Q2 2025 Badger Meter Inc Earnings Call
Ladies and gentlemen, welcome to the second quarter, 2025 Badger meter earnings conference call.
After the prepared remarks, there'll be an opportunity to ask questions. If you'd like to ask a question you can do so by pressing star, followed by the number 1 on your telephone keypad.
Speaker Change: It's now my pleasure to turn the conference over to Barbara noverini head of investor relations. Please go ahead.
Barbara Noverini: Thank you. Good morning and thank you for joining the badger meter. Second quarter 2025 earnings conference call. I'd like to introduce myself as the new head of investor relations.
Barbara Noverini: With me on the call today are Ken bachor.
Bob Rockledge: Chairman president and chief executive officer and Bob Rockledge Chief Financial Officer.
Bob Rockledge: The earnings released and related. Slide, presentation were made available this morning on our website quickly. I will cover the Safe Harbor. Reminding you that, any Ford looking statements made during this, call are subject to very various risks and uncertainties. The most important of which are outlined in our press release and SEC filings.
Bob Rockledge: On today's call, we will refer to certain non-gaap Financial metrics our earning slides, provide a Reconciliation of the gaap to non-gaap financial metrics. You used with that? I'll turn the call over to Ken.
Ken Bachor: Thanks Barb.
Ken Bachor: Earnings call, I'm pleased to report another quarter of record sales and solid Financial results, that demonstrated disciplined execution and the durability of the drivers that support techn technology is actioned across the water industry.
Ken Bachor: against difficult comps in the prior year, quarter sales, grew 10% year-over-year for 5%, excluding the Smart Cover acquisition,
Ken Bachor: Despite trade related cost, headwinds gross margins continued, to Trend above our normalized range of 38 to 40% and we generated robust free cash flow in the quarter.
Ken Bachor: Halfway through the year. I remain encouraged by the resilience of our business, as we faced ongoing macroeconomics trade and policy on certainty.
Ken Bachor: Our proven history of differentiated operational, execution, combined with ongoing customer demand and momentum and Technology adoption Trends positions us to successfully navigate this near to near-term uncertainty while supporting the long-term goals of our customers.
Speaker Change: Thoughts on blue edge, and our Outlook. Go ahead.
Thanks, Ken and good morning everyone. Turning to slide 3 total sales of 238 million in the second quarter of 2025 representative increase of 10% year-over-year or 5% sales growth, when excluding just over 10 million dollars in sales from Smart Cover in its first full quarter of under our ownership.
Speaker Change: Total utility water product line, sales increased 11% year-over-year or 6%. Excluding smart cover.
Speaker Change: As expected moderating core sales growth from recent double digit levels was primarily a function of the difficult second, quarter sales comparison, which was the high water mark for the prior year.
Speaker Change: in the quarter, we delivered higher sales of meters Beacon, Software as a service, water quality, and remote Monitoring Solutions,
Speaker Change: Sales for the flow. Instrumentation product line were essentially flat year-over-year as lower demand in the de-emphasized array of Market, applications offset, modest growth in water, related and markets.
Speaker Change: Turning to profitability operating earnings increased 8% year-over-year to 44.9 million with operating margins down, 40 basis points to 18.8% from the prior Year's 19.2%.
Speaker Change: The structural mixed benefit of Technology. Adoption by our customers continues to benefit gross margins, which expanded 170 basis points to 41.1% in the second quarter from 39.4% in the prior year quarter.
Speaker Change: As expected. This did represent a sequential decline from 42.9% in the first quarter of the year, which you'll recall was the result of favorable customer and product. Mix that quarter, that did not repeat this quarter.
Speaker Change: Gross margin in the second quarter of 2025 also continued to benefit from ongoing. Operational excellence initiatives while recently implemented, price increases partially mitigated, certain tariff related cost pressures in the quarter.
