Badger Meter Annual Report 2020

FY2020 Annual Report · Badger Meter

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2020 BADGER METER
ANNUAL REPORT

OUR
COMPANY

With more than a century of water
technology innovation, Badger Meter
(NYSE:BMI) is a global provider
of industry leading water solutions
encompassing flow measurement, quality
and other system parameters. These offerings
provide our customers with the data and analytics
essential to optimize their operations and contribute
to the sustainable use and protection of the world’s
most precious resource.

PERFORMANCE DATA

December 31,

Operations (dollars in thousands)

Net Sales

Operating Earnings

Net Earnings

Diluted per Common Share Amounts

Diluted Earnings

Cash Dividends

Year-End Financial Position (dollars in thousands)

Total Assets
Net Cash (Debt)(1)

Shareholders’ Equity

Other
Free Cash Flow(2)

Number of Employees

$500

$400

$300

$200

$100

$425.5

'16

'17

'18

'19

'20

Net Sales
(in millions)

$60

$50

$40

$30

$20

$10

2019

2020

% Change

$ 424,625

$ 62,148

$ 47,177

$ 1.61

$ 0.64

$ 421,893

$ 44,391

$ 331,068

$ 73,218

1,567

$ 425,544

$ 65,156

$ 49,343

$ 1.69

$ 0.70

$ 468,380

$ 72,273

$ 361,259

$ 80,519

1,602

$1.80

$0.80

$1.69

$49.3

$1.50

0.2

4.8

4.6

5.0

9.4

10.0

$0.70

$1.20

$0.90

$0.60

$0.30

$0.00

'16

'17

'18

'19

'20

$0.60

$0.40

$0.20

$0.00

'16

'17

'18

'19

'20

Adjusted Diluted EPS (2)

Dividends per Share

'16

'17

'18

'19

'20

Adjusted Net Earnings (2)
(in millions)

(1) Net cash (debt) equals cash and cash equivalents less short term debt and any long term debt.

(2) See last page for reconciliation of GAAP to non-GAAP measures, including adjusted operating earnings, net earnings, diluted earnings per share and free cash flow.

2020 BADGER METER ANNUAL REPORT | 1

OUR SOLUTIONS

UTILITY WATER SOLUTIONS
Badger Meter offers a wide range of smart metering solutions used to measure and control the flow of liquids in a diverse array of
applications, serving municipalities, water utilities, and residential, commercial and industrial customers worldwide.

SMART WATER IS BADGER METER
We work with utilities to increase operational efficiencies, effectiveness and responsiveness
within their water systems. Our end-to-end solutions provide actionable information through
data analytics from an interconnected and interoperable network of sensors and devices that
empower people and organizations to efficiently use and conserve water.

Utilities are leveraging our highly reliable and secure infrastructure-free cellular network offerings
to make their meter reading more efficient, scalable and secure for the long term. We offer fully
integrated smart water solutions that provide real-time access to detailed water usage data and
leak detection, so utilities can improve efficiency, reduce water loss and enhance
event management.

To further expand our smart water portfolio, we recently acquired s::can GmbH and Analytical
Technology, Inc. (ATi), two leaders in real-time water quality monitoring solutions. The
combination of their optical and electrochemical sensing solutions provides for comprehensive
and automated monitoring of a variety of parameters within the water distribution network,
increasing water protection and security.

CHOICE MATTERS
At Badger Meter we believe choice matters. We offer a comprehensive product line for residential, commercial and fire service
applications. Our leading meter families, E-Series®, Recordall® and ModMAG®, are available in a range of technologies, materials
and sizes. Our experts help utilities choose the technology that best fits their needs, including ultrasonic, nutating disc and
electromagnetic. Because all our meters are designed for accuracy and longevity, we have the right product for any application.

CELLULAR KEEPS IT EASY

Our ORION® Cellular endpoints utilize the existing Internet of Things
(IoT) cellular infrastructure to efficiently and securely deliver meter

reading data to the utility. This innovative technology eliminates the
need for standard utility-owned fixed network advanced metering
infrastructure (AMI), allows for rapid deployment and decreases

ongoing maintenance when paired with our BEACON®
Advanced Metering Analytics (AMA) solution.

Our smart water solutions work in tandem with BEACON AMA—

a cloud-based Software as a Service (SaaS) that offers a wide
choice of utility management and consumer engagement solutions

to meet any meter reading, proactive exception management and

2 | 2020 BADGER METER ANNUAL REPORT

reporting needs. The integrated EyeOnWater® consumer engagement tools give utility customers
the power to manage their water use through easy-to-understand consumption graphs and
configurable leak notifications, providing timely, visual access to their water usage behavior.

THE SMART
WATER SHOW

To further advance our
thought leadership efforts in
support of our customers,
Morrice Blackwell, a 25-year
Badger Meter veteran and
Senior Solution Architect
created and hosts “The Smart
Water Show.” Each episode of
the educational online show
highlights important smart
water topics, technologies and
solutions to help utilities make
informed decisions that best suit
their unique needs.

COMMERCIAL & INDUSTRIAL SOLUTIONS
Badger Meter Flow Instrumentation products and solutions provide technology to measure and
control whatever moves through a pipe or pipeline—including water, wastewater, air, steam,
other liquids and gases. An industry leader in both mechanical and electrical flow metering
technologies, we offer one of the broadest flow control and measurement portfolios in the
industry. And we apply our expertise to further enhance our products’ ease-of-use, accuracy
and effectiveness.

In addition, the water quality monitoring solutions from s::can and ATi will provide our industrial
customers with both process and discharge water quality monitoring capabilities.

Customers can rely on Badger Meter Flow Instrumentation for application-specific solutions that
deliver accurate, timely and dependable data essential for product quality, cost management,
regulatory compliance and safer, more sustainable operations.

2020 BADGER METER ANNUAL REPORT | 3

A MESSAGE TO OUR SHAREHOLDERS

2020 will long be remembered as monumental, with

a social justice movement and the entire world
challenged by a public health and economic

crisis. In such times, it is our ability to stay true
to Badger Meter’s values and vision that is

of the utmost importance. As a company, I
am proud of the response of our employees
globally to the unprecedented and far-reaching

impact of COVID-19, both to them personally

and to our company. Our sales, service and
support staff around the globe embraced new

ways of working and increased productivity, and our
operations and supply chain teams were able to safely

respond to the needs of our customers despite the

broad-based disruption caused by the virus.

Kenneth C. Bockhorst

Chairman, President and

Chief Executive Officer

Although this year taught us that no business is completely immune, the COVID-19 crisis reminded us of the criticality of the
water industry. Serving this vital and essential industry requires resiliency and the capability to transform in the face of sweeping
changes. One such transformation was the digital revolution that occurred in mere weeks. This was evident within our own
operations, as well as within utilities who found themselves challenged to safely install and read meters, invoice customers,
engage consumers, turn on previously shut-off water, and perform other critical services. For those customers already employing
our ORION LTE-M Cellular radio AMI (advanced metering infrastructure) solution—with increased reads, two-way communication,
unparalleled coverage, robust battery life—they were seamlessly able to leverage real-time data analytics to help manage their
utility operations remotely.

COVID-19 will have a profound impact on the global water sector and its pace of digital transformation. For Badger Meter, the
potential long-term implications of this crisis on our business includes two particular secular trends. First, the benefit of automated
meter reading adoption, whether AMR (aka drive-by) or AMI, to remotely assess meter functionality, leak detection and usage
reads. Second, remote actuation of flow restriction technology, to either limit, or in the case of this pandemic, immediately return to
full service water availability to end consumers.

I am extremely proud of our ability to execute on our growth strategies, including pursuing strategic and accretive acquisitions
during the COVID era. We recently completed two transactions, which serve to establish the foundation of our water quality
monitoring portfolio. Water quality is a growing concern across the globe. The addition of s::can GmbH and Analytical Technology,
Inc. (ATi), and their collective expertise in real-time water quality monitoring, to the trusted Badger Meter portfolio is of tremendous
strategic value to our customers. Incorporating real-time water quality parameters, along with Badger Meter’s core flow
measurement, pressure and temperature sensing capabilities, enhance the scope of actionable data for municipalities to improve

4 | 2020 BADGER METER ANNUAL REPORT

operational security, awareness and efficiency. In addition, the combined offerings provide industrial customers with both
process and discharge water quality monitoring capabilities.

We continue to invest in enhancements to BEACON AMA, our integrated technology platform for smart water
monitoring, which leverages our growing portfolio of smart products and solutions. Our customers benefit from more
holistic, integrated solutions that operationalize real-time data. These digitally enabled solutions reduce overall
costs and offer the safer, remote solutions spotlighted by the pandemic. These dynamics are in addition to the
secular drivers that have already been evolving—such as the need to reduce unaccounted for water, simplify
compliance reporting, drive conservation, address the aging workforce of utilities and connect with end
consumers. We are also expanding the functionality of our EyeOnWater software app that effectively
enables consumer engagement.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
COMMITMENT
In 2020, we issued a new global Sustainability Report, highlighting how we continue to create
value for our stakeholders by strengthening our business in an environmentally and socially
conscious manner. The Sustainability Report focuses on four strategic pillars that help
define and guide Badger Meter’s ESG strategies and execution of those strategies.
Through these pillars, Badger Meter’s ESG efforts are focused on the most material
and impactful areas, including water conservation, health and safety, operational
efficiency, and employee engagement and inclusion.

As I reflect on this past year, I naturally think of our employees—the roughly 1,600
of my colleagues around the globe who are critical to the achievement of our vision
and the successful execution of our strategic plans. Of all the decisions our leadership
team made in 2020, I am most proud of our unwavering support for our employees during
this period of tremendous uncertainty. As the pandemic emerged in spring, we extended
emergency sick pay to employees, and utilized a short-term furlough as a method to respond
to the drop in sales activity versus resorting to widespread layoffs. This allowed us to retain and
drive engagement of our exceptional team.

We remain deeply committed to developing a diverse and inclusive workplace, reflective of the diverse
customer and other stakeholder groups we serve. We recognize racial equality as a basic human right,
and respect the cultures, customs and values of the people in communities in which we operate.

While sustainability has long been core to our culture, and our commitment to preserve the world’s most
precious resource, we will continue to take action to ensure we are meeting the demands of the rapidly changing
world we live in. There is much we have accomplished in our 115-year history, yet there is more we can and will do
to make a real and positive impact on our planet.

