Hello, and welcome to the Evoqua Water Technologies Second Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. After the speaker's opening remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star, then one on your telephone keypad. If you would like to withdraw your question, please press the pound key on your telephone keypad. As a reminder, this conference call is being recorded and your participation implies consent to our recording of this call. If you do not agree with these terms, please disconnect at this time. Thank you. I would now like to turn the call over to Dan Brailer, Vice President of Investor Relations. Please go ahead. Thank you, Brittany. Thanks everyone for joining us for today's call to review our Second Quarter 2022 Financial Results. Participating on today's call are Ron Keating, President and Chief Executive Officer, and Ben Stas, Executive Vice President and Chief Financial Officer. After our prepared remarks, we'll open the call to questions. This conference call includes forward-looking statements, including third quarter and full fiscal year 2022 expectations, statements relating to demand outlook in our end markets, growth opportunities, our order pipeline, our acquisition strategy and pipeline, integration and future performance of the Mar Cor business, supply chain challenges, inflation, labor shortages, and general macroeconomic conditions, as well as statements related to the ongoing impact of the COVID-19 pandemic. Actual results may differ materially from our expectations. For additional information on Evoqua, please refer to the company's SEC filings, including the risk factors described therein. On this conference call, we'll also discuss certain non-GAAP financial measures. Information with respect to such non-GAAP financial measures is included in the appendix of the presentation slides for this call, which can be obtained at Evoqua's investor relations website. Unless otherwise specified, references on this call to full year measures or to a year refer to our fiscal year, which ends on September 30th. Means to access this conference call via webcast were disclosed in the press release, which was posted on our investor relations website. Replays of this conference call will be archived and available for the next 14 days. With that, I would now like to turn the call over to Ron. Ron? Thank you, Dan, and thank you for joining us. I appreciate your interest in Evoqua, and I'm pleased to provide insight into our results and outlook. Please turn to slide three. We had another strong quarter of organic growth and margin expansion. Overall organic growth was up approximately 11% and Adjusted EBITDA margin expanded 50 basis points year-over-year. We are pleased to see broad diversification of organic growth across most regions and product lines, as well as double-digit year-over-year growth across aftermarket, capital, and service. Market demand is strong and our book-to-bill ratio remains above one. We see demand strength across multiple end markets, including microelectronics, life sciences, and food and beverage. ISS backlog continues to grow, up 13% year-over-year and up 6% sequentially. Digitally enabled revenues grew by almost 13%, and we continue to see solid capital and outsourced water demand. Supply chain visibility, material and labor availability, and inflationary pressures are challenges that we are managing well today. Navigating this dynamic time will make Evoqua a stronger and more resilient organization. I will speak more about this on a later slide. We have completed our first quarter with Mar Cor, and we're pleased with the initial progress. The integration is on track and the teams are working very well together. We did see a jump in net working capital this quarter in support of our strong organic order and revenue growth. Excluding Mar Cor, our net working capital sales ratio would have been 12.6%. Mar Cor brought significant working capital assets to Evoqua and provides nice opportunities for future cash generation. Our balance sheet and liquidity remain strong and we are focused on cash flow generation. Please turn to slide four. Evoqua is a performance-driven water technology company focused on delivering strong financial results. As you can see, we've delivered outstanding results across these six key metrics over the past several years. We have a talented and dedicated team focused on solving some of the world's most complex water problems, and our results demonstrate the strength of our business model and focused execution. We're proud of the progress we have made, and we remain focused on the daily actions that lead to executing our strategy. Please turn to slide five. The macro environment remains challenging on several levels, but we're taking actions to seamlessly serve our customers while driving profitable growth. This slide highlights four notable macroeconomic challenges, supply chain visibility, material availability, labor availability, and the war in Ukraine. We are also providing insight into market demand and order backlog, as well as price cost performance. Supply chain and material availability challenges have no simple fixes and we expect them to remain for some time. Our team has been nimble in responding to daily issues and focused on mitigating actions, as well as over-communicating customer delivery schedules against expectations. Additionally, we're closely monitoring COVID-19 lockdowns in China and the impacts they may have on our supply chain and the China market. Our China