Badger Meter, Inc. Q2 2026 Earnings Recap

Shares fell 15.5% as investors reacted negatively to a pronounced year-over-year revenue decline and margin compression amid continued project pacing headwinds and a cautious full-year outlook reaffirmed to be flat to last year. Weakness in utility water sales and ongoing electronic component cost pressures contributed to investor disappointment.

Key Takeaways

• Total Q2 sales declined 7% year-over-year to $222.3 million; organic base sales (excluding acquisition) fell 7.5% y/y but improved 9% sequentially.
• Utility water sales declined 8% y/y and 9% organically, reflecting slower AMI project shipments; flow instrumentation grew 6% y/y.
• Operating earnings fell 12% y/y; base operating margin compressed 40 basis points to 18.4% due to lower volumes and project mix; gross margin declined 30 basis points to 40.8%.
• Rising electronics component costs driven by AI and data center demand are pressuring margins; these challenges show no signs of easing.
• Free cash flow dropped to $21.9 million from $40.6 million year-over-year, impacted by lower earnings and elevated working capital levels from revenue timing.