Badger Meter Q1 Earnings Beat on Solid Revenue Growth, Shares Soar 10%

Badger Meter, Inc. BMI reported earnings per share (EPS) of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Quarterly net sales were $222.2 million, up 13% from $196.3 million in the year-ago quarter, driven by higher utility water sales and the initial contribution from the SmartCover acquisition. The expansion not only highlights BMI’s ability to capitalize on favorable market trends but also its operational execution. The Zacks Consensus Estimate was pegged at $222 million.

In a move to expand its smart water portfolio, Badger Meter completed the acquisition of SmartCover on Jan. 30, 2025. SmartCover offers advanced sewer and lift-station monitoring capabilities, which are now integrated into Badger’s BlueEdge water management suite. Customer feedback on SmartCover’s integration has been overwhelmingly positive, reinforcing the acquisition's strategic value.

Badger Meter, Inc. Price, Consensus and EPS Surprise

Badger Meter, Inc. price-consensus-eps-surprise-chart | Badger Meter, Inc. Quote

Following the better-than-anticipated performance, BMI’s shares rallied 9.64% and closed trading at $201.63 on April 17, 2025. In the past year, shares have gained 11.3% against the Zacks Instruments-Control industry’s decline of 10.8%.

Segmental Performance

In the quarter under review, utility water sales rose 16%, driven by strong demand for mechanical and E-Series Ultrasonic meters, increased uptake of ORION Cellular radio endpoints and continued expansion of BEACON SaaS solutions. Two months of SmartCover contributions helped boost utility water sales. Even excluding SmartCover, organic utility water sales were up 12%, highlighting rising customer adoption of Badger Meter’s digital smart water solutions.

Flow instrumentation sales dipped 5% year over year, as slight growth in water-related sectors was offset by reduced demand in a range of market applications that the company is no longer prioritizing. However, sequential sales were up 7% from the fourth quarter of 2024, suggesting growth potential in the long term.

Other Details

In the first quarter, gross profit was $95.4 million, up from 77.2 million in the prior-year quarter. The gross margin was 42.9%, up 360 basis points (bps) year over year. The upside resulted from a favorable product/customer mix and ongoing operational improvements.

Operating earnings surged 35% year over year to $49.5 million, showcasing effective cost control and favorable product and customer mix. The operating margin hit a record 22.2%, expanding 360 bps over the prior year.

Selling, engineering and administration (SEA) expenses rose 13% year over year to $46 million to support growth and acquisition efforts but remained flat as a percentage of sales at 20.7%. SEA costs increased with the SmartCover integration, which contributed around $1.1 million in intangible asset amortization. Without factoring in the SmartCover acquisition, SEA expenses would have increased by $2.2 million, or 5%.

Cash Flow & Liquidity

In the first quarter of 2025, Badger Meter generated $33 million of net cash from operating activities compared with $21.5 million a year ago. 

As of March 31, 2025, the company had $131.4 million of cash and cash equivalents and $141 million of total current liabilities compared with the respective figures of $295.3 million and $118.2 million as of Dec. 31, 2024.

The company reported a record quarterly free cash flow of $30 million, which increased 60% year over year on the back of improved earnings and effective working capital management.

Outlook

Going ahead, Badger Meter is preparing for a tougher year-over-year comparison in the second quarter but remains optimistic about its long-term growth. Management expects continued high single-digit revenue growth over the long term.  The company is maintaining its normalized gross margin expectation in the 38–40% range, acknowledging potential future tariff pressures.

BMI’s Zacks Rank

Badger Meter currently has a Zacks Rank #3 (Hold). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies

BlackBerry Limited BB reported the fourth quarter of fiscal 2025 non-GAAP EPS of 3 cents. The figure was better than the company’s estimate of a loss of 1 cent to EPS of 1 cent. In the year-ago quarter, it reported a non-GAAP EPS of 3 cents. The Zacks Consensus Estimate was pegged at 2 cents per share.

In the past, shares of BB have gained 13.3%.

Simulations Plus, Inc. SLP reported second-quarter fiscal 2025 adjusted earnings of 31 cents per share, which fell 3% year over year. However, the figure surpassed the Zacks Consensus Estimate of 25 cents per share.

In the past, shares of SLP have declined 27.4%

CSX Corporation CSX reported disappointing first-quarter 2025 results, wherein both earnings and revenues lagged the Zacks Consensus Estimate. Quarterly earnings per share of 34 cents missed the Zacks Consensus Estimate of 37 cents and decreased 26% on a year-over-year basis on the back of lower revenues.

Shares of CSX declined 20% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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