Badger Meter (BMI) Q4 2024 earnings summary

Executive summary

• Achieved record sales of $205.2M in Q4 2024 (up 13% year-over-year) and $826.6M for the full year (up 18%), with strong growth in operating profit, EPS, and cash flow metrics.

• Operating margin in Q4 was 19.1%, with a 230 bps full year improvement; EPS grew 24% in Q4 to $1.04 and 35% for the year to $4.23.

• Announced the acquisition of SmartCover, a provider of sewer and lift station monitoring solutions, for $185 million, expanding real-time monitoring and recurring software revenue.

• Software revenue exceeded $56 million, representing 6.7% of sales and a 28% CAGR over five years.

• Maintained a continuous improvement mindset, reducing working capital intensity and doubling the dividend rate over five years.

Financial highlights

• Q4 sales grew 13% year-over-year to $205.2M; full year revenue was $826.6M, up 18%.

• Utility water product line sales increased 14% year-over-year; flow instrumentation up 1%.

• Operating margin expanded 150 bps to 19.1% in Q4; gross margin improved 110 bps to 40.3%.

• Q4 EPS was $1.04, up 24% from $0.84 in the prior year quarter; full year EPS rose 35%.

• Free cash flow reached a record $47.4M in Q4 (up 32% year-over-year) and $142M for 2024, with 114% free cash flow conversion.

Outlook and guidance

• High single-digit average top-line growth expected, supported by a strong order book, pipeline, and resilient demand for smart water offerings.

• Margins expected to gradually improve, but SmartCover acquisition will temporarily increase SG&A as a percent of sales.

• Gross margin guidance remains at 38%-40% due to macro uncertainty, especially tariffs.

• SmartCover will be EPS dilutive in 2025, turning accretive in year two.

• Free cash flow conversion above 100% targeted for 2025.