Badger Meter Annual Report 2022

FY2022 Annual Report · Badger Meter

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2022 BADGER METER
ANNUAL REPORT

OVERVIEW

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.

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

$600

$500

$400

$300

$200

$100

'18

'19

'20

'21

'22

Net Sales
(in millions)

$70

$60

$50

$40

$30

$20

$10

'18

'19

'20

'21

'22

Adjusted Net Earnings (2)
(in millions)

2021

2022

% Change

$ 505,198

$ 78,723

$ 60,884

$ 2.08

$ 0.76

$ 530,818

$ 87,174

$ 403,070

$ 80,764

1,837

$ 565,568

$ 87,295

$ 66,496

$ 2.26

$ 0.85

$ 603,047

$ 138,052

$ 442,422

$ 76,560

1,976

$2.40

$2.00

$1.60

$1.20

$0.80

$0.40

$0.00

'18

'19

'20

'21

'22

$1.00

$0.75

$0.50

$0.25

$0.00

11.9

10.9

9.2

8.7

11.8

'18

'19

'20

'21

'22

Adjusted Diluted EPS (2)

Dividends per Share

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

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

2 | 2022 BADGER METER ANNUAL REPORT

A MESSAGE TO OUR SHAREHOLDERS

This past year was remarkable in many ways. It was a
year of outstanding financial performance, including
record orders, sales and profits, strong operating
execution and solid cash flow. At the same time,
it was a year shaped by a number of ongoing
challenges, including the effects of inflation,
supply chain constraints, labor challenges

and geopolitical events.

Kenneth C. Bockhorst

Chairman, President and

Chief Executive Officer

Our ability to achieve record financial results in the face of these challenges is a testament to our global team – their focus on
executing our strategy and unrelenting efforts to support our customers. We continued to invest in innovation – tackling complex
water challenges and delivering sustainable and digitally enabled solutions that our customers value – as evidenced by our
differentiated performance. And we returned value to shareholders, with 2022 marking the 30th consecutive year of annual
dividend rate increases. In summary, our business model has once again proven resilient.

We celebrated a number of these milestones by ringing the closing bell at the New York Stock Exchange this past fall. It was
an honor to be there, and I am proud to have represented our nearly 2,000 global Badger Meter employees and their many
accomplishments.

Propelled by attractive secular trends, the demand for smart water solutions continues to strengthen. These underlying demand
drivers include aging infrastructure, retiring utility employees, increased regulation and compliance, climate change, and security,
among others.

We continued to demonstrate our competitive differentiation and carved out exciting strategic growth opportunities to address
these challenges. Utilities and other industries across the globe are implementing our innovative smart water technologies to
streamline processes, increase operational efficiencies and save water. Our end-to-end smart water solutions provide actionable
data and analytics from a connected network of instruments, sensors and devices, empowering users to resourcefully use and
conserve water.

Utilities are leveraging our highly reliable, infrastructure-free ORION® Cellular network offerings to make their data communication
more efficient, scalable and secure. We offer fully integrated smart water solutions that provide near real-time access to detailed
water usage data, water quality parameters, leak detection, and now, high-frequency pressure monitoring with the recent
acquisition of Syrinix, so customers can improve efficiency, reduce water loss and enhance event management.

Our BEACON® Software as a Service (SaaS) offers a comprehensive and tailorable digital software solution that combines data,
communications and analytics to enable our customers to be more efficient, resilient and sustainable throughout the water eco-

2022 BADGER METER ANNUAL REPORT | 3

system. The integrated EyeOnWater® consumer engagement tool gives utility customers the power to manage their water use
through easy-to-understand graphics and configurable notifications, providing timely, visual access to their water usage behavior
and potential leaks.

We are committed to maintaining an innovation-driven, customer-centric culture, which strives to continue to increase the
capabilities and advance the sustainable outcomes of our broad portfolio of products and solutions.

ADVANCING OUR COMMITMENT TO ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (ESG)
As a smart water solutions provider, we play a key role in empowering our customers to drive efficiency, resiliency and
sustainability into their operations. We also recognize that as a company we have a responsibility to reduce our own impact on the
environment as well as lead in developing solutions that preserve and protect the world’s most precious resource – water.

In 2022, we continued to make progress on our ESG journey. In summary:

• We published our 2020-2021 biennial sustainability report, which included a number of disclosure enhancements, including:

Advances to reporting in line with standards set forth by the Global Reporting Initiative (GRI), United Nations
Sustainable Development Goals (SDGs), the Sustainability Accounting Standards Board (SASB) and the Task Force
on Climate-related Financial Disclosures (TCFD).

Completion of an ESG materiality assessment, identifying the ESG topics most material to the Company and
its stakeholders.

Enrichments to the governance structure and processes related to ESG matters at the Board of Directors, Board
committee and management levels.

• We made progress on the ESG-related “SMART” goals, which are an important element to our annual performance

assessment. These include employee safety, minimizing regrettable turnover and reducing greenhouse gas (GHG) emissions.
Goals are cascaded throughout the organization to ensure alignment and accountability.

Safety remains a top ESG priority and our goal for Total Case Incident Rate (TCIR) is zero. In 2022, global TCIR was
0.59 compared to 0.75 in 2021 and 0.65 in 2020. While we are proud of our performance in 2022, most notably in
relation to industry averages, we recognize there is always more work to be done.

Consistent with the broader labor market, our regrettable turnover increased
modestly in 2022 to 10.0% compared to 9.6% in 2021 and 4.3% in 2020. Increased
labor competition in the U.S. was the primary driver of the increase. We completed
our second annual global engagement survey in 2022 as part of our continuous
improvement process to enable positive change and increased employee
engagement. The results of that survey led to our recognition as a 2023 Top
Workplaces USA.

4 | 2022 BADGER METER ANNUAL REPORT

° GHG emission intensity declined year-over-year again in 2022, the second year of our “15% reduction by 2030” goal.

Electrical efficiency-related projects across multiple locations led to the decrease in intensity.

•

Finally, we published a Supplement to our initial Report on Board Diversity, providing an update on our diversity journey.
We believe the tone for our diversity commitment starts from the top, with 100% of the last three board appointments from
underrepresented demographics. At the upcoming 2023 Annual Shareholders Meeting, we anticipate that 44% of Board
nominees will be from underrepresented demographics. Of our 11 executive officers, four are from diverse groups.

ESG is an essential aspect of our business strategy, which not only fosters innovative solutions, it also fuels strong financial
performance over the long-term. Enhancing shareholder value by taking care of all stakeholders – customers, employees and
communities – remains key to our vision to preserve and protect the world’s most precious resource.

RECORD FINANCIAL RESULTS
Despite the confluence of macro factors that made the business environment challenging in 2022, including widespread inflation
and supply chain shortages, we achieved record financial results.

Robust demand for our industry-leading, comprehensive smart water solutions, coupled with our demonstrated capability to
navigate external challenges and capitalize on the demand environment, differentiated Badger Meter performance in 2022.

12%

20.1%

115%

Sales
Growth

EBITDA
Margin

EPS
Growth

Free
Cash Flow
Conversion

•

Total sales in 2022 were $565.6 million, an increase of 12% compared to $505.2 million in 2021. Sales into the utility water
sector grew 14% illustrating the continued market adoption of smart water advanced metering infrastructure (AMI) solutions,
water quality monitoring and BEACON SaaS offerings. Flow instrumentation sales increased 4% over 2021 with its focus on
water-related applications.

Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) of $113.4 million(1) increased 6% year over year,
despite unprecedented inflation across input costs and supply chain disruptions that impacted operations. Favorable product
mix, higher volumes, and the benefit of pricing actions enabled us to maintain strong EBITDA margins at 20.1%.(1)

•

Fiscal 2022 EPS was $2.26, a 9% increase from the $2.08 delivered in 2021.

• We generated free cash flow of $76.6(1) million, representing 115%(1) conversion of net earnings into cash due to our

strong earnings foundation and solid working capital management. We finished 2022 with $138.1 million of cash and cash
equivalents.

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

2022 BADGER METER ANNUAL REPORT | 5

DISCIPLINED CAPITAL ALLOCATION DRIVING
LONG-TERM RETURNS
Badger Meter has a long track record of generating and deploying cash efficiently to drive
growth, create outstanding returns for shareholders and strengthen our future. Our priorities
include investments in organic growth, dividends and attractive acquisitions.

•

In 2022, we reached a rare milestone for any company – delivering 30 consecutive years
of annual dividend increases. The annual dividend rate now stands at $0.90 per share, an
increase of 12.5% over the prior year.

• We deployed £15 million in early January 2023 for Syrinix, Ltd, a strategic acquisition that extends

and augments our digital software offering with real-time pressure monitoring solutions. Over the
past three years, we’ve deployed nearly $100 million on strategic acquisitions.

Moving forward, we will continue to generate and deploy cash in line with our capital allocation framework,
with a focus on accelerating growth and creating strong returns for shareholders.

FINAL THOUGHTS
Although some of the challenges we experienced in 2022 are still with us, we enter 2023 encouraged and optimistic
about our future. We have a proven strategy, incredible momentum and a winning culture. The Badger Meter team
has demonstrated unwavering responsiveness during these challenging times, and our record performance is a direct
result of their trust, engagement, tireless efforts and disciplined execution. It’s our people, our culture and values,
and our vision that make us successful. We are committed to continuing to drive strong shareholder returns while
protecting the world’s most precious resource.

Sincerely –

Ken Bockhorst
Chairman, President and
Chief Executive Officer

6 | 2022 BADGER METER ANNUAL REPORT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

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

For the fiscal year ended December 31, 2022

or
☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to______
Commission File No. 001-06706

BADGER METER, INC.

(Exact name of registrant as specified in its charter)

Wisconsin
(State or other jurisdiction
of incorporation or organization)

4545 W. Brown Deer Road
Milwaukee, Wisconsin
(Address of principal executive offices)

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

53233
(Zip code)

(414) 355-0400

(Registrant’s telephone number, including area code)

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

Common Stock
(Title of each class)

BMI
(Trading Symbol)

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

☒
☐
☐

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 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
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 ☐
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 ☐
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
the Exchange Act.
Large accelerated filer
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
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
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. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 the last business day of the registrant’s most recently completed second fiscal quarter:
As of June 30, 2022, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $2.35 billion. For purposes
of this calculation only, (i) shares of Common Stock are deemed to have a market value of $80.89 per share, the closing price of the Common Stock as reported on the
New York Stock Exchange on June 30, 2022, and (ii) each of the Company's executive officers and directors is deemed to be an affiliate of the Company.
As of February 3, 2023, there were 29,292,952 shares of Common Stock outstanding with a par value of $1 per share.

Smaller reporting company
Emerging growth company

☐
☐

Portions of the Company's Proxy Statement for the 2023 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 definitive Proxy Statement into Part III of this
Annual Report on Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE

UNITED STATES
1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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

For the fiscal year ended December 31, 2022

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

For the transition period from to______

FORM 10-K

Commission File No. 001-06706

BADGER METER, INC.

(Exact name of registrant as specified in its charter)

Wisconsin

(State or other jurisdiction

of incorporation or organization)

4545 W. Brown Deer Road

Milwaukee, Wisconsin

(Address of principal executive offices)

39-0143280

(I.R.S. Employer

Identification No.)

53233

(Zip code)

days. Yes ☒ No ☐

the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

☒

☐

report. ☒

(414) 355-0400

(Registrant’s telephone number, including area code)

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

Common Stock

(Title of each class)

BMI

(Trading Symbol)

New York Stock Exchange

(Name of each exchange on which registered)

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 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

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

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 ☐

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

Smaller reporting company

Emerging growth company

☐

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. ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the

correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the

registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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 the last business day of the registrant’s most recently completed second fiscal quarter:

As of June 30, 2022, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $2.35 billion. For purposes

of this calculation only, (i) shares of Common Stock are deemed to have a market value of $80.89 per share, the closing price of the Common Stock as reported on the

New York Stock Exchange on June 30, 2022, and (ii) each of the Company's executive officers and directors is deemed to be an affiliate of the Company.

As of February 3, 2023, there were 29,292,952 shares of Common Stock outstanding with a par value of $1 per share.

Portions of the Company's Proxy Statement for the 2023 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 definitive Proxy Statement into Part III of this

DOCUMENTS INCORPORATED BY REFERENCE

Annual Report on Form 10-K.

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,
2022.

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 2022 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 products fall into two product lines: sales of water meters, radios, software and related technologies, and water quality
monitoring solutions to water utilities (utility water) and sales of meters and other sensing instruments, valves, software and other
solutions for industrial applications in water, wastewater, and other industries (flow instrumentation). The Company estimates that
over 90% of its products are used in water related applications.

Utility water, the largest sales product line, 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, enabling operating efficiencies and engaging with their end consumers. 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, static meters are an increasing percentage of the
water meters sold by the Company and in the industry, due to a variety of attributes, 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, 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

read meters via radio technology. A manually read meter consists of a water meter and a register that provides a visual totalized meter
2
3
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
(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.

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 2022 Annual Report on Form 10-K, the words “we,” “us” and “our” refer to the Company.

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 products fall into two product lines: sales of water meters, radios, software and related technologies, and water quality

monitoring solutions to water utilities (utility water) and sales of meters and other sensing instruments, valves, software and other

solutions for industrial applications in water, wastewater, and other industries (flow instrumentation). The Company estimates that

over 90% of its products are used in water related applications.

Utility water, the largest sales product line, 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, enabling operating efficiencies and engaging with their end consumers. 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, static meters are an increasing percentage of the

water meters sold by the Company and in the industry, due to a variety of attributes, 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
(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) AMR meter reading, ORION (SE) for traditional fixed network applications, and ORION
Cellular for an infrastructure-free AMI solution. ORION ME is the solution best suited for utilities that prefer mobile reading.
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 smart water ecosystem. The Company’s BEACON® software suite improves

utility visibility to their water and water usage. BEACON 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 smart water product

sales, including radio products. To a much lesser extent, housing starts also contribute to the new product sales base. The industry
continues to undergo a conversion from manually read water meters to meters with radio technology, and for AMR systems to be
upgraded to AMI. The Company estimates that approximately 70% of water meters installed in the United States have been converted
to some form of 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. Real-time water quality parameters
enhance 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 coupled with radio technology, and on ultrasonic compared to
mechanical meters. 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 utility water. 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 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®, ModMag®, and Research Control®. 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.

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”) and Roper Technologies, Inc. (“Neptune”). Together with Badger Meter, it is estimated that these

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

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

Cellular for an infrastructure-free AMI solution. ORION ME is the solution best suited for utilities that prefer mobile reading.