business grew in the single digits this quarter, which is a decline from the double-digit growth we've experienced over the last several quarters. Labor availability and talent retention challenges are confronting almost every organization. We are actively engaged in recruiting, retaining our team. We have implemented several initiatives such as trade school partnerships, university partnerships, internal development programs, and skills training, and we are seeing positive results. We've been pleased to see our digitally enabled sales grow double digits over the past several quarters, providing productivity and margin benefits. Digital connectivity and virtually being on site with customers provides tremendous benefits that pay back quickly in tight labor markets. While we hope for a quick end to the Ukraine conflict, the implications on the broader markets may be long-lasting. There has been minimal direct impact to Evoqua sales and operations. However, we are impacted by the resulting supply chain disruptions and the rise in energy costs and steel prices. Overall market demand remains strong and our order book is growing. We're seeing multiple markets with attractive growth opportunities, and we believe we're well positioned to grow. Our pricing actions have been effective as price cost has been positive year-to-date. Freight, fleet, and steel costs have been challenging, but our team's done a terrific job managing this very dynamic market. We continue to take actions and have an expectation of delivering a positive price-cost ratio for the full year. Please turn to slide six. Two key long-term financial targets are 3%-5% organic revenue growth and a 20% Adjusted EBITDA margin. This graph shows our performance since 2018 for both metrics. We're pleased with our performance, especially when considering the constraints placed on the business as discussed in the previous slide. Organic LTM revenues have grown by 9%, while EBITDA margin has increased 20 basis points since the end of 2021. On the right-hand side of the slide, we've highlighted multiple organic growth opportunities as well as levers to help us achieve our Adjusted EBITDA margin target. We're focused on profitably growing our organic business while continuing to pursue strategic tuck-in M&A targets. We expect to announce additional acquisitions in the second half of this fiscal year. Please turn to slide seven. This chart represents our third quarter expected order demand by end market compared to the prior year's third quarter order rate. We anticipate strong order demand in the third quarter across most end markets, including microelectronics, life sciences, food and beverage, and light general industries. Municipal wastewater and aquatics are improving from the prior quarter outlook, with seasonal demand driving growth across both end markets. Expected third quarter orders in the power end markets are showing a slight decline due to very strong order growth from Frontier in last year's third quarter. The refining markets orders are flat to last year based on strong comps and a deferral of turnaround services due to refinery capacity demand. The underlying demand from the power and refining sectors are both solid. Overall, we expect to see strong order demand across most of our end markets in the second half of 2022. We also anticipate supply chain challenges limiting our order conversion visibility and potentially creating order conversion delays. Please turn to slide eight. There is a global energy transition underway as the market moves to cleaner and renewable energy sources focused on CO₂ reductions. There are multiple sources of energy generation, and water treatment is involved in all of them to varying extents, particularly in biofuels. Evoqua supports many developing applications where investments are being made in renewable fuels, renewable natural gas, and blue and green hydrogen. Evoqua's legacy process and wastewater experience in traditional downstream refining and the food vertical markets are a natural fit for alternative feedstock processing and renewable fuels. Our portfolio of wastewater technologies allow our customers to treat the most difficult organic wastewater streams while also helping them to achieve their carbon intensity goals and produce a source of renewable energy. Our core process water portfolio also plays a vital role in providing utility makeup water for new greenfield refinery investments. Additionally, our Magneto specialty anodes and our Ionpure brands within the APT segment are leading technologies within hydrogen investments today and will also play a notable role in the build-out of the future hydrogen economy. Please turn to slide nine. We are very pleased to have released our 2022 sustainability report on Earth Day, April 22nd. This year's sustainability report highlights the accomplishments of our team in the past fiscal year and details our path ahead. The report matured from last year to utilize GRI core standards and SASB, both known in sustainability reporting. Creating this report was a thoughtful reflection on what we have done to date and where we want to go in the future. We look forward to further enhancing our customer handprint impact and to reducing the impact of our own footprint. The slide also highlights a PFAS handprint win within our ISS segment. The Orange County Water District selected Evoqua to provide ongoing service to remove PFAS from their drinking water systems on a two-year service contract. We will treat the drinking water for a majority