Badger Meter (NYSE:BMI) executives said the company closed fiscal 2025 with record sales, profitability, and cash flow, pointing to continued demand for its cellular AMI (advanced metering infrastructure) offering and early progress integrating its SmartCover acquisition into the company’s BlueEdge smart water management portfolio.
Fourth-quarter results and demand commentary
Chief Financial Officer Dan Weltzien, who assumed the CFO role on Jan. 1, 2026 after serving as vice president and controller, reported fourth-quarter 2025 sales of $221 million, up 8% year over year, or 2% on a “base” basis excluding SmartCover.
“The sequential quarterly sales decline … has everything to do with the calendar and quarter-specific customer and project mix, and very little to do with other influences, such as underlying market conditions,” Weltzien said, adding that recent congressional actions supported state revolving fund funding “consistent with historic levels.”
Flow instrumentation sales were flat year over year, with modest growth in water-focused end markets offset by declines in “de-emphasized applications,” management said.
Margins, expenses, and cash flow
Operating earnings increased 10% in the fourth quarter, exceeding revenue growth. Operating margin improved 40 basis points to 19.5% from 19.1%. On a base basis, operating earnings increased 9% and base operating margin expanded 140 basis points to 20.5%.
Gross margin expanded 180 basis points to 42.1% from 40.3%, benefiting from product and business mix. Weltzien said profitability was supported by a “structural mix” that included ultrasonic meters, cellular AMI, water quality, and SmartCover, which were described as above-average profitability. He also said project pacing helped margins because turnkey projects can include more pass-through, lower-margin items such as outsourced installation labor and ancillary supplies.
Looking ahead, the company said it had largely reached price-cost parity on 2025 tariff and trade-related costs, but expects trade conditions to remain “fluid” in 2026. Management also flagged elevated copper and other input costs as a potential 2026 headwind and reiterated a normalized gross margin range of 39% to 42% alongside “routine price mitigation actions.” In Q&A, Weltzien said there was nothing specific to point to that would imply quarter-to-quarter margin variability, while acknowledging ongoing monitoring of commodity costs and tariffs.
SG&A expenses were $49.9 million in the quarter, up $6.4 million year over year, primarily due to SmartCover. Excluding SmartCover-related items, including $1.6 million of intangible amortization, base SG&A increased $1.3 million, or 2.9%, driven mainly by personnel costs.
Fourth-quarter EPS was $1.14, up from $1.04, while the tax provision was 24.8% versus 27.1% a year earlier. Badger Meter reported record quarterly free cash flow of $50.8 million, up about $3.4 million year over year, with working capital at 20.9% of sales at Dec. 31, 2025, roughly in line with the prior year.
Full-year 2025 highlights and capital deployment
Chairman, President, and CEO Ken Bockhorst said 2025 produced 11% sales growth to more than $900 million, representing a 17% compound annual growth rate over the past five years.
Management said software revenue, including SmartCover, exceeded $74 million and represented 8% of sales. Bockhorst said software revenue has grown at a 28% CAGR over the past five years, and described the company’s software revenue as recurring during Q&A.
Operating margin expanded 90 basis points to 20% in 2025 despite what management called the “initially dilutive impact” of SmartCover; base operating margin increased 200 basis points year over year. Bockhorst said Badger Meter again generated free cash flow above 100% of net earnings and ended the year with more than $225 million in cash.
On capital allocation, Bockhorst noted the company increased its dividend for the 33rd consecutive year and repurchased $15 million of shares in the fourth quarter when management viewed the market price as offering an attractive long-term return. During Q&A, he said the company would continue investing for long-term growth rather than pursuing “short-sighted” cost cuts, while also emphasizing ongoing flexibility for dividends, share repurchases, and additional M&A.
SmartCover integration and 2026 expectations
Bockhorst said the company made “strong progress” integrating SmartCover in 2025. SmartCover delivered $40 million of sales during the year, with management noting that profitability improved due to higher volumes and cost management. Badger Meter said it transferred SmartCover’s manufacturing to its Racine, Wisconsin facility and remains on track for earnings accretion in 2026.
In response to a question about the business outlook, Bockhorst said Badger Meter expects continued adoption of sewer line monitoring and characterized SmartCover as a category leader in North America. He said the company acquired SmartCover in part because it had grown at about a 20% CAGR for multiple years and because adoption remains early.
For 2026, management emphasized that timing of AMI projects can create uneven quarterly and annual performance. Bockhorst said the second half of 2025 featured a concentration of concluding AMI turnkey projects, contributing to 6% base revenue growth, below the company’s longer-term “high single-digit” outlook. He said that pacing dynamic is expected to extend into the first half of 2026, with several awarded projects expected to begin multi-year deployments later in the year.
“We’d like to remind investors that it is not unusual to experience certain quarters, or even whole years, that are above or below our expectation of high single-digit sales growth over a five-year forward period,” Bockhorst said. In Q&A, he added that he views 2026 as “the inverse effect of 25,” with lower growth in the first half and higher growth in the second half based on visibility into in-flight and awarded projects.
PRASA award details and project pacing
Badger Meter highlighted a major AMI project award with the Puerto Rico Aqueduct and Sewer Authority (PRASA), described as one of the largest deployments in the world. Executive Vice President of North America Municipal Utility Bob Wrocklage said the multi-year project is expected to include E-Series ultrasonic meters, ORION cellular AMI radios, and BEACON SaaS across Puerto Rico, representing about 1.6 million service connections.
Wrocklage said Badger Meter’s role will be supply-only and will not include prime contractor work, installation responsibilities, or ancillary product supply. Production will use the company’s Racine facility. In Q&A, management said the manufacturing location is driven by Buy American requirements tied to project funding and acknowledged that labor cost differences can imply margin impacts, which management said were contemplated during contracting.
On timing, Wrocklage said PRASA planning began more than five years ago, with Badger Meter’s involvement in the pilot and RFP process beginning in 2021. The pilot deployment began in 2023, the award occurred in 2025, and management expects product shipments in 2026, with an initial ramp earlier in the year and more meaningful revenue contribution in the second half as deployment begins “in earnest.” Executives also cautioned that many variables can influence the pacing and duration of such projects, and said they would not size the revenue impact for 2026 or beyond.
Wrocklage added that large AMI project deployments are often “not as smooth as people might think,” citing factors such as installation resources, budget cycles, and weather. He said a five-year horizon is a common expectation for deployments of this type, though timing can shift.
Management emphasized that PRASA is not additive to Badger Meter’s long-term “high single-digit” growth outlook, but rather is included within it. In Q&A, Bockhorst also reiterated that the company did not use temporary tariff surcharges, describing pricing actions as “pretty clean” compared to approaches that might be reversed if tariff conditions change.
Badger Meter said it expects to release first-quarter 2026 results on April 16, 2026, and announced plans to hold its inaugural investor day on May 21 in New York City.
About Badger Meter (NYSE:BMI)
Badger Meter, founded in 1905 and headquartered in Milwaukee, Wisconsin, is a global leader in flow measurement and control solutions. The company’s core business centers on the design, manufacture and sale of water meters, control valves and related accessories for municipal and industrial water utilities. Over its more than a century of operation, Badger Meter has built a reputation for precision engineering, durability and compliance with international regulatory standards.
The company’s product portfolio includes mechanical and ultrasonic water meters, electromagnetic flow meters for industrial applications, and a range of control valves that help utilities manage pressure and flow in distribution networks.