2020 BADGER METER ANNUAL REPORT | 5

FINANCIAL RESULTS DEMONSTRATE RESILIENCY

Early in the year, it would have been impossible to predict how fiscal year 2020 would conclude. While the arrival of
COVID-19 to our primary US market in the March/April time frame brought a drop in order activity, we took swift
and effective action to protect our employees and operations resulting in outstanding performance despite the
unprecedented challenges we encountered. While we faced some ongoing order and award delays, most
notably in the flow instrumentation product line, activity levels largely returned to “normal” as the severe

lockdowns were lifted and customer operations resumed.

163%

21.2%

EPS
Growth

Free
Cash Flow
Conversion

EBIDTA
Margin

•

Total sales in 2020 were $425.5 million, approximately
flat with the $424.6 million in the previous year. However,
sales into the utility water sector grew 4% for the year,
even with the short-term impact on demand brought on by
the health and economic crisis. This was due to continued
penetration of smart water AMI solutions, ultrasonic
meters and Software as a Service (SaaS) offerings.

Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA) margin was a record 21.2%(1),
an improvement of 90 basis points over the prior year’s
20.3% due to favorable product mix, cost management
and the benefit of price/cost dynamics. Fiscal 2020 EPS
was $1.69, a 5% increase from the $1.61 delivered
in 2019.

• We generated free cash flow of $80.5(1) million,

representing 163% conversion of net earnings into cash
due to our strong earnings foundation and solid working
capital management.

6 | 2020 BADGER METER ANNUAL REPORT

(1) See last page for reconciliation of GAAP to Non-GAAP financial metrics.

CAPITAL DEPLOYMENT DRIVING LONG-TERM RETURNS
Badger Meter continues to generate and deploy cash efficiently to accelerate growth and create strong returns for
shareholders.

•

In 2020, we increased our annual dividend per share by 9%, marking 28 consecutive years of increasing the
annual dividend per share paid. This use of cash is aligned with our balanced capital allocation objectives.

• We deployed net cash of $29 million during the calendar year, and another approximately $44 million
in early January 2021—a total of approximately $73 million on accretive, strategic acquisitions
that extend and augment our offerings in the water sector with real-time water quality monitoring
technologies.

Looking ahead, we will remain active in identifying and pursuing strategic acquisitions. In addition
to a strong balance sheet, we generate excellent cash flow which we will continue to deploy in a
disciplined manner, driving strong returns for our shareholders.

FINAL THOUGHTS
In summary, I am pleased with the resilience of our business model and our financial
performance in relation to the economic severity of this unprecedented crisis. We are
well positioned as we enter 2021 with ample organic and inorganic opportunities
to build on our already strong foundation, and we are in a great financial position
to support our longer-term aspirations of protecting the world’s most precious
resource.

Last, but not least, I want to thank our customers, suppliers and shareholders for their
ongoing support and commitment to Badger Meter.

Sincerely –

Ken Bockhorst
Chairman, President and
Chief Executive Officer

2020 BADGER METER ANNUAL REPORT | 7

CORPORATE INFORMATION

BOARD OF DIRECTORS
Todd A. Adams1,2
Chairman, President and Chief Executive

Gail A. Lione2, 3
Senior Counsel, Dentons; Retired Executive,

Officer, Rexnord Corporation

Harley-Davidson, Inc.

James F. Stern1, 3
Executive Vice President, General Counsel

and Secretary, A. O. Smith Corporation

Kenneth C. Bockhorst
Chairman, President and Chief Executive

James W. McGill2
Retired Executive, Eaton Corporation

Glen E. Tellock1
President and Chief Executive Officer,

Officer, Badger Meter, Inc.

Gale E. Klappa (Lead Director)2, 3
Executive Chairman, WEC Energy Group

Tessa M. Meyers1,3
Global Vice President – Software and Control,

Rockwell Automation

Lakeside Foods

Committees of the Board:

1. Audit and Compliance

2. Compensation

3. Corporate Governance

EXECUTIVE OFFICERS
Kenneth C. Bockhorst
Chairman, President and

William R.A. Bergum
Vice President – General Counsel

Chief Executive Officer

and Secretary

Gregory M. Gomez
Vice President – Global Flow Instrumentation

and International Utility

Karen M. Bauer
Vice President – Investor Relations,

Corporate Strategy and Treasurer

Fred J. Begale
Vice President – Engineering

OTHER
Badger Meter, Inc. Headquarters
4545 West Brown Deer Road
P.O. Box 245036
Milwaukee, Wisconsin 53224-9536
(414) 355-0400
www.badgermeter.com

Independent Registered Public Accounting Firm
Ernst & Young, LLP, Milwaukee, Wisconsin

Transfer Agent
American Stock Transfer & Trust Company, LLC
New York, New York
(877) 248-6415
www.amstock.com

Listing of Common Stock
New York Stock Exchange; Symbol – BMI

BMI
LISTED
NYSE

Sheryl L. Hopkins
Vice President – Human Resources

William J. Parisen
Vice President – Global Operations

Kimberly K. Stoll
Vice President – Sales and Marketing

Daniel R. Weltzien
Vice President – Controller

Robert A. Wrocklage
Senior Vice President – Chief

Financial Officer

Form 10-K Report/Shareholder Information
The 2020 Form 10-K annual report (without exhibits) as filed with the Securities and
Exchange Commission, is included in this report. Shareholder information, including
news releases and Form 10-K, are available on the company’s website:
www.badgermeter.com.

Forward Looking Statements
Any forward looking statements contained in this document are subject to various risks
and uncertainties, the most important of which are outlined in the Form 10-K.

Trademarks
Trademarks appearing in this document are the property of their respective entities.

Investor Relations
Financial analysts and investors should direct inquires to:
Karen Bauer
Vice President – Investor Relations, Corporate Strategy and Treasurer
kbauer@badgermeter.com
(414) 371-7276

8 | 2020 BADGER METER ANNUAL REPORT

UNITED STATES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Washington, DC 20549
FORM 10-K
FORM 10-K

☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020
For the fiscal year ended December 31, 2020
or
or
☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For the transition period from to
Commission File No. 001-06706
Commission File No. 001-06706

BADGER METER, INC.
BADGER METER, INC.

(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)

Wisconsin
Wisconsin
(State or other jurisdiction
(State or other jurisdiction
of incorporation or organization)
of incorporation or organization)
4545 W. Brown Deer Road
4545 W. Brown Deer Road
Milwaukee, Wisconsin
Milwaukee, Wisconsin
(Address of principal executive offices)
(Address of principal executive offices)

39-0143280
39-0143280
(I.R.S. Employer
(I.R.S. Employer
Identification No.)
Identification No.)

53233
53233
(Zip code)
(Zip code)

(414) 355-0400
(414) 355-0400
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(b) of the Act:

Common Stock
Common Stock
(Title of each class)
(Title of each class)

BMI
BMI
(Trading Symbol)
(Trading Symbol)

New York Stock Exchange
New York Stock Exchange
(Name of each exchange on which registered)
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☒ No ☐
90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
the Exchange Act.
Large accelerated filer
Large accelerated filer
Accelerated filer
Accelerated filer
Non-accelerated filer
Non-accelerated filer
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity: As of June 30, 2020, the aggregate market value of the shares of Common Stock held by non-
was last sold, or the average bid and asked price of such common equity: As of June 30, 2020, the aggregate market value of the shares of Common Stock held by non-
affiliates of the Registrant was approximately $1.82 billion. For purposes of this calculation only, (i) shares of Common Stock are deemed to have a market value of
affiliates of the Registrant was approximately $1.82 billion. For purposes of this calculation only, (i) shares of Common Stock are deemed to have a market value of
$62.92 per share, the closing price of the Common Stock as reported on the New York Stock Exchange on June 30, 2020, and (ii) each of the Company's executive
$62.92 per share, the closing price of the Common Stock as reported on the New York Stock Exchange on June 30, 2020, and (ii) each of the Company's executive
officers and directors is deemed to be an affiliate of the Company.
officers and directors is deemed to be an affiliate of the Company.
As of February 3, 2021, there were 29,145,410 shares of Common Stock outstanding with a par value of $1 per share.
As of February 3, 2021, there were 29,145,410 shares of Common Stock outstanding with a par value of $1 per share.

Smaller reporting company
Smaller reporting company
Emerging growth company
Emerging growth company

☒
☒
☐
☐
☐
☐

☐
☐
☐
☐

Portions of the Company's Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission under
Portions of the Company's Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission under
Regulation 14A within 120 days after the end of the registrant's fiscal year, are incorporated by reference from the definiti ve Proxy Statement into Part III of this Annual
Regulation 14A within 120 days after the end of the registrant's fiscal year, are incorporated by reference from the definiti ve Proxy Statement into Part III of this Annual
Report on Form 10-K.
Report on Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENTS INCORPORATED BY REFERENCE

Special Note Regarding Forward Looking Statements

Certain statements contained in this Annual Report on Form 10-K, 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 differ materially from those in the forward looking statements. The words “anticipate,” “believe,”
“estimate,” “expect,” “think,” “should,” “could” and “objective” or similar expressions are intended to identify forward looking
statements. All such forward looking statements are based on the Company’s then current views and assumptions and involve risks
and uncertainties. Some risks and uncertainties that could cause actual results to differ materially from those expressed or implied in
forward looking statements include those described in Item 1A of this Annual Report on Form 10-K for the year ended December 31,
2020.

ITEM 1.

BUSINESS

PART I

Badger Meter, Inc. (the “Company”) is a leading innovator, manufacturer and marketer of products incorporating flow
measurement, quality, control and other system solutions serving markets worldwide. The Company was incorporated in 1905.

Throughout this 2020 Annual Report on Form 10-K, the words “we,” “us” and “our” refer to the Company.

Available Information

The Company's internet address is http://www.badgermeter.com. The Company makes available free of charge through its
website its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those
reports, on the same day they are electronically filed with, or furnished to, the Securities and Exchange Commission. The Company is
not including the information contained on or available through its website as a part of, or incorporating such information by reference
into, this Annual Report on Form 10-K.

Market Overview, Products, Systems and Solutions

With more than a century of water technology innovation, Badger Meter is a global provider of industry leading water
solutions encompassing flow measurement, quality and other system parameters. These offerings provide customers with the data and
analytics essential to optimize their operations and contribute to the sustainable use and protection of the world’s most precious
resource. The Company’s flow measurement products measure water and other fluids and are known for accuracy, long-lasting
durability and for providing valuable and timely measurement data through various methods. The Company’s water quality
monitoring solutions include optical sensing and electrochemical instruments that provide real-time, on-demand data parameters. The
Company’s product lines fall into two categories: sales of water meters, radios and related technologies, and water quality monitoring
solutions to water utilities (utility water) and sales of meters and other sensing instruments, valves and other products for industrial
applications in water, wastewater, and other industries (flow instrumentation). The Company estimates that approximately 90% of its
products are used in water related applications.

