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ad2f4156d0182b9a7e8ea24c061cdc2fc1cca83ca207251445e30f2b6ac896df

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

1f798a54f24b15acc4f11657ade2779144e06603e2df4a6a5afaedb237f3d73f

ce880a92623cd59dfc75584352ec1155bc498942a50c43cb8a5e662cd561f7b8

- Total Revenue: N/A for Q4 2024 (no reported data)  **[0000950170-24-016245_bmi-20231231.htm:35]**   
- Utility Water Market: N/A for Q4 2024 (no reported data)  **[0000950170-24-115576_bmi-20240930.htm:17]**   
- Flow Instrumentation: N/A for Q4 2024 (no reported data)  **[0000950170-24-115576_bmi-20240930.htm:17]**   
- Geographic Breakdown (United States, Asia, Canada, Europe, Mexico, Middle East, Other): N/A for Q4 2024 (no reported data)  **[0000950170-24-016245_bmi-20231231.htm:61]**   

No year-over-year figures or material KPI changes can be calculated for Q4 2024, as the source documents do not provide data for this period.  

3e96d71726d8f2f46923dfd98e5fc01bf0ab8645542f17bb5402d81632602d66

| Program Details          | Program 1       |
|--------------------------|-----------------|
| **Approval Date**        | February 2023  **[0000950170-24-115576_bmi-20240930.htm:26]**  |
| **End Date/Duration**    | February 2026  **[0000950170-24-115576_bmi-20240930.htm:26]**  |
| **Total Additional Amount** | 200,000 shares  **[0000950170-24-115576_bmi-20240930.htm:26]**  |
| **Remaining Authorization** | 200,000 shares (as of 2025-01-07)  **[0000950170-24-115576_bmi-20240930.htm:26]**  |
| **Details**              | No explicit purpose stated    |

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1. Given the strong sales growth over the past three years, are you anticipating a significant slowdown in 2025 to low or mid-single-digit growth, and how does this align with your long-term strategic growth expectations?
2. Considering the resilience of your utility business even during challenging times, would a scenario of flat or declining sales growth in 2025 be surprising, and what factors could lead to such an outcome?
3. Can you quantify the potential impact of recent hurricanes on your business in the Southeastern U.S., specifically how project delays in that region might influence your fourth-quarter and 2025 outlook?
4. With gross margins reaching a record high this quarter, can you elaborate on the key drivers behind this improvement and discuss the sustainability of these margin levels going forward, especially considering potential mix variability?
5. Your SaaS revenues increased approximately 35% this quarter; to what extent is this growth driven solely by meter deployments versus adoption of new services like leak detection under BlueEdge, and how do you plan to diversify and expand SaaS revenue streams beyond hardware attachment?

f6a600b644a373b5be7841e3f0ac29da4458d9d05931b5c36b12d142ca2df380

United States

Asia

Canada

Europe

Mexico

Middle East

Other

Total Revenue

21daf793aa60d631ba524ae3de0b9c1122db067a430d33c998b499ad5cdf5630

Badger Meter, Inc. (BMI) is an innovator, manufacturer, marketer, and distributor of products that incorporate flow measurement, control, quality, and communication solutions. The company focuses on providing smart water solutions and flow instrumentation for utility and industrial markets. BMI's offerings include advanced metering infrastructure, software services, and various meters and sensors for water and fluid management.

1. **Utility Water** - Develops and supplies water meters, radios, software technologies, and services for water utilities, including sensors for leak detection and water quality monitoring.  **[0000950170-24-016245_bmi-20231231.htm:4]** **[0000950170-24-115576_bmi-20240930.htm:13]** **[0000950170-24-016245_bmi-20231231.htm:6]** **[0000950170-24-045898_bmi-20240331.htm:11]** 
   - **Sub-products**:
     - Mechanical and ultrasonic water meters
     - Cellular Advanced Metering Infrastructure (AMI) solutions
     - ORION® Cellular endpoints
     - BEACON® Software as a Service (SaaS)  **[0001157523-24-000122_a53887922ex99_1.htm:1]** **[0000950170-24-016245_bmi-20231231.htm:35]** 

2. **Flow Instrumentation** - Provides meters, valves, and sensing instruments for measuring and controlling fluids like water, air, steam, and other liquids and gases, targeting industrial markets such as water/wastewater and HVAC.  **[0000950170-24-016245_bmi-20231231.htm:4]** **[0000950170-24-016245_bmi-20231231.htm:6]**

