2023 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
2022
2023
% Change
24.4
35.2
39.3
38.9
16.5
$ 565,568
$ 87,295
$ 66,496
$ 2.26
$ 0.85
$ 603,047
$ 138,052
$ 442,422
$ 76,560
1,976
$ 703,592
$ 118,049
$ 92,598
$ 3.14
$ 0.99
$ 716,919
$ 191,782
$ 516,482
$ 98,114
2,140
Net Sales
(in millions)
Net Earnings
(in millions)
Diluted EPS
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 free cash flow.
2 | 2023 BADGER METER ANNUAL REPORT
A MESSAGE TO OUR SHAREHOLDERS
Our success in delivering innovative and
comprehensive solutions to preserve and
protect the world’s most precious resource
resulted in another record-breaking year for
Badger Meter. With exceptional customer
service and strong execution by our teams
across the globe, we were able to surpass
$700 million in revenues, expand margins,
generate record cash flow and increase our
annual dividend for the 31st consecutive year,
enabling strong returns for shareholders.
Kenneth C. Bockhorst
Chairman, President and
Chief Executive Officer
This year marks my fifth anniversary as CEO of Badger Meter. It is a natural time to assess our strategy, evolution and results.
The Badger Meter team has done a tremendous job successfully evolving a good business into a great one by developing and
executing our comprehensive growth strategy. This evolution and performance create a strong foundation for future growth as we
continue to make investments in innovation, software, production capacity and acquisitions to build on the differentiated value we
deliver to customers to address the myriad of challenges faced by the water industry.
While the word “meter” is a part of the Badger Meter name, and remains a prominent element of our offering, our evolution and the
growth we have had - and will continue to deliver - goes far beyond the meter.
The macro challenges of labor shortages, aging infrastructure, regulation, compliance, water conservation and climate events
continue to drive much needed investment into critical water systems. The broad suite of Badger Meter customizable solutions
spanning metering, sensors, instruments, communication, software and support offerings is uniquely positioned to serve the
evolving needs of our utility and other customers.
The total available market for smart water globally is valued at approximately $20 billion - giving Badger Meter ample opportunity
to continue to grow and expand these offerings in our core U.S. market as well as other select regional markets across the globe.
It also gives us opportunities to add to our portfolio of solutions with other sensors and hardware-enabled software via organic
innovation and disciplined M&A investments.
At its core, our suite of solutions aids customers in capitalizing on the data and insights from hardware offerings across the water
ecosystem to drive operational value. This includes:
•
•
•
Improving efficiency - optimizing operations and situational awareness
Building resiliency - improving the ability to plan, predict and react to water events
Enabling sustainability - reducing water loss and engaging consumers
2023 BADGER METER ANNUAL REPORT | 3
This solution suite follows our “choice matters” customer mantra and spans smart measurement hardware, reliable
communications, data and analytics software as well as ongoing support and expertise.
Our smart measurement hardware encompasses the industry’s broadest range of products, providing each customer the ability
to tailor solutions to best meet their needs. For example, we provide a variety of metering technologies including both mechanical
and ultrasonic meters for flow measurement data. Our water quality monitoring solutions include both optical sensing and
electrochemical instruments that provide real-time, on-demand data parameters. We also provide high frequency and other
pressure, network monitoring and acoustic leak detection hardware that add valuable real-time monitoring data.
Our broad range of communication solutions provide customers with a choice of industry-leading options for communicating the
valuable data collected from their installed hardware. Utilities leverage our highly reliable, infrastructure-free ORION® Cellular
network offerings to make their data communication more efficient, scalable and secure.
Another critical component of our suite of solutions is our software. Our comprehensive and tailorable digital software provides the
insights and analytics that are critical to the holistic management of our customers’ water systems. The integrated EyeOnWater®
consumer engagement app provides end-users the power to manage their water usage and identify potential leaks with
visualization and configurable notifications.
Finally, we operate as true partners providing training, project management, technical support and other collaborative services for
customers.
We remain committed to evolving our strategies and suite of solutions to meet the needs of customers today and into the future.
ADVANCING OUR COMMITMENT TO CORPORATE RESPONSIBILITY
Sustainability is an essential part of our vision and culture, and we take our responsibility to all stakeholders seriously. We enable
sustainability by developing solutions that preserve and protect the world’s most precious resource - water. And we promote
sustainability by working to reduce our impact on the environment. This alignment of responsibilities is demonstrated in both our
strong financial and sustainability performance.
In 2023, we continued to make progress on our corporate responsibility journey. In summary:
• We published our 2022 sustainability report outlining the progress on the most impactful ESG matters and added new
disclosure enhancements, including employee engagement feedback as well as tax and political spending transparency.
• We achieved both absolute and intensity reductions in greenhouse gas (GHG) emissions in 2022, and in 2023 set a new,
more aggressive target of 50% intensity reduction by 2030 (from the 2020 baseline).
• We completed our first CDP Climate Change survey, providing added transparency to our climate-related risks
and opportunities.
We made progress on our ESG-related “SMART” goals, which are an important element to our annual performance assessment.
These include employee safety, minimizing regrettable turnover and reducing GHG emissions. Goals are cascaded throughout the
organization to ensure alignment and accountability.
4 | 2023 BADGER METER ANNUAL REPORT
•
Safety remains a top ESG priority and our goal for Total Case Incident Rate (TCIR) is zero. In 2023, global TCIR declined
to 0.40 from 0.59 in 2022 and 0.75 in 2021. While we are proud of our trendline in performance, most notably in relation to
industry averages, we recognize there is always more work to be done.
• Despite a still challenging U.S. labor market, our regrettable turnover decreased in 2023 to 8.3% compared to 10.0% in 2022
and 9.6% in 2021. We completed our third annual global engagement survey in 2023 as part of our continuous improvement
process to enable positive change and increase employee engagement.
• Our preliminary 2023 GHG emissions reflect further intensity reductions based on the execution of our action plans across the
organization.
In summary, I am proud of the way employees around the world are coming together to embrace our vision and our culture of
responsibility.
24%
20.8%
39%
106%
Sales
Growth
EBITDA
Margin(1)
EPS
Growth
Free
Cash Flow
Conversion(1)
RECORD FINANCIAL RESULTS
In 2023, we remained committed to the formula that has led to our success: focusing on our customers, offering innovative and
differentiated technologies, and driving operational excellence. Despite the continuation of external economic and geopolitical
challenges, we delivered record 2023 financial performance.
•
•
Total sales in 2023 were $703.6 million, an increase of 24% compared to $565.6 million in 2022. Sales into the utility water
sector grew 28% reflective of the continued market adoption of smart water advanced metering infrastructure (AMI) solutions,
water quality monitoring and BEACON® SaaS offerings. Flow instrumentation sales increased 7% over 2022 with a continuing
focus on water-related applications.
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) of $146.0 million(1) increased 29% year-over-year
as favorable product mix, higher volumes, the benefit of value-based pricing actions and continued leverage of selling,
engineering and administrative expenses as a percentage of revenues enabled us to improve EBITDA margins by 70 basis
points to 20.8%(1).
•
Fiscal 2023 EPS was $3.14, a 39% increase from the $2.26 delivered in 2022.
• We generated free cash flow of $98.1 million(1), representing 106%(1) conversion of net earnings into cash due to our strong
earnings foundation and continued solid working capital management. We finished 2023 with $191.8 million of cash and
cash equivalents.
(1) See last page for reconciliation of GAAP to Non-GAAP financial metrics.
2023 BADGER METER ANNUAL REPORT | 5
DISCIPLINED CAPITAL ALLOCATION
DRIVING LONG-TERM RETURNS
Strong cash flow is the currency we use to measure our success, affording us ample
opportunities to further accelerate our strategy and unlock incremental growth potential.
Our capital allocation priorities remain unchanged and include investments in organic growth,
dividends and attractive acquisitions.
•
In 2023 we increased our annual dividend rate by 20% to $1.08 per share. This marks the 31st
consecutive year of annual dividend increases.
• We invested capital to extend our manufacturing output, added automation, test equipment and capacity to
better serve our growing customer base.
• We completed the acquisition of Syrinix in January 2023. Additionally, in early January 2024, we acquired select
remote water monitoring hardware and software assets to further add to the suite of solutions our customers
value.
Looking ahead, we will remain active in identifying and pursuing strategic acquisitions, utilizing our strong balance sheet
and cash flow capabilities to create long-term returns for shareholders.
FINAL THOUGHTS
As I look back on my five-year milestone, I am proud of the efforts of the Badger Meter team in successfully evolving the
business, executing our winning growth strategy and delivering tangible results. This powerful formula for value creation
enables Badger Meter to make a real difference in delivering value for customers, exceptional careers for our employees
and results for our shareholders.
As we look ahead to 2024, I’m confident and excited. We have strong momentum and our teams around the world are
united by our vision and culture. We remain focused on enabling sustainability-driven outcomes for customers and
driving strong shareholder returns while protecting the world’s most precious resource.
Sincerely –
Ken Bockhorst
Chairman, President and
Chief Executive Officer
6 | 2023 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, 2023
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
☒
☐
☐
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
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, 2023, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $4.30 billion. For purposes
of this calculation only, (i) shares of Common Stock are deemed to have a market value of $147.56 per share, the closing price of the Common Stock as reported on the
New York Stock Exchange on June 30, 2023, and (ii) each of the Company's executive officers and directors is deemed to be an affiliate of the Company.
As of January 31, 2024, there were 29,352,121 shares of Common Stock outstanding with a par value of $1 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the 2024 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.
1
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,
2023.
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 2023 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 and Solutions
With more than a century of water technology innovation, Badger Meter is a global provider of industry leading water
management solutions, with nearly 95% of net sales derived from water-related applications. These tailorable solutions encompass
smart measurement hardware, reliable communications, data and analytics software as well as ongoing support and expertise essential
to optimize customers' operations and contribute to the sustainable use and protection of the world’s most precious resource.
The Company’s smart measurement hardware is primarily comprised of the following product families:
•
•
•
meters that measure the flow of water and other fluids and are known for accuracy, long-lasting durability and for
providing valuable and timely flow measurement data.
water quality monitoring solutions, including optical sensing and electrochemical instruments that provide real-
time, on-demand data parameters.
high frequency pressure and acoustic leak detection hardware that provides real-time monitoring data.
The Company’s broad range of communication solutions include the ORION® branded family of radio endpoints, providing
customers with a choice of industry-leading options for communicating data from hardware into usable applications.
The Company’s hardware-enabled software provides the insights and analytics critical to the holistic management of our
customers’ water systems. These digital solutions increase visibility, empowering customers to monitor system performance and
make decisions aiding efficiency, resiliency, and sustainability.
The Company also provides training, project management, technical support and other collaborative services for customers.
The Company’s solutions fall into two product lines: sales of meters, water quality sensors and other hardware,
communication, and software and related technologies, to water utilities (utility water) and sales of meters, other sensing instruments,
valves, software and other solutions to commercial and industrial customers, including water related applications (flow
instrumentation).
Utility Water Product Line (approximately 85% of Net Sales in 2023)
Utility water smart metering solutions are comprised of 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. This product line further comprises other instruments and sensors used in the water distribution
2
4
system to ensure the safe and efficient delivery of clean water. These sensors are used to detect leaks and to monitor various water
quality parameters throughout the distribution system. The largest geographic market in which the Company operates is North
America, primarily the United States. The majority of water meters sold are mechanical in nature, with increasing adoption over time
of ultrasonic (static) metering technology due to a variety of attributes, including their ability to maintain measurement accuracy over
their useful life.
Utility water meters (both residential and commercial sizes) 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
5
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 2023 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 and Solutions
With more than a century of water technology innovation, Badger Meter is a global provider of industry leading water
management solutions, with nearly 95% of net sales derived from water-related applications. These tailorable solutions encompass
smart measurement hardware, reliable communications, data and analytics software as well as ongoing support and expertise essential
to optimize customers' operations and contribute to the sustainable use and protection of the world’s most precious resource.
The Company’s smart measurement hardware is primarily comprised of the following product families:
•
•
•
meters that measure the flow of water and other fluids and are known for accuracy, long-lasting durability and for
providing valuable and timely flow measurement data.
water quality monitoring solutions, including optical sensing and electrochemical instruments that provide real-
time, on-demand data parameters.
high frequency pressure and acoustic leak detection hardware that provides real-time monitoring data.
The Company’s broad range of communication solutions include the ORION® branded family of radio endpoints, providing
customers with a choice of industry-leading options for communicating data from hardware into usable applications.
The Company’s hardware-enabled software provides the insights and analytics critical to the holistic management of our
customers’ water systems. These digital solutions increase visibility, empowering customers to monitor system performance and
make decisions aiding efficiency, resiliency, and sustainability.
The Company also provides training, project management, technical support and other collaborative services for customers.
The Company’s solutions fall into two product lines: sales of meters, water quality sensors and other hardware,
communication, and software and related technologies, to water utilities (utility water) and sales of meters, other sensing instruments,
valves, software and other solutions to commercial and industrial customers, including water related applications (flow
instrumentation).
Utility Water Product Line (approximately 85% of Net Sales in 2023)
Utility water smart metering solutions are comprised of 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. This product line further comprises other instruments and sensors used in the water distribution
system to ensure the safe and efficient delivery of clean water. These sensors are used to detect leaks and to monitor various water
quality parameters throughout the distribution system. The largest geographic market in which the Company operates is North
America, primarily the United States. The majority of water meters sold are mechanical in nature, with increasing adoption over time
of ultrasonic (static) metering technology due to a variety of attributes, including their ability to maintain measurement accuracy over
their useful life.
Utility water meters (both residential and commercial sizes) 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 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. Among other benefits, AMI
systems eliminate the need for utility personnel to drive through service territories to collect data from the meters and provide utilities
with more frequent and diverse data from their meters at specified intervals.
5
The ORION® family of endpoints offers water utilities a choice of industry-leading options for communicating meter
reading and event data. ORION Cellular endpoints power our Network as a Service (NaaS) approach to AMI, eliminating the need for
the utility to install or maintain infrastructure, enabling rapid or gradual deployment, and enhancing network reliability. ORION
mobile read endpoints support customers looking to deploy an AMR solution.
