Badger Meter’s second quarter results were met with a negative market reaction, reflecting investor concern over profitability despite revenue exceeding Wall Street forecasts. Management attributed the sales growth to ongoing adoption of its technology solutions, including higher sales of meters, water quality, and remote monitoring offerings. However, CEO Kenneth Bockhorst and CFO Robert Wrocklage highlighted that difficult comparisons to the prior year, increased operating expenses from the SmartCover acquisition, and tariff-related cost pressures weighed on margins and earnings.
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Badger Meter (BMI) Q2 CY2025 Highlights:
- Revenue: $238.1 million vs analyst estimates of $236.6 million (9.9% year-on-year growth, 0.6% beat)
- Adjusted EPS: $1.17 vs analyst expectations of $1.25 (6.7% miss)
- Adjusted EBITDA: $53.72 million vs analyst estimates of $56.36 million (22.6% margin, 4.7% miss)
- Operating Margin: 18.8%, in line with the same quarter last year
- Market Capitalization: $5.68 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Badger Meter’s Q2 Earnings Call
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Nathan Jones (Stifel) questioned the sustainability of higher SEA expenses post-SmartCover acquisition. CFO Robert Wrocklage explained most cost increases stem from the acquisition and a unique deferred compensation expense, with underlying investments supporting future growth.
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Scott Graham (Seaport Research Partners) asked if recent price increases were enough to fully offset tariff pressures. Wrocklage responded that pricing actions partially mitigated costs but uncertainty around tariffs makes cost neutrality difficult to guarantee.
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Andrew Krill (Deutsche Bank) pressed for clarity on the timing of new AMI projects and whether project delays were a concern. CEO Kenneth Bockhorst said variability is typical and the company remains confident in its long-term growth trajectory.
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Rob Mason (Baird) inquired about SmartCover’s sales contribution and whether recent results reflect seasonality or market share gains. Management noted growth is primarily from expanding market presence rather than seasonal effects.
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Jeffrey Reive (RBC) raised questions about cost synergy realization from SmartCover and the potential impact of EPA funding cuts. Wrocklage said synergy focus is on revenue growth, and Bockhorst noted utilities’ funding flexibility should help mitigate risks from federal budget pressures.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will monitor (1) the pace of SmartCover integration and realization of commercial synergies, (2) Badger Meter’s ability to manage tariff and commodity cost headwinds while protecting margins, and (3) the timing and scale of new AMI and water management project deployments. Progress on digital adoption and execution of the BlueEdge platform will also be key indicators of long-term competitive positioning.
Badger Meter currently trades at $192.58, down from $245.59 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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