Badger Meter, Inc.

Total sales in Q2 were $222.3 million, down 7% year over year; excluding UDlive, base sales were down 7.5% year over year and 9% higher sequentially versus Q1. Utility water sales declined 8% year over year, while flow instrumentation sales rose 6%. Gross margin was 40.8%, down 30 basis points year over year; operating earnings declined 12% and operating margin was 17.7%, down 110 basis points. Base operating profit margin, excluding UDlive, was 18.4%, down 40 basis points. Diluted EPS was $1.02 versus $1.17 last year, and the effective tax rate was 25.2% versus 24.5%. Free cash flow was $21.9 million versus $40.6 million last year. For the full year, management still expects organic revenue excluding UDlive to be roughly flattish versus 2025, with sequential improvement in base quarterly revenue and growth more heavily weighted to Q4. The company also expects UDlive intangible asset amortization of approximately $5 million annually.

Ken Bockhorst said the quarter unfolded largely as expected, with sequential revenue improvement driven by initial ramps in previously awarded AMI projects and a modest pickup in short-term order rates. He emphasized that the full-year outlook is unchanged: organic revenue excluding UDlive should be roughly flattish versus 2025, but not perfectly flat, because project timing and order patterns remain uneven. His tone was confident on the long-term story, citing replacement demand, AMI adoption, recurring software, beyond-the-meter growth, and disciplined execution as durable drivers.

Dan Weltzien highlighted that Q2 sales were $222.3 million, down 7% year over year, while base sales were 9% higher sequentially versus Q1. He cited gross margin of 40.8%, operating margin of 17.7%, base operating margin of 18.4%, and diluted EPS of $1.02, and noted that SG&A was $51.4 million, down $1.6 million year over year due to spending controls and lower incentive compensation. He also pointed to free cash flow of $21.9 million, working capital at 22.9% of sales, $25.3 million of share repurchases in the quarter, about $90 million remaining on the authorization, and a newly renewed five-year $150 million credit facility that remains undrawn.

Analysts focused on whether the second-half ramp looks more visible than 90 days ago, and management said the cohort of nine awarded projects feels solid, though timing remains uneven and not all projects start at once. Questions also centered on electronics cost pressure and whether price can offset it; management said they are managing both cost and availability and can generally recapture increases through pricing and contract escalators, though not perfectly in every case. There was also concern about PRASA and whether any legal or political developments had changed expectations; management said nothing has changed in its view of the project and reiterated it won a fair and open process. Analysts asked about capital allocation and share repurchases, and management said the approach remains balanced between reinvestment, buybacks, dividends, and M&A.