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]

Core Viewpoint - Badger Meter's stock has declined 10% following a disappointing Q4 earnings report, with sales falling short of Wall Street expectations, leading to a year-over-year decline of approximately 30% in stock value [1][2]. Financial Performance - For the full year, Badger Meter reported revenue growth of 11%, earnings per share (EPS) growth of 13%, and free cash flow (FCF) growth of 19% [1]. - In Q4, the company achieved $221 million in sales, which was $11 million below expectations, representing an 8% increase year-over-year and only a 2% increase on an organic basis [2][1]. Future Outlook - CEO Kenneth Bockhorst indicated that revenue growth may remain subdued until the second half of 2025, as several awarded projects are expected to begin multi-year turnkey deployments [3]. - The company anticipates that the current dynamics will persist through the first half of 2026 [3]. Valuation - Badger Meter's valuation has decreased from an average of 43 times FCF over the last five years to a more reasonable 26 times FCF, suggesting a potential buying opportunity for long-term investors [4]. Strategic Developments - The company is shifting towards tech-focused solutions, with Smart Cover, a 2025 acquisition, experiencing a 25% sales growth [6]. - Software-as-a-Service sales have increased by 27% and now account for nearly 10% of total sales [6].

Badger Meter Fourth Quarter & Full Year 2025 Financial Results January 28, 2026 1 Forward Looking Statements 2 Durable Demand For Smart Water Solutions in 2025 Drove Profitable Growth and Robust Cash Generation FY 13% 10% 5% 8% 2% 3% 5% 5% 6% 0% 2% 4% 6% 8% 10% 12% 14% Q4 2024 Q1 2025 Q2 2025 Q3 2025 Q4 2025 Base SmartCover 13% 13% 10% 8% 19.1% 20.0% 21.1% As Reported OP Margin FY 2024 As Reported OP Margin FY 2025 Base Operating Profit Margin FY 2025 19.1% 19.5% 20.5% As Reported OP Margin Q4 2024 As Repor ...

Badger Meter (BMI) came out with quarterly earnings of $1.14 per share, missing the Zacks Consensus Estimate of $1.15 per share. This compares to earnings of $1.04 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -0.78%. A quarter ago, it was expected that this manufacturer of products that measure gas and water flow would post earnings of $1.11 per share when it actually produced earnings of $1.19, delivering a surprise of +7. ...

Core Insights - Badger Meter, Inc. reported record sales, profitability, and cash flow for the full year 2025, driven by sustained demand for smart water management solutions [2][11] - The acquisition of SmartCover in early 2025 expanded Badger Meter's capabilities in sewer monitoring and stormwater management, positioning the company for long-term growth [3][11] Fourth Quarter 2025 Highlights - Utility water sales increased by 9% year-over-year, or 2% excluding SmartCover, with growth driven by customer adoption of digital smart water solutions [5][9] - Operating earnings rose by 10% year-over-year to $43.0 million, with operating profit margins expanding to 19.5% [7][9] - Total sales reached $220.7 million, an 8% increase from $205.2 million in the prior year [9][10] Full Year 2025 Highlights - Record sales of $916.7 million, up 11% from $826.6 million in 2024, with base sales increasing by 6% year-over-year [9][11] - Operating earnings for the year increased by 16% to $183.4 million, with operating profit margins at 20.0% [9][11] - Diluted earnings per share (EPS) increased by 13% to $4.79, compared to $4.23 in 2024 [9][11] Strategic Initiatives - The company emphasized the importance of its BlueEdge suite of smart water management solutions, which addresses various challenges across the water cycle [12][13] - Badger Meter's selection for the Puerto Rico Aqueduct and Sewer Authority's AMI project highlights its capabilities in enhancing water system resiliency [14] Financial Performance - Gross margin improved to 42.1%, benefiting from a favorable sales mix and lower pass-through revenue [7][9] - Cash provided by operations reached $54.8 million in Q4 2025 and $183.7 million for the full year [9][11] Outlook - The company anticipates high single-digit sales growth and operating profit margin expansion over the next five years, driven by the adoption of cellular AMI solutions and international expansion opportunities [15][16]

Core Viewpoint - Badger Meter, Inc. is a key player in the flow measurement and control solutions industry, focusing on smart water technology and aiming to dominate the market by 2026 [1][4]. Price Target Trends - The consensus price target for Badger Meter has decreased from $215.92 to $157 over the past year, indicating a more conservative outlook from analysts [2][6]. - Analyst Kristina Ruggeri from Argus Research has set a bullish price target of $218, reflecting confidence in the company's growth potential [3][6]. Strategic Focus - Badger Meter is concentrating on transitioning its existing client base to innovative smart water technology products, which are designed to generate recurring revenue [3][4][6]. - The company is making strong initial efforts to encourage clients to adopt new offerings, although a significant portion has yet to make the switch [4][6]. Upcoming Earnings Report - Badger Meter's fourth quarter and full year 2025 earnings report is scheduled for release on January 28, 2026, which will provide insights into its performance and future prospects [5].