10-Q · April 20, 2026
Badger Meter reported Q1 net sales of $202,277,000 and diluted EPS of $0.93, both down versus Q1 2025. Gross margin narrowed to 41.69% and operating earnings declined materially, while operating cash flow remained…
Earnings analysis · 10-Q
BMI earnings analysis
Filed October 23, 2026 · Our reading of the company's report
The latest report
Badger Meter delivered a better-than-expected earnings quarter, with diluted EPS of $1.24, revenue of $235.9 million, gross margin of 41.9% and operating margin of 20.2%; margins and EPS improved both year over year and…
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Badger Meter delivered a better-than-expected earnings quarter, with diluted EPS of $1.24, revenue of $235.9 million, gross margin of 41.9% and operating margin of 20.2%; margins and EPS improved both year over year and sequentially. However, nine-month revenue declined 5.1%, operating margin fell to 18.5%, operating cash flow declined to $103.9 million, and cash fell to $67.9 million after acquisitions, repurchases and dividends. Flow Instrumentation grew 2.1% in the quarter, while Utility Water was essentially flat as uneven AMI project timing offset SaaS and UDlive contributions.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $1.24
- Segment
- One reportable segment. Utility Water revenue was $208.9 million in Q3 2026, down 0.1% year over year; nine-month revenue was $582.3 million, down 5.9%.
- Segment
- Flow Instrumentation revenue was $27.0 million in Q3 2026, up 2.1% year over year; nine-month revenue was $78.2 million, up 1.3%.
- Segment
- UDlive contributed $5.6 million of Q3 revenue and $7.7 million from acquisition through September 30, 2026; it is reported within Utility Water.
What stood out
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Margins and EPS improved
Q3 revenue was $235.9 million, up 0.1% from $235.7 million a year ago and up approximately 6.2% from $222 million in Q2 2026. Revenue was below the $240.7 million consensus estimate, but diluted EPS of $1.24 exceeded the $1.22 estimate.
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Strong sequential margin recovery
Gross margin increased to 41.9% from 40.7% year over year and 40.8% in Q2, while operating margin rose to 20.2% from 19.6% year over year and 17.7% in Q2. Management attributed the gross-margin improvement to favorable mix, including increased SaaS revenue and ultrasonic meter volume.
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Flow instrumentation grew
Flow Instrumentation revenue grew 2.1% year over year to $27.0 million in Q3, driven by strong demand across water-focused end markets. Utility Water revenue was $208.9 million, with increased BEACON SaaS revenue and $5.6 million from UDlive partly offsetting uneven AMI project pacing.
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Quarterly improvement amid YTD pressure
Nine-month revenue was $660.5 million, down 5.1% year over year, while nine-month operating margin declined to 18.5% from 20.2% and diluted EPS declined to $3.19 from $3.65. The quarter therefore showed improvement against a weaker year-to-date backdrop.
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Positive free cash flow generation
Operating cash flow was $103.9 million for the first nine months of 2026 versus $128.9 million a year earlier. After $12.3 million of property, plant and equipment expenditures, implied year-to-date free cash flow was approximately $91.6 million.
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Investment in growth and returns
The company maintained shareholder returns while investing in growth: it paid $35.9 million of dividends and repurchased $119.0 million of stock during the first nine months. The UDlive acquisition cost $94.4 million and added $7.7 million of revenue through September 30.
What to watch
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Cash balance declined sharply
Cash and equivalents fell to $67.9 million from $226.0 million at December 31, 2025, after $94.4 million for UDlive, $119.0 million for share repurchases and $35.9 million of dividends. Although unused credit lines were $154.5 million, liquidity has materially declined.
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Inventory weighs on working capital
Primary working capital increased to $208.0 million, or 23.6% of sales, from $192.0 million, or 20.9%, at year-end. Inventories rose $14.5 million to $166.4 million, primarily from strategic purchasing and timing of receipts, while nine-month operating cash flow fell $25.0 million year over year to $103.9 million.
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Electronic supply-chain exposure
Management reported longer lead times, reduced availability and higher procurement costs for critical electronic components as suppliers prioritize AI and data-center demand. The company relies on single suppliers for most brass castings and certain resin and electronic subassemblies; a supplier loss could cause higher costs and delivery delays.
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AMI pacing and expense pressure
Nine-month Utility Water revenue fell 5.9% to $582.3 million because of uneven AMI project pacing, despite higher SaaS revenue and $7.7 million from UDlive. The company also reported that SEA expenses increased to $151.7 million, or 23.0% of sales, from 21.4% a year earlier.
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UDlive earn-out and integration risk
UDlive carries a potential earn-out of up to $50.0 million based on EBITDA targets over the 24 months following acquisition. The fair value of the earn-out liability was $12.0 million at September 30, 2026, and the purchase-price allocation remained preliminary.
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Tariff and trade uncertainty
The company states that evolving tariffs and trade restrictions may increase costs; it has enacted price increases where possible and applied for tariff refunds after a February 2026 Supreme Court ruling invalidated certain tariffs. Prolonged supply-chain constraints could adversely affect future operating results.
Management's outlook
The 10-Q provides no quantitative EPS or revenue guidance. Management states that operating cash flows, available borrowing capacity and capital-raising ability provide adequate resources for ongoing requirements, future capital expenditures and new-product development; unused credit lines were $154.5 million at September 30, 2026.
Earlier filings 4
10-K · February 17, 2026
Badger Meter emphasizes its BlueEdge suite connecting meters, communications (ORION®) and BEACON® software, with ~95% of net sales water-related and Utility Water representing ~89% of net sales in 2025. Financially, Q4…
10-Q · July 23, 2025
Badger Meter reported Q2 net sales of $238,095,000, up from $216,658,000 a year earlier, with gross margin improving to $97,810,000 (41.1%). Net earnings were $34,584,000 (diluted EPS $1.17), and management completed…
10-K · February 14, 2025
Badger Meter positions itself as a focused water-technology provider — "nearly 95% of net sales derived from water-related applications" — with its BlueEdge suite and BEACON SaaS; Utility Water accounted for…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.