Company Performance - Badger Meter (BMI) ended the recent trading session at $172.87, showing a +0.06% change from the previous day's closing price, outperforming the S&P 500 which lost 0.23% [1] - The stock has dropped by 18.53% in the past month, underperforming the Computer and Technology sector's loss of 16.18% and the S&P 500's loss of 12.13% [2] Upcoming Financial Results - Badger Meter is set to announce its earnings on April 17, 2025, with an anticipated EPS of $1.08, reflecting a 9.09% increase compared to the same quarter last year [3] - The consensus estimate projects revenue of $222.04 million, indicating a 13.12% rise from the equivalent quarter last year [3] Full Year Projections - For the full year, Zacks Consensus Estimates project earnings of $4.65 per share and revenue of $931.8 million, showing changes of +9.93% and +12.73% respectively from the previous year [4] - Recent changes to analyst estimates indicate confidence in the company's business performance and profit potential [4] Valuation Metrics - Badger Meter is currently trading at a Forward P/E ratio of 37.19, which is a premium compared to the industry's average Forward P/E of 20.48 [7] - The company has a PEG ratio of 3.08, compared to the average PEG ratio of 2.9 for Instruments - Control stocks [7] Industry Context - The Instruments - Control industry is part of the Computer and Technology sector, holding a Zacks Industry Rank of 208, placing it in the bottom 17% of all 250+ industries [8] - The Zacks Industry Rank assesses the strength of industry groups, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [8]

Most investors will see Wall Street analysts take a new view on the stock and move past it, only weighing how much upside there could be in that specific pick. However, the true benefit of following analyst ratings and valuation targets is that investors can reverse engineer some of these views into a broader industry or peer group sentiment, which then connects the dots to what the economy might take on. With President Trump having announced the April 2 trade tariffs—dubbed “Liberation Day” by some—the mov ...

In the latest market close, Badger Meter (BMI) reached $192.38, with a -1.72% movement compared to the previous day. This change lagged the S&P 500's 1.12% loss on the day. Meanwhile, the Dow experienced a drop of 0.31%, and the technology-dominated Nasdaq saw a decrease of 2.04%.The the stock of manufacturer of products that measure gas and water flow has fallen by 5.7% in the past month, lagging the Computer and Technology sector's loss of 4.05% and the S&P 500's loss of 2.91%.The investment community wil ...

Badger Meter, Inc. (BMI) , a leading provider of smart water solutions, has witnessed a share price decline of 7.7% year to date (YTD). This decline is steeper than the S&P 500 composite and the Instruments-Control industry’s decline of 2.3% and 2.2%, respectively.Price PerformanceImage Source: Zacks Investment ResearchWith a challenging start to 2025 for BMI, investors must be contemplating how to strategize their investment.Challenges Loom Ahead for BMIRising expenses and intense competition amid broader ...

Company Overview - Badger Meter is the leading North American provider of water management solutions, offering a range of products from flow measurement to software solutions for data analytics [5] - The company is set to celebrate its 120th anniversary in March and aims to modernize outdated water utilities through its technology-focused BlueEdge offering [6] Recent Performance - Badger Meter has experienced a significant pullback, down 16% from its highs in late 2024, despite a long history of outperforming the S&P 500 [3][4] - The company has seen its revenue growth accelerate as customers invest in aging infrastructure rather than just cutting costs [7] Strategic Acquisitions - Badger Meter has made 14 tuck-in acquisitions since 2010 to enhance revenue growth and technological capabilities [8] - The recent $185 million acquisition of SmartCover positions Badger Meter as the largest provider of sewer line monitoring in the U.S., capturing around 50% market share [9][10] Market Trends - The company is well-positioned to benefit from megatrends such as aging infrastructure, stricter environmental regulations, and population growth that demands a more resilient water grid [10] Profitability and Financial Metrics - Badger Meter's SaaS revenue has grown by 28% annually over the last six years, contributing to higher profit margins [14] - The company's return on invested capital (ROIC) stands at 22%, indicating strong management performance in generating profits [16] Dividend Growth - The company raised its dividend by 26% this year, marking 32 consecutive years of annual increases, with a low payout ratio of 25% of free cash flow [17] - Historical performance shows that an investor who bought Badger Meter in 2000 would now receive a 36% yield compared to their original cost basis [18] Valuation - Trading at 41 times free cash flow, Badger Meter is considered more expensive than the market, but its improving profitability and dividend history make it a compelling investment opportunity [20]