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 smart water ecosystem. The Company’s BEACON® software suite improves

utility visibility to their water and water usage. BEACON 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 smart water product

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

continues to undergo a conversion from manually read water meters to meters with radio technology, and for AMR systems to be

upgraded to AMI. The Company estimates that approximately 70% of water meters installed in the United States have been converted

to some form of 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. Real-time water quality parameters

enhance 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 coupled with radio technology, and on ultrasonic compared to

mechanical meters. 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 utility water. 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 flow metering technologies for industrial markets, the Company offers one of the

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

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”) and Roper Technologies, Inc. (“Neptune”). Together with Badger Meter, it is estimated that these
companies sell in excess of 85% of the water meters in the North American market. The remaining market share is comprised of
competitors such as Master Meter, Inc., Mueller Water Products, Inc., Kamstrup A/S and Diehl Metering GmbH depending on the
metering technology.

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

Technologies), Neptune and Sensus.

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. 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 and software
solutions. 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
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. 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 $15.8 million in 2022, $14.7 million in 2021 and $11.6 million in
2020. 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.

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 2022, 2021 and

2020 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.

companies sell in excess of 85% of the water meters in the North American market. The remaining market share is comprised of

competitors such as Master Meter, Inc., Mueller Water Products, Inc., Kamstrup A/S and Diehl Metering GmbH depending on the

metering technology.

Technologies), Neptune and Sensus.

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

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. 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 and software

solutions. 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

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. 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.

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

existing products and manufacturing process improvements were $15.8 million in 2022, $14.7 million in 2021 and $11.6 million in

2020. 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.

Research and Development

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 2022, 2021 and
2020 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.
6

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 2022 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, developing and retaining top talent, in addition to fostering an inclusive environment where
all employees can thrive.

The Company and its subsidiaries employed 1,976 persons at December 31, 2022. Approximately 105 of those employees

are covered by a collective bargaining agreement with District 10 of the International Association of Machinists. The Company
currently operates under a three-year contract with the union, which expires on October 31, 2025. The Company believes it has good
relations with the union and its employees.

The below information strives to provide further details on our core values and the key programs and initiatives we utilize to

attract, develop and retain a diverse and engaged workforce:

Core Values. Living our core values is at the heart of Badger Meter’s culture. Our global employee engagement survey

consistently measures this sentiment and our employees highly rate our company values. Our culture prioritizes trust, responsibility,
collaboration, excellence and customer focus. The first of these, trust, calls for us to act honestly, ethically and with integrity. We
maintain a formal ethics and compliance program that encourages doing the right thing. As part of this program, all ethical and legal
concerns brought forth by employees are fully investigated and resolved. Employee training is used to reinforce our values
companywide, with participation in trainings related to ethics at nearly 100%. In addition to trust, our values include a focus on
diversity, equity, and inclusion, as well as continuous improvement and environmental responsibility.

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

two-way communication, training and development and early talent pipeline programs, among other activities to attract and retain key
talent:

• We focus on the physical, mental and financial wellbeing of our employees and this is reflected in our employee benefit
offerings. We offer employee assistance and work life benefits to all global employees. Our comprehensive benefits
include healthcare, disability and life insurance, paid time off, and various leave programs, as well as retirement savings
plans and financial advisory services.

• We offer flexible, remote work and part-time arrangements, as business roles permit.
• Consistent with the broader labor market, our regrettable turnover increased to 10.0% in 2022, compared to 9.6% in

2021, and 4.3% in 2020. Increased labor competition in the US was the primary driver of the increase.
• We implemented our second global employee engagement survey in 2022. Over 93% of all global employees
5

voluntarily participated. The 2022 survey showed improvement in many areas, as a result of our targeted engagement
action plan and commitment to continuous improvement. We will continue to utilize feedback received from the survey
to identify meaningful actions targeted at fostering improvement in employee engagement, including pulse surveys to
monitor effectiveness of action plans.

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:

• We maintain a Human Rights policy, Equal Employment Opportunity policy and partner with a variety of recruiting and

hiring agencies focused on diverse candidates.

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 2022 Annual Report on Form 10-K for further information.

Human Capital Resources

all 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, developing and retaining top talent, in addition to fostering an inclusive environment where

The Company and its subsidiaries employed 1,976 persons at December 31, 2022. Approximately 105 of those employees

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

currently operates under a three-year contract with the union, which expires on October 31, 2025. The Company believes it has good

relations with the union and its employees.

The below information strives to provide further details on our core values and the key programs and initiatives we utilize to

attract, develop and retain a diverse and engaged workforce:

Core Values. Living our core values is at the heart of Badger Meter’s culture. Our global employee engagement survey

consistently measures this sentiment and our employees highly rate our company values. Our culture prioritizes trust, responsibility,

collaboration, excellence and customer focus. The first of these, trust, calls for us to act honestly, ethically and with integrity. We

maintain a formal ethics and compliance program that encourages doing the right thing. As part of this program, all ethical and legal

concerns brought forth by employees are fully investigated and resolved. Employee training is used to reinforce our values

companywide, with participation in trainings related to ethics at nearly 100%. In addition to trust, our values include a focus on

diversity, equity, and inclusion, as well as continuous improvement and environmental responsibility.

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

two-way communication, training and development and early talent pipeline programs, among other activities to attract and retain key

talent:

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:

• We maintain a Human Rights policy, Equal Employment Opportunity policy and partner with a variety of recruiting and

hiring agencies focused on diverse candidates.

• Currently, 36% of our executive officer group is diverse (three women, one Southeast Asian).
• We conduct an external pay equity analysis on an annual basis, taking action to make adjustments where warranted.
7
• We have a dedicated DEI team focused on fostering diversity, equity and inclusion across our global workforce.
• We are a signatory to the Equality Act, supporting LGBTQ rights.
• We actively participate as part of the Metropolitan Milwaukee Association of Commerce (MMAC) Diversity Pledge, a

commitment to increasing diversity representation in the workforce.

• The following provides the percentage of certain employee demographic details aligned with the Sustainability

Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI) reporting frameworks:

Females in the workforce, globally
Female representation in management, globally
Female representation in manufacturing, globally
Female representation on the Board of Directors
Minorities in the U.S. workforce
Minority representation in U.S. management
Minority representation in U.S. manufacturing

2022
40%
27%
51%
30%
30%
12%
54%

2021
39%
29%
48%
22%
26%
11%
47%

Employee Rights, Health and Safety. The safety and health of our employees is a top priority. In addition to on-the-job

safety, we take a holistic view of employee health and well-being, including our multifaceted wellness program, B|Well, which aims
to provide information, activities, support and rewards for smart and healthy choices.

• Safety, as measured by our global Total Case Incident Rate (TCIR), was 0.59 in 2022, compared to 0.75 in 2021, and
0.65 in 2020. Our goal is zero. While we are proud of our performance in 2022, most notably in relation to industry
averages, we recognize there is more work to be done.

• 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
Sheryl L. Hopkins
Richard Htwe
Lars Bo Kristensen
Kimberly K. Stoll
Matthew L. Stuyvenberg
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 — Human Resources
Vice President — Global Operations
Vice President — Global Flow Instrumentation and International Utility
Vice President — Sales and Marketing
Vice President — Software and Water Quality
Vice President — Controller

Age at
2/28/2023
50
44
55
58
58
55
56
57
56
40
44

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

• Currently, 36% of our executive officer group is diverse (three women, one Southeast Asian).

• We conduct an external pay equity analysis on an annual basis, taking action to make adjustments where warranted.

• We have a dedicated DEI team focused on fostering diversity, equity and inclusion across our global workforce.

• We are a signatory to the Equality Act, supporting LGBTQ rights.

• We actively participate as part of the Metropolitan Milwaukee Association of Commerce (MMAC) Diversity Pledge, a

commitment to increasing diversity representation in the workforce.

• The following provides the percentage of certain employee demographic details aligned with the Sustainability

Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI) reporting frameworks:

Females in the workforce, globally

Female representation in management, globally

Female representation in manufacturing, globally

Female representation on the Board of Directors

Minorities in the U.S. workforce

Minority representation in U.S. management

Minority representation in U.S. manufacturing

2022

40%

27%

51%

30%

12%

54%

2021

39%

29%

48%

22%

26%

11%

47%

Employee Rights, Health and Safety. The safety and health of our employees is a top priority. In addition to on-the-job

safety, we take a holistic view of employee health and well-being, including our multifaceted wellness program, B|Well, which aims

to provide information, activities, support and rewards for smart and healthy choices.

• Safety, as measured by our global Total Case Incident Rate (TCIR), was 0.59 in 2022, compared to 0.75 in 2021, and

0.65 in 2020. Our goal is zero. While we are proud of our performance in 2022, most notably in relation to industry

averages, we recognize there is more work to be done.

• 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

Position

Age at
2/28/2023
50
44
55
58
58
55
56
57
56
40
44

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
8
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.

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. Htwe was elected Vice President - Global Operations in January 2023. Prior to joining the Company, Mr. Htwe served

as Vice President of Global Operations for Emerson Commercial and Residential Solutions for its InSinkErator business unit from
January 2022 to December 2022 and Vice President of Operations for Wahl Clipper Corporation from March 2013 to December 2021.
Previously, he held roles of increasing responsibility at Oshkosh Corporation.

Mr. Kristensen was elected Vice President - Flow Instrumentation and International Utility in December 2022. Prior to

joining the Company, Mr. Kristensen served as Group CEO for Agramkow Fluid Systems from October 2020 to November 2022.
Additionally, Mr. Kristensen spent 20 years with Kamstrup, holding various international management roles, including General
Manager for Kamstrup Water Metering, LLC and Senior Vice President of North America.

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

Mr. Stuyvenberg was elected Vice President – Water Quality in January 2022 and Vice President - Software and Water

7
Quality in January 2023. Mr. Stuyvenberg joined Badger Meter in April 2007 as Mechanical Engineer of Applied Research and has
since held roles of increasing responsibility, including Manager of Mechanical Engineering and Director of Utility Engineering.

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.

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.

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. Htwe was elected Vice President - Global Operations in January 2023. Prior to joining the Company, Mr. Htwe served

as Vice President of Global Operations for Emerson Commercial and Residential Solutions for its InSinkErator business unit from

January 2022 to December 2022 and Vice President of Operations for Wahl Clipper Corporation from March 2013 to December 2021.

Previously, he held roles of increasing responsibility at Oshkosh Corporation.

Mr. Kristensen was elected Vice President - Flow Instrumentation and International Utility in December 2022. Prior to

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

Mr. Stuyvenberg was elected Vice President – Water Quality in January 2022 and Vice President - Software and Water

Quality in January 2023. Mr. Stuyvenberg joined Badger Meter in April 2007 as Mechanical Engineer of Applied Research and has
since held roles of increasing responsibility, including Manager of Mechanical Engineering and Director of Utility Engineering.

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 and software 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, United Kingdom, 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, Tulsa, Oklahoma and Collegeville, Pennsylvania.

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 2022 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 2022 Annual Report on Form 10-K.

Risk Management

The Company’s Enterprise Risk Management (ERM) process aims to identify, manage and monitor significant and material

risks. The ERM process assesses, manages, and monitors risks consistent with the integrated risk framework in the Enterprise Risk
Management-Integrated Framework (2017) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). We believe that risk-taking is an inherent aspect of the execution of our strategy. Our goal is to manage risks pragmatically
as opposed to avoiding risks altogether. We can mitigate risks and their impact on our Company only to a limited extent.

A group of executives prioritizes identified risks and assigns an executive to address each major identified risk area and lead
action plans to manage each risk. Our Board of Directors provides oversight of the ERM process and reviews the significant identified
risks. The Audit and Compliance Committee of the Board of Directors also reviews significant financial risk exposures and the steps
management has taken to monitor, manage and mitigate them wherever possible. Our other Board committees also play a role in risk
management, as detailed in their respective charters.

Our goal is to proactively manage risks using a structured approach in combination with strategic planning, with the intent to

preserve and enhance shareholder value. However, the risks set forth Item 1A. Risk Factors and elsewhere in this Annual Report on
Form 10-K and other risks and uncertainties could unfavorably affect us and cause our results to vary materially from recent results or
from our anticipated future results.

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 2022 Annual Report on Form 10-K, including the
“Special Note Regarding Forward Looking Statements” at the front of this 2022 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 and solutions could harm our future success.

We believe our future success depends, in part, on our ability to develop technologically advanced products that meet or

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

Foreign Operations and Export Sales

The Company sells its products and software 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, United Kingdom, 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, Tulsa, Oklahoma and Collegeville, Pennsylvania.

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 2022 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 2022 Annual Report on Form 10-K.

Risk Management

The Company’s Enterprise Risk Management (ERM) process aims to identify, manage and monitor significant and material

risks. The ERM process assesses, manages, and monitors risks consistent with the integrated risk framework in the Enterprise Risk

Management-Integrated Framework (2017) issued by the Committee of Sponsoring Organizations of the Treadway Commission

(COSO). We believe that risk-taking is an inherent aspect of the execution of our strategy. Our goal is to manage risks pragmatically

as opposed to avoiding risks altogether. We can mitigate risks and their impact on our Company only to a limited extent.

A group of executives prioritizes identified risks and assigns an executive to address each major identified risk area and lead

action plans to manage each risk. Our Board of Directors provides oversight of the ERM process and reviews the significant identified

risks. The Audit and Compliance Committee of the Board of Directors also reviews significant financial risk exposures and the steps

management has taken to monitor, manage and mitigate them wherever possible. Our other Board committees also play a role in risk

management, as detailed in their respective charters.

Our goal is to proactively manage risks using a structured approach in combination with strategic planning, with the intent to

preserve and enhance shareholder value. However, the risks set forth Item 1A. Risk Factors and elsewhere in this Annual Report on

Form 10-K and other risks and uncertainties could unfavorably affect us and cause our results to vary materially from recent results or

from our anticipated future results.

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 2022 Annual Report on Form 10-K, including the

“Special Note Regarding Forward Looking Statements” at the front of this 2022 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 and solutions could harm our future success.

We believe 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
10
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 than mechanical metering that could affect the competitive landscape
in North America. We believe we have a competitive product and market position. 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. Our products have an extended expected life and we therefore offer extended duration warranty coverages. 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 software products do not operate as intended, our business could be materially and adversely affected.

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

may encounter unexpected complications when used with other technologies utilized by the customer. A failure of our software
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 role as a prime contractor brings certain risks that could have a material adverse effect to our business.

We periodically assume the role of prime contractor for providing complete technology systems, installation and other

services and project management to customers and 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 routinely manage these types of arrangements, it is possible to encounter a situation where we
may not be able to perform to the expectations of the customer or 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 inability to obtain adequate supplies of raw materials and component parts at reasonable prices could decrease our profit
margins and negatively impact timely delivery to customers and could have a material adverse effect on our business, results
of operations and financial condition.

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

disruptions and challenges may be caused by a number of factors affecting our suppliers, including, but not limited to, capacity

constraints, port congestion, labor disputes or unrest, labor shortages and costs, economic downturns, availability of credit, a high

interest rate environment, impaired financial condition, sanctions/tariffs, energy inflation/availability and geopolitical risks (such as

the current conflict between Russia and Ukraine). The effects of climate change, including extreme weather events, may exacerbate

these risks.

