Financial Data and Key Metrics Changes - Total sales for Q3 2025 reached $236 million, marking a 13% year-over-year increase, with BASE sales growth at 8% [5][6] - Operating earnings rose 13% year-over-year to $46.1 million, with operating margins slightly up to 19.6% from 19.5% [6][8] - Consolidated EPS increased to $1.19 from $1.08 in the prior year, representing a 10% year-over-year growth [7] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 14% year-over-year, or 8% excluding SmartCover, driven by higher ultrasonic meter volumes and increased Beacon SaaS sales [5][6] - Flow instrumentation product line sales grew by 4% year-over-year, supported by strength in water-related markets [5] Market Data and Key Metrics Changes - Primary working capital as a percentage of sales was 22%, showing a 150 basis point improvement year-over-year [8] - Record free cash flow of $48.2 million increased by approximately $6 million year-over-year, largely due to lower cash taxes [8] Company Strategy and Development Direction - The company is focused on expanding its BlueEdge suite of modular smart water management solutions, which is seen as a long-term growth driver [9][10] - The company is well-positioned to enable customers to adopt new technologies for efficiency and resiliency, despite macroeconomic uncertainties [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit average top-line growth over the next five years, despite potential unevenness in project timing [11][40] - The company remains optimistic about the long-term trends driving change in the water industry, which will encourage customer evolution [12] Other Important Information - The company has increased its gross margin range from 39% to 42% on a normalized basis, reflecting ongoing structural mix improvements [6][53] - The company returned cash to shareholders by increasing its dividend for the 33rd consecutive year [12] Q&A Session Summary Question: Inquiry about gross profit margin expectations - Management indicated that the lack of new tariff news and continued strong performance gave them confidence to raise the gross margin range [16][17] Question: Project timing and customer decision-making - Management clarified that they do not expect a decline in business but noted the inherent unevenness in project timing [19][20] Question: Growth expectations for SmartCover - Management remains excited about SmartCover's integration and growth potential, with expectations of continued outsized growth [24][25] Question: Pricing strategies in response to tariff impacts - Management discussed targeted product-specific price increases to mitigate tariff-related costs, with expectations of reaching price-cost parity [30][32] Question: Water quality performance and customer needs - Management expressed strong traction in water quality offerings and confidence in their parameter capabilities [34][35] Question: Outlook for 2026 and growth targets - Management refrained from providing specific guidance for 2026 but expressed confidence in achieving high single-digit growth over the cycle [39][40] Question: Capital allocation and potential for buybacks - Management reiterated their focus on organic growth, dividends, and M&A, while not ruling out buybacks in the future [43][44] Question: Federal stimulus impact on metering - Management noted that very little federal stimulus money has gone toward metering, with macro drivers remaining the primary focus for utilities [45][46]

Core Insights - The company reported a 13% year-over-year increase in operating earnings to $46.1 million, with operating margins slightly improving to 19.6% from 19.5% [1] - Excluding the Smart Cover acquisition, base operating earnings rose 15% year-over-year to $46.6 million, and base operating margins expanded by 120 basis points [1] - Total sales for 2025 reached $236 million, reflecting a 13% year-over-year increase, with base sales growth of 8% [2] - The company is increasing its gross margin range from a historical 38%-40% to a new normalized range of 39%-42% due to ongoing structural mix improvements and price increases [1][4] Financial Performance - Gross margins improved by 50 basis points to 40.7% from 40.2% in the prior year quarter, benefiting from structural mix improvements and price increases [1] - Record free cash flow of $48.2 million increased by approximately $6 million year-over-year, largely due to lower cash taxes [7] - Consolidated EPS rose to $1.19, a 10% increase from $1.08 in the prior year quarter [6] Sales and Market Trends - Utility water product line sales increased by 14% year-over-year, or 8% excluding SmartCover, driven by higher ultrasonic meter volumes and increased BEACON Software as a Service sales [2] - The company continues to see healthy activity levels across its pipeline, with expectations of high single-digit average top-line growth over the next five years [12] Strategic Initiatives - The integration of Smart Cover is progressing well, with the company expecting to deliver anticipated cost and sales synergies [14] - The company remains focused on investing in organic growth and maintaining its R&D leadership in the industry [43] Customer Engagement and Market Outlook - Customer feedback from recent trade shows indicates strong interest in the company's BlueEdge suite of solutions, which are seen as critical for utility water infrastructure [8][11] - Despite macroeconomic uncertainties, utility customers are planning for long-term technology adoption to enhance efficiency and resiliency [11][13]

