BADGER METER INC

Previous wording

The ORION® family of endpoints offers water utilities a choice of industry-leading options for communicating meter reading and event data. ORION Cellular endpoints power our Network as a Service (NaaS) approach to AMI, eliminating the need for the utility to install and maintain infrastructure, enabling rapid or gradual deployment, and enhancing network reliability. ORION mobile read endpoints support customers looking to deploy an AM R solution.

Current wording

The ORION® family of endpoints offers water utilities a choice of industry-leading options for communicating meter reading and event data. ORION Cellular endpoints power our Network as a Service (NaaS) approach to AMI, eliminating the need for the utility to install and maintain infrastructure, enabling rapid or gradual deployment, and enhancing network reliability. ORION mobile read endpoints support customers looking to deploy an AMR solution.

Previous wording

Effective May 1, 2026, the Company acquired 100% of the outstanding stock of UDlive Limited (UDlive), headquartered in Alton, England. UDlive is a provider of hardware-enabled software solutions for sewer line monitoring. The purchase consideration was $94.4 million, net of cash acquired, with a potential earn-out of up to an additional $50.0 million based on the achievement of established EBITDA targets in the 24 month period following the acquisition date. The earn-out is payable within 90 days following April 30, 2028, or, if disputed, 21 days following the agreement as to or determination of the earn-out amount. The UDlive acquisition will be accounted for under the purchase method, and accordingly, the results of operations will be included in the Company's financial statements from the date of acquisition.

Current wording

Effective May 1, 2026, the Company acquired 100% of the outstanding stock of UDlive Limited (UDlive), headquartered in Alton, England. UDlive is a provider of hardware-enabled software solutions for sewer line monitoring. The purchase consideration was $94.4 million, net of cash acquired, with a potential earn-out of up to an additional $50.0 million based on the achievement of established EBITDA targets in the 24 month period following the acquisition date. The earn-out is payable within 90 days following April 30, 2028, or, if disputed, 21 days following the agreement as to or determination of the earn-out amount. The UDlive acquisition is accounted for under the purchase method, and accordingly, the results of operations are included in the Company's financial statements from the date of acquisition.

Previous wording

The total purchase consideration for UDlive, net of cash acquired, was $94.4 million. The acquisition was funded by cash on hand. The fair value of the potential earn-out at June 30, 2026 was $12.0 million and was recorded as a liability. The fair value of the earn-out was calculated using a Monte Carlo simulation model which incorporated projected EBITDA and adjusted the volatility and discount rate to reflect the risk profile of EBITDA. The Company's preliminary allocation of the purchase price included $0.7 million of account receivables, $5.7 million of inventories, $3.4 million of other assets, $53.8 million of intangible assets and $69.9 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 10 to 12 years. The Company also assumed $1.7 million of payables, $13.6 million of net deferred income tax liabilities, $10.0 million of deferred revenue and $1.7 million of other liabilities as part of the acquisition. The preliminary allocation of the purchase price to the net assets acquired was based upon the estimated fair values, at the date of acquisition. As of June 30, 2026, the Company had not completed its analysis for estimating the fair value, including the finalization of the fair value of the assets acquired and contingent consideration. Revenue associated with UDlive from the date of acquisition through June 30, 2026 was $2.0 million. UDlive 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 UDlive, net of cash acquired, was $94.4 million. The acquisition was funded by cash on hand. The fair value of the potential earn-out at the date of acquisition was $12.0 million. The fair value of the earn-out was calculated using a Monte Carlo simulation model which incorporated projected EBITDA and adjusted the volatility and discount rate to reflect the risk profile of EBITDA. The Company's preliminary allocation of the purchase price included $0.7 million of account receivables, $4.9 million of inventories, $3.4 million of other assets, $53.8 million of intangible assets and $70.6 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 10 to 12 years. The Company also assumed $1.7 million of payables, $13.6 million of net deferred income tax liabilities, $10.0 million of deferred revenue and $1.7 million of other liabilities as part of the acquisition. The preliminary allocation of the purchase price to the net assets acquired was based upon the estimated fair values, at the date of acquisition. As of September 30, 2026, the Company had not completed its analysis for estimating the fair value, including the finalization of the fair value of the assets acquired and contingent consideration. Revenue associated with UDlive from the date of acquisition through September 30, 2026 was $7.7 million. UDlive is reported within the utility water product line and the Company will continue to operate under a single segment.

Previous wording

The Company's net sales for the three months ended June 30, 2026 were $222.3 million, a decrease of 6.6% compared to $238.1 million during the same period in 2025. Sales of utility water products were $195.0 million, a decrease of 8.1% from the prior year’s $212.2 million. The utility water decline reflects expected uneven AMI project pacing, partially offset by increased BEACON SaaS revenue and other BlueEdge beyond the meter solution offerings, as well as revenue associated with the acquisition of UDlive of $2.0 million. Sales of flow instrumentation products were $27.3 million compared to the prior year’s $25.9 million, an increase of 5.6%, with growth in water-focused end markets.