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 than mechanical metering that could affect the competitive landscape

in North America. We believe we have a competitive product and market position. 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. Our products have an extended expected life and we therefore offer extended duration warranty coverages. 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 software products do not operate as intended, our business could be materially and adversely affected.

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

may encounter unexpected complications when used with other technologies utilized by the customer. A failure of our software

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

We periodically assume the role of prime contractor for providing complete technology systems, installation and other

services and project management to customers and 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 routinely manage these types of arrangements, it is possible to encounter a situation where we

may not be able to perform to the expectations of the customer or 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,

BUSINESS CONDITIONS

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. Further supply chain
disruptions and challenges may be caused by a number of factors affecting our suppliers, including, but not limited to, capacity
constraints, port congestion, labor disputes or unrest, labor shortages and costs, economic downturns, availability of credit, a high
interest rate environment, impaired financial condition, sanctions/tariffs, energy inflation/availability and geopolitical risks (such as
the current conflict between Russia and Ukraine). The effects of climate change, including extreme weather events, may exacerbate
these risks.

The inability to obtain adequate supplies of raw materials and component parts for our products at reasonable 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 continued delays in the production or
transportation of these materials for reasons that are beyond our control. World commodity markets and the ongoing inflationary
environment are affecting, and may continue to 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.

Global public health pandemics could have a material adverse effect on our business, results of operations and financial
condition.

Global health pandemics and related containment measures taken by federal and state governments could result in business

slowdowns or shutdowns, weakened economic conditions, economic uncertainty, and volatility in the financial markets and could
interfere 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 extent to which future pandemics impact our business operations in future periods will depend on multiple factors that

cannot be accurately predicated at this time, such as the duration and scope of any pandemic, the extent and effectiveness of
containment actions, the disruption caused by such actions, and the impact of these and other factors on our employees, suppliers and
customers. If we are not able to respond to and manage the impact of such events effectively, we could experience a material adverse
effect on our business, results of operations and overall financial performance.

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, rising interest rates, 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, instability in world markets, and a higher interest rate environment. 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, rising
interest rates, delays in the timing or amounts of possible annual federal funding, 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 have a material adverse effect on our business, results of operations and overall financial performance.

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 a 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.

Risks related to foreign markets could decrease our profitability.
10
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, including the effect of a
strong U.S. dollar, 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

The inability to obtain adequate supplies of raw materials and component parts for our products at reasonable 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 continued delays in the production or

transportation of these materials for reasons that are beyond our control. World commodity markets and the ongoing inflationary

environment are affecting, and may continue to 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.

condition.

Global public health pandemics could have a material adverse effect on our business, results of operations and financial

Global health pandemics and related containment measures taken by federal and state governments could result in business

slowdowns or shutdowns, weakened economic conditions, economic uncertainty, and volatility in the financial markets and could

interfere 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 extent to which future pandemics impact our business operations in future periods will depend on multiple factors that

cannot be accurately predicated at this time, such as the duration and scope of any pandemic, the extent and effectiveness of

containment actions, the disruption caused by such actions, and the impact of these and other factors on our employees, suppliers and

customers. If we are not able to respond to and manage the impact of such events effectively, we could experience a material adverse

effect on our business, results of operations and overall financial performance.

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, rising interest rates, 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, instability in world markets, and a higher interest rate environment. 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, rising

interest rates, delays in the timing or amounts of possible annual federal funding, 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 have a material adverse effect on our business, results of operations and overall financial performance.

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

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, including the effect of a
strong U.S. dollar, 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. Increased labor competition from accelerated retirements, wage inflation and
scarcity of labor may negatively impact costs and negatively impact employee engagement, productivity and efficiency.

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

12
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. 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 or Russian and Belarus Financial Sanctions Act of 2022. Our
policies mandate strict compliance with such laws and we devote resources to ensure compliance.

Changes in environmental or regulatory requirements, including climate change legislation, 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
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.

Concern over climate change has resulted in, and could continue to result in, new legal or regulatory requirements designed
11
to reduce or mitigate the effects of greenhouse gas (GHG) emissions. We may become subject to additional legislation, regulations or
accords regarding climate change, and compliance with any new rules could be difficult and costly, as a result of increased energy,
environmental and other costs and capital expenditures. Our failure to successfully comply with any such legislation, regulation, or

accord could have a material adverse effect on our business, results of operations and overall financial performance.

retain existing employees, which may hinder our growth. Increased labor competition from accelerated retirements, wage inflation and

scarcity of labor may negatively impact costs and negatively impact employee engagement, productivity and efficiency.

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

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. 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.

Changes in environmental or regulatory requirements, including climate change legislation, could entail additional expenses
that could decrease our profitability.

Concern over climate change has resulted in, and could continue to result in, new legal or regulatory requirements designed
to reduce or mitigate the effects of greenhouse gas (GHG) emissions. We may become subject to additional legislation, regulations or
accords regarding climate change, and compliance with any new rules could be difficult and costly, as a result of increased energy,
environmental and other costs and capital expenditures. Our failure to successfully comply with any such legislation, regulation, or
accord could have a material adverse effect on our business, results of operations and overall financial performance.

GENERAL

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

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
13
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.

Climate change, extreme weather and other natural phenomena could adversely affect our business.

Climate changes and weather conditions may affect, or cause volatility in, our financial results. Drought conditions could

drive higher demand for smart water solutions that advance conservation efforts in residential and commercial applications. Our sales
also may be adversely affected by unusual weather, weather patterns or other natural phenomena that could have an impact on the
timing of orders in given periods, depending on the particular mix of customers being served by us at the time. The unpredictable
nature of weather conditions and climate change therefore may result in volatility for certain portions of our business, as well as the
operations of certain of our customers and suppliers.

Failure to meet environmental, social and governance (ESG) expectations or standards, or to achieve our ESG goals, could
adversely affect our business, results of operations and overall financial performance.

In recent years, there has been an increased focus from stakeholders on ESG matters, including GHG emissions and climate-

related risks, renewable energy, water stewardship, waste management, diversity, equity and inclusion, responsible sourcing and
supply chain, human rights and social responsibility. Given our commitment to certain ESG principles, we actively manage these
issues and have established certain goals, commitments and targets. These goals, commitments and targets reflect our current plans
and are not guarantees that we will be able to achieve them. Evolving stakeholder expectations and our efforts to manage these issues,
report on them and accomplish our goals present numerous operational, regulatory, reputational, financial, legal and other risks, any of
which could have a material adverse impact on our financial condition.

Litigation against us could be costly, time consuming to defend and could adversely affect our profitability.

From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of business. For example,

we may be subject to workers' compensation claims, employment/labor disputes, customer and supplier disputes, product liability
claims, intellectual property disputes and contractual disputes related to warranties arising out of the conduct of our business.
Litigation may result in substantial costs and may divert management's attention and resources, which could adversely affect our
profitability or financial condition.

Disruptions and other damages to our information technology and other networks and operations, and breaches in data security
or cybersecurity attacks could have a negative financial impact and damage our reputation.

Our ability to serve customers, as well as increase revenues and control costs, depends in part on the reliability of our
sophisticated technologies, system networks and cloud-based software. We use information technology and other systems to manage
our business in order to maximize our revenue, effectiveness and efficiency. Unauthorized parties gaining access to digital systems
and networks for purposes of misappropriating assets or sensitive financial, personal or business information, corrupting data, causing
operational disruptions and other cyber-related risks could adversely impact our customer relationships, business plans and our
reputation. In some cases, we are dependent on third-party technologies and service providers for which there is no certainty of
uninterrupted availability or through which hackers could gain access to sensitive and/or personal information. These potential
disruptions and cyber-attacks could negatively affect revenues, costs, customer demand, system availability and our reputation.

Further, as the Company pursues its strategy to grow through acquisitions and to pursue newer technologies that improve our

operations and cost structure, the Company is also expanding and improving its information technologies, resulting in a larger

technological presence and corresponding exposure to cybersecurity risk. Certain new technologies present new and significant

cybersecurity safety risks that must be analyzed and addressed before implementation. If we fail to assess and identify cybersecurity

risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks.

Failure to successfully identify, complete and integrate acquired businesses or products could adversely affect our operations.

As part of our business strategy, we continue to evaluate and may pursue selected business or product acquisition

opportunities that we believe may provide us with certain operating and financial benefits. There can be no assurance that we will

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.

Climate change, extreme weather and other natural phenomena could adversely affect our business.

Climate changes and weather conditions may affect, or cause volatility in, our financial results. Drought conditions could

drive higher demand for smart water solutions that advance conservation efforts in residential and commercial applications. Our sales

also may be adversely affected by unusual weather, weather patterns or other natural phenomena that could have an impact on the

timing of orders in given periods, depending on the particular mix of customers being served by us at the time. The unpredictable

nature of weather conditions and climate change therefore may result in volatility for certain portions of our business, as well as the

operations of certain of our customers and suppliers.

Failure to meet environmental, social and governance (ESG) expectations or standards, or to achieve our ESG goals, could

adversely affect our business, results of operations and overall financial performance.

In recent years, there has been an increased focus from stakeholders on ESG matters, including GHG emissions and climate-

related risks, renewable energy, water stewardship, waste management, diversity, equity and inclusion, responsible sourcing and

supply chain, human rights and social responsibility. Given our commitment to certain ESG principles, we actively manage these

issues and have established certain goals, commitments and targets. These goals, commitments and targets reflect our current plans

and are not guarantees that we will be able to achieve them. Evolving stakeholder expectations and our efforts to manage these issues,

report on them and accomplish our goals present numerous operational, regulatory, reputational, financial, legal and other risks, any of

which could have a material adverse impact on our financial condition.

Litigation against us could be costly, time consuming to defend and could adversely affect our profitability.

From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of business. For example,

we may be subject to workers' compensation claims, employment/labor disputes, customer and supplier disputes, product liability

claims, intellectual property disputes and contractual disputes related to warranties arising out of the conduct of our business.

Litigation may result in substantial costs and may divert management's attention and resources, which could adversely affect our

profitability or financial condition.

Disruptions and other damages to our information technology and other networks and operations, and breaches in data security

or cybersecurity attacks could have a negative financial impact and damage our reputation.

Further, as the Company pursues its strategy to grow through acquisitions and to pursue newer technologies that improve our

operations and cost structure, the Company is also expanding and improving its information technologies, resulting in a larger
technological presence and corresponding exposure to cybersecurity risk. Certain new technologies present new and significant
cybersecurity safety risks that must be analyzed and addressed before implementation. If we fail to assess and identify cybersecurity
risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks.

Failure to successfully identify, complete and integrate acquired businesses or products could adversely affect our operations.

As part of our business strategy, we continue to evaluate and may pursue selected business or product acquisition
opportunities that we believe may provide us with certain operating and financial benefits. There can be no assurance that we will
identify or complete transactions with suitable acquisition candidates in the future. If we complete any such acquisitions, they may
require integration into our existing business with respect to administrative, financial, legal, sales, marketing, manufacturing and other
14
functions to realize these anticipated benefits. If we are unable to successfully integrate a business or product acquisition, we may not
realize the benefits identified in our due diligence process, and our financial results may be negatively impacted. Additionally,
significant unexpected liabilities may arise during or after completion of an acquisition.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

The Company has sales, development, distribution and manufacturing facilities and customer service offices as noted in Part
I, Item 1 of this 2022 Annual Report on Form 10-K under the heading “Foreign Operations and Export Sales.” The principal facilities
utilized by the Company at December 31, 2022 are listed below. The Company owns all such facilities except as noted. The
Company believes that its facilities are generally well maintained and have sufficient capacity for its current needs.

Milwaukee, Wisconsin, USA
Racine, Wisconsin, USA
Nogales, Mexico

Location

(1) Leased facility. Lease term expires December 31, 2025.

ITEM 3.

LEGAL PROCEEDINGS

Principal Use
Manufacturing and offices
Manufacturing and offices
Manufacturing

Approximate area
(square feet)

324,200
134,300 (1)
181,300

In the normal course of business, the Company is named in legal proceedings from time to time. There are currently no

material legal proceedings pending with respect to the Company.

The Company is subject to contingencies related to environmental laws and regulations. Information about the Company's
compliance with environmental regulations is included in Part I, Item 1 of this 2022 Annual Report on Form 10-K under the heading
“Environmental Protection.”

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s Common Stock is traded on the New York Stock Exchange (NYSE Trading Symbol: BMI). At February 3,
2023, there were approximately 556 holders of the Company’s Common Stock. Other information required by this Item is set forth in
Note 2 “Common Stock” and Note 10 “Unaudited: Quarterly Results of Operations, Common Stock Price and Dividends” in the Notes
to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

The following information in Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be

“filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C under the Securities Exchange Act of
1934, as amended, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent the Company specifically incorporates it by reference into such a filing.

The following graph compares on a cumulative basis the yearly percentage change since January 1, 2018 in (a) the total

shareholder return on the Company’s Common Stock with (b) the total return on the Russell 2000® Index, and (c) the total return of
the peer group made up of 18 companies, including the Company, in similar industries, employment markets and with similar market
capitalization. The Russell 2000® Index is a trademark of the Frank Russell Company, and is used herein for comparative purposes in
accordance with Securities and Exchange Commission regulations.

The graph assumes $100 invested on December 31, 2017. It further assumes the reinvestment of dividends. The returns of

each component company in the peer groups have been weighted based on such company's relative market capitalization.

December 31

Badger Meter, Inc.

Russell 2000 Index

Peer Group

Return %
Cumulative $
Return %
Cumulative $
Return %
Cumulative $

2017

2018

4.10%

2019
33.45%

2020
46.39%

2021
14.12%

2022

3.21%

$ 100.00 $ 104.10 $ 138.92 $ 203.36 $ 232.09 $ 239.54

-11.01%

25.52%

19.96%

14.82%

-20.44%

$ 100.00 $ 88.99 $ 111.70 $ 134.00 $ 153.85 $ 122.41

-18.68%

42.56%

14.50%

25.53%

-18.76%

$ 100.00 $ 81.32 $ 115.93 $ 132.74 $ 166.63 $ 135.37

14
16

The peer group consists of Evoqua Water Technologies Corp. (AQUA), Badger Meter, Inc. (BMI), Brady Corporation

(BRC), CIRCOR International, Inc. (CIR), CTS Corporation (CTS), Enerpac Tool Group Corp. (EPAC), ESCO Technologies Inc.
(ESE), The Gorman-Rupp Company (GRC), Helios Technologies, Inc. (HLIO), Itron, Inc. (ITRI), Kadant Inc. (KAI), Lindsay
Corporation (LNN), Mueller Water Products, Inc. (MWA), Douglas Dynamics, Inc. (PLOW), Strattec Security Corporation (STRT),
Standex International Corporation (SXI), Watts Water Technologies, Inc. (WTS) and Zurn Water Solutions Corporation (ZWS).