9bacc557bb867e6c68b49f582dd85695eaab30a7bbe8dd02447be7416c1bc0f6

Utility Water Market

- ORION Cellular

- BEACON SaaS

Municipal Water Products

Flow Instrumentation

- Global Flow Instrumentation

Specialty Products

fae34eb596add0368c7afc9f1b1b8405889159369933a544e2fe35386b9320ed

### Summary of Badger Meter (BMI) Guidance from the Last Four Earnings Calls

| **Earnings Call Title** | **Issued Period** | **Guided Period** | **Guidance** |
|--------------------------|-------------------|-------------------|--------------|
| **Q3 2024 Earnings Call** | Q3 2024 | **Q4 2024** and **FY 2025** | - **Sales Growth**: High single-digit growth through a cycle, with uneven quarterly outcomes. - **Backlog**: Strong backlog with no meaningful change from the prior quarter. - **Margins**: Record operating margin of **19.5%** in Q3 2024, but no new normalized gross margin range declared. - **Tax Rate**: Effective income tax rate expected to remain in the **plus or minus 25% range**. - **Hurricane Impacts**: Potential delays in Southeastern U.S. utility projects due to hurricane recovery activities, but no quantified impact. **[BMI_3402965_2]** **[BMI_3402965_9]** **[BMI_3402965_5]** **[BMI_3402965_10]** **[BMI_3393630_4]** |
| **Q2 2024 Earnings Call** | Q2 2024 | **Second Half of FY 2024** | - **Sales Growth**: Normalizing into the **high single-digit range** in the back half of 2024. - **Operating Margins**: Modest year-over-year expansion expected in the second half of 2024. - **Gross Margins**: Expected to remain within the **38%-40% range**, though pressures like copper pricing may prevent reaching the high end. **[BMI_3393630_11]** **[BMI_3393630_2]** **[BMI_3393630_4]** **[BMI_3393630_8]** |
| **Q1 2024 Earnings Call** | Q1 2024 | **5-Year Strategic Cycle** | - **Growth Outlook**: High single-digit growth on average over a 5-year cycle, with variability year-to-year. - **Sales and Earnings Comparisons**: Tougher year-over-year comparisons expected as 2024 progresses. - **SEA Expenses**: Absolute SEA spending to increase due to growth investments, but SEA leverage expected. - **Revenue Seasonality**: Sequential revenue growth from Q1 to Q2 2024 will not match the 11% seen in 2023. **[BMI_3379997_10]** **[BMI_3379997_2]** **[BMI_3379997_4]** **[BMI_3379997_11]** **[BMI_3379997_5]** |
| **Q4 2023 Earnings Call** | Q4 2023 | **Strategic Cycle** | - **Sales Growth**: High single-digit growth expected through the strategic cycle. - **Margins**: Gradual year-over-year margin improvement anticipated. - **Top-Line Growth**: Expected to moderate from recent levels due to the law of larger numbers. **[BMI_3370985_6]** **[BMI_3370985_5]** |

### Notes:
- Badger Meter does not provide specific quarterly or annual guidance but instead focuses on strategic cycles and qualitative commentary.
- The periods guided for are often broad (e.g., "second half of FY 2024" or "5-year strategic cycle") rather than specific quarters or fiscal years.