Information and analytics are critical to the smart water ecosystem. The Company’s BEACON® Software as a Service
(SaaS), amongst others, 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 technologies comprise the majority of smart water product
sales, including radio products. To a much lesser extent, housing starts also contribute to sales annually. 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
digital AMI solutions. The Company estimates that approximately one-third of water meters installed in the United States have been
converted to AMI systems.
In addition, the Company provides various other hardware, instruments and sensors, and related software, to enhance the
scope and breadth of connected data valuable to a water utility's operation. This includes 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. It also includes high frequency pressure
and leak detection sensors that provide real-time alarms and event location triangulation to aid operators in responding to burst pipe
and other leak events quickly, reducing water loss and system downtime. The data and insights collected from these additional
operational sensors are often conveyed by cellular networks and can be leveraged alongside of the metering data within BEACON to
unlock powerful insights about the operations of a customer's distribution network.
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, software, water quality
monitoring and on ultrasonic compared to mechanical meters.
Flow Instrumentation Product Line (approximately 15% of Net Sales in 2023)
The flow instrumentation product line primarily serves water applications throughout the broader industrial market, with both
standard and customized solutions. This product line includes meters, valves and other sensing instruments sold worldwide to measure
and control the quantity of fluids, including water, air, steam, and other liquids and gases. These products, oftentimes leveraging the
same technologies used in utility water, are used in a variety of industries and applications, with the Company’s primary market focus
3
being water/wastewater, heating, ventilating and air conditioning (HVAC) and corporate sustainability. Flow instrumentation
products are generally sold through manufacturers’ representatives and original equipment manufacturers as the primary flow
measurement device within a product or system. Specialized communication protocols that control the entire flow measurement
process and mandatory certifications drive these markets.
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 and water quality monitoring in wastewater treatment, industrial process, building automation and precision
engineering applications where flow measurement, quality and control are critical.
6
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 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. Among other benefits, AMI
systems eliminate the need for utility personnel to drive through service territories to collect data from the meters and provide utilities
with more frequent and diverse data from their meters at specified intervals.
The ORION® family of endpoints offers water utilities a choice of industry-leading options for communicating meter
reading and event data. ORION Cellular endpoints power our Network as a Service (NaaS) approach to AMI, eliminating the need for
the utility to install or maintain infrastructure, enabling rapid or gradual deployment, and enhancing network reliability. ORION
mobile read endpoints support customers looking to deploy an AMR solution.
Information and analytics are critical to the smart water ecosystem. The Company’s BEACON® Software as a Service
(SaaS), amongst others, 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 technologies comprise the majority of smart water product
sales, including radio products. To a much lesser extent, housing starts also contribute to sales annually. 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
digital AMI solutions. The Company estimates that approximately one-third of water meters installed in the United States have been
converted to AMI systems.
In addition, the Company provides various other hardware, instruments and sensors, and related software, to enhance the
scope and breadth of connected data valuable to a water utility's operation. This includes 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. It also includes high frequency pressure
and leak detection sensors that provide real-time alarms and event location triangulation to aid operators in responding to burst pipe
and other leak events quickly, reducing water loss and system downtime. The data and insights collected from these additional
operational sensors are often conveyed by cellular networks and can be leveraged alongside of the metering data within BEACON to
unlock powerful insights about the operations of a customer's distribution network.
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, software, water quality
monitoring and on ultrasonic compared to mechanical meters.
Flow Instrumentation Product Line (approximately 15% of Net Sales in 2023)
The flow instrumentation product line primarily serves water applications throughout the broader industrial market, with both
standard and customized solutions. This product line includes meters, valves and other sensing instruments sold worldwide to measure
and control the quantity of fluids, including water, air, steam, and other liquids and gases. These products, oftentimes leveraging the
same technologies used in utility water, 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 through manufacturers’ representatives and original equipment manufacturers as the primary flow
measurement device within a product or system. Specialized communication protocols that control the entire flow measurement
process and mandatory certifications drive these markets.
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 and water quality monitoring in wastewater treatment, industrial process, building automation and precision
engineering applications where flow measurement, quality and control are critical.
The Company offers one of the broadest flow measurement, control and communication portfolios in the market. 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.
Customers and Competition
6
The Company's products are sold throughout the world through employees, resellers and representatives, with utility water
sales largely via a direct salesforce and regional distributors, and flow instrumentation sales largely via representatives and
distributors. No single customer accounts for more than 10% of the Company's sales.
The Company faces competition for both its utility water and flow instrumentation product lines. Major competitors for
utility water meters include Roper Technologies, Inc. (“Neptune”) and Xylem, Inc. (“Sensus”). Together with Badger Meter, it is
estimated that these companies sell roughly 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 Hubbel, Inc. (Aclara
Technologies), Itron, Inc., 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 of meter technologies, the Company is well positioned to
compete in niche, specialized applications 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 generally.
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.
4
Expenditures for research and development activities related to development of new products, the improvement of existing
products and manufacturing process improvements were $19.0 million in 2023, $15.8 million in 2022 and $14.7 million in 2021.
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.
7
The Company offers one of the broadest flow measurement, control and communication portfolios in the market. 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.
Customers and Competition
The Company's products are sold throughout the world through employees, resellers and representatives, with utility water
sales largely via a direct salesforce and regional distributors, and flow instrumentation sales largely via representatives and
distributors. No single customer accounts for more than 10% of the Company's sales.
The Company faces competition for both its utility water and flow instrumentation product lines. Major competitors for
utility water meters include Roper Technologies, Inc. (“Neptune”) and Xylem, Inc. (“Sensus”). Together with Badger Meter, it is
estimated that these companies sell roughly 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 Hubbel, Inc. (Aclara
Technologies), Itron, Inc., 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 of meter technologies, the Company is well positioned to
compete in niche, specialized applications 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 generally.
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 development of new products, the improvement of existing
products and manufacturing process improvements were $19.0 million in 2023, $15.8 million in 2022 and $14.7 million in 2021.
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 2023, 2022 and
2021 were not material.
7
Government Regulations
The Company’s operations worldwide are subject to various federal, state, local and foreign laws and regulations. Whether at
the federal, state, or local level, the intent of these laws and regulations is to protect product safety, public health and the environment.
Similar laws and regulations have been adopted by government authorities in other countries in which we manufacture, distribute, and
sell our products.
The Company believes that its operations, including its manufacturing locations, are in substantial compliance with all
applicable government laws and regulations, including those related to environmental, consumer protection, international trade, labor
and employment, human rights, tax, anti-bribery and competition matters. Any additional measures to maintain compliance are not
expected to materially affect the Company's capital expenditures, competitive position, financial position or results of operations.
There are currently no legislative or administrative regulations pending which we anticipate will have a substantial adverse
impact on the Company's revenues, earnings or cash flows. However, if new or amended laws or regulations impose significant
operational restrictions and compliance requirements upon the Company or its products, the Company's business, capital expenditures,
results of operations, financial condition and competitive position could be negatively impacted. Refer to Part I, Item 1A. “Risk
Factors” of this 2023 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
global business strategy. 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 2,140 persons at December 31, 2023. Approximately 117 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 adherence to our stated 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 at all
5
times. As part of this program, all ethical and legal concerns raised by employees are fully investigated and resolved. Employees have
the ability to raise concerns confidentially through our Ethics Hotline, without fear of retaliation. Employee training is used to
reinforce our values companywide, and our annual ethics and compliance training is administered globally with nearly 100%
completion by eligible employees. 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.
8
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 2023, 2022 and
Environmental Protection
2021 were not material.
Government Regulations
The Company’s operations worldwide are subject to various federal, state, local and foreign laws and regulations. Whether at
the federal, state, or local level, the intent of these laws and regulations is to protect product safety, public health and the environment.
Similar laws and regulations have been adopted by government authorities in other countries in which we manufacture, distribute, and
sell our products.
The Company believes that its operations, including its manufacturing locations, are in substantial compliance with all
applicable government laws and regulations, including those related to environmental, consumer protection, international trade, labor
and employment, human rights, tax, anti-bribery and competition matters. Any additional measures to maintain compliance are not
expected to materially affect the Company's capital expenditures, competitive position, financial position or results of operations.
There are currently no legislative or administrative regulations pending which we anticipate will have a substantial adverse
impact on the Company's revenues, earnings or cash flows. However, if new or amended laws or regulations impose significant
operational restrictions and compliance requirements upon the Company or its products, the Company's business, capital expenditures,
results of operations, financial condition and competitive position could be negatively impacted. Refer to Part I, Item 1A. “Risk
Factors” of this 2023 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
global business strategy. 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 2,140 persons at December 31, 2023. Approximately 117 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 adherence to our stated 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 at all
times. As part of this program, all ethical and legal concerns raised by employees are fully investigated and resolved. Employees have
the ability to raise concerns confidentially through our Ethics Hotline, without fear of retaliation. Employee training is used to
reinforce our values companywide, and our annual ethics and compliance training is administered globally with nearly 100%
completion by eligible employees. 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 invest in the growth and development of our employees, offering a range of all employee, managerial, and leader
training that spans on-demand, virtual, and live instructor-led formats.
• We offer flexible, remote work and part-time arrangements, as business roles permit.
• Our regrettable turnover decreased to 8.3% in 2023, compared to 10.0% in 2022, and 9.6% in 2021. A stabilizing labor
8
market in the US was the primary driver of the decrease.
• We implemented our third annual global employee engagement survey in 2023, with over 93% of all global employees
voluntarily participating. The 2023 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.
• 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, with no findings requiring adjustments.
• 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
2023
40%
28%
51%
33%
32%
15%
56%
2022
40%
27%
51%
30%
30%
12%
54%
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 0.40 in 2023, compared to 0.59 in 2022, and
0.75 in 2021. Our goal is zero. While we are proud of our performance in 2023, most notably in relation to industry
averages, we recognize there is more work to be done.
6
• 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.
9
• We invest in the growth and development of our employees, offering a range of all employee, managerial, and leader
training that spans on-demand, virtual, and live instructor-led formats.
• We offer flexible, remote work and part-time arrangements, as business roles permit.
• Our regrettable turnover decreased to 8.3% in 2023, compared to 10.0% in 2022, and 9.6% in 2021. A stabilizing labor
market in the US was the primary driver of the decrease.
• We implemented our third annual global employee engagement survey in 2023, with over 93% of all global employees
voluntarily participating. The 2023 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.
• 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, with no findings requiring adjustments.
• 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
2023
40%
28%
51%
33%
32%
15%
56%
2022
40%
27%
51%
30%
30%
12%
54%
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 0.40 in 2023, compared to 0.59 in 2022, and
0.75 in 2021. Our goal is zero. While we are proud of our performance in 2023, 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
9
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
2/28/2024
51
45
56
59
59
56
57
58
57
41
45
There are no family relationships between any of the executive officers. Officers are elected annually at the first meeting of
the Board of Directors (the "Board") 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.
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.
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.
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.
7
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
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.
10
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
Sheryl L. Hopkins
Richard Htwe
Lars Bo Kristensen
Kimberly K. Stoll
Chairman, President and Chief Executive Officer
Senior Vice President — Chief Financial Officer
Position
Vice President — Investor Relations, Corporate Strategy and Treasurer
Vice President — Engineering
Vice President — Human Resources
Vice President — Global Operations
Vice President — Global Flow Instrumentation and International Utility
Vice President — Sales and Marketing
William R. A. Bergum
Vice President — General Counsel and Secretary
Matthew L. Stuyvenberg
Vice President — Software and Water Quality
Daniel R. Weltzien
Vice President — Controller
Age at
2/28/2024
51
45
56
59
59
56
57
58
57
41
45
There are no family relationships between any of the executive officers. Officers are elected annually at the first meeting of
the Board of Directors (the "Board") 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.
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.
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.
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
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.
Foreign Operations and Export Sales
10
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 2023 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, quality, 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 2023 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 financial reporting risk exposures and the
processes management utilizes to monitor, manage and mitigate risks 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 2023 Annual Report on Form 10-K, including the
“Special Note Regarding Forward Looking Statements” at the front of this 2023 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
8
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
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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 2023 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, quality, 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 2023 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 financial reporting risk exposures and the
processes management utilizes to monitor, manage and mitigate risks 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 2023 Annual Report on Form 10-K, including the
“Special Note Regarding Forward Looking Statements” at the front of this 2023 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
11
a network may have an adverse impact on the Company, however, we have strong relationships with telecommunication providers that
assist in mitigating this risk. 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 cloud-based solutions, 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
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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.
12
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, however, we have strong relationships with telecommunication providers that
assist in mitigating this risk. 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 cloud-based solutions, 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
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 and in the Middle East). 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
12
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 inflationary environments
may 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.
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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.
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 or weak 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.
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
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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
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
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 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
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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
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
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 1C. CYBERSECURITY
The Company’s Board and management recognize the importance of maintaining the trust and confidence of our customers,
clients, business partners and employees, and that effective risk oversight is critical in running a successful business and fulfilling its
fiduciary responsibilities to the company and its shareholders. Our Board is responsible for assuring that an appropriate culture of risk
management exists within the Company and for setting the right “tone at the top.” The Board oversees an enterprise-wide approach to
risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-
term organizational performance and enhance shareholder value.
A fundamental part of risk management is not only understanding the risks a company faces and what steps management is
taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The involvement of the full
Board in setting the Company’s business strategy is a key part of its assessment of management’s tolerance for risk and also a
determination of what constitutes an appropriate level of risk for the Company.
Refer to Part I, Item 1A. “Risk Factors” of this 2023 Annual Report on Form 10-K for further information about the
Company's overall ERM process.
Risk Management and Strategy
Cybersecurity is a critical component of the Company’s ERM program. The Company has established an information
security framework to help safeguard the confidentiality, integrity, and availability of information assets and ensure regulatory,
operational, and contractual requirements are fulfilled. The Company’s cybersecurity program is focused on the following key areas:
Governance: The Board provides oversight of the ERM process and reviews the significant identified risks. The Board’s
oversight of cybersecurity risk management is supported by the Audit and Compliance Committee, which regularly interacts with the
Company’s senior management, including the Director - Information Systems (i.e. the Company's chief information officer). The
Company’s various Board committees also play a role in risk management, as detailed in their respective charters.