of the district's 2.5 million residents. Samsung Austin Semiconductor was recognized as this year's Evoqua's Sustainability Award winner for their commitment to water conservation and reuse at their Austin, Texas plant. Our sustainability team honored Samsung and past Evoqua Sustainability Award winners with a celebration at the NYSE's opening bell ceremony on Earth Day. I would now like to turn the call over to Ben. Thank you, Ron. Please turn to slide 10. For the second quarter, reported revenues were up approximately 23% to $427 million. Organic revenues grew approximately 11%, driven by broad-based volume growth and price realization. We saw revenues increase in aftermarket, capital, and services, as well as growth across most regions and product lines versus the prior year. Second quarter Adjusted EBITDA increased 26% to $73 million for an overall margin of 17.2%, an increase of 50 basis points. Strong volume, favorable price-cost, and mix contributed to improved profitability. Please turn to slide 11. Our Integrated Solutions and Services segment second quarter revenues were up approximately 31% to $295 million. Organic revenues grew more than 11%, driven by volume and price realization. Services, aftermarket, and capital revenues all grew double-digit rates versus the prior year. Capital sales were driven by microelectronics, life sciences, and food and beverage end markets. M&A continues to be an important part of our growth strategy. We are pleased to report good initial progress on the Mar Cor integration. The integration and synergies are on track after one quarter. Our capital project and outsourced water pipeline is strong and growing. Digital-enabled revenues grew approximately 13% for the quarter versus the prior year. Adjusted EBITDA increased 29% to $64 million due to higher volume, favorable price costs. Adjusted EBITDA margins for the quarter was 21.6% down, impacted primarily by inflationary costs. Please turn to slide 12. We continue to see strong year-over-year growth in ISS backlog. Second quarter backlog was up $92 million or 13% over the prior quarter, with growth coming from both capital and services. Mar Cor added approximately $31 million of backlog as of March 31, with approximately $20 million being capital opportunities across multiple end markets. We expect to see our book-to-bill ratio remain above one throughout fiscal 2022. As Ron mentioned, we are closely monitoring our pipeline, order book, supplier lead times. Supply chain visibility constraints create the potential for shipment delays in the second half of the year. Please turn to slide 13. Applied Product Technologies' second quarter revenues were $132 million, up nearly 8%. Organic revenues increased $11 million or 9%, driven by strong volume growth. Revenues grew in North America and APAC, while EMEA declined slightly. Adjusted EBITDA increased 8% to approximately $27 million, benefiting from volume and favorable mix. Adjusted EBITDA margin was flat year-over-year at 20.7% due to operational variances and higher inflationary costs. Please turn to slide 14. One of APT's long-term organic technology that expands our product portfolio and to pursue market share gains in core end markets. We are pleased to highlight low-pressure total organic. Based off our VX line of UVs, this next generation system has a smaller footprint and combines efficiency and power required in the equipment and the processes to reduce TOC. One application of UV TOC reduction is for ultrapure water used in microchip industry. The lower the TOC, the less defects in the production processes, producing improved manufacturing efficiency. We are seeing strong opportunities across the market, especially in microelectronics, wastewater treatment and reuse. The global offering is also included in our North American ISS-built systems, as well as in systems abroad, and has a recurring aftermarket sales. Please turn to slide 15. Capital spending, primarily for outsourced water, was approximately $21 million for the quarter or approximately 4.9% of revenues, + 15.3% of LTM sales. As Ron mentioned, our net working capital to sales was approximately 12.6% Mar Cor. As a result of our strong organic revenue, we have seen increases in accounts receivable, contract assets, and inventory. We have indicated in the past, over the long term, we anticipate net working capital to sales could be in the low teens range, given some projects may have varying amounts of working capital requirements. Also, we expect to see improvements over time to Mar Cor's net working capital as we integrate the business. Please turn to slide 16. Year-to-date operating cash flow was $29 million in Q2 versus $63 million in the prior year. Adjusted net income was 47% on a year-to-date basis. Operating cash flow was impacted by investments in working capital, as I previously mentioned, to support conversion of strong backlog, growing order rates, and higher inventory to help mitigate supply chain uncertainties. Our net leverage ratio finished at 3.1x Adjusted EBITDA. As Ron mentioned earlier, our leverage as of the end of Q2 on a pro forma basis with the expected annualized impact of Mar Cor results is approximately 2.8x, well within our targeted range. Maintaining a strong balance sheet with net leverage within our targeted range over the long run remains a key priority. Our weighted average cost of debt for the second quarter was 3.5%, an improvement of approximately 35 basis points over the prior year. I would now like to turn the call back