Badger Meter(BMI) - 2025 Q3 - Quarterly Report

Part I. Financial Information Unaudited consolidated financial statements and management's discussion and analysis for the period ended September 30, 2025 Item 1. Financial Statements (unaudited) This section presents the unaudited consolidated condensed financial statements of Badger Meter, Inc. for the period ended September 30, 2025, including balance sheets, statements of operations, comprehensive income, cash flows, and shareholders' equity, along with accompanying notes detailing accounting policies, acquisitions, contingencies, and revenue recognition Consolidated Condensed Balance Sheets Presents the company's financial position, highlighting assets, liabilities, and equity as of September 30, 2025 | Metric (In thousands of USD) | Sep 30, 2025 | Dec 31, 2024 | Change | % Change | | :--------------------------- | :----------- | :----------- | :----- | :------- | | Total Assets | $978,270 | $816,413 | $161,857 | 19.8% | | Total Current Assets | $494,586 | $540,116 | $(45,530) | -8.4% | | Goodwill | $236,654 | $111,770 | $124,884 | 111.7% | | Total Liabilities | $276,270 | $210,179 | $66,091 | 31.4% | | Total Shareholders' Equity | $702,510 | $606,232 | $96,278 | 15.9% | - Goodwill significantly increased by $124.9 million, primarily due to the acquisition of SmartCover® Systems[12][34][77] Consolidated Condensed Statements of Operations Details the company's revenues, expenses, and net earnings for the three and nine months ended September 30, 2025 | Metric (In thousands of USD, except per share) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | YoY Change | % YoY Change | | :------------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :----------- | | Net sales | $235,651 | $208,438 | $27,213 | 13.1% | | Gross margin | $95,836 | $83,878 | $11,958 | 14.3% | | Operating earnings | $46,084 | $40,623 | $5,461 | 13.4% | | Net earnings | $35,077 | $32,038 | $3,039 | 9.5% | | Diluted EPS | $1.19 | $1.08 | $0.11 | 10.2% | | Dividends declared per common share | $0.40 | $0.34 | $0.06 | 17.6% | | Metric (In thousands of USD, except per share) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | YoY Change | % YoY Change | | :------------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :----------- | | Net sales | $695,957 | $621,376 | $74,581 | 12.0% | | Gross margin | $289,083 | $246,424 | $42,659 | 17.3% | | Operating earnings | $140,372 | $118,713 | $21,659 | 18.2% | | Net earnings | $108,059 | $94,225 | $13,834 | 14.7% | | Diluted EPS | $3.65 | $3.19 | $0.46 | 14.4% | | Dividends declared per common share | $1.08 | $0.88 | $0.20 | 22.7% | Consolidated Condensed Statements of Comprehensive Income Presents net earnings and other comprehensive income components for the three and nine months ended September 30, 2025 | Metric (In thousands of USD) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | YoY Change | % YoY Change | | :--------------------------- | :-------------------------- | :-------------------------- | :--------- | :----------- | | Net earnings | $35,077 | $32,038 | $3,039 | 9.5% | | Foreign currency translation adjustments | $(366) | $4,726 | $(5,092) | -107.7% | | Comprehensive income | $34,663 | $36,731 | $(2,068) | -5.6% | | Metric (In thousands of USD) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | YoY Change | % YoY Change | | :--------------------------- | :-------------------------- | :-------------------------- | :--------- | :----------- | | Net earnings | $108,059 | $94,225 | $13,834 | 14.7% | | Foreign currency translation adjustments | $13,166 | $1,092 | $12,074 | 1105.7% | | Comprehensive income | $121,080 | $95,221 | $25,859 | 27.2% | Consolidated Condensed Statements of Cash Flows Outlines cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2025 | Metric (In thousands of USD) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | YoY Change | % YoY Change | | :--------------------------- | :-------------------------- | :-------------------------- | :--------- | :----------- | | Net cash provided by operations | $128,897 | $102,967 | $25,930 | 25.2% | | Net cash used for investing activities | $(194,017) | $(11,149) | $(182,868) | 1640.3% | | Net cash used for financing activities | $(31,237) | $(25,111) | $(6,126) | 24.4% | | (Decrease) increase in cash and cash equivalents | $(93,612) | $67,173 | $(160,785) | -239.3% | | Cash and cash equivalents – end of period | $201,693 | $258,955 | $(57,262) | -22.1% | - The significant increase in cash used for investing activities is primarily due to the $184.0 million acquisition of SmartCover® Systems in 2025[19][34][77] Consolidated Condensed Statements of Shareholders' Equity Details changes in shareholders' equity, including reinvested earnings and comprehensive income, as of September 30, 2025 | Metric (In thousands of USD) | Sep 30, 2025 | Dec 31, 2024 | Change | % Change | | :--------------------------- | :----------- | :----------- | :----- | :------- | | Total Shareholders' Equity | $702,510 | $606,232 | $96,278 | 15.9% | | Reinvested earnings | $624,054 | $547,796 | $76,258 | 13.9% | | Accumulated other comprehensive income (loss) | $5,115 | $(7,906) | $13,021 | 164.7% | - Accumulated other comprehensive income shifted from a loss of $7.9 million at December 31, 2024, to an income of $5.1 million at September 30, 2025, largely driven by foreign currency translation adjustments[12][22][31] Notes to Unaudited Consolidated Condensed Financial Statements Provides detailed explanations and disclosures supporting the unaudited consolidated condensed financial statements Note 1. Basis of Presentation Describes the accounting principles and assumptions used in preparing the interim financial statements - The unaudited consolidated condensed financial statements include all necessary adjustments for fair presentation, with interim results not necessarily indicative of full-year performance[26] Note 2. Additional Financial Information Disclosures Provides further details on cash equivalents and warranty and after-sale costs - Cash equivalents are highly liquid investments with original maturities of ninety days or less[29] | Warranty and After-Sale Costs (In thousands of USD) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | YoY Change | % YoY Change | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :----------- | | Balance at beginning of period | $16,693 | $11,102 | $5,591 | 50.4% | | Net additions charged to earnings | $10,898 | $9,908 | $990 | 10.0% | | Costs incurred | $(5,832) | $(5,350) | $(482) | 9.0% | | Balance at end of period | $21,759 | $15,660 | $6,099 | 38.9% | Note 3. Accumulated Other Comprehensive Income (Loss) Details the components of accumulated other comprehensive income and their changes | Component (In thousands of USD) | Balance at Dec 31, 2024 | Net Current Period OCI (Loss) | Balance at Sep 30, 2025 | | :------------------------------ | :---------------------- | :---------------------------- | :---------------------- | | Unrecognized pension and postretirement benefits | $1,146 | $(145) | $1,001 | | Foreign currency translation | $(9,052) | $13,166 | $4,114 | | Total | $(7,906) | $13,021 | $5,115 | - Foreign currency translation adjustments significantly contributed to the positive shift in accumulated other comprehensive income in 2025[31] Note 4. Acquisitions Outlines the details of significant business acquisitions made by the company - On January 30, 2025, Badger Meter acquired SmartCover® Systems for $184.0 million, a provider of sewer line and lift station monitoring solutions. This acquisition added $27.8 million in revenue for the eight months ended September 30, 2025, and resulted in $85.6 million in intangible assets and $119.8 million in goodwill[33][34][76][77] - On January 1, 2024, the Company acquired Telog® product line and Unity Remote Monitoring software for $3.0 million in cash[35][78] Note 5. Contingencies, Litigation and Commitments Addresses potential legal, environmental, and supply chain risks and commitments - The Company is not currently involved in any material legal proceedings[36] - Environmental compliance expenditures were not material in 2024 and the first nine months of 2025[37][96] - The Company relies on single suppliers for certain brass castings, resin, and electronic subassemblies, mitigating risks through close supplier relationships, alternative suppliers, and business interruption insurance[38] Note 6. Income Taxes Provides information on the company's income tax provision and effective tax rates | Metric (In thousands of USD) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :--------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Earnings