Badger Meter, Inc. reported first‑quarter 2026 financial results that fell short of analyst expectations, with total sales of $202.3 million, a 9% decline from the $222.2 million recorded in the same period a year earlier.
Revenue was driven by a 10% drop in utility water sales and a 4% decline in flow instrumentation sales, while other segments remained flat. The company’s gross margin held steady at 41.7%, near the top of its normalized range, but operating earnings slipped to $35.2 million, reflecting a 17.4% operating margin that is 4.8 percentage points lower than the 22.2% margin reported in Q1 2025.
Operating earnings were compressed by higher selling, engineering and administration (SEA) costs, including acquisition‑related expenses, and by a weaker mix of short‑cycle orders that reduced volume leverage. Despite the margin squeeze, free cash flow exceeded 100% of net earnings, underscoring the resilience of Badger’s recurring software and hardware revenue model.
Management attributed the revenue shortfall to the timing of large utility contracts that concluded in the first quarter, which created a temporary dip in sales. Weaker than expected short‑cycle order rates contributed an additional $15‑$20 million revenue shortfall, while the increase in SEA expenses further pressured margins.
The company guided that revenue will improve sequentially in the second half of 2026 and that full‑year organic revenue will be flat compared with 2025, excluding the UDlive acquisition. Guidance signals cautious confidence, with management emphasizing a strong pipeline of awarded projects and a focus on maintaining profitability through cost discipline.
Badger announced a definitive agreement to acquire UDlive, a UK‑based provider of hardware‑enabled software for sewer line monitoring. The deal is expected to close at the end of April 2026, add approximately $22 million in trailing‑twelve‑month revenue, and be EPS‑accretive in its first year, reinforcing the company’s recurring software revenue stream.
Analysts noted that the earnings and revenue miss, combined with margin compression, prompted a negative market reaction. Consensus estimates for the quarter were $1.20–$1.22 per share in EPS and $230–$232 million in revenue; the company reported $0.93 EPS and $202.3 million in revenue, a miss of $0.27 per share and $28–$30 million respectively.
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