over to Ron. Please turn to slide 17. We had a strong quarter with outstanding results across most key metrics of the business. Market demand remains strong, and we are pleased with the broad-based organic revenue growth across both segments, most regions, and product lines. Our pipeline remains robust and our backlog continues to grow. We are closely monitoring macroeconomic and supply chain challenges and the potential impacts to order and backlog conversion. We're managing through a dynamic market with rising costs and material and labor availability constraints. We are pleased to have positive price cost again in the second quarter, and we're working to achieve for the full year. Through our outsourced water business and to benefit from its contribution to the ISS segment's highly recurring revenue model. We are pleased to have the Mar Cor business as a part of Evoqua, and we're off to a great start and a successful integration. In closing, we're raising our full-year outlook by increasing the low end of the revenue and Adjusted EBITDA ranges by $20 million and $5 million, respectively. We expect full-year revenue $1.64-$1.70 to $300 million, respectively. For the third quarter, consistent with past third quarters as a percentage of the full-year outlook, which is approximately 26%, as shown on slide 20 in the appendix. I will now open the call for questions. At this time, if you would like to ask a question, please press the star and one on your touch-tone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star and one if you would like to ask. Question from Deane Dray with RBC Capital Markets. Your line is now open. Thank you. Good morning, everyone. Good morning, Deane. Good morning, Deane Dray. Hey, maybe we can start with sales and earnings visibility for the second half. On a lot of, like, directional positive, price/cost positive in a tough market, book-to-bill staying above one. You did highlight some potential shipment delays and sales less on services. Just kinda take us through these potential shipment delays. You know, where are the weakest links and how are you working through them? Thanks. Thanks, Deane. I appreciate the question. You know, first of all, what I'd like to say is I've never felt better about the business. I mean, what we've seen in the end markets, the momentum, the backlog that continues to grow gives us, you know, just great confidence in what the future holds. You know, we're being balanced in the guide we're giving around the back half of the year, obviously, Deane. As you highlighted, it does only affect primarily our capital and some of our product shipments, with the supply chain issues. But still, even with some of the, you know, service opportunities we have, we need installations to happen for those service expansions to grow in the outsourced water areas and other areas. Confidence in what's coming, but we're being, you know, balanced with, you know, China shutdown, the impacts on just supply chain challenges and, like, availability, you know. We're being cautious about that. That's helpful. I wanted to go back to page six, the multiple organic sales growth opportunities on the upper right-hand side. They all look real familiar, and then these have been growth initiatives for a while. It's interesting that you list the first one, water conservation initiatives. You know, that's showing up. It's got a lot of emphasis right here. Can you just expand on that? Relates to the sustainability efforts we're seeing. Broad report, what their water use and how that's being lowered and managed. Just take us through this, and talk about the initiatives reading into, the P&L. Thanks. Yeah, it's a great question. It is at front and center in every company's mind, thinking about water conservation, recycle, reuse, doing what's right for the environment, you know, with the whole focus on ESG. Ultimately, Deane, I mean, what we see in the water conservation initiatives slides into slide seven and the order rate activity we're having. You know, if you see companies investing and being very focused on recycle and reuse, it fits very well with microelectronics, life sciences, a lot of what's happening in the more core industrial markets that we operate in. For activity that we anticipate to see in Q3 will lead to, and that's actually very robust order activity in Q3 of 2021. Very strong about all of the end markets, as we look forward, and water conservation is one of the things that's. Really good to hear. Just a quick one for Ben. On Mar Cor, just take us where do they. Working capital to sales, and how soon can you get them to Evoqua's? Great question, Deane. Thank you. They're high. It's not atypical of what I saw when I first came to Evoqua, so they're in that 20% range. Once we get them on our systems and integrated into our processes, that allows end-to-end inventory management, receivables management, et cetera. We believe that to be what we are traditionally. Obviously that's a lot of cash we can pull out of working capital and just effectively reduces what we paid for Mar Cor. We can get them on our systems, make sure that we're taking care of customers during this very difficult time. We will certainly be working that working capital down. There's some low-hanging fruit that we'll take advantage of immediately, but it's gonna take a little bit of time to get through the integration before we see the real benefits and get them down to our level. Yeah, that sounds like a great opportunity. Thank you. We will take our next question from