Badger Meter Restores Year-Over-Year Operating Earnings Growth

The Tip Desk · October 27, 2026 · 2 min read

Operating earnings rose 4% to $47.7 million as third-quarter sales rose 6% sequentially to $235.9 million.

Badger Meter, Inc. (BMI), the water-metering and software company, reported third-quarter operating earnings of $47.7 million, a 4% increase from a year earlier, after a second quarter in which operating earnings had fallen 12% year-over-year.

Total sales were $235.9 million, up 6% sequentially from the second quarter’s $222.3 million and modestly above the prior year’s $235.7 million. Base sales, which exclude UDlive acquired May 1, 2026, were $230.3 million.

Chairman, President and Chief Executive Officer Kenneth C. Bockhorst said third-quarter sales reflected the ongoing ramp of awarded utility water projects as well as solid underlying demand trends.

Utility water sales were flat year-over-year, including $5.6 million from UDlive. Excluding the acquisition, utility water sales increased 5% sequentially from the second quarter, yet declined 3% year-over-year, reflecting uneven AMI project pacing partially offset by higher software revenue. In the second quarter, excluding UDlive, utility water sales had been down 9% year-over-year.

Sales of flow instrumentation products increased 2% year-over-year, with strong demand across water-focused end markets against a difficult prior-year comparison.

Operating profit margins were 20.2%, versus 19.6% in the prior-year comparable quarter. Base operating earnings were $48.0 million, with Base operating profit margins of 20.9%. Gross margins of 41.9% were 120 basis points higher than the prior year’s 40.7%. The company said margin improvement reflected higher sales and structural mix benefits, while UDlive gross margins include the dilutive impact of inventory fair-value step-up amortization.

Selling, engineering and administration expenses were $51.1 million, $1.3 million higher year-over-year. The inclusion of UDlive results along with related intangible asset amortization combined added $2.3 million to year-over-year expenses. Base SEA expenses of $48.8 million declined $0.9 million, or 2%, year-over-year due to spending controls and lower incentive compensation.

The effective tax rate was 25.1%, compared with 26.1% a year earlier. Diluted earnings per share were $1.24, up 4% from $1.19.

During the quarter the company repurchased approximately $55 million of outstanding shares and increased its annual dividend rate by 10% to $1.76 a share, the 34th consecutive year of dividend growth. Cash and cash equivalents were $67.9 million at September 30.

Bockhorst said that as the company enters the final quarter of 2026, it continues to anticipate both sequential and year-over-year Base revenue improvement, inclusive of the fewer operating days typical for the fourth fiscal quarter, and expects to sustain this growth momentum into 2027. The company said it remains focused on cost management actions to mitigate the uneven 2026 sales cadence and on addressing material cost pressures related to electronics supply chain dynamics.