Utility water, the largest sales category, is comprised of either mechanical or static (ultrasonic) water meters along with the

related radio and software technologies and services used by water utilities as the basis for generating their water and wastewater
revenues. It further comprises other sensor technology used in the water distribution system to ensure the safe and efficient delivery
of clean water. These sensors are used to detect leaks in the distribution piping system and to monitor various water quality
parameters throughout the distribution system. The largest geographic market for the Company’s utility water products is North
America, primarily the United States, because most of the Company's meters are designed and manufactured to conform to standards
promulgated by the American Water Works Association. The majority of water meters sold by the Company continue to be
mechanical in nature; however, ultrasonic meters are an increasing percentage of the water meters sold by the Company and in the
industry, due to a variety of factors, including their ability to maintain measurement accuracy over their useful life. Providing
ultrasonic water meter technology, combined with advanced radio technology, provides the Company with the opportunity to sell into
other geographical markets, for example the Middle East, Europe and Southeast Asia.

The flow instrumentation product line primarily serves water applications throughout the broader industrial markets. This

product line includes meters, valves and other sensing instruments sold worldwide to measure and control the quantity of fluids going
through a pipe or pipeline including water, air, steam, oil, and other liquids and gases. These products are used in a variety of
industries and applications, with the Company’s primary market focus being water/wastewater; heating, ventilating and air
conditioning (HVAC) and corporate sustainability. Flow instrumentation products are generally sold to original equipment
manufacturers as the primary flow measurement device within a product or system, as well as through manufacturers’ representatives.

Utility water meters (both residential and commercial) are generally classified as either manually read meters or remotely

Special Note Regarding Forward Looking Statements

Certain statements contained in this Annual Report on Form 10-K, 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 differ materially from those in the forward looking statements. The words “anticipate,” “believe,”

“estimate,” “expect,” “think,” “should,” “could” and “objective” or similar expressions are intended to identify forward looking

statements. All such forward looking statements are based on the Company’s then current views and assumptions and involve risks

and uncertainties. Some risks and uncertainties that could cause actual results to differ materially from those expressed or implied in

forward looking statements include those described in Item 1A of this Annual Report on Form 10-K for the year ended December 31,

PART I

Badger Meter, Inc. (the “Company”) is a leading innovator, manufacturer and marketer of products incorporating flow

measurement, quality, control and other system solutions serving markets worldwide. The Company was incorporated in 1905.

Throughout this 2020 Annual Report on Form 10-K, the words “we,” “us” and “our” refer to the Company.

2020.

ITEM 1.

BUSINESS

Available Information

The Company's internet address is http://www.badgermeter.com. The Company makes available free of charge through its

website its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those

reports, on the same day they are electronically filed with, or furnished to, the Securities and Exchange Commission. The Company is

not including the information contained on or available through its website as a part of, or incorporating such information by reference

into, this Annual Report on Form 10-K.

Market Overview, Products, Systems and Solutions

With more than a century of water technology innovation, Badger Meter is a global provider of industry leading water

solutions encompassing flow measurement, quality and other system parameters. These offerings provide customers with the data and

analytics essential to optimize their operations and contribute to the sustainable use and protection of the world’s most precious

resource. The Company’s flow measurement products measure water and other fluids and are known for accuracy, long-lasting

durability and for providing valuable and timely measurement data through various methods. The Company’s water quality

monitoring solutions include optical sensing and electrochemical instruments that provide real-time, on-demand data parameters. The

Company’s product lines fall into two categories: sales of water meters, radios and related technologies, and water quality monitoring

solutions to water utilities (utility water) and sales of meters and other sensing instruments, valves and other products for industrial

applications in water, wastewater, and other industries (flow instrumentation). The Company estimates that approximately 90% of its

products are used in water related applications.

Utility water, the largest sales category, is comprised of either mechanical or static (ultrasonic) water meters along with the

related radio and software technologies and services used by water utilities as the basis for generating their water and wastewater

revenues. It further comprises other sensor technology used in the water distribution system to ensure the safe and efficient delivery

of clean water. These sensors are used to detect leaks in the distribution piping system and to monitor various water quality

parameters throughout the distribution system. The largest geographic market for the Company’s utility water products is North

America, primarily the United States, because most of the Company's meters are designed and manufactured to conform to standards

promulgated by the American Water Works Association. The majority of water meters sold by the Company continue to be

mechanical in nature; however, ultrasonic meters are an increasing percentage of the water meters sold by the Company and in the

industry, due to a variety of factors, including their ability to maintain measurement accuracy over their useful life. Providing

ultrasonic water meter technology, combined with advanced radio technology, provides the Company with the opportunity to sell into

other geographical markets, for example the Middle East, Europe and Southeast Asia.

The flow instrumentation product line primarily serves water applications throughout the broader industrial markets. This

Utility water meters (both residential and commercial) are generally classified as either manually read meters or remotely

read meters via radio technology. A manually read meter consists of a water meter and a register that provides a visual totalized meter
reading. Meters equipped with radio technology (endpoints) receive flow measurement data from battery-powered encoder registers
attached to the water meter, which is encrypted and transmitted via radio frequency to a receiver that collects and formats the data
appropriately for water utility usage and billing systems. These remotely read systems are classified as either automatic meter reading
3
(AMR) systems, where a vehicle equipped for meter reading purposes, including a radio receiver, computer and reading software,
collects the data from the utilities’ meters; or advanced metering infrastructure (AMI) systems, where data is gathered utilizing a
network (either fixed or cellular) of data collectors or gateway receivers that are able to receive radio data transmission from the
utilities’ meters. AMI systems eliminate the need for utility personnel to drive through service territories to collect data from the
meters. These systems provide utilities with more frequent and diverse data from their meters at specified intervals.

The ORION® branded family of radio endpoints provides water utilities with a range of industry-leading options for meter

reading. These include ORION (ME) for migratable AMR meter reading, ORION (SE) for traditional fixed network applications, and
ORION Cellular for an infrastructure-free meter reading solution. ORION Migratable makes the migration to fixed network easier for
utilities that prefer to start with mobile reading and later adopt fixed network communications, allowing utilities to choose a solution
for their current needs and be positioned for their future operational changes. ORION Cellular eliminates the need for utility-owned
fixed network infrastructure, allows for gradual or full deployment, and decreases ongoing maintenance.

Information and analytics are critical to the water metering ecosystem. The Company’s BEACON® Advanced Metering

Analytics (AMA) software suite improves utility visibility to their water and water usage. BEACON AMA is a secure, cloud-hosted
software suite that includes a customizable dashboard, and has the ability to establish alerts for specific conditions. It also allows for
consumer engagement tools that permit end water users (such as homeowners) to view and manage their water usage activity.
Benefits to the utility include improved customer service, increased visibility through faster leak detection, the ability to promote and
quantify the effects of its water conservation efforts, and easier compliance reporting.

Water meter replacement and the adoption and deployment of new technology comprise the majority of water meter product

sales, including radio products. To a much lesser extent, housing starts also contribute to the new product sales base. Over the last
decade, there has been a growing trend in the conversion from manually read water meters to meters with radio technology. This
conversion rate is accelerating, with the Company estimating that approximately 65% of water meters installed in the United States
have been converted to a radio solution technology.

In addition to our water utility flow measurement solutions, the Company provides various water quality monitoring

solutions utilizing optical sensors and electrochemical instruments that measure a variety of parameters including turbidity, pH,
chlorine, nitrates and approximately 40 others. Utilizing these solutions, water quality can be monitored continually or periodically
throughout the network from its original source to the point in which it is recycled and returned. The addition of real-time water
quality parameters to core flow measurement, pressure and temperature sensing capabilities enhances the scope of actionable data for
water utilities to improve operational security, awareness and efficiency.

The Company’s net sales and corresponding net earnings depend on unit volume and product mix, with the Company
generally earning higher average selling prices and margins on meters equipped with radio technology, and higher margins on
ultrasonic compared to mechanical meters. The Company’s proprietary radio products generally result in higher margins than
remarketed, non-proprietary technology products. The Company also sells registers and endpoints separately to customers who wish
to upgrade their existing meters in the field.

Flow instrumentation products are used in flow measurement and control applications across a broad industrial spectrum,

occasionally leveraging the same technologies used in the municipal water category. Specialized communication protocols that
control the entire flow measurement process and mandatory certifications drive these markets. The Company provides both standard
and customized flow instrumentation solutions.

The industries served by the Company’s flow instrumentation products face accelerating demands to contain costs, reduce

product variability, and meet ever-changing safety, regulatory and sustainability requirements. To address these challenges, customers
must reap more value from every component in their systems. This system-wide scrutiny has heightened the focus on flow
instrumentation in industrial process, manufacturing, commercial fluid, building automation and precision engineering applications
where flow measurement and control are critical.

A leader in both mechanical and static (ultrasonic) flow metering technologies for industrial markets, the Company offers one

of the broadest flow measurement, control and communication portfolios in the market. This portfolio carries respected brand names
including Recordall®, Hedland®, Dynasonics®, Blancett®, and Research Control®, and includes eight of the ten major flow meter
technologies. Customers rely on the Company for application-specific solutions that deliver accurate, timely and dependable flow
data and control essential for product quality, cost control, safer operations, regulatory compliance and more sustainable operations.

In addition, the Company provides various water quality monitoring solutions utilizing optical sensors and electrochemical

instruments that measure a variety of parameters providing industrial customers with both process and discharge water quality
monitoring capabilities.

appropriately for water utility usage and billing systems. These remotely read systems are classified as either automatic meter reading

(AMR) systems, where a vehicle equipped for meter reading purposes, including a radio receiver, computer and reading software,

collects the data from the utilities’ meters; or advanced metering infrastructure (AMI) systems, where data is gathered utilizing a

network (either fixed or cellular) of data collectors or gateway receivers that are able to receive radio data transmission from the

utilities’ meters. AMI systems eliminate the need for utility personnel to drive through service territories to collect data from the

meters. These systems provide utilities with more frequent and diverse data from their meters at specified intervals.

The ORION® branded family of radio endpoints provides water utilities with a range of industry-leading options for meter

reading. These include ORION (ME) for migratable AMR meter reading, ORION (SE) for traditional fixed network applications, and

ORION Cellular for an infrastructure-free meter reading solution. ORION Migratable makes the migration to fixed network easier for

utilities that prefer to start with mobile reading and later adopt fixed network communications, allowing utilities to choose a solution

for their current needs and be positioned for their future operational changes. ORION Cellular eliminates the need for utility-owned

fixed network infrastructure, allows for gradual or full deployment, and decreases ongoing maintenance.

