Badger Meter (BMI) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales reached $208.4 million, up 12% year-over-year, driven by strong demand for smart water solutions and BlueEdge suite adoption.

• Record operating margin of 19.5%, up 260 basis points from the prior year, with operating profit rising 29% year-over-year.

• Diluted EPS increased 23% to $1.08, with net earnings for the quarter at $32.0 million, up from $26.0 million.

• Free cash flow hit a record $42 million, up 48% year-over-year, and cash from operations reached $45.1 million.

• Annual dividend rate raised by 26% to $1.36 per share, marking 32 consecutive years of increases.

Financial highlights

• Gross margin improved to 40.2% from 39.1% a year ago, with gross profit up 15% year-over-year.

• SG&A/SEA expenses were $43.3 million, but as a percent of sales declined to 20.8% from 22.2%.

• Utility water product line sales increased 14% year-over-year, driven by BlueEdge and SaaS adoption.

• Flow instrumentation sales remained flat year-over-year, with steady demand in water-focused markets.

• Cash and cash equivalents at quarter-end were $259.0 million, up from $192.0 million at year-end 2023.

Outlook and guidance

• High single-digit sales growth rates targeted over the strategic cycle, with no expectation of a down year in 2025.

• Fourth quarter expected to have fewer customer operating days due to U.S. holidays and possible hurricane-related project delays, which are expected to be temporary.

• Favorable demand, strong order rates, and durable macro trends support a positive long-term outlook.

• Continued investment in organic and inorganic growth, with strong cash flow and borrowing capacity.