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Marquette Bmi

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The presentation written and delivered by myself and a team of Marquette AIM Seniors at the America\'s Regional of the CFA Global Investment Research Challange in March, 2009

The presentation written and delivered by myself and a team of Marquette AIM Seniors at the America\'s Regional of the CFA Global Investment Research Challange in March, 2009

Published in: Business, Economy & Finance

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  • Transcript

    • 1. Badger Meter, Inc. CFA Global Investment Research Challenge 2009 Marquette University
    • 2. Recommendation SELL Target Price $2 5 Per Share Current Price $ 29 Per Share Source: Bloomberg, Team Projections Market Cap (Mil): $428.17   52 WK H-L: $62.74-17.58   FY Dec 2008A 2009E 2010E Shares Out (Mil): 14.81 Institutional Holdings 72.99% Revenue (Mil) $279.55 $258.19 $259.28 Float (Mil): 13.84 Insider Holdings 5.28% Net Income (Mil) $25.08 $19.18 $19.76 Avg. Daily Volume: 239,884 Return On Equity 24.71% EPS $1.72 $1.32 $1.36 TTM Dividend: $0.40 Debt To Common Equity 22.67% P/E 17x 22x 21x Dividend Yield: 1.38%                
    • 3. Presentation Outline
      • Overview
      • Revenue Assumptions
      • Margin Analysis
      • Valuation Methodology
    • 4. Company Synopsis Overview
      • Manufactures Fluid Meters And Meter Reading Technology
      • Primary Customers Are Utilities And Industrial Companies
      • $5.8 Billion Market
      • Oligopolistic Industry
    • 5. Overview Competitive Dynamics
      • Meter Manufacturing
        • ∙ High Barriers To Entry
        • ∙ Commoditized Product
      • Meter Reading: AMR/AMI
        • ∙ Fragmented Market
        • ∙ High Margin Product
        • ∙ Opportunity For Differentiation
      Source: BMI Data
    • 6. Utility Segment - Market Assessment Revenue Assumptions Source: BMI Data, Team Projections $ In Millions
        • Significant Factors
        • Municipal Budget
          • 2/3 Fall, 1/3 Spring
        • Municipal Funding
          • American Recovery And Reinvestment Act Of 2009
      • Implication
        • Two Year Market Downturn
      83% Of Total Revenue
    • 7. Increased Funding Costs Source: Bloomberg Revenue Assumptions AA 5yr Municipal Bonds Over 5yr Treasury Bonds
    • 8. Utility Segment - Meter Sales Revenue Assumptions
      • New Meters (1/3 Sales)
        • Water Shortages In 36 States
        • 13M Unmetered Residential Units
      • Replacement Meters (2/3 Sales)
        • Average Cycle Is 15 Years
        • Cycle Delays
      Source: BMI Data
    • 9. Utility Segment - AMR/AMI
      • Pricing
        • High Price Point vs. Traditional Meters ($150 v. $30)
        • Delayed Technology Adoption
      Revenue Assumptions Source: BMI Data, Team Projections
    • 10. Industrial Segment Revenue Assumptions
      • 25% International
      • 75% Domestic
      17% Of Total Revenue
    • 11. Margin Analysis Spot Copper Price Per Metric Ton vs. Company Margins Source: Bloomberg, BMI Data Copper Price Margin As % Of Revenue
    • 12. Discounted Cash Flow Model Valuation Methodology Valuation $ In Millions Terminal EBITDA Multiple 7.5x Projected EBITDA, 2013 $59,771 Terminal Value $448,279 Discounted Terminal Value $302,702 Sum Of PV FCF $80,902 Net Debt $18,957 Value Of Equity $364,472 Target Price Per Share $24.61
    • 13. Conclusion Q&A Reiterate SELL Rating For BMI Price Target: $25 Per Share