Core Insights - The company experienced a 6% sequential decline in utility water sales in Q4 2025, attributed to fewer operating days and project pacing effects rather than market conditions or customer demand [1] - Total sales for Q4 2025 reached $221 million, marking an 8% year-over-year increase, with utility water product line sales rising by 9% [2] - The company reported a year-over-year operating earnings growth of 10%, with operating profit margins increasing from 19.1% to 19.5% [5][6] Financial Performance - Gross margins expanded to 42.1% in Q4 2025, up from 40.3% in the prior year, benefiting from a favorable product mix [6] - The company generated record quarterly free cash flow of $50.8 million, an increase of approximately $3.4 million year-over-year [9] - Consolidated EPS for Q4 2025 was $1.14, a 10% increase from $1.04 in the prior year [8] Project Developments - The Puerto Rico Aqueduct and Sewer Authority (PRASA) AMI project is one of the largest deployments globally, involving approximately 1.6 million service connections [12] - The PRASA project is expected to begin product shipments in 2026, with significant revenue contributions anticipated in the second half of the year [14] - The company emphasized that project pacing dynamics will influence revenue growth in 2026, with expectations of lower growth in the first half and higher growth in the second half [20][56] Market Outlook - The company projects a high single-digit sales growth outlook over the next five years, supported by awarded but not yet executed projects [41][49] - The software revenue, including SmartCover, has grown significantly, now exceeding $74 million and representing 8% of total sales [16] - The company remains confident in its ability to manage project cycles and maintain growth despite potential market fluctuations [22][45]

Core Insights - Badger Meter reported record sales, profitability, and cash flow for fiscal 2025, driven by strong demand for its cellular AMI offerings and successful integration of the SmartCover acquisition into its BlueEdge smart water management portfolio [3][11] Sales Performance - Fourth-quarter 2025 sales reached $221 million, an 8% increase year over year, or 2% on a base basis excluding SmartCover [2] - Utility water product line sales rose 9% year over year, with a 6.6% sequential decline attributed to fewer operating days and project pacing [1][6] Profitability and Margins - The company achieved a full-year operating margin of approximately 20% and a fourth-quarter gross margin of 42.1%, reflecting a 180 basis point improvement from the previous year [6][7] - Operating earnings increased by 10% in the fourth quarter, with base operating margin expanding 140 basis points to 20.5% [7][12] Cash Flow and Capital Allocation - Badger Meter generated record quarterly free cash flow of $50.8 million, up about $3.4 million year over year, and ended the year with over $225 million in cash [10][12] - The company increased its dividend for the 33rd consecutive year and repurchased $15 million of shares in Q4, emphasizing a commitment to shareholder returns [4][13] SmartCover Integration and Future Expectations - The integration of SmartCover is progressing well, with the acquisition contributing $40 million in sales for 2025 and expected earnings accretion in 2026 [5][14] - Management anticipates uneven quarterly performance in 2026 due to the timing of AMI projects, with significant deployments expected to ramp in the second half of the year [16][21] Major Projects - Badger Meter secured a significant AMI project with the Puerto Rico Aqueduct and Sewer Authority (PRASA), involving approximately 1.6 million service connections [18][19] - The company will act as a supply-only partner for the PRASA project, with production taking place at its Racine facility [20] Software Revenue Growth - Software revenue, including SmartCover, exceeded $74 million, representing 8% of total sales and growing at a 28% compound annual growth rate over the past five years [11][12]

