Q3 2020 Badger Meter Inc Earnings Call
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Ladies and gentlemen.
Welcome to the third quarter 2020, Badger meter earnings conference call.
At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session I need to press star one on your telephone if you require any further assistance. Please press star Zero. Please note. This call is being recorded it is now my pleasure to turn the conference over to Karen.
Our vice President of Investor Relations strategy and Treasurer. Please go ahead.
Good morning, and thank you for joining the Badger meter third quarter 2020 earnings conference call I Hope, you're all doing well and staying safe.
On the call with me today are Ken Bockhorst, Chairman, President and Chief Executive Officer, and Bob Brocklin's, Chief Financial Officer.
The earnings release and related slide presentation are available on our website quickly I will cover the safe Harbor reminding you that any forward looking statements made during this call are subject to various risks and uncertainties. The most important of which are outlined in our press release and SEC filings.
On today's call, we will refer to certain non-GAAP financial metrics, our press release and slides provide a reconciliation of the GAAP to non-GAAP financial metrics Hughes.
With that I will turn the call over to Ken.
Thanks, Karen and thank you for joining our third quarter earnings call I want to start by thanking the global Badger meter team for their continued commitment and efforts to safely serve and support our customers around the globe, while the majority of our non production employees continue to work from home. We have many dedicated employees at our manufacturing sites and with customers all that hearing to the many layered helping.
Safety protocols as you are.
As you read in this mornings release, our financial performance in the quarter rebounded reflective of the resiliency of the critical municipal water market as a man.
As a matter of fact, we delivered a record quarter in terms of Vps and tied the record for quarterly sales, we improved manufacturing output and experienced more consistent order demand after the trough in activity last quarter stemming from the rapid onset of widespread pandemic lockdowns not.
Not surprisingly and as we anticipated most flow instrumentation end markets remain challenged Bob.
Bob will walk you through the details of the quarter and after that I'll come back and talk further about the market outlook and what we're hearing from customers in the current environment.
Thanks, Ken and good morning, everyone as you can.
As you can see on slide four total sales for the third quarter were 113.6 million compared to 108.6 million in the same period last year, an increase of 5%.
As we noted last quarter activity levels began to improve is locked down started to be lifted in mid may and into June and this activity stabilization continued all throughout the third quarter.
In municipal water overall sales increased 11% or roughly equal combination of improved order rates and recovery of the backlog built in Q2, which as we noted last quarter was the result of lockdown induced manufacturing disruptions, which limited our output.
Positive revenue mix trends continued with further adoption of smart metering solutions, including Orion cellular radios and Beacon software as a service revenue along with ultrasonic meter penetration as.
As noted and as anticipated flow instrumentation sales declined 18% year over year reflective of the broadly challenged markets an application served globally.
Operating profit as a percent of sales was 17.2% a 210 basis point increase from the prior years, 15.1% with improved gross profit margins and Sta leverage contributing to the strong result.
Gross margin for the quarter was 39.6% up 120 basis points year over year.
Margins benefited from higher sales volumes and positive sales mix, notably the overall trends of ultrasonic meter adoption and am I implementations, including higher Beacon software as a service center Ryan cellular radio sales.
Well copper prices, which serve as a proxy for breast have been increasing our average price cost in the third quarter was effectively neutral compared to the prior year due in part to the normal purchasing to production leg finally.
Finally, a reminder that prior year's results included a nonrecurring discrete warranty provision associated with the product sold only outside North America.
<unk> expenses for the third quarter were 25.5 million down $300000 year over year with higher personnel costs, mostly offset by lower travel trade show and other ongoing pandemic impacted expenses do you.
The expense run rate was $2.3 million higher than the second quarter's 23.2 million roughly.
Reflecting the lifting of the temporary cost actions taken in the second quarter in response to the rapid onset of the pandemic.
The income tax provision in the third quarter of 2020 was 23.9% slightly higher than the prior years, 22.1% rate in so.
In summary, EPS was 51 cents in the third quarter of 2020, an increase of 16% from the prior year EPS of 44 cents.
Working capital as a percent of sales was 23% relatively in line with the prior two quarters, we again delivered strong free cash flow, which at $19.1 million, what's kisses consistent with the prior year comparable quarter. Despite the deferral of our federal income tax quarterly installment payment under the cares act from the second quarter into the third quarter.
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Our year to date free cash flow of $67.8 million was 22% higher than the prior year $55.6 million and is currently tracking at 187% conversion to net earnings.