Speaker Change: Year to date. We have adeptly managed, the controllable aspects of the known tariff landscape. However, the trade environment remains fluid
Speaker Change: As an example, copper prices, recently spiked on copper specific tariff. Concerns
Although we primarily use recycled brass in our Ingot recipe, secondary markets like these do experience. Ripple effects when the primary commodity is impacted
Speaker Change: Last quarter, we walked you through the manufacturing and supply chain footprint supporting our Us sales, along with the Tariff related, exposures and mitigation efforts.
While announced in rumored, tariff rates by country and commodity continually evolve our underlying tariff related exposures, and mitigation actions remain the same.
Speaker Change: Most importantly, we continue to see the competitive playing field as level in terms of both exposures and planned mitigation actions including any potential targeted pricing actions.
That said, the ongoing trade uncertainty and lag impact of mitigation actions. Once again prompts us to leave our normalized, gross margin range of 38 to 40% unchanged for now.
Speaker Change: Despite another quarter of gross margin performance above 40%.
Sea expenses in the second quarter were 52.9 million. An increase of approximately 9.1 million dollars a year over year. Due primarily to the addition of smart cover, including 1.6, million of intangible asset amortization.
Speaker Change: Excluding the acquisition sea expenses. Increased 3.3 million, the result of higher Personnel costs to support growth and approximately 1 million of deferred compensation. Expense resulting from the year-over-year change in stock price, that is unique to this quarter.
Speaker Change: The income tax provision in the second quarter of 2025 was 24 and a half percent modestly prior Year's 23.8%.
Speaker Change: Consolidated EPS was a17 versus a12 in the prior year quarter.
Primary working capital is a percent of sales at June 30th. 2025 was 21.8% consistent with the prior quarter end and about 200 basis points better than a year ago.
Speaker Change: Free cash flow increased. 19% year-over-year to 40.6 million largely due to higher earnings and working capital, differential, between years.
Ken Bachor: With that, I'll turn the call back over to Ken.
Ken Bachor: Thanks, Bob. Next, I'd like to talk about the progress we've made.
Ken Bachor: It a reminder blue edge is the brand that unifies the comprehensive Suite of products and solutions that enable our customers to manage their water and wastewater systems beyond the meter.
Ken Bachor: In June our booth at the ace trade show Endeavor, which is our industry's biggest event of the Year. Highlighted the various use cases of our extensible Solutions and included smart cover for the first time.
Ken Bachor: Which brings the power of our Beacon Software to utility field personnel, and we introduced Cobalt, which leverages machine learning for advanced insights within our preaching platform.
Ken Bachor: Our booth was the physical representation of our Evolution beyond the meter.
Today our blue edge portfolio of Water Management Solutions, provides tremendous value to customers. And it was exciting to see the energy in our booth, as well as the enthusiasm that both long-standing and soon to be new customers have for our solution.
Ken Bachor: While it's only been a year since we've launched this concept, we've already seen meaningful momentum in our efforts to inform utilities of the advantages of our flu. Exclusions
Ken Bachor: Furthermore, we've elevated our already strong reputation as a trusted partner.
Ken Bachor: A long-term relationship with us. We that will be there to enable our customers as they evolve and plan for the future.
Ken Bachor: We're seeing increasing numbers of rfps that ask for Solutions, beyond the meter and our offering elevates our standing in the bid process while providing tangible reasons for us to continue our partnership with customers post sale. Even after their Ami, projects are complete
Ken Bachor: In summary we're very pleased with the strong. Start to the evolving aspect of our long-term strategy.
Finally, turning the yellow. We routinely highlight that our business can be uneven quarter to quarter and year to year. It is simply the nature of the business. Giving utility replacement Cycles project deployment schedules project phase in Phase outs, Etc.
The difficult second quarter comparison from a year ago that Bob discussed earlier is just 1 example of that phenomenon.
Ken Bachor: Another example is that we did have a number of Ami projects wrap up in the second quarter.