Collaborative Approach: The Company has implemented a comprehensive, cross-functional approach to identifying,
preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the
prompt escalation of certain cybersecurity incidents so that decisions regarding the materiality, public disclosure and reporting of such
incidents can be made by management in a timely manner. Senior leadership also briefs the Board on information security matters at
least annually.
Technical Safeguards: The Company deploys technical safeguards that are designed to protect the Company’s information
systems from cybersecurity threats, such as machine learning intelligence platforms with an array of technologies, extensive
encryption, firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated
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and improved through vulnerability assessments and cybersecurity threat intelligence. The frameworks used to guide the deployment
of technical safeguards include: International Organization for Standardization (ISO) 27001, Service Organization Control 2 (SOC 2),
Sarbanes Oxley (SOX), and National Institute of Standards and Technology (NIST). The Company has been ISO 27001 certified
since 2015 and is externally audited and certified annually by a leading IT compliance attestation firm.
Incident Response Planning: The Company has established, maintains and regularly tests incident response plans that address
the Company’s overall preparedness and response to a cybersecurity incident. The plans include, among other steps, assessment
processes to determine the magnitude and materiality of an incident, an analysis of the need and method to communicate to various
constituencies (customers, employees, authorities, etc.), and the requirements for public and regulatory disclosure. In addition to this
response planning framework, among other mitigating actions the Company maintains an insurance policy for cybersecurity liability
that provides not only coverage for breaches, but also loss prevention services and claims advisors.
Third Party Risk Management: The Company maintains a comprehensive, risk-based approach to identifying and overseeing
cybersecurity risks presented by third parties, including vendors, service providers and other external users of the Company’s systems,
as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those
third party systems. Third parties are granted access to systems based on the principle of least privilege.
Education and Awareness: The Company provides mandatory annual training for personnel regarding cybersecurity threats to
educate employees with effective tools and knowledge to address cybersecurity threats, and to communicate the Company’s evolving
information security policies, standards, processes and practices. Quarterly internal phishing tests are performed, and periodic and/or
thematic email communications are provided throughout the year to raise awareness. Individual training is given to personnel as
needed.
Governance
The Board oversees the Company’s ERM process, including the management of risks arising from cybersecurity threats. The
Board receives annual cybersecurity updates from senior management, and the Audit and Compliance Committee provides a deeper
level of oversight through an annual review to management’s approach to cybersecurity risk with the Director – Information Systems.
The Board and the Audit and Compliance Committee also receive prompt and timely information regarding any cybersecurity incident
that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed.
The Director – Information Systems, in coordination with management, works collaboratively across the Company to
implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to
any cybersecurity incidents in accordance with the Company’s incident response plans. Management is actively involved in the
incident response and risk management process (mitigation, transference, and acceptance).
IT Management and General Counsel are explicitly informed by the internal security team and Managed Security Service
Provider (MSSP) of incidents and periodically updated on the investigation progress and impact of the incident. Management also
receives explicit monthly summaries on all incidents. Major incidents are reported to company management and summarized at an
annual management review meeting.
Internal IT Management has the following certifications: Certified Information Systems Security Professional (CISSP),
Certified Information Systems Auditor (CISA), GIAC/SANS Certified Forensic Examiner, Magnet Certified Forensic
Examiner, BBA Information Technology Emphasis Security, and CompTIA Security+.
While the Company has experienced, and expects to continue to experience, cyber threats, no material security breaches of
third-party information have occurred. Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not
materially affected the Company, including its business strategy, results of operations or financial condition. Additional information
on cybersecurity risks we face is discussed in Part I, Item 1A “Risk Factors” under the heading “General,” which should be read in
conjunction with the foregoing information.
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 2023 Annual Report on Form 10-K under the heading “Foreign Operations and Export Sales.” The principal facilities
14
17
utilized by the Company at December 31, 2023 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 2023 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 January 31,
2024, there were approximately 560 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, 2019 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 17 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, 2018. 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.
15
18
19
December 31
Badger Meter, Inc.
Russell 2000 Index
Peer Group
2018
2019
2020
2021
2022
2023
33.45%
46.39%
14.12%
3.21%
42.56%
Return %
Return %
Return %
Cumulative $
$ 100.00 $ 133.45 $ 195.35 $ 222.95 $ 230.10 $ 328.04
25.52%
19.96%
14.82%
-20.44%
16.93%
Cumulative $
$ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85
Cumulative $
$ 100.00 $ 139.76 $ 157.21 $ 190.25 $ 153.61 $ 204.89
39.76%
12.49%
21.01%
-19.26%
33.38%
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 January 31,
2024, there were approximately 560 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, 2019 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 17 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, 2018. 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 $
2018
2019
33.45%
2020
46.39%
2021
14.12%
2022
3.21%
2023
42.56%
$ 100.00 $ 133.45 $ 195.35 $ 222.95 $ 230.10 $ 328.04
25.52%
19.96%
14.82%
-20.44%
16.93%
$ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85
39.76%
12.49%
21.01%
-19.26%
33.38%
$ 100.00 $ 139.76 $ 157.21 $ 190.25 $ 153.61 $ 204.89
The peer group consists of 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
19
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 2023, the Board authorized the repurchase of up to 200,000 shares of the Company’s Common Stock through
February 2026. The following table provides information about the Company's purchases under this repurchase program during the
quarter ended December 31, 2023 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.
October 1, 2023 - October 31, 2023
November 1, 2023 - November 30, 2023
December 1, 2023 - December 31, 2023
Total as of December 31, 2023
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
- $
- $
- $
-
-
-
-
-
-
-
-
200,000
200,000
200,000
200,000
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ITEM 6. RESERVED
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Long Term Business Trends
Across the globe significant infrastructure investments needs, aging workforce, 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 critical to providing 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, pressure 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 one-third of their respective connections have converted to an AMI radio
solution. 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.
As noted above, customers are increasingly looking for more frequent and diverse data to holistically manage their water
networks. As a leading provider of water quality and pressure management monitoring solutions, we are able to meet these needs and
enhance the scope of actionable data for customers to help measure, conserve and protect water.
Together, our tailorable smart water solutions provide actionable information through data analytics derived 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 adoption of smart water solutions. With strong relationships with
telecommunication providers such as AT&T and Verizon (among others), we stay abreast of emerging cellular technology changes to
provide 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 measurement hardware
(metering, water quality, pressure sensors, etc), radio and software technologies in order to meet its customers’ increasing expectations
for accurate and actionable data and insights. As technologies such as ORION Cellular and BEACON digital solutions have become
more widely adopted, the Company’s revenue from Software as a Service (SaaS) has increased significantly, and is margin accretive.
The Company also seeks opportunities for additional revenue enhancement. For instance, the Company has made inroads
into select regional markets outside the US such as the Middle East, UK and others with its tailorable smart water solutions portfolio.
The Company is periodically asked to oversee and supervise field installation of its products and provide training and other services
for certain customers. Strategic mergers and acquisitions are another avenue for profitable sales growth.
Acquisitions
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 total purchase consideration for Syrinix, net of cash acquired, was $17.1 million. The Company's allocation of the
purchase price at December 31, 2023 included $0.6 million of receivables, $0.7 million of inventories, $2.1 million of other assets,
$7.7 million of intangible assets and $10.3 million of goodwill. The intangible assets acquired are primarily developed technology,
customer relationships and trademarks with estimated average useful lives of 13 to 15 years. The Company also assumed $1.9 million
of payables, $2.0 million of deferred income taxes and $0.4 million of other current and long-term liabilities as part of the acquisition.
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As of December 31, 2023, 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 2023 increased $138.0 million, or 24.4%, to $703.6 million from $565.6 million in 2022. Sales into the utility
water market were $603.1 million, an increase of 27.8% over the prior year’s $471.8 million. The increase in utility water sales
reflected strong growth across the Company's broad smart water solutions and the continued robust adoption of cellular AMI
solutions, specifically ORION Cellular endpoints and BEACON SaaS revenues, as well as increased E-Series Ultrasonic meter
volumes. Sales of products into the global flow instrumentation end markets were $100.5 million, 7.2% higher than the prior year’s
$93.8 million due to steady order demand across the water-focused end markets, offset by modest decline in de-emphasized general
industrial markets.
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 $415.2 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 revenue, 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% greater than the prior year’s $89.9 million due 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%.
Operating Earnings
Operating earnings in 2023 were $118.0 million, or 16.8% of sales, compared to $87.3 million, or 15.4% of sales, in 2022.
Gross margin dollars increased $56.5 million due to higher net sales, with gross margin as a percent of sales increasing from 38.9% in
2022 to 39.3% in 2023. The gross margin improvement was due to higher volumes and favorable sales mix. Selling, engineering and
administration (“SEA”) expenses were $158.4 million or 22.5% of sales compared to $132.7 million or 23.5% of sales in the prior
year. The increase in SEA expenses year-over-year was due to higher personnel costs, including headcount, salaries and incentive
compensation, as well as the acquisition of Syrinix and the associated intangible asset amortization.
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. 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.
Interest Income, Net
Net interest income was $4.0 million in 2023, $0.6 million in 2022 and less than $0.1 million in 2021. The increase in interest
income in 2023 and 2022 was due to increased cash balances and increased interest rates. Changes in net interest income in 2021 was
immaterial.
Income Taxes
There were no significant variations in the provision for income taxes as a percentage of earnings before income taxes which
was 24.1%, 24.2% and 22.6% for 2023, 2022 and 2021, respectively.
Earnings and Diluted Earnings per Share
For 2023, the increase in operating earnings resulted in net earnings of $92.6 million compared to $66.5 million in 2022. On
a diluted basis, earnings per share were $3.14 in 2023 compared to $2.26 in 2022.
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.
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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:
December 31, 2023
December 31, 2022
Receivables
Inventories
Payables
Primary Working Capital
$
$
83,507
153,674
(81,807 )
155,374
11.9%
21.8%
-11.6%
22.1%
$
76,651
119,856
(71,440 )
125,067
(In thousands)
$
$
PWC%
$
PWC%
13.5%
21.2%
-12.6%
22.1%
Overall, PWC increased $30.3 million compared to the previous year-end. Receivables at December 31, 2023 were $83.5
million compared to $76.7 million at the end of 2022, an increase of $6.9 million due to increased sales, partially offset by improved
days sales outstanding. The Company believes its receivables balance is fully collectible. Inventories at December 31, 2023 were
$153.7 million compared to $119.9 million at the end of 2022. Inventory increased $33.8 million, due to component cost inflation,
higher safety stock levels and increased sales activity. Payables at December 31, 2023 were $81.8 million compared to $71.4 million
at the end of 2022. The increase was due to increased inventory balances and the timing of payments relative to year end.
Cash Provided by Operations
Cash provided by operations in 2023 was $110.1 million compared to $82.5 million in 2022. The increase from 2022 was
driven primarily by increased operating earnings and working capital management. Operating cash flow was more than adequate to
fund acquisitions ($17.1 million, net of cash acquired), capital expenditures of $12.0 million and dividends of $29.1 million in 2023.
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. Operating cash flow was more
than adequate to fund capital expenditures of $5.9 million and dividends of $24.9 million.
Capital expenditures were $12.0 million, $5.9 million and $6.7 million in fiscal 2023, 2022 and 2021, respectively. Capital
expenditures for fiscal 2024 are expected to be in the $14.0-18.0 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 2023 or 2022. At the end of 2023, the Company was in a net
cash position of $191.8 million.
The Company’s financial condition remains strong. On July 8, 2021, the Company entered into a new credit agreement, with
a maturity date of July 8, 2026. 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, 2023. 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 $154.4 million of unused credit lines available at December 31, 2023.
CONTRACTUAL OBLIGATIONS
The Company's significant contractual obligations as of December 31, 2023 are discussed in Note 12 “Leases” in the Notes to
Consolidated Financial Statements in Part II, Item 8 of this 2023 Annual Report on Form 10-K. There are no material undisclosed
guarantees. As of December 31, 2023 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 2023 Annual Report on Form 10-K.
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Postretirement medical claims are paid by the Company as they are submitted, and they are anticipated to be $0.3 million in 2024
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 "Basis of Presentation and Accounting Policies" in the Notes to Consolidated Financial Statements in Part
II, Item 8 of this 2023 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, 2023 and 2022, our reserve for
product warranties was $11.1 million and $9.6 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, 2023 and 2022 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 as of
December 31, 2023 and 2022. 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,
2023. No impairment was noted and no adjustments were recorded to goodwill or intangible assets as a result of this analysis.
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24
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 2023, 2022 and 2021 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, 2023 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.
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 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 2023 Annual Report on Form 10-K.
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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, 2023 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, 2023, 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.
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, 2023, 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, 2023, 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, 2023 and 2022, 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, 2023, and the related notes and our report dated February 16, 2024, 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
22
26
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 16, 2024
28
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, 2023, 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, 2023, 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, 2023 and 2022, 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, 2023, and the related notes and our report dated February 16, 2024, 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 16, 2024
BADGER METER, INC.
Report of Independent Registered Public Accounting Firm
28
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,
2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2023, 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, 2023, 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 16, 2024 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 Matter
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
23
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.
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 $11.1 million as of December 31, 2023, 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.
29
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,
2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2023, 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, 2023, 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 16, 2024 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 Matter
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 $11.1 million as of December 31, 2023, 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
29
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 also
tested an analysis which utilized historical claim amounts as a percentage of sales and compared the results of
this to the Company’s reserve calculation. 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 16, 2024
24
30
BADGER METER, INC.
Consolidated Balance Sheets
Assets
Current assets:
Cash and cash equivalents
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
Long-term deferred revenue
Deferred income taxes
Accrued non-pension postretirement benefits
Other accrued employee benefits
Other long-term liabilities
Commitments and contingencies (Note 6)
Shareholders’ equity:
Common stock, $1 par, authorized 80,000,000 and 40,000,000 shares in
2023 and 2022, respectively; issued 37,221,098 shares in 2023 and 2022
Capital in excess of par value
Reinvested earnings
Accumulated other comprehensive loss
Less: Treasury stock, at cost, 7,873,781 shares in 2023 and
7,928,071 shares in 2022
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying notes.
