Badger Meter's Q3 Sales Surge 12%, Net Income Up 14.7% on SmartCover Boost

Ticker: BMI · Form: 10-Q · Filed: 2025-10-22T00:00:00.000Z

Sentiment: bullish

Topics: Water Technology, Smart Metering, Acquisition Growth, Utility Sector, Earnings Growth, Infrastructure, Dividend Increase

Related Tickers: BMI, Xylem, ITT

TL;DR

Badger Meter's strategic acquisition of SmartCover is paying off big, driving double-digit growth and making BMI a solid buy in the smart water space.

AI Summary

Badger Meter Inc. (BMI) reported a strong financial performance for the nine months ended September 30, 2025, with net sales increasing by 12% to $695.96 million from $621.38 million in the prior year. Net earnings also saw a significant rise of 14.68% to $108.06 million, up from $94.23 million. This growth was partly driven by the acquisition of SmartCover Systems on January 30, 2025, for $184.0 million, which contributed $27.8 million in revenue for the eight months ended September 30, 2025. Diluted earnings per share increased to $3.65 from $3.19. The company's total assets grew to $978.27 million from $816.41 million at December 31, 2024, largely due to the SmartCover acquisition which added $85.6 million in intangible assets and $119.8 million in goodwill. Cash and cash equivalents decreased by $93.61 million to $201.69 million, primarily due to the $184.02 million spent on acquisitions. Dividends declared per common share increased to $1.08 for the nine months ended September 30, 2025, compared to $0.88 in the prior year.

Why It Matters

Badger Meter's robust growth, fueled by strategic acquisitions like SmartCover Systems, signals strong demand in the utility water sector, particularly for monitoring solutions. This performance could attract investors seeking exposure to essential infrastructure and smart water technology, potentially driving BMI's stock price higher. For employees, the expansion through acquisitions suggests job stability and potential growth opportunities within an expanding company. Customers benefit from enhanced product offerings and integrated solutions, strengthening Badger Meter's competitive position against rivals in the water utility market. The broader market sees a leader in water management technology consolidating its position, reflecting a growing trend towards digitalization and efficiency in resource management.

Risk Assessment

Risk Level: medium — The company's significant increase in goodwill to $236.65 million from $111.77 million and intangible assets to $122.06 million from $45.07 million, largely due to the $184.0 million SmartCover acquisition, introduces integration and impairment risks. Additionally, the reliance on single suppliers for critical components like brass castings and electronic subassemblies, as noted in Note 5, poses a supply chain risk that could lead to higher costs or delivery delays.

Analyst Insight

Investors should consider increasing their position in BMI, given the strong revenue and net income growth driven by strategic acquisitions in the high-growth smart water sector. Monitor the integration of SmartCover Systems and potential future acquisitions for continued expansion and market leadership.

Financial Highlights

debt To Equity
N/A
revenue
$695.96M
operating Margin
20.18%
total Assets
$978.27M
total Debt
N/A
net Income
$108.06M
eps
$3.65
gross Margin
41.53%
cash Position
$201.69M
revenue Growth
+12%

Revenue Breakdown

SegmentRevenueGrowth
Total Net Sales$695.96M+12%

Key Numbers

Key Players & Entities

FAQ

How did Badger Meter's net sales perform in the nine months ended September 30, 2025?

Badger Meter's net sales increased by 12% to $695.96 million for the nine months ended September 30, 2025, up from $621.38 million in the same period of 2024.

What was the impact of the SmartCover Systems acquisition on Badger Meter's financials?

The acquisition of SmartCover Systems for $184.0 million on January 30, 2025, contributed $27.8 million in revenue for the eight months ended September 30, 2025, and significantly increased intangible assets by $85.6 million and goodwill by $119.8 million.

Did Badger Meter's earnings per share grow in the latest quarter?