Core Viewpoint - Badger Meter, Inc. is a prominent player in the flow measurement and control solutions sector, with a diverse product range and a focus on both domestic and international markets [1] Price Target and Analyst Sentiment - The consensus price target for Badger Meter has fluctuated, decreasing from a high of $225.00 to $206.50, indicating a potential shift in analyst sentiment [2][6] - Despite a 10% increase in sales, the company's earnings per share (EPS) fell short of expectations, resulting in a 2.3% decline in stock price [2][6] Market Conditions and Company Performance - Broader market conditions, such as interest rates and economic outlook, significantly influence analyst expectations [3] - Badger Meter has demonstrated strong revenue growth and expanding profit margins, with a recent 17.6% increase in dividends reflecting confidence in its financial health [3][6] Future Outlook and Management Expectations - The management anticipates continued year-over-year growth, supported by synergies from SmartCover [4] - Analyst Kristina Ruggeri from Argus Research has set a price target of $218 for Badger Meter, suggesting potential growth from its current position [4] Upcoming Earnings Report - Badger Meter is scheduled to release its third-quarter 2025 earnings report on October 21, 2025, which will provide further insights into its performance and future outlook [5]

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 similar expressions are intended to identify forward looking stateme ...

Group 1: Earnings Performance - Badger Meter reported quarterly earnings of $1.19 per share, exceeding the Zacks Consensus Estimate of $1.11 per share, and up from $1.08 per share a year ago [1] - The earnings surprise for this quarter was +7.21%, while the previous quarter had a surprise of -3.31% with actual earnings of $1.17 compared to an expected $1.21 [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times [2] Group 2: Revenue Performance - The company posted revenues of $235.65 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.74%, and up from $208.44 million year-over-year [3] - Badger Meter has topped consensus revenue estimates four times over the last four quarters [3] Group 3: Stock Performance and Outlook - Badger Meter shares have declined approximately 11.7% since the beginning of the year, contrasting with the S&P 500's gain of 14.5% [4] - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $230.07 million, and for the current fiscal year, it is $4.69 on revenues of $919.67 million [8] Group 4: Industry Context - The Instruments - Control industry, to which Badger Meter belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, indicating potential challenges for stock performance [9] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [6]

[FORM 8-K Filing Information](index=1&type=section&id=FORM%208-K%20Filing%20Information) This section details the administrative and identification information for the Form 8-K filing, including registrant specifics and securities status [Registrant Details](index=1&type=section&id=Registrant%20Details) This section provides core identification details for Badger Meter, Inc. as the registrant, including address, contact, and report date - Registrant: **Badger Meter, Inc.**[1](index=1&type=chunk) - Date of Report: **October 21, 2025**[1](index=1&type=chunk) - Address: **4545 W. Brown Deer Rd., Milwaukee, Wisconsin 53223**[1](index=1&type=chunk) - Telephone: **(414) 355-0400**[1](index=1&type=chunk) [Securities and Emerging Growth Company Status](index=1&type=section&id=Securities%20and%20Emerging%20Company%20Status) This section outlines the registrant's listed securities and confirms its status regarding emerging growth company provisions Listed Securities | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |---|---|---| | Common Stock | BMI | New York Stock Exchange | - Badger Meter, Inc. is **not an emerging growth company**[3](index=3&type=chunk) [Items Reported](index=3&type=section&id=Items%20Reported) This section details the specific items reported in the Form 8-K, including financial results and accompanying exhibits [Item 2.02 Results of Operations and Financial Condition](index=3&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) Badger Meter, Inc. reported its financial results for the third quarter ended September 30, 2025, through a press release issued on October 21, 2025 - Badger Meter, Inc. issued a press release on **October 21, 2025**, announcing financial results for the **third quarter ended September 30, 2025**[4](index=4&type=chunk)[5](index=5&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=3&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section details the exhibits furnished with the Form 8-K, specifically identifying the press release containing the third-quarter financial results Furnished Exhibits | Exhibit No. | Description | |---|---| | (99.1) | Badger Meter, Inc. Press Release, dated October 21, 2025 | [SIGNATURES](index=3&type=section&id=SIGNATURES) This section confirms the official signing and authorization of the Form 8-K filing by the registrant's authorized officer [Signature Details](index=3&type=section&id=Signature%20Details) The report was duly signed on behalf of Badger Meter, Inc. by its Senior Vice President – Chief Financial Officer, confirming its authorization - Report signed by **Robert A. Wrocklage**, Senior Vice President – Chief Financial Officer[12](index=12&type=chunk) - Date of signature: **October 21, 2025**[12](index=12&type=chunk)