Current wording

The Company's net sales for the three months ended September 30, 2026 were $235.9 million, an increase of 0.1% compared to $235.7 million during the same period in 2025. Sales into the utility water market were $208.9 million, a decrease of 0.1% from the prior year’s $209.2 million. Utility water sales continue to reflect uneven AMI project pacing partially offset by increased BEACON SaaS revenue, and $5.6 million of revenue associated with the acquisition of UDlive. Sales of flow instrumentation products were $27.0 million compared to the prior year's $26.5 million, an increase of 2.1%, driven by strong demand across the water-focused end markets.

Previous wording

Total operating earnings for the three months ended June 30, 2026 were $39.4 million, or 17.7% of sales, compared to $44.9 million, or 18.8% of sales, in the comparable prior year quarter. Gross margin dollars decreased $7.0 million, with gross margin as a percent of sales of 40.8%, a decrease from 41.1% in the prior year comparable quarter due to lower sales volumes and product mix. Selling, engineering and administration (SEA) expenses were $51.4 million or 23.1% of sales compared to $52.9 million or 22.2% in the comparable prior year quarter. The decrease in SEA expenses was due to decreased incentive compensation and other cost containment actions, partially offset by final transaction-related costs for the UDlive acquisition of $1.2 million. The inclusion of UDlive results for two months along with related intangible asset amortization combined added $1.8 million to year-over-year expenses.

Current wording

Total operating earnings for the three months ended September 30, 2026 were $47.7 million, or 20.2% of sales, compared to $46.1 million, or 19.6% of sales, in the comparable prior year quarter. Gross margin dollars increased $3.0 million, with gross margin as a percent of sales of 41.9%, an increase from 40.7% of sales in the prior year comparable quarter. Gross margin improvement in the current year was driven by favorable product mix, including increased SaaS revenue and ultrasonic meter volume. Selling, engineering and administration (SEA) expenses were $51.1 million or 21.7% of sales compared to $49.8 million or 21.1% of sales in the comparable prior year quarter. The increase in SEA expenses was mainly the result of the inclusion of UDlive, inclusive of the acquired intangible asset amortization, partially offset by lower incentive compensation and other appropriate cost controls.

Previous wording

The provision for income taxes as a percentage of earnings before income taxes for the quarter ended June 30, 2026 was 25.2% compared to 24.5% 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, 2026 was 25.1% compared to 26.1% 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, 2026 were $29.7 million, or $1.02 per diluted share, compared to $34.6 million, or $1.17 per diluted share, for the same period in 2025.

Current wording

As a result of the above-mentioned items, net earnings for the three months ended September 30, 2026 were $35.9 million, or $1.24 per diluted share, compared to $35.1 million, or $1.19 per diluted share, for the same period in 2025.

Previous wording

The Company's net sales for the six months ended June 30, 2026 were $424.6 million compared to $460.3 million during the same period in 2025. Sales into the utility water market were $373.4 million, a decrease of 8.8% from the prior year’s $409.5 million due to uneven AMI project pacing partially offset by increased BEACON SaaS revenue and water quality product revenue, as well as revenue associated with the acquisition of UDlive of $2.0 million. Sales of flow instrumentation products were $51.2 million compared to the prior year’s $50.8 million, an increase of 0.8%.

Current wording

The Company's net sales for the nine months ended September 30, 2026 were $660.5 million, a decrease of 5.1%, compared to $696.0 million during the same period in 2025. Sales into the utility water market were $582.3 million, a decrease of 5.9% from the prior year’s $618.7 million due to uneven AMI project pacing, partially offset by an increase in SaaS revenue, and $7.7 million of revenue with the acquisition of UDlive. Sales of flow instrumentation products were $78.2 million compared to the prior year’s $77.2 million, an increase of 1.3%.

Previous wording

Total operating earnings for the six months ended June 30, 2026 were $74.5 million, or 17.6% of sales, compared to $94.3 million, or 20.5% of sales, in the comparable prior year period. Gross margin dollars decreased $18.1 million, with gross margin as a percent of sales of 41.2%, a decrease from 42.0% in the prior year comparable period. SEA expenses were $100.6 million or 23.7% of sales compared to $99.0 million or 21.5% in the comparable prior year period. The year-over-year increase in SEA expense was the result of the inclusion of UDlive acquisition described above and increased personnel costs including salaries and benefits, partially offset by a decrease in incentive compensation.