While we already have new Ami projects in hand to replace them. The timing of the start of those projects is such that we expect absolute sales to decide sequentially in the third quarter of 2025.
despite the moderation in sales, we still expect sales growth year-over-year, excluding smart covers
Nevertheless, despite the macroeconomic trade and policy uncertainty. We've experienced here today. The multiple long-term secular Trends fueling growth where we are positioned in the water industry remains strong.
Our core products and solutions are critical to the operations of a water, utility commercial and Industrial customers.
Ken Bachor: As a reminder, the meter is the cash register of the utility and remains a priority for investment.
Ken Bachor: Thus our ongoing conviction and high single-digit Revenue growth. Over the long term is underpinned by these enduring favorable industry from fundamentals.
Along with customer order and demand Trends project Awards pending in future RFD activity and the competitive positioning of our broad, portfolio solutions, to best, address water challenge.
Ken Bachor: We continue to generate strong cash flow, and retain a balance sheet with significant financial flexibilities. Withstand macroeconomic pressure while pursuing both organic and strategically relevant inorganic Investments.
Ken Bachor: All while paying a dividend that is grown in line with earnings for over 3 days.
Ken Bachor: After nearly 6 months of integration, we remain on track to deliver the anticipated sales and cost synergies associated with the Smart Cover acquisition.
Ken Bachor: We made tangible progress in leveraging. Badger meter resources across smart covers, business. Continue to identify, go to market opportunities for smart covers as part of our fluid, Suite of solutions.
Finally, I'd like to call out our recently published 2024 sustainability report.
Ken Bachor: I'm proud that the collective efforts of our team allowed us to exceed and raise our targets for Greenhouse greenhouse gas intensity reduction while also delivering records of 2024 Financial results.
Ken Bachor: Our continuous Improvement philosophy towards sustainability efforts continues to produce favorable outcomes as it has across the entire business.
In summer and summary, we're carefully managing through uncertainty in the broader environment by focusing on what we can control in the near term. While diligently, executing against the long-term, strategic plan that we're confident will continue to create value for both. Our customers, and our shareholders
For that operator, please open the line for questions.
Speaker Change: Thank you, please. Press star, followed by the number 1. If you'd like to ask a question and ensure your devices are muted locally when it's your turn to speak.
Speaker Change: If you change your mind or your questions already been answered, you can withdraw your question by pressing star, followed by the number 2.
Speaker Change: Our first question today comes from Nathan Jones with stifel
Please go ahead. Your line is open.
Speaker Change: Good morning, everyone.
Speaker Change: I guess, uh,
Speaker Change: it's kind of gone up about 7 million bucks, which was
I think more than people were looking for, um, you've got an extra quarter of smart cover in there and that 1 time uh Deferred Comp.
Speaker Change: Uh, number in that.
Speaker Change: Can you talk about the other Investments that have been made there to to support future growth? I guess and X the the million dollar um right up of Deferred Comp is this kind of 52 million a new level of sgna that we should be expecting going forward.
Speaker Change: Yeah, I think you picked up on. I think the 2 main pieces that are relevant to the coordinates and certainly yes.
Speaker Change: 4 3 months of smart covers sea run rate. Which of course we mentioned at acquisition is above line, average, organically. And then when you add the intangible amortization to that, which again, we've sized for the year and the quarter, uh, that that's certainly an element of that uptick sequentially. You've also picked up on the very unique item to the quarter that being the Deferred Comp expense to the tune of about a million bucks. So absent. Uh, you know, those items essentially, uh, sea growth, uh, year-over-year is up 2 to 3 million dollars and it's ongoing investment to support the wonderful things that we're doing in the marketplace in terms of continuing to evolve our software offering to keep it leading. Uh, Best in Class to continue to bring Innovative, uh, product development to Market that differentiates. Not only our meter.