In February 2020, the Board of Directors authorized the repurchase of up to 400,000 shares of the Company’s Common

Stock through February 2023. The following table provides information about the Company's purchases under this repurchase
program during the quarter ended December 31, 2022 of equity securities that are registered by the Company pursuant to Section 12 of
the Exchange Act.

October 1, 2022 - October 31, 2022
November 1, 2022 - November 30, 2022
December 1, 2022 - December 31, 2022
Total as of December 31, 2022

Total number
of shares
purchased

Average price
paid per share

Total number
of shares
purchased as
part of a
publicly
announced
program

Maximum
number of
shares that
may yet be
purchased
under the
program

- $
- $
- $
-

-
-
-

-
-
-
-

339,678
339,678
339,678
339,678

On February 10, 2023, the Board of Directors approved a new share repurchase authorization of up to 200,000 shares of the
Company's Common Stock through February 10, 2026.

ITEM 6. RESERVED

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Long Term Business Trends

Across the globe, increasing regulations and a focus on climate-change and sustainability are driving companies and utilities

to better manage critical resources like water. Some customers measure fluids to identify leaks and/or misappropriation for cost
control or add measurement points to help automate manufacturing. Other customers employ measurement to comply with
government mandates and laws including those associated with process and discharge water quality monitoring. The Company
provides flow measurement technology to primarily measure water, but also other fluids, gases and steam. This technology is critical
to provide baseline usage data and to quantify reductions as customers attempt to reduce consumption. For example, once water usage
metrics are better understood, a strategy for water-use reduction can be developed with specific water-reduction initiatives targeted to
those areas where it is most viable. With the Company’s technology, customers have found costly leaks, pinpointed equipment in
need of repair, and identified areas for process improvements.

Increasingly, customers in the utility water market are interested in more frequent and diverse data collection and the use of

water metering and quality analytics to evaluate water distribution activity. Specifically, AMI technology enables water utilities to
capture readings from each meter at more frequent and variable intervals. There are more than 50,000 water utilities in the United
States and the Company estimates that approximately 70% of their respective connections have converted to a radio solution, of which
the Company estimates approximately half still utilize AMR technology. The Company believes it is well positioned to meet the
continuing conversion trends to AMI with its comprehensive radio and software solutions.

In addition, certain water utilities are converting from mechanical to static meters. Ultrasonic water metering maintains a

high level of measurement accuracy over the life of the meter, reducing a utility’s non-revenue water. The Company has over a
decade of proven reliability in the market with its ultrasonic meters and has recently launched its next generation of ultrasonic
metering with its D-Flow technology, which the Company believes increases its competitive differentiation.

For over 118 years, the Company has offered innovative flow metering and control solutions for smart water management,

smart buildings and smart industrial processes. The acquisitions of s::can and ATi, leading providers of water quality monitoring
solutions, have added real-time water quality parameters to the Company’s capabilities and has enhanced the scope of actionable data
for its customers to help measure, conserve and protect water. The combined solutions from Badger Meter offer technology that
measures both the quantity and quality of water.

Finally, the concept of “Smart Cities” is one avenue to affect efficient city operations, conserve resources and improve
17
15
service and delivery. Smart water solutions (“Smart Water”) are those that provide actionable information through data analytics from
an interconnected and interoperable network of sensors and devices that help people and organizations efficiently use and conserve
water. Badger Meter is well positioned to benefit from the advancement of Smart Water applications. With its strong relationship
with AT&T, among others, Badger Meter stays abreast of emerging cellular technology changes which the Company believes is the

premier infrastructure-free AMI solution.

Revenue and Product Mix

As the industry continues to evolve, the Company has been at the forefront of innovation across metering, radio and software

technologies in order to meet its customers’ increasing expectations for accurate and actionable data. As technologies such as ORION

Cellular and BEACON digital solutions have become more readily adopted, the Company’s revenue from Software as a Service

(SaaS) has increased significantly, albeit from a small base, and is margin accretive.

In addition, the Company has expanded its smart water offering with the addition of online water quality monitoring

solutions, adding real-time water quality parameters to augment the scope of actionable data for water utility and industrial customers

to optimize their operations.

The Company also seeks opportunities for additional revenue enhancement. For instance, the Company has made inroads

into the Middle East market with its ultrasonic meter technology and is pursuing other geographic expansion opportunities.

Additionally, the Company is periodically asked to oversee and perform field installation of its products for certain customers. In

these cases, the Company assumes the role of general contractor and typically hires installation subcontractors and supervises their

work.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

ITEM 6. RESERVED

OPERATIONS

Long Term Business Trends

Across the globe, increasing regulations and a focus on climate-change and sustainability are driving companies and utilities

to better manage critical resources like water. Some customers measure fluids to identify leaks and/or misappropriation for cost

control or add measurement points to help automate manufacturing. Other customers employ measurement to comply with

government mandates and laws including those associated with process and discharge water quality monitoring. The Company

provides flow measurement technology to primarily measure water, but also other fluids, gases and steam. This technology is critical

to provide baseline usage data and to quantify reductions as customers attempt to reduce consumption. For example, once water usage

metrics are better understood, a strategy for water-use reduction can be developed with specific water-reduction initiatives targeted to

those areas where it is most viable. With the Company’s technology, customers have found costly leaks, pinpointed equipment in

need of repair, and identified areas for process improvements.

Increasingly, customers in the utility water market are interested in more frequent and diverse data collection and the use of

water metering and quality analytics to evaluate water distribution activity. Specifically, AMI technology enables water utilities to

capture readings from each meter at more frequent and variable intervals. There are more than 50,000 water utilities in the United

States and the Company estimates that approximately 70% of their respective connections have converted to a radio solution, of which

the Company estimates approximately half still utilize AMR technology. The Company believes it is well positioned to meet the

continuing conversion trends to AMI with its comprehensive radio and software solutions.

In addition, certain water utilities are converting from mechanical to static meters. Ultrasonic water metering maintains a

high level of measurement accuracy over the life of the meter, reducing a utility’s non-revenue water. The Company has over a

decade of proven reliability in the market with its ultrasonic meters and has recently launched its next generation of ultrasonic

metering with its D-Flow technology, which the Company believes increases its competitive differentiation.

For over 118 years, the Company has offered innovative flow metering and control solutions for smart water management,

Finally, the concept of “Smart Cities” is one avenue to affect efficient city operations, conserve resources and improve
service and delivery. Smart water solutions (“Smart Water”) are those that provide actionable information through data analytics from
an interconnected and interoperable network of sensors and devices that help people and organizations efficiently use and conserve
water. Badger Meter is well positioned to benefit from the advancement of Smart Water applications. With its strong relationship
with AT&T, among others, Badger Meter stays abreast of emerging cellular technology changes which the Company believes is the
premier infrastructure-free AMI solution.

Revenue and Product Mix

As the industry continues to evolve, the Company has been at the forefront of innovation across metering, radio and software
technologies in order to meet its customers’ increasing expectations for accurate and actionable data. As technologies such as ORION
Cellular and BEACON digital solutions have become more readily adopted, the Company’s revenue from Software as a Service
(SaaS) has increased significantly, albeit from a small base, and is margin accretive.

In addition, the Company has expanded its smart water offering with the addition of online water quality monitoring
solutions, adding real-time water quality parameters to augment the scope of actionable data for water utility and industrial customers
to optimize their operations.

The Company also seeks opportunities for additional revenue enhancement. For instance, the Company has made inroads

into the Middle East market with its ultrasonic meter technology and is pursuing other geographic expansion opportunities.
Additionally, the Company is periodically asked to oversee and perform field installation of its products for certain customers. In
these cases, the Company assumes the role of general contractor and typically hires installation subcontractors and supervises their
work.

Acquisitions

Effective January 1, 2021, the Company acquired 100% of the outstanding stock of ATi, headquartered in Collegeville,

Pennsylvania, a provider of water quality monitoring systems.

The total purchase consideration for ATi, net of cash acquired, was $44.0 million. The Company's allocation of the purchase
price at December 31, 2021 included $3.9 million of receivables, $3.9 million of inventory, $2.5 million of other assets, $21.0 million
of intangibles and $16.4 million of goodwill that is deductible for tax purposes. The intangible assets acquired are primarily customer
relationships, developed technology and trademarks with estimated average useful lives of 12 to 15 years. The Company also
assumed $1.4 million of accounts payable, $0.6 million of deferred tax liabilities and $1.7 million of other liabilities as part of the
acquisition. The allocation of the purchase price to the assets acquired was based upon the estimated fair values at the date of
acquisition.

As of December 31, 2021, the Company had completed its analysis for estimating the fair value of the assets acquired with

no additional adjustments. This acquisition is further described in Note 3 “Acquisitions” in the Notes to Consolidated Financial
Statements.

Effective November 2, 2020, the Company acquired 100% of the outstanding stock of s::can headquartered in Vienna,

Austria. s::can specializes in optical water quality sensing solutions that provide real-time measurement of a variety of parameters in
water and wastewater utilizing in-line monitoring systems and other applications.

The total purchase consideration for s::can, net of cash acquired, was $30.5 million, inclusive of $1.3 million of working

capital adjustments. The Company's allocation of the purchase price at December 31, 2021 included $2.6 million of receivables, $4.3
million of inventory, $1.2 million of other assets, $12.7 million of intangibles and $17.7 million of goodwill that is not deductible for
tax purposes. The intangible assets acquired are primarily customer relationships and developed technology with an estimated average
useful life of 12 years. The Company also assumed $3.5 million of accounts payable, $3.2 million of deferred tax liabilities and $1.3
million of other liabilities as part of the acquisition. The allocation of the purchase price to the assets acquired was based upon the
estimated fair values at the date of acquisition.

As of December 31, 2021, the Company had completed its analysis for estimating the fair value of the assets acquired with

no additional adjustments. This acquisition is further described in Note 3 “Acquisitions” in the Notes to Consolidated Financial
Statements.

RESULTS OF OPERATIONS

Net Sales

16
Net sales in 2022 increased $60.4 million, or 11.9%, to $565.6 million from $505.2 million in 2021. Excluding the

increased meter volumes including E-Series Ultrasonic meters. Sales of products into the global flow instrumentation end markets

were $93.8 million, 4.3% higher than the prior year’s $89.9 million due to strong order demand and modestly improving supply chain

dynamics year-over-year. Excluding the unfavorable impact of the strong US dollar between years, flow instrumentation sales

increased 7.1%.

Net sales in 2021 increased $79.7 million, or 18.7%, to $505.2 million from $425.5 million in 2020. Sales into the utility

water market were $415.3 million, an increase of 20.6% over the prior year’s $344.3 million. The acquisitions of s::can and ATi

increased sales $40.7 million compared to 2020. The remaining increase of $39.0 million was attributable to higher sales of the

Company’s water meter, radio and software products including ORION Cellular endpoints as well as increased BEACON SaaS

revenue associated with data collection and software analytics. These favorable trends more than offset the supply chain shortages of

certain components which limited sales of certain products throughout 2021 and contributed to the record backlog level throughout

2021. Sales of products into the global flow instrumentation end markets were $89.9 million, 10.7% greater than the prior year’s

$81.2 million due to the stabilization of industrial demand globally and across the array of end markets served.

Operating Earnings

Operating earnings in 2022 were $87.3 million, or 15.4% of sales, compared to $78.7 million, or 15.6% of sales, in 2021.

Gross margin dollars increased $14.5 million due to higher net sales, with gross margin as a percent of sales decreasing from 40.7% in

2021 to 38.9% in 2022. The year-over-year increase in inflationary cost pressures, coupled with production volatility caused by

Acquisitions

acquisition.

Statements.

Effective January 1, 2021, the Company acquired 100% of the outstanding stock of ATi, headquartered in Collegeville,

Pennsylvania, a provider of water quality monitoring systems.

The total purchase consideration for ATi, net of cash acquired, was $44.0 million. The Company's allocation of the purchase

price at December 31, 2021 included $3.9 million of receivables, $3.9 million of inventory, $2.5 million of other assets, $21.0 million

of intangibles and $16.4 million of goodwill that is deductible for tax purposes. The intangible assets acquired are primarily customer

relationships, developed technology and trademarks with estimated average useful lives of 12 to 15 years. The Company also

assumed $1.4 million of accounts payable, $0.6 million of deferred tax liabilities and $1.7 million of other liabilities as part of the

acquisition. The allocation of the purchase price to the assets acquired was based upon the estimated fair values at the date of

As of December 31, 2021, the Company had completed its analysis for estimating the fair value of the assets acquired with

no additional adjustments. This acquisition is further described in Note 3 “Acquisitions” in the Notes to Consolidated Financial

Effective November 2, 2020, the Company acquired 100% of the outstanding stock of s::can headquartered in Vienna,

Austria. s::can specializes in optical water quality sensing solutions that provide real-time measurement of a variety of parameters in

water and wastewater utilizing in-line monitoring systems and other applications.

The total purchase consideration for s::can, net of cash acquired, was $30.5 million, inclusive of $1.3 million of working

capital adjustments. The Company's allocation of the purchase price at December 31, 2021 included $2.6 million of receivables, $4.3

million of inventory, $1.2 million of other assets, $12.7 million of intangibles and $17.7 million of goodwill that is not deductible for

tax purposes. The intangible assets acquired are primarily customer relationships and developed technology with an estimated average

useful life of 12 years. The Company also assumed $3.5 million of accounts payable, $3.2 million of deferred tax liabilities and $1.3

million of other liabilities as part of the acquisition. The allocation of the purchase price to the assets acquired was based upon the
estimated fair values at the date of acquisition.

As of December 31, 2021, the Company had completed its analysis for estimating the fair value of the assets acquired with

no additional adjustments. This acquisition is further described in Note 3 “Acquisitions” in the Notes to Consolidated Financial
Statements.

RESULTS OF OPERATIONS

Net Sales

Net sales in 2022 increased $60.4 million, or 11.9%, to $565.6 million from $505.2 million in 2021. Excluding the

unfavorable impact of the strong US dollar between years, sales increased 13.2%. Sales into the utility water market were $471.8
million, an increase of 13.6% over the prior year’s $415.3 million. The utility water sales growth reflected strong market demand and
the continued adoption of cellular AMI solutions, specifically ORION Cellular endpoints and BEACON SaaS revenues, as well as
increased meter volumes including E-Series Ultrasonic meters. Sales of products into the global flow instrumentation end markets
were $93.8 million, 4.3% higher than the prior year’s $89.9 million due to strong order demand and modestly improving supply chain
dynamics year-over-year. Excluding the unfavorable impact of the strong US dollar between years, flow instrumentation sales
increased 7.1%.

