Badger Meter earnings improved in the third quarter of 2026 as wider margins offset nearly flat sales, but its cash balance fell sharply over the first nine months. Results announced on October 22 for the quarter ended September 30 showed diluted earnings per share of $1.24, up from $1.19 a year earlier. Management expects further revenue improvement in the fourth quarter, excluding the recently acquired UDlive business.
Key Takeaways
- Quarterly operating profit rose 4%, with the operating margin reaching 20.2%.
- Acquisitions, share repurchases and dividends outweighed operating cash generation over nine months.
- Management expects fourth-quarter revenue growth excluding UDlive, despite uneven utility project timing.
Table of Contents
- Badger Meter earnings improve despite uneven utility demand
- Cash decline reflects investment and shareholder distributions
- Fourth-quarter outlook depends on project execution
- Conclusion
Badger Meter earnings improve despite uneven utility demand
Badger Meter’s third-quarter financial results showed sales of $235.9 million, compared with $235.7 million a year earlier and 6% above the second quarter. Operating earnings increased to $47.7 million from $46.1 million, while net earnings reached $35.9 million, up from $35.1 million.
The operating margin widened to 20.2% from 19.6%, and gross margin increased to 41.9% from 40.7%. The company attributed the gross-margin improvement to higher sales and structural mix benefits. A lower effective tax rate also supported earnings.
Utility water sales were flat year over year, including a $5.6 million contribution from UDlive, acquired on May 1, 2026. Excluding that acquisition, utility water sales fell 3% from a year earlier but increased 5% sequentially. Badger Meter cited uneven timing of advanced metering infrastructure projects, partly offset by higher software revenue. Flow instrumentation sales increased 2%.
The quarterly improvement did not erase the weaker first half. Nine-month sales totaled $660.5 million, down from $696.0 million, while net earnings fell to $93.0 million from $108.1 million.
| Item | Details |
|---|---|
| Acquisitions, net of cash acquired | $94.4 million cash outflow in the first nine months of 2026 |
| Common-stock repurchases | $119.0 million cash outflow in the first nine months of 2026 |
| Dividends paid | $35.9 million cash outflow in the first nine months of 2026 |
| Property, plant and equipment spending | $12.3 million cash outflow in the first nine months of 2026 |
Cash decline reflects investment and shareholder distributions
Cash and cash equivalents fell to $67.9 million at September 30 from $226.0 million at December 31, 2025. That decline needs to be read alongside the company’s cash uses rather than treated on its own as evidence of operating distress.
Operations generated $103.9 million during the first nine months, compared with $128.9 million a year earlier. Acquisition spending, capital investment and shareholder distributions together exceeded that inflow. Share repurchases alone totaled approximately $55.5 million in the third quarter.
Current assets of $367.9 million remained above current liabilities of $148.3 million at September 30. Nevertheless, the smaller cash reserve leaves less immediately available cash than at the start of the year.
Fourth-quarter outlook depends on project execution
Chairman, President and Chief Executive Officer Kenneth C. Bockhorst said the company anticipated both sequential and year-over-year fourth-quarter revenue improvement on its “Base” measure, which excludes UDlive. Management also expected that growth momentum to continue into 2027. These are expectations, not completed results.
Bockhorst highlighted cost controls and ongoing material-cost pressure associated with electronics supply chains. The outlook therefore combines an expected improvement in project activity with continued attention to spending and input costs.
Badger Meter also increased its annual dividend rate by 10% to $1.76 per share, marking its 34th consecutive year of dividend growth.
Conclusion
The next test for Badger Meter earnings is whether fourth-quarter utility project activity delivers the revenue improvement management expects. Cash generation will also matter after nine months in which acquisitions and shareholder distributions substantially reduced cash reserves.
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