2018 INVESTOR PRESENTATION Badger Meter, Inc. 1

Transcription

1 2018 INVESTOR PRESENTATION 2017 Badger Meter, Inc. 1

2 FORWARD LOOKING STATEMENTS Certain statements contained in this presentation as well as other information provided from time to time by 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. Please see our 2016 Form 10-K for a list of words or expressions that identify such statements Badger Meter, Inc. 2

3 ALWAYS WORKING CORPORATE OVERVIEW 2017 Badger Meter, Inc. 3

4 BUSINESS OVERVIEW Flow Instrumentation - Non-Water, 16.1% Flow Instrumentation - Water, 7.6% 84% WATER RELATED BUSINESS Utility Water Meters and Systems, 76.4% 2017 Badger Meter, Inc. 4

5 PRODUCT LINES flow & industrial instrumentation (24%) markets served water utility instrumentation & connectivity (76%) Mechanical Water Meters Electronic Water Meters Connectivity Analytics markets served Municipal Water Utilities Turbine Meters Oval Gear OP Meters Magnetic Meters Ultrasonic Meters Vortex Meters Variable Area DP Meters Venturi Valves Coriolis Mass Industrial Process Aerospace Mining Semiconductor Petrochemical Power Generation Food & Beverage Pharmaceutical & Biotech Chemical HVAC Test & Measurement Water & Wastewater Research Gas Radios Gas Utilities Concrete Vibrators Construction 2017 Badger Meter, Inc. 5

6 10 WAYS TO MEASURE FLOW global flow meter market by technology ($MIL) Single/Multi Jet Positive Displacement* Turbine/Impeller* Coriolis* Magnetic* Ultrasonic* Differential Pressure* Vortex* Variable Area* * In Badger Meter portfolio Thermal Mass $0 $500 $1,000 $1,500 Flow Meters Water Meters Badger Meter offers eight of the ten common flow technologies identified in the annual IHS survey North American water meter market primarily uses positive displacement and turbine meters Rest of world water meter market primarily uses single and multi-jet and turbine meters Global water meter markets are starting to shift from mechanical to electronic meters, such as magnetic and ultrasonic, which Badger Meter also offers Source: IHS Research, Badger Meter, Inc.

7 GLOBAL FOOTPRINT PHOENIX LOS GATOS NOGALES DENVER MILWAUKEE RACINE TULSA NASHVILLE MEXICO CITY BRNO POLAND CZECH STUTTGART SLOVAKIA BERN LULEA SWEDEN DUBAI SHANGHAI SINGAPORE 8 Manufacturing Facilities 8 Sales/Distribution Centers 2 R&D Centers 2017 Badger Meter, Inc. 7

8 SALES ($mil) DILUTED EPS MILLIONS NET INCOME ($mil) DILUTED EPS FINANCIAL RESULTS $400 $300 $200 $262.9 $319.7 NET SALES $334.1 $364.8 $377.7 $393.7 $402.4 $50 $45 $40 $35 $30 $25 $20 $0.64 $0.98 NET INCOME & EPS $1.03 $0.90 $0.85 $1.11 $1.19 $1.40 $1.20 $1.00 $0.80 $0.60 $15 $0.40 $100 $10 $5 $0.20 $ $0.00 $ $110 $105 $100 $0.28 QUARTERLY SALES & EPS $0.36 $0.33 $0.30 $0.30 $0.27 $0.21 $0.25 $0.40 $0.35 $0.30 $0.25 $90 $80 $70 $60 $50 DEBT TO EBITDA $95 $90 $85 $80 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 $0.20 $0.15 $0.10 $0.05 $0.00 $40 $30 $20 $10 $ Debt EBITDA Debt/EBITDA Badger Meter, Inc. 8

9 ALWAYS WORKING WATER UTILITY MARKET 2017 Badger Meter, Inc. 9

10 KEY GROWTH STRATEGIES UTILITY MARKETS Maintain our leading position in the North American water metering market through development of leading-edge technologies for Meters Radios Software Continue acquisition of distribution network Take advantage of select international markets (Middle East) Identify strategic acquisition opportunities to enhance technology and market channels 2017 Badger Meter, Inc. 10

11 number of services (000 S) U.S. WATER UTILITY MARKET The U.S. water utility market consists of 49,479 utilities Approximately 40% of meters in operation lack communication capabilities (manually read meters) largest U.S. water utilities 404 Utilities 46% of Meters ALL U.S. WATER UTILITIES 45,347 Utilities 18% of Meters 3,728 Utilities 36% of Meters SOURCE: 2011 EPA Survey (latest available) Approximately 7% of homes with utility water service are unmetered Both represent significant future opportunities for Badger Meter Meters with Tech Meters No Tech No Meters SOURCE: EPA and Company Estimates 2017 Badger Meter, Inc. 11

12 meter units WATER METERING SHIFT TO AUTOMATION Badger Meter was the first company to begin offering meter reading connectivity (1988) Connectivity allows for automated metering and integration of real-time data with analytics MANUAL READ $30-$40 Price per meter CONNECTIVITY $100-$150 Price per meter & radio Badger Meter offers: ORION Cellular two-way cellular network with BEACON Advanced Metering Analytics ORION ME/SE two-way simultaneous mobile and fixed network ORION CE one-way mobile 140, , ,000.0 North American water meter market projected conversion to connectivity 52% 55% 58% 60% 63% 65% Connectivity reduces utility costs, improves billing accuracy, aids in leak detection and encourages conservation Approximately 50% of the U.S. market has been converted (per IHS) every 1% additional conversion represents $30 million in new sales for Badger Meter 80, , , , Manual Read Meters Meters with Connectivity 2017 Badger Meter, Inc. Source: IHS Research,