25
31
December 31,
2023
2022
(In thousands)
191,782
83,507
34,764
41,261
77,649
153,674
13,214
442,177
9,257
72,149
144,582
225,988
(152,110 )
73,878
53,737
11,249
22,715
113,163
716,919
81,807
29,871
11,102
9,168
131,948
49,763
5,061
3,614
5,293
4,758
37,221
59,185
458,719
(1,646 )
(36,997 )
516,482
716,919
$
$
$
$
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
32,240
4,648
3,917
3,940
5,568
37,221
53,282
395,155
(5,983 )
(37,253 )
442,422
603,047
$
$
$
$
BADGER METER, INC.
Consolidated Statements of Operations
Net sales
Cost of sales
Gross margin
Selling, engineering and administration
Operating earnings
Interest income, 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,
2023
2022
2021
(In thousands except per share amounts)
703,592 $
427,154
276,438
158,389
118,049
(4,047 )
130
121,966
29,368
92,598 $
3.16 $
3.14 $
29,284
172
29,456
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
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
2023
Years ended December 31,
2022
(In thousands)
2021
$
92,598 $
66,496 $
60,884
4,411
(74 )
96,935 $
(6,719 )
600
60,377 $
(1,516 )
339
59,707
$
See accompanying notes.
26
32
33
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
Acquisitions, net of cash acquired
Proceeds from company owned life insurance plans
Net cash used for investing activities
Financing activities:
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
See accompanying notes.
2023
Years ended December 31,
2022
(In thousands)
2021
$
92,598 $
66,496 $
60,884
10,937
17,173
(9,650 )
(338 )
5,188
(6,351 )
(32,467 )
8,506
(7,012 )
31,533
17,519
110,117
(12,003 )
(17,127 )
-
(29,130 )
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 )
(29,052 )
967
-
-
(28,085 )
828
53,730
138,052
191,782 $
(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 )
(45,273 )
596
(51,423 )
(22,155 )
2,036
(460 )
72
(20,507 )
(679 )
14,901
72,273
87,174
38,934 $
-
830
450
24,038 $
-
2,283
1,517
19,981
118
-
-
$
$
27
34
BADGER METER, INC.
Consolidated Statements of Shareholders’ Equity
Years ended December 31,
Common
Stock at $1
par value*
Capital in
excess of
par value
Reinvested
earnings
Accumulated
other
comprehensive
income
(loss)
Treasury
stock (at cost)
Total
(In thousands except per share amounts)
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
Net earnings
Pension and postretirement benefits
(net of ($26) tax effect)
Foreign currency translation
Cash dividends of $0.99 per share
Stock options exercised
Stock-based compensation
Issuance of treasury stock (24 shares)
Balance, December 31, 2023
$
37,221 $
44,964 $
-
-
-
-
-
-
-
-
$
37,221 $
-
-
-
-
-
-
-
-
$
37,221 $
-
-
-
-
-
-
-
$
37,221 $
-
-
-
-
1,622
2,330
-
308
49,224 $
-
-
-
-
581
3,148
-
329
53,282 $
-
-
-
-
824
5,188
(109 )
59,185 $
314,850 $
60,884
-
-
(22,199 )
-
-
-
-
353,535 $
66,496
-
-
(24,876 )
-
-
-
-
395,155 $
92,598
-
-
(29,034 )
-
-
-
1,313 $
(37,089 ) $
-
-
361,259
60,884
339
(1,516 )
-
-
-
-
-
136 $
-
600
(6,719 )
-
-
-
-
-
-
-
-
414
-
(460 )
89
(37,046 ) $
-
-
-
-
122
-
(427 )
98
(5,983 ) $
(37,253 ) $
-
(74 )
4,411
-
-
-
-
-
-
-
-
143
-
113
339
(1,516 )
(22,199 )
2,036
2,330
(460 )
397
403,070
66,496
600
(6,719 )
(24,876 )
703
3,148
(427 )
427
442,422
92,598
(74 )
4,411
(29,034 )
967
5,188
4
516,482
458,719 $
(1,646 ) $
(36,997 ) $
* 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.
28
35
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
management solutions, with nearly 95% of net sales derived from water-related applications. These tailorable solutions
encompass smart measurement hardware, reliable communications, data and analytics software as well as ongoing support and
expertise essential to optimize customers' operations and contribute to the sustainable use and protection of the world’s most
precious resource. The Company's smart measurement hardware is primarily comprised of the following product families:
• Meters that measure the flow of water and other fluids and are known for accuracy, long-lasting durability and for
providing valuable and timely flow measurement data.
• Water quality monitoring solutions, including optical sensing and electrochemical instruments that provide real-
time, on demand data parameters.
•
High frequency pressure and acoustic leak detection hardware that provides real-time monitoring data.
The Company’s broad range of communication solutions include the ORION® branded family of radio endpoints,
providing customers with a choice of industry-leading options for communicating data from hardware into usable applications.
The Company’s hardware-enabled software provides the insights and analytics critical to the holistic management of our
customers’ water systems. These digital solutions increase visibility, empowering customers to monitor system performance
and make decisions aiding efficiency, resiliency, and sustainability. The Company also provides training, project management,
technical support and other collaborative services for customers. The Company’s solutions fall into two product lines: sales of
meters, water quality sensors and other hardware, communication, and software and related technologies, to water utilities
(utility water) and sales of meters, other sensing instruments, valves, software and other solutions to commercial and industrial
customers, including water related applications (flow instrumentation).
Utility water smart metering solutions are comprised of 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. This product line further comprises other instruments and
sensors used in the water distribution system to ensure the safe and efficient delivery of clean water. These sensors are used to
detect leaks and to monitor various water quality parameters throughout the distribution system. The largest geographic market
in which the Company operates is North America, primarily the United States. The majority of water meters sold are
mechanical in nature, with increasing adoption over time of ultrasonic (static) metering technology due to a variety of
attributes, including their ability to maintain measurement accuracy over their useful life.
The flow instrumentation product line primarily serves water applications throughout the broader industrial market,
with both standard and customized solutions. This product line includes meters, valves and other sensing instruments sold
worldwide to measure and control the quantity of fluids including water, air, steam, and other liquids and gases. These
products, oftentimes leveraging the same technologies used in utility water, 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 through manufacturers’ representatives and original
equipment manufacturers as the primary flow measurement device within a product or system. Specialized communication
protocols that control the entire flow measurement process and mandatory certifications drive these markets.
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.
29
36
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:
2023
2022
2021
Inventories
Balance at
beginning
of year
Provision and
reserve
adjustments
Write-offs less
recoveries
Balance at end
of year
$
1,179 $
697
552
(In thousands)
1,862 $
515
191
(137 ) $
(33 )
(46 )
2,904
1,179
697
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:
2023
2022
2021
Property, Plant and Equipment
Balance at
beginning
of year
Net additions
charged to
earnings
Disposals
Balance at end
of year
$
6,681 $
6,078
6,400
(In thousands)
2,135 $
1,498
1,329
(1,942 ) $
(895 )
(1,651 )
6,874
6,681
6,078
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 $3.7
million and $4.8 million at December 31, 2023 and 2022, 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, 2023, 2022 and 2021 was $3.3 million, $3.8 million and $4.5 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
2023, $8.6 million in 2022 and $10.0 million in 2021. Amortization expense expected to be recognized is $8.6 million in 2024,
$8.2 in 2025, $7.4 million in 2026, $5.7 million in 2027, $4.3 million in 2028 and $19.5 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, 2023
December 31, 2022
Gross carrying
amount
Accumulated
amortization
Gross carrying
amount
Accumulated
amortization
$
30
37
66,157 $
7,086
627
650
8,235
27,884
15,424
(In thousands)
41,845 $
1,301
610
578
5,863
12,936
9,193
58,504 $
6,857
691
650
8,058
38,602
15,880
$
126,063 $
72,326 $
129,242 $
37,857
840
661
560
5,097
22,023
8,597
75,635
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 2023, 2022 and 2021. Goodwill was $113.2
million at December 31, 2023 and $101.3 million at December 31, 2022. The increase in goodwill from 2022 to 2023 resulted
from the acquisition of Syrinix Ltd, headquartered in Norwich, United Kingdom in 2023, as well as currency translation
adjustments of $1.6 million. 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
2023
2022
2021
$
9,606 $
93 $
9,759 $
(8,356 ) $
12,868
11,617
-
-
5,624
5,856
(8,886 )
(4,605 )
11,102
9,606
12,868
Research and Development
million in 2022 and $14.7 million in 2021.
Healthcare
Research and development costs are charged to expense as incurred and amounted to $19.0 million in 2023, $15.8
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.
38
$8.2 in 2025, $7.4 million in 2026, $5.7 million in 2027, $4.3 million in 2028 and $19.5 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, 2023
December 31, 2022
Gross carrying
amount
Accumulated
amortization
Gross carrying
amount
Accumulated
amortization
$
$
66,157 $
7,086
627
650
8,235
27,884
15,424
126,063 $
(In thousands)
41,845 $
1,301
610
578
5,863
12,936
9,193
72,326 $
58,504 $
6,857
691
650
8,058
38,602
15,880
129,242 $
37,857
840
661
560
5,097
22,023
8,597
75,635
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 2023, 2022 and 2021. Goodwill was $113.2
million at December 31, 2023 and $101.3 million at December 31, 2022. The increase in goodwill from 2022 to 2023 resulted
from the acquisition of Syrinix Ltd, headquartered in Norwich, United Kingdom in 2023, as well as currency translation
adjustments of $1.6 million. 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
2023
2022
2021
$
9,606 $
12,868
11,617
93 $
-
-
9,759 $
5,624
5,856
(8,356 ) $
(8,886 )
(4,605 )
11,102
9,606
12,868
Research and Development
Research and development costs are charged to expense as incurred and amounted to $19.0 million in 2023, $15.8
million in 2022 and $14.7 million in 2021.
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.
38
31
Accumulated Other Comprehensive Loss
Components of accumulated other comprehensive loss at December 31, 2023 are as follows:
(In thousands)
Balance at beginning of period
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income, net
of tax of ($26)
Net current period other comprehensive loss, net of tax
Accumulated other comprehensive loss
Unrecognized
pension and
postretirement
benefits
Foreign
currency
Total
$
$
994 $
-
(74 )
(74 )
920 $
(6,977 ) $
4,411
-
4,411
(2,566 ) $
(5,983 )
4,411
(74 )
4,337
(1,646 )
Reclassifications out of accumulated other comprehensive income during 2023 were immaterial.
Components of accumulated other comprehensive income 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 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 and cash equivalents, 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.
Recently Adopted Accounting Pronouncements
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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
32
39
Reclassifications out of accumulated other comprehensive income during 2022 were immaterial.
Accumulated Other Comprehensive Loss
Components of accumulated other comprehensive loss at December 31, 2023 are as follows:
(In thousands)
Balance at beginning of period
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income, net
of tax of ($26)
Net current period other comprehensive loss, net of tax
Accumulated other comprehensive loss
Unrecognized
pension and
postretirement
benefits
Foreign
currency
Total
994 $
-
(74 )
(74 )
920 $
(6,977 ) $
4,411
-
4,411
(2,566 ) $
(5,983 )
4,411
(74 )
4,337
(1,646 )
Reclassifications out of accumulated other comprehensive income during 2023 were immaterial.
Components of accumulated other comprehensive income 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 )
$
$
$
$
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 and cash equivalents, 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
Use of Estimates
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.
Recently Adopted Accounting Pronouncements
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 adopted ASU No. 2021-08 on January 1, 2023, the
39
impact of which was not significant to the Company.
In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures," which requires enhanced disclosures on segment expenses, interim segment disclosures, and
requirements for entities operating under a single segment. The guidance is effective on a retrospective basis for fiscal years
beginning after December 15, 2023 and interim periods beginning after January 1, 2025, early adoption is permitted. The
Company is currently assessing the impact of this proposed change on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax
Disclosures," which requires additional disclosure associated with the effective tax rate reconciliation and payment of income
taxes. The guidance is effective for fiscal years beginning after December 15, 2025 and will be applied on a prospective basis
with the option to apply the standard retrospectively. The Company is currently assessing the impact of this proposed change on
its consolidated financial statements.
Note 2 Common Stock
Common Stock
On April 28, 2023, at the Company's annual meeting of stockholders, the stockholders approved an amendment to the
Restated Articles of Incorporation to increase the number of authorized shares of the Company's common stock, par value $1
per share, from 40,000,000 to 80,000,000 shares.
In February 2023, the Board authorized the repurchase of up to 200,000 shares of the Company's Common Stock
through February 2026.
The authorized common stock of the Company consisted of 80,000,000 and 40,000,000 shares of common stock as of
December 31, 2023 and 2022, respectively, $1 par value, of which 37,221,098 were issued and outstanding as of December 31,
2023 and 2022, respectively.
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, 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 total purchase consideration for Syrinix, net of cash acquired, was $17.1 million. The Company's allocation of the
purchase price at December 31, 2023 included $0.6 million of receivables, $0.7 million of inventories, $2.1 million of other
assets, $7.7 million of intangible assets and $10.3 million of goodwill. The intangible assets acquired are primarily developed
technology, customer relationships and trademarks with estimated average useful lives of 13 to 15 years. The Company also
assumed $1.9 million of payables, $2.0 million of deferred income taxes and $0.4 million of other current and long-term
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, 2023, 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, 2023 and 2022. On July 8, 2021, the Company entered
into a new credit agreement, with a maturity date of July 8, 2026. 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, 2023. The Company had $154.4 million of unused credit lines available at
December 31, 2023.
33
40
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 adopted ASU No. 2021-08 on January 1, 2023, the
impact of which was not significant to the Company.
In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures," which requires enhanced disclosures on segment expenses, interim segment disclosures, and
requirements for entities operating under a single segment. The guidance is effective on a retrospective basis for fiscal years
beginning after December 15, 2023 and interim periods beginning after January 1, 2025, early adoption is permitted. The
Company is currently assessing the impact of this proposed change on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax
Disclosures," which requires additional disclosure associated with the effective tax rate reconciliation and payment of income
taxes. The guidance is effective for fiscal years beginning after December 15, 2025 and will be applied on a prospective basis
with the option to apply the standard retrospectively. The Company is currently assessing the impact of this proposed change on
its consolidated financial statements.
Note 2 Common Stock
Common Stock
On April 28, 2023, at the Company's annual meeting of stockholders, the stockholders approved an amendment to the
Restated Articles of Incorporation to increase the number of authorized shares of the Company's common stock, par value $1
per share, from 40,000,000 to 80,000,000 shares.
