BADGER METER INC

Previous wording

Our BlueEdge tailorable smart water solutions provide actionable information through data analytics derived from an interconnected and interoperable network of sensors and devices that enable people and organizations to efficiently use and conserve water. Badger Meter is well positioned to benefit from the adoption of smart water solutions. Our strong relationships with telecommunication providers such as AT&T and Verizon (among others), we stay abreast of emerging cellular technology changes to provide the premier infrastructure-free AMI solution.

Current wording

Our BlueEdge tailorable smart water solutions provide actionable information through data analytics derived from an interconnected and interoperable network of sensors and devices that enable people and organizations to efficiently use and conserve water. Badger Meter is well positioned to benefit from the adoption of smart water solutions. Our strong relationships with telecommunication providers such as AT&T and Verizon (among others) keep us abreast of emerging cellular technology changes to provide the premier infrastructure-free AMI solution.

Previous wording

The total purchase consideration for SmartCover, net of cash acquired, was $184.0 million, following the net working capital adjustment of $0.9 million. The Company's allocation of the purchase price at June 30, 2025 included $6.7 million of receivables, $5.0 million of inventories, $4.8 million of other assets, $85.6 million of intangible assets and $118.6 million of goodwill that is not deductible for tax purposes. The intangible assets acquired are primarily developed technology, customer relationships and trademarks with estimated average useful lives of 12 to 20 years. The Company also assumed $1.6 million of payables, $19.7 million of net deferred income tax liabilities, $12.0 million of deferred revenue and $3.4 million of other liabilities as part of the acquisition. The preliminary allocation of the purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of June 30, 2025, the Company had not completed its analysis for estimating the fair value of the assets acquired. Revenue associated with SmartCover for the five months ended June 30, 2025 was $16.7 million. SmartCover is reported within the utility water product line and the Company will continue to operate under a single segment.

Current wording

The total purchase consideration for SmartCover, net of cash acquired, was $184.0 million, following the net working capital adjustment of $0.9 million. The Company's allocation of the purchase price at September 30, 2025 included $6.7 million of receivables, $4.6 million of inventories, $4.8 million of other assets, $85.6 million of intangible assets and $119.8 million of goodwill that is not deductible for tax purposes. The intangible assets acquired are primarily developed technology, customer relationships and trademarks with estimated average useful lives of 12 to 20 years. The Company also assumed $1.6 million of payables, $19.7 million of net deferred income tax liabilities, $12.2 million of deferred revenue and $4.0 million of other liabilities as part of the acquisition. The preliminary allocation of the purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of September 30, 2025, the Company had not completed its analysis for estimating the fair value of the assets acquired. Revenue associated with SmartCover for the eight months ended September 30, 2025 was $27.8 million. SmartCover is reported within the utility water product line and the Company will continue to operate under a single segment.

Previous wording

As the industry continues to evolve, the Company has been at the forefront of innovation across measurement hardware (metering, water quality, pressure sensors, etc.), radio and software technologies in order to meet its customers’ increasing expectations for accurate and actionable data and insights. As technologies such as ORION Cellular and BEACON digital solutions have become more widely adopted, the Company’s revenue from Software as a Service (SaaS) has increased significantly, and is margin accretive.

Current wording

increasing expectations for accurate and actionable data and insights. As technologies such as ORION Cellular and BEACON digital solutions have become more widely adopted, the Company’s revenue from Software as a Service (SaaS) has increased significantly, and is margin accretive.

Previous wording

The Company also seeks opportunities for additional revenue enhancement. For instance, the Company has made inroads into select regional markets outside the US such as the Middle East, UK and others with our BlueEdge offering. The Company sometimes oversees and supervises field installation of its products and provide training and other services for certain customers. Strategic mergers and acquisitions are another avenue for profitable sales growth.

Current wording

The Company also seeks opportunities for additional revenue enhancement. For instance, the Company has made inroads into select regional markets outside the US such as the Middle East, UK and others with our BlueEdge offering. The Company sometimes oversees and supervises field installation of its products and provides training and other services for certain customers. Strategic mergers and acquisitions are another avenue for profitable sales growth.

Previous wording

During the first half of 2025, the United States introduced trade policy actions that have increased import tariffs across a wide range of countries at various rates, with certain exemptions such as USMCA-compliant imports. These tariff changes and subsequent retaliatory actions have the potential to increase various input costs for the Company. At present, the Company is managing applicable tariff-related cost burdens with selective supply chain and pricing actions, as has been our historical practice during uncertain and turbulent economic times. The Company has contingency plans in place to adequately respond to a wide range of potential economic scenarios and our management, along with the Board of Directors, continues to monitor and evaluate the ongoing situation.

Current wording

During 2025, the United States introduced trade policy actions that have increased import tariffs across a wide range of countries at various rates, with certain exemptions such as USMCA-compliant imports. These tariff changes and subsequent retaliatory actions have the potential to increase various input costs for the Company. At present, the Company is managing applicable tariff-related cost burdens with selective supply chain and pricing actions, as has been our historical practice during uncertain and turbulent economic times. The Company has contingency plans in place to adequately respond to a wide range of potential economic scenarios and our management, along with the Board of Directors, continues to monitor and evaluate the ongoing situation.

