In the latest trading session, Badger Meter (BMI) closed at $240.91, marking a +1.36% move from the previous day. This move outpaced the S&P 500's daily gain of 0.32%. Meanwhile, the Dow experienced a rise of 0.53%, and the technology-dominated Nasdaq saw an increase of 0.26%. Prior to today's trading, shares of the manufacturer of products that measure gas and water flow had lost 2.01% lagged the Computer and Technology sector's gain of 7.22% and the S&P 500's gain of 4.51%.The investment community will be ...

Core Insights - Rhythm Pharmaceuticals announced positive topline results from its Phase 2 trial of bivamelagon, showing significant BMI reductions in patients with acquired hypothalamic obesity [2][3] - The company plans to engage with regulatory authorities for a Phase 3 trial design and has requested an End-of-Phase 2 meeting with the U.S. FDA [7] Group 1: Trial Results - Bivamelagon achieved BMI reductions of -9.3% in the 600mg cohort and -7.7% in the 400mg cohort at 14 weeks [1][4] - A post-hoc analysis indicated that the BMI reductions from bivamelagon were consistent with those achieved by setmelanotide in similar patient populations [3][5] - Patients reported a mean reduction of -2.8 points in hunger scores in both the 600mg and 400mg cohorts [1][3] Group 2: Safety and Tolerability - The trial demonstrated safety and tolerability consistent with MC4R agonism, with limited instances of localized hyperpigmentation observed [4][6] - The most common adverse events included mild diarrhea and nausea, with one serious adverse event reported [6] Group 3: Next Steps and Regulatory Plans - Rhythm plans to seek input from U.S. and EU regulatory authorities regarding the Phase 3 trial design for bivamelagon [7] - The company is refining the formulation of bivamelagon to potentially improve tolerability before initiating the Phase 3 trial [7] Group 4: Company Background - Rhythm Pharmaceuticals is focused on transforming the lives of patients with rare neuroendocrine diseases and has in-licensed bivamelagon from LG Chem, Ltd [2][13] - The company’s lead asset, setmelanotide, is already approved for treating certain types of obesity [13][14]

Company Performance - Badger Meter (BMI) ended the recent trading session at $239.51, demonstrating a -1.28% change from the preceding day's closing price, trailing the S&P 500 which registered a daily loss of 0.79% [1] - Over the past month, shares of Badger Meter had lost 1.73%, lagging behind the Computer and Technology sector's gain of 7.88% and the S&P 500's gain of 5.22% [2] Earnings Projections - The company is scheduled to release its earnings on July 22, 2025, with projected earnings per share (EPS) of $1.19, reflecting a 6.25% increase from the same quarter last year, and expected revenue of $234.33 million, showing an 8.16% escalation compared to the year-ago quarter [3] - For the full year, Zacks Consensus Estimates project earnings of $4.91 per share and revenue of $924.92 million, representing changes of +16.08% and +11.9%, respectively, from the prior year [4] Analyst Estimates and Valuation - Recent changes to analyst estimates for Badger Meter reflect the latest short-term business trends, with upbeat changes indicating a favorable outlook on business health and profitability [5] - Badger Meter is currently trading at a Forward P/E ratio of 49.41, which is a premium compared to the industry average Forward P/E of 27.52 [8] Industry Context - The Instruments - Control industry, which includes Badger Meter, is part of the Computer and Technology sector and currently carries a Zacks Industry Rank of 201, placing it within the bottom 19% of over 250 industries [10]

