Badger Meter (BMI) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 sales of $216.7 million, up 23% year-over-year, surpassing $200 million for the first time, driven by strong utility water demand and backlog conversion.

• Operating margin reached a record 19.2%, up 240 basis points, with operating profit rising 41% year-over-year.

• EPS increased 47% to $1.12, with net earnings of $33.1 million, up from $22.5 million in Q2 2023.

• Free cash flow reached $34.1 million, up 70% year-over-year, and cash and cash equivalents rose to $226.2 million.

• Launched BlueEdge platform and published 2023 Sustainability Report, highlighting ESG progress and customer sustainability enablement.

Financial highlights

• Q2 2024 sales were $216.7 million, up 23.2% from $175.9 million in Q2 2023; utility water sales grew 26%, flow instrumentation sales rose 5%.

• Gross margin was 39.4%, stable and in the upper half of the normalized range.

• Operating income was $41.6 million, up 41% year-over-year; EBITDA margin reached 22.9%.

• Free cash flow for Q2 2024 was $34.1 million, and net cash from operations was $36.4 million.

• Six-month net sales reached $412.9 million, up 23% from the prior year period.

Outlook and guidance

• Sales growth is expected to normalize to high single digits in the second half of 2024 due to tougher year-over-year comparisons and less backlog conversion.

• Long-term demand is supported by durable macro trends, infrastructure investment, and a strong opportunity pipeline.

• Focus remains on high single-digit sales growth rates, with flexibility for organic and inorganic investments.

• Bid funnel and order rates remain constructive, but year-over-year comparisons will become more challenging.

• Modest operating margin expansion expected, driven by favorable sales mix and SEA leverage.