Badger Meter, Inc. · NYSE:BMI
Badger Meter — Investor Presentation (October 2021)
23 slides from Badger Meter's investor presentation, October 2021
Slide 1: Badger Meter, Inc. General Investor Presentation
BADGER METER, INC. GENERAL INVESTOR PRESENTATION October 2021 © 2021 Badger Meter, Inc. 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain statements contained in this presentation as well as other information provided from time to time by Badger Meter, Inc. (the “company”) or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to
Slide 3: Premier Smart Water Solutions Provider
PREMIER SMART WATER SOLUTIONS PROVIDER • Comprehensive suite of digital smart water offerings including flow measurement, water quality and other parameters with 93% WATER RELATED software / analytics solutions BUSINESS • Industry leader in North American smart water metering, with a Flow strong glo
Slide 4: Comprehensive Portfolio of Smart Water Offerings
COMPREHENSIVE PORTFOLIO OF SMART WATER OFFERINGS Secular Drivers Our Solutions Outcomes Measurements Data Accessibility Population Growth Water Scarcity • Flow (total and rate) • Wired / wireless networks Revenue and Demand Change Environment Changes • Water quality • Mobile communications / IoT Cap
Slide 5: Smart Water Innovation Leader
SMART WATER INNOVATION LEADER Driving Enhancements in Smarter Measurement & Actionable Data Enhanced Operational Efficiencies Static Metering Water Quality Cellular & IoT Software & Analytics • Smarter meters – flow, • Low maintenance, • 5th generation endpoint • Cloud software for utility pressur
Slide 6: Third Quarter 2021 Financial Snapshot
THIRD QUARTER 2021 FINANCIAL SNAPSHOT • Utility water sales increased 12.2%, acquisitions (US$ in millions, except per share data) Q3 2021 Q3 2020 Change contributed $10M with 1.7% core growth. Strong order activity and SaaS growth more than offset Sales $128.7 $113.6 13.3% impact of supply chain co
Slide 7: Outlook / Summary
OUTLOOK / SUMMARY • Demonstrated success in managing myriad of macroeconomic challenges and delivering for our customers – strong execution of supply chain, logistics and inflation dynamics. Anticipate continuation of these headwinds into Q4 and 2022 • Investing in and advancing digital solutions to
Slide 8: Water Quality Monitoring – s::can and ATi
WATER QUALITY MONITORING – S::CAN AND ATI • Complementary offerings Macro Trends Driving Applications • Product technology – robust and full portfolio of both WATER SECURITY electrochemical and optical sensors A case for network water quality Potable water monitoring; optimize • Geographies - ATi st
Slide 9: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES • No outstanding debt obligations and $67M of cash at September Internal Investment to support organic 30, 2021 growth and sustain core business • Strong free cash flow, working capital management – 125% conversion of net earnings YTD Grow the dividend annually in line
Slide 10: Environmental, Social and Governance Integral to Business Strategy
ENVIRONMENTAL, SOCIAL AND GOVERNANCE INTEGRAL TO BUSINESS STRATEGY • Smart Water Solutions enable water conservation, resiliency and improved water quality – aligned with United Nations SDGs − Estimate our products save >5B gallons of water annually, equating to >11.5M kWh of energy (7,850 tons of C
Slide 11: Background Information
BACKGROUND INFORMATION © 2021 Badger Meter, Inc. 11
Slide 12: Competitive Advantages – Why Badger Meter Wins
COMPETITIVE ADVANTAGES – WHY BADGER METER WINS >50K Water Utilities in US Broadest Range of Offerings • Brass and polymer – Choice Matters • Mechanical and static (ultrasonic) Utility Size and their Share of • Drive by, fixed and cellular radio technology Meter connections Technology Leadership • We