before income taxes | $47,442 | $42,911 | $144,015 | $124,365 | | Provision for income taxes | $12,365 | $10,873 | $35,956 | $30,140 | | Effective income tax rate | 26.1% | 25.3% | 25.0% | 24.2% | Note 7. Fair Value Measurements of Financial Instruments Discusses the fair value of financial instruments and their measurement - The carrying amounts of cash and cash equivalents, receivables, and payables approximate their fair values due to their short-term nature[42] Note 8. Subsequent Events Discloses any significant events occurring after the reporting period - No material subsequent events were identified through the date of filing[43] Note 9. Industry Segment and Geographic Areas Describes the company's operating segments and geographical revenue distribution - Badger Meter operates as a single reportable segment, focusing on water and wastewater management solutions, due to similarities in products, processes, customers, and distribution methods[44] Note 10. Revenue Recognition Details the company's revenue recognition policies, including geographic and timing breakdowns | Revenue by Geographic Area (In thousands of USD) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :----------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | United States | $210,714 | $188,130 | $627,039 | $559,283 | | Foreign | $24,387 | $20,331 | $66,318 | $53,693 | | Total | $235,651 | $208,438 | $695,957 | $621,376 | | Revenue by Timing (In thousands of USD) | 3 Months Ended Sep 30, 2025 | % | 3 Months Ended Sep 30, 2024 | % | 9 Months Ended Sep 30, 2025 | % | 9 Months Ended Sep 30, 2024 | % | | :-------------------------------------- | :-------------------------- | :- | :-------------------------- | :- | :-------------------------- | :- | :-------------------------- | :- | | Recognized over time | $24,187 | 10.3% | $15,846 | 7.6% | $67,559 | 9.7% | $42,924 | 6.9% | | Recognized at a point in time | $211,464 | 89.7% | $192,592 | 92.4% | $628,398 | 90.3% | $578,452 | 93.1% | | Total | $235,651 | 100.0% | $208,438 | 100.0% | $695,957 | 100.0% | $621,376 | 100.0% | - Revenue recognized over time, primarily from BEACON® SaaS and SmartCover® revenue, increased significantly, reflecting a shift towards subscription-based services[47][52] | Contract Balances (In thousands of USD) | Sep 30, 2025 | Dec 31, 2024 | | :-------------------------------------- | :----------- | :----------- | | Receivables | $115,056 | $84,325 | | Contract liabilities | $94,710 | $78,274 | - As of September 30, 2025, $94.7 million of transaction price was allocated to unsatisfied performance obligations, with estimated revenue recognition extending through 2030 and beyond[53] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Badger Meter's business, financial performance for the three and nine months ended September 30, 2025, and an analysis of its financial condition, liquidity, and capital resources. It highlights growth drivers, strategic acquisitions, and market trends Business Description and Overview Provides an overview of Badger Meter's core business, product lines, and market focus - Badger Meter is a global provider of water management solutions, with approximately 95% of net sales from water-related applications, offering hardware, communication, software, and support services under its BlueEdge™ brand[55] - The Company's solutions are categorized into two product lines: Utility Water (88% of 2024 Net Sales) and Flow Instrumentation (12% of 2024 Net Sales)[59][60][69] - Utility Water solutions include smart metering (AMR/AMI), water quality monitoring, leak detection, and remote sewer monitoring, with a focus on North America[60][61][62][63][64][65][67] - Flow Instrumentation serves industrial markets, including water/wastewater, HVAC, and corporate sustainability, with products measuring and controlling various fluids[69][70] Long-Term Business Trends Discusses key market drivers and evolving trends impacting the company's long-term growth strategy - Key drivers for the business include significant infrastructure investment needs, an aging workforce, increasing regulations, and a focus on climate change and sustainability, all driving demand for better water management[71] - The utility water market is seeing a continuing conversion to Advanced Metering Infrastructure (AMI) systems, with an estimated 