Financial Performance - Net sales in 2024 increased by $123.0 million, or 17.5%, to $826.6 million from $703.6 million in 2023, with utility water market sales rising by 20.3% to $725.5 million [141]. - Operating earnings in 2024 were $157.9 million, or 19.1% of sales, compared to $118.0 million, or 16.8% of sales in 2023, with gross margin as a percentage of sales increasing from 39.3% to 39.8% [143]. - Cash provided by operations in 2024 was $155.0 million, up from $110.1 million in 2023, driven by increased operating earnings and effective working capital management [150]. - Earnings per share on a diluted basis increased to $4.23 in 2024 from $3.14 in 2023, reflecting strong operational performance [147]. Acquisitions and Investments - The Company acquired 100% of SmartCover for approximately $185 million in cash effective January 30, 2025, enhancing its sewer line monitoring capabilities [136]. - The Company also acquired the Telog/Unity Assets for $3.0 million in cash effective January 1, 2024, expanding its remote water monitoring offerings [137]. Working Capital and Efficiency - Primary working capital as a percentage of sales was 20.8% as of December 31, 2024, compared to 22.1% in 2023, indicating improved efficiency [149]. - The Company had a net cash position of $295.3 million at the end of 2024, with $154.1 million of unused credit lines available [153]. Warranty and Tax Liabilities - The reserve for product warranties increased from $11.1 million in 2023 to $16.7 million in 2024, reflecting a rise in warranty claims rates due to new technology introductions [156]. - The gross accrued liability for unrecognized tax benefits decreased from $1.4 million in 2023 to $1.2 million in 2024, with accrued interest remaining approximately $0.1 million for both years [157]. - Valuation allowances for deferred tax assets rose from $2.7 million in 2023 to $3.3 million in 2024, primarily related to foreign net operating loss carryforwards [159]. Market Position and Risks - The Company estimates that approximately 40% of water utility connections in the U.S. have converted to an AMI radio solution, positioning it well for future growth [130]. - The Company is exposed to market risks due to competition in the water metering market, with potential impacts from new entrants lacking brand recognition [164]. - The Company relies on single suppliers for certain components, which could disrupt operations if those suppliers are lost [166]. - The price and availability of raw materials are influenced by economic conditions, with commodity risk managed by locking in purchase prices [167]. - The Company believes foreign currency risk will not materially affect its financial position or results of operations [168]. - The Company does not hold or issue derivative instruments for trading purposes, adhering to a strict policy against such practices [169]. - The Company is subject to contingencies related to environmental laws, which could result in future costs if circumstances change [162]. Goodwill and Intangible Assets - The Company completed its impairment analysis for goodwill and intangible assets in Q4 2024, noting no impairment and no adjustments recorded [161]. Software and Margin Improvement - The Company’s revenue from Software as a Service (SaaS) has significantly increased, contributing to margin improvement [134].

Core Insights - Badger Meter, Inc. (BMI) reported fourth-quarter 2024 earnings per share (EPS) of $1.04, exceeding the Zacks Consensus Estimate by 3% and up from 84 cents in the same quarter last year [1] - Quarterly net sales reached $205.2 million, a 12.5% increase from $182.4 million year-over-year, driven by higher sales in utility water and flow instrumentation segments, and surpassed the consensus mark by 2.6% [2] - The company anticipates high single-digit sales growth rates in the future [2] Financial Performance - Gross profit for the quarter was $82.8 million, reflecting a 15.8% year-over-year increase, with a gross margin of 40.3%, up 110 basis points from the previous year [8] - Operating earnings were reported at $39.2 million, representing 19.1% of sales, compared to $32.1 million or 17.6% of sales in the prior year [9] - Selling, engineering, and administration expenses totaled $43.5 million, or 21.2% of sales, down from 21.6% in the previous year, attributed to increased headcount and acquisition costs [11] Cash Flow & Liquidity - Badger Meter generated $52.1 million in net cash from operating activities, up from $37.9 million a year ago [12] - The company reported a record quarterly free cash flow of $47.4 million, a 32% increase year-over-year, indicating improved earnings and working capital management [13] - As of December 31, 2024, Badger Meter had $295.3 million in cash and cash equivalents, compared to $259 million as of September 30, 2024 [12] Strategic Developments - Badger Meter announced the acquisition of SmartCover Systems for $185 million in cash, enhancing its BlueEdge suite with real-time monitoring capabilities for sewer lines and lift stations [4][5] - SmartCover, with annual revenues of $35 million, provides solutions that help utilities monitor sewer levels and prevent overflows, thereby reducing costs and protecting public health [4] Segment Performance - Utility water sales increased by 14%, driven by strong adoption of the BlueEdge suite among utility customers, particularly in cellular AMI [6] - Sales of flow instrumentation products saw a modest 1% increase year-over-year, with growth in water-related applications offsetting declines in other markets [7] Stock Performance - Following the earnings announcement, Badger Meter's shares rose by 2.6%, closing at $213.91 on January 31, 2025, with a 52.9% increase over the past year compared to the industry's 5.6% growth [3]