In February 2023, the Board authorized the repurchase of up to 200,000 shares of the Company's Common Stock
The authorized common stock of the Company consisted of 80,000,000 and 40,000,000 shares of common stock as of
December 31, 2023 and 2022, respectively, $1 par value, of which 37,221,098 were issued and outstanding as of December 31,
through February 2026.
2023 and 2022, respectively.
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, 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 total purchase consideration for Syrinix, net of cash acquired, was $17.1 million. The Company's allocation of the
purchase price at December 31, 2023 included $0.6 million of receivables, $0.7 million of inventories, $2.1 million of other
assets, $7.7 million of intangible assets and $10.3 million of goodwill. The intangible assets acquired are primarily developed
technology, customer relationships and trademarks with estimated average useful lives of 13 to 15 years. The Company also
assumed $1.9 million of payables, $2.0 million of deferred income taxes and $0.4 million of other current and long-term
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, 2023, 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, 2023 and 2022. On July 8, 2021, the Company entered
into a new credit agreement, with a maturity date of July 8, 2026. 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, 2023. The Company had $154.4 million of unused credit lines available at
December 31, 2023.
Note 5 Stock Compensation
As of December 31, 2023, the Company has an Omnibus Incentive Plan under which 1,000,000 shares are reserved for
40
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, 2023 and 2022 there were 909,688 and 938,147 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, 2023, 2022 and 2021 was $0.2 million,
$0.3 million and $0.4 million, respectively. No new stock options were granted in 2023, 2022 and 2021.
The following table summarizes stock option activity for the three-year period ended December 31, 2023:
Options outstanding - December 31, 2020
Options exercised
Options outstanding - December 31, 2021
Options exercised
Options forfeited
Options outstanding - December 31, 2022
Options exercised
Options outstanding - December 31, 2023
Exercisable options —
December 31, 2021
December 31, 2022
December 31, 2023
Number of shares
Weighted-
average
exercise price
316,194 $
(88,932 )
227,262 $
(25,986 )
(4,529 )
196,747 $
(30,433 )
166,314 $
170,484 $
163,316
147,937
37.75
22.89
43.56
27.04
60.82
45.35
31.77
47.83
38.31
42.23
46.06
The weighted-average contractual life remaining for options outstanding as of December 31, 2023 was 3.8 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
$
2023
2022
2021
(In thousands)
3,919 $
17,718
16,023
$
2,175
12,529
10,910
7,085
14,316
11,635
As of December 31, 2023, the unrecognized compensation expense related to stock options was approximately $0.2
million, which will be recognized over a weighted average period of 1.1 years. There were no anti-dilutive options in 2023 and
2022.
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 2023 was $75,000. 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 in
the period the grants are awarded. Director stock compensation expense recognized by the Company was $0.5 million in 2023,
$0.5 million in 2022 and $0.3 million in 2021. As of December 31, 2023, there was no unrecognized compensation cost related
to the director stock award.
34
41
Note 5 Stock Compensation
As of December 31, 2023, 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, 2023 and 2022 there were 909,688 and 938,147 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, 2023, 2022 and 2021 was $0.2 million,
$0.3 million and $0.4 million, respectively. No new stock options were granted in 2023, 2022 and 2021.
The following table summarizes stock option activity for the three-year period ended December 31, 2023:
Options outstanding - December 31, 2020
Options outstanding - December 31, 2021
Options exercised
Options exercised
Options forfeited
Options exercised
Exercisable options —
December 31, 2021
December 31, 2022
December 31, 2023
Options outstanding - December 31, 2022
Options outstanding - December 31, 2023
Number of shares
exercise price
Weighted-
average
316,194 $
(88,932 )
227,262 $
(25,986 )
(4,529 )
196,747 $
(30,433 )
166,314 $
170,484 $
163,316
147,937
37.75
22.89
43.56
27.04
60.82
45.35
31.77
47.83
38.31
42.23
46.06
The weighted-average contractual life remaining for options outstanding as of December 31, 2023 was 3.8 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
$
2023
2022
2021
(In thousands)
3,919 $
17,718
16,023
2,175
$
12,529
10,910
7,085
14,316
11,635
As of December 31, 2023, the unrecognized compensation expense related to stock options was approximately $0.2
million, which will be recognized over a weighted average period of 1.1 years. There were no anti-dilutive options in 2023 and
2022.
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 2023 was $75,000. 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 in
the period the grants are awarded. Director stock compensation expense recognized by the Company was $0.5 million in 2023,
$0.5 million in 2022 and $0.3 million in 2021. As of December 31, 2023, there was no unrecognized compensation cost related
to the director stock award.
Restricted Stock
The Company periodically issues nonvested shares of the Company's Common Stock to certain eligible employees.
41
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 was $2.0 million in 2023, $1.6 million in 2022 and $1.4 million in 2021.
The fair value of nonvested shares is determined based on the market price of the shares on the grant date.
Nonvested at December 31, 2020
Granted
Vested
Forfeited
Nonvested at December 31, 2021
Granted
Vested
Forfeited
Nonvested at December 31, 2022
Granted
Vested
Forfeited
Nonvested at December 31, 2023
Shares
Fair value
per share
57,549 $
17,430
(16,528 )
(1,384 )
57,067 $
21,637
(23,302 )
(4,327 )
51,075 $
21,261
(30,408 )
(836 )
41,092 $
57.33
99.90
49.31
58.68
72.62
97.41
66.87
86.53
84.85
125.11
75.97
97.68
111.99
As of December 31, 2023, there was $2.8 million of unrecognized compensation cost related to nonvested restricted
stock that is expected to be recognized over a weighted average period of 1.9 years.
Performance Share Units
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, 2022 and 2023 will range from 50% to 200% of the granted number of
performance shares for the three-year performance period ending December 31, 2023, December 31, 2024, and December 31,
2025, 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 was $2.5 million in 2023, $1.2
million in 2022 and $0.6 million in 2021.
A summary of performance share activity for the three 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
Granted
Adjustment for expected performance results
Nonvested at December 31, 2023
35
42
Performance
Shares
Weighted
Average Grant
Date Fair Value
—
100.37
100.37
100.37
97.62
97.62
99.43
98.92
123.77
120.74
108.59
— $
14,748
7,374
22,122 $
16,870
6,746
(2,892 )
42,846 $
18,698
10,701
72,245 $
As of December 31, 2023, there was $3.5 million of unrecognized compensation cost related to nonvested
performance share units that is expected to be realized over a weighted average period of 1.9 years.
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 was $2.0 million in 2023, $1.6 million in 2022 and $1.4 million in 2021.
The fair value of nonvested shares is determined based on the market price of the shares on the grant date.
Shares
Fair value
per share
57,549 $
17,430
(16,528 )
(1,384 )
57,067 $
21,637
(23,302 )
(4,327 )
51,075 $
21,261
(30,408 )
(836 )
41,092 $
57.33
99.90
49.31
58.68
72.62
97.41
66.87
86.53
84.85
125.11
75.97
97.68
111.99
Nonvested at December 31, 2020
Granted
Vested
Forfeited
Granted
Vested
Forfeited
Granted
Vested
Forfeited
Nonvested at December 31, 2021
Nonvested at December 31, 2022
Nonvested at December 31, 2023
Performance Share Units
As of December 31, 2023, there was $2.8 million of unrecognized compensation cost related to nonvested restricted
stock that is expected to be recognized over a weighted average period of 1.9 years.
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, 2022 and 2023 will range from 50% to 200% of the granted number of
performance shares for the three-year performance period ending December 31, 2023, December 31, 2024, and December 31,
2025, 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 was $2.5 million in 2023, $1.2
million in 2022 and $0.6 million in 2021.
A summary of performance share activity for the three 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
Granted
Adjustment for expected performance results
Nonvested at December 31, 2023
Performance
Shares
Weighted
Average Grant
Date Fair Value
—
100.37
100.37
100.37
97.62
97.62
99.43
98.92
123.77
120.74
108.59
— $
14,748
7,374
22,122 $
16,870
6,746
(2,892 )
42,846 $
18,698
10,701
72,245 $
As of December 31, 2023, there was $3.5 million of unrecognized compensation cost related to nonvested
performance share units that is expected to be realized over a weighted average period of 1.9 years.
Note 6 Commitments and Contingencies
Commitments
42
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 $3.6 million in 2023, $3.5 million in 2022 and $3.1 million in 2021. 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 2023, 2022 and 2021 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 2023, 2022 or 2021. The discount rate used to measure the net periodic pension cost was
5.09% for 2023, 2.61% for 2022 and 2.08% for 2021. The amount accrued was $0.8 million and $0.7 million as of
December 31, 2023 and 2022, 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 $1.2 million
in 2023, $1.1 million in 2022 and $0.9 million in 2021.
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 $4.0 million in 2023, $3.7 million in 2022 and $3.1 million in 2021.
36
Other Postretirement Benefits
The Company also has a postretirement healthcare benefit plan that provides medical benefits for certain U.S. retirees
and eligible dependents hired prior to November 1, 2004. Employees are eligible to receive postretirement healthcare benefits
upon meeting certain age and service requirements. No employees hired after October 31, 2004 are eligible to receive these
benefits. This plan requires employee contributions to offset benefit costs.
43
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 $3.6 million in 2023, $3.5 million in 2022 and $3.1 million in 2021. 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 2023, 2022 and 2021 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 2023, 2022 or 2021. The discount rate used to measure the net periodic pension cost was
5.09% for 2023, 2.61% for 2022 and 2.08% for 2021. The amount accrued was $0.8 million and $0.7 million as of
December 31, 2023 and 2022, 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 $1.2 million
in 2023, $1.1 million in 2022 and $0.9 million in 2021.
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 $4.0 million in 2023, $3.7 million in 2022 and $3.1 million in 2021.
Other Postretirement Benefits
The Company also has a postretirement healthcare benefit plan that provides medical benefits for certain U.S. retirees
and eligible dependents hired prior to November 1, 2004. Employees are eligible to receive postretirement healthcare benefits
upon meeting certain age and service requirements. No employees hired after October 31, 2004 are eligible to receive these
benefits. This plan requires employee contributions to offset benefit costs.
The following table sets forth the components of net periodic postretirement benefit cost for the years ended
December 31, 2023, 2022 and 2021:
Service cost, benefits attributed for service of active employees for the
period
Interest cost on the accumulated postretirement benefit obligation
Amortization of actuarial gain
Net periodic postretirement benefit cost
43
$
$
2023
2022
2021
(In thousands)
72 $
206
(193 )
85 $
91 $
119
(48 )
162 $
104
99
-
203
The discount rate used to measure the net periodic postretirement benefit cost was 5.16% for 2023, 2.82% for 2022
and 2.45% for 2021. It is the Company's policy to fund healthcare benefits on a cash basis. Because the plan is unfunded, there
are no plan assets. The following table provides a reconciliation of the projected benefit obligation at the Company's December
31 measurement date:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain
Plan participants' contributions
Benefits paid
Benefit obligation, end of year
2023
2022
(In thousands)
4,244 $
72
206
(22 )
543
(1,121 )
3,922 $
5,544
91
119
(833 )
600
(1,277 )
4,244
$
$
The amounts recognized in the Consolidated Balance Sheets at December 31 are:
Accrued compensation and employee benefits
Accrued non-pension postretirement benefits
Amounts recognized at December 31
2023
2022
(In thousands)
309 $
3,613
3,922 $
328
3,916
4,244
$
$
The discount rate used to measure the accumulated postretirement benefit obligation was 4.96% for 2023 and 5.16%
for 2022. The Company's discount rate assumptions for its postretirement benefit plan are based on the average yield of a
hypothetical high quality bond portfolio with maturities that approximately match the estimated cash flow needs of the plan.
Because the plan requires the Company to establish fixed Company contribution amounts for retiree healthcare benefits, future
healthcare cost trends do not generally impact the Company's accruals or provisions.
Estimated future benefit payments of postretirement benefits, assuming increased cost sharing, expected to be paid in
each of the next five years beginning with 2024 are $0.3 million through 2028, with an aggregate of $1.6 million for the five
years thereafter. These amounts can vary significantly from year to year because the cost sharing estimates can vary from
actual expenses as the Company is self-insured.
Amounts included in accumulated other comprehensive income, net of tax, at December 31, 2023 that have not yet
been recognized in net periodic benefit cost are as follows:
Net actuarial loss (gain)
Pension
plans
Other
postretirement
benefits
$
(In thousands)
48 $
(968 )
37
44
Amounts included in accumulated other comprehensive income, net of tax, at December 31, 2023 expected to be
recognized in net periodic benefit cost during the fiscal year ending December 31, 2024 are not expected to be material.
The following table sets forth the components of net periodic postretirement benefit cost for the years ended
December 31, 2023, 2022 and 2021:
Service cost, benefits attributed for service of active employees for the
period
Interest cost on the accumulated postretirement benefit obligation
Amortization of actuarial gain
Net periodic postretirement benefit cost
$
$
72 $
206
(193 )
85 $
91 $
119
(48 )
162 $
104
99
-
203
2023
2022
2021
(In thousands)
The discount rate used to measure the net periodic postretirement benefit cost was 5.16% for 2023, 2.82% for 2022
and 2.45% for 2021. It is the Company's policy to fund healthcare benefits on a cash basis. Because the plan is unfunded, there
are no plan assets. The following table provides a reconciliation of the projected benefit obligation at the Company's December
31 measurement date:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain
Benefits paid
Plan participants' contributions
Benefit obligation, end of year
Accrued compensation and employee benefits
Accrued non-pension postretirement benefits
Amounts recognized at December 31
The amounts recognized in the Consolidated Balance Sheets at December 31 are:
2023
2022
(In thousands)
4,244 $
72
206
(22 )
543
(1,121 )
3,922 $
5,544
91
119
(833 )
600
(1,277 )
4,244
2023
2022
(In thousands)
309 $
3,613
3,922 $
328
3,916
4,244
$
$
$
$
The discount rate used to measure the accumulated postretirement benefit obligation was 4.96% for 2023 and 5.16%
for 2022. The Company's discount rate assumptions for its postretirement benefit plan are based on the average yield of a
hypothetical high quality bond portfolio with maturities that approximately match the estimated cash flow needs of the plan.