Net sales in 2021 increased $79.7 million, or 18.7%, to $505.2 million from $425.5 million in 2020. Sales into the utility

water market were $415.3 million, an increase of 20.6% over the prior year’s $344.3 million. The acquisitions of s::can and ATi
increased sales $40.7 million compared to 2020. The remaining increase of $39.0 million was attributable to higher sales of the
Company’s water meter, radio and software products including ORION Cellular endpoints as well as increased BEACON SaaS
revenue associated with data collection and software analytics. These favorable trends more than offset the supply chain shortages of
certain components which limited sales of certain products throughout 2021 and contributed to the record backlog level throughout
2021. Sales of products into the global flow instrumentation end markets were $89.9 million, 10.7% greater than the prior year’s
$81.2 million due to the stabilization of industrial demand globally and across the array of end markets served.

Operating Earnings

Operating earnings in 2022 were $87.3 million, or 15.4% of sales, compared to $78.7 million, or 15.6% of sales, in 2021.

Gross margin dollars increased $14.5 million due to higher net sales, with gross margin as a percent of sales decreasing from 40.7% in
2021 to 38.9% in 2022. The year-over-year increase in inflationary cost pressures, coupled with production volatility caused by
intermittent component delays, tempered gross margin percent in the current year. Selling, engineering and administration (“SEA”)
expenses were $132.7 million or 23.5% of sales compared to $126.8 million or 25.1% of sales in the prior year. The increase in SEA
19
expenses year-over-year was due to higher personnel and incentive compensation costs, R&D investments, and travel.

Operating earnings in 2021 were $78.7 million, or 15.6% of sales, compared to $65.2 million, or 15.3% of sales, in 2020.
Gross margin increased $37.2 million, and as a percent of sales increased from 39.5% in 2020 to 40.7% in 2021. The gross margin
improvement was due to higher volumes, improved sales mix as noted above, acquisition mix and strategic pricing actions that offset
inflationary cost pressures from material input costs. SEA expenses were $126.8 million or 25.1% of sales compared to $103.1
million or 24.2% of sales in the prior year. The acquired businesses added $16.9 million of SEA expenses. The remaining $6.8
million increase was primarily due to higher personnel costs including increased headcount and higher incentive compensation and
benefits.

Interest (Income) Expense, Net

Net interest income was $0.6 million in 2022 and less than $0.1 million in 2021. Net interest expense was less than $0.1

million in 2020. The increase in interest income in 2022 was due to increased cash balances and an improved interest rate
environment. Changes in net interest (income) expense in 2021 and 2020 were immaterial.

Income Taxes

There were no significant variations in the provision for income taxes as a percentage of earnings before income taxes which

was 24.2%, 22.6% and 24.1% for 2022, 2021 and 2020, respectively.

Earnings and Diluted Earnings per Share

For 2022, the increase in operating earnings resulted in net earnings of $66.5 million compared to $60.9 million in 2021. On

a diluted basis, earnings per share were $2.26 in 2022 compared to $2.08 in 2021.

For 2021, the increase in operating earnings resulted in net earnings of $60.9 million compared to $49.3 million in 2020. On

a diluted basis, earnings per share were $2.08 in 2021 compared to $1.69 in 2020.

LIQUIDITY AND CAPITAL RESOURCES

The main sources of liquidity for the Company are cash from operations and borrowing capacity. In addition, depending on

market conditions, the Company may access the capital markets to strengthen its capital position and to provide additional liquidity for
17
general corporate purposes.

Primary Working Capital

Receivables

Inventories

Payables

Primary Working Capital

We use primary working capital ("PWC") as a percentage of sales as a key metric for working capital efficiency. We define

this metric as the sum of receivables and inventories less payables, divided by annual net sales. The following table shows the

components of our PWC (in thousands):

December 31, 2022

December 31, 2021

76,651

119,856

(71,440 )

125,067

PWC%

(In thousands)

13.5%

21.2%

-12.6%

22.1%

65,866

99,611

(41,859 )

123,618

PWC%

13.1%

19.7%

-8.3%

24.5%

Overall, PWC increased $1.4 million compared to the previous year-end. Receivables at December 31, 2022 were $76.7

million compared to $65.9 million at the end of 2021, an increase of $10.8 million due to increased sales. The Company believes its

receivables balance is fully collectible. Inventories at December 31, 2022 were $119.9 million compared to $99.6 million at the end

of 2021. Inventory increased $20.2 million, due to component cost inflation and higher safety stock levels associated with varied

component shortages. Payables at December 31, 2022 were $71.4 million compared to $41.9 million at the end of 2021. The increase

was due to timing of payments and increased inventory levels between years.

intermittent component delays, tempered gross margin percent in the current year. Selling, engineering and administration (“SEA”)

expenses were $132.7 million or 23.5% of sales compared to $126.8 million or 25.1% of sales in the prior year. The increase in SEA

expenses year-over-year was due to higher personnel and incentive compensation costs, R&D investments, and travel.

Operating earnings in 2021 were $78.7 million, or 15.6% of sales, compared to $65.2 million, or 15.3% of sales, in 2020.

Gross margin increased $37.2 million, and as a percent of sales increased from 39.5% in 2020 to 40.7% in 2021. The gross margin

improvement was due to higher volumes, improved sales mix as noted above, acquisition mix and strategic pricing actions that offset

inflationary cost pressures from material input costs. SEA expenses were $126.8 million or 25.1% of sales compared to $103.1

million or 24.2% of sales in the prior year. The acquired businesses added $16.9 million of SEA expenses. The remaining $6.8

million increase was primarily due to higher personnel costs including increased headcount and higher incentive compensation and

benefits.

Interest (Income) Expense, Net

Income Taxes

Net interest income was $0.6 million in 2022 and less than $0.1 million in 2021. Net interest expense was less than $0.1

million in 2020. The increase in interest income in 2022 was due to increased cash balances and an improved interest rate

environment. Changes in net interest (income) expense in 2021 and 2020 were immaterial.

There were no significant variations in the provision for income taxes as a percentage of earnings before income taxes which

was 24.2%, 22.6% and 24.1% for 2022, 2021 and 2020, respectively.

Earnings and Diluted Earnings per Share

For 2022, the increase in operating earnings resulted in net earnings of $66.5 million compared to $60.9 million in 2021. On

a diluted basis, earnings per share were $2.26 in 2022 compared to $2.08 in 2021.

For 2021, the increase in operating earnings resulted in net earnings of $60.9 million compared to $49.3 million in 2020. On

a diluted basis, earnings per share were $2.08 in 2021 compared to $1.69 in 2020.

LIQUIDITY AND CAPITAL RESOURCES

The main sources of liquidity for the Company are cash from operations and borrowing capacity. In addition, depending on

market conditions, the Company may access the capital markets to strengthen its capital position and to provide additional liquidity for
general corporate purposes.

Primary Working Capital

We use primary working capital ("PWC") as a percentage of sales as a key metric for working capital efficiency. We define

this metric as the sum of receivables and inventories less payables, divided by annual net sales. The following table shows the
components of our PWC (in thousands):

December 31, 2022

December 31, 2021

Receivables
Inventories
Payables

Primary Working Capital

76,651
119,856
(71,440 )
125,067

13.5%
21.2%
-12.6%
22.1%

65,866
99,611
(41,859 )
123,618

(In thousands)
$

PWC%

13.1%
19.7%
-8.3%
24.5%

Overall, PWC increased $1.4 million compared to the previous year-end. Receivables at December 31, 2022 were $76.7

million compared to $65.9 million at the end of 2021, an increase of $10.8 million due to increased sales. The Company believes its
receivables balance is fully collectible. Inventories at December 31, 2022 were $119.9 million compared to $99.6 million at the end
of 2021. Inventory increased $20.2 million, due to component cost inflation and higher safety stock levels associated with varied
component shortages. Payables at December 31, 2022 were $71.4 million compared to $41.9 million at the end of 2021. The increase
was due to timing of payments and increased inventory levels between years.

Cash Provided by Operations

Cash provided by operations in 2022 was $82.5 million compared to $87.5 million in 2021. The decrease from 2021 was

driven primarily by increased operating earnings offset by increased working capital requirements as described above. Operating cash
20
flow was more than adequate to fund capital expenditures of $5.9 million and dividends of $24.9 million.

Cash provided by operations in 2021 was $87.5 million compared to $89.6 million in 2020. The decrease from 2020 was
driven primarily by increased operating earnings offset by increased working capital requirements. Operating cash flow was more
than adequate to fund acquisitions ($45.3 million, net of cash acquired), capital expenditures of $6.7 million and dividends of $22.2
million.

Capital expenditures were $5.9 million, $6.7 million and $9.1 million in fiscal 2022, 2021 and 2020, respectively. Capital

expenditures for fiscal 2023 are expected to be in the $10.0-12.0 million range, but could vary depending on timing of projects,
growth opportunities and the amount of assets purchased.

The Company had no short-term borrowings as of the end of 2022 or 2021. At the end of 2022, the Company was in a net

cash position of $138.1 million.

The Company’s financial condition remains strong. On July 8, 2021, the Company entered into a new credit agreement. The

credit agreement includes a $150.0 million multi-currency line of credit that supports commercial paper (up to $100.0 million). The
facility includes several features that enhance the Company’s financial flexibility including an increase feature, acquisition holiday
and favorable financial covenants. The Company was in compliance with all covenants as of December 31, 2022. The Company
believes that its operating cash flows, available borrowing capacity, and its ability to raise capital provide adequate resources to fund
ongoing operating requirements, future capital expenditures and the development of new products. The Company had $156.6 million
of unused credit lines available at December 31, 2022.

CONTRACTUAL OBLIGATIONS

The Company's significant contractual obligations as of December 31, 2022 are discussed in Note 12 “Leases” in the Notes to

Consolidated Financial Statements in Part II, Item 8 of this 2022 Annual Report on Form 10-K. There are no material undisclosed
guarantees. As of December 31, 2022 the Company had no additional material purchase obligations other than those created in the
ordinary course of business related to inventory and property, plant and equipment, which generally have terms of less than 90 days.
The Company also has long-term obligations related to its postretirement plans which are discussed in detail in Note 7 “Employee
Benefit Plans” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 2022 Annual Report on Form 10-K.
18
Postretirement medical claims are paid by the Company as they are submitted, and they are anticipated to be $0.4 million in 2023
based on actuarial estimates; however, these amounts can vary significantly from year to year because the Company is self-insured.

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

We believe the following accounting estimates are the most critical to the understanding of our financial statements as they

could have the most significant effect on our reported results and require subjective or complex judgments by management.

Accounting principles generally accepted in the United States require us to make estimates and assumptions that affect the reported

amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods

reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those

estimates. Refer to Note 1 in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 2022 Annual Report on Form 10-

K for information regarding our significant accounting policies.

Warranty and After-Sale Costs

Our products carry warranties that generally range from one to twenty years and are based on terms that are generally

accepted in the market. We provide for the estimated cost of product warranty at the time of sale. The product warranty provision is

estimated based upon warranty loss experience using actual historical failure rates and estimated costs of product replacement. The

variables used in the calculation of the provision are reviewed at least annually. At times, warranty issues may arise which are beyond

the scope of our historical experience. We provide for any such warranty issues as they become known and estimable. The

introduction of additional technology, such as our ORION cellular radios, electronic meters and registration, have generally caused

our annual warranty claims rates to increase over time. While our warranty costs have historically been within calculated estimates, it

is possible that future warranty costs could differ significantly from those estimates. At December 31, 2022 and 2021, our reserve for

product warranties was $9.6 million and $12.9 million, respectively.

Cash Provided by Operations

Cash provided by operations in 2022 was $82.5 million compared to $87.5 million in 2021. The decrease from 2021 was

driven primarily by increased operating earnings offset by increased working capital requirements as described above. Operating cash

flow was more than adequate to fund capital expenditures of $5.9 million and dividends of $24.9 million.

Cash provided by operations in 2021 was $87.5 million compared to $89.6 million in 2020. The decrease from 2020 was

driven primarily by increased operating earnings offset by increased working capital requirements. Operating cash flow was more

than adequate to fund acquisitions ($45.3 million, net of cash acquired), capital expenditures of $6.7 million and dividends of $22.2

million.

Capital expenditures were $5.9 million, $6.7 million and $9.1 million in fiscal 2022, 2021 and 2020, respectively. Capital

expenditures for fiscal 2023 are expected to be in the $10.0-12.0 million range, but could vary depending on timing of projects,

growth opportunities and the amount of assets purchased.

The Company had no short-term borrowings as of the end of 2022 or 2021. At the end of 2022, the Company was in a net

cash position of $138.1 million.

The Company’s financial condition remains strong. On July 8, 2021, the Company entered into a new credit agreement. The

credit agreement includes a $150.0 million multi-currency line of credit that supports commercial paper (up to $100.0 million). The

facility includes several features that enhance the Company’s financial flexibility including an increase feature, acquisition holiday

and favorable financial covenants. The Company was in compliance with all covenants as of December 31, 2022. The Company

believes that its operating cash flows, available borrowing capacity, and its ability to raise capital provide adequate resources to fund

ongoing operating requirements, future capital expenditures and the development of new products. The Company had $156.6 million

of unused credit lines available at December 31, 2022.

CONTRACTUAL OBLIGATIONS

The Company's significant contractual obligations as of December 31, 2022 are discussed in Note 12 “Leases” in the Notes to

Consolidated Financial Statements in Part II, Item 8 of this 2022 Annual Report on Form 10-K. There are no material undisclosed
guarantees. As of December 31, 2022 the Company had no additional material purchase obligations other than those created in the
ordinary course of business related to inventory and property, plant and equipment, which generally have terms of less than 90 days.
The Company also has long-term obligations related to its postretirement plans which are discussed in detail in Note 7 “Employee
Benefit Plans” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 2022 Annual Report on Form 10-K.
Postretirement medical claims are paid by the Company as they are submitted, and they are anticipated to be $0.4 million in 2023
based on actuarial estimates; however, these amounts can vary significantly from year to year because the Company is self-insured.

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

We believe the following accounting estimates are the most critical to the understanding of our financial statements as they

could have the most significant effect on our reported results and require subjective or complex judgments by management.
Accounting principles generally accepted in the United States require us to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods
reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those
estimates. Refer to Note 1 in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 2022 Annual Report on Form 10-
K for information regarding our significant accounting policies.

Warranty and After-Sale Costs

Our products carry warranties that generally range from one to twenty years and are based on terms that are generally

accepted in the market. We provide for the estimated cost of product warranty at the time of sale. The product warranty provision is
estimated based upon warranty loss experience using actual historical failure rates and estimated costs of product replacement. The
variables used in the calculation of the provision are reviewed at least annually. At times, warranty issues may arise which are beyond
the scope of our historical experience. We provide for any such warranty issues as they become known and estimable. The
introduction of additional technology, such as our ORION cellular radios, electronic meters and registration, have generally caused
our annual warranty claims rates to increase over time. While our warranty costs have historically been within calculated estimates, it
is possible that future warranty costs could differ significantly from those estimates. At December 31, 2022 and 2021, our reserve for
product warranties was $9.6 million and $12.9 million, respectively.

