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Investing.com -- Badger Meter Inc . (NYSE:BMI) shares tumbled 9.4% after the water technology company reported second quarter earnings that fell short of analyst expectations despite posting better-than-expected revenue.
The water management solutions provider reported earnings per share of $1.17 for the second quarter ended June 30, 2025, missing analyst estimates of $1.23 by $0.06. Revenue came in at $238.1 million, slightly above the consensus estimate of $236.95 million and up 10% from $216.7 million in the same quarter last year.
The significant stock decline reflects investor disappointment with the earnings miss, which overshadowed the company’s revenue growth and operational improvements. Operating earnings increased 8% year-over-year to $44.9 million, though operating profit margins declined to 18.8% from 19.2% in the prior year quarter.
"We delivered strong sales growth, solid profitability and robust cash flow against last year’s quarterly sales high-water mark," said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer of Badger Meter.
Utility water sales, the company’s core business, increased 11% year-over-year, including the first full quarter contribution from the SmartCover acquisition. Excluding SmartCover, utility water sales grew 6%, compared to 26% growth in the second quarter of 2024.
Gross margin improved to 41.1%, up 170 basis points from 39.4% in the prior year quarter, benefiting from sales mix improvement and operational excellence initiatives. However, higher selling, engineering and administration expenses, which increased to $52.9 million from $43.8 million a year earlier, weighed on profitability.
Cash flow remained strong with cash provided by operations reaching $44.6 million, a 22% increase year-over-year.
Looking ahead, Bockhorst expressed confidence in the company’s long-term growth prospects, citing "enduring favorable industry fundamentals, customer order and demand trends, project awards, pending and future RFP activity" as supporting high single-digit revenue growth over the long term.
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