We ended the quarter with approximately $94 million of cash on the balance sheet as we paid down the small your line of credit with excess cash we continue to have full access to our untapped 125 million dollar credit facility, our stable balance sheet and ample liquidity remain a clear source of strength for badger meter with that I'll turn the call.
All back over to Ken.
Thanks, Bob.
Unfortunately, much of the globe, including the majority of U.S. States are experiencing a resurgence in coated cases, thankfully medical professionals are better prepared now to treat individuals with the knowledge gained about the disease. While this continues to create uncertainty. We are optimistic that extensive lockdowns will not again become a necessity, regardless, we remain fully prepared to manage safe.
Really in support of our customers and the critical and essential water sector.
Our municipal water customer base is large and diverse the potential for some do experienced difficult budgetary challenges exist due to a variety of contributing factors. However, as we have continued to learn from our active dialog across the spectrum of customers their activities are essential and in many cases regulated some are implementing temporary cost reduction measures measures. So.
Just hiring freezes and travel restrictions restrictions, however, spending on critical unnecessary activities, which includes metering solutions required for billing and controlling non revenue water continues in many respects are low.
Our large and diverse customer base means that there will not be a solar single response as each municipal operation is unique with different needs and priorities.
This whole waterbed tenders and awards are mostly proceeding as planned although a few evan Kurt extended timelines or deferrals, there have been no widespread or significant cancellations and most daily order activity has returned to near normal AR.
Our supply chain and logistics partners continue to operate with new safety protocols and processes in place to address the needs of customers with no critical shortage is currently.
In spite of all the challenges and uncertainty I am extremely pleased with the level of execution of our team as evidenced by our operational and financial results through the first nine months of 2020.
Most of this fiscal year, we've been managing in a pandemic environment with countless changes to how all of US do business in severe economic shock to the global economy. Despite that backdrop, we have delivered municipal water sales growth strong EBITDA margin expansion robust working capital management and cash flow and an increase in earnings per share. It is a true testament to the.
Criticality of the water industry and the exceptional badger meter team.
Now turning to the outlook, let me start at a granular level, where I do want to highlight a few items in terms of near term outlook first.
First the benefit of the backlog conversion into sales we saw in Q3 on a year to date basis. It is neutral created in Q2 recovered in Q3, but as you analyze the municipal water growth rate in the quarter order activity alone accounted for a solid mid single digit growth rate in sales. The second as Bob noted copper prices on average have trended up.
And with our normal lag this will be a factor in Q4.
I'll remind you that while still important the impact of brass on our cost structure has been moderating overtime as we sell more software and radios versus primarily meters.
Lastly, you may recall, we had a seasonally strong fourth quarter of municipal water sales a year ago, which creates a tougher comps for the balance of 2020.
Turning to the more important longer term dynamics. It is clear that COVID-19 will have a profound impact on the global water sector, and we will believe and we believe it will be a catalyst for increased adoption of smart water solutions, our customers have a need for holistic integrated solutions that operationally that operationalize real time data. These.
Digitally enabled solutions, such as our smart meter am I offering reduce overall costs and offer safer remote solutions. These factors are in addition to the secular drivers that have already been evolving such as the need to reduce non revenue water drive conservation addressed the aging workforce of utilities and connect with end consumers.
With our robust cash flow and ample liquidity, we are actively investing in and developing products and solutions to address these challenges.
This includes both organic and acquisition driven growth geared toward augmenting our offerings offerings and attractive adjacency, serving water related markets and applications. For example added sensors and instruments for complementary and complimentary data elements, such as pressure and temperature, which are used to determine system health. It also includes expanding punch functionality of our eye on.
Water software App that helps drive consumer engagement.
To close out the prepared remarks, I'm pleased with our financial performance the resilience of our business model and our organizations response to these unprecedented times, we will continue to stay close to the rapidly changing implement implications of the pandemic and both near term operations and longer term trends and are prepared to successfully manage all aspects within.
Our control with.
With that operator, please open the line for questions.
At this time I would like to remind everyone in order to ask a question. Please press star and the number one on your telephone keypad. Your first question comes from the line.
Rick.
From Baird. Your line is open.
Yes, good morning, and thanks for the question.
Just a couple of things and maybe we'll oh, well I'll direct this involved but can you are welcome.
Could you could you tell us some color maybe around.
Incremental gross margins here.