Information and analytics are critical to the water metering ecosystem. The Company’s BEACON® Advanced Metering

Analytics (AMA) software suite improves utility visibility to their water and water usage. BEACON AMA is a secure, cloud-hosted

software suite that includes a customizable dashboard, and has the ability to establish alerts for specific conditions. It also allows for

consumer engagement tools that permit end water users (such as homeowners) to view and manage their water usage activity.

Benefits to the utility include improved customer service, increased visibility through faster leak detection, the ability to promote and

quantify the effects of its water conservation efforts, and easier compliance reporting.

Water meter replacement and the adoption and deployment of new technology comprise the majority of water meter product

sales, including radio products. To a much lesser extent, housing starts also contribute to the new product sales base. Over the last

decade, there has been a growing trend in the conversion from manually read water meters to meters with radio technology. This

conversion rate is accelerating, with the Company estimating that approximately 65% of water meters installed in the United States

have been converted to a radio solution technology.

In addition to our water utility flow measurement solutions, the Company provides various water quality monitoring

solutions utilizing optical sensors and electrochemical instruments that measure a variety of parameters including turbidity, pH,

chlorine, nitrates and approximately 40 others. Utilizing these solutions, water quality can be monitored continually or periodically

throughout the network from its original source to the point in which it is recycled and returned. The addition of real-time water

quality parameters to core flow measurement, pressure and temperature sensing capabilities enhances the scope of actionable data for

water utilities to improve operational security, awareness and efficiency.

The Company’s net sales and corresponding net earnings depend on unit volume and product mix, with the Company

generally earning higher average selling prices and margins on meters equipped with radio technology, and higher margins on

ultrasonic compared to mechanical meters. The Company’s proprietary radio products generally result in higher margins than

remarketed, non-proprietary technology products. The Company also sells registers and endpoints separately to customers who wish

to upgrade their existing meters in the field.

Flow instrumentation products are used in flow measurement and control applications across a broad industrial spectrum,

occasionally leveraging the same technologies used in the municipal water category. Specialized communication protocols that

control the entire flow measurement process and mandatory certifications drive these markets. The Company provides both standard

and customized flow instrumentation solutions.

The industries served by the Company’s flow instrumentation products face accelerating demands to contain costs, reduce

product variability, and meet ever-changing safety, regulatory and sustainability requirements. To address these challenges, customers

must reap more value from every component in their systems. This system-wide scrutiny has heightened the focus on flow

instrumentation in industrial process, manufacturing, commercial fluid, building automation and precision engineering applications

where flow measurement and control are critical.

A leader in both mechanical and static (ultrasonic) flow metering technologies for industrial markets, the Company offers one

In addition, the Company provides various water quality monitoring solutions utilizing optical sensors and electrochemical

instruments that measure a variety of parameters providing industrial customers with both process and discharge water quality
monitoring capabilities.

The Company's products are sold throughout the world through employees, resellers and representatives. Depending on the

customer mix, there can be a moderate seasonal impact on sales, primarily relating to higher sales of certain utility water products
during the spring and summer months. No single customer accounts for more than 10% of the Company's sales.

Competition

The Company faces competition for both its utility water and flow instrumentation product lines. The competition varies
from moderate to strong depending upon the products involved and the markets served. Major competitors for utility water meters
include Xylem, Inc. (“Sensus”), Roper Technologies, Inc. (“Neptune”), Master Meter, Inc. and Mueller Water Products, Inc. Together
with Badger Meter, it is estimated that these companies sell in excess of 90% of the water meters in the North American market, which
has historically been somewhat insulated from penetration by other competitors due to the historic nature of the mechanical metering
technology used. As static metering technology continues to gain traction in the North American market, additional competitors
include firms such as Kamstrup A/S, Diehl Metering GmbH and Itron, Inc., although these competitors lack brand recognition and
product breadth and do not have extensive water utility channel distribution to effectively reach the more than 50,000 water utilities in
the United States, which impedes their ability to compete. In addition, as previously noted, the broader technology acceptance of
static metering worldwide also provides competitive opportunities for Badger Meter outside North America.

The Company's primary competitors for utility water radio products in North America are Itron, Inc., Hubbel, Inc. (Aclara

Technologies), Neptune and Sensus. The vast majority of the Company’s radio sales are of its own proprietary radio systems;
however, the Company may also resell other third party radio products as part of an overall smart meter solution (e.g. Aclara, Itron®).

The Company’s primary competitors for water quality monitoring solutions vary depending on the products and offerings.

Traditional water quality monitoring relies on reagents or test kits, along with lab samples with waiting time for results and the
number and scale of competition can be extensive. The Company’s online, real-time water quality monitoring capabilities generally
compete with smaller, specialized firms.

A number of the Company's competitors in certain markets have greater financial resources than the Company. The

Company, however, believes it currently provides the leading technologies in water meters and water-dedicated radio solutions and
analytics. As a result of significant research and development activities, the Company enjoys favorable patent positions and trade
secret protections for several of its technologies, products and processes.

There are many competitors in the flow instrumentation markets due to the various end markets and applications served.

They include, among others, Emerson Electric Company, Krohne Messtechnik GmbH, Endress+Hauser AG, Yokogawa Electric
Corporation and Cameron International. With a broad portfolio consisting of products utilizing eight of the ten major flow meter
technologies, the Company is well positioned to compete in niche, specialized applications within these markets, primarily focused on
the water/wastewater and HVAC.

Raw Materials and Components

Raw materials used in the manufacture of the Company's products include purchased castings made of metal or alloys (such
as brass, which uses copper as its main component, aluminum, stainless steel and cast iron), plastic resins, glass, microprocessors and
other electronic subassemblies, and components. There are multiple sources for these raw materials and components, but the
Company relies on single suppliers for certain brass castings, resins and electronic subassemblies. The Company believes these items
would be available from other sources, but that the loss of certain suppliers may result in a higher cost of materials, delivery delays,
short-term increases in inventory and higher quality control costs in the short term. The Company carries business interruption
insurance on key suppliers. The Company's purchases of raw materials are based on production schedules, and as a result, inventory
on hand is generally not exposed to price fluctuations. World commodity markets and currency exchange rates may also affect the
prices of material purchased in the future. The Company does not hold significant amounts of precious metals.

Research and Development

Expenditures for research and development activities related to the development of new products, the improvement of

existing products and manufacturing process improvements were $11.6 million in 2020, $11.9 million in 2019 and $11.1 million in
2018. Research and development activities are primarily sponsored by the Company. The Company also engages from time to time in
joint research and development with other companies and organizations.

Intangible Assets

The Company owns or controls several trade secrets and many patents, trademarks and trade names in the United States and

other countries that relate to its products and technologies. No single patent, trademark, trade name or trade secret is material to the
Company's business as a whole.

The Company's products are sold throughout the world through employees, resellers and representatives. Depending on the

customer mix, there can be a moderate seasonal impact on sales, primarily relating to higher sales of certain utility water products

during the spring and summer months. No single customer accounts for more than 10% of the Company's sales.

Competition

The Company faces competition for both its utility water and flow instrumentation product lines. The competition varies

from moderate to strong depending upon the products involved and the markets served. Major competitors for utility water meters

include Xylem, Inc. (“Sensus”), Roper Technologies, Inc. (“Neptune”), Master Meter, Inc. and Mueller Water Products, Inc. Together

with Badger Meter, it is estimated that these companies sell in excess of 90% of the water meters in the North American market, which

has historically been somewhat insulated from penetration by other competitors due to the historic nature of the mechanical metering

technology used. As static metering technology continues to gain traction in the North American market, additional competitors

include firms such as Kamstrup A/S, Diehl Metering GmbH and Itron, Inc., although these competitors lack brand recognition and

product breadth and do not have extensive water utility channel distribution to effectively reach the more than 50,000 water utilities in

the United States, which impedes their ability to compete. In addition, as previously noted, the broader technology acceptance of

static metering worldwide also provides competitive opportunities for Badger Meter outside North America.

The Company's primary competitors for utility water radio products in North America are Itron, Inc., Hubbel, Inc. (Aclara

Technologies), Neptune and Sensus. The vast majority of the Company’s radio sales are of its own proprietary radio systems;

however, the Company may also resell other third party radio products as part of an overall smart meter solution (e.g. Aclara, Itron®).

The Company’s primary competitors for water quality monitoring solutions vary depending on the products and offerings.

Traditional water quality monitoring relies on reagents or test kits, along with lab samples with waiting time for results and the

number and scale of competition can be extensive. The Company’s online, real-time water quality monitoring capabilities generally

compete with smaller, specialized firms.

A number of the Company's competitors in certain markets have greater financial resources than the Company. The

Company, however, believes it currently provides the leading technologies in water meters and water-dedicated radio solutions and

analytics. As a result of significant research and development activities, the Company enjoys favorable patent positions and trade

secret protections for several of its technologies, products and processes.

There are many competitors in the flow instrumentation markets due to the various end markets and applications served.

They include, among others, Emerson Electric Company, Krohne Messtechnik GmbH, Endress+Hauser AG, Yokogawa Electric

Corporation and Cameron International. With a broad portfolio consisting of products utilizing eight of the ten major flow meter

technologies, the Company is well positioned to compete in niche, specialized applications within these markets, primarily focused on

the water/wastewater and HVAC.

Raw Materials and Components

Raw materials used in the manufacture of the Company's products include purchased castings made of metal or alloys (such

as brass, which uses copper as its main component, aluminum, stainless steel and cast iron), plastic resins, glass, microprocessors and

other electronic subassemblies, and components. There are multiple sources for these raw materials and components, but the

Company relies on single suppliers for certain brass castings, resins and electronic subassemblies. The Company believes these items

would be available from other sources, but that the loss of certain suppliers may result in a higher cost of materials, delivery delays,

short-term increases in inventory and higher quality control costs in the short term. The Company carries business interruption

insurance on key suppliers. The Company's purchases of raw materials are based on production schedules, and as a result, inventory

on hand is generally not exposed to price fluctuations. World commodity markets and currency exchange rates may also affect the

prices of material purchased in the future. The Company does not hold significant amounts of precious metals.

Research and Development

Expenditures for research and development activities related to the development of new products, the improvement of

Intangible Assets

The Company owns or controls several trade secrets and many patents, trademarks and trade names in the United States and

other countries that relate to its products and technologies. No single patent, trademark, trade name or trade secret is material to the
Company's business as a whole.