Core Viewpoint - Badger Meter, Inc. (BMI) has shown a strong stock performance with a year-to-date gain of 14.9%, outperforming the S&P 500 and the Instruments-Control industry [1][2] Group 1: Positive Long-Term Outlook - Increasing demand for digital smart water solutions is driven by regulatory pressures, aging infrastructure, and climate-related challenges [3] - Macroeconomic factors such as replacement-driven demand and the rise of Advanced Metering Infrastructure (AMI) adoption are additional growth drivers [3] - BMI is experiencing strong demand for its products, including mechanical and E-Series Ultrasonic meters, ORION Cellular endpoints, and BEACON Software-as-a-Service revenues [4] Group 2: Strategic Acquisitions - BMI's acquisition of SmartCover Systems for $185 million enhances its monitoring solutions and expands its BlueEdge suite [7] - SmartCover contributes $35 million in annual revenues and provides technology that helps utilities monitor sewer levels, reducing costs and protecting public health [8] - The acquisition has already generated $6 million in revenue contribution within months [9] Group 3: Financial Performance - BMI reported a record quarterly free cash flow of $30 million, a 60% increase year over year, supported by improved earnings and effective working capital management [10] - As of March 31, 2025, the company had $131.4 million in cash and cash equivalents, indicating a strong cash position [10] Group 4: Challenges Ahead - Rising expenses and intense competition pose challenges, with ongoing tariff uncertainties expected to impact U.S. manufacturing operations [11] - Tariffs on electronics and components may lead to higher input costs, necessitating selective price increases [12] - The first quarter of 2025 saw SEA expenses rise to $46 million, primarily due to the incorporation of SmartCover [13] Group 5: Market Position and Valuation - BMI's stock is trading at a forward price/earnings ratio of 48.48X, significantly higher than the industry's 18.96X, reflecting its long-term growth potential [16] - Analysts have revised earnings estimates downward by 0.9% for the current quarter, indicating some caution in the market [17] Group 6: Investment Strategy - The company's strong position in the smart water solutions market and strategic acquisitions provide a competitive edge [18] - While the valuation is high and short-term cost pressures exist, robust free cash flow and a solid balance sheet offer financial flexibility [18] - New investors are advised to wait for a better entry point, while existing investors should retain their holdings [19]

Core Insights - Badger Meter, Inc. (BMI) reported Q1 2025 EPS of $1.30, exceeding Zacks Consensus Estimate by 20.4% and up from $0.99 in the same quarter last year [1] - Quarterly net sales reached $222.2 million, a 13% increase from $196.3 million year-over-year, driven by higher utility water sales and contributions from the SmartCover acquisition [1][4] Financial Performance - Gross profit for the quarter was $95.4 million, up from $77.2 million year-over-year, with a gross margin of 42.9%, an increase of 360 basis points [6] - Operating earnings surged 35% year-over-year to $49.5 million, with an operating margin of 22.2%, also expanding by 360 basis points [6] - The company generated $33 million in net cash from operating activities, compared to $21.5 million a year ago [9] Segment Performance - Utility water sales increased by 16%, supported by strong demand for mechanical and E-Series Ultrasonic meters, and a 12% organic growth excluding SmartCover contributions [4] - Flow instrumentation sales decreased by 5% year-over-year, but showed a 7% sequential increase from Q4 2024, indicating potential long-term growth [5] Strategic Developments - Badger Meter completed the acquisition of SmartCover on January 30, 2025, enhancing its smart water portfolio with advanced monitoring capabilities [2] - Customer feedback on SmartCover's integration has been positive, reinforcing the strategic value of the acquisition [2] Market Reaction - Following the strong performance, BMI's shares rose by 9.64%, closing at $201.63 on April 17, 2025, with a year-over-year gain of 11.3% compared to a 10.8% decline in the Zacks Instruments-Control industry [3] Outlook - The company anticipates a challenging year-over-year comparison in Q2 but remains optimistic about long-term growth, expecting continued high single-digit revenue growth [11]