With with the mix benefits and I know koppers kind of moved around for Europe, and mostly favorable, but maybe turning against us a little bit, but again, the incrementals you're kind of suggest.
That as we move into 21.
Our gross margin can comfortably kind of ensure both 40%.
And I'm just I'm, just curious if I'm missing any puts and takes there maybe like this but maybe you could just throw some color on that.
Yes.
Object can barely hear you I don't know others.
Can you hear me now.
Yeah, that's better for sure sorry about that Mike problem. So I think you.
So I think you addressed the mix comment which is certainly relevant if you look over the last.
The last eight or nine quarters consistently we've been able to generate.
Generate gross margins in the upper quarter of that upper half I should say of that normalized 36% to 40% range. So I think you'll continue to see that tightening when you speak to incrementals in the quarter I think just on paper the incrementals appear pretty robust and Juicy. That's one of the reasons is as I had mentioned in the prepared comments just reminding.
<unk> of the prior year, a discrete item and so when you effectively normalized for that had a that that headwind to you.
Headwind a year ago, the incrementals really fall into that 30% range, which is very consistent with what we've talked about as kind of a long term increase.
Incrementals decrementals for the business. So I think once you normalize that juicy incremental on paper to reflect that onetime item I think you'll see they fall very close to where weve anticipated now to your comment on you know the ability to continue to drive margins north of gross margins again, north of 40% I think I've consistently.
We've been on record that certainly mix is a driver and we continue to see that so I do see that tightening of the range in the gross margin performance at the same time I I like to always remind folks that we still at the end of the day operate a in up in an oligopoly in the marketplace and well while rational we're part of a a narrow set of competitors.
It is and I think that that constant competition within that narrow set of competitors continues to drive that.
To drive that constant expansion down over time, so I think you're right in terms of that Incrementing north.
But I just I caution against this kind of stairway to Heaven concept that we've talked about in the past.
Okay I understand and then just as a follow up Ken if I look at.
The second.
Third quarter revenue and 19.
You know versus the second and third quarter revenue in aggregate in 20.
And I, just kind of stack those comps, what which kind of falls out of it is about <unk> point and a half.
<unk> growth.
And a year over year and I'm just you know what's your perspective on that I mean, the suggestion is that maybe things are accelerating you kind of mentioned that maybe mid single digit type of.
Growth coming out of you know into the third quarter, but I'm just I'm just kind of curious you know when you stack the comps and kind of you know try.
Try to try to factor out.
You know the cobot impact here on the business is it is it your sense that we are accelerating off with this kind of low single digit type of trailing growth maybe into the into.
Into the mid single digits year.
Eric So.
You look at the impact of our industry. We've said this I think several times you know when when it can be uneven and sometimes you get these periods, where it may be down and it doesn't react to a situation like cold calls I'd like a stack bar. So what happened in Q2 doesn't just roll back in Q3 and Q4 so.
The previous quarter to that we were 6% Q4 last year, we were 8% here, we would have been mid single digit this quarter, yeah, I feel I feel pretty comfortable that where we've moved into this.
Back to the near normal state of of mid single digit growth for for utility.
Okay, Okay fair enough.
That perspective is over a multiple quarter horizon, yeah, yeah yeah.
Okay, Yes fair enough. Thank you.
Sure.
Your next question comes from the line of Nathan Jones from Stifel. Your line is open.
Good morning, everyone Mark.
Good morning.
I can maybe I could just follow up on a they go what is the life. It doesn't sound like that very widespread but could you give us a little bit more detail about what customers are saying on the old the delays kind of how long the delay.
Ladies that you're saying how widespread that.
And do you think that's something that's going to correct itself in fairly short order or is that something that utilities are waiting to see what their budgets are going to look like next year with some potential revenue headwinds from kind of it and things like that.
Yeah, Nathan so it's it's mostly on the bid side not the order side. So the orders are again back to somewhat of what we think and near normal and on the bids it's been it's been.
Mostly what we hear is it's a matter of months not a matter of year. So these aren't these aren't long term deferrals. Its generally around the fact that you know it's still somewhat inefficient people arent all working together, so so being able to do a really solid bed, sometimes a little more difficult with people being remote not us, but any customers. So so in general we have.
Seen some beds.
Moved to the right, but it's really not been enough to be.
To be concerning.
So your view of that is it's really more kind of a disruption and disruption.