Environmental Protection

The Company is subject to contingencies related to environmental laws and regulations. A future change in circumstances

with respect to these specific matters or with respect to sites formerly or currently owned or operated by the Company, off-site
disposal locations used by the Company, and property owned by third parties that is near such sites, could result in future costs to the
Company and such amounts could be material. Expenditures for compliance control provisions and regulations during 2020, 2019 and
2018 were not material.

Government Regulations

The Company’s operations worldwide are subject to various federal, state, local and foreign laws and regulations. Whether at
the federal, state, or local level, the intent of these laws and regulations is to protect product safety, public health and the environment.
Similar laws and regulations have been adopted by government authorities in other countries in which we manufacture, distribute, and
sell our products.

The Company believes that its operations, including its manufacturing locations, are in substantial compliance with all
applicable government laws and regulations, including those related to environmental, consumer protection, international trade, labor
and employment, human rights, tax, anti-bribery and competition matters. Any additional measures to maintain compliance are not
expected to materially affect the Company's capital expenditures, competitive position, financial position or results of operations.

There are currently no legislative or administrative regulations pending which we anticipate will have a substantial adverse
impact on the Company's revenues, earnings or cash flows. However, if new or amended laws or regulations impose significant
operational restrictions and compliance requirements upon the Company or its products, the Company's business, capital expenditures,
results of operations, financial condition and competitive position could be negatively impacted. Refer to Part I, Item 1A. “Risk
Factors” of this 2020 Annual Report on Form 10-K for further information.

Human Capital Resources

Our employees are our greatest strength and are critical to the achievement of our vision and successful execution of our

strategies. We are committed to recruiting and retaining top talent, in addition to fostering an inclusive environment where all
employees can thrive.

The Company and its subsidiaries employed 1,602 persons at December 31, 2020. Approximately 102 of these employees

are covered by a collective bargaining agreement with District 10 of the International Association of Machinists. The Company is
currently operating under a three-year contract with the union, which expires on October 31, 2022. The Company believes it has good
relations with the union and all of its employees.

Some examples of key programs and initiatives that are focused on attracting, developing and retaining a diverse workforce

include:

Core Values. Living our core values is at the heart of Badger Meter’s culture. In 2020, we refreshed and contemporized our

company values to define shifts in mindsets and behaviors needed to win in a competitive marketplace and strengthen the employee
experience. Significant enhancements included a focus on diversity, continuous improvement and environmental responsibility.

Recruitment and Retention. In addition to market competitive compensation and benefits, we focus on open, two-way
communication, training and development and early talent programs, among other activities to attract and retain key talent. Our
regrettable turnover was 4.3% in 2020, down from 7.6% in 2019 and 9.9% in 2018.

Diversity, Equity and Inclusion. We believe that developing a diverse and inclusive business makes us and society stronger,

energizes our growth through customer engagement and helps us attract and retain talent.

•
•

40% of our executive officer group is diverse (three women, one Latino).
Implemented and completed a pay equity study, taking action to make adjustments where warranted, and continue to
actively monitor pay equity.

• Badger Meter is a signatory to the Equality Act, supporting LGBTQ rights.
•

Signed Metropolitan Milwaukee Association of Commerce (MMAC) Diversity Pledge, a commitment to increasing
diversity representation in the workforce.

Employee Rights, Health and Safety. In addition to on-the-job safety, Badger Meter takes a holistic view of employee health

and well-being, including our multifaceted wellness program, B|Well which aims to provide information, activities and support for

smart and healthy choices.

Environmental Protection

2018 were not material.

Government Regulations

sell our products.

The Company is subject to contingencies related to environmental laws and regulations. A future change in circumstances

with respect to these specific matters or with respect to sites formerly or currently owned or operated by the Company, off-site

disposal locations used by the Company, and property owned by third parties that is near such sites, could result in future costs to the

Company and such amounts could be material. Expenditures for compliance control provisions and regulations during 2020, 2019 and

The Company’s operations worldwide are subject to various federal, state, local and foreign laws and regulations. Whether at

the federal, state, or local level, the intent of these laws and regulations is to protect product safety, public health and the environment.

Similar laws and regulations have been adopted by government authorities in other countries in which we manufacture, distribute, and

The Company believes that its operations, including its manufacturing locations, are in substantial compliance with all

applicable government laws and regulations, including those related to environmental, consumer protection, international trade, labor

and employment, human rights, tax, anti-bribery and competition matters. Any additional measures to maintain compliance are not

expected to materially affect the Company's capital expenditures, competitive position, financial position or results of operations.

There are currently no legislative or administrative regulations pending which we anticipate will have a substantial adverse

impact on the Company's revenues, earnings or cash flows. However, if new or amended laws or regulations impose significant

operational restrictions and compliance requirements upon the Company or its products, the Company's business, capital expenditures,

results of operations, financial condition and competitive position could be negatively impacted. Refer to Part I, Item 1A. “Risk

Factors” of this 2020 Annual Report on Form 10-K for further information.

Human Capital Resources

employees can thrive.

Our employees are our greatest strength and are critical to the achievement of our vision and successful execution of our

strategies. We are committed to recruiting and retaining top talent, in addition to fostering an inclusive environment where all

The Company and its subsidiaries employed 1,602 persons at December 31, 2020. Approximately 102 of these employees

are covered by a collective bargaining agreement with District 10 of the International Association of Machinists. The Company is

currently operating under a three-year contract with the union, which expires on October 31, 2022. The Company believes it has good

relations with the union and all of its employees.

Some examples of key programs and initiatives that are focused on attracting, developing and retaining a diverse workforce

include:

Core Values. Living our core values is at the heart of Badger Meter’s culture. In 2020, we refreshed and contemporized our

company values to define shifts in mindsets and behaviors needed to win in a competitive marketplace and strengthen the employee

experience. Significant enhancements included a focus on diversity, continuous improvement and environmental responsibility.

Recruitment and Retention. In addition to market competitive compensation and benefits, we focus on open, two-way

communication, training and development and early talent programs, among other activities to attract and retain key talent. Our

regrettable turnover was 4.3% in 2020, down from 7.6% in 2019 and 9.9% in 2018.

Diversity, Equity and Inclusion. We believe that developing a diverse and inclusive business makes us and society stronger,

energizes our growth through customer engagement and helps us attract and retain talent.

•
•

• Badger Meter is a signatory to the Equality Act, supporting LGBTQ rights.
•

Signed Metropolitan Milwaukee Association of Commerce (MMAC) Diversity Pledge, a commitment to increasing
diversity representation in the workforce.

Employee Rights, Health and Safety. In addition to on-the-job safety, Badger Meter takes a holistic view of employee health

and well-being, including our multifaceted wellness program, B|Well which aims to provide information, activities and support for
smart and healthy choices.

•
•

Safety as measured by our Total Case Incident Rate (TCIR) was 0.65 in 2020, down from 0.98 in 2019 and 1.30 in 2018.
Implemented COVID-19 health and safety measures including remote work, robust on-site safety protocols (temperature
screening, face coverings, manufacturing modifications to accommodate social distancing, among others) and enhanced
sick leave benefits.

• Badger Meter’s Human Rights Policy outlines our commitment to respecting and supporting internationally recognized

human rights and freedoms.

• We provide an Employee Assistance Program (EAP) and mental health coverage.

Community and Social Activities. Through both financial contributions and volunteer efforts of our employees, Badger Meter

supports programs and organizations that address water conservation and quality, education and community concerns which are all
vital to community sustainability.

Information about the Company’s Executive Officers

The following table sets forth certain information regarding the Executive Officers of the Registrant.

Name

Kenneth C. Bockhorst
Robert A. Wrocklage
Karen M. Bauer
Fred J. Begale
William R. A. Bergum
Gregory M. Gomez
Sheryl L. Hopkins
William J. Parisen
Kimberly K. Stoll
Daniel R. Weltzien

Position

Chairman, President and Chief Executive Officer
Senior Vice President — Chief Financial Officer
Vice President — Investor Relations, Corporate Strategy and Treasurer
Vice President — Engineering
Vice President — General Counsel and Secretary
Vice President — Global Flow Instrumentation and International Utility
Vice President — Human Resources
Vice President — Global Operations
Vice President — Sales and Marketing
Vice President — Controller

Age at
2/28/2021
48
42
53
56
56
56
53
54
54
42

There are no family relationships between any of the executive officers. Officers are elected annually at the first meeting of

the Board of Directors held after each annual meeting of the shareholders. Each officer holds office until his or her successor has been
elected or until his or her death, resignation or removal. There is no arrangement or understanding between any executive officer and
any other person pursuant to which he or she was elected as an officer.

Mr. Bockhorst was elected President in April 2018, Chief Executive Officer in January 2019 and Chairman in January 2020
after serving as Senior Vice President - Chief Operating Officer for the Company from October 2017 to April 2018. Prior to joining
the Company, Mr. Bockhorst was Executive Vice President of the Energy segment, preceded by President of Hydratight and Global
Vice President Operations of Enerpac, all within Actuant Corporation (now Enerpac Tool Group) from March 2011 to October 2017.

Mr. Wrocklage was elected Vice President – Chief Financial Officer and Treasurer in 2019 and Senior Vice President – Chief

Financial Officer in January 2020 after serving as Vice President - Finance for the Company from August 2018 to December 2018.
Prior to joining the Company, Mr. Wrocklage spent ten years with Actuant Corporation (now Enerpac Tool Group), holding various
corporate and business unit financial leadership roles, most recently as Vice President - Corporate Controller and Chief Accounting
Officer.

Ms. Bauer was elected Vice President - Investor Relations, Corporate Strategy and Treasurer effective June 2019. She joined

Badger Meter in July 2018 as Director, Investor Relations and Corporate Strategy. In her role she also oversees the Company’s ESG
(Environmental, Social & Governance) initiatives. Prior to joining Badger Meter, she served at Actuant Corporation (now Enerpac
Tool Group), most recently as Director, Investor Relations & Communications.

Mr. Begale has served as Vice President - Engineering for more than five years.

Mr. Bergum has served as Vice President - General Counsel and Secretary for more than five years.

Mr. Gomez was elected Vice President – Flow Instrumentation and International Utility in March 2019. Mr. Gomez served as

Vice President - Business Development and Flow Instrumentation from April 2017 to March 2019, Vice President - Flow

Instrumentation from September 2014 to April 2017.

Ms. Hopkins was elected Vice President - Human Resources in October 2020. Prior to joining the Company, Ms. Hopkins

served as Vice President of Human Resources for ADVENT from April 2019 to October 2020 and Senior Vice President of Human

Resources for Runzheimer International from July 2010 to March 2018. Previously, she held roles of increasing responsibility at

Eaton Corporation and other multinational public companies.