Because the plan requires the Company to establish fixed Company contribution amounts for retiree healthcare benefits, future
healthcare cost trends do not generally impact the Company's accruals or provisions.
Estimated future benefit payments of postretirement benefits, assuming increased cost sharing, expected to be paid in
each of the next five years beginning with 2024 are $0.3 million through 2028, with an aggregate of $1.6 million for the five
years thereafter. These amounts can vary significantly from year to year because the cost sharing estimates can vary from
actual expenses as the Company is self-insured.
Amounts included in accumulated other comprehensive income, net of tax, at December 31, 2023 that have not yet
been recognized in net periodic benefit cost are as follows:
Net actuarial loss (gain)
Pension
plans
Other
postretirement
benefits
$
(In thousands)
48 $
(968 )
Amounts included in accumulated other comprehensive income, net of tax, at December 31, 2023 expected to be
recognized in net periodic benefit cost during the fiscal year ending December 31, 2024 are not expected to be material.
Note 8 Income Taxes
The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant
judgment is required in determining the worldwide provision for income taxes and recording the related deferred tax assets and
44
liabilities.
Details of earnings before income taxes are as follows:
Domestic
Foreign
Total
The provision (benefit) for income taxes is as follows:
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
Total
2023
2022
(In thousands)
2021
$
$
120,384 $
1,582
121,966 $
83,680 $
4,037
87,717 $
74,509
4,114
78,623
2023
2022
(In thousands)
2021
$
$
29,629 $
8,147
1,242
(7,376 )
(1,332 )
(942 )
29,368 $
20,089 $
4,720
2,031
(4,289 )
(955 )
(375 )
21,221 $
15,299
3,556
1,939
(1,774 )
(600 )
(681 )
17,739
The provision for income tax differs from the amount that would be provided by applying the statutory U.S. corporate
income tax rate in each year due to the following items:
Provision at statutory rate
State income taxes, net of federal tax benefit
Valuation allowance
Foreign - tax rate differential and other
Federal tax credits
Compensation subject to section 162(m)
Stock based compensation
Other
Actual provision
2023
2022
(In thousands)
2021
$
$
25,613 $
5,236
(78 )
340
(1,548 )
930
(967 )
(158 )
29,368 $
18,421 $
2,938
571
388
(1,016 )
693
(523 )
(251 )
21,221 $
16,511
2,288
168
606
(770 )
685
(1,510 )
(239 )
17,739
38
45
The components of deferred income taxes as of December 31 are as follows:
Deferred tax assets:
Reserve for receivables and inventory
Accrued compensation
Reserves and payables
Accrued post-retirement medical benefits
Net operating loss and credit carryforwards
Deferred compensation
Accrued qualified plan benefits
Accrued stock-based compensation
Deferred revenue
Operating lease liabilities
Research and development costs
Other
Total gross deferred tax assets
Less: valuation allowance
Total net deferred tax assets
Deferred tax liabilities:
Property, plant and equipment
Intangible assets
Prepaids
Operating lease assets
Other
Total deferred tax liabilities
Net deferred tax assets
2023
2022
(In thousands)
$
$
2,959 $
4,069
2,509
971
4,948
1,269
988
1,166
8,128
1,071
5,744
1,359
35,181
(2,683 )
32,498
4,323
8,361
394
1,020
746
14,844
17,654 $
2,972
2,209
2,340
1,054
2,827
1,139
1,193
1,120
4,793
1,262
2,625
987
24,521
(2,690 )
21,831
4,454
7,247
238
1,258
525
13,722
8,109
As of December 31, 2023, the Company had U.S. federal net operating loss carryforwards of approximately $2.8
million, U.S. state net operating loss carryforwards of approximately $2.0 million, and foreign net operating loss carryforwards
of approximately $13.7 million, of which $13.5 million have an unlimited carryforward period. The Company's tax credit
carryforward of $0.6 million relates to state specific tax credits that the Company expects to fully utilize in future tax periods.
The Company has recorded a full valuation allowance against certain deferred tax assets which are not likely to be realized. The
valuation allowance relates primarily to foreign net operating loss carryforwards.
In 2021, the Organization for Economic Cooperation and Development ("OEDC") released Pillar Two Global Anti-
Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of
operation. The OECD continues to release guidance and countries are implementing legislation to adopt these rules, which are
expected to be effective for accounting periods beginning on or after December 31, 2023. The United States has not yet
enacted legislation implementing Pillar Two. The Company is continuing to evaluate the Pillar Two rules and their potential
impact on future periods. Based on existing proposed rules, the Company does not meet the revenue requirements for the Pillar
Two rules to apply. As a result, the Company does not expect the rules to have a material impact on its effective tax rate.
In general, it is the Company's practice and intention to reinvest earnings of its non-U.S. subsidiaries in those
operations. As of December 31, 2023, the Company has not made a provision for incremental U.S. income taxes or additional
foreign withholding taxes on approximately $15.8 million of such undistributed earnings, $14.4 million of which was
previously subject to U.S. tax that is deemed indefinitely reinvested.
Changes in the Company's gross liability for unrecognized tax benefits, excluding interest and penalties, were as
follows:
Balance at beginning of year
Increases (reductions) in unrecognized tax benefits as a result of positions taken
during the prior year
Increases in unrecognized tax benefits as a result of positions taken during the
current year
Reductions to unrecognized tax benefits as a result of a lapse of the applicable
statute of limitations
Balance at end of year
39
46
2023
2022
$
(In thousands)
1,039 $
84
485
(213 )
1,395 $
$
1,172
(89 )
231
(275 )
1,039
The Company does not expect a significant increase or decrease to the total amount of unrecognized tax benefits
during the next twelve months. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the
effective tax rate. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state
and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for
years prior to 2020, and, with few exceptions, state and local income tax examinations by tax authorities for years prior to 2019.
The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as
operating expenses. Accrued interest was approximately $0.1 million at both December 31, 2023 and 2022 and there were no
penalties accrued in either year.
Note 9 Industry Segment and Geographic Areas
The Company is an innovator, manufacturer, marketer and distributor of products incorporating flow measurement,
control, quality and communication solutions, which comprise one reportable segment. The Company manages and evaluates
its operations as one segment primarily due to similarities in the nature of the products, production processes, customers and
methods of distribution.
47
As of December 31, 2023, the Company had U.S. federal net operating loss carryforwards of approximately $2.8
million, U.S. state net operating loss carryforwards of approximately $2.0 million, and foreign net operating loss carryforwards
of approximately $13.7 million, of which $13.5 million have an unlimited carryforward period. The Company's tax credit
carryforward of $0.6 million relates to state specific tax credits that the Company expects to fully utilize in future tax periods.
The Company has recorded a full valuation allowance against certain deferred tax assets which are not likely to be realized. The
valuation allowance relates primarily to foreign net operating loss carryforwards.
In 2021, the Organization for Economic Cooperation and Development ("OEDC") released Pillar Two Global Anti-
Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of
operation. The OECD continues to release guidance and countries are implementing legislation to adopt these rules, which are
expected to be effective for accounting periods beginning on or after December 31, 2023. The United States has not yet
enacted legislation implementing Pillar Two. The Company is continuing to evaluate the Pillar Two rules and their potential
impact on future periods. Based on existing proposed rules, the Company does not meet the revenue requirements for the Pillar
Two rules to apply. As a result, the Company does not expect the rules to have a material impact on its effective tax rate.
In general, it is the Company's practice and intention to reinvest earnings of its non-U.S. subsidiaries in those
operations. As of December 31, 2023, the Company has not made a provision for incremental U.S. income taxes or additional
foreign withholding taxes on approximately $15.8 million of such undistributed earnings, $14.4 million of which was
previously subject to U.S. tax that is deemed indefinitely reinvested.
Changes in the Company's gross liability for unrecognized tax benefits, excluding interest and penalties, were as
follows:
Balance at beginning of year
Increases (reductions) in unrecognized tax benefits as a result of positions taken
during the prior year
Increases in unrecognized tax benefits as a result of positions taken during the
current year
Reductions to unrecognized tax benefits as a result of a lapse of the applicable
statute of limitations
Balance at end of year
2023
2022
$
(In thousands)
1,039 $
84
485
(213 )
1,395 $
$
1,172
(89 )
231
(275 )
1,039
The Company does not expect a significant increase or decrease to the total amount of unrecognized tax benefits
during the next twelve months. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the
effective tax rate. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state
and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for
years prior to 2020, and, with few exceptions, state and local income tax examinations by tax authorities for years prior to 2019.
The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as
operating expenses. Accrued interest was approximately $0.1 million at both December 31, 2023 and 2022 and there were no
penalties accrued in either year.
Note 9 Industry Segment and Geographic Areas
The Company is an innovator, manufacturer, marketer and distributor of products incorporating flow measurement,
control, quality and communication solutions, which comprise one reportable segment. The Company manages and evaluates
its operations as one segment primarily due to similarities in the nature of the products, production processes, customers and
methods of distribution.
Information regarding revenues by geographic area is as follows:
Revenues:
United States
Foreign:
Asia
Canada
Europe
Mexico
Middle East
Other
Total
2023
2022
(In thousands)
2021
$
621,166 $
491,683 $
432,188
13,545
12,958
39,106
4,258
10,381
2,178
703,592 $
14,995
12,768
28,718
3,931
9,286
4,187
565,568 $
16,736
11,867
30,359
5,110
7,176
1,762
505,198
47
$
Information regarding assets by geographic area is as follows:
Long-lived assets:
United States
Foreign:
Europe
Mexico
Total
Total assets:
United States
Foreign:
Europe
Mexico
Total
2023
2022
(In thousands)
$
43,882 $
43,182
12,807
17,189
73,878 $
12,923
17,437
73,542
$
2023
2022
(In thousands)
$
550,018 $
466,697
140,999
25,902
716,919 $
113,945
22,405
603,047
$
40
48
Information regarding revenues by geographic area is as follows:
Revenues:
United States
Foreign:
Asia
Canada
Europe
Mexico
Middle East
Other
Total
Information regarding assets by geographic area is as follows:
Long-lived assets:
United States
Foreign:
Europe
Mexico
Total
Total assets:
United States
Foreign:
Europe
Mexico
Total
2023
2022
(In thousands)
2021
$
621,166 $
491,683 $
432,188
13,545
12,958
39,106
4,258
10,381
2,178
703,592 $
14,995
12,768
28,718
3,931
9,286
4,187
565,568 $
16,736
11,867
30,359
5,110
7,176
1,762
505,198
$
2023
2022
(In thousands)
$
43,882 $
43,182
12,807
17,189
73,878 $
12,923
17,437
73,542
$
2023
2022
(In thousands)
$
550,018 $
466,697
140,999
25,902
716,919 $
113,945
22,405
603,047
$
Note 10 Unaudited: Quarterly Results of Operations, Common Stock Price and Dividends
The Company's Common Stock is listed on the New York Stock Exchange under the symbol BMI. Earnings per share
are computed independently for each quarter. As such, the annual per share amount may not equal the sum of the quarterly
amounts due to rounding. The Company currently anticipates continuing to pay cash dividends. Shareholders of record as of
December 31, 2023 and 2022 totaled 560. Voting trusts and street name shareholders are counted as single shareholders for
this purpose.
2023
Net sales
Gross margin
Net earnings
Earnings per share:
Basic
Diluted
Dividends declared
Stock price:
High
Low
Quarter-end close
2022
Net sales
Gross margin
Net earnings
Earnings per share:
Basic
Diluted
Dividends declared
Stock price:
High
Low
Quarter-end close
March 31
June 30
September 30 December 31
(In thousands, except per share data)
Quarter ended
$
$
$
159,101 $
62,816
19,415
175,858 $
69,434
22,493
186,193
$
72,723
25,969
182,440
71,465
24,721
0.66 $
0.66
0.23
0.77 $
0.76
0.23
0.89 $
0.88
0.27
0.84
0.84
0.27
124.35 $
103.93
121.82
156.15 $
117.53
147.56
170.86 $
138.71
143.87
158.47
134.06
154.37
$
48
132,402 $
50,723
14,360
137,833 $
54,760
16,664
148,009
$
57,522
17,933
147,324
56,965
17,539
$
$
0.49 $
0.49
0.20
0.57 $
0.57
0.20
0.61 $
0.61
0.23
0.60
0.60
0.23
108.76 $
85.55
99.71
102.67 $
73.20
80.89
103.30 $
76.88
92.39
120.54
88.16
109.03
Note 11 Revenue Recognition
Revenue for sales of products and services is derived from contracts with customers. The products and services
promised in contracts include the sale of utility water and flow instrumentation products, such as flow meters and radios,
quality sensing equipment, software access and other ancillary services. Contracts generally state the terms of sale, including
the description, quantity and price of each product or service. Since the customer typically agrees to a stated rate and price in
the contract that does not vary over the life of the contract, the majority of the Company's contracts do not contain variable
41
consideration. The Company establishes a provision for estimated warranty and returns as well as certain after sale costs as
discussed in Note 1 “Summary of Significant Accounting Policies.”
The Company disaggregates revenue from contracts with customers into geographical regions and by the timing of
when goods and services are transferred. The Company determined that disaggregating revenue into these categories depicts
how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.
Information regarding revenues disaggregated by geographic area is disclosed in Note 9 “Industry Segment and Geographic
Areas.”
49
Note 10 Unaudited: Quarterly Results of Operations, Common Stock Price and Dividends
The Company's Common Stock is listed on the New York Stock Exchange under the symbol BMI. Earnings per share
are computed independently for each quarter. As such, the annual per share amount may not equal the sum of the quarterly
amounts due to rounding. The Company currently anticipates continuing to pay cash dividends. Shareholders of record as of
December 31, 2023 and 2022 totaled 560. Voting trusts and street name shareholders are counted as single shareholders for
this purpose.
