Badger Meter benefits from new-technology products

With strong sales of new-technology products and a lowered tax rate, Badger Meter Inc. is encouraged about 2018, CEO Richard Meeusen said Tuesday.

The Brown Deer-based maker of water meters and sensors reported a 2017 fourth-quarter profit of $7.2 million, or 25 cents per share, up more than 18% from the same period a year earlier.

The fourth-quarter results beat Wall Street expectations. The average estimate of three analysts surveyed by Zachs Investment Research was for 23 cents a share.

Badger had $96.7 million in revenue in the quarter ended Dec. 31, a 3.8% increase from the year-ago period.

For 2017, Badger had a profit of $34.6 million, or $1.19 per share. The company had $402.4 million in revenue, topping $400 million for the first time.

Much of the growth was driven by products introduced in the last few years, such as water meters that use radios and cellular networks for automated meter reading.

“The growth rate of the new technologies was much higher than any growth in the old technologies. So without those, we would not have gone over $400 million. That’s driven a big piece of our sales,” Meeusen said.

The company also saw growth in industrial markets, such as oil and gas, where its meters are used.

“We are optimistic as we head into 2018,” Meeusen said.

Badger, like many companies, stands to gain from the federal Tax Cuts and Jobs Act signed into law Dec. 22.

Badger’s future effective tax rates are likely to be reduced from approximately 36% to 24%, according to Meeusen.

“That’s a good drop. It will generate additional cash for us,” he said.

“We intend to use that additional cash to invest in our business. We are looking at some strategic acquisitions, and it means upgrading our machinery, equipment and facilities.”

The company is closing a small manufacturing facility in Scottsdale, Ariz., eliminating about 35 jobs, and is moving the work to its plant in Racine.

“We offered jobs to people in Scottsdale, to come to Racine, and a few took them,” Meeusen said, but most of the hiring is taking place in Racine.