Badger Meter (BMI) Earnings Date & Reports

Key Takeaways

• Badger Meter reported third quarter 2026 earnings per share (EPS) of $1.24, up 4% from $1.19 a year earlier and modestly above consensus estimates.
• Net sales were $235.9 million, essentially flat year over year and slightly below analyst forecasts of roughly $240 million.
• Operating margin expanded to 20.2% from 19.6%, while gross margin climbed 120 basis points to 41.9% on a favorable product mix.
• The company raised its annual dividend by 10% to $1.76 per share, marking its 34th consecutive year of increases, and repurchased about $55 million of stock.
• Management expects sequential and year-over-year base sales growth in the fourth quarter and says it expects to sustain that momentum into 2027.

Earnings Context and Why It Matters

Badger Meter is a Milwaukee-based provider of flow measurement, water quality, and control technologies, and a leading player in the ongoing digital transformation of the water sector. Its third quarter 2026 results matter because they arrive after a choppy first half, during which uneven timing of utility smart-meter projects pressured sales. Investors are closely watching whether the company's shift toward higher-margin software, ultrasonic meters, and "beyond the meter" solutions can offset near-term revenue softness. The report also offers a read on electronic component cost pressures tied to the broader artificial intelligence and data-center build-out, which have squeezed input costs across the industrial technology landscape.

Reported Results

For the third quarter ended September 30, 2026, Badger Meter posted net sales of $235.9 million, essentially flat versus $235.7 million in the prior-year period and slightly below consensus expectations near $240 million. Diluted EPS rose 4% to $1.24, topping analyst estimates of roughly $1.22 to $1.23.

Profitability was the quarter's highlight. Operating earnings increased 4% to $47.7 million, lifting operating margin 60 basis points to 20.2%. Gross margin expanded 120 basis points to 41.9%, driven by a favorable mix shift toward ultrasonic meters and growing software-as-a-service revenue. Excluding the UDlive acquisition completed in May 2026, base gross margin reached 42.1%, the top of the company's normalized range.

Net earnings were $35.9 million, compared with $35.1 million a year earlier. Free cash flow was $40.3 million, down from $48.2 million, reflecting higher cash taxes. Flow instrumentation sales rose 2% year over year, supported by water applications and emerging data-center demand.

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Market Reaction and Investor Sentiment

Shares of Badger Meter rose roughly 7% in the session following the report, a notable move on a day when the broader Nasdaq traded lower. The rally signaled that investors chose to look past the modest revenue miss and focus instead on margin expansion, improving sequential momentum, and management's constructive commentary on the fourth quarter and 2027. The company said base sales, which exclude UDlive, rose 5% sequentially from the second quarter as previously awarded utility projects began to ramp, an inflection point after a difficult first half. The 10% dividend increase and continued share repurchases reinforced confidence in cash generation and shareholder returns.

Forward Outlook and Key Factors to Monitor

Management expects both sequential and year-over-year base sales growth in the fourth quarter of 2026, even with fewer operating days due to the holiday calendar, and anticipates sustaining that momentum into 2027. For the full year, organic revenue is now expected to decline in the low single digits, an improvement from earlier, more cautious guidance.

Several factors will shape the quarters ahead. First, the pacing of large utility smart-meter projects remains inherently uneven, and investors should watch whether awarded contracts convert to shipments on schedule. Second, electronic component costs and availability, driven by artificial intelligence and data-center demand, continue to pressure materials; the company has so far offset these through pricing and product mix, but the challenge persists.

Third, the structural shift toward higher-margin software and ultrasonic meters is a key margin lever, with management expecting gross margin to remain within its 39% to 42% range. Finally, the integration of recent acquisitions such as UDlive and SmartCover, along with the launch of the OneNetwork software platform, will be important indicators of the company's ability to expand beyond traditional metering. Investors will also monitor free cash flow conversion, which management targets at above 100% of net earnings.

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