Speaker Change: To cash products but are around uh the meter Technologies and continue to drive adoption of those Technologies which remain very early stage in terms of us and North American Water, Utility, adoption. And so, yeah. I mean those are those are pieces of it. Obviously, we don't guide but you've picked up on the outliers that would help to inform your outlook moving forward.
1.6 million of intangible amortization is any of that, um, like inventory step up, or something that goes away? Or is that what you expect to continuing level of amortization, to be?
Speaker Change: Yeah that is entirely the intangible asset. Amortization the inventory step up that was a small amount in the association with the acquisition passed out in the first quarter. So essentially that's the continuing run rate for the life of those varying lived intangibles that we disclosed in the financials.
Speaker Change: Okay. So there's no reason to expect it to be less than 52 million in the, in the sgna line, going forward.
Speaker Change: Yeah, we'll leave that to to you to figure out but ultimately you've picked up on the 2 unique pieces. Yep.
Speaker Change: Fair enough. I, I guess then maybe you could.
Speaker Change: Provide a little bit more color. I mean, you answer a few of the things that Bob, but just on what, uh, what kind of, uh, capabilities, let's not call them expenses. We call them capabilities, have been added to the business to support future growth.
Speaker Change: Yeah, so so Nathan, as you know, you reflect on the past 5 years, I, it's probably not fair to think about it because due to 2020 was the co quarter, but we're up 165% Revenue.
Speaker Change: So some of it is just a random things of continuing to increase capacity on some of the, the product lines that that we continue to invest in some of it is investing. And, of course, people as we go through our 5 years strategic plans every year and we look forward on, you know what, what the new skills and new offerings are, we're going to have sometimes that drives
investing in different kinds of skills that we currently have today continuing to invest in our software business, that we're totally excited about. So all the things that we've told you over the years that we're investing in to grow, it's just a matter of continuing continuing to do that and and frankly we still feel taking the smart covered piece aside. Our ability to grow at a rate faster than our investment in Sea. Um is is uh is still that that still is intact.
Speaker Change: I think that's the key there is that there's there's nothing unique about the rate, there's nothing unique about the rate of investment in this quarter, anything different than what we've been doing for the last 4 or 5 years. In terms of our primary uh cash Capital, allocation priority of organic investment in the business. It's just the way I think it's sequencing on a year-over-year basis and in concert with those 2 unique items that you mentioned to start your question.
Speaker Change: Great. Thanks very much for taking my questions.
Scott Brown: Our next question comes from Scott, Brown with C Port research partners.
Speaker Change: Please go ahead.
Speaker Change: Yes, uh, hi. Good morning. I have a similar question to Nathan. Just want to maybe
On the sea that the 1.6 million stays but the 1 million a variable Deferred Comp is unique to the quarter. So am I to infer that? That means that that goes away next quarter.
Speaker Change: Not in its entirety. But when you experience a quarter where the stock price goes up over fifty dollars from beginning to end and you have liabilities Associated that, that track that there's going to be an oversized impact that is absolutely unique to the second quarter.
Understood done. That's clear. Thank you. But the 1 other question though, around this. Bob, you also I think indicated that if you strip those out there was a $3 million core increase. Now if my calculations are right here, that that $3 million core increase.
Speaker Change: On a year-over-year basis is about the same as your sales number.
Speaker Change: Sales increase in total, which would suggest that maybe there was a little bit more because you typically, get leverage off of that line would suggest, maybe a little bit more investment in this quarter, although you just said that was not the case. So maybe you can connect those dots for me.
Speaker Change: Um so I I think the simplest way to say this is that uh we're uh we're comparing to a quarter of sea as a percent of sales at 20.2% which is abnormally low, stripping out, all the noise in the quarter. So in essence, uh, stripping out smart cover for all intents and purposes, we'd have been at 20.7%. So yes, there is a 50 basis point increase, but that is no, in, any know, in any way different than, where we've been historically, or on in recent quarters and is still indicative of our ability to leverage sea over time. Just not quarter to quarter.