Yes, Badger Meter's diluted earnings per share increased to $1.19 for the three months ended September 30, 2025, compared to $1.08 in the prior year, and to $3.65 for the nine months ended September 30, 2025, up from $3.19.

What are the key risks identified in Badger Meter's 10-Q filing?

Key risks include potential integration challenges and impairment risks from the significant increase in goodwill and intangible assets due to acquisitions, and supply chain risks from reliance on single suppliers for critical components like brass castings and electronic subassemblies.

How did Badger Meter's cash position change due to investing activities?

Badger Meter's cash and cash equivalents decreased by $93.61 million for the nine months ended September 30, 2025, primarily due to $184.02 million spent on acquisitions, net of cash acquired.

What was the change in Badger Meter's dividends declared per common share?

Dividends declared per common share increased to $0.40 for the three months ended September 30, 2025, from $0.34 in the prior year, and to $1.08 for the nine months ended September 30, 2025, up from $0.88.

What is Badger Meter's strategy for growth based on this filing?

Badger Meter's strategy for growth appears to involve strategic acquisitions, as evidenced by the SmartCover Systems purchase, to expand its product lines and market reach, particularly in sewer line and lift station monitoring solutions within the utility water product line.

How much did Badger Meter spend on property, plant and equipment expenditures?

Badger Meter spent $9.99 million on property, plant and equipment expenditures for the nine months ended September 30, 2025, an increase from $8.15 million in the same period of 2024.

What is the current status of Badger Meter's warranty and after-sale costs reserve?

The warranty and after-sale costs reserve for Badger Meter stood at $21.76 million at September 30, 2025, increasing from $16.69 million at the beginning of the nine-month period.

Is Badger Meter subject to any material legal proceedings?

No, according to Note 5 of the filing, there are currently no material legal proceedings pending with respect to Badger Meter.

Risk Factors

Industry Context

Badger Meter operates in the water meter and smart water technology sector, a market driven by increasing demand for water conservation, aging infrastructure replacement, and the adoption of smart city initiatives. The industry is characterized by a shift towards digital solutions and data analytics for water management. Competition comes from both established players and emerging technology companies.

Regulatory Implications

The company must navigate evolving environmental regulations and water management policies, particularly those focused on water scarcity and efficiency. Compliance with data privacy and cybersecurity standards is also crucial, given the increasing digitization of water infrastructure and the sensitive data collected.

What Investors Should Do

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Key Dates

Glossary

Goodwill
An intangible asset that arises when a company acquires another company for a price greater than the fair value of its identifiable net assets. It represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. (The significant increase in goodwill ($236.65M from $111.77M) is directly attributable to the SmartCover Systems acquisition, indicating a substantial premium paid over the fair value of acquired net assets.)
Intangible Assets
Non-physical assets that have value, such as patents, copyrights, trademarks, and brand recognition. In the context of acquisitions, it includes items like customer lists, technology, and assembled workforce. (The increase in intangible assets ($122.06M from $45.07M) reflects the value attributed to SmartCover's technology and intellectual property acquired in the transaction.)
Diluted Earnings Per Share (EPS)
A measure of the company's profit allocated to each outstanding share of common stock, including the potential dilution from stock options, convertible securities, and warrants. (The increase in diluted EPS to $3.65 from $3.19 signifies improved profitability on a per-share basis, a key metric for investors.)
Effective Income Tax Rate
The actual percentage of pre-tax income that a company pays in income taxes. (The slight increase in the effective tax rate from 25.3% to 26.1% for the three months ended September 30, 2025, indicates a marginally higher tax burden on earnings.)

Year-Over-Year Comparison

Badger Meter Inc. has demonstrated robust year-over-year performance. Net sales for the nine months ended September 30, 2025, increased by 12% to $695.96 million, compared to $621.38 million in the prior year. Net earnings also saw a substantial rise of 14.68% to $108.06 million. The company's total assets grew significantly to $978.27 million, largely due to the strategic acquisition of SmartCover Systems, which also led to an increase in goodwill and intangible assets. While cash and cash equivalents decreased due to acquisition spending, the overall financial health appears strong, supported by increased diluted EPS and dividends per share.

