Third Quarter 2009 Highlights

Net sales were $60,814,000 for the third quarter of 2009, an 11.6% decrease from sales of $68,826,000 for the third quarter of 2008.

Earnings from continuing operations were a third quarter record $6,965,000, a 19.5% increase from earnings from continuing operations of $5,828,000 for the same period in 2008.

Net earnings were a third quarter record $14,355,000, a 146.3% increase from earnings of $5,828,000 for the third quarter of 2008.

Diluted earnings per share from continuing operations were a third quarter record $0.47, a 20.5% increase from earnings of $0.39 per diluted share for the comparable prior period.

Diluted earnings per share were a third quarter record $0.96, a 146.2% increase from earnings of $0.39 per diluted share for the comparable prior period.

Nine Months 2009 Highlights

Net sales were $193,901,000 for the first three quarters of 2009, an 8.5% decrease from sales of $211,906,000 for the first three quarters of 2008.

Earnings from continuing operations were $21,695,000 for the first three quarters of 2009, a 14.9% increase from earnings from continuing operations of $18,889,000 for the comparable prior period.

Net earnings were $29,085,000 for the first nine months of 2009, a 54.0% increase from earnings of $18,889,000 for the same period in 2008.

Diluted earnings per share from continuing operations were $1.45, a 14.2% increase from earnings of $1.27 per diluted share for the comparable prior period.

Diluted earnings per share were $1.95 for the first three quarters of 2009, a 53.5% increase from earnings of $1.27 per diluted share for the first nine months of the prior year.

Operations Review

"Our record third quarter earnings and earnings per share were due to a combination of factors, including recognition of a tax benefit, lower commodity costs, ongoing expense reduction efforts and strong pricing discipline," said Richard A. Meeusen, chairman, president and chief executive officer of Badger Meter.

Meeusen said the third quarter and nine months results include recognition of previously unrecognized tax benefits taken on prior returns for certain deductions related to the shutdown of the company's French subsidiaries which were previously presented as discontinued operations. With the favorable completion of an IRS audit, these tax benefits were recognized in the third quarter as discontinued operations. In addition, interest expense for the quarter and year-to-date are credit balances because they include nearly $1.2 million and $0.9 million, respectively, of interest expense reversed for amounts previously accrued for these tax issues as part of continuing operations. On a per share basis, the interest credit has net after tax impacts of approximately $0.05 per share and $0.04 per share for the quarter and year-to-date, respectively.

"The gross profit margin was 39.0% in the third quarter of 2009, compared to 34.0% for the prior year quarter. Selling, engineering and administration expenses decreased 8.2% in the third quarter and 4.1% for the 2009 year-to-date, reflecting the impact of our cost-containment programs," said Meeusen.

He said third quarter sales declined 9% in the company's utility markets and 24% in the industrial markets. "Many of our utility customers are continuing to delay purchasing decisions while waiting to see if they will receive federal stimulus dollars for infrastructure improvements. On the industrial side, all of our product lines continue to be affected by the impact of the global recession on customer spending," said Meeusen.

"With stimulus funding moving at a slow pace, we do not expect to see much impact from this spending in our fourth quarter. However, we are positioned to meet the ˜Buy American' standards that will be critical when municipalities start to receive stimulus funding for their projects," said Meeusen.

"Although the uncertainty about stimulus funding is impacting sales to our utility customers, we are excited about our recently announced contract to supply our Badger® ORION® radio-frequency products for gas meters to Duke Energy. This is our first major win in the natural gas utility market and gives us a solid foothold for further expansion in this area," noted Meeusen.

"We remain optimistic about the future of Badger Meter. With a series of recent engineering innovations like the ORION natural gas product, opportunities for further market penetration for our AMR/AMI products, our strong financial position and long-term customer relationships, we have the key elements in place to support our continued growth," added Meeusen.

Conference Call and Webcast

Badger Meter management will hold a conference call to discuss the company's third quarter 2009 results on Tuesday, October 20, at 10:00 AM Central/11:00 AM Eastern time. Interested parties can listen to the call live on the Internet through the company's Web site: www.badgermeter.com or by dialing 1-888-680-0865 and entering the passcode 53006829. Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PT86YQJYM. Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.

A telephone replay of the conference call will be available through Tuesday, October 27, by dialing 1-888-286-8010 and entering the passcode 29439733. The Webcast will be archived on the company's Web site until its next earnings release.

About Badger Meter

Badger Meter is a leading manufacturer and marketer of products incorporating liquid flow measurement and control technologies, developed both internally and with other technology companies, as well as the leader in providing digital connectivity to AMR/AMI technologies.