Yeah, I mean I mean we thank you for that Clarity. I've done. Yeah.
Speaker Change: Okay, so then let me just, um, ask this 1 last question. If I may the third bullet point says, that strategic price increases mitigated certain paraffin impacts, which suggests to me that you were maybe price cost negative in the quarter and then if that's the correct, assumption.
Speaker Change: Should you essentially be price cost neutral for the rest of the year?
Speaker Change: So I think you're picking up on the right Dynamic. Certainly our, our our book of business here is varies in terms of go to market. Sometimes we're direct other times, we're through distribution, sometimes we have Poe to PO pricing other times we have long-term contracts, right? The the pricing actions implemented in the quarter were implemented in. Call it mid mid April and by default they won't be effective on everything that we shipped in the quarter.
Speaker Change: To the extent tariff cost pressures remained static which I don't think anyone is saying those 2 be the case your exactly right in your diagnosis of how we've characterized the second quarter results.
Speaker Change: I think what remains to be seen and the main priority reason why we're not redrawing, a gross margin line or normalized, gross margin range in this quarter. Despite again, once again having 41.1% gross margins is the uncertainty associated with tariff costs. So the last part of your question, is difficult to answer. Not knowing exactly what the forthcoming. Uh, reciprocal reciprocal tariff. Impacts are as well as then, uh, the Tariff around Copper, which, at this time is just a rumored statement. Nothing that's been firmly implemented. And so that's the overall hesitancy to tell you that, we're going to be cost neutral moving forward because the cost side can change while equally the price side can change as well.
Speaker Change: Thanks very much.
Speaker Change: Our next question comes from Andrew Crowe with Dutch bank. Please go ahead.
Speaker Change: Hi, thanks. Good morning, everyone. Um, wanted to follow up on the comments about the Ami project in the funnel and it being a little unclear, you know, when they might start. So just, you know, is this like a change where they've been deferred, or pushed out a little bit? Or is this more normal course of business? And, you know, maybe also just generally, uh, comment on like, uni activity in general. I think there's been some fears, maybe of, like a little bit of softness there. Thanks.
That will be rolling up that.
Speaker Change: That our funnel remains as robust as ever. So, so not a concern for the long term in any way, doesn't change our view on high single digits to the cycle. Um, just just pointing out that, you know, we still expect to grow, uh, next quarter and into the future, but it's just not a stack bar from sequential.
Speaker Change: In terms of total just market demand.
Speaker Change: You know, like we always have, we continue to spend a lot of time talking to customers and several pieces of the the cycle, on, who's working with, you know, um, consulting firms on Ami projects that we'll see in 3 to 5 years. How we're doing on rfps that are currently in motion, uh, things that are that are currently being rolled out orders backlogs where every bit is bullish as we've ever been. So so customer demand side in terms of people inquiring about new projects are moving forward with projects remains largely unchanged.
Speaker Change: Okay, great. That's very helpful and then a quick clarification on the comments about sales being down quarter over quarter into 3 Q. Just was that a total sales comment or more core sales. So in other words like kind of strip out smart cover and your core dollars are down as well. Thanks
Speaker Change: Hey Andrew, that's that's a core comments.
Yeah, so the script specifically, uh, clarified excluding Smart Cover. So essentially core core growth within obviously the non-comparable
Speaker Change: Great.
Rob Mason: Thank you. Our next question comes from Rob, Mason with bad, please go ahead.
Rob Mason: Uh yes, good morning. Ken Bob, maybe I'll just pick up real quick uh around Smart Cover. Uh, so the the sales in the quarter look like they were and this is the guests, you know, the First full quarter we're seeing of smart cover, um, you know, above the Run rate of sales that they, uh, reported last, um, calendar year. So I'm just curious, you know, is that reflective of seasonality in the business is that, um, kind of underlying organic growth, um, just how we should be thinking about, you know, 10 million contribution this quarter anyway of smart cover sales. And, you know how the, um, uh, you know, maybe, uh, quarter to quarter pattern, should look there.