b292d11173a65909870ec13f87dbc6789d6b6e1197c1e9fa4441aec53f459061

| Name                  | Position                                                                 | Start Date       | Short Bio                                                                                                                                                                                                 |
|-----------------------|--------------------------------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Kenneth C. Bockhorst  | Chairman, President, and Chief Executive Officer                         | January 2019     | Joined Badger Meter as COO in October 2017, promoted to President in April 2018, CEO in January 2019, and Chairman in January 2020. Previously held leadership roles at Actuant Corporation, IDEX, and Eaton.  **[0000950170-24-016245_bmi-20231231.htm:12]** **[0000950170-24-032923_bmi-20240308.htm:4]** **[0000950170-23-003676_bmi-20221231.htm:11]**                       |
| Robert A. Wrocklage   | Senior Vice President — Chief Financial Officer                          | January 2020     | Elected as Senior Vice President — CFO in January 2020, previously served as Vice President — CFO and Treasurer in 2019, and Vice President - Finance from August 2018 to December 2018.  **[0000950170-24-016245_bmi-20231231.htm:12]**                                                    |
| Karen M. Bauer        | Vice President — Investor Relations, Corporate Strategy and Treasurer    | June 2019        | Elected Vice President in June 2019, joined the company in July 2018 as Director, Investor Relations and Corporate Strategy. Oversees ESG initiatives.  **[0000950170-24-016245_bmi-20231231.htm:12]** **[0000950170-23-003676_bmi-20221231.htm:11]** **[0001564590-22-006284_bmi-10k_20211231.htm:11]**                                                                                 |
| Fred J. Begale        | Vice President — Engineering                                             | N/A              | Has served as Vice President - Engineering at Badger Meter for more than five years.  **[0000950170-24-016245_bmi-20231231.htm:13]** **[0000950170-23-003676_bmi-20221231.htm:12]** **[0001564590-22-006284_bmi-10k_20211231.htm:12]**                                                                                                            |
| William R. A. Bergum  | Vice President — General Counsel and Secretary                           | N/A              | Has been in the role since at least 2022, but exact start date is unspecified.                                                                                                                                                                  |
| Sheryl L. Hopkins     | Vice President — Human Resources                                         | October 2020     | Elected Vice President — Human Resources in October 2020. Previously served as Vice President of Human Resources for ADVENT and Senior Vice President of Human Resources for Runzheimer International.  **[0000950170-24-016245_bmi-20231231.htm:13]** **[0000950170-23-003676_bmi-20221231.htm:12]**                                   |
| Richard Htwe          | Vice President — Global Operations                                       | January 2023     | Elected Vice President — Global Operations in January 2023. Previously served as Vice President of Global Operations for Emerson Commercial and Residential Solutions' InSinkErator business unit and Wahl Clipper Corporation.  **[0000950170-24-016245_bmi-20231231.htm:13]** **[0000950170-23-003676_bmi-20221231.htm:12]**          |
| Lars Bo Kristensen    | Vice President — Global Flow Instrumentation and International Utility   | December 2022    | Elected Vice President in December 2022. Previously served as Group CEO for Agramkow Fluid Systems and held various international management roles at Kamstrup.  **[0000950170-24-016245_bmi-20231231.htm:13]** **[0000950170-23-003676_bmi-20221231.htm:12]**                                                                          |
| Kimberly K. Stoll     | Vice President — Sales and Marketing                                     | N/A              | Has served as Vice President — Sales and Marketing at Badger Meter for more than five years.  **[0000950170-24-016245_bmi-20231231.htm:13]** **[0000950170-23-003676_bmi-20221231.htm:12]**                                                                                                       |
| Matthew L. Stuyvenberg| Vice President — Software and Water Quality                              | January 2023     | Elected Vice President — Water Quality in January 2022 and Vice President — Software and Water Quality in January 2023. Joined Badger Meter in April 2007 as a Mechanical Engineer of Applied Research.  **[0000950170-24-016245_bmi-20231231.htm:13]** **[0000950170-23-003676_bmi-20221231.htm:12]**                                  |
| Daniel R. Weltzien    | Vice President — Controller                                              | March 2019       | Elected Vice President — Controller in March 2019.  **[0000950170-24-016245_bmi-20231231.htm:13]**                                                                                                                                                                                          |

d372c88e23f1de4b166cd901cec44438a83278f9b853d0cbaa1695a920115a93

- **Potential delays in project execution due to hurricanes could negatively impact near-term revenues, with uncertainty on the timing of when delayed projects will contribute**.  **[BMI_3402965_9]** **[BMI_3402965_8]**  The CEO admitted: "*I would say for sure that there would be delays, not cancellations, but I can't promise they would be the first quarter.*"  **[BMI_3402965_9]**
- **The company's SaaS revenue growth is heavily reliant on hardware sales, with 99% of SaaS revenue tied to meter hardware, limiting potential growth from cross-selling new services**.  **[BMI_3402965_11]**  The CFO stated: "*Where we stand today, **99%** of the revenue stream is related to meter to cash, surrounding BEACON and AMI.*"  **[BMI_3402965_11]**
- **Backlog normalization may indicate slowing demand growth, as the company did not report any meaningful increase in backlog this quarter**.  **[BMI_3402965_10]**  The CEO mentioned: "*We didn't call it out this quarter because there was no meaningful change within it.*"  **[BMI_3402965_10]**