Filing Stats: 4,432 words · 18 min read · ~15 pages · Grade level 15.7 · Accepted 2025-10-22 15:22:33

Key Financial Figures

Filing Documents

Financial Information

Part I. Financial Information: Item 1

Financial Statements (unaudited)

Financial Statements (unaudited): 4 Consolidated Condensed Balance Sheets - September 30, 2025 and December 31, 2024 4 Consolidated Condensed Statements of Operations - Three and Nine Months Ended September 30, 2025 and 2024 5 Consolidated Condensed Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2025 and 2024 6 Consolidated Condensed Statements of Cash Flows - Nine Months Ended September 30, 2025 and 2024 7 Consolidated Condensed Statements of Shareholders' Equity – Three and Nine Months Ended September 30, 2025 and 2024 8 Notes to Unaudited Consolidated Condensed Financial Statements 9 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 3

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 19 Item 4

Controls and Procedures

Controls and Procedures 19

Other Information

Part II. Other Information: Item 1A

Risk Factors

Risk Factors 20 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 20 Item 5 Other Information 20 Item 6 Exhibits 20

Signatures

Signatures 21 2 Table of Contents Special Note Regarding Forward Looking Statements Certain statements contained in this Quarterly Report on Form 10-Q, as well as other information provided from time to time by Badger Meter, Inc. (the "Company" or "Badger Meter") or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those statements. The words "anticipate," "believe," "estimate," "expect," "think," "should," "could" and "objective" or similar expressions are intended to identify forward looking statements. All such forward looking statements are based on the Company's then current views and assumptions and involve risks and uncertainties. See Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for further information regarding risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements as a result of new information, future events or any other reason. 3 Table of Contents

– Financial Information

Part I – Financial Information

Financial Statements

Item 1 Financial Statements BADGER METER, INC. Consolidated Conden sed Balance Sheets September 30, December 31, (Unaudited) (In thousands) 2025 2024 Assets Current assets: Cash and cash equivalents $ 201,693 $ 295,305 Receivables, net of allowance for doubtful accounts 115,056 84,325 Inventories: Finished goods 26,180 24,022 Work in process 30,291 36,705 Raw materials 96,156 82,681 Total inventories 152,627 143,408 Prepaid expenses and other current assets 25,210 17,078 Total current assets 494,586 540,116 Property, plant and equipment, at cost 246,217 233,203 Less accumulated depreciation ( 167,855 ) ( 158,943 ) Net property, plant and equipment 78,362 74,260 Intangible assets, at cost less accumulated amortization 122,060 45,066 Other assets 13,955 12,676 Deferred income taxes 32,653 32,525 Goodwill 236,654 111,770 Total assets $ 978,270 $ 816,413 Liabilities and shareholders' equity Current liabilities: Payables $ 69,786 $ 55,659 Accrued compensation and employee benefits 33,524 34,912 Warranty and after-sale costs, current 8,926 7,283 Other current liabilities 41,186 20,351 Total current liabilities 153,422 118,205 Long-term deferred revenue 69,180 64,153 Deferred income taxes 24,065 3,652 Accrued non-pension postretirement benefits 3,395 3,033 Other accrued employee benefits 6,447 6,927 Warranty and after-sale costs, long-term 12,833 9,410 Other long-term liabilities 6,418 4,801 Commitments and contingencies (Note 5) Shareholders' equity: Common stock, $ 1 par, authorized 80,000,000 , issued 37,221,098 shares in 2025 and 2024 37,221 37,221 Capital in excess of par value 72,541 65,819 Reinvested earnings 624,054 547,796 Accumulated other comprehensive income (loss) 5,115 ( 7,906 ) Less: Treasury stock, at cost, 7,751,313 shares i

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