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October 19, 2023

Badger Meter (BMI) Reports Record Q3 Results

Badget Meter (BMI) is out with Q3 reports ahead of the bell today. Revenue was up 26% to $186.2 million, beating consensus of $179.1 million, while EPS of $0.88 beat consensus of $0.81 and rose by 44%. Utility water sales were up 31% while flow instrumentation products grew by 2%. Management declined to give precise guidance, instead saying, “We remain focused on execution and capitalizing on the strength of our end markets with anticipated strong sales and operating performance, yet with sequentially fewer total operating days as a result of holidays in the fourth quarter. Robust cash flow and ample cash and credit availability provide us with the financial flexibility to execute our capital allocation priorities and continued investments in growth.” Shares are indicated to open slightly higher but with the conference call at 10 a.m. ET, when analysts should pressure management to give more forward-looking commentary, I suspect it will be an hour or two before we can get a good sense of how the day will go for BMI. No change to our hold rating at this point. HOLD

Tyler Laundon is chief analyst of the limited-subscription advisory, Cabot Small-Cap Confidential and grand slam advisory Cabot Early Opportunities. He has spent his entire career managing, consulting and analyzing start-up and small-cap companies. His hands-on experience has taught Tyler that the development of a superior business model is the biggest factor in determining a company’s long-term success. Accordingly, his research focuses on assessing the viability of management’s growth strategies, trends in addressable markets and achievement of major developmental milestones.