Financial Data and Key Metrics Changes - The company reported a 13% quarterly sales growth, building on a challenging 24% increase in the prior year comparable quarter [6] - Consolidated EPS was $1.04 in Q4 2024, a 24% improvement from $0.84 in the prior year comparable quarter [10] - Operating margins expanded by 150 basis points to 19.1% in the quarter, with gross profit margins improving to 40.3% from 39.2% in the prior year [7][10] - Free cash flow reached a record $47.4 million, up 32% year over year [11] Business Line Data and Key Metrics Changes - Total utility water product line sales increased by 14% year over year, driven by strong demand for the Blue Edge suite of utility smart water solutions [6] - Sales for the flow instrumentation product line were up slightly by 1% in the quarter, as growth in core water-related applications offset declines in other areas [7] Market Data and Key Metrics Changes - The company achieved 18% sales growth in 2024, surpassing $800 million in revenue, with a five-year top-line CAGR of 14% [12] - Software revenue exceeded $56 million, representing 6.7% of sales and a 28% compound annual growth rate over the past five years [12] Company Strategy and Development Direction - The acquisition of Smart Cover was announced, aimed at enhancing the company's offerings in sewer and lift station monitoring [4][14] - The company plans to leverage existing cash for the acquisition, which was priced at $185 million, equating to about five times Smart Cover's 2024 sales of approximately $35 million [15] - The strategic focus remains on addressing macro water challenges and enhancing the Blue Edge suite of solutions [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing positive tone of the business, with expectations for high single-digit growth in 2025 [27] - The company anticipates continued improvement in margins and working capital efficiency, despite potential macroeconomic uncertainties [18][19] Other Important Information - The company reclassified the current portion of deferred revenue from payables to other current liabilities, which does not affect cash from operations or free cash flow [70] - The next earnings call is tentatively scheduled for April 17, 2025, marking the last call for the current VP of Investor Relations [71] Q&A Session Summary Question: Can you clarify your Mexico manufacturing exposure and contingency plans for potential tariffs? - Management acknowledged the uncertainty surrounding tariffs but emphasized their limited sourcing from China and strong operational capabilities in North America [22][25] Question: What are the demand drivers for Smart Cover? - Demand is driven by regulatory compliance, labor availability, and the need for real-time monitoring due to extreme weather events [31][32] Question: How much of Smart Cover's revenue is recurring? - Approximately one-third of Smart Cover's $35 million in trailing revenue is classified as recurring, with an additional 20% from aftermarket product replacement services [35] Question: What enabled the improvement in working capital performance? - Continuous improvement efforts and a focus on inventory management contributed to the reduction in inventory levels [36][38] Question: What is the outlook for revenue cadence through 2024? - Management noted that revenue can be uneven from quarter to quarter, with expectations for high single-digit growth over the strategic planning horizon [44][45] Question: Why does Smart Cover have a significant market share in monitoring solutions? - Smart Cover has established a strong presence in the market, leveraging its expertise and existing relationships with utility customers [49][50] Question: Will the acquisition of Smart Cover be accretive or dilutive to earnings in the short term? - The acquisition is expected to be EPS dilutive in 2025 but accretive in the following year [67]

Core Viewpoint - Badger Meter (BMI) reported quarterly earnings of $1.04 per share, exceeding the Zacks Consensus Estimate of $1.01 per share, and showing an increase from $0.84 per share a year ago [1][2]. Financial Performance - The earnings surprise for the quarter was 2.97%, with the company having surpassed consensus EPS estimates in all four of the last quarters [2]. - Badger Meter's revenues for the quarter ended December 2024 were $205.18 million, surpassing the Zacks Consensus Estimate by 2.60%, and up from $182.44 million year-over-year [3]. Market Performance - Badger Meter shares have declined approximately 1.7% since the beginning of the year, while the S&P 500 has gained 3.2% [4]. - The current consensus EPS estimate for the upcoming quarter is $1.10 on revenues of $211.14 million, and for the current fiscal year, it is $4.76 on revenues of $887.82 million [8]. Industry Outlook - The Instruments - Control industry, to which Badger Meter belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook [9]. - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Badger Meter's stock performance [6].

Financial Results Announcement - Badger Meter, Inc. announced its financial results for Q4 2024 on January 31, 2025[4] - The press release detailing the financial results is available as Exhibit 99.1[5] Company Information - The company is listed on the New York Stock Exchange under the symbol BMI[2] - The report was signed by Robert A. Wrocklage, Senior Vice President – Chief Financial Officer[10]