Badger Meter (BMI) generates the bulk of its revenue selling commercial and residential water metering systems to water utilities. The company has significant long-term growth potential, as its water utility customers upgrade to advanced metering (AMR/AMI) systems from manually read meters.
According to the company, less than 30% of water meters installed in the U.S. have been converted to AMR/AMI, which means approximately 37,000 water utilities are still operating manually read meters. Badger Meter claims a current market share of approximately 20% in North America for AMR/AMI. There is plenty of room for growth as more customers upgrade their meters to the newer technologies.
The company is satisfying the market demand with its popular ORION drive-by AMR and the GALAXY fixed network AMI. In addition, Badger Meter has an agreement with Itron (ITRI) to resell the ITRON drive-by AMR until early 2011.
Also, the company continues to invest in new products and technologies to meet evolving customer needs. Recently, the company launched the E-Series™ Meter, a new line of residential water meters.
The company believes that its operating cash flows, available borrowing capacity including $39.6 million of unused credit lines as on June 30, 2009, and its ability to raise capital will provide adequate resources to fund ongoing operations, future capital expenditures, and new product developments.
Apart from providing the advanced metering solutions to water utility customers, the company sees other revenue enhancement opportunities. In recent years, Badger Meter has been asked to oversee and perform installation of its products in the field for some customers. Also, the company has started selling its Orion technology to natural gas utilities for installation on their gas meters.
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