Nathan Jones with Stifel. Your line is open. Good morning, everyone. Good morning, Nathan. Good morning, Nathan. I'm gonna ask another one about the guidance range. Did a little bit of math, and over the last six has averaged 14% higher than your first half revenue. The guidance is for the second half revenue to be 7%-14% higher than the first half there for Mar Cor. Is this really just caution around the capital shipments and potentially, you know, delays in those in the fourth- It is. We wanna make sure we're balanced, and a lot of it's, you know, tied to availability of some of the component supplies. It's not even our availability to be able to ship. It's a customer site being ready for us to be able to ship. A little more, you know, challenges with clarity on what the conversion rate is going to be is, it's not because, you know, when we're managing and our team's doing a remarkable job, we need to complete our projects. It's the customers being ready with site approval, with things that they're getting done, and actually just the rest of the infrastructure they need for us to be able to install. From Michael Halloran. Good morning, everyone. On the, you know, a lot of what we've talked about here is just not understanding backlog delays, timing in the environment, et cetera, are more engaged than a year ago because of the complications they're seeing and the labor challenges out there. Do you think this is just still an iterative progression that just continues to be a positive one? Yeah. Mike, honestly, customer and I would, you know, even in my opening remarks, I made the comment that being digitally connected and on-site virtually in a tight labor market creates a pretty quick payback. The value prop of what we've rolled out with our strategy over, you know, the past three to four deployment is absolutely coming through. Because I think what you'll wind up having now is making sure that what we're delivering to customers, they're actually able to take. You know, the value props there is with their transition or at least with their site that they're preparing for us to be able to put it on site. Thanks for that. Just on the capital priority side, obviously, some nice moves you've made recently here. How are you thinking about what pipeline looks like externally, ability to be aggressive if the right transactions come and kind of balancing that with your targeted leverage range and all the initiatives you have internally? Yeah, we still have a very robust funnel of tuck-in acquisitions and acquisition opportunities. We're executing off the balance sheet where it is our capability to do it and we're, you know, continuing to execute on that. Appreciate it. Thanks for your time. Thanks. We'll go to Andrew Kaplowitz with Citi. Your line is open. Morning, guys. I was hoping you could talk a little bit more about the, I know this comes up every quarter, where we stand with that in terms of data points you're tracking and eyes on for in terms of, you know, potential catalyst to any- Yeah, I mean, that was one of the things we actually highlighted on the sustainability slide with the PFAS win that we've received. I would say, Andrew, it continues to where you have certain water districts that are moving faster than others, still waiting on, you know, the final MCLs to be set and what level they're going to be treating to, but we anticipate that, you know, will be coming in the next 12 months. I think stay fairly consistent at what we've seen, where it's, you know, north of $100 million, and we typically are winning about a 1/3 of the applications that we're going after. Okay, got it. Then you know, secondly, like, yeah, I know that you got a lot of questions on that given the level of conservatism in your guidance. At this point, what is the conservatism just to reiterate is around you know what you expect in terms of supply chain issues and being able to deliver products relative to delays around. Yeah, I guess, why wouldn't that be converting in the back half if you now finally have those out of the way? Comment I made earlier on Nathan's question, I think, and it's around customers being ready for us to actually deliver. You know, we've historically had a little bit of COVID delays because it was site access and getting on site. Now that, you know, we have site access capabilities, we can get on site, it's customers having their operation ready for us to actually deliver. It's a lot more that than it is us actually having the components to develop our own or to complete our own products. We're able to manage that much better than, you know, the larger systems that a customer is putting in that our water system goes into. Ben, you wanna comment on the backlog? Yeah. Andrew, as you can see in our working capital, we've prepared ourselves to be able to deliver. There's, you know, obviously potential for upside. We wanted to take a measured approach for the very reasons that Ron talked about. There are certain things that are not in our control, and also on the macro front, there are certain things on the macro front that aren't in our control, such as the potential for China lockdowns, et cetera, that we just have to keep our eye on. We're so very ready to take potential. Got it. Okay. Thank you, guys. We'll take our next question from John Walsh with Credit Suisse. Your line is open. Hi. Good morning, and thanks for taking the questions. Hey, John. Hey, I guess maybe first just following up on the PFAS line of questioning. You've obviously highlighted a lot of