Income Taxes

The Company operates in numerous taxing jurisdictions and is subject to regular examinations by U.S. federal, state and non-

U.S. taxing authorities. Our income tax provision for income taxes is based on the interpretation of applicable taxing laws in the
jurisdictions in which we conduct business. Due to the ambiguity of tax laws within each jurisdiction, the judgment involved in
evaluating and estimating certain tax positions, and how these estimates impact other taxing considerations, it is possible that our
income tax positions could differ from actual payments made or benefits received. The Company annually reviews all uncertain tax
positions, which represent tax positions taken that are subject to varied interpretations of applicable tax law. Interest is accrued on all
unrecognized tax benefits and recorded as interest expense and penalties are recorded as operating expenses in the Consolidated
Statements of Operations. Accrued interest was approximately $0.1 million at both December 31, 2022 and 2021 and there were no
penalties accrued in either year.

The Company recognizes deferred tax assets and liabilities for differences between the financial statement and tax basis of
assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to
the periods in which the differences are expected to affect taxable income. The Company establishes valuation allowances against
certain deferred tax assets that are not likely to be realized. The Company recorded valuation allowances of $2.7 million and $2.2
million as of December 31, 2022 and 2021, respectively. The valuation allowance relates primarily to foreign net operating loss
carryforwards.

Goodwill and Intangible Assets

Goodwill and intangible assets arise through business acquisitions. The allocation of purchase price includes the use of

estimates in determining future cash flows, the allocation of future cash flows to identifiable intangibles, and their estimated useful
lives. If actual results differ from those estimates, it could result in future impairment. The Company assesses goodwill and
intangible assets for impairment on an annual basis, or more frequently if an event indicates potential impairment. Potential
impairment is first assessed using a qualitative assessment to determine if the fair value is more likely than not less than its carrying
value. If it is estimated through the qualitative analysis that fair value is less than carrying value, a quantitative assessment is
completed. This assessment uses estimates, including the estimate of future useful life, the amount and timing of future cash flows,
and the fair value of future operations. Any impairment charges are recorded in the period the impairment is determined. Multiple
factors can have an impact on future cash flows of a reporting unit, as such, it is possible that our estimates in evaluating impairment
could differ from future results.

We completed our impairment analysis for goodwill and intangible assets in the fourth quarter for the year ended
19
December 31, 2022. No impairment was noted and no adjustments were recorded to goodwill or intangible assets as a result of this
analysis.

OTHER MATTERS

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 with environmental control provisions and regulations

during 2022, 2021 and 2020 were not material.

See the “Special Note Regarding Forward Looking Statements” at the front of this Annual Report on Form 10-K and Part I,

Item 1A “Risk Factors” in this Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of risks and

uncertainties that could impact the Company's financial performance and results of operations.

MARKET RISKS

In the ordinary course of business, the Company is exposed to various market risks. The Company operates in an

environment where competition varies from moderate to strong. The Company believes it currently provides the leading technology

in water meters and radio systems for water utilities. A number of the Company's competitors in certain markets have greater

financial resources. As the global water metering market continues to adopt static metering technology, the number of competitors in

the North American market may increase. We believe new static metering market entrants lack brand recognition and product breadth

and do not have the appropriate utility sales channels to meaningfully compete in the North American market. In addition, the

market's level of acceptance of the Company's newer product offerings, including real-time water quality monitoring and BEACON

SaaS, may have a significant effect on the Company's results of operations. As a result of significant research and development

activities, the Company enjoys favorable patent positions for several of its products.

Income Taxes

The Company operates in numerous taxing jurisdictions and is subject to regular examinations by U.S. federal, state and non-

U.S. taxing authorities. Our income tax provision for income taxes is based on the interpretation of applicable taxing laws in the

jurisdictions in which we conduct business. Due to the ambiguity of tax laws within each jurisdiction, the judgment involved in

evaluating and estimating certain tax positions, and how these estimates impact other taxing considerations, it is possible that our

income tax positions could differ from actual payments made or benefits received. The Company annually reviews all uncertain tax

positions, which represent tax positions taken that are subject to varied interpretations of applicable tax law. Interest is accrued on all

unrecognized tax benefits and recorded as interest expense and penalties are recorded as operating expenses in the Consolidated

Statements of Operations. Accrued interest was approximately $0.1 million at both December 31, 2022 and 2021 and there were no

penalties accrued in either year.

The Company recognizes deferred tax assets and liabilities for differences between the financial statement and tax basis of

assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to

the periods in which the differences are expected to affect taxable income. The Company establishes valuation allowances against

certain deferred tax assets that are not likely to be realized. The Company recorded valuation allowances of $2.7 million and $2.2

million as of December 31, 2022 and 2021, respectively. The valuation allowance relates primarily to foreign net operating loss

carryforwards.

Goodwill and Intangible Assets

Goodwill and intangible assets arise through business acquisitions. The allocation of purchase price includes the use of

estimates in determining future cash flows, the allocation of future cash flows to identifiable intangibles, and their estimated useful

lives. If actual results differ from those estimates, it could result in future impairment. The Company assesses goodwill and

intangible assets for impairment on an annual basis, or more frequently if an event indicates potential impairment. Potential

impairment is first assessed using a qualitative assessment to determine if the fair value is more likely than not less than its carrying
value. If it is estimated through the qualitative analysis that fair value is less than carrying value, a quantitative assessment is
completed. This assessment uses estimates, including the estimate of future useful life, the amount and timing of future cash flows,
and the fair value of future operations. Any impairment charges are recorded in the period the impairment is determined. Multiple
factors can have an impact on future cash flows of a reporting unit, as such, it is possible that our estimates in evaluating impairment
could differ from future results.

We completed our impairment analysis for goodwill and intangible assets in the fourth quarter for the year ended
December 31, 2022. No impairment was noted and no adjustments were recorded to goodwill or intangible assets as a result of this
analysis.

OTHER MATTERS

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 with environmental control provisions and regulations
during 2022, 2021 and 2020 were not material.

See the “Special Note Regarding Forward Looking Statements” at the front of this Annual Report on Form 10-K and Part I,

Item 1A “Risk Factors” in this Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of risks and
uncertainties that could impact the Company's financial performance and results of operations.

MARKET RISKS

In the ordinary course of business, the Company is exposed to various market risks. The Company operates in an
environment where competition varies from moderate to strong. The Company believes it currently provides the leading technology
in water meters and radio systems for water utilities. A number of the Company's competitors in certain markets have greater
financial resources. As the global water metering market continues to adopt static metering technology, the number of competitors in
the North American market may increase. We believe new static metering market entrants lack brand recognition and product breadth
and do not have the appropriate utility sales channels to meaningfully compete in the North American market. In addition, the
market's level of acceptance of the Company's newer product offerings, including real-time water quality monitoring and BEACON
SaaS, may have a significant effect on the Company's results of operations. As a result of significant research and development
activities, the Company enjoys favorable patent positions for several of its products.

The Company's ability to generate operating income and to increase profitability depends somewhat on the general conditions

of the United States and foreign economies, including to some extent such things as the length and severity of global economic
downturns; the timing and size of governmental programs such as annual federal funding and periodic stimulus fund programs, as well
as the impact of government budget cuts or partial shutdowns of governmental operations; international or civil conflicts that affect
international trade; the ability of municipal water utility customers to authorize and finance purchases of the Company's products; the
Company's ability to obtain financing; housing starts in the United States; and overall industrial activity. In addition, changes in
governmental laws and regulations, particularly laws dealing with the content or handling of materials, customs or trade practices,
may impact the results of operations. These factors are largely beyond the Company's control and depend on the economic condition
and regulatory environment of the geographic region of the Company's operations.

The Company relies on single suppliers for certain castings and components in several of its product lines. Although

alternate sources of supply exist for these items, the loss of certain suppliers could temporarily disrupt operations in the short term.
The Company attempts to mitigate these risks by working closely with key suppliers, purchasing minimal amounts from alternative
suppliers and by purchasing business interruption insurance where appropriate.

The Company's foreign currency risk relates to the sales of products to foreign customers and purchases of material from
foreign vendors. The Company uses lines of credit with U.S. and European banks to offset currency exposure related to European
receivables and other monetary assets. The Company believes the effect of a change in foreign currency rates will not have a material
adverse effect on the Company's financial position or results of operations, either from a cash flow perspective or on the financial
statements as a whole.

The Company typically does not hold or issue derivative instruments and has a policy specifically prohibiting the use of such

instruments for trading purposes.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

20
Information required by this Item is set forth in Part II, Item 7 “Management's Discussion and Analysis of Financial

Condition and Results of Operations” under the heading “Market Risks” in this 2022 Annual Report on Form 10-K.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

BADGER METER, INC.

Management's Annual Report on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial

reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company's internal control over

financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of

changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of

December 31, 2022 using the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (2013 Framework). Based on this assessment, the Company's management believes that,

as of December 31, 2022, the Company's internal control over financial reporting was effective based on those criteria.

Ernst & Young LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements

included in this Annual Report on Form 10-K and, as part of its audit, has issued an attestation report, included herein, on the

effectiveness of the Company's internal control over financial reporting.

The Company's ability to generate operating income and to increase profitability depends somewhat on the general conditions

of the United States and foreign economies, including to some extent such things as the length and severity of global economic

downturns; the timing and size of governmental programs such as annual federal funding and periodic stimulus fund programs, as well

as the impact of government budget cuts or partial shutdowns of governmental operations; international or civil conflicts that affect

international trade; the ability of municipal water utility customers to authorize and finance purchases of the Company's products; the

Company's ability to obtain financing; housing starts in the United States; and overall industrial activity. In addition, changes in

governmental laws and regulations, particularly laws dealing with the content or handling of materials, customs or trade practices,

may impact the results of operations. These factors are largely beyond the Company's control and depend on the economic condition

and regulatory environment of the geographic region of the Company's operations.

The Company relies on single suppliers for certain castings and components in several of its product lines. Although

alternate sources of supply exist for these items, the loss of certain suppliers could temporarily disrupt operations in the short term.

The Company attempts to mitigate these risks by working closely with key suppliers, purchasing minimal amounts from alternative

suppliers and by purchasing business interruption insurance where appropriate.

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. The Company does not hold significant amounts of precious metals. The price and

availability of raw materials is influenced by economic and industry conditions, including supply and demand factors that are difficult

to anticipate and cannot be controlled by the Company. Commodity risk is managed by keeping abreast of economic conditions and

locking in purchase prices for quantities that correspond to the Company's forecasted usage.

The Company's foreign currency risk relates to the sales of products to foreign customers and purchases of material from

foreign vendors. The Company uses lines of credit with U.S. and European banks to offset currency exposure related to European

receivables and other monetary assets. The Company believes the effect of a change in foreign currency rates will not have a material
adverse effect on the Company's financial position or results of operations, either from a cash flow perspective or on the financial
statements as a whole.

The Company typically does not hold or issue derivative instruments and has a policy specifically prohibiting the use of such

instruments for trading purposes.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this Item is set forth in Part II, Item 7 “Management's Discussion and Analysis of Financial

Condition and Results of Operations” under the heading “Market Risks” in this 2022 Annual Report on Form 10-K.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

BADGER METER, INC.

Management's Annual Report on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company's internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of

December 31, 2022 using the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 Framework). Based on this assessment, the Company's management believes that,
as of December 31, 2022, the Company's internal control over financial reporting was effective based on those criteria.

Ernst & Young LLP, an independent registered public accounting firm, has audited the Consolidated Financial Statements

included in this Annual Report on Form 10-K and, as part of its audit, has issued an attestation report, included herein, on the
effectiveness of the Company's internal control over financial reporting.

BADGER METER, INC.

23
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Badger Meter, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Badger Meter, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria

established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Badger Meter, Inc. (the Company) maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated
statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended
December 31, 2022, and the related notes and our report dated February 22, 2023, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material

weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
21
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the

assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being

made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance

regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a

material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of

changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Milwaukee, Wisconsin

February 22, 2023

BADGER METER, INC.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Badger Meter, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Badger Meter, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria

established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway

Commission (2013 framework) (the COSO criteria). In our opinion, Badger Meter, Inc. (the Company) maintained, in all material

respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated

statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended

December 31, 2022, and the related notes and our report dated February 22, 2023, expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its

assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual

Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control

over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be

independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material

weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Milwaukee, Wisconsin
February 22, 2023

BADGER METER, INC.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Badger Meter, Inc.
25

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Badger Meter, Inc. (the Company) as of December 31,

2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each
of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion

on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the

critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by

communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures

to which it relates.

Warranty and After-Sale Costs Reserve

Description of the

As described in Note 1 to the consolidated financial statements, the Company estimates and records provisions

Matter

for warranties and other after-sale costs. Warranty provisions are recorded in the period of sale, using

historical claims data revised for recent trending and expectations to estimate future warranty costs. After-sale

costs represent costs expected to be incurred related to specifically identified product issues as well as activities

outside the written warranty policy and are estimated by the Company based on the individual facts and

circumstances. The Company’s accrued liability was $9.6 million as of December 31, 2022, representing its

best estimate of the expected warranty and after-sale costs.

Auditing management's estimates for warranty and after-sale costs involved significant auditor judgment

because the reserve for warranty and after-sale costs requires the Company to estimate future claims. The

calculation to estimate future claims includes a number of inputs and assumptions, the most significant of

which include the number and type of claims, an evaluation of warranty trends, consideration of product

developments, and estimates of future costs to replace or repair specifically identified items.

BADGER METER, INC.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Badger Meter, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Badger Meter, Inc. (the Company) as of December 31,

2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each

of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial

statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the

Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period

ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal

Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013

framework) and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion

on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are

required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures
to which it relates.

Description of the
Matter

How We Addressed
the Matter in Our
Audit

Warranty and After-Sale Costs Reserve

As described in Note 1 to the consolidated financial statements, the Company estimates and records provisions

for warranties and other after-sale costs. Warranty provisions are recorded in the period of sale, using
historical claims data revised for recent trending and expectations to estimate future warranty costs. After-sale
costs represent costs expected to be incurred related to specifically identified product issues as well as activities
outside the written warranty policy and are estimated by the Company based on the individual facts and
circumstances. The Company’s accrued liability was $9.6 million as of December 31, 2022, representing its
best estimate of the expected warranty and after-sale costs.
Auditing management's estimates for warranty and after-sale costs involved significant auditor judgment
because the reserve for warranty and after-sale costs requires the Company to estimate future claims. The
calculation to estimate future claims includes a number of inputs and assumptions, the most significant of
which include the number and type of claims, an evaluation of warranty trends, consideration of product
developments, and estimates of future costs to replace or repair specifically identified items.