Previous wording

The Company's net sales for the three months ended June 30, 2025 were $238.1 million, an increase of 9.9% compared to $216.7 million during the same period in 2024. Sales into the utility water market were $212.2 million, an increase of 11.4% from the prior year’s $190.6 million. Utility water net sales grew as a result of increased BEACON® SaaS revenues, increased meter volumes, as well as revenue associated with the acquisition of SmartCover of $10.6 million. Sales of products into the global flow instrumentation end markets were $25.9 million compared to the prior year’s $26.1 million, a decrease of 1.0%, as a result of steady order demand within the water-focused end markets, offset by decreases in de-emphasized industrial markets.

Current wording

The Company's net sales for the three months ended September 30, 2025 were $235.7 million, an increase of 13.1% compared to $208.4 million during the same period in 2024. Sales into the utility water market were $209.2 million, an increase of 14.3% from the prior year’s $183.0 million. The Company's net sales grew as a result of increased ultrasonic meter, water quality solution and BEACON® SaaS revenues, as well as revenue associated with the acquisition of SmartCover of $11.1 million. Sales of products into the global flow instrumentation end markets were $26.5 million compared to the prior year's $25.4 million, an increase of 4.3%, driven by steady order demand within the water-focused end markets.

Previous wording

Total operating earnings for the three months ended June 30, 2025 were $44.9 million, or 18.8% of sales, compared to $41.5 million, or 19.2% of sales, in the comparable prior year quarter. Gross margin dollars increased $12.4 million, with gross margin as a percent of sales of 41.1%, an increase from 39.4% in the prior year comparable quarter. Gross margin in the current quarter benefited from increased sales volumes and favorable product mix, including higher SaaS revenues, offset by tariff and input cost pressures. Selling, engineering and administration (“SEA”) expenses were $52.9 million or 22.2% of sales compared to $43.9 million or 20.2% in the comparable prior year quarter. The increase in SEA expenses was mainly the result of the inclusion of SmartCover, inclusive of the acquired intangible asset amortization, combined with continued growth-related spending including higher headcount, merit increases, and incentive compensation, as well as deferred compensation expense driven by the increase in our stock price during the quarter.

Current wording

Total operating earnings for the three months ended September 30, 2025 were $46.1 million, or 19.6% of sales, compared to $40.6 million, or 19.5% of sales, in the comparable prior year quarter. Gross margin dollars increased $12.0 million, with gross margin as a percent of sales of 40.7%, an increase from 40.2% of sales in the prior year comparable quarter. Gross margin improvement in the current year was driven by positive sales mix, including higher SaaS revenues, offset by tariff and input cost pressures. Selling, engineering and administration (“SEA”) expenses were $49.8 million or 21.1% of sales compared to $43.3 million or 20.8% of sales in the comparable prior year quarter. The increase in SEA expenses was mainly the result of the inclusion of SmartCover, inclusive of the acquired intangible asset amortization, combined with higher incentive compensation and personnel-related expenses, offset by deferred compensation benefit driven by the change in our stock price during the quarter.

Previous wording

The provision for income taxes as a percentage of earnings before income taxes for the quarter ended June 30, 2025 was 24.5% compared to 23.8% for the comparable prior year period. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Current wording

The provision for income taxes as a percentage of earnings before income taxes for the quarter ended September 30, 2025 was 26.1% compared to 25.3% for the comparable prior year period. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Previous wording

As a result of the above-mentioned items, net earnings for the three months ended June 30, 2025 were $34.6 million, or $1.17 per diluted share, compared to $33.1 million, or $1.12 per diluted share, for the same period in 2024.

Current wording

As a result of the above-mentioned items, net earnings for the three months ended September 30, 2025 were $35.1 million, or $1.19 per diluted share, compared to $32.0 million, or $1.08 per diluted share, for the same period in 2024.

Previous wording

The Company's net sales for the six months ended June 30, 2025 were $460.3 million compared to $412.9 million during the same period in 2024. Sales into the utility water market were $409.5 million, an increase of 13.6% from the prior year’s $360.6 million. Utility water net sales grew as a result of increased metering and BEACON® SaaS revenues, as well as five months of revenue associated with the acquisition of SmartCover of $16.7 million. Sales of products into the global flow instrumentation end markets were $50.8 million compared to the prior year’s $52.3 million, a decrease of 2.9%, due largely to decreased international sales year-over-year.

Current wording

The Company's net sales for the nine months ended September 30, 2025 were $696.0 million, an increase of 12.0%, compared to $621.4 million during the same period in 2024. Sales into the utility water product line were $618.7 million, an increase of 13.8% from the prior year’s $543.7 million. Utility water net sales grew as a result of increased metering, water quality solution and BEACON® SaaS revenues, as well as eight months of revenue associated with the acquisition of SmartCover of $27.8 million. Sales of products into the global flow instrumentation end markets were $77.3 million compared to the prior year’s $77.7 million, a decrease of 0.6%.