1f5f066f2288acb73fa53564cf7f9f605d5cc5e5868844ba0c1ffcf7e71c41e4

- **Consistent Sales Growth and Positive Outlook for 2025:** Despite challenging conditions, Badger Meter's utility business grew **4% in the COVID year** and **9% in the supply chain year**. The CEO stated they "certainly don't expect down years" and feel "strong coming into 2025".  **[BMI_3402965_7]** **[BMI_3402965_5]** **[BMI_3402965_8]**
- **Margin Expansion Driven by Multiple Factors:** The company reported **record operating margins of 19.5%**, with margin improvements attributed to increasing unit volumes, favorable mix, and positive price/cost dynamics.  **[BMI_3402965_6]**
- **Strong Capital Allocation and Growth Opportunities:** Badger Meter maintains a healthy balance sheet with a net cash position, recently raised its dividend by **26%**, and remains focused on strategic M&A activities to enhance growth and shareholder returns.  **[BMI_3402965_14]**

cd8fc4834b160df484c1847dd20c3a130b597bf01bac9397acdca9bfbef2b192

- **Management anticipates sales growth to normalize to high single digits in the back half of the year**, down from the previous **23% year-over-year growth**.  **[BMI_3393630_4]**  This suggests a potential slowdown in revenue growth due to tougher year-over-year comparisons.
- **Incremental margins**, which were around **30% in recent quarters**, are expected to normalize back to the historical mid-20% range as organic growth slows.  **[BMI_3393630_5]**  This indicates limited future margin expansion.
- **Increased SEA expenses** may impact operating margins, with management only expecting **modest operating margin expansion** year-over-year.  **[BMI_3393630_11]**  This suggests that rising costs could pressure profitability.

eae66477897e5f7da4c81e5df3e10d1965b1c1f435327860abc006cbce511c90

- **Strong Backlog and Order Rates Indicate Sustained Demand:** The company remains "really excited about the level of order rates and what we have in the backlog"  **[BMI_3393630_9]** , with a "positive outlook that we have on the markets hasn't changed at all"  **[BMI_3393630_4]** , signaling continued growth potential.
- **Effective Cost Management Leading to Margin Expansion:** Despite inflationary pressures like rising copper prices, the company has maintained gross margins "in a pretty tight band" over the last six quarters.  **[BMI_3393630_8]**  Recent quarters have seen incremental margins "kind of hit that **30% level**," attributed to "robust growth and then the pace of growth investment being modestly slower".  **[BMI_3393630_5]**
- **Leveraging the BlueEdge Platform for Revenue Growth:** The introduction of the **BlueEdge** platform enables the company to "talk with customers about the full extensibility that we can provide throughout their network system," facilitating cross-selling opportunities and meeting customers "where they are in their technology journey".  **[BMI_3393630_6]**

6e57c5d7a7a04eb72b3bb6b4677ff905696a51e9700e8d8d1057679fa4095bfe

1. **2025 Sales Outlook**  
   **Q:** Do you expect lower sales growth in 2025?  
   **A:** We feel strong coming into 2025 and do not expect a down year; even during COVID, our utility business grew **4%**, and **9%** during the supply chain year. While annual growth rates may vary between **5% to 12%**, the macro drivers remain strong, and we certainly don't expect down years. ** **[BMI_3402965_5]** **[BMI_3402965_7]** **

2. **Margin Drivers**  
   **Q:** What drove the margin improvement this quarter?  
   **A:** Margin improvement was driven by increased unit volumes, higher average selling prices due to customer and product mix, and positive price-cost benefits; these are the three contributing factors. **[BMI_3402965_6]**

3. **Hurricane Impact**  
   **Q:** How will the hurricane affect your business, especially in the Southeast?  
   **A:** While we can't quantify the impact, we maintain strong direct communication with customers; there may be delays but not cancellations. We have managed such challenges before and continue to deliver strong results despite potential unevenness. ** **[BMI_3402965_8]** **[BMI_3402965_9]** **

4. **Backlog Levels**  
   **Q:** How does your current backlog compare to normal levels?  
   **A:** Our backlog remains very positive with no meaningful change this quarter; we see solid performance across all market areas from engineering to shipping. **[BMI_3402965_10]**

5. **SaaS Revenue Growth**  
   **Q:** Is your SaaS revenue growth solely unit-driven or from new services?  
   **A:** Growth is primarily driven by additional hardware units in the field; **99%** of SaaS revenue is related to meter-to-cash solutions surrounding BEACON and AMI, with a **100%** attachment rate to hardware sales. **[BMI_3402965_11]**

6. **Capital Allocation and M&A**  
   **Q:** What are your capital allocation priorities, and any M&A plans?  
   **A:** Our priorities remain investing in R&D leadership, maintaining dividends—**32 consecutive years** of increases—and disciplined M&A to expand our BlueEdge portfolio, focusing on sensors and software to enhance customer satisfaction. **[BMI_3402965_14]**