Financial Performance - Net sales for Q1 2025 increased to $222,211,000, a 13.2% rise from $196,280,000 in Q1 2024[14] - Gross margin improved to $95,437,000, compared to $77,178,000 in the same period last year, reflecting a significant increase of 23.6%[14] - Net earnings for Q1 2025 were $38,398,000, up 31.8% from $29,131,000 in Q1 2024[14] - Earnings per share (EPS) for Q1 2025 were $1.31 (basic) and $1.30 (diluted), compared to $0.99 for both in Q1 2024[14] - Comprehensive income for Q1 2025 was $43,556,000, compared to $25,509,000 in Q1 2024, reflecting a growth of 70.8%[16] - Total operating earnings for Q1 2025 were $49.4 million, representing 22.2% of sales, compared to $36.6 million or 18.6% of sales in Q1 2024[85] - Gross margin for Q1 2025 was 42.9%, an increase from 39.3% in the prior year, benefiting from higher sales volumes and a favorable product mix[85] Assets and Liabilities - Total assets increased to $899,596,000 as of March 31, 2025, up from $816,413,000 at the end of 2024, marking a growth of 10.2%[12] - Cash and cash equivalents decreased to $131,358,000 from $295,305,000, a decline of 55.6%[12] - Total current liabilities rose to $141,017,000, an increase of 19.3% from $118,205,000 in the previous period[12] - The balance of contract liabilities increased to $90.6 million as of March 31, 2025, up from $78.3 million at the end of 2024[50] - Primary Working Capital (PWC) increased to $187.5 million (22.0% of sales) as of March 31, 2025, compared to $172.1 million (20.8% of sales) at the end of 2024[89] - Receivables rose by $27.5 million due to increased sales activity, while inventories increased by $6.0 million[89] Cash Flow - The company reported a net cash provided by operations of $33,027,000 for Q1 2025, compared to $21,460,000 in Q1 2024, an increase of 53.8%[19] - Cash provided by operations in Q1 2025 was $33.0 million, up from $21.5 million in Q1 2024, driven by higher net earnings[90] - Cash and cash equivalents decreased to $131.4 million from $295.3 million at the end of 2024, primarily due to $184.9 million used for the SmartCover acquisition[91] Dividends and Share Repurchase - The company declared dividends of $0.34 per share in Q1 2025, up from $0.27 per share in Q1 2024[14] - The company authorized the repurchase of up to 200,000 shares of common stock through February 2026, with no shares purchased in Q1 2025[102] Acquisitions and Investments - The total purchase consideration for SmartCover was $184.9 million, with $117.4 million allocated to goodwill that is not tax-deductible[34][35] - The company acquired SmartCover for $184.9 million, with revenue contribution of $6.2 million for the two months ended March 31, 2025[77][78] - The Company acquired select remote water monitoring hardware and software for $3.0 million effective January 1, 2024[36] - Property, plant, and equipment expenditures for Q1 2025 were $3.0 million, slightly higher than $2.7 million in Q1 2024[90] Market and Revenue Insights - Utility water market net sales reached $197.3 million, up 16.0% from $170.1 million in the prior year, driven by increased sales of mechanical and ultrasonic meters, ORION® Cellular endpoints, and BEACON® SaaS revenue[84] - The Company recognized $20.3 million in revenue over time, representing 9.1% of total revenue, compared to $12.7 million or 6.5% in the prior year[48] - The company continues to operate under a single segment, focusing on water and wastewater management solutions[45] - Approximately 40% of water meters installed in the U.S. have been converted to advanced metering infrastructure (AMI) systems[67][73] - The flow instrumentation product line accounted for approximately 12% of net sales in 2024, serving various industrial applications[70] - The company is expanding into international markets, including the Middle East and the UK, with its BlueEdge offerings[82] Taxation - The effective income tax rate for the Company was 24.4% for the three months ended March 31, 2025, compared to 23.5% in the prior year[42] - The provision for income taxes for Q1 2025 was 24.4%, compared to 23.5% in the prior year[86] Compliance and Internal Controls - The company remains compliant with all financial covenants as of March 31, 2025[92] - There were no material changes in the company's internal control over financial reporting during Q1 2025[98]

Financial Data and Key Metrics Changes - Total sales grew 13% year over year in Q1 2025, with a 10% increase excluding smart cover, following a 23% growth in Q1 2024 [9][10] - Operating profit margins reached a record 22.2%, expanding 360 basis points year over year, while gross profit margins improved to 42.9%, also a 360 basis point increase from the prior year [12][17] - Consolidated EPS increased by 31% to $1.30 from $0.99 in the prior year [17][18] - Free cash flow for the quarter was $30 million, up 60% from $18.8 million in the previous year [18] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 16% year over year, or 12% when excluding smart cover revenue [10] - Sales for the flow instrumentation product line decreased nearly 5% year over year, although there was a sequential improvement of 7% from Q4 2024 [11] Market Data and Key Metrics Changes - Year over year growth in utility water was driven by cellular AMI adoption, including associated meters, Orion cellular endpoints, and beacon software [11] - The company noted strong positive feedback from customers regarding the integration of smart cover into their water management solutions [7] Company Strategy and Development Direction - The company aims to manage uncertainties related to tariffs and macroeconomic conditions while focusing on operational execution and supply chain management [19][27] - The acquisition of smart cover is expected to enhance the company's product offerings and drive sales and operating synergies [7][28] - The long-term average revenue growth outlook remains at high single digits with modest margin improvement over time [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of their business model, particularly in the context of replacement-driven demand [46][72] - The evolving tariff situation and macroeconomic challenges are acknowledged, but the company believes it can manage these effectively [19][27] - The company remains debt-free and has ample capacity to invest in growth despite economic volatility [29] Other Important Information - The company was recognized on the Barron's list of 100 most sustainable companies for the third consecutive year [29] - Karen Bauer, the retiring Investor Relations Executive, was acknowledged for her contributions over 72 quarters [30][105] Q&A Session Summary Question: Can you provide more color on the favorable product and customer mix benefits? - Management indicated that while the margins are impressive, they are influenced by various factors, and some elements driving Q1 results may not be sustainable [40][42] Question: Are core customers showing signs of pulling back on spending? - Management reported no indications of customers pulling back, emphasizing the durability of the replacement-driven market [46][72] Question: What is the aggregate impact of tariffs on COGS? - Management stated that the situation is complex and variable, but they believe they can manage the impact through pricing actions [56][60] Question: How are municipal budgets affecting AMI investments? - Management noted that utilities often reprioritize budgets to ensure meter replacements are funded, even during budget constraints [71][72] Question: Are price increases already communicated to customers? - Management confirmed that price increases are forthcoming but have not yet been communicated to customers [94] Question: What caused the increase in receivables? - The increase was attributed to timing differences in sales between Q4 and Q1, along with the addition of smart cover [102]