Previous wording

Total operating earnings for the six months ended June 30, 2025 were $94.3 million, or 20.5% of sales, compared to $78.1 million, or 18.9% of sales, in the comparable prior year period. Gross margin dollars increased $30.7 million, with gross margin as a percent of sales of 42.0%, an increase from 39.4% in the prior year comparable period. Gross margin improvement was the result of increased sales volumes and favorable customer and product mix offset by tariff and other input cost pressures. SEA expenses were $99.0 million or 21.5% of sales compared to $84.5 million or 20.5% in the comparable prior year period. The year-over-year increase in SEA expense was the result of the inclusion of SmartCover, inclusive of the acquired intangibles asset amortization, combined with continued growth-related spending including higher headcount, merit increases, and incentive compensation.

Current wording

Total operating earnings for the nine months ended September 30, 2025 were $140.4 million, or 20.2% of sales, compared to $118.7 million, or 19.1% of sales, in the comparable prior year period. Gross margin dollars increased $42.7 million, with gross margin as a percent of sales of 41.5%, an increase from 39.7% of sales in the prior year comparable period. Gross margin improvement was the result of increased sales volume and favorable product mix partially offset by tariff and other input cost pressures. SEA expenses were $148.7 million or 21.4% of sales compared to $127.7 million or 20.6% of sales in the comparable prior year period. The year-over-year increase in SEA was the result of the inclusion of SmartCover, inclusive of the acquired intangible asset amortization, combined with higher personnel costs including merit increases and incentive compensation.

Previous wording

The provision for income taxes as a percentage of earnings before income taxes for the six months ended June 30, 2025 was 24.4% compared to 23.7% for the comparable prior year period. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Current wording

The provision for income taxes as a percentage of earnings before income taxes for the nine months ended September 30, 2025 was 25.0% compared to 24.2% for the comparable prior year period. Interim provisions are based on an estimate of the overall annual rate that can vary due to state taxes, the relationship of foreign and domestic earnings, and other credits and allowances.

Previous wording

As a result of the above-mentioned items, net earnings for the six months ended June 30, 2025 were $73.0 million, or $2.47 per diluted share, compared to $62.2 million, or $2.11 per diluted share, for the same period in 2024.

Current wording

As a result of the above-mentioned items, net earnings for the nine months ended September 30, 2025 were $108.1 million, or $3.65 per diluted share, compared to $94.2 million, or $3.19 per diluted share, for the same period in 2024.

Previous wording

Overall, PWC increased $18.7 million compared to the previous year-end. Receivables at June 30, 2025 increased $33.3 million due to higher sales activity. Inventories increased $3.9 million due to increased sales activity. Payables at June 30, 2025 were $18.5 million higher than the prior year-end due to timing of payments and increased inventory levels.

Current wording

Overall, PWC increased $25.8 million compared to the previous year-end. Receivables at September 30, 2025 increased $30.7 million due to higher sales activity. Inventories increased $9.2 million due to increased sales activity. Payables at September 30, 2025 were $14.1 million higher than prior year-end due to timing of payments and increased inventory levels.

Previous wording

Cash provided by operations in the first six months of 2025 was $77.6 million compared to $57.9 million in the same period of 2024. Higher net earnings and working capital differential were the largest contributors to the increase in cash provided by operations compared to the same period in 2024.

Current wording

Cash provided by operations in the first nine months of 2025 was $128.9 million compared to $103.0 million in the same period of 2024. Higher net earnings and favorable working capital trends contributed to the increase in cash provided by operations compared to the same period in 2024.

Previous wording

Property, plant and equipment expenditures for the first six months of 2025 were $6.9 million compared to $5.0 million in the comparable prior year period.

Current wording

Property, plant and equipment expenditures for the first nine months of 2025 were $10.0 million compared to $8.1 million in the comparable prior year period.

Previous wording

Cash and cash equivalents decreased to $165.2 million from $295.3 million at December 31, 2024, the result of the $77.6 million cash provided by operations, offset by $184.0 million deployed for the SmartCover acquisition and payment of quarterly dividends.

Current wording

Cash and cash equivalents decreased to $201.7 million from $295.3 million at December 31, 2024, the result of the $128.9 million cash provided by operations, offset by the $184.0 million deployed for the SmartCover acquisition and payment of quarterly dividends.

Previous wording

The Company is subject to contingencies related to environmental laws and regulations. A future change in circumstances with respect to these specific matters or with respect to sites formerly or currently owned or operated by the Company, off-site disposal locations used by the Company, and property owned by third parties that is near such sites, could result in future costs to the Company and such amounts could be material. Expenditures for compliance with environmental control provisions and regulations during 2024 and the first two quarters of 2025 were not material.

Current wording

The Company is subject to contingencies related to environmental laws and regulations. A future change in circumstances with respect to these specific matters or with respect to sites formerly or currently owned or operated by the Company, off-site disposal locations used by the Company, and property owned by third parties that is near such sites, could result in future costs to the Company and such amounts could be material. Expenditures for compliance with environmental control provisions and regulations during 2024 and the first three quarters of 2025 were not material.