Basis of Presentation and Accounting Policies

12 Months Ended

Dec. 31, 2025

Accounting Policies [Abstract]

Basis of Presentation and Accounting Policies

Note 1 Basis of Presentation and Accounting Policies

Profile

With more than a century of water technology innovation, Badger Meter is a global provider of industry leading water management solutions, with approximately 95% of net sales derived from water-related applications. Badger Meter's offerings, marketed as BlueEdge®, are comprised of a suite of tailorable solutions that connect water management technology, software and support services to deliver insights enabling the proactive management of water across the water cycle. These tailorable solutions encompass measurement and control hardware, connectivity and communication, data visualization and software-delivered actionable insights as well as ongoing support and expertise essential to optimize customers' operations and contribute to the sustainable use and protection of the world’s most precious resource.

The Company's measurement and control hardware, instruments and sensors are primarily comprised of the following product families:

•meters that measure the flow of water and other fluids and are known for accuracy, long-lasting durability and for providing valuable and timely flow measurement data.

•water quality monitoring solutions, including optical sensing and electrochemical instruments that provide real-time, on demand data parameters.

•high frequency pressure and acoustic leak detection hardware that provides real-time monitoring data.

•remote sewer monitoring solutions to aid in predicting, detecting and preventing sewer overflow spills and lift station solutions for monitoring and control.

The Company’s broad range of communication solutions include the ORION® branded family of radio endpoints, along with remote telemetry units, providing customers with a choice of industry-leading options for communicating data from hardware into use-specific software applications.

The Company’s hardware-enabled software solutions provide insights and analytics critical to the holistic management of our customers’ water systems. These digital solutions increase visibility, empowering customers to monitor system performance and make decisions aiding efficiency, resiliency, and sustainability.

The Company also provides training, project management, technical support and other collaborative services for customers. This support is becoming increasingly critical as customers strive to extract maximum value from their deployed technology investments while managing workforce demographic changes, infrastructure upgrades, and water loss management, among other operating challenges.

The Company’s solutions fall into two product lines:

•Utility Water - sales of meters, water quality and sewer monitoring sensors and other hardware, communication, and software and related technologies, to water utilities.

•Flow Instrumentation - sales of meters, other sensing instruments, valves, software and other solutions to commercial and industrial customers, including water-related applications.

Utility water smart metering solutions are comprised of water meters along with the connected radio endpoints and software technologies and services used by water utilities as the basis for generating their water and wastewater revenues, enabling operating efficiencies and engaging with their end consumers. This product line further comprises other instruments and sensors used in the water distribution system to ensure the safe and efficient treatment, delivery and return of water. These sensors are used to detect leaks, monitor various water quality parameters throughout the distribution system and treatment process, and monitor, detect and prevent sewer overflow spills. The largest geographic market in which the Company operates is North America, primarily the United States.

The flow instrumentation product line primarily serves water applications throughout the broader industrial market, with both standard and customized solutions. This product line includes meters, valves and other sensing instruments sold worldwide to measure and control the quantity of fluids including water, air, steam, and other liquids and gases. These

products, oftentimes leveraging the same technologies used in utility water, are used in a variety of industries and applications, with the Company’s primary market focus being water/wastewater, heating, ventilating and air conditioning (HVAC), and corporate sustainability. Flow instrumentation products are generally sold through manufacturers’ representatives and original equipment manufacturers as the primary flow measurement device within a product or system. Specialized communication protocols that control the entire flow measurement process and mandatory certifications drive these markets.

Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of ninety days or less to be cash equivalents.

Receivables

Receivables consist primarily of trade receivables. The Company does not require collateral or other security and evaluates the collectability of its receivables based on a number of factors. An allowance for doubtful accounts is recorded for significant past due receivable balances based on a review of the past due items and the customer's ability and likelihood to pay, as well as applying a historical write-off ratio to the remaining balances. Changes in the Company's allowance for doubtful accounts are as follows:

	Balance at beginning of year		Provision and reserve adjustments			Write-offs less recoveries			Balance at end of year
	(In thousands)
2025	$	2,980	$	(44	)	$	(449	)	$	2,487
2024		2,904		275			(199	)		2,980
2023		1,179		1,862			(137	)		2,904

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. The Company estimates and records provisions for obsolete and excess inventories. Changes to the Company's obsolete and excess inventories reserve are as follows:

	Balance at beginning of year		Net additions charged to earnings		Disposals			Balance at end of year
	(In thousands)
2025	$	8,485	$	3,354	$	(2,353	)	$	9,486
2024		6,874		4,023		(2,412	)		8,485
2023		6,681		2,135		(1,942	)		6,874

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the respective assets by the straight-line method. The estimated useful lives of assets are: for land improvements, 15 years; for buildings and improvements, 10 to 39 years; and for machinery and equipment, 3 to 20 years.

Capitalized Software and Hardware

Capitalized internal use software and hardware included in other assets in the Consolidated Balance Sheets were $3.7 million and $3.8 million at December 31, 2025 and 2024, respectively. These amounts are amortized on a straight-line basis over the estimated useful lives of the software and/or hardware, ranging from 1 to 5 years. Amortization expense recognized for the years ending December 31, 2025, 2024 and 2023 was $3.5 million, $3.4 million and $3.3 million, respectively.

Long-Lived Assets

Property, plant and equipment and identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets.