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Insights - The Zacks Instruments – Control industry is poised for growth driven by a focus on energy-efficient production processes and the integration of advanced software systems, alongside a rising demand for modern technology to replace outdated industrial controls with automated solutions [1][4]. Industry Overview - The industry includes manufacturers of precision and specialty motion-control components and systems, providing sophisticated flow measurement, control, and communication solutions for various gases and liquids used in commercial and residential applications [3]. - Key products include those for fuel, combustion, fluid actuation, electronic applications, and energy control, with some companies also offering HVAC products and water reuse solutions [3]. Growth Drivers - Increased adoption of industrial automation and higher investments in new technologies are expected to drive growth, particularly in North America, supported by rising infrastructural investments in energy and power sectors, and favorable government policies [4]. - The pharmaceutical industry's process automation market is also expanding due to cost factors and evolving regulations, indicating a mature buyer base willing to partner with process control industry players [4]. Challenges - Elevated customer inventory levels, high capital expenditures for infrastructure upgrades, and inflationary pressures are potential hindrances to the process automation and instrumentation market [2]. - Material cost inflation and rising transportation costs, exacerbated by geopolitical tensions and economic sanctions, are negatively impacting industry margins, with companies struggling to pass on costs to customers due to competitive pressures [5]. Technological Trends - The industry's growth is significantly influenced by the emphasis on digitized technologies, such as the Industrial Internet of Things, which enhances manufacturing processes and compliance with regulations [6]. - The demand for process automation and instrumentation products is expected to grow, driven by the need for improved product quality and emission reductions [6]. Market Performance - The Zacks Instruments – Control industry currently holds a Zacks Industry Rank of 12, placing it in the top 5% of over 250 Zacks industries, indicating positive near-term prospects [7][8]. - However, the industry has underperformed compared to the S&P 500 and the broader Zacks Computer and Technology sector over the past year, with a gain of only 3.3% compared to 18.8% and 28.7% for the S&P 500 and sector, respectively [9]. Valuation Metrics - The industry has a trailing 12-month EV/EBITDA ratio of 14.1X, which is lower than the S&P 500's 18.59X and the sector's 19.48X, suggesting potential undervaluation [12]. 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 8.5% and a stock gain of 39% over the past year [15]. - **Badger Meter, Inc. (BMI)**: Provides flow measurement and control solutions, emphasizing digital solutions and operationalizing real-time data, with a long-term earnings growth expectation of 12% [18][19]. - **Thermon Group Holdings, Inc. (THR)**: Offers engineered industrial process heating solutions, expanding its market reach through strategic acquisitions, with a consistent earnings surprise of 5.4% [22].

I have a masters degree in Analytics from Northwestern University and a bachelors degree in Accounting. I have worked in the investment arena for over 10 years starting as an analyst and working my way up to a management role. Dividend investing is a personal hobby and I look forward to sharing my thoughts with the Seeking Alpha community.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a pur ...

I have a masters degree in Analytics from Northwestern University and a bachelors degree in Accounting. I have worked in the investment arena for over 10 years starting as an analyst and working my way up to a management role. Dividend investing is a personal hobby and I look forward to sharing my thoughts with the Seeking Alpha community.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a pur ...