•

Safety as measured by our Total Case Incident Rate (TCIR) was 0.65 in 2020, down from 0.98 in 2019 and 1.30 in 2018.

Implemented COVID-19 health and safety measures including remote work, robust on-site safety protocols (temperature

screening, face coverings, manufacturing modifications to accommodate social distancing, among others) and enhanced

• Badger Meter’s Human Rights Policy outlines our commitment to respecting and supporting internationally recognized

sick leave benefits.

human rights and freedoms.

• We provide an Employee Assistance Program (EAP) and mental health coverage.

Community and Social Activities. Through both financial contributions and volunteer efforts of our employees, Badger Meter

supports programs and organizations that address water conservation and quality, education and community concerns which are all

vital to community sustainability.

Information about the Company’s Executive Officers

The following table sets forth certain information regarding the Executive Officers of the Registrant.

Chairman, President and Chief Executive Officer

Senior Vice President — Chief Financial Officer

Position

Vice President — Investor Relations, Corporate Strategy and Treasurer

Vice President — Engineering

William R. A. Bergum

Vice President — General Counsel and Secretary

Vice President — Global Flow Instrumentation and International Utility

Name

Kenneth C. Bockhorst

Robert A. Wrocklage

Karen M. Bauer

Fred J. Begale

Gregory M. Gomez

Sheryl L. Hopkins

William J. Parisen

Kimberly K. Stoll

Daniel R. Weltzien

Vice President — Human Resources

Vice President — Global Operations

Vice President — Sales and Marketing

Vice President — Controller

Age at

2/28/2021

There are no family relationships between any of the executive officers. Officers are elected annually at the first meeting of

the Board of Directors held after each annual meeting of the shareholders. Each officer holds office until his or her successor has been

elected or until his or her death, resignation or removal. There is no arrangement or understanding between any executive officer and

any other person pursuant to which he or she was elected as an officer.

Mr. Bockhorst was elected President in April 2018, Chief Executive Officer in January 2019 and Chairman in January 2020

after serving as Senior Vice President - Chief Operating Officer for the Company from October 2017 to April 2018. Prior to joining

the Company, Mr. Bockhorst was Executive Vice President of the Energy segment, preceded by President of Hydratight and Global

Vice President Operations of Enerpac, all within Actuant Corporation (now Enerpac Tool Group) from March 2011 to October 2017.

Mr. Wrocklage was elected Vice President – Chief Financial Officer and Treasurer in 2019 and Senior Vice President – Chief

Financial Officer in January 2020 after serving as Vice President - Finance for the Company from August 2018 to December 2018.

Prior to joining the Company, Mr. Wrocklage spent ten years with Actuant Corporation (now Enerpac Tool Group), holding various

corporate and business unit financial leadership roles, most recently as Vice President - Corporate Controller and Chief Accounting

Officer.

Ms. Bauer was elected Vice President - Investor Relations, Corporate Strategy and Treasurer effective June 2019. She joined

Mr. Begale has served as Vice President - Engineering for more than five years.

Mr. Bergum has served as Vice President - General Counsel and Secretary for more than five years.

Mr. Gomez was elected Vice President – Flow Instrumentation and International Utility in March 2019. Mr. Gomez served as

Vice President - Business Development and Flow Instrumentation from April 2017 to March 2019, Vice President - Flow
Instrumentation from September 2014 to April 2017.

Ms. Hopkins was elected Vice President - Human Resources in October 2020. Prior to joining the Company, Ms. Hopkins
served as Vice President of Human Resources for ADVENT from April 2019 to October 2020 and Senior Vice President of Human
Resources for Runzheimer International from July 2010 to March 2018. Previously, she held roles of increasing responsibility at
Eaton Corporation and other multinational public companies.

Mr. Parisen was elected Vice President - Global Operations in June 2019. He joined Badger Meter in August 2018 as Senior

Director, Global Supply Chain. Prior to joining Badger Meter, he was employed at Actuant Corporation (now Enerpac Tool Group)
where he most recently held the position of Vice President - Global Operations for the Industrial and Energy segments.

Ms. Stoll has served as Vice President - Sales and Marketing for more than five years.

Mr. Weltzien was elected Vice President – Controller in March 2019. Prior to joining the Company, Mr. Weltzien spent eight

years with Actuant Corporation (now Enerpac Tool Group), holding various corporate and business unit financial leadership roles,
most recently as Senior Director of Finance for its Hydratight business unit.

Foreign Operations and Export Sales

The Company sells its products through employees, resellers and representatives throughout the world. Additionally, the
Company has sales, distribution and manufacturing facilities in Neuffen, Germany and Vienna, Austria; sales and customer service
offices in Mexico, Singapore, China, United Arab Emirates and other similar locations throughout the world; manufacturing facilities
in Nogales, Mexico, Brno, Czech Republic and Bern, Switzerland; and a development facility in Luleå, Sweden. The Company
exports products from the United States that are manufactured in Milwaukee, Wisconsin; Racine, Wisconsin and Tulsa, Oklahoma.

Information about the Company's foreign operations and export sales is included in Note 9 “Industry Segment and
Geographic Areas” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 2020 Annual Report on Form 10-K.

Financial Information about Industry Segments

The Company operates in one industry segment as an innovator, manufacturer and marketer of products incorporating flow

measurement, control and communication solutions. Information about the Company's sales, operating earnings and assets is included
in the Consolidated Financial Statements and in Note 9 “Industry Segment and Geographic Areas” in the Notes to Consolidated
Financial Statements in Part II, Item 8 of this 2020 Annual Report on Form 10-K.

ITEM 1A RISK FACTORS

Shareholders, potential investors and other readers are urged to consider the significant business risks described below in

addition to the other information set forth or incorporated by reference in this 2020 Annual Report on Form 10-K, including the
“Special Note Regarding Forward Looking Statements” at the front of this 2020 Annual Report on Form 10-K. If any of the events
contemplated by the following risks actually occur, our financial condition or results of operations could be materially adversely
affected. The following list of risk factors may not be exhaustive. We operate in a continually changing business, economic and
geopolitical environment, and new risk factors may emerge from time to time. We can neither predict these new risk factors with
certainty nor assess the precise impact, if any, on our business, or the extent to which any factor, or combination of factors, may
adversely impact our results of operations. While there is much uncertainty, we do analyze the risks we face, perform a probability
assessment of their impacts and attempt to soften their potential impact when and if possible.

PRODUCTS, TECHNOLOGY AND SERVICES

The inability to develop technologically advanced products could harm our future success.

We believe that our future success depends, in part, on our ability to develop technologically advanced products that meet or
exceed appropriate industry standards. Although we believe that we currently have a competitive advantage in this area, maintaining
such advantage will require continued investment in research and development, sales, marketing and manufacturing capabilities.
There can be no assurance that we will have sufficient resources to make such investments or that we will be able to make the
technological advances necessary to maintain such competitive advantage. If we are unable to maintain our competitive advantage,
7
our future financial performance may be adversely affected. We are not currently aware of any emerging standards, technologies or
new products that could render our existing products obsolete in the near term. Our radios operate on networks which are changing as
part of the natural evolution of technology. The pace of that change is largely outside of the Company’s control and the sun-setting of
a network may have an adverse impact on the Company. The municipal water industry is continuing to see the adoption of static

water meters. Static water metering has lower barriers to entry that could affect the competitive landscape in North America. We

believe we have a competitive product. If the adoption rate for static meters were to accelerate, we believe competitors lack brand

recognition and product breadth and do not have extensive water utility channel distribution to effectively reach the more than 50,000

water utilities in the United States.

Failure to manufacture quality products could have a material adverse effect on our business.

If we fail to maintain and enforce quality control and testing procedures, our products will not meet required performance

standards. Product quality and performance are a priority for us since our products are used in various applications where precise

control of fluids is essential. Although we believe our products are perceived as high quality, any future production and/or sale of

substandard products could seriously harm our reputation, resulting in both a loss of current customers to competitors and damage to

Mr. Parisen was elected Vice President - Global Operations in June 2019. He joined Badger Meter in August 2018 as Senior

Director, Global Supply Chain. Prior to joining Badger Meter, he was employed at Actuant Corporation (now Enerpac Tool Group)

where he most recently held the position of Vice President - Global Operations for the Industrial and Energy segments.

Ms. Stoll has served as Vice President - Sales and Marketing for more than five years.

Mr. Weltzien was elected Vice President – Controller in March 2019. Prior to joining the Company, Mr. Weltzien spent eight

years with Actuant Corporation (now Enerpac Tool Group), holding various corporate and business unit financial leadership roles,

most recently as Senior Director of Finance for its Hydratight business unit.

Foreign Operations and Export Sales

The Company sells its products through employees, resellers and representatives throughout the world. Additionally, the

Company has sales, distribution and manufacturing facilities in Neuffen, Germany and Vienna, Austria; sales and customer service

offices in Mexico, Singapore, China, United Arab Emirates and other similar locations throughout the world; manufacturing facilities

in Nogales, Mexico, Brno, Czech Republic and Bern, Switzerland; and a development facility in Luleå, Sweden. The Company

exports products from the United States that are manufactured in Milwaukee, Wisconsin; Racine, Wisconsin and Tulsa, Oklahoma.

Information about the Company's foreign operations and export sales is included in Note 9 “Industry Segment and

Geographic Areas” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 2020 Annual Report on Form 10-K.

Financial Information about Industry Segments

The Company operates in one industry segment as an innovator, manufacturer and marketer of products incorporating flow

measurement, control and communication solutions. Information about the Company's sales, operating earnings and assets is included

in the Consolidated Financial Statements and in Note 9 “Industry Segment and Geographic Areas” in the Notes to Consolidated

Financial Statements in Part II, Item 8 of this 2020 Annual Report on Form 10-K.

ITEM 1A RISK FACTORS

Shareholders, potential investors and other readers are urged to consider the significant business risks described below in

addition to the other information set forth or incorporated by reference in this 2020 Annual Report on Form 10-K, including the

“Special Note Regarding Forward Looking Statements” at the front of this 2020 Annual Report on Form 10-K. If any of the events

contemplated by the following risks actually occur, our financial condition or results of operations could be materially adversely

affected. The following list of risk factors may not be exhaustive. We operate in a continually changing business, economic and

geopolitical environment, and new risk factors may emerge from time to time. We can neither predict these new risk factors with

certainty nor assess the precise impact, if any, on our business, or the extent to which any factor, or combination of factors, may

adversely impact our results of operations. While there is much uncertainty, we do analyze the risks we face, perform a probability

assessment of their impacts and attempt to soften their potential impact when and if possible.