Intangible Assets

Intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 20 years. The Company does not have any intangible assets deemed to have indefinite lives. Amortization expense was $14.7 million in 2025, $9.1 million in 2024 and $8.6 million in 2023. Amortization expense expected to be recognized is $14.4 million in 2026, $11.7 in 2027, $10.4 million in 2028, $9.9 million in 2029, $9.1 million in 2030 and $63.0 million thereafter. The carrying value and accumulated amortization by major class of intangible assets are as follows:

	December 31, 2025				December 31, 2024
	Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
	(In thousands)
Technologies	$	115,176	$	42,011	$	62,451	$	42,341
Intellectual property		7,773		2,379		6,463		1,583
Non-compete agreements		3,708		1,094		597		592
Licenses		650		612		650		595
Customer lists		6,694		5,544		8,092		6,382
Customer relationships		38,561		19,397		28,981		15,532
Trade names		26,863		9,892		15,097		10,240
Total intangibles	$	199,425	$	80,929	$	122,331	$	77,265

Goodwill

Goodwill is tested for impairment annually during the fourth quarter or more frequently if an event indicates that the goodwill might be impaired. Potential impairment is identified by comparing the fair value of a reporting unit with its carrying value. No adjustments were recorded to goodwill as a result of these tests during 2025, 2024 and 2023. Goodwill was $235.6 million at December 31, 2025 and $111.8 million at December 31, 2024. The change in goodwill from 2024 to 2025 resulted from currency translation adjustments of $5.5 million and the acquisition of SmartCover of $118.3 million. This acquisition is further described in Note 3 “Acquisitions”.

Warranty and After-Sale Costs

The Company estimates and records provisions for warranties and other after-sale costs in the period in which the sale is recorded, based on a lag factor and historical warranty claim experience. After-sale costs represent a variety of activities outside of the written warranty policy, such as investigation of unanticipated issues after the customer has installed the product or analysis of water quality issues. Changes in the Company's warranty and after-sale costs reserve are as follows:

	Balance at beginning of year		Provision of acquired business		Net additions charged to earnings		Costs incurred			Balance at end of year
	(In thousands)
2025	$	16,693	$	607	$	12,933	$	(8,659	)	$	21,574
2024		11,102		69	$	13,349	$	(7,827	)		16,693
2023		9,606		93	$	9,759	$	(8,356	)		11,102

Research and Development

Research and development costs are charged to expense as incurred and amounted to $21.6 million in 2025, $19.2 million in 2024 and $19.0 million in 2023.

Healthcare

The Company estimates and records provisions for healthcare claims incurred but not reported, based on medical cost trend analysis, reviews of subsequent payments made and estimates of unbilled amounts.

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss) at December 31, 2025 are as follows:

(In thousands)	Unrecognized pension and postretirement  benefits		Foreign currency			Total
Balance at beginning of period	$	1,146	$	(9,052	)	$	(7,906	)
Other comprehensive income before reclassifications		-		13,907			13,907
Amounts reclassified from accumulated other comprehensive income, net of tax of $153		473		-			473
Net current period other comprehensive income, net of tax		473		13,907			14,380
Accumulated other comprehensive income	$	1,619	$	4,855		$	6,474

Reclassifications out of accumulated other comprehensive income (loss) during 2025 were immaterial.

Components of accumulated other comprehensive income (loss) at December 31, 2024 are as follows:

(In thousands)	Unrecognized pension and postretirement  benefits		Foreign currency			Total
Balance at beginning of period	$	920	$	(2,566	)	$	(1,646	)
Other comprehensive loss before reclassifications		-		(6,486	)		(6,486	)
Amounts reclassified from accumulated other comprehensive income, net of tax of $76		226		-			226
Net current period other comprehensive income (loss), net of tax		226		(6,486	)		(6,260	)
Accumulated other comprehensive income (loss)	$	1,146	$	(9,052	)	$	(7,906	)

Reclassifications out of accumulated other comprehensive income (loss) during 2024 were immaterial.

Use of Estimates

The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Fair Value Measurements of Financial Instruments

The carrying amounts of cash and cash equivalents, receivables and payables in the financial statements approximate their fair values due to the short-term nature of these financial instruments. Included in other assets are insurance policies on various individuals who were associated with the Company. The carrying amounts of these insurance policies approximate their fair value.

Subsequent Events

The Company evaluates subsequent events at the date of the balance sheet as well as conditions that arise after the balance sheet date but before the financial statements are issued. The effects of conditions that existed at the balance sheet date are recognized in the financial statements. Events and conditions arising after the balance sheet date but before the financial statements are issued are evaluated to determine if disclosure is required to keep the financial statements from being misleading. To the extent such events and conditions exist, if any, disclosures are made regarding the nature of events and the estimated financial effects for those events and conditions. For purposes of preparing the accompanying consolidated financial statements and the notes to these financial statements, the Company evaluated subsequent events through the date the accompanying financial statements were issued.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which requires additional disclosure associated with the effective tax rate reconciliation and payment of income taxes. The guidance is effective for fiscal years beginning after December 15, 2025 and can be applied on a prospective basis

with the option to apply the standard retrospectively. The Company adopted ASU No. 2023-09 on December 31, 2025, applying the standard on a retrospective basis, the impact of which was not significant to the Company or its related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure," which requires additional disclosure of specified information about certain costs and expense categories. The guidance is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, and will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently assessing the impact of this proposed change on its consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, "Targeted Improvements to the Accounting for Internal-Use Software," which removes the development stage requirements and implements a probable-to-complete recognition threshold associated with capitalization of internal use software costs. This guidance is effective for fiscal years beginning after December 15, 2027 and interim periods within those reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been made available for issuance. The Company is currently assessing the impact of this proposed changed on its consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-scope improvements." The amendments clarify the scope, form, and content of interim financial statement disclosures and improve the navigability of Topic 270 without changing existing interim reporting requirements. This guidance is effective for fiscal years beginning after December 15, 2027, and interim periods within those reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements and related disclosures.