2023
Net sales
Gross margin
Net earnings
Earnings per share:
Dividends declared
Stock price:
Basic
Diluted
High
Low
Quarter-end close
2022
Net sales
Gross margin
Net earnings
Earnings per share:
Basic
Diluted
Dividends declared
Stock price:
High
Low
Quarter-end close
March 31
June 30
September 30 December 31
(In thousands, except per share data)
Quarter ended
$
159,101 $
175,858 $
186,193
$
182,440
62,816
19,415
69,434
22,493
72,723
25,969
71,465
24,721
$
0.66 $
0.66
0.23
0.77 $
0.76
0.23
0.89 $
0.88
0.27
$
124.35 $
156.15 $
170.86 $
103.93
121.82
117.53
147.56
138.71
143.87
0.84
0.84
0.27
158.47
134.06
154.37
$
132,402 $
137,833 $
148,009
$
147,324
50,723
14,360
54,760
16,664
57,522
17,933
56,965
17,539
$
$
0.49 $
0.49
0.20
0.57 $
0.57
0.20
0.61 $
0.61
0.23
0.60
0.60
0.23
108.76 $
85.55
99.71
102.67 $
73.20
80.89
103.30 $
76.88
92.39
120.54
88.16
109.03
Note 11 Revenue Recognition
Revenue for sales of products and services is derived from contracts with customers. The products and services
promised in contracts include the sale of utility water and flow instrumentation products, such as flow meters and radios,
quality sensing equipment, software access and other ancillary services. Contracts generally state the terms of sale, including
the description, quantity and price of each product or service. Since the customer typically agrees to a stated rate and price in
the contract that does not vary over the life of the contract, the majority of the Company's contracts do not contain variable
consideration. The Company establishes a provision for estimated warranty and returns as well as certain after sale costs as
discussed in Note 1 “Summary of Significant Accounting Policies.”
The Company disaggregates revenue from contracts with customers into geographical regions and by the timing of
when goods and services are transferred. The Company determined that disaggregating revenue into these categories depicts
how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.
Information regarding revenues disaggregated by geographic area is disclosed in Note 9 “Industry Segment and Geographic
Areas.”
Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows
for the years ended December 31:
Revenue recognized over time
Revenue recognized at a point in time
Total
2023
44,317
659,275
703,592
$
$
49
(In thousands)
$
6.3%
93.7%
100.0%
$
2022
35,695
529,873
565,568
6.3%
93.7%
100.0%
The Company performs its obligations under a contract by shipping products or performing services in exchange for
consideration. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable to
the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods or
services and the Company has not transferred control of the goods or services.
The Company's receivables and contract liabilities are as follows at the years ended December 31 are as follows:
Receivables
Contract liabilities
$
2023
2022
(In thousands)
83,507 $
59,970
76,651
40,700
Contract liabilities are included in payables and long-term deferred revenue on the Company’s Consolidated Balance
Sheet. The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced
receivables at December 31, 2023 and 2022.
A performance obligation in a contract is a promise to transfer a distinct good or service to the customer. At contract
inception, the Company assesses the products and services promised in its contracts with customers. The Company then
identifies performance obligations to transfer distinct products or services to the customer. In order to identify performance
obligations, the Company considers all of the products or services promised in the contract regardless of whether they are
explicitly stated or are implied by customary business practices.
The Company's performance obligations are satisfied at a point in time or over time as work progresses. The majority
of the Company's revenue recognized at a point in time is for the sale of utility and flow instrumentation products. Revenue
from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from
the product, which generally coincides with title transfer during the shipping process. The majority of the Company's revenue
that is recognized over time relates to the BEACON software as a service (“SaaS”).
The Company records revenue for BEACON SaaS revenue over time as the customer benefits from the use of the
Company's software. Control of an asset is therefore transferred to the customer over time and the Company will recognize
revenue for BEACON SaaS as service units are used by the customer.
Revenue is recorded for various ancillary services, such as project management and training, over time as the customer
benefits from the services provided. The majority of this revenue will be recognized equally throughout the contract period as
the customer receives benefits from the Company's promise to provide such services. If the service is not provided evenly over
the contract period, revenue will be recognized by the associated input/output method that best measures the progress towards
contract completion.
42
As of December 31, 2023, the Company had certain contracts with unsatisfied performance obligations. For contracts
recorded as long-term liabilities, $60.0 million was the aggregate amount of the transaction price allocated to performance
obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that
revenue recognized from satisfying those performance obligations will be approximately $10.2 million in 2024, $6.8 million in
2025, $5.8 million in 2026, $5.1 million in 2027, $4.2 million in 2028 and $27.9 million thereafter.
The Company also has contracts that include both the sale and installation of flow meters as performance obligations.
In those cases, the Company records revenue for installed flow meters at the point in time when the flow meters have been
accepted by the customer. The customer cannot control the use of and obtain substantially all of the benefits from the
equipment until the customer has accepted the installed product. Therefore, for both the flow meter and the related installation,
the Company has concluded that control is transferred to the customer upon customer acceptance of the installed flow meter. In
addition, the Company has a variety of ancillary revenue streams which are minor. The types and composition of the
Company's revenue streams did not materially change during the year ended December 31, 2023.
50
Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows
for the years ended December 31:
Revenue recognized over time
Revenue recognized at a point in time
Total
2023
2022
(In thousands)
$
$
44,317
659,275
703,592
6.3%
93.7%
$
100.0%
$
35,695
529,873
565,568
6.3%
93.7%
100.0%
The Company performs its obligations under a contract by shipping products or performing services in exchange for
consideration. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable to
the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods or
services and the Company has not transferred control of the goods or services.
The Company's receivables and contract liabilities are as follows at the years ended December 31 are as follows:
Receivables
Contract liabilities
$
2023
2022
(In thousands)
83,507 $
59,970
76,651
40,700
Contract liabilities are included in payables and long-term deferred revenue on the Company’s Consolidated Balance
Sheet. The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced
receivables at December 31, 2023 and 2022.
A performance obligation in a contract is a promise to transfer a distinct good or service to the customer. At contract
inception, the Company assesses the products and services promised in its contracts with customers. The Company then
identifies performance obligations to transfer distinct products or services to the customer. In order to identify performance
obligations, the Company considers all of the products or services promised in the contract regardless of whether they are
explicitly stated or are implied by customary business practices.
The Company's performance obligations are satisfied at a point in time or over time as work progresses. The majority
of the Company's revenue recognized at a point in time is for the sale of utility and flow instrumentation products. Revenue
from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from
the product, which generally coincides with title transfer during the shipping process. The majority of the Company's revenue
that is recognized over time relates to the BEACON software as a service (“SaaS”).
The Company records revenue for BEACON SaaS revenue over time as the customer benefits from the use of the
Company's software. Control of an asset is therefore transferred to the customer over time and the Company will recognize
revenue for BEACON SaaS as service units are used by the customer.
Revenue is recorded for various ancillary services, such as project management and training, over time as the customer
benefits from the services provided. The majority of this revenue will be recognized equally throughout the contract period as
the customer receives benefits from the Company's promise to provide such services. If the service is not provided evenly over
the contract period, revenue will be recognized by the associated input/output method that best measures the progress towards
contract completion.
As of December 31, 2023, the Company had certain contracts with unsatisfied performance obligations. For contracts
recorded as long-term liabilities, $60.0 million was the aggregate amount of the transaction price allocated to performance
obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. The Company estimates that
revenue recognized from satisfying those performance obligations will be approximately $10.2 million in 2024, $6.8 million in
2025, $5.8 million in 2026, $5.1 million in 2027, $4.2 million in 2028 and $27.9 million thereafter.
The Company also has contracts that include both the sale and installation of flow meters as performance obligations.
In those cases, the Company records revenue for installed flow meters at the point in time when the flow meters have been
accepted by the customer. The customer cannot control the use of and obtain substantially all of the benefits from the
equipment until the customer has accepted the installed product. Therefore, for both the flow meter and the related installation,
the Company has concluded that control is transferred to the customer upon customer acceptance of the installed flow meter. In
addition, the Company has a variety of ancillary revenue streams which are minor. The types and composition of the
Company's revenue streams did not materially change during the year ended December 31, 2023.
The transaction price for a contract is allocated to each distinct performance obligation and recognized as revenue
50
when, or as, each performance obligation is satisfied. For contracts with multiple performance obligations, the Company
allocates the contract's transaction price to each performance obligation using the best estimate of the standalone selling price
of each distinct good or service in a contract. The primary method used to estimate standalone selling price is the observable
price when the good or service is sold separately in similar circumstances and to similar customers. If standalone selling price
is not directly observable, it is estimated using either a market adjustment or cost plus margin approach.
The recording of assets recognized from the costs to obtain and fulfill customer contracts primarily relate to the
deferral of sales commissions and network service contracts on the Company's BEACON software arrangements. The
Company's costs incurred to obtain or fulfill a contract with a customer are amortized over the period of benefit of the related
revenue. The Company expenses any costs incurred immediately when the amortization period would be one year or less.
These costs are recorded within selling, engineering and administration expenses.
For the year ended December 31, 2023 and 2022, the Company elected the following practical expedients:
In accordance with Subtopic 340-40 “Other Assets and Deferred Costs - Contracts with Customers,” the Company
elected to expense the incremental costs of obtaining a contract when the amortization period for such contracts would have
been one year or less. The Company does not disclose the value of unsatisfied performance obligations for contracts with an
original expected length of one year or less, and contracts for which it has the right to invoice for services performed.
The Company has made an accounting policy election to exclude all taxes by governmental authorities from the
measurement of the transaction price.
Note 12 Leases
The Company rents facilities, equipment and vehicles under operating leases, some of which contain renewal options.
Upon inception of a rent agreement, the Company determines whether the arrangement contains a lease based on the unique
conditions present. Leases that have a term over a year are recognized on the balance sheet as right-of-use assets and lease
liabilities. Right-of-use assets are included in other assets on the Company’s Consolidated Balance Sheet. Lease liabilities are
included in other current liabilities and other long-term liabilities on the Company’s Consolidated Balance Sheet. Information
regarding the Company's right-of-use assets and the corresponding lease liabilities at the years ended December 31 is as
follows:
Right-of-use assets
Lease liabilities
December 31,
2023
December 31,
2022
$
(In thousands)
5,522 $
5,758
6,533
6,792
The Company’s operating lease agreements have lease and non-lease components that require payments for common
area maintenance, property taxes and insurance. The Company has elected to account for both lease and non-lease components
as one lease component. The fixed and in-substance fixed consideration in the Company’s rent agreements constitute operating
lease expense that is included in the capitalized right-of-use assets and lease liabilities. The variable and short-term lease
expense payments are not included in the present value of the right-of use-assets and lease liabilities on the Consolidated
Balance Sheet. The Company’s rent expense for the years ended December 31 is as follows:
43
Operating lease expense
Variable and short-term lease expense
Rent expense
2023
2022
(In thousands)
3,406 $
192
3,598 $
3,447
76
3,523
$
$
The Company records right-of-use assets and lease liabilities based upon the present value of lease payments over the
expected lease term. The Company’s lease agreements typically do not have implicit interest rates that are readily determinable.
As a result, the Company utilizes an incremental borrowing rate that would be incurred to borrow on a collateralized basis over
a similar term in a comparable economic environment. As of December 31, 2023 and 2022, the remaining lease term on the
51
The transaction price for a contract is allocated to each distinct performance obligation and recognized as revenue
when, or as, each performance obligation is satisfied. For contracts with multiple performance obligations, the Company
allocates the contract's transaction price to each performance obligation using the best estimate of the standalone selling price
of each distinct good or service in a contract. The primary method used to estimate standalone selling price is the observable
price when the good or service is sold separately in similar circumstances and to similar customers. If standalone selling price
is not directly observable, it is estimated using either a market adjustment or cost plus margin approach.
The recording of assets recognized from the costs to obtain and fulfill customer contracts primarily relate to the
deferral of sales commissions and network service contracts on the Company's BEACON software arrangements. The
Company's costs incurred to obtain or fulfill a contract with a customer are amortized over the period of benefit of the related
revenue. The Company expenses any costs incurred immediately when the amortization period would be one year or less.
These costs are recorded within selling, engineering and administration expenses.
For the year ended December 31, 2023 and 2022, the Company elected the following practical expedients:
In accordance with Subtopic 340-40 “Other Assets and Deferred Costs - Contracts with Customers,” the Company
elected to expense the incremental costs of obtaining a contract when the amortization period for such contracts would have
been one year or less. The Company does not disclose the value of unsatisfied performance obligations for contracts with an
original expected length of one year or less, and contracts for which it has the right to invoice for services performed.
The Company has made an accounting policy election to exclude all taxes by governmental authorities from the
measurement of the transaction price.
Note 12 Leases
The Company rents facilities, equipment and vehicles under operating leases, some of which contain renewal options.
Upon inception of a rent agreement, the Company determines whether the arrangement contains a lease based on the unique
conditions present. Leases that have a term over a year are recognized on the balance sheet as right-of-use assets and lease
liabilities. Right-of-use assets are included in other assets on the Company’s Consolidated Balance Sheet. Lease liabilities are
included in other current liabilities and other long-term liabilities on the Company’s Consolidated Balance Sheet. Information
regarding the Company's right-of-use assets and the corresponding lease liabilities at the years ended December 31 is as
follows:
Right-of-use assets
Lease liabilities
December 31,
2023
December 31,
2022
$
(In thousands)
5,522 $
5,758
6,533
6,792
The Company’s operating lease agreements have lease and non-lease components that require payments for common
area maintenance, property taxes and insurance. The Company has elected to account for both lease and non-lease components
as one lease component. The fixed and in-substance fixed consideration in the Company’s rent agreements constitute operating
lease expense that is included in the capitalized right-of-use assets and lease liabilities. The variable and short-term lease
expense payments are not included in the present value of the right-of use-assets and lease liabilities on the Consolidated
Balance Sheet. The Company’s rent expense for the years ended December 31 is as follows:
Operating lease expense
Variable and short-term lease expense
Rent expense
2023
2022
(In thousands)
3,406 $
192
3,598 $
3,447
76
3,523
$
$
The Company records right-of-use assets and lease liabilities based upon the present value of lease payments over the
expected lease term. The Company’s lease agreements typically do not have implicit interest rates that are readily determinable.