Yeah, I would I would say that that you know we we obviously are spending a ton of time feedback in the field with our customers.
Bob and I and the leadership team here engaging constantly with our sales force and yeah that I would say that is generally the case.
I think.
Got it.
I was just gonna say I think you know Ken's comments are really addressed on kind of the sequencing and pacing of Q2 to Q3 to Q4.
Your question I think was maybe reaching a bit more into 2021 and budget cycles and clearly we've all acknowledge the challenges that exist in that space, but I think coming back to the point in the prepared remarks, and then just some.
Just some of the discussions we've had you know is this concept of we have a very diverse customer base on the water utility side of the business and each utility need is different. So there is not a one size fits all single response, and I think just like a static metering adoption and am I preferences vary utility the utility I think the budget response.
The attitudes towards cost containment versus non revenue water management and other other trends as different utility to utility and Thats, what we see playing out.
Yes, I certainly hearing that betas are now the number one thing on the block for for cutting spending.
Maybe when it comes to expenses in your own business you mentioned in the press release. This morning at this and lower travel and type in related expenses.
Do you assume that they're coming back into the business at some point you are seeing some rising copper prices here.
It's about 30% incremental margins and.
Some expenses coming back into the business should we expect you guys to be able to maintain that kind of call it 30% incremental.
Spot some of these expenses coming back into the business in the shelter yes.
Yes, Nathan I would say the short answer is yes, and you know we like every other industry. Every other company you know we've really learned a lot about what can be done now without travel and entertainment expense and how effective some of these.
Technology tools have become too to conduct business. So we certainly will be very prudent as we as we continue to analyze which of these which of these trends are going to stack and in which of these are still going to require going out to to visit people. So we've been working very closely with our customers and and you know we.
Go in and we see customers whenever they want to be seen we follow all the safety protocols. So you know some of that some of that activity has occurred.
But clearly we are we will keep a close eye on making sure that we can continue to conduct business the best efficient way possible going forward and maintaining that margin.
Excellent thanks, very much for taking my questions sure.
Andrew Buscaglia from Berenberg Your line is open.
Hey, guys.
Could you talk a little bit about your.
So you're generating a lot of cash these days.
Kathryn cash position is pretty high.
And I know you've talked about more.
In M&A in the past papers to update us on anything going on there, but secondly, what are you what are your plans to do with your.
Cash you know its building pretty robust.
And you talk a little about investing in.
Investing in digital solutions, maybe you can talk about where you are investing specifically.
Yeah. So so Andrew you know our capital allocation priorities clearly based on the strength of our cash balances and balance sheet are clearly intact. So one we're going to continue to invest in internal R&D. We've got some great projects that we continue to work on on the meter and communication side a week.
Also our investing and developing out some of our own internal software capabilities to augment the beacon platform.
Second is increasing dividends in line with earnings. So we did increase our dividend again for the twentyth consecutive year and thirdly of course is the M&A piece and coming into the pandemic. We we have a strong funnel of opportunities that we're excited about that that we're talking to not auctions. So they're not time.
Around so it's been it's been nice and that way that we've been able to maintain communications, although traveling out of course has been difficult, but we still believe we still have a really strong funnel of opportunities that that are actionable and it's just trying to get through diligence and being able to get them over the finish line that that has primarily been the challenge so our capital allocation.
Some priorities remain the same we would like to be moving down the path that we have stated before of perhaps adding water quality to our water quantity strength, perhaps adding more and more data and analytics, which of course the market is continuing to look for more out so capital allocation priorities are the same.
Do I wish we could go faster sure, but that's one of the that's one of the Rugrats of Covance.
Okay, Okay and.
Are you talking about seeing some acts.
Seeing some acceleration here with the smart water metering.
And you put together a pretty good quarter is there anything any reason to believe you.
You are picking up some share gains here or are your conversations but.
Municipalities. There is there any reason to believe you could be picking up share in the future given the sort of an acceleration and want to spend on these.
These products and you guys have a pretty broad offering.
Well, yes. So first off you know as we've been pretty open about this is a very difficult market to take share and so am I extremely confident and the product offering that we have that we're providing value to our customers with with our choice that we offer with whatever kind of meter they want whichever type of communication platform and provide.
Moving them with with data that helps them monitor and operate their business I feel great about that do I think we're winning share I think we're certainly holding our own and doing quite well.
Got it thank you.
Bob sure now from RBC Your line is open.
Thank you I I have a an interesting question for you.