Current wording

Total operating earnings for the nine months ended September 30, 2026 were $122.3 million, or 18.5% of sales, compared to $140.4 million, or 20.2% of sales, in the comparable prior year period. Gross margin dollars decreased $15.1 million in line with the sales decline resulting in a gross margin as a percent of sales of 41.5%, consistent with the prior year comparable period. SEA expenses were $151.7 million or 23.0% of sales compared to $148.7 million or 21.4% of sales in the prior year period. The year-over-year increase in SEA was the result of the inclusion of UDlive as described above and increased personnel costs including salaries and benefits, partially offset by a decrease in incentive compensation.

Previous wording

The provision for income taxes as a percentage of earnings before income taxes for the six months ended June 30, 2026 was 25.0% compared to 24.4% 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, 2026 and 2025 was 25.0%. 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, 2026 were $57.1 million, or $1.95 per diluted share, compared to $73.0 million, or $2.47 per diluted share, for the same period in 2025.

Current wording

As a result of the above-mentioned items, net earnings for the nine months ended September 30, 2026 were $93.0 million, or $3.19 per diluted share, compared to $108.1 million, or $3.65 per diluted share, for the same period in 2025.

Previous wording

PWC increased $9.5 million compared to the previous year-end. Receivables at June 30, 2026 increased $8.9 million due to timing of shipments. The Company believes its receivables balance is fully collectible. Inventories increased $26.1 million due to the timing of inventory receipts and sales pacing in the first half of 2026. Payables at June 30, 2026 were $25.5 million higher than the prior year-end due to timing of payments and increased inventory levels.

Current wording

Overall, PWC increased $16.0 million compared to the previous year-end. Receivables at September 30, 2026 decreased $0.5 million due to strong collections and timing of shipments in the quarter. Inventories increased $14.5 million due to strategic purchasing initiatives and timing of inventory receipts related to current quarter shipments. Payables at September 30, 2026 were $2.0 million lower than prior year-end due to timing of payments.

Previous wording

Cash provided by operations in the first six months of 2026 was $60.6 million compared to $77.6 million in the same period of 2025. Lower net earnings and working capital differential were the largest contributors to the decrease in cash provided by operations compared to the same period in 2025.

Current wording

Cash provided by operations in the first nine months of 2026 was $103.9 million compared to $128.9 million in the same period of 2025. Lower net earnings and working capital differentials were the largest contributors to the decrease in cash provided by operations compared to the same period in 2025.

Previous wording

Property, plant and equipment expenditures for the first six months of 2026 were $9.3 million compared to $6.9 million in the comparable prior year period.

Current wording

Property, plant and equipment expenditures for the first nine months of 2026 were $12.3 million compared to $10.0 million in the comparable prior year period.

Previous wording

Cash and cash equivalents at June 30, 2026 decreased to $95.7 million from $226.0 million at December 31, 2025, the result of the $60.6 million cash provided by operations, offset by $94.4 million deployed for the UDlive acquisition, $63.5 million for the repurchase of Company common stock and $23.3 million for the payment of quarterly dividends.

Current wording

Cash and cash equivalents decreased to $67.9 million from $226.0 million at December 31, 2025, the result of the $103.9 million cash provided by operations, offset by the $94.4 million deployed for the acquisition of UDlive, $119.0 million for the repurchase of Company common stock and $35.9 million for the payment of quarterly dividends.

Previous wording

The Company's credit facility includes a $150.0 million multi-currency line of credit that supports commercial paper (up to $100.0 million). The facility includes several features that enhance the Company's financial flexibility including an increase feature, acquisition holiday, and favorable financial covenants. On June 5, 2026, the Company amended and extended its credit facility, with an extended maturity date of July 8, 2031. The Company was in compliance with all covenants as of June 30, 2026. The Company believes that its operating cash flows, available borrowing capacity, and its ability to raise capital provide adequate resources to fund ongoing operating requirements, future capital expenditures and the development of new products. The Company had $154.6 million of unused credit lines available at June 30, 2026.

Current wording

The Company's credit facility includes a $150.0 million multi-currency line of credit that supports commercial paper (up to $100.0 million). The facility includes several features that enhance the Company's financial flexibility including an increase feature, acquisition holiday, and favorable financial covenants. On June 5, 2026, the Company amended and extended its credit facility, with an extended maturity date of July 8, 2031. The Company was in compliance with all covenants as of September 30, 2026. The Company believes that its operating cash flows, available borrowing capacity, and its ability to raise capital provide adequate resources to fund ongoing operating requirements, future capital expenditures and the development of new products. The Company had $154.5 million of unused credit lines available at September 30, 2026.

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 2025 and the first two quarters of 2026 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 2025 and the first three quarters of 2026 were not material.