7. **BlueEdge and Bundled Offerings**  
   **Q:** Are you accelerating bundled sales through BlueEdge?  
   **A:** BlueEdge allows us to tailor solutions, approaching customers wherever they are in their technological journey, enhancing cross-selling and bundling opportunities; this strategy helps increase wallet share. **[BMI_3402965_13]**

8. **International Opportunities**  
   **Q:** Can you discuss international market opportunities?  
   **A:** We've seen global growth through acquisitions like s::can, ATI, and Syrinix, which have strong relationships and installed bases in over **50 countries**; we're excited about expanding BlueEdge globally, with opportunities like **AMP8** in the U.K. **[BMI_3402965_15]**

11bb91240d469123be4d5782c2b73624e8fc8c58157cec390178f4b679e06d0e

- The company expects **growth rates to moderate** from previous double-digit percentages to **high single digits** over the next strategic cycle, indicating a potential slowdown in growth momentum.  **[BMI_3370985_7]** **[BMI_3370985_6]**
- Management indicated that growth **will not always be linear**, with possible quarterly fluctuations, which could lead to uneven financial performance.  **[BMI_3370985_11]**
- The competitive environment may become more challenging as supply chains normalize and **competitors improve their capabilities**, including new entrants like Kamstrup, which could impact Badger Meter's market position.  **[BMI_3370985_15]**

042edd184cd361c889ddcb41024f4ab250d4777b6a1f99883dcf89286ea811e0

- The company's growth rate is expected to moderate from the 23% achieved in the recent quarter due to tougher comparisons, potentially leading to lower growth rates in the near term.  **[BMI_3379997_10]**
- Inflationary pressures, such as rising commodity prices like copper and increased transportation costs, could negatively impact margins, and management acknowledges that inflation is "not gone" and may present future cost pressures.  **[BMI_3379997_7]**
- Increased investments in growth initiatives and higher support costs associated with their more technical, electronic products are expected to cause Selling, Engineering, and Administrative (SEA) expenses to rise throughout the year, which may weigh on profit margins.  **[BMI_3379997_11]** **[BMI_3379997_5]**

2e15912179617adca68af2f8dba147e166cc024cd3368d9364c60fb121311ec0

- **Strong Backlog and Positive Outlook for High Single-Digit Growth**: Badger Meter's backlog entering **2024 is still higher than it was coming into 2023**, indicating robust demand and continued optimism. The company expects **high single-digit growth over the next five years**, reinforcing confidence in its strategic outlook.  **[BMI_3370985_7]** **[BMI_3370985_6]**
- **Accelerated Growth in Water Quality and Pressure Monitoring Businesses**: The company's **water quality and pressure monitoring segments are growing faster than high single digits**, potentially contributing more significantly to growth over the strategic cycle. This highlights the success of recent acquisitions and the expanding market for these solutions.  **[BMI_3370985_10]**
- **Sustained Incremental Margins and Operating Profit Expansion**: Badger Meter maintains its target of **25% incremental margins** at both the operating profit and EBITDA levels. The company continues to leverage Selling, Engineering, and Administrative (SEA) expenses, improving SEA as a percentage of sales and driving operating profit expansion year-over-year through **continuous improvement**.  **[BMI_3370985_8]** **[BMI_3370985_9]**

1d4bc5b11f74cb17b12ab096512bc0481df6a09a75c243a4f9bc32eab2575307

- **Significant growth opportunity in AMI adoption**: Badger Meter is capitalizing on the expansion of Advanced Metering Infrastructure (AMI), with only **approximately 35% of the market currently implemented**, indicating a **long runway for growth** and a **positive long-term outlook**.  **[BMI_3379997_12]**
- **Strategic acquisitions enhancing portfolio and cross-selling**: The company's recent acquisitions in water quality, pressure, and network monitoring solutions are yielding positive results, leading to increased **customer wallet share** and strengthening their market position through cross-selling opportunities.  **[BMI_3379997_9]**
- **Continued investment in innovation driving growth**: Badger Meter is investing in engineering resources and software development, focusing on innovative solutions like their **Beacon** SaaS platform, which is central to their growth strategy and helps maintain their position as a market innovator.  **[BMI_3379997_11]**

c2f85f98ebe0079fa078fb8c534c7d0d1266a32315f172f9b4a74051e85e0d39

Badger Meter Inc (BMI)

Financials