In This Article:
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Total Sales Growth: 13% year-over-year in Q1 2025.
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Utility Water Product Line Sales: Increased 16% year-over-year.
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Flow Instrumentation Sales: Decreased nearly 5% year-over-year.
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Operating Profit Margins: Record 22.2%, expanding 360 basis points year-over-year.
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Gross Profit Margins: 42.9%, a 360 basis point improvement from the prior year.
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Software Revenue Growth: Up 25% in the quarter.
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SEA Expenses: Increased by $5.4 million or 13% year-over-year to $46 million.
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Income Tax Provision: Increased to 24.4% from 23.5% in the prior year.
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EPS: Increased 31% to $1.30 from $0.99 in the prior year comparable quarter.
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Free Cash Flow: $30 million, up 60% from $18.8 million in the prior year.
Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Badger Meter Inc (NYSE:BMI) reported a strong start to the year with solid revenue growth and record operating margins.
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The acquisition of SmartCover has been positively received by customers, enhancing the BlueEdge suite of water management solutions.
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Total sales grew 13% year-over-year, with utility water product line sales increasing by 16%.
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The company achieved a record operating profit margin of 22.2%, with gross profit margins improving to 42.9%.
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Software revenue grew by 25% in the quarter, contributing significantly to the positive sales mix.
Negative Points
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Sales for the flow instrumentation product lines decreased nearly 5% year-over-year due to lower demand in certain market applications.
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There is significant uncertainty surrounding tariffs and the macroeconomic situation, which could impact future margins.
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The company faces potential import tariff exposure on electronics and components from various countries, which could increase costs.
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SEA expenses increased by 13% year-over-year, partly due to the SmartCover acquisition.
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The income tax provision increased to 24.4% from 23.5% in the prior year, impacting net earnings.
Q & A Highlights
Q: Can you provide more color on the favorable product and customer mix benefits and whether gross margins will moderate back to the 38% to 40% range in Q2 if the tariff backdrop remains stable? A: Kenneth Bockhorst, CEO, explained that despite the uncertain environment, the company feels strong about the durability of their margins due to positive structural mix. CFO Robert Wrocklage added that while many factors contributed favorably to the Q1 margin, some are episodic. They are cautious about declaring a new margin range due to potential tariff-related input cost pressures.