Yeah, so so I'm I'll make a general comment and I see Bob wanted to to, to jump into. So let me just talk in general about how, uh, how excited we are about the Smart Cover acquisition. So we've, uh, We've added about 5 months. Now, I mentioned the, uh, the great reaction that we had at Ace a lot of the feedback that we're getting within the market. So getting a lot of positive momentum from both market and just through the integration that we've had thus far. Um, I think it's we couldn't be more pleased with the results that we've had thus far in the team, that's on board. So feel great about the long-term fundamentals there. I think Bob was going to make a point on sales, so I'll turn it to him. But I just wanted to clear that
Bob Rockledge: Everything that we think that we've, uh, everything that we thought we knew about smart covers proven to be true very early on in here. Yeah. I mean, you, you hit the main point, which is, of course, I know. Everybody's immediate concern is quarter to quarter, but our long-term growth outlook for Smart Cover is multi-year, if not multi-decade, again, referencing back to, uh, you know, the sewer line monitoring portion of this business, is virtually Greenfield with very low, digital adoption uh, in the uh, less than 1 half of 1%. So essentially, we believe not only in the revenue growth in the short term, but but the long term I would say, there's this is little to do with seasonality and entirely to do with, um, advancing our positioning, as a leader, in the market and help.
Bob Rockledge: Helping you helping utilities, uh, solve primarily 4 main use cases in. What? Generally tends to be out of sight. Out of mind. In fact, underground infrastructure. That is blind spots for those utilities and so yes, we're we're pleased with the revenue growth thus far, but certainly have a high aspirations as we move forward as well.
Bob Rockledge: and,
Bob Rockledge: you know, Bob, you know, my quick math around uh, the contribution from Smart Cover at the EPS level. You know, I know this is a gap number, of course. Um, you know, it would have been in the neighborhood of kind of 6. 7 cents diluted.
Bob Rockledge: In the quarter year over year.
Bob Rockledge: Distributions, uh, shortly thereafter primarily in year 2. So as you can imagine, a lot of that is about market adoption. And the great sales opportunities and sales growth that we mentioned, while also leveraging what at the current time is an above line, average, sea business. But that we think over time provides well above line average incremental both through the combination of software attachment rate and then leveraging, the cost base.
Bob Rockledge: Yep. Um if I could sneak in 1 more real quick, just again, we'll have to see how the uh you know, tariff uh tariffs around Copper, you know, ultimately play out. But you know if you think that there could be um you know some added cost to copper ore in in that ultimately flows through to scrap brass. Do you think that could have any influence on the adoption rate between? Um,
Bob Rockledge: You know, mechanical and uh, solid state meters, I mean, does the pricing differential?
Bob Rockledge: Uh, that exists today. Does that narrow? Um, does it make the value proposition for solid state stronger?
relatively well, uh,
Yeah. So the first thing I'd I'd remind everyone Rob and I know you know this is we have a great ultrasonic line. So even if that were to happen um we think that when that certainly would not be a negative event, we could just block people up from from mechanical to ultrasonic within our portfolio.
Bob Rockledge: Uh, secondly, um, people. I know, I know there's this myth about mechanical meters and clearly we fully understand a mechanical meter can be smart too with the communications software. And there are tangible reasons why a lot of utilities still want to buy a mechanical here. So, uh, along the way, we feel that we have a strong ability to continue to, uh, to
Bob Rockledge: mitigate the cost issues and continue to sell a lot of mechanical meters, and it's almost a walk up there. Ultrasonic, we're happy to help them do that too.
Ken Bachor: Very good. Thanks Ken.
Bob Rockledge: Sure.
Speaker Change: Thank you. Our next question comes from Jeffrey Reed with RBC. Please. Go ahead.
