Badger Meter is an innovator in flow measurement, control and communication
solutions, serving water utilities, municipalities, and commercial and industrial
customers worldwide. The Company’s products measure water, oil, chemicals
and other fluids, and are known for accuracy, long-lasting durability and for
providing and communicating valuable and timely measurement data. The Company’s
product lines fall into two categories: sales of water meters and related technologies
to municipal water utilities (municipal water) and sales of meters to various
industries for water and other fluids (flow instrumentation). The Company estimates
that over 75% of its products are used in water applications when both categories
are grouped together.
Municipal water, the largest category by sales volume, includes mechanical
and ultrasonic (electronic) water meters and related technologies and services
used by municipal water utilities as the basis for generating water and wastewater
revenues. The key market for the Company’s municipal water meter products
is North America, primarily the United States, because most meters are designed
and manufactured to conform to standards promulgated by the American Water Works
Association. The majority of water meters sold continues to be mechanical in
nature. In recent years, the Company has made inroads in selling ultrasonic
water meters. The development of smaller diameter ultrasonic water meters combined
with advanced radio technology now provides the Company with the opportunity
to sell into other geographical markets, for example Europe, the Middle East
and South America. In the municipal water category, sales of water meters and
related technologies and services are also commonly referred to as residential
or commercial water meter sales, the latter referring to larger sizes of water
meters.
Flow instrumentation includes meters and valves sold worldwide to measure and
control materials flowing through a pipe or pipeline including water, air, steam,
oil, and other liquids and gases. These products are used in a variety of applications,
primarily into the following industries: water/wastewater; heating, ventilating
and air conditioning (HVAC); oil and gas; chemical and petrochemical; test and
measurement; automotive aftermarket; and the concrete construction process.
Furthermore, the Company’s flow instrumentation technologies are sold
to original equipment manufacturers as the primary flow measurement device within
a product or system.
Residential and commercial water meters 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 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 billing systems. These remotely
read, or mobile, systems are either automatic meter reading (AMR) systems, where
a vehicle equipped for meter reading purposes, including a radio receiver, computer
and reading software, collects the data from utilities’ meters; or fixed
network advanced metering infrastructure (AMI) systems, where data is gathered
utilizing a network of permanent data collectors or gateway receivers that are
always active or listening for the radio transmission from the utilities’
meters. AMI systems eliminate the need for utility personnel to drive through
service territories to collect meter reading data. These systems provide the
utilities with more frequent and diverse data at specified intervals from their
meters.
The ORION® family of radio endpoints provides water utilities with a range
of industry-leading options for meter reading. These include ORION Mobile (for
mobile meter reading), ORION Fixed Network (for traditional fixed network applications),
and ORION Cellular (for infrastructure-free meter reading). ORION Mobile makes
the migration to fixed network easier for utilities that prefer to start with
mobile reading and later adopt fixed network communications, allowing utilities
to choose a solution for their current needs and be positioned for their future
operational changes.
Critical to the water metering ecosystem is information and analytics. The
Company’s BEACON® AMA Managed Solution is the latest in metering technology.
BEACON AMA combines the BEACON analytical software suite with proven ORION technologies
using two-way fixed and cellular networks in a managed solution, improving utilities’
visibility of their water consumption and eliminating the need for costly utility
managed infrastructure.
The BEACON AMA secure, cloud-hosted software suite includes a customizable
dashboard, the ability to establish alerts for specific conditions, and consumer
engagement tools that allow end water customers 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.
The Company’s net sales and corresponding net earnings depend on unit
volume and product mix, with the Company generally earning higher margins on
meters equipped with radio technology. The Company’s proprietary radio
products generally result in higher margins than the remarketed, non-proprietary
technology products. The Company also sells registers and endpoints separately
to customers who wish to upgrade their existing meters in the field.
The proprietary ORION endpoint technology has been licensed to other technology
providers on a non-exclusive basis, including those providing radio products
that communicate over power lines, broadband networks and proprietary radio
frequency networks, allowing ORION a distinct advantage in the radio solutions
market. In addition, the ORION universal gateway receiver transmits data over
a variety of public wireless networks, which allows for strategic deployments,
such as monitoring large commercial users.
Water meter replacement and the adoption and deployment of new technology comprise
the majority of water meter product sales, including radio products. To a much
lesser extent, housing starts also contribute to the new product sales base.
Over the last decade, there has been a growing trend in the conversion from
manually read water meters to radio technology. This conversion rate is accelerating
and contributes to an increased water meter and radio solutions base of business.
The Company estimates that less than 53% of water meters installed in the United
States have been converted to a radio solutions technology. The Company’s
strategy is to fulfill customers’ metering expectations and requirements
with its proprietary meter reading systems or other systems available through
its alliance partners in the marketplace.
Flow instrumentation products serve flow measurement and control applications
across a broad industrial spectrum, occasionally leveraging the same technologies
used in the municipal water category. Specialized communication protocols that
control the entire flow measurement process and mandatory certifications drive
these markets. The Company’s specific flow measurement and control applications
and technologies serve the flow measurement market through both customized and
standard flow instrumentation solutions.
Industries today face accelerating demands to contain costs, reduce product
variability, and meet ever-changing safety, regulatory and sustainability requirements.
To address these challenges, customers must reap more value from every component
in their systems. This system-wide scrutiny has heightened the focus on flow
instrumentation in industrial process, manufacturing, commercial fluid, building
automation, and precision engineering applications where flow measurement and
control are critical.