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 Q4 2025 reached $221 million, an 8% year-over-year increase, with base sales growth of 2% [6] - Operating earnings grew by 10% year-over-year, with operating profit margins increasing by 40 basis points to 19.5% [9] - Consolidated EPS was $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 [6] - Flow instrumentation product line sales were 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 [21] Market Data and Key Metrics Changes - The U.S. market for meters is approximately 6 million units per year, with Badger Meter holding about 30% market share [35] - 85% of the U.S. market is replacement-driven, indicating a stable demand for Badger Meter's products [63] 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 [14] - The PRASA AMI project is expected to be one of the largest deployments globally, with a focus on E-Series ultrasonic meters and ORION cellular AMI radios [15] - The company is committed to maintaining a clean balance sheet with over $225 million in cash, allowing for organic and inorganic growth investments [20] 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 2026 [24] - The company does not foresee significant impacts from federal funding constraints on its growth trajectory [23] - Management highlighted the importance of long-term trends in the water industry, which support demand for smart water management solutions [22] Other Important Information - The company successfully integrated SmartCover into its operations, with expectations for earnings accretion in 2026 [21] - SG&A expenses in Q4 were $49.9 million, with a year-over-year increase primarily due to the SmartCover acquisition [11] 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 was expected to show lower growth due to fewer working days and project completions [27][28] Question: What is the expected growth rate for 2026? - Management anticipates a lower growth rate in the first half of 2026, with a higher growth rate expected in the second half due to awarded projects [30][31] Question: How does the company view the U.S. market size and its share? - Management confirmed that the U.S. market size is around 6 million meters per year, with Badger Meter's share remaining approximately 30% [35][38] Question: What is the expected impact of the PRASA project on revenue? - Management refrained from sizing the revenue impact of the PRASA project, emphasizing the variability in project deployment timelines [18][19] Question: How does the company manage pricing in relation to tariffs? - Management indicated that pricing adjustments have primarily been through list price increases, without temporary tariff add-ons, maintaining a clean pricing strategy [56][57]

Financial Data and Key Metrics Changes - Total sales for Q3 2025 reached $236 million, reflecting a 13% year-over-year increase, with Base sales growth at 8% [5][6] - Operating earnings increased by 13% year-over-year to $46.1 million, with operating margins slightly up to 19.6% from 19.5% [6][8] - Consolidated EPS rose to $1.19, a 10% increase compared to $1.08 in the prior year quarter [8][9] - Record free cash flow of $48.2 million increased by approximately $6 million year-over-year, primarily due to lower cash taxes [9] 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 unit 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 [6] Market Data and Key Metrics Changes - The company noted a steady demand for its cellular AMI solution and BlueEdge suite, supported by macroeconomic drivers encouraging technology adoption across the water cycle [3][10] - The trade environment remains fluid, but the company has effectively managed tariff and trade-related cost pressures [3][7] Company Strategy and Development Direction - The company is focused on long-term growth through its BlueEdge solutions, which are modular and allow customers to adopt technologies at their own pace [10][11] - The company is well-positioned to capitalize on long-term trends in the water industry, with a strong cash flow generation capability and a net cash position of approximately $200 million [14] - The company continues to prioritize organic growth, increasing dividends for the 33rd consecutive year, and pursuing strategic acquisitions [14][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite macroeconomic uncertainties, highlighting ongoing customer enthusiasm for technology adoption [12][13] - The company anticipates a solid close to the year, despite typical seasonal impacts in Q4 due to fewer operating days [12][22] - Management expects to achieve high single-digit average top-line growth over the next five years [12][49] Other Important Information - The company has successfully transitioned certain manufacturing operations to its facility in Racine, Wisconsin, as part of the SmartCover acquisition integration [14] - The company is optimistic about the growth potential of SmartCover, which has shown 25% growth in the quarter [29][30] Q&A Session Summary Question: Insights on gross profit margin expectations - Management indicated that the lack of new tariff news and continued strong performance has led to confidence in raising the gross margin range to 39%-42% [17][19] Question: Project timing and customer decision-making - Management clarified that while Q3 may not show sequential growth over Q2, it does not indicate a decline in business, and customers are still moving forward with projects [20][22] Question: SmartCover growth and profitability - Management remains excited about SmartCover's growth potential, expecting it to become EPS accretive in year two post-acquisition [29][33] Question: Pricing strategies amid tariff impacts - Management noted targeted product-specific price increases to mitigate tariff-related costs, with expectations for price realization to catch up to costs [37][39] Question: Water quality performance and customer needs - Management expressed strong traction in water quality offerings and confidence in their current parameters, with no immediate gaps identified [41][42] Question: 2026 growth outlook and capital allocation - Management refrained from providing specific guidance for 2026 but expressed confidence in achieving high single-digit growth over the cycle [46][49] Question: Federal stimulus impact on metering - Management indicated that very little federal stimulus money has been directed toward metering, with macro drivers remaining the primary focus for utilities [53][55]