We evaluated the design and tested the operating effectiveness of internal controls over the Company's

warranty and after-sale costs reserve process, including management's assessment of the assumptions and data
underlying the projection of future warranty and after-sale costs.
Our substantive audit procedures included, among others, evaluating the significant assumptions discussed
above and the accuracy and completeness of the underlying data used in management's warranty and after-sales
costs reserve calculation. We evaluated the historical activity used to develop the lag calculation, including
reviewing the data for any developing trends in the claims data, considered the impact of product developments
on the calculation, and evaluated the cost build up for any specific reserve items, including procedures to
support the completeness of the number and type of products impacted and the estimated future cost to repair
or replace the products. We assessed the historical accuracy of management's estimates by comparing the
warranty and after-sale costs reserve in prior years to the actual claims paid in the subsequent years. We
assessed management’s methodology and tested the valuation of the warranty and after-sale costs reserve by
developing an independent expectation for the reserve based on the historical amounts recorded as a percentage
of sales and compared our expectation to the amount recorded by management. We evaluated the completeness
of the reserve estimate for known warranty claims or product issues based on our review of after-sales costs
and through inquiries of operational and executive management and evaluated whether specific product issues
were appropriately considered in the determination of the warranty and after-sale costs reserve.

/s/ Ernst & Young LLP

We have served as Badger Meter, Inc.’s auditor since 1927.

Milwaukee, Wisconsin
February 22, 2023

BADGER METER, INC.

Consolidated Balance Sheets

Assets

Current assets:

Cash
Receivables
Inventories:

Finished goods
Work in process
Raw materials

Total inventories

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, at cost

Land and improvements
Building and improvements
Machinery and equipment

Less accumulated depreciation

Net property, plant and equipment

Intangible assets, at cost less accumulated amortization
Other assets
Deferred income taxes
Goodwill
Total assets

Liabilities and Shareholders’ equity

Current liabilities:

Payables
Accrued compensation and employee benefits
Warranty and after-sale costs
Other current liabilities

Total current liabilities

Other long-term liabilities
Deferred income taxes
Accrued non-pension postretirement benefits
Other accrued employee benefits
Commitments and contingencies (Note 6)
Shareholders’ equity:

Common stock, $1 par, authorized 40,000,000 shares, issued
37,221,098 shares in 2022 and 2021
Capital in excess of par value
Reinvested earnings
Accumulated other comprehensive (loss) income
Less: Treasury stock, at cost, 7,928,071 shares in 2022 and

7,971,367 shares in 2021

Total shareholders’ equity
Total liabilities and shareholders’ equity

See accompanying notes.

24
28

December 31,

2022

2021

(In thousands)

138,052
76,651

31,350
23,577
64,929
119,856
13,273
347,832

8,947
70,845
141,153
220,945
(147,403 )
73,542
53,607
14,048
12,757
101,261
603,047

71,440
20,513
9,606
8,753
110,312
37,808
4,648
3,917
3,940

37,221
53,282
395,155
(5,983 )

(37,253 )
442,422
603,047

87,174
65,866

25,991
24,747
48,873
99,611
8,709
261,360

9,183
71,103
136,510
216,796
(138,746 )
78,050
64,176
15,390
7,529
104,313
530,818

41,859
20,644
12,868
6,775
82,146
29,804
5,385
5,214
5,199

37,221
49,224
353,535
136

(37,046 )
403,070
530,818

BADGER METER, INC.

Consolidated Statements of Operations

Net sales
Cost of sales
Gross margin
Selling, engineering and administration
Operating earnings
Interest (income) expense, net
Other pension and postretirement costs
Earnings before income taxes
Provision for income taxes
Net earnings
Earnings per share:

Basic
Diluted

Shares used in computation of earnings per share:

Basic
Impact of dilutive securities
Diluted

$
$

Years ended December 31,

2022

2021

2020

(In thousands except per share amounts)

565,568 $
345,598
219,970
132,675
87,295
(552 )
130
87,717
21,221
66,496 $

2.28 $
2.26 $

29,218
158
29,376

505,198 $
299,714
205,484
126,761
78,723
(20 )
120
78,623
17,739
60,884 $

2.09 $
2.08 $

29,144
194
29,338

425,544
257,295
168,249
103,093
65,156
30
145
64,981
15,638
49,343

1.70
1.69

29,052
178
29,230

See accompanying notes.

BADGER METER, INC.

Consolidated Statements of Comprehensive Income

Net earnings
Other comprehensive income (loss):

Foreign currency translation adjustments
Pension and postretirement benefits, net of tax

Comprehensive income

2022

Years ended December 31,
2021
(In thousands)

2020

66,496 $

60,884 $

49,343

(6,719 )
600
60,377 $

(1,516 )
339
59,707 $

1,096
(208 )
50,231

See accompanying notes.

25
29

BADGER METER, INC.

Consolidated Statements of Cash Flows

Operating activities:
Net earnings

Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation
Amortization
Deferred income taxes
Noncurrent employee benefits
Stock-based compensation expense

Changes in:

Receivables
Inventories
Payables
Prepaid expenses and other assets
Other liabilities
Total adjustments

Net cash provided by operations
Investing activities:

Property, plant and equipment expenditures
Proceeds from company owned life insurance plans
Acquisitions, net of cash acquired
Net cash used for investing activities
Financing activities:

Net decrease in short-term debt
Payment of contingent acquisition consideration
Dividends paid
Proceeds from exercise of stock options
Repurchase of common stock for treasury stock
Issuance of treasury stock

Net cash used for financing activities
Effect of foreign exchange rates on cash
Increase in cash and cash equivalents
Cash and cash equivalents – beginning of period
Cash and cash equivalents – end of period
Supplemental disclosure of cash flow information:

Cash paid during the year for:

Income taxes
Interest

Property, plant and equipment acquired through operating lease
Property, plant and equipment accrued and unpaid

2022

Years ended December 31,
2021
(In thousands)

2020

66,496 $

60,884 $

49,343

11,090
15,151
(5,619 )
(648 )
3,148

(11,328 )
(21,021 )
28,007
(10,557 )
7,732
15,955
82,451

(5,891 )
-
-
(5,891 )

-
-
(24,881 )
703
(427 )
-
(24,605 )
(1,077 )
50,878
87,174
138,052 $

11,291
16,571
(3,055 )
(234 )
2,330

(1,240 )
(13,633 )
7,005
(8,281 )
15,872
26,626
87,510

(6,746 )
596
(45,273 )
(51,423 )

-
-
(22,155 )
2,036
(460 )
72
(20,507 )
(679 )
14,901
72,273
87,174 $

12,253
12,963
(3,082 )
206
1,415

3,036
5,129
(391 )
(3,522 )
12,228
40,235
89,578

(9,059 )
-
(29,134 )
(38,193 )

(4,600 )
(1,001 )
(20,340 )
1,058
(3,116 )
180
(27,819 )
(164 )
23,402
48,871
72,273

24,038 $
- $
2,283 $
1,517 $

19,981 $
118 $
- $
- $

17,995
91
-
-

$
$
$
$

See accompanying notes.

26
31

BADGER METER, INC.

Consolidated Statements of Shareholders’ Equity

Common
Stock at $1
par value*

Capital in
excess of
par value

Years ended December 31,
Accumulated
other
comprehensive
income
(loss)
(In thousands except share and per share amounts)

Employee
benefit
stock

Reinvested
earnings

Treasury

stock (at cost)

Total

Balance, December 31, 2019
Net earnings
Pension and postretirement benefits
(net of $69 tax effect)
Foreign currency translation
Cash dividends of $0.70 per share
Stock options exercised
ESSOP transactions
Stock-based compensation
Purchase of common stock for treasury stock
Issuance of treasury stock (22 shares)
Balance, December 31, 2020
Net earnings
Pension and postretirement benefits
(net of ($112) tax effect)
Foreign currency translation
Cash dividends of $0.76 per share
Stock options exercised
Stock-based compensation
Purchase of common stock for treasury stock
Issuance of treasury stock (19 shares)
Balance, December 31, 2021
Net earnings
Pension and postretirement benefits
(net of ($197) tax effect)
Foreign currency translation
Cash dividends of $0.85 per share
Stock options exercised
Stock-based compensation
Purchase of common stock for treasury stock
Issuance of treasury stock (24 shares)
Balance, December 31, 2022

37,200 $
-

41,956 $
-

285,879 $
49,343

425 $
-

(154 ) $
-

(34,238 ) $ 331,068
49,343

-
-
-
21
-
-
-
-
37,221 $
-

-
-
-
-
-
-
-
37,221 $
-

-
-
-
-
-
-
-
37,221 $

-
-
-
877
280
1,415
-
436
44,964 $
-

-
-
-
1,622
2,330
-
308
49,224 $
-

-
-
-
581
3,148
-
329
53,282 $

-
-
(20,372 )
-
-
-
-
-
314,850 $
60,884

-
-
(22,199 )
-
-
-
-
353,535 $
66,496

-
-
(24,876 )
-
-
-
-
395,155 $

(208 )
1,096
-
-
-
-
-
-
1,313 $
-

339
(1,516 )
-
-
-
-
-
136 $
-

600
(6,719 )
-
-
-
-
-
(5,983 ) $

-
-
-
-
154
-

-
- $
-

-
-
-
-
-

-
- $
-

-
-
-
-
-

-
- $

-
-
-
160
-
-
(3,116 )
105

(208 )
1,096
(20,372 )
1,058
434
1,415
(3,116 )
541
(37,089 ) $ 361,259
60,884

-
-
-
414
-
(460 )
89

339
(1,516 )
(22,199 )
2,036
2,330
(460 )
397
(37,046 ) $ 403,070
66,496

-
-
-
122
-
(427 )
98

600
(6,719 )
(24,876 )
703
3,148
(427 )
427
(37,253 ) $ 442,422

* Each common share of stock equals $1 par value; therefore, the number of common shares is the same as the dollar value.

See accompanying notes.

27
32

BADGER METER, INC.

Notes to Consolidated Financial Statements

Note 1 Basis of Presentation and Accounting Policies

Profile

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, software and related
technologies, and water quality monitoring solutions to water utilities (utility water) and sales of meters and other sensing
instruments, valves, software and other solutions for industrial applications in water, wastewater, and other industries (flow
instrumentation). The Company estimates that over 90% of its products are used in water related applications.

Utility water, the largest sales product line, 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, enabling operating efficiencies and engaging with their end consumers. 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,
static 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, 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.

Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All

intercompany transactions have been eliminated in consolidation.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of ninety days or less to be cash

equivalents.

Receivables

Receivables consist primarily of trade receivables. The Company does not require collateral or other security and

evaluates the collectability of its receivables based on a number of factors. An allowance for doubtful accounts is recorded for
significant past due receivable balances based on a review of the past due items and the customer's ability and likelihood to pay,
as well as applying a historical write-off ratio to the remaining balances. Changes in the Company's allowance for doubtful
accounts are as follows:

2022
2021
2020

Inventories

Balance at
beginning
of year

Provision and
reserve
adjustments

Write-offs less
recoveries

Balance at end
of year

697 $
552
224

(In thousands)
515 $
191
356

(33 ) $
(46 )
(28 )

1,179
697
552

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out
method. The Company estimates and records provisions for obsolete and excess inventories. Changes to the Company's
obsolete and excess inventories reserve are as follows:

2022
2021
2020

Property, Plant and Equipment

Balance at
beginning
of year

Net additions
charged to
earnings

Disposals

Balance at end
of year

6,078 $
6,400
5,440

(In thousands)
1,498 $
1,329
2,964

(895 ) $

(1,651 )
(2,004 )

6,681
6,078
6,400

Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the

respective assets by the straight-line method. The estimated useful lives of assets are: for land improvements, 15 years; for
buildings and improvements, 10 to 39 years; and for machinery and equipment, 3 to 20 years.

Capitalized Software and Hardware

Capitalized internal use software and hardware included in other assets in the Consolidated Balance Sheets were $4.8

million and $5.6 million at December 31, 2022 and 2021, respectively. These amounts are amortized on a straight-line basis
over the estimated useful lives of the software and/or hardware, ranging from 1 to 5 years. Amortization expense recognized
for the years ending December 31, 2022, 2021 and 2020 was $3.8 million, $4.5 million and $3.7 million, respectively.

Long-Lived Assets

Property, plant and equipment and identifiable intangible assets are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted
cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between
the fair value and carrying value of the asset or group of assets.

Intangible Assets

Intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 20 years.
The Company does not have any intangible assets deemed to have indefinite lives. Amortization expense was $8.6 million in
2022, $10.0 million in 2021 and $7.2 million in 2020. Amortization expense expected to be recognized is $8.0 million in 2023,

$7.9 in 2024, $7.5 million in 2025, $6.7 million in 2026, $6.1 million in 2027 and $17.4 million thereafter. The carrying value
and accumulated amortization by major class of intangible assets are as follows:

Technologies
Intellectual property
Non-compete agreements
Licenses
Customer lists
Customer relationships
Trade names
Total intangibles

Goodwill

December 31, 2022

December 31, 2021

Gross carrying
amount

Accumulated
amortization

Gross carrying
amount

Accumulated
amortization

58,504 $
6,857
691
650
8,058
38,602
15,880
129,242 $

(In thousands)

37,857 $
840
661
560
5,097
22,023
8,597
75,635 $

58,789 $
10,169
748
650
8,083
39,202
16,050
133,691 $

34,254
2,744
506
543
4,501
19,663
7,304
69,515

Goodwill is tested for impairment annually during the fourth quarter or more frequently if an event indicates that the

goodwill might be impaired. Potential impairment is identified by comparing the fair value of a reporting unit with its carrying
value. No adjustments were recorded to goodwill as a result of these tests during 2022, 2021 and 2020. Goodwill was $101.3
million at December 31, 2022, $104.3 million at December 31, 2021, and $88.7 million at December 31, 2020. The increase
from 2020 to 2021 resulted from the acquisition of ATi, headquartered in Collegeville, Pennsylvania in 2021. This acquisition
is further described in Note 3 “Acquisitions”.

Warranty and After-Sale Costs

The Company estimates and records provisions for warranties and other after-sale costs in the period in which the sale

is recorded, based on a lag factor and historical warranty claim experience. After-sale costs represent a variety of activities
outside of the written warranty policy, such as investigation of unanticipated issues after the customer has installed the product
or analysis of water quality issues. Changes in the Company's warranty and after-sale costs reserve are as follows:

Balance at
beginning
of year

Provision of
acquired business

Net additions
charged to
earnings
(In thousands)

Costs
incurred

Balance at end
of year

2022
2021
2020

12,868 $
11,617
5,583

- $
-
500

5,624 $
5,856
7,855

(8,886 ) $
(4,605 )
(2,321 )

9,606
12,868
11,617

Research and Development

Research and development costs are charged to expense as incurred and amounted to $15.8 million in 2022, $14.7

million in 2021 and $11.6 million in 2020.

Healthcare

The Company estimates and records provisions for healthcare claims incurred but not reported, based on medical cost

trend analysis, reviews of subsequent payments made and estimates of unbilled amounts.