13 KEY STRATEGY: MAINTAIN TECHNOLOGY LEADERSHIP Mechanical Meters 1 Electronic Meters 1 Leading-Edge Integrated Solutions Badger Meter Solution Customer Benefits Recordall Turbo Series Recordall Disc Recordall Compound E-Series Ultrasonic M-Series Electromagnetic Meters 1 The broadest product offering of any company, with both mechanical and electronic meters in both metal and polymer housing Leading Edge Product: E-Series Ultrasonic Meter New Development: D-Flow Technology will be incorporated into the E-Series meters in 2018; cost reduction and performance improvement 2 2 Radios 2 Complete family of two-way connectivity solutions, including drive-by, fixed network and cellular radios Meters compatible with third-party connectivity solutions Leading Edge Product: ORION Cellular Radio New Development: Cellular LTE introduced in 2017; Cat M in development Leading-Edge Integrated Solutions Cellular Endpoint Fixed Network Endpoint BEACON 2 Hosted Solution 2 Cellular Network ORION Network Gateway Transceiver Software 3 BEACON AMA, defined as Advanced Metering Analytics, software suite provides analytics tools, dashboards and integration with utility billing systems to transform measurement data into a proactive decision making tool Leading Edge Product: BEACON AMA with Eye-on-Water Consumer Application New Development: Additional analytical features in development Consumer Portal Smart Phone Utility Co. Utility Client Computers

14 OUR STRONG COMPETITIVE TECHNOLOGY POSITION While competitors offer limited technologies for water metering, Badger Meter is the only North American company with a full product line Badger Meter Sensus Neptune Master Meter Mueller Elster Water Itron residential meters: Mechanical Brass Mechanical Polymer Electronic Brass or Steel Electronic Polymer commercial meters: Mechanical Brass or Cast Iron Electronic Steel or Cast Iron meter reading systems: Drive-By Fixed/Mesh Network (mesh) Simultaneous Drive-By/Fixed Cellular Residential (new) 2017 Badger Meter, Inc. 14

15 ALWAYS WORKING FLOW INSTRUMENTATION 2017 Badger Meter, Inc. 15

16 KEY GROWTH STRATEGIES FLOW INSTRUMENTATION MARKETS Continue to target our four core flow instrumentation markets: Chemical and Petrochemical Oil and Gas Building Automation/HVAC Water and Wastewater Take advantage of opportunities in growing oil and gas markets Continue new product development to target niche markets Identify strategic acquisition opportunities to enhance technology and market channels 2017 Badger Meter, Inc. 16

17 FLOW & INDUSTRIAL INSTRUMENTATION MARKET SHARE Endress Hauser 16% Yokagowa 7% Emerson 31% ABB 6% Krohne 7% INDUSTRIAL METER GLOBAL MARKET SHARE Siemens 4% Azbil 3% Cameron 3% Other 25% Badger Meter 1% The global flow meter market is served by several large companies and a fragmented group of smaller players focused on specific markets or technologies Badger Meter holds niche markets with various flow technologies, making up 1.3% global market share SOURCE: IHS Research, Badger Meter, Inc. 17

18 KEY STRATEGY: FOCUS ON 4 CORE MARKETS core growth markets: other markets: 2017 Badger Meter, Inc. 18

19 ACQUISITIONS Over the past 7 years, Badger Meter has made seven strategic acquisitions, for a total of $133 million: year company type location price water utility instrumentation and connectivity: 2017 Carolina Meter Distributor Wilmington, NC $6.0 mil 2017 D-Flow Technology/R&D Lulea, Sweden $23.0 mil 2015 United Utilities Distributor Smyrna, TN $3.3 mil 2014 National Meter Distributor Denver, CO $22.9 mil 2013 Aquacue Technology/R&D Los Gatos, CA $13.8 mil flow and industrial instrumentation: 2012 Racine Federated Technology/Manufacturing Racine, WI $57.0 mil 2011 Remag Technology/Manufacturing Bern, Switzerland $4.9 mil 2010 Cox Instruments Technology/Manufacturing Scottsdale, AZ $7.8 mil 2017 Badger Meter, Inc. 19

20 KEY INVESTMENT HIGHLIGHTS Integrated technology company providing a comprehensive suite of flow measurement, connectivity and software / analytics solutions to a diverse customer base Industry leader in North American water metering, with a strong global position in flow metering technologies Strong competitive position underpinned by continuous investment in innovation and technology transfer benefits from serving both utility and industrial markets Attractive, long-term industry growth fundamentals: Stable business model supported by regular water meter replacements Market conversion to meter connectivity remains at an early stage (approximately 55%) with increased conversion driving sales of higher content and higher margin products Water conservation efforts driving increased usage of water meters for both utility and non-utility applications Increasing value of precision measurement and integrated solutions in process industries globally Culture of innovation and investment in R&D drives regular new product expansion Premium financial profile and exceptional operational track record 2017 Badger Meter, Inc. 20

21 ALWAYS WORKING QUESTIONS 2017 Badger Meter, Inc. 21