Badger Meter Q1 Revenue Falls 9% to $202M, EPS Slumps to $0.93
Badger Meter’s Q1 revenue declined 9% to $202 million, driven by a 10% drop in utility water sales and a 4% fall in flow instrumentation sales. Gross margin slipped 120 basis points to 41.7%, operating margin contracted to 17.4%, and diluted EPS fell from $1.30 to $0.93.
1. Q1 Financial Results
Badger Meter reported Q1 revenue of $202 million, down 9% year-over-year, with operating earnings of $35.2 million and diluted EPS of $0.93 versus $1.30 last year. Gross margin decreased 120 basis points to 41.7% and operating margin contracted to 17.4%.
2. Project Pacing and Order Variability
Short-cycle order rates were $15 million to $20 million below internal expectations, causing a project air pocket after historical AMI deployments concluded. Management attributes the variability to timing differences in utility replacement cycles rather than structural demand shifts.
3. Cost Discipline and Capital Allocation
To protect margin integrity, executive salaries were cut by 10%, and the company repurchased 256,000 shares for $38 million, leaving $115 million remaining on authorization. Free cash flow in Q1 was approximately $30 million, supporting ongoing share buybacks.
4. Outlook and Project Pipeline
Full-year 2026 organic revenue is expected to be flat with 2025, with growth weighted to the second half as awarded AMI projects for 2.6 million to 3.6 million connections begin deployment. The $100 million UDLive acquisition is projected to be immediately accretive, enhancing sewer line monitoring capabilities.