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive loss at December 31, 2022 are as follows:

(In thousands)
Balance at beginning of period
Other comprehensive loss before reclassifications
Amounts reclassified from accumulated other comprehensive income, net
of tax of ($197)
Net current period other comprehensive loss, net of tax
Accumulated other comprehensive loss

Unrecognized
pension and
postretirement
benefits

Foreign
currency

Total

394 $
-

600
600
994 $

(258 ) $

(6,719 )

-
(6,719 )
(6,977 ) $

136
(6,719 )

600
(6,119 )
(5,983 )

Reclassifications out of accumulated other comprehensive income during 2022 are immaterial.

Components of accumulated other comprehensive income at December 31, 2021 are as follows:

(In thousands)
Balance at beginning of period
Other comprehensive loss before reclassifications
Amounts reclassified from accumulated other comprehensive income, net
of tax of ($112)
Net current period other comprehensive loss, net of tax
Accumulated other comprehensive income

Unrecognized
pension and
postretirement
benefits

Foreign
currency

Total

55 $
-

339
339
394 $

1,258 $
(1,516 )

-
(1,516 )

(258 ) $

1,313
(1,516 )

339
(1,177 )
136

Reclassifications out of accumulated other comprehensive income during 2021 were immaterial.

Use of Estimates

The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”)

requires management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Fair Value Measurements of Financial Instruments

The carrying amounts of cash, receivables and payables in the financial statements approximate their fair values due to

the short-term nature of these financial instruments. Included in other assets are insurance policies on various individuals who
were associated with the Company. The carrying amounts of these insurance policies approximate their fair value.

Subsequent Events

The Company evaluates subsequent events at the date of the balance sheet as well as conditions that arise after the

balance sheet date but before the financial statements are issued. The effects of conditions that existed at the balance sheet date
are recognized in the financial statements. Events and conditions arising after the balance sheet date but before the financial
statements are issued are evaluated to determine if disclosure is required to keep the financial statements from being
misleading. To the extent such events and conditions exist, if any, disclosures are made regarding the nature of events and the
estimated financial effects for those events and conditions. For purposes of preparing the accompanying consolidated financial
statements and the notes to these financial statements, the Company evaluated subsequent events through the date the
accompanying financial statements were issued.

Effective January 1, 2023, the Company acquired 100% of the outstanding stock of Syrinix Ltd. ("Syrinix"),

headquartered in the United Kingdom, a provider of high-frequency pressure monitoring and leak detection solutions. The
purchase consideration, net of cash acquired, was approximately $18.0 million. The Syrinix acquisition will be accounted for
under the purchase method, and accordingly, the results of operations will be included in the Company's financial statements
from the date of acquisition. The acquisition is not expected to have a material impact on the Company's consolidated financial
statements and notes thereto.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for
income taxes by removing certain exceptions to the general principles in Topic 740 and modifies the existing guidance to enable
more consistent application. This guidance is effective for fiscal years beginning after December 15, 2020, including interim
periods within that fiscal year with early adoption being permitted. The Company adopted ASU No. 2019-12 on January 1, 2021,
the impact of which was not significant to the Company.

In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805), Accounting for Contract
Assets and Contract Liabilities with Customers," which requires contract assets and contract liabilities acquired in a business
combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, "Revenue from
Contracts with Customers." The guidance is effective for fiscal years beginning after December 15, 2022. The Company does
not currently expect a material impact to its consolidated financial statements or disclosures from the adoption of this standard.

Note 2 Common Stock

Common Stock

The authorized common stock of the Company as of December 31, 2022 consisted of 40,000,000 shares of common

stock, $1 par value, of which 37,221,098 were issued and outstanding as of December 31, 2022 and 2021, respectively.

Stock Options

There were no anti-dilutive options in 2022 and 2021.

Note 3 Acquisitions

Acquisitions are accounted for under the purchase method, and accordingly, the results of operations were included in

the Company's financial statements from the date of acquisition. The acquisitions did not have a material impact on the
Company's consolidated financial statements or the notes thereto.

Effective January 1, 2021, the Company acquired 100% of the outstanding stock of ATi, headquartered in

Collegeville, Pennsylvania, a provider of water quality monitoring systems.

The total purchase consideration for ATi, net of cash acquired, was $44.0 million. The Company's allocation of the

purchase price at December 31, 2021 included $3.9 million of receivables, $3.9 million of inventory, $2.5 million of other
assets, $21.0 million of intangibles and $16.4 million of goodwill that is deductible for tax purposes. The intangible assets
acquired are primarily customer relationships, developed technology and trademarks with estimated average useful lives of 12
to 15 years. The Company also assumed $1.4 million of accounts payable, $0.6 million of deferred tax liabilities and $1.7
million of other liabilities as part of the acquisition. The allocation of the purchase price to the assets acquired was based upon
the estimated fair values at the date of acquisition. As of December 31, 2021, the Company had completed its analysis for
estimating the fair value of the assets acquired with no additional adjustments.

Effective November 2, 2020, the Company acquired 100% of the outstanding stock of s::can headquartered in Vienna,

Austria. s::can specializes in optical water quality sensing solutions that provide real-time measurement of a variety of
parameters in water and wastewater utilizing in-line monitoring systems and other applications.

The total purchase consideration for s::can, net of cash acquired, was $30.5 million, inclusive of $1.3 million of

working capital adjustments. The Company's allocation of the purchase price at December 31, 2021 included $2.6 million of
receivables, $4.3 million of inventory, $1.2 million of other assets, $12.7 million of intangibles and $17.7 million of goodwill
that is not deductible for tax purposes. The intangible assets acquired are primarily customer relationships and developed
technology with an estimated average useful life of 12 years. The Company also assumed $3.5 million of accounts payable,
$3.2 million of deferred tax liabilities and $1.3 million of other liabilities as part of the acquisition. The allocation of the
purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of December 31,
2021, the Company had completed its analysis for estimating the fair value of the assets acquired with no additional
adjustments.

Note 4 Short-term Debt and Credit Lines

The Company did not have short-term debt at December 31, 2022 and 2021. On July 8, 2021, the Company entered

into a new credit agreement. The Company amended its credit agreement to modify the benchmark interest rate on January 20,
2023. The credit agreement includes a $150.0 million multi-currency line of credit that supports commercial paper (up to
$100.0 million). The facility includes several features that enhance the Company’s financial flexibility including an increase
feature, acquisition holiday and favorable financial covenants. The Company was in compliance with all covenants as of
December 31, 2022. The Company had $156.6 million of unused credit lines available at December 31, 2022.

Note 5 Stock Compensation

As of December 31, 2022, the Company has an Omnibus Incentive Plan under which 1,000,000 shares are reserved for
restricted stock, performance shares and stock options grants for employees, as well as stock grants for directors. The plan was
approved in 2021 and replaced all prior stock-based plans except for shares and options previously issued under those plans.
As of December 31, 2022 and 2021 there were 938,147 and 994,119 shares, respectively, of the Company’s Common Stock
available for grant under the 2021 Omnibus Incentive Plan. The Company recognizes the cost of stock-based awards in net
earnings for all of its stock-based compensation plans on a straight-line basis over the service period of the awards. The
following sections describe the four types of grants in more detail.

Stock Options

The Company estimates the fair value of its option awards using the Black-Scholes option-pricing formula, and

records compensation expense for stock options ratably over the stock option grant’s vesting period. Stock option
compensation expense recognized by the Company for the years ended December 31, 2022, 2021 and 2020 was $0.3 million,
$0.4 million and $0.4 million, respectively. No new stock options were granted in 2022 and 2021.

The following table summarizes the transactions of the Company’s stock option plans for the three-year period ended

December 31, 2022:

Number of shares

Weighted-
average
exercise price

Options outstanding - December 31, 2019
Options granted
Options exercised
Options forfeited
Options outstanding - December 31, 2020
Options exercised
Options outstanding - December 31, 2021
Options exercised
Options forfeited
Options outstanding - December 31, 2022
Exercisable options —
December 31, 2020
December 31, 2021
December 31, 2022

337,332 $
41,807
(55,716 )
(7,229 )
316,194 $
(88,932 )
227,262 $
(25,986 )
(4,529 )
196,747 $

235,829 $
170,484
163,316

The following assumptions were used for valuing options granted in the year ended December 31, 2020:

Per share fair value of options granted during the period
Risk-free interest rate
Dividend yield
Volatility factor
Weighted-average expected life in years

31.82
62.76
18.99
50.19
37.75
22.89
43.56
27.04
60.82
45.35

30.82
38.31
42.23

17.49

0.64 %
1.05 %
30.0 %
7.0

The expected life was based on historical exercise behavior and the projected exercise of unexercised stock options.

The risk-free interest rate was based on the U.S. Treasury yield curve in effect on the date of grant for the respective expected
life of the option. The expected dividend yield was based on the expected annual dividends divided by the grant date market

value of the Company’s Common Stock. The expected volatility was based on the historical volatility of the Company’s
Common Stock.

The weighted-average contractual life remaining for options outstanding as of December 31, 2022 was 4.3 years.

The following table summarizes the aggregate intrinsic value related to options exercised, outstanding and exercisable

as of and for the years ended December 31:

Exercised
Outstanding
Exercisable

2022

2021
(In thousands)

2020

2,175 $
12,529
10,910

7,085
14,316
11,635

3,054
17,805
14,913

As of December 31, 2022, the unrecognized compensation cost related to stock options was approximately $0.4

million, which will be recognized over a weighted average period of 1.8 years.

Director Stock Grant

Non-employee directors receive an annual stock award of the Company’s Common Stock under the 2021 Omnibus
Incentive Plan. The annual stock award for 2022 was $64,000. The Company values stock grants for directors at the closing
price of the Company’s stock on the day the grant was awarded. The Company records compensation expense for this plan
ratably over the annual service period beginning May 1. Director stock compensation expense recognized by the Company for
the years ended December 31, 2022 was $0.5 million compared to $0.3 million in 2021 and $0.4 million in 2020. As of
December 31, 2022, the unrecognized compensation cost related to the director stock award that is expected to be recognized
over the remaining four months is estimated to be approximately $0.2 million.

Restricted Stock

The Company periodically issues nonvested shares of the Company's Common Stock to certain eligible employees.

The Company values restricted stock on the closing price of the Company's stock on the day the grant was awarded. The
Company records compensation expense for this plan ratably over the vesting periods. Restricted stock compensation expense
recognized by the Company for the year ended December 31, 2022 was $1.6 million compared to $1.4 million in 2021 and $1.0
million in 2020.

The fair value of nonvested shares is determined based on the market price of the shares on the grant date.

Nonvested at December 31, 2019
Granted
Vested
Forfeited
Nonvested at December 31, 2020
Granted
Vested
Forfeited
Nonvested at December 31, 2021
Granted
Vested
Forfeited
Nonvested at December 31, 2022

Fair value
per share

64,480 $
20,758
(25,044 )
(2,645 )
57,549 $
17,430
(16,528 )
(1,384 )
57,067 $
21,637
(23,302 )
(4,327 )
51,075 $

48.21
64.19
39.87
54.35
57.33
99.90
49.31
58.68
72.62
97.41
66.87
86.53
84.85

As of December 31, 2022, there was $2.2 million of unrecognized compensation cost related to nonvested restricted

stock that is expected to be recognized over a weighted average period of 1.8 years.

Performance Share Units

Beginning in 2021, the Company periodically issues performance share units to certain eligible employees. Recipients

of performance share grants are eligible to receive shares of our common stock depending upon the level of our total adjusted
return on invested capital (ROIC) and adjusted free cash flow conversion as measured over a three-year performance period.
The number of shares earned for awards granted in 2021 and 2022 will range from 50% to 200% of the granted number of
performance shares for the three-year performance period ending December 31, 2023 and December 31, 2024, respectively, and
will vest, to the extent earned, in the fiscal quarter following the end of the applicable three-year performance period.
Performance share compensation expense recognized by the Company for the year ended December 31, 2022 was $1.2 million
compared to $0.6 million in 2021.

A summary of performance share activity for the two years ended December 31 is as follows:

Nonvested at December 31, 2020
Granted
Adjustment for expected performance results
Nonvested at December 31, 2021
Granted
Adjustment for expected performance results
Forfeited
Nonvested at December 31, 2022

Performance
Shares

Weighted
Average Grant
Date Fair Value
—
100.37
100.37
100.37
97.62
97.62
99.43
98.92

— $

14,748
7,374
22,122 $
16,870
6,746
(2,892 )
42,846 $

As of December 31, 2022, there was $2.4 million of unrecognized compensation cost related to nonvested performance

share units that is expected to be realized over a weighted average period of 1.8 years.

Note 6 Commitments and Contingencies

Commitments

The Company makes commitments in the normal course of business. The Company rents equipment, vehicles and

facilities under operating leases, some of which contain renewal options. Total rental expense charged to operations under all
operating leases was $3.5 million in 2022, and $3.1 million in 2021 and 2020. The Company’s lease commitments and future
minimum lease payments are discussed in Note 12 “Leases.”

Contingencies

In the normal course of business, the Company is named in legal proceedings. There are currently no material legal

proceedings pending with respect to the Company.

The Company is subject to contingencies related to environmental laws and regulations. A future change in
circumstances with respect to 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 with environmental control
provisions and regulations during 2022, 2021 and 2020 were not material.

The Company relies on single suppliers for most brass castings and certain resin and electronic subassemblies in
several of its product lines. The Company believes these items would be available from other sources, but that the loss of
certain suppliers could 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 attempts to mitigate these risks by working closely with key suppliers,
purchasing minimal amounts from alternative suppliers and by purchasing business interruption insurance where appropriate.

The Company reevaluates its exposures on a periodic basis and makes adjustments to reserves as appropriate.

Note 7 Employee Benefit Plans

The Company maintains supplemental non-qualified plans for certain officers and other key employees. The expense
for these plans was not material for 2022, 2021 or 2020. The discount rate used to measure the net periodic pension cost was
2.61% for 2022, 2.08% for 2021 and 2.87% for 2020. The amount accrued was $0.7 million and $0.6 million as of
December 31, 2022 and 2021, respectively.

The Company also maintains an Employee Savings and Stock Ownership Plan (“ESSOP”) for the majority of the U.S.

employees. The ESSOP includes a voluntary 401(k) savings plan that allows certain employees to defer up to 50% of their
income on a pretax basis subject to limits on maximum amounts. The Company matches 25% of each employee’s contribution,
with the match percentage applying to a maximum of 7% of each employee's salary. Compensation expense was $1.1 million
in 2022 compared to $0.9 million in 2021 and $0.5 million in 2020.

The Company also contributes to a defined contribution feature within the ESSOP plan. Contributions are
discretionary and are calculated as a percentage of eligible wages of the employee. Compensation expense under the defined
contribution feature was $3.7 million in 2022, $3.1 million in 2021 and $2.0 million in 2020.