PRODUCTS, TECHNOLOGY AND SERVICES

The inability to develop technologically advanced products could harm our future success.

We believe that our future success depends, in part, on our ability to develop technologically advanced products that meet or
exceed appropriate industry standards. Although we believe that we currently have a competitive advantage in this area, maintaining
such advantage will require continued investment in research and development, sales, marketing and manufacturing capabilities.
There can be no assurance that we will have sufficient resources to make such investments or that we will be able to make the
technological advances necessary to maintain such competitive advantage. If we are unable to maintain our competitive advantage,
our future financial performance may be adversely affected. We are not currently aware of any emerging standards, technologies or
new products that could render our existing products obsolete in the near term. Our radios operate on networks which are changing as
part of the natural evolution of technology. The pace of that change is largely outside of the Company’s control and the sun-setting of
a network may have an adverse impact on the Company. The municipal water industry is continuing to see the adoption of static
water meters. Static water metering has lower barriers to entry that could affect the competitive landscape in North America. We
believe we have a competitive product. If the adoption rate for static meters were to accelerate, we believe competitors lack brand
recognition and product breadth and do not have extensive water utility channel distribution to effectively reach the more than 50,000
water utilities in the United States.

Failure to manufacture quality products could have a material adverse effect on our business.

If we fail to maintain and enforce quality control and testing procedures, our products will not meet required performance
standards. Product quality and performance are a priority for us since our products are used in various applications where precise
control of fluids is essential. Although we believe our products are perceived as high quality, any future production and/or sale of
substandard products could seriously harm our reputation, resulting in both a loss of current customers to competitors and damage to
our ability to attract new customers. In addition, if any of our products prove to be defective, we may be required to participate in a
recall involving such products or incur warranty related expenses. A successful claim brought against us with respect to a defective
product in excess of available insurance coverage, if any, or a requirement to participate in a major product recall, could have a
material adverse effect on our business, results of operations or financial condition.

If our technology products do not operate as intended, our business could be materially and adversely affected.

We sell and install software products, including some that are provided in “the cloud,” that may contain unexpected design

defects or may encounter unexpected complications during installation or when used with other technologies utilized by the customer.
A failure of our technology products to operate as intended and in a seamless fashion with other products or a failure or breach of a
cloud network could materially and adversely affect our results of operations, financial position and cash flows.

Our expanded role as a prime contractor brings certain risks that could have a material adverse effect to our business.

The Company periodically assumes the role of prime contractor for providing complete technology systems, installation and

other services and project management to governmental entities, which brings with it added risks, including but not limited to, our
responsibility for managing subcontractor performance and project timelines and the potential for expanded warranty and performance
obligations. While we have managed a number of these types of arrangements, it is possible to encounter a situation where we may
not be able to perform to the expectations of the governmental entity, and thus incur additional costs that could affect our profitability
or harm our reputation.

If we are not able to protect our proprietary rights to our software and related products, our ability to market our software
products could be hindered and our results of operations, financial position and cash flows could be materially and adversely
affected.

We rely on our agreements with customers, confidentiality agreements with employees, and our trademarks, trade secrets,

copyrights and patents to protect our proprietary rights. These legal protections and precautions may not prevent misappropriation of
our proprietary information. In addition, substantial litigation regarding intellectual property rights exists in the software industry, and
software products and other components may increasingly be subject to third-party infringement claims. Such litigation and
misappropriation of our proprietary information could hinder our ability to market and sell products and services and our results of
operations, financial position and cash flows could be materially and adversely affected.

BUSINESS CONDITIONS

The global coronavirus (COVID-19) pandemic, or other global public health pandemics, could have a material adverse effect
on our business, results of operations and financial condition.

Our business, results of operations and financial condition may be adversely affected if a global public health pandemic,

including the current global coronavirus (COVID-19) pandemic, interferes with the ability of our employees, suppliers, and customers
to perform our and their respective responsibilities and obligations relative to the conduct of our business and operations. The COVID-
19 pandemic has significantly impacted economic activity and markets around the world, and it could have a material negative impact
on our business and operations in numerous ways, including but not limited to those outlined below:

•

The risk that we, or our employees, suppliers or customers may be prevented from conducting business activities for an indefinite
period of time, including shutdowns that may be requested or mandated by governmental authorities.

Restrictions on shipping products from certain jurisdictions where they are produced or into certain jurisdictions where customers
are located.

Inability to meet our customers’ needs and achieve cost targets due to disruptions in our manufacturing and supply arrangements

caused by the loss or disruption of essential manufacturing and supply elements, such as raw materials or other finished product

components, transportation, workforce or other manufacturing and distribution capability.

•

Failure of third parties on which we rely, including our suppliers, distributors, contractors and commercial banks, to meet their

obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or

operational difficulties and may adversely impact our operations.

•

Significant reductions in demand or significant volatility in demand and a global economic recession that could further reduce

demand for our products, resulting from actions taken by governments, businesses, and/or the general public in an effort to limit

exposure to and spreading of such infectious diseases, such as travel restrictions, quarantines, and business shutdowns or

slowdowns.

our ability to attract new customers. In addition, if any of our products prove to be defective, we may be required to participate in a

recall involving such products or incur warranty related expenses. A successful claim brought against us with respect to a defective

product in excess of available insurance coverage, if any, or a requirement to participate in a major product recall, could have a

material adverse effect on our business, results of operations or financial condition.

If our technology products do not operate as intended, our business could be materially and adversely affected.

We sell and install software products, including some that are provided in “the cloud,” that may contain unexpected design

defects or may encounter unexpected complications during installation or when used with other technologies utilized by the customer.

A failure of our technology products to operate as intended and in a seamless fashion with other products or a failure or breach of a

cloud network could materially and adversely affect our results of operations, financial position and cash flows.

Our expanded role as a prime contractor brings certain risks that could have a material adverse effect to our business.

The Company periodically assumes the role of prime contractor for providing complete technology systems, installation and

other services and project management to governmental entities, which brings with it added risks, including but not limited to, our

responsibility for managing subcontractor performance and project timelines and the potential for expanded warranty and performance

obligations. While we have managed a number of these types of arrangements, it is possible to encounter a situation where we may

not be able to perform to the expectations of the governmental entity, and thus incur additional costs that could affect our profitability

or harm our reputation.

affected.

If we are not able to protect our proprietary rights to our software and related products, our ability to market our software

products could be hindered and our results of operations, financial position and cash flows could be materially and adversely

We rely on our agreements with customers, confidentiality agreements with employees, and our trademarks, trade secrets,

copyrights and patents to protect our proprietary rights. These legal protections and precautions may not prevent misappropriation of

our proprietary information. In addition, substantial litigation regarding intellectual property rights exists in the software industry, and

software products and other components may increasingly be subject to third-party infringement claims. Such litigation and

misappropriation of our proprietary information could hinder our ability to market and sell products and services and our results of

operations, financial position and cash flows could be materially and adversely affected.

BUSINESS CONDITIONS

The global coronavirus (COVID-19) pandemic, or other global public health pandemics, could have a material adverse effect

on our business, results of operations and financial condition.

Our business, results of operations and financial condition may be adversely affected if a global public health pandemic,

•

Restrictions on shipping products from certain jurisdictions where they are produced or into certain jurisdictions where customers
are located.

Inability to meet our customers’ needs and achieve cost targets due to disruptions in our manufacturing and supply arrangements
caused by the loss or disruption of essential manufacturing and supply elements, such as raw materials or other finished product
components, transportation, workforce or other manufacturing and distribution capability.

Failure of third parties on which we rely, including our suppliers, distributors, contractors and commercial banks, to meet their
obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or
operational difficulties and may adversely impact our operations.

Significant reductions in demand or significant volatility in demand and a global economic recession that could further reduce
demand for our products, resulting from actions taken by governments, businesses, and/or the general public in an effort to limit
exposure to and spreading of such infectious diseases, such as travel restrictions, quarantines, and business shutdowns or
slowdowns.

•
Deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our
operations and capital expenditures.

Deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our
operations and capital expenditures.

•
Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may
result in legal claims or litigation against us.

Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may
result in legal claims or litigation against us.

The extent to which the COVID-19 pandemic, or other outbreaks of disease or similar public health threats, materially and

adversely impacts our business, results of operations and financial condition is highly uncertain and will depend on future
adversely impacts our business, results of operations and financial condition is highly uncertain and will depend on future
developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease, the
developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease, the
development and timeline of an effective and broadly available vaccine and the actions that may be taken by various governmental
development and timeline of an effective and broadly available vaccine and the actions that may be taken by various governmental
authorities and other third parties in response to the outbreak. In addition, how quickly, and to what extent, normal economic and
authorities and other third parties in response to the outbreak. In addition, how quickly, and to what extent, normal economic and
operating conditions can resume cannot be predicted, and the resumption of normal business operations may be delayed or constrained
operating conditions can resume cannot be predicted, and the resumption of normal business operations may be delayed or constrained
by lingering effects of the COVID-19 pandemic on our suppliers, third-party service providers, and/or customers.
by lingering effects of the COVID-19 pandemic on our suppliers, third-party service providers, and/or customers.

The inability to obtain adequate supplies of raw materials and component parts at favorable prices could decrease our profit
margins and negatively impact timely delivery to customers.

We are affected by the availability and prices for raw materials and component parts, including purchased castings made of

We are affected by the availability and prices for raw materials and component parts, including purchased castings made of
metal or alloys (such as brass, which uses copper as its main component, aluminum, stainless steel and cast iron), plastic resins,
metal or alloys (such as brass, which uses copper as its main component, aluminum, stainless steel and cast iron), plastic resins,
microprocessors and other electronic subassemblies, and components that are used in the manufacturing process. The inability to
microprocessors and other electronic subassemblies, and components that are used in the manufacturing process. The inability to
obtain adequate supplies of raw materials and component parts for our products at favorable prices could have a material adverse
obtain adequate supplies of raw materials and component parts for our products at favorable prices could have a material adverse
effect on our business, financial condition or results of operations by decreasing profit margins and by negatively impacting timely
effect on our business, financial condition or results of operations by decreasing profit margins and by negatively impacting timely
deliveries to customers. In the past, we have been able to offset price increases in raw materials and component parts by increased
deliveries to customers. In the past, we have been able to offset price increases in raw materials and component parts by increased
sales prices, active materials management, product engineering programs and the diversity of materials used in the production
sales prices, active materials management, product engineering programs and the diversity of materials used in the production
processes. However, we cannot be certain that we will be able to accomplish this in the future. Since we do not control the actual
processes. However, we cannot be certain that we will be able to accomplish this in the future. Since we do not control the actual
production of these raw materials and component parts, there may be delays caused by an interruption in the production or
production of these raw materials and component parts, there may be delays caused by an interruption in the production or
transportation of these materials for reasons that are beyond our control. World commodity markets and inflation may also affect raw
transportation of these materials for reasons that are beyond our control. World commodity markets and inflation may also affect raw
material and component part prices. In addition, we rely on single suppliers for microprocessors, castings and components in several
material and component part prices. In addition, we rely on single suppliers for microprocessors, castings and components in several
of our product lines and the loss of such suppliers could temporarily disrupt operations in the short term.
of our product lines and the loss of such suppliers could temporarily disrupt operations in the short term.