Badger Meter First Quarter 2025 Financial Results April 17, 2025 1 Forward Looking Statements Certain statements contained in this presentation as well as other information provided from time to time by Badger Meter, Inc. (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 statements. The words "anticipate," "believe," "estimate," "expect," "think," "should," "could" and "objective" or s ...

Industry Overview - The Zacks Instruments – Control industry focuses on energy-efficient production processes and integrated software systems, with rising demand for advanced technology to replace legacy industrial controls expected to drive growth [1][4] - The industry includes manufacturers of precision and specialty motion-control components and systems, providing solutions for flow measurement, control, and communication across various sectors [3] Growth Drivers - Increased adoption of automation and higher investments in new technologies are anticipated to propel growth, particularly in North America, supported by rising infrastructural investments in energy and power sectors [4] - The pharmaceutical industry's process automation market is expanding due to cost factors and evolving regulations, indicating a shift towards high-quality equipment and partnerships with process control players [4][6] Challenges - Elevated customer inventory levels, high capital expenditures for infrastructure upgrades, and market volatility may negatively impact the process automation and instrumentation market [2] - Material cost inflation and rising transportation costs, exacerbated by geopolitical tensions, are affecting margins and production schedules, with companies struggling to pass on costs to customers due to competitive pressures [5] Technological Trends - The industry's growth is significantly driven by the emphasis on digitized technologies, including the Industrial Internet of Things, which enhances manufacturing processes and compliance with regulations [6] - Process instrumentation equipment is crucial for measuring key elements in industries such as chemicals, mining, and pharmaceuticals, contributing to improved product quality and emission reductions [6] Market Performance - The Zacks Instruments – Control industry has underperformed compared to the S&P 500 and the broader Zacks Computer and Technology sector, with a decline of 12.3% over the past year [9] - The industry currently holds a Zacks Industry Rank of 89, placing it in the top 36% of over 250 Zacks industries, indicating positive near-term prospects [7][8] Valuation Metrics - The industry has a trailing 12-month Enterprise Value-to-EBITDA (EV/EBITDA) ratio of 11.19X, lower than the S&P 500's 15.54X and the sector's 14.30X, suggesting potential undervaluation [11] Notable Companies - **Watts Water Technologies, Inc. (WTS)**: Focuses on water safety and flow control products, benefiting from cost-reduction actions and a strong balance sheet, with a long-term earnings growth expectation of 7.1% [14] - **Badger Meter, Inc. (BMI)**: Provides flow measurement and control solutions, known for accuracy and durability, with a long-term earnings growth expectation of 12.1% and a 20.2% gain over the past year [17][18] - **Thermon Group Holdings, Inc. (THR)**: Offers engineered industrial process heating solutions, expanding its market reach through acquisitions, with a consistent earnings surprise of 11.3% on average [21]

Core Insights - Badger Meter (BMI) reported quarterly earnings of $1.30 per share, exceeding the Zacks Consensus Estimate of $1.08 per share, and up from $0.99 per share a year ago [1] - The company achieved a revenue of $222.21 million for the quarter, surpassing the Zacks Consensus Estimate by 0.14% and increasing from $196.28 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was 20.37%, following a previous surprise of 2.97% when earnings were $1.04 per share against an expectation of $1.01 [2] - Badger Meter has consistently surpassed consensus EPS estimates over the last four quarters [2] Revenue Insights - The company has also exceeded consensus revenue estimates three times in the last four quarters [3] - Current consensus EPS estimate for the upcoming quarter is $1.16 on revenues of $236.44 million, and for the current fiscal year, it is $4.61 on revenues of $930.73 million [8] Market Performance - Badger Meter shares have declined approximately 13.3% since the beginning of the year, compared to a decline of 10.3% for the S&P 500 [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Instruments - Control industry, to which Badger Meter belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9] - Another company in the same industry, Sensata (ST), is expected to report a year-over-year earnings decline of 19.1% in its upcoming results [10]