Smart water systems represent to my opinion, one of the great growth opportunities that we have here.
Sensors connected devices basically meters that we have especially for one of the biggest pain points, which is what.
Water leakage in aging infrastructure I was wondering if a badger has been working on ways to using sophisticated acoustical devices for example to.
Fine the leaks to identify changes in pressure that can predict a major water break or other problems here.
Yeah, Hey, Bob. Thanks, Yes. Good question. So you know as we continue to to take the stance of being the innovator in this market one of the things that are that we are excited about that we released last year. In fact was the three and four inch E series ultrasonic meters that comes standard with the pressure and temperature sensors that.
Then that then gets communicated through our Beacon system, you know enough credit pressure of course can be an indicator by pipe failures temperature can also be an important factor and as I was just talking about with what we're looking to invest in organically in both through M&A. That's in the lane way a of your question. So the obviously smart.
Water smart metering are critical to operations and I think we've got a really good position with our brand name our customer relationships and ability to offer those those services in the future.
All right. Thank you.
You are welcome.
Again.
A question Please press star and the number one on your telephone keypad.
Income from betting 10 Scattergood your line is open.
Great. Thanks for taking my question.
Sure.
You've been good pretty comprehensive already but I did have a couple more so one thing hum.
I wanted to chat about warranties, I mean, <unk> warranty charges I mean, that's a fact of life and the meter space you had one in 19 you had one in 16.
And are there any issues there we should be thinking about you know as it relates to everything you've been through this year.
Factory interruptions, not only for yourself, but for component vendors and then you talked about the shift to new technology. There is always some some things to work out anything there that could arise as we move forward.
Well to your point in any industry, you're going to have warranty charges from here and there, but there is not anything that that I think is substantial that anyone should need to be concerned about.
Okay fair enough and the other one.
You know at last call second quarter call can you talked about you know the whole federal infrastructure Bill and I guess your take was that it would be a positive. It if it was executed quickly and efficiently, but but maybe less so if it was you know dragged out a process was dragged out and created uncertainty about about funding and so forth.
And any update there I mean, obviously were days from the election now and any update there on what you're thinking customers are thinking in terms of how this could shake out in the next 12 months, whether this could be a positive or or Uh huh.
What kind of the prevailing view as in the marketplace on fed.
No stimulus.
Can you tell me who is going to win.
[laughter] I, Okay shoot all right. So you know.
Again, it's one of those things where true.
Truly anytime there is an infrastructure package for the long term, which we continually beat the drum on it's going to be good for our industry and it's going to be good for US you don't it gets into so many different factors of is it a democratic sweep and then they can just do whatever they want fast perhaps that could be good is it Republicans share the center.
Then there's the gridlock as 10 happens to be I can't predict the myriad of things that will come out of it but I do believe that there that there is a I do believe that there is a general feeling that the country wants and needs infrastructure stimulus.
But again I'm, just going to I'm going to hope that when it happens it happens quickly, but either way, it's going to be good for us for the long term and I still.
Completely believe in the fundamentals of what we're doing in smart metering and smart water that we're going to be OK, regardless of what happens, but it can be helpful.
Got it okay, well thanks for your time and congrats on a great run from stock. Thank you.
Thank you.
Your next question comes from the line of Rick Eastman from Baird. Your line is open.
So going back again [laughter].
Quickly when you look at the utility business in beauty business can you give us a sense of you know the the six and eight inch ultrasonic meters kind of coming to market, which was the commercial business.
Piece of Muni water.
Did that grow older residential.
He was here.
He bump here.
On the newer product introductions, yeah. So.
Yeah. So you had mentioned six and eight inch so that those are not a new launch for us yet.
Obviously, something that's in the funnel, but when we talk about Q3, standalone residential outpaced commercial but that often flips quarter to quarter. So I wouldn't necessarily draw too many conclusions from that but clearly the current quarter growth was driven more by residential than commercial.
Got you Okay and then he just one last question just around the the flow business. The industrial flow business. You know as you look at that business here and you talked about staying lower for longer thing, which is understandable.
You kind of like getting any sense that that business is just you know bottoming from a from a quarterly revenue standpoint.
You could make that argument when you look at it but what's your sense in terms of you know is this a a U shaped bottom for that business and <unk>, you know kind of stabilize down here.
Yeah. So so in a in all honesty on this one just once a little more difficult for us to predict right. We have a great handle on on the the smart meter market, but you got to remember flow instrumentation for US is a series of small you know small.
