Badger Meter Announces Q1 2026 Financial Results
Badger Meter, Inc. (NYSE: BMI) reported its financial results for the first quarter ended March 31, 2026, delivering a performance that reflects near-term variability in project timing and customer ordering patterns, even as the company maintains confidence in its long-term growth trajectory and strategic direction.
During the first quarter of 2026, Badger Meter recorded total sales of $202.3 million, representing a 9% decline compared with $222.2 million in the same period last year. The year-over-year decrease was primarily driven by the timing of large project deployments and weaker-than-expected short-cycle order activity, particularly from municipal customers. Despite this decline, company leadership emphasized that these dynamics are largely timing-related and do not indicate any deterioration in underlying demand or competitive positioning.
Operating earnings for the quarter totaled $35.2 million, down from $49.4 million reported in the first quarter of 2025. This resulted in an operating profit margin of 17.4%, compared to 22.2% in the prior-year period. The contraction in profitability was largely attributable to lower sales volumes and reduced operating leverage, coupled with a modest increase in operating expenses.
Net earnings for the quarter came in at $27.3 million, translating to diluted earnings per share (EPS) of $0.93, compared with $1.30 per share in the same quarter last year. The effective tax rate was 24.8%, slightly higher than the 24.4% recorded in the first quarter of 2025.
Chairman, President and Chief Executive Officer Kenneth C. Bockhorst noted that the company entered 2026 with the expectation that project activity would be weighted toward the second half of the year. He indicated that first-quarter results aligned with this outlook, as the comparable prior-year period benefited from several large projects that were still in active deployment at that time but have since been completed.
Bockhorst also highlighted that short-cycle order rates were softer than anticipated during the quarter. However, he emphasized that the year-over-year revenue decline and associated margin pressure are not indicative of any structural changes in the business. Instead, they reflect normal fluctuations in project timing and customer purchasing patterns. He reiterated that the company continues to see strong underlying demand, supported by long-term drivers such as infrastructure modernization, regulatory requirements, and increasing focus on water resource management.
A key strategic development during the quarter was Badger Meter’s announcement of a definitive agreement to acquire UDlive, a United Kingdom-based provider of hardware-enabled software solutions for sewer line monitoring. The transaction is expected to close at the end of April 2026 and represents an important step in expanding the company’s capabilities in digital water management.
The acquisition of UDlive is expected to complement Badger Meter’s existing SmartCover platform by extending its sewer monitoring capabilities across a broader range of applications, network conditions, and geographic markets. Together, SmartCover and UDlive will enhance the company’s position in the global market for water and wastewater monitoring solutions, particularly as utilities face increasing challenges related to aging infrastructure, stricter environmental regulations, and climate-related risks.
Additionally, the integration of UDlive is expected to strengthen the company’s BlueEdge suite of solutions. This platform provides utilities with actionable intelligence across the entire water cycle, enabling more efficient and proactive management of water resources. By expanding its digital offerings, Badger Meter aims to increase its exposure to higher-margin, recurring software revenue streams, which are expected to play a growing role in the company’s long-term financial performance.
From an operational perspective, utility water sales declined 10% year-over-year, reflecting both project timing dynamics and softer short-cycle municipal demand. However, this decline was partially offset by continued growth in software-as-a-service (SaaS) offerings, as well as strong performance in SmartCover, water quality monitoring, and network monitoring solutions.
Sales of flow instrumentation products decreased by 4% compared to the prior year. While water-related markets showed modest growth, this was more than offset by lower demand in certain de-emphasized application areas, consistent with the company’s ongoing portfolio optimization efforts.
Gross margin for the quarter was 41.7%, remaining near the upper end of the company’s normalized range of 39% to 42%. Although slightly below the record 42.9% achieved in the first quarter of 2025, this performance underscores the company’s ability to maintain strong pricing discipline and operational efficiency, even in a lower-volume environment.
Selling, Engineering, and Administration (SEA) expenses totaled $49.2 million, representing 24.3% of sales. While these expenses declined sequentially from the previous quarter, they increased by $3.1 million on a year-over-year basis. The increase was driven by acquisition-related costs as well as the inclusion of an additional month of SmartCover-related expenses.
Looking ahead, Badger Meter remains optimistic about the remainder of 2026. The company has a strong pipeline of awarded projects scheduled to begin deployment in the second half of the year, which is expected to drive improved revenue and earnings performance. Furthermore, its multi-year opportunity funnel remains robust, supported by favorable industry trends and increasing adoption of smart water technologies.
Overall, while first-quarter results reflect short-term variability, Badger Meter continues to execute on its strategic priorities, including expanding its digital solutions portfolio, enhancing its recurring revenue base, and strengthening its leadership position in the global water management market.
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