Badger Meter (BMI) reported a 9% year-over-year decline in total sales for Q1 2026, totaling $202 million, primarily due to the completion of major Advanced Metering Infrastructure (AMI) projects and weaker short-cycle order rates. The company’s utility water sales also decreased by 10%, reflecting challenges in project pacing and demand variability. Despite these headwinds, management emphasized that the revenue shortfall is timing-related rather than indicative of a structural decline in demand.
The company’s gross margin fell to 41.7%, down 120 basis points from the previous year, while operating earnings dropped to $35.2 million, resulting in an operating margin of 17.4%. However, Badger Meter maintains a robust pipeline of awarded AMI projects, with potential connections ranging from 2.6 million to 3.6 million, which is expected to drive sequential revenue improvement in the latter half of the year. The recent acquisition of UK-based UDLive for $100 million is anticipated to be immediately accretive, enhancing Badger Meter’s offerings in the global water infrastructure market.
Investors should note that while the first quarter’s performance may appear disappointing, management’s outlook for 2026 remains stable, with expectations for organic revenue to align with 2025 levels as project deployments ramp up and short-cycle orders recover. This positions Badger Meter for potential growth in the second half of the year, supported by strategic cost discipline and a strong balance sheet.
Source: fool.com