Small playing in an oil and gas and Petrochem and auto and.
And and wastewater H. faci, and what we see in and waste water and H.B.C. sustainability that.
That was down less and even petrochem as Ben has been okay, but then the oil and gas auto Aero are are more damage. So it's hard for us to give you a straight answer is we feel on on the utility side, but I think.
I think its a.
I think it's probably bottomed I mean, we we revenue we were slightly up from Q3 versus Q2 order activity is a little higher the other thing about that business now that I'm rambling on in the bet is that that's more global in nature for us. So as we saw the pandemic sweep across it it started in Asia, where we have some Asia revenue for fundamental.
And then it hit Europe next then it hit the U.S. snacks and now you've got the resurgence of cases, so I'm pretty comfortable saying, it's going to be lower for longer I'm, not pretty comfortable being able to predict what and when I do I do think you can think sequentially Q2 was down 22% year over year Q3 down 18% year over year I do.
I think we think that that pace of decline moderates in the short term moving forward.
Yeah. It's.
It's still clearly lower clearly lower for longer.
And as that business starts to come back and you know we can all look out to a positive year over year quarter somewhere.
So how how the impact on the gross margin as that business you know it starts to approach some sort of year over year growth rate.
Would it be accretive to the gross margin.
Yes, I think you we've talked about this a little bit last quarter, Rick that you know really where we stand today is there is not a tremendous amount of margin differential between the two product lines. So growth in one decline and the other it doesn't necessarily have an oversized impact and so really there they're very similar margin gross margin profiles when you compare municipal water.
Versus flow instrumentation product lines, so I think.
I think that answers.
With you again with the assumption that down sales means a decremental there.
No for the current time, so as it as it rebounds.
Had a nice rebound on the gross margin there with volume.
It is one dollar for dollar as yet.
Okay, all right very good thank you again, and a tremendous quarter and that's nice work. Thank you.
Thank you.
Tate Sullivan from Maxim Group Your line is open.
Well thank you.
Thank you for the comments and on the Muni water revenue growth year over year very impressive I mean, it's usually a smaller portion, but any bump from international or was that all most all U.S. driven that revenue growth rate you can yeah, yeah, U.S.U.S. driving that that's the majority of the activity anyway that the international is.
So small even if it was a percent growth it would sound great, but it's it's U.S.
Okay. Thank you and then more if you may on the Beacon sales cycle, who is not selling beacon to existing customers that it's still dependent on getting the newer water meters inside homes or can you do something on the water main lines or can you talk about the beacon sale cycle does it have to go tail together with selling bulk new sales of water meters.
It now so it doesn't need the sale of a meter but it doesn't need the sale of an Orion radio. So if you have a fully installed meter base you could decide a utility could decide to come back and buy the cellular radios and then upgrade what the the Beacon software as a service package.
Typically what we see as the full am I bid where people do go out and they're looking at you know up.
Upgrading the meters. So they can capture their non revenue water upgrading the communication. So they can get the efficiencies of of and safe operations and efficiencies of getting billing reads and getting all that other information. So normally it's full but it doesn't have to be but.
But also trade at the same time. Your question mentioned that you know the assumption that the radios are only at the at the at the cash Register at the metering point. There are other use case applications within utilities, where our cellular radios are being used on supply lines as well as hydrant hydrants elsewhere in the distribution network. So it's not just a a use case in.
The home or in the commercial business can also be used on supply lines or other points within the within the distribution system.
Thank you that's it that's all I was wondering and then also on that you you quantified for the percent of revenue would be can you you off for that today or is that a similar to what you've said historically yeah.
Yeah. So so 2019, if you recall it was roughly 4% for the year and it has continued to grow this year.
Okay and then.
And then on integrating water quality and my last one thank you for that and integrating water quality.
Capability into existing meters or future meter sales does that could that be internally developed are still mostly driven by M&A.
Yeah, you know so it's one of those things where it could be internally develop but it could be faster with M&A. So so that's kind of answering it both ways, but.
Perfect. Okay. Thank you very much.
You're welcome.
There are no further questions [laughter] present.
Great well. Thank you all for joining our call today for your planning purposes, our fourth quarter full year 2020 call is tentatively scheduled for Friday January 29, I'll be around all day to take any follow up questions. You might have have a great day. Thank you.
This concludes today's conference call.
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