Core Viewpoint - Badger Meter's recent earnings report showed a mixed performance, with earnings per share missing estimates but net sales increasing year over year, indicating potential growth despite challenges in the market [2][10]. Financial Performance - Badger Meter reported Q2 2025 earnings per share (EPS) of $1.17, missing the Zacks Consensus Estimate by 3.3%, but up from $1.12 in the same quarter last year [2]. - Quarterly net sales reached $238.1 million, a 10% increase from $216.7 million in the prior year, driven by higher utility water sales and contributions from the SmartCover acquisition [2]. - Gross profit was $97.8 million, up from $85.4 million year over year, with a gross margin of 41.1%, reflecting a 170 basis point improvement [6]. - Operating earnings increased by 8% year over year to $44.9 million, while operating margin slightly declined to 18.8% from 19.2% [7]. Segmental Performance - Utility water sales rose 11% year over year, supported by the adoption of digital smart water technologies, with organic utility water sales up 6% excluding SmartCover [4]. - Flow instrumentation sales remained flat year over year, as growth in water-related markets was offset by reduced demand in non-water-related applications [5]. Cost and Expenses - Selling, general and administrative (SGA) expenses increased by 20.7% year over year to $52.9 million, primarily due to the SmartCover acquisition [8]. - Without the SmartCover impact, SGA expenses rose by 8%, driven by higher personnel costs and deferred compensation expenses [8]. Cash Flow and Liquidity - In Q2 2025, Badger Meter generated $44.6 million in net cash from operating activities, compared to $36.4 million a year ago [9]. - As of June 30, 2025, the company had $165.2 million in cash and cash equivalents, with total current liabilities of $138.7 million [9]. Outlook - The company is optimistic about achieving high single-digit revenue growth in the long term, supported by strong industry fundamentals and sustained customer demand [10]. - However, estimates have been trending downward, with a consensus estimate shift of -8.68%, leading to a Zacks Rank of 5 (Strong Sell) [11][13].

Core Insights - Badger Meter, Inc. (BMI) reported Q2 2025 EPS of $1.17, missing the Zacks Consensus Estimate by 3.3%, but up from $1.12 in the same quarter last year [1] - Quarterly net sales reached $238.1 million, a 10% increase from $216.7 million year-over-year, driven by higher utility water sales and contributions from the SmartCover acquisition [1] Segment Performance - Utility water sales increased by 11% year-over-year, supported by the adoption of digital smart water technologies and higher demand for metering solutions [4] - Flow instrumentation sales remained flat year-over-year, with slight growth in water-related markets offset by reduced demand in non-water-related applications [5] Financial Performance - Gross profit rose to $97.8 million from $85.4 million in the prior year, with a gross margin of 41.1%, up 170 basis points year-over-year [6] - Operating earnings increased by 8% year-over-year to $44.9 million, while operating margin slightly declined to 18.8% [7] Cash Flow & Liquidity - Cash from operations grew to $44.6 million from $36.4 million a year ago, with cash and cash equivalents at $165.2 million as of June 30, 2025 [11] Management Commentary - Management noted strong demand for its cellular AMI solution and BlueEdge portfolio, despite macroeconomic challenges [2] - The integration of SmartCover is expected to reveal new market opportunities [2] Outlook - The company anticipates high single-digit revenue growth in the long term, supported by strong industry fundamentals and sustained customer demand [12]