Financial Data and Key Metrics Changes - Total sales for Q4 2025 reached $221 million, an 8% year-over-year increase, with base sales growth of 2% [7] - Operating profit margins increased by 40 basis points to 19.5%, while base operating profit margins expanded by 140 basis points to 20.5% [9] - Consolidated EPS rose to $1.14, a 10% increase from $1.04 in the prior year quarter [12] - Record quarterly free cash flow of $50.8 million, up approximately $3.4 million year-over-year [12] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 9% year-over-year, or 2% excluding SmartCover [7] - Flow instrumentation product line sales remained flat year-over-year, with modest growth in water-focused end markets [9] - SmartCover generated $40 million in sales for 2025, representing a 25% annualized growth [22] Market Data and Key Metrics Changes - The company reported a 17% compounded annual growth rate over the past five years, with software revenue exceeding $74 million, accounting for 8% of total sales [19] - The U.S. market for meters is approximately 6 million units per year, with Badger Meter holding about 30% market share [35][38] Company Strategy and Development Direction - The company aims to leverage its cellular AMI technology as a foundation for real-time insights and analytics, expanding through the Blue Edge suite of smart water management solutions [15] - The PRASA AMI project is expected to be one of the largest deployments globally, with a focus on enhancing market leadership in cellular AMI technology [15][16] - The company emphasizes long-term growth driven by secular trends in the water industry, with a conviction of high single-digit sales growth over the next five years [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of fewer operating days and project pacing effects on Q4 sales, indicating that these factors are typical in the industry [8][29] - The company expects project pacing dynamics to continue into the first half of 2026, with a higher growth rate anticipated in the second half as awarded projects commence [23][61] - Management remains confident in achieving high single-digit growth despite potential fluctuations in project timing and market conditions [54][57] Other Important Information - The company has a clean balance sheet with over $225 million in cash, providing financial flexibility for reinvestment [20] - The company has increased its dividend for 33 consecutive years and repurchased $15 million in shares in Q4 [21] Q&A Session Summary Question: Did the company see the full impact of project conclusions in Q4? - Management indicated that project pacing and timing can vary, and the second half of the year was expected to show lower growth than the first half due to these factors [27][29] Question: What is the size of the U.S. market for meters? - Management confirmed that the U.S. market is approximately 6 million meters per year, with Badger Meter's share around 30% [35][38] Question: How does the company view gross margins moving forward? - Management noted that while gross margins are strong, there are headwinds expected from turnkey projects and commodity prices, but structural mix will continue to positively impact margins [42][44] Question: How is the PRASA project funded? - The project is partially funded by FEMA dollars in response to Hurricane Maria, which also drives the Buy American requirement for manufacturing [70] Question: What is the expected timeline for the PRASA project? - Management indicated that large AMI projects typically span five years, with variability in deployment timing due to various factors [47][48]

Financial Data and Key Metrics Changes - Total sales for Q4 2025 reached $221 million, an 8% year-over-year increase, with base sales growth of 2% [7] - Operating profit margins increased by 40 basis points to 19.5%, while base operating profit margins expanded by 140 basis points to 20.5% [9] - Consolidated EPS rose to $1.14, a 10% increase from $1.04 in the prior year quarter [12] - Record quarterly free cash flow of $50.8 million, up approximately $3.4 million year-over-year [12] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 9% year-over-year, or 2% excluding SmartCover [7] - Flow instrumentation product line sales remained flat year-over-year, with modest growth in water-focused end markets [9] - SmartCover generated $40 million in sales for 2025, representing a 25% annualized growth [22] Market Data and Key Metrics Changes - The company reported a 17% compounded annual growth rate over the past five years, with software revenue exceeding $74 million, accounting for 8% of total sales [19] - The U.S. market for meters is approximately 6 million units per year, with Badger Meter holding about 30% market share [35][38] Company Strategy and Development Direction - The company aims to leverage its cellular AMI technology as a foundation for real-time insights and analytics, expanding through the Blue Edge suite of smart water management solutions [15] - The PRASA AMI project is expected to be one of the largest deployments globally, with a focus on enhancing market leadership in cellular AMI technology [15][16] - The company emphasizes long-term growth driven by ongoing demand for smart water management solutions and the integration of SmartCover into its operations [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit sales growth over the next five years, despite potential project pacing dynamics in the near term [24] - The company does not foresee significant impacts from federal funding constraints on its growth trajectory [24] - Management acknowledged the fluid nature of global tariff and trade conditions but indicated that they have reached price-cost parity on tariff-related impacts [10][11] Other Important Information - The company has a clean balance sheet with over $225 million in cash, providing financial flexibility for reinvestment [20] - The company has increased its dividend for 33 consecutive years and repurchased $15 million in shares in Q4 2025 [21] Q&A Session Summary Question: Did the company see the full impact of project conclusions in Q4? - Management noted that project pacing can vary, and the second half of the year experienced lower growth than the first half due to fewer operating days and project timing [27][29] Question: How does the company view the U.S. market size and its share? - Management confirmed that the U.S. market is approximately 6 million meters per year, with Badger Meter's share around 30% [35][38] Question: What is the expected impact of the PRASA project on revenue? - Management stated that while the PRASA project is significant, it will not add to the long-term growth outlook, which remains focused on high single-digit growth [17][24] Question: How does the company plan to manage gross margins in 2026? - Management indicated that while there are headwinds from commodity prices and project mix, they expect structural mix to positively impact margins [42][44] Question: How is the PRASA project funded? - The project is partially funded by FEMA dollars in response to Hurricane Maria, which also drives the Buy American requirement for manufacturing [70]

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]