40% of US water meters already converted, and a shift from mechanical to static (ultrasonic) meters for improved accuracy[66][72][73] - Customers increasingly seek frequent and diverse data for holistic water network management, which Badger Meter addresses with its smart water solutions, including water quality, pressure management, and sewer line monitoring[74][75] Acquisitions Details recent strategic acquisitions and their impact on the company's product offerings - On January 30, 2025, Badger Meter acquired SmartCover® Systems for $184.0 million, enhancing its sewer line and lift station monitoring solutions within the utility water product line[76][77] - On January 1, 2024, the Company acquired the Telog® product line and Unity Remote Monitoring software for $3.0 million, expanding its remote water monitoring capabilities[78] Revenue and Product Mix Analyzes revenue composition, including growth in SaaS and international market expansion efforts - Revenue from Software as a Service (SaaS), including ORION Cellular and BEACON digital solutions, has significantly increased and is margin accretive[80] - The Company is pursuing additional revenue enhancement through expansion into select international markets (e.g., Middle East, UK) and strategic mergers and acquisitions[81] Current Business Trends – Tariffs Addresses the impact of import tariffs on input costs and the company's mitigation strategies - Increased import tariffs in 2025 have the potential to raise input costs, which the Company is managing through selective supply chain and pricing actions[82] Results of Operations - Three Months Ended September 30, 2025 Analyzes the financial performance for the third quarter, including sales, margins, and earnings | Metric (In millions of USD) | Q3 2025 | Q3 2024 | YoY Change | % YoY Change | | :-------------------------- | :------ | :------ | :--------- | :----------- | | Net Sales | $235.7 | $208.4 | $27.3 | 13.1% | | Utility Water Sales | $209.2 | $183.0 | $26.2 | 14.3% | | Flow Instrumentation Sales | $26.5 | $25.4 | $1.1 | 4.3% | | Operating Earnings | $46.1 | $40.6 | $5.5 | 13.4% | | Operating Margin | 19.6% | 19.5% | 0.1 pp | | | Gross Margin % | 40.7% | 40.2% | 0.5 pp | | | Net Earnings | $35.1 | $32.0 | $3.1 | 9.7% | | Diluted EPS | $1.19 | $1.08 | $0.11 | 10.2% | - Utility water sales growth was driven by increased ultrasonic meter, water quality solution, BEACON® SaaS revenues, and $11.1 million from the SmartCover acquisition[83] - Gross margin improvement was due to a positive sales mix, including higher SaaS revenues, despite tariff and input cost pressures[84] - Selling, engineering and administration (SEA) expenses increased due to the inclusion of SmartCover (including intangible asset amortization), higher incentive compensation, and personnel-related expenses[84] Results of Operations - Nine Months Ended September 30, 2025 Analyzes the financial performance for the nine-month period, including sales, margins, and earnings | Metric (In millions of USD) | 9M 2025 | 9M 2024 | YoY Change | % YoY Change | | :-------------------------- | :------ | :------ | :--------- | :----------- | | Net Sales | $696.0 | $621.4 | $74.6 | 12.0% | | Utility Water Sales | $618.7 | $543.7 | $75.0 | 13.8% | | Flow Instrumentation Sales | $77.3 | $77.7 | $(0.4) | -0.6% | | Operating Earnings | $140.4 | $118.7 | $21.7 | 18.3% | | Operating Margin | 20.2% | 19.1% | 1.1 pp | | | Gross Margin % | 41.5% | 39.7% | 1.8 pp | | | Net Earnings | $108.1 | $94.2 | $13.9 | 14.8% | | Diluted EPS | $3.65 | $3.19 | $0.46 | 14.4% | - Utility water net sales grew due to increased metering, water quality solutions, BEACON® SaaS revenues, and $27.8 million from the SmartCover acquisition[87] - Gross margin improvement was driven by increased sales volume and favorable product mix, partially offset by tariff and input cost pressures[88] - SEA expenses increased year-over-year due to the inclusion of SmartCover (including intangible asset amortization) and higher personnel costs[88] Liquidity and Capital Resources Assesses the company's cash flow, working capital, and available credit for operations and investments - Primary sources of liquidity are cash from operations and borrowing capacity, with potential access to capital markets[91] | Primary Working Capital (In thousands of USD) | Sep 30, 2025 | PWC% | Dec 31, 2024 | PWC% | | :------------------------------------------ | :----------- | :--- | :----------- | :--- | | Receivables | $115,056 | 12.8% | $84,325 | 10.2% | | Inventories | $152,627 | 16.9% | $143,408 | 17.3% | | Payables | $(69,786) | -7.7% | $(55,659) | -6.7% | | Primary Working Capital | $197,897 | 22.0% | $172,074 | 20.8% | - Primary Working Capital increased by $25.8 million, driven by higher receivables and inventories due to increased sales activity, partially offset by higher payables[92] - Cash provided by operations increased to $128.9 million (9M 2025) from $103.0 million (9M 2024), supported by higher net earnings and favorable working capital trends[93] - Cash and cash equivalents decreased to $201.7 million from $295.3 million at December 31, 2024, primarily due to the $184.0 million SmartCover acquisition and dividend payments, partially offset by operating cash flow[94] - The Company has a $150.0 million multi-currency line of credit and $154.7 million of unused credit lines available, ensuring adequate resources for operations and future investments[95] Other Matters Covers miscellaneous financial matters, including environmental compliance expenditures - Environmental compliance expenditures were not material in 2024 and the first three quarters of 2025[96] Contractual Obligations Confirms the status of the company's contractual obligations - Contractual obligations have not materially changed since the 2024 Annual Report on Form 10-K, unless otherwise indicated[98] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there have been no material changes to the Company's quantitative and qualitative disclosures about market risk since its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to market risk disclosures since the 2024 Annual Report on Form 10-K[99] Item 4. Controls and Procedures This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Reports on the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2025[100] Changes in Internal Control Over Financial Reporting Addresses any material changes in internal control over financial reporting - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2025[101] Part II. Other Information Contains additional information not covered in the financial statements, including risk factors and equity matters Item 1A. Risk Factors This section confirms that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors since the 2024 Annual Report on Form 10-K[103] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides information on the Company's share repurchase program, indicating no shares were repurchased during the quarter ended September 30, 2025 | Period | Total shares purchased | Average price paid per share | Total shares purchased as part of a publicly announced program | Maximum number of shares that may yet be purchased under the program | | :----- | :--------------------- | :--------------------------- | :----------------------------------------------------------- | :----------------------------------------------------------------- | | July 1, 2025 - July 31, 2025 | - | $ - | - | 200,000 | | August 1, 2025 - August 31, 2025 | - | $ - | - | 200,000 | | September 1, 2025 - September 30, 2025 | - | $ - | - | 200,000 | | Total as of September 30, 2025 | - | | - | 200,000 | - No shares were repurchased under the authorized program during the quarter ended September 30, 2025, leaving 200,000 shares available for repurchase[104][105] Item 5. Other Information This section confirms that no Rule 10b5-1 or non-Rule 10b-1 trading arrangements were adopted or terminated by directors or executive officers during the third quarter of 2025 - No Rule 10b5-1 or non-Rule 10b-1 trading arrangements were adopted or terminated by directors or executive officers during Q3 2025[106] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and iXBRL formatted financial statements - Exhibits include certifications (31.1, 31.2, 32) and iXBRL formatted financial statements (101, 104)[108] Signatures Provides the official signatures of the company's executive officers, certifying the report's accuracy - The report was signed by Kenneth C. Bockhorst (Chairman, President and CEO), Robert A. Wrocklage (Senior Vice President – CFO), and Daniel R. Weltzien (Vice President – Controller and Treasurer) on October 22, 2025[110][112]