Slide 13: Cellular Communication vs. Fixed Network
CELLULAR COMMUNICATION VS. FIXED NETWORK • Easy • Flexible • Resilient • Savings • Standard LTE-M Cellular Communication Technology – Example of Innovation Leadership © 2021 Badger Meter, Inc. 13
Slide 14: Smart Water Acceleration
SMART WATER ACCELERATION The Business Case The Solutions Why are utilities willing to pay more? How our leading technologies deliver • Reduce non-revenue water (NRW) • Meters • Mechanical meters lose some accuracy over • Static (E-series ultrasonic) holds accuracy over time lifetime; commercial size
Slide 15: Utility Water-Integrated Solution Offering
UTILITY WATER-INTEGRATED SOLUTION OFFERING Mechanical Meters 1 Static Meters 1 • Broadest product offering - both mechanical 1 and static meters in both metal and polymer • Next generation E-Series Ultrasonic Meter METERS with D-Flow technology Recordall® Disc E-Series® Ultrasonic • Complete line of
Slide 16: Smart Water Key Growth Strategies
SMART WATER KEY GROWTH STRATEGIES • Maintain leading position in the North American smart water market through continued development of leading-edge offerings • Penetrate and grow select international markets (e.g. Middle East, UK) with fit-for- market solutions • Leverage addition of real-time wate
Slide 17: Radio Connectivity - Penetration
RADIO CONNECTIVITY - PENETRATION MANUAL READ METERS WITH RADIOS/SOFTWARE $40-$50 price $150-$250 price per per meter system CONVERSION TO CONTINUE • Badger Meter was the first US company to offer radios on water meters (1988) • Radio connectivity allows for automated North American water meter marke
Slide 18: Flow Instrumentation Key Growth Strategies
FLOW INSTRUMENTATION KEY GROWTH STRATEGIES • Expand niche share by targeting water-related applications, predominately • Building Automation/HVAC/Sustainability • Water and Wastewater treatment and distribution • Leverage addition of real-time water quality monitoring for industrial process and disc
Slide 19: Strategic Acquisitions
STRATEGIC ACQUISITIONS Potential Steps in Process Acquisition Targets Criteria • Technology solutions that can be • Companies leveraged across both utility and flow Ideation List of Potential Targets previously tracked Water quality monitoring New targets added instrumentation markets • • Sensors /
Slide 20: Acquisition History
ACQUISITION HISTORY Year Company Type Location Price Utility Water Instrumentation and Connectivity: 2021 Analytical Technology, Inc Water quality monitoring USA / UK $44M 2020 s::can Water quality monitoring Vienna, Austria $31M 2018 Innovative Metering Distributor Tampa, FL $8M Solutions 2017 Caro
Slide 21: Global Innovation and Manufacturing Footprint
GLOBAL INNOVATION AND MANUFACTURING FOOTPRINT LULEA SWEDEN – Ultrasonic technology development MILWAUKEE, WI – Communication technologies, advanced metering development BERN, BRNO, CZECH REPUBLIC MILWAUKEE - HQ RACINE, WI SWITERLAND VIENNA AUSTRIA – Optical water quality sensing VIENNA
Slide 22: Annual Financial Trends
ANNUAL FINANCIAL TRENDS (US$ in millions, except per share data) • Sales growth driven primarily by smart water solution penetration 2017 2018 2019 2020 • Radios and SaaS Sales $402.4 $433.7 $424.6 $425.5 Adj Oper Earnings 56.6 59.4 62.2 65.2 • Margins driven predominately by 14.1% 13.7% 14.6% 15.3%
Slide 23: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS EBITDA Free Cash Flow (US$ in millions) (US$ in millions) Q3 2021 Q3 2020 YTD 2021 YTD 2020 Q3 2021 Q3 2020 Net Earnings (GAAP) $15.9 $14.9 $43.6 $36.2 Cash from Ops (GAAP) $17.7 $21.4 Interest expense 0.0 0.0 0.0 0.0 Capital Expenditures (3.8) (2.3) Income tax provi