Economic conditions could cause a material adverse impact on our sales and operating results.

As a supplier of products and software, the majority of which are to water utilities, we may be adversely affected by global

economic conditions, delays in governmental programs created to stimulate the economy, and the impact of government budget cuts or
economic conditions, delays in governmental programs created to stimulate the economy, and the impact of government budget cuts or
partial shutdowns of governmental operations that affect our customers, including independent distributors, large city utilities, public
partial shutdowns of governmental operations that affect our customers, including independent distributors, large city utilities, public
and private water companies and numerous smaller water utilities. These customers may delay capital projects, including non-critical
and private water companies and numerous smaller water utilities. These customers may delay capital projects, including non-critical
maintenance and upgrades, or may not have the ability to authorize and finance purchases during economic downturns or instability in
maintenance and upgrades, or may not have the ability to authorize and finance purchases during economic downturns or instability in
world markets. We also sell products for other applications to reduce our dependency on the municipal water market. A significant
world markets. We also sell products for other applications to reduce our dependency on the municipal water market. A significant
downturn in this market could cause a material adverse impact on sales and operating results. Therefore, a downturn in general
downturn in this market could cause a material adverse impact on sales and operating results. Therefore, a downturn in general
economic conditions, as well as in the municipal water market, and delays in the timing or amounts of possible annual federal funding
economic conditions, as well as in the municipal water market, and delays in the timing or amounts of possible annual federal funding
and periodic stimulus fund programs, government budget cuts or partial shutdowns of governmental operations, or the availability of
and periodic stimulus fund programs, government budget cuts or partial shutdowns of governmental operations, or the availability of
9
funds to municipalities could result in a reduction in demand for our products and services and could harm the business.
funds to municipalities could result in a reduction in demand for our products and services and could harm the business.

Geopolitical crisis, including terrorism or pandemics, could adversely affect our business.

Our operations are susceptible to global events, including acts or threats of war or terrorism, international conflicts, political

instability, and widespread outbreak of an illness or other health issue. The occurrence of any of these events could have an adverse

effect on our business results and financial condition. See the separate risk factor specific to the global coronavirus (COVID-19)

pandemic.

Risks related to foreign markets could decrease our profitability.

Since we sell products worldwide as well as manufacture products in several countries, we are subject to risks associated with

doing business internationally. These risks include such things as changes in foreign currency exchange rates, changes in political or

economic conditions of specific countries or regions, potentially negative consequences from changes in tax laws or regulatory

requirements, differing labor regulations, and the difficulty of managing widespread operations.

•

Deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our

operations and capital expenditures.

Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may

result in legal claims or litigation against us.

The extent to which the COVID-19 pandemic, or other outbreaks of disease or similar public health threats, materially and

adversely impacts our business, results of operations and financial condition is highly uncertain and will depend on future

developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease, the

development and timeline of an effective and broadly available vaccine and the actions that may be taken by various governmental

authorities and other third parties in response to the outbreak. In addition, how quickly, and to what extent, normal economic and

operating conditions can resume cannot be predicted, and the resumption of normal business operations may be delayed or constrained

by lingering effects of the COVID-19 pandemic on our suppliers, third-party service providers, and/or customers.

The inability to obtain adequate supplies of raw materials and component parts at favorable prices could decrease our profit

margins and negatively impact timely delivery to customers.

We are affected by the availability and prices for raw materials and component parts, including purchased castings made of

metal or alloys (such as brass, which uses copper as its main component, aluminum, stainless steel and cast iron), plastic resins,

microprocessors and other electronic subassemblies, and components that are used in the manufacturing process. The inability to

obtain adequate supplies of raw materials and component parts for our products at favorable prices could have a material adverse

effect on our business, financial condition or results of operations by decreasing profit margins and by negatively impacting timely

deliveries to customers. In the past, we have been able to offset price increases in raw materials and component parts by increased

sales prices, active materials management, product engineering programs and the diversity of materials used in the production

processes. However, we cannot be certain that we will be able to accomplish this in the future. Since we do not control the actual

production of these raw materials and component parts, there may be delays caused by an interruption in the production or

transportation of these materials for reasons that are beyond our control. World commodity markets and inflation may also affect raw

material and component part prices. In addition, we rely on single suppliers for microprocessors, castings and components in several

of our product lines and the loss of such suppliers could temporarily disrupt operations in the short term.

Economic conditions could cause a material adverse impact on our sales and operating results.

As a supplier of products and software, the majority of which are to water utilities, we may be adversely affected by global

economic conditions, delays in governmental programs created to stimulate the economy, and the impact of government budget cuts or
partial shutdowns of governmental operations that affect our customers, including independent distributors, large city utilities, public
and private water companies and numerous smaller water utilities. These customers may delay capital projects, including non-critical
maintenance and upgrades, or may not have the ability to authorize and finance purchases during economic downturns or instability in
world markets. We also sell products for other applications to reduce our dependency on the municipal water market. A significant
downturn in this market could cause a material adverse impact on sales and operating results. Therefore, a downturn in general
economic conditions, as well as in the municipal water market, and delays in the timing or amounts of possible annual federal funding
and periodic stimulus fund programs, government budget cuts or partial shutdowns of governmental operations, or the availability of
funds to municipalities could result in a reduction in demand for our products and services and could harm the business.

Geopolitical crisis, including terrorism or pandemics, could adversely affect our business.

Our operations are susceptible to global events, including acts or threats of war or terrorism, international conflicts, political

instability, and widespread outbreak of an illness or other health issue. The occurrence of any of these events could have an adverse
effect on our business results and financial condition. See the separate risk factor specific to the global coronavirus (COVID-19)
pandemic.

Risks related to foreign markets could decrease our profitability.

Since we sell products worldwide as well as manufacture products in several countries, we are subject to risks associated with

doing business internationally. These risks include such things as changes in foreign currency exchange rates, changes in political or
economic conditions of specific countries or regions, potentially negative consequences from changes in tax laws or regulatory
requirements, differing labor regulations, and the difficulty of managing widespread operations.

An inability to attract and retain skilled employees could negatively impact our growth and decrease our profitability.

Our success depends on our continued ability to identify, attract, develop and retain skilled personnel throughout our

organization. Current and future compensation arrangements, including benefits, may not be sufficient to attract new employees or
retain existing employees, which may hinder our growth.

Competitive pressures in the marketplace could decrease our revenues and profits.

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Competitive pressures in the marketplace for our products could adversely affect our competitive position, leading to a

possible loss of market share or a decrease in prices, either of which could result in decreased revenues and profits. We operate in an
environment where competition varies from moderate to strong and a number of our competitors have greater financial resources. Our
competitors also include alliance partners that sell products that do or may compete with our products. The principal elements of
competition for our most significant product applications, residential and commercial water meters for the municipal water utility
market (with various radio technology systems), are price, product technology, quality and service. The competitive environment is
also affected by the movement toward radio technologies and away from manually read meters, the demand for replacement units and,
to some extent, such things as global economic conditions, the timing and size of governmental programs such as stimulus programs,
the ability of municipal water utility customers to authorize and finance purchases of our products, our ability to obtain financing,
housing starts in the United States, and overall economic activity. For our flow instrumentation products, the competitive environment
is affected by the general economic health of various industrial sectors particularly in the United States and Europe.

GOVERNMENT REGULATION

Violations or alleged violations of laws that impose requirements for the conduct of the Company’s overseas operations,
including the Foreign Corrupt Practices Act (FCPA) or other anti-corruption laws, trade sanctions and sanctioned parties
restrictions could adversely affect our business.

In foreign countries where we operate, a risk exists that our employees, third party partners or agents could engage in

business practices prohibited by applicable laws and regulations, such as the FCPA. Such anti-corruption laws generally prohibit
companies from making improper payments to foreign officials, require companies to keep accurate books and records, and maintain
appropriate internal controls. Our policies mandate strict compliance with such laws and we devote resources to ensure compliance.
However, we operate in some parts of the world that have experienced governmental corruption, and, in certain circumstances, local
customs and practice might not be consistent with the requirements of anti-corruption laws. We remain subject to the risk that our
employees, third party partners or agents will engage in business practices that are prohibited by our policies and violate such laws and
regulations. Violations by us or a third party acting on our behalf could result in significant internal investigation costs and legal fees,
civil and criminal penalties, including prohibitions on the conduct of our business and reputational harm.

We may also be subject to legal liability and reputational damage if we violate U.S. trade sanctions administered by the U.S.

Treasury Department’s Office of Foreign Assets Control (OFAC), the European Union, the United Nations and trade sanction laws,
such as the Iran Threat Reduction and Syria Human Rights Act of 2012. Our policies mandate strict compliance with such laws and
we devote resources to ensure compliance.

Changes in environmental or regulatory requirements could entail additional expenses that could decrease our profitability.

We are subject to a variety of laws in various countries and markets, such as those regulating lead or other material content in
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certain of our products, the handling, recycling and disposal of certain electronic and other materials, the use and/or licensing of radio
frequencies necessary for radio products, data privacy and protection, as well as customs and trade practices. We cannot predict the
nature, scope or effect of future environmental or regulatory requirements to which our operations might be subject or the manner in
which existing or future laws will be administered or interpreted. Currently, the cost of complying with existing laws is included as

part of our on-going expenses and does not have a material effect on our business or financial position, but a change in the future

could adversely affect our profitability.

GENERAL

profitability.

Economic impacts due to leadership or policy changes in the countries where we do business could negatively affect our

We may be affected by adjustments to economic and trade policies, such as taxation, changes to or withdrawal from

international trade agreements, or the like, when countries where we produce or sell our products change leadership or economic

policies. These types of changes, as well as any related regulatory changes, could significantly increase our costs and adversely affect

our profitability and financial condition.

Global and regional economic and political conditions could adversely affect our business.