demand at different water districts. Mm-hmm. We've seen some, you know, food chains and packaging manufacturers say they're gonna remove it from, you know, their products. Are you having conversations with manufacturers that they wanna actually start installing systems as well as the water districts to treat for as a contaminant? Yeah, John, we have actually had conversations with that with various manufacturers of different types, where they feel like they're coming off site, so they want to do some pretreatment. It's still on that, though, I would say it's still pretty early days. The water districts have moved much more quickly on this because frankly, they're testing for PFAS. They see it in, you know, in their aquifers and in their wells, and they wanna make sure that they treat it before it gets to the drinking water plant. But I do think you'll see that emerge more with actually industrial operators paying attention to what's happened in their water system because they're gonna wind up cleaning soil as well. Great. Maybe just looking at slide five, obviously you highlighted being positive price cost in Q1 and Q2. It looks like the language here is working to achieve positive price cost for the full year. Do you need more price or just can you unpack that a little bit, just the confidence you have in getting the price cost positive for the full year? We have confidence that we will deliver a you know price cost ratio that is positive for the full year. We watch commodities with regularity, and we've got a you know very disciplined pricing approach that we've had for the last several years that's paying off now. You know, again, it's the operating execution that the team has delivered on that they're able to drive price. Some of the challenges we still have, though, is making sure that we're getting the price high enough to see the margins fall through, and we've had a little margin impact on that as well. Yeah, Ron. Just to add, we've, if you really look at our margin, we're very proud that we've been able to continue to expand EBITDA margins during these unprecedented inflationary times. Great job by the team as well as the strategy in terms of mix that has helped that, including outsourced water. If you adjust for the net impact of price cost year to date and for both quarters, that's been about a 70 basis points drag on our EBITDA margin. That's pretty impactful. It just shows the overall impact of the strategy when you take that out. We're proud to be able to expand it, price cost, but we're also cognizant as there is a drag associated with price cost on margin, even if we stay ahead on price versus cost. Yeah. That led to the comment I made, John, on, you know, our EBITDA target of 20% Adjusted EBITDA and being a little delayed in the progress there, but still making progress, which is great during these times. Yeah. Yeah. No, that's great. Really appreciate you taking the questions. Thank you. Thank you. We'll take our next question from Brian Lee with Goldman Sachs. Your line is open. Hey, guys. Good morning. Thanks for taking the questions. Maybe just to stay on that margin topic for a moment. You know, speaking of the margin progression, you know, if I look at the guidance, EBITDA margins, I think you're implying are up roughly 20 or 30 basis points versus second half EBITDA margins from fiscal 2021. This quarter, ISS was down a bit, APT was flat. How should we kind of think about where you get that year-on-year margin expansion in the second half across the two segments? Can they both sort of, you know, get to year-on-year margin expansion exiting the year? Well, it's gonna be tougher in the second half as prices continue to rise with costs continuing to go up, as I mentioned earlier. On the other side, you know, we do have some healthy programs in place, particularly in the area of outsourced water, as well as a good mix with microelectronics and some of the capital as well. That should provide some relief. It's too tough to call at this point. We certainly wanna continue to provide margin expansion, but it will be more difficult as we work through the second half of the year for the reasons we just talked about. The guide that we talked about, you can do the calc on that. That does reflect a measured approach as in margins as well. Certainly we will hopefully work to be able to do better on that, if the macroeconomic supply chain constraints, including our customers, provide that opportunity. Brian, we anticipate, you know, the bigger benefit from the Mar Cor integration, which Mar Cor was a bit of a drag in the second quarter. That really comes in the first half of next year as we're integrating facilities through the latter half of this year. That's a good point. Mar Cor, we will improve their margins as we integrate those facilities, and that should help as well. Okay, great. That's super helpful. Then I know you guys talked about this a bit earlier in the call, but the, you know, sort of the conservatism around and the commentary around, you know, order conversion. Are you actually seeing any trends or shifts in that, as of today? Or what are sort of the areas where you're kind of seeing some reason to be a bit more, you know, prudent and maybe signal a pause, if you will? Just kind of thinking about, you know, your commentary here into the second half. Then any way to sort of quantify? Are we talking weeks or months or what's sort of the discussions that are being had in terms of, the potential for, delays on some of that? Yeah. Brian, I'll just