As a result, the Company utilizes an incremental borrowing rate that would be incurred to borrow on a collateralized basis over
a similar term in a comparable economic environment. As of December 31, 2023 and 2022, the remaining lease term on the
Company’s leases was 5.3 years. As of December 31, 2023 and 2022, the discount rate was 5.0%. The future minimum lease
payments to be paid under operating leases are as follows:
51
2024
2025
2026
2027
2028
Thereafter
Total future lease payments
Present value adjustment
Present value of future lease payments
December 31,
2023
(In thousands)
2,552
1,964
837
225
129
942
6,649
(891 )
5,758
$
$
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, the
Company's management evaluated, with the participation of the Company's Chairman, President and Chief Executive Officer
and the Company's Senior Vice President - Chief Financial Officer, the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the year
ended December 31, 2023. Based upon their evaluation of these disclosure controls and procedures, the Company's Chairman,
President and Chief Executive Officer and the Company's Senior Vice President - Chief Financial Officer concluded that, as of
the date of such evaluation, the Company's disclosure controls and procedures were effective.
44
Changes in Internal Controls over Financial Reporting
There was no change in the Company's internal control over financial reporting that occurred during the quarter ended
December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over
financial reporting.
Management's Annual Report on Internal Control over Financial Reporting
The report of management required under this Item 9A is contained in Item 8 of this 2023 Annual Report on
Form 10-K under the heading “Management's Annual Report on Internal Control over Financial Reporting.”
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
The attestation report required under this Item 9A is contained in Item 8 of this 2023 Annual Report on Form 10-K
under the heading “Report of Independent Registered Public Accounting Firm.”
ITEM 9B. OTHER INFORMATION
During the fourth quarter of 2023, none of our directors or executive officers adopted or terminated any "Rule 10b5-1
trading arrangement" or non-Rule 10b-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
52
53
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, the
Company's management evaluated, with the participation of the Company's Chairman, President and Chief Executive Officer
and the Company's Senior Vice President - Chief Financial Officer, the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the year
ended December 31, 2023. Based upon their evaluation of these disclosure controls and procedures, the Company's Chairman,
President and Chief Executive Officer and the Company's Senior Vice President - Chief Financial Officer concluded that, as of
the date of such evaluation, the Company's disclosure controls and procedures were effective.
Changes in Internal Controls over Financial Reporting
There was no change in the Company's internal control over financial reporting that occurred during the quarter ended
December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over
financial reporting.
Management's Annual Report on Internal Control over Financial Reporting
The report of management required under this Item 9A is contained in Item 8 of this 2023 Annual Report on
Form 10-K under the heading “Management's Annual Report on Internal Control over Financial Reporting.”
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
The attestation report required under this Item 9A is contained in Item 8 of this 2023 Annual Report on Form 10-K
under the heading “Report of Independent Registered Public Accounting Firm.”
ITEM 9B. OTHER INFORMATION
During the fourth quarter of 2023, none of our directors or executive officers adopted or terminated any "Rule 10b5-1
trading arrangement" or non-Rule 10b-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this Item with respect to directors is included under the headings “Nomination and Election of
Directors” and in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April
26, 2024 and is incorporated herein by reference.
Information concerning the executive officers of the Company is included in Part I, Item 1 of this 2023 Annual Report
on Form 10-K under the heading “Information about the Company’s Executive Officers.”
The Company has adopted the Badger Meter, Inc. Code of Conduct for Financial Executives that applies to the
Company's Chairman, President and Chief Executive Officer, the Company's Senior Vice President - Chief Financial Officer
and other persons performing similar functions. A copy of the Badger Meter, Inc. Code of Conduct for Financial Executives is
posted on the Company's website at www.badgermeter.com. The Badger Meter, Inc. Code of Conduct for Financial Executives
is also available in print to any shareholder who requests it in writing from the Secretary of the Company. The Company
satisfies the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, the Badger
Meter, Inc. Code of Conduct for Financial Executives by posting such information on the Company's website at
www.badgermeter.com.
The Company is not including the information contained on its website as part of, or incorporating it by reference into,
53
this 2023 Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is included under the headings “Executive Compensation,” “Compensation
Committee Interlocks and Insider Participation”, “CEO Pay Ratio” and "Pay Versus Performance" in the Company's definitive
Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 26, 2024, and is incorporated herein by
reference; provided, however, that the information under the subsection “Executive Compensation - Compensation Committee
45
Report” 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 Exchange Act or to be the liabilities of Section 18 of the Exchange Act, and will not be
deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent it is specifically incorporated by reference into such a filing.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information required by this Item is included under the headings “Stock Ownership of Beneficial Owners,” “Stock
Ownership of Management” and “Equity Compensation Plan Information” in the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders to be held on April 26, 2024 and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this Item is included under the headings “Related Person Transactions” and “Nomination and
Election of Directors - Independence, Committees, Meetings and Attendance” in the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders to be held on April 26, 2024, and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is included under the heading “Principal Accounting Firm Fees” in the Company's
definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 26, 2024, and is incorporated
herein by reference.
54
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this Item with respect to directors is included under the headings “Nomination and Election of
Directors” and in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April
26, 2024 and is incorporated herein by reference.
Information concerning the executive officers of the Company is included in Part I, Item 1 of this 2023 Annual Report
on Form 10-K under the heading “Information about the Company’s Executive Officers.”
The Company has adopted the Badger Meter, Inc. Code of Conduct for Financial Executives that applies to the
Company's Chairman, President and Chief Executive Officer, the Company's Senior Vice President - Chief Financial Officer
and other persons performing similar functions. A copy of the Badger Meter, Inc. Code of Conduct for Financial Executives is
posted on the Company's website at www.badgermeter.com. The Badger Meter, Inc. Code of Conduct for Financial Executives
is also available in print to any shareholder who requests it in writing from the Secretary of the Company. The Company
satisfies the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, the Badger
Meter, Inc. Code of Conduct for Financial Executives by posting such information on the Company's website at
www.badgermeter.com.
The Company is not including the information contained on its website as part of, or incorporating it by reference into,
this 2023 Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is included under the headings “Executive Compensation,” “Compensation
Committee Interlocks and Insider Participation”, “CEO Pay Ratio” and "Pay Versus Performance" in the Company's definitive
Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 26, 2024, and is incorporated herein by
reference; provided, however, that the information under the subsection “Executive Compensation - Compensation Committee
Report” 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 Exchange Act or to be the liabilities of Section 18 of the Exchange Act, and will not be
deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent it is specifically incorporated by reference into such a filing.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information required by this Item is included under the headings “Stock Ownership of Beneficial Owners,” “Stock
Ownership of Management” and “Equity Compensation Plan Information” in the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders to be held on April 26, 2024 and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this Item is included under the headings “Related Person Transactions” and “Nomination and
Election of Directors - Independence, Committees, Meetings and Attendance” in the Company's definitive Proxy Statement
relating to the Annual Meeting of Shareholders to be held on April 26, 2024, and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is included under the heading “Principal Accounting Firm Fees” in the Company's
definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 26, 2024, and is incorporated
herein by reference.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
Documents filed as part of this Annual Report on Form 10-K:
1. Financial Statements. See the financial statements included in Part II, Item 8 “Financial Statements and Data” in
this 2023 Annual Report on Form 10-K, under the headings “Consolidated Balance Sheets,” “Consolidated
Statements of Operations,” “Consolidated Statements of Comprehensive Income,” “Consolidated Statements of
Cash Flows” and “Consolidated Statements of Shareholders' Equity.”
2. Financial Statement Schedules. Financial statement schedules are omitted because the information required in
54
these schedules is included in the Notes to Consolidated Financial Statements.
3. Exhibits. The exhibits listed in the following Exhibit Index are filed as part of this 2023 Annual Report on Form
10-K that is incorporated herein by reference.
ITEM 16. FORM 10-K SUMMARY
None.
46
55
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 16, 2024.
SIGNATURES
BADGER METER, INC.
By: /s/ Kenneth C. Bockhorst
Kenneth C. Bockhorst
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated on February 16, 2024.
Name
/s/ Kenneth C. Bockhorst
Kenneth C. Bockhorst
/s/ Robert A. Wrocklage
Robert A. Wrocklage
/s/ Daniel R. Weltzien
Daniel R. Weltzien
/s/ Todd A. Adams
Todd A. Adams
/s/ Henry F. Brooks
Henry F. Brooks
/s/ Melanie K. Cook
Melanie K. Cook
/s/ Xia Liu
Xia Liu
/s/ James W. McGill
James W. McGill
/s/ Tessa M. Myers
Tessa M. Myers
/s/ James F. Stern
James F. Stern
/s/ Glen E. Tellock
Glen E. Tellock
Title
Chairman, President and
Chief Executive Officer and
Director (Principal executive officer)
Senior Vice President —
Chief Financial Officer
(Principal financial officer)
Vice President — Controller
(Principal accounting officer)
Director
Director
Director
Director
Director
Director
Director
Director
47
58
BADGER METER, INC.
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES TO GAAP PERFORMANCE MEASURES
(in thousands, except share and earnings per share data)
BADGER METER, INC.
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES TO GAAP PERFORMANCE MEASURES
(in thousands, except share and earnings per share data)
2023
2022
2021
2020
2019
Net earnings (GAAP measure)
Interest (income) expense, net
Provision for income taxes
Depreciation
Amortization
EBITDA
Net earnings (GAAP measure)
Interest (income) expense, net
Provision for income taxes
Depreciation
Amortization
EBITDA
Net Sales
EBITDA %
2023
2022
2021
2020
2019
$92,598
(4,047)
29,368
10,937
17,173
$146,029
$703,592
20.8%
$66,496
(552)
21,221
11,090
15,151
$113,406
$565,568
20.1%
$92,598
(4,047)
29,368
10,937
17,173
$146,029
$60,884
(20)
17,739
11,291
16,571
$106,465
$505,198
21.1%
$66,496
(552)
21,221
11,090
15,151
$113,406
$60,884
(20)
17,739
11,291
16,571
$106,465
$49,343
30
15,638
12,253
12,963
$90,227
$49,343
30
15,638
12,253
12,963
$90,227
$47,177
253
14,430
11,569
12,577
$86,006
$425,544
21.2%
$424,625
20.3%
$47,177
253
14,430
11,569
12,577
$86,006
Net Sales
EBITDA %
Cash provided by operations (GAAP measure)
Capital expenditures
Free cash flow
Cash provided by operations (GAAP measure)
Capital expenditures
Free cash flow
Free cash flow
Net earnings (GAAP measure)
Free cash flow conversion
Free cash flow
Net earnings (GAAP measure)
Free cash flow conversion
$703,592
20.8%
$565,568
20.1%
$505,198
21.1%
$425,544
21.2%
$424,625
20.3%
$110,117
(12,003)
$98,114
$82,451
(5,891)
$76,560
$87,510
(6,746)
$80,764
$89,578
(9,059)
$80,519
$80,714
(7,496)
$73,218
$110,117
(12,003)
$98,114
$82,451
(5,891)
$76,560
$87,510
(6,746)
$80,764
$89,578
(9,059)
$80,519
$80,714
(7,496)
$73,218
$98,114
$92,598
106%
$76,560
$66,496
115%
$80,764
$60,884
133%
$80,519
$49,343
163%
$73,218
$47,177
155%
$98,114
$92,598
106%
$76,560
$66,496
115%
$80,764
$60,884
133%
$80,519
$49,343
163%
$73,218
$47,177
155%
48
CORPORATE INFORMATION
BOARD OF DIRECTORS
Todd A. Adams2
Chairman, President and Chief Executive
Melanie K. Cook1
Retired Executive, GE Appliances
Tessa M. Meyers1, 3
Senior Vice President – Intelligent Devices,
Committees of the Board:
1. Audit and Compliance
Officer, Zurn Elkay Water Solutions
Kenneth C. Bockhorst
Chairman, President and Chief Executive
Officer, Badger Meter, Inc.
Henry F. Brooks2
President – Power and Controls,
Collins Aerospace
Xia Liu1
Executive Vice President and Chief Financial
Officer, WEC Energy Group
James W. McGill2, 3
Retired Executive, Eaton Corporation
Rockwell Automation
James F. Stern1, 3
Executive Vice President, General Counsel
and Secretary, A. O. Smith Corporation
Glen E. Tellock (Lead Director)2, 3
Retired Chief Executive Officer,
Lakeside Foods
2. Compensation and Human Resources
3. Corporate Governance and Sustainability
EXECUTIVE OFFICERS
Kenneth C. Bockhorst
Chairman, President and
William R.A. Bergum
Vice President – General Counsel
Lars Bo Kristensen
Vice President – Global Flow Instrumentation
Daniel R. Weltzien
Vice President – Controller
Chief Executive Officer
and Secretary
and International Utility Water
Sheryl L. Hopkins
Vice President – Human Resources
Richard Htwe
Vice President – Global Operations
Kimberly K. Stoll
Vice President – Sales and Marketing
Matthew L. Stuyvenberg
Vice President – Software and Water Quality
Robert A. Wrocklage
Senior Vice President – Chief
Financial Officer
Form 10-K Report/Shareholder Information
The 2023 Form 10-K annual report (without exhibits) as filed with the Securities and
Exchange Commission, is included in this report. Shareholder information, including
news releases and Form 10-K, are available on the company’s website:
www.badgermeter.com.
Forward Looking Statements
Any forward looking statements contained in this document are subject to various risks
and uncertainties, the most important of which are outlined in the Form 10-K.
Trademarks
Trademarks appearing in this document are the property of their respective entities.
Investor Relations
Financial analysts and investors should direct inquires to:
Karen Bauer
Vice President – Investor Relations, Corporate Strategy and Treasurer
kbauer@badgermeter.com
(414) 371-7276
Karen M. Bauer
Vice President – Investor Relations,
Corporate Strategy and Treasurer
Fred J. Begale
Vice President – Engineering
OTHER
Badger Meter, Inc. Headquarters
4545 West Brown Deer Road
P.O. Box 245036
Milwaukee, Wisconsin 53224-9536
(414) 355-0400
www.badgermeter.com
Independent Registered Public Accounting Firm
Ernst & Young, LLP, Milwaukee, Wisconsin
Transfer Agent
Equiniti Trust Company, LLC
P.O. Box 500, Newark, NJ
(877) 248-6415
www.equiniti.com
Listing of Common Stock
New York Stock Exchange; Symbol – BMI
BMI
LISTED
NYSE
© 2024 Badger Meter, Inc. All rights reserved.
4545 West Brown Deer Road
Milwaukee, Wisconsin 53223
www.badgermeter.com