Badger Meter Delivers Impressive Q3 Results, Poised for Continued Growth

Badger Meter, Inc. (NYSE: BMI), a global leader in water technology solutions, has reported its financial results for the third quarter of 2024, showcasing impressive growth and operational excellence. The company's performance highlights its ability to capitalize on the increasing demand for smart water management solutions, driven by the industry's focus on efficiency, resiliency, and sustainability.

Unlocking the Power of Smart Water Solutions

Robust Sales Growth and Margin Expansion

Badger Meter's third-quarter results demonstrate its ability to deliver strong financial performance. The company reported total sales of 8.4 million, a 12% increase compared to the prior year's 6.2 million. This growth was driven by solid demand for the company's tailorable water management solutions, particularly in the utility water segment.Operating profit increased by 29% year-over-year, with operating profit margins expanding to a record 19.5%, a 260-basis point improvement from the prior year's 16.9%. This impressive margin expansion was achieved through a favorable sales mix, effective price/cost management, strong operational execution, and continued selling, engineering, and administration (SEA) expense leverage.

Delivering Value Through Innovation

Badger Meter's success is underpinned by its commitment to innovation and the development of cutting-edge water management solutions. The company's BlueEdge suite of offerings, which includes meters, water quality and pressure sensors, ORION communication endpoints, and BEACON Software as a Service (SaaS), has been a key driver of growth, enabling utility customers to realize the benefits of enhanced efficiency, resiliency, and sustainability.The company's focus on tailoring its solutions to meet the unique needs of its customers has been a crucial factor in its ability to maintain a strong competitive position. By leveraging its deep industry expertise and technological capabilities, Badger Meter has been able to deliver innovative products and services that address the evolving challenges faced by water utilities and other water-intensive industries.

Robust Cash Flow and Shareholder Returns

Badger Meter's financial performance has also been marked by strong cash flow generation, with net cash provided by operations increasing by 43% year-over-year to .1 million. This robust cash flow has enabled the company to maintain a healthy balance sheet and provide attractive returns to its shareholders.In line with its commitment to shareholder value creation, Badger Meter recently announced a 26% increase in its annual dividend rate to .36 per share, representing the 32nd consecutive year of dividend growth. This move underscores the company's confidence in its long-term growth prospects and its ability to generate sustainable cash flows.

Navigating Industry Challenges with Resilience

While Badger Meter's performance has been impressive, the company is not immune to the challenges faced by the water industry. The company noted that it expects sequentially fewer total operating days in the fourth quarter due to holiday-shortened activity levels at its customers. Additionally, evolving hurricane recovery activities in the Southeast U.S. have the potential to delay utility projects in the near term.However, Badger Meter's management team remains optimistic about the company's ability to navigate these challenges. By leveraging its strong backlog, robust bid funnel, and constructive order rates, the company anticipates delivering high single-digit sales growth rates over the cycle, while continuing to strive for modest operating profit margin expansion year-over-year.

Driving Sustainable Value Creation

Badger Meter's success is underpinned by its steadfast culture of continuous improvement and its unwavering commitment to serving its customers. The company's ability to execute and deliver outperformance, even in the face of industry challenges, is a testament to the strength of its team and the resilience of its business model.Looking ahead, Badger Meter remains focused on capitalizing on the durable macro trends benefiting the water industry, leveraging its innovative solutions to help its customers achieve their efficiency, resiliency, and sustainability goals. By preserving and protecting the world's most precious resource, the company is poised to continue driving sustainable value creation for its shareholders.