Thanks, good morning, you mentioned your progressing as expected on Smart Cover integration, could you remind us the cost Synergy opportunity where you are today in capturing it and maybe how quickly you can expect to realize the remaining upside and is this mostly an sea cost out opportunity?
So, so, um, there, I don't I'm looking at Bob, I don't believe we ever signed these costs on opportunity publicly. Um, yeah. So I think let me just clarify. So certainly when we talk about the most dramatic and impactful synergies of the Smart Cover acquisition, it is all about commercial synergies. Accelerating what was already great Standalone, organic Revenue growth by advancing uh the connectivity of the technology to our existing installed base, whether that's direct at customers or through, uh distribution. So, a number 1 priority, from a synergies perspective, is commercial synergies.
Speaker Change: As it relates to the cost, the common I made earlier was about leveraging, an existing sea cost base. So, prior prior to Badger's ownership,
Speaker Change: Smart Cover was Private Equity owned and they were in basically Revenue. Growth boats, they invested heavily in advancing the technology and software advance and having the right feet on the street for sales. And so, they carried a higher leverage of lever level level of sea, uh, coming into our acquisition.
Speaker Change: We're not saying we're reducing that we're saying we're able to lever that as the incremental sales growth that we bring to the table, through our great access to Market and long tenured, uh, customer relationships occur. There are certain aspects of cost synergies. When you start to look at the product side, meaning the product that's smart cover sells for smart, uh, for sewer line monitoring as PCB as and has batteries in it and our component.
components that we're familiar with buying and whereas we buy
Speaker Change: Hundreds of thousands, if not millions of those parts and components smart cover in history has only, you know, has only sold smaller amounts. And we believe that we can leverage certain of those components through our supply chain and otherwise, but that is absolutely secondary to the primary Synergy, which is commercial synergies. And so, a big part of taking this from EPS decretive in year 1 to EPS a creative in years to 3 and Beyond is all about the top line, revenue growth and then not having to invest in Sea at a rate, commensurate with that great High organic above line average sales growth
Speaker Change: Metering. Maybe at a high level, how would you break down? Customer Project funding between just Munn budgets and federal support like State resolve and funds.
Speaker Change: Yeah. So, uh, so Jeffrey. There's a lot of ways that utilities have to, to fund their their projects and and remembering again as I said in the script that the the meter and Ami is effectively the cash register of the utility, so it remains a very high priority for them regardless of whatever funding may or may not be available. So of course, there are State revolving funds which may be uh, reduced some in the new bill but they still exist in the Lithia local cost interest loans are still out there in very supported by the government that federal government. And then you've got utilities have the ability to raise rates. They have the ability to issue municipal bonds.
Speaker Change: Um, there's there's a myriad of ways that the funding happens, and this is where our direct sales model gives us an opportunity to talk directly with the utilities on how they're viewing the upcoming plans. And and, uh, as you can imagine, you can always do that but we've done that even more. So in the last 3 months, with all the noise around this and continue to, uh, to remain quite positive on the ability to grow High single digits through the cycle because utilities are still talking about investing. And and they have the means to do that for where we positioned ourselves in the water industry which you know, your question isn't wrong for the water industry, but I feel like we're pretty well positioned.
Speaker Change: It should not be affected.
Speaker Change: All right. Thank you.
Speaker Change: Thanks.
Speaker Change: Just as a final reminder, if you'd like to ask a question. Please press star. Followed by 1 and your telephone keypad will just pause here.
We have no further questions in the queue, so I'll hand back over to Barbara for any closing comments.
Barbara Noverini: Thank you, operator. And thank you all for joining our call today for your planning purposes. Our third quarter 2025 call is tentatively scheduled for October 21st and I'll be around all day to take any follow-up questions. You may have thanks and have a great day.
Barbara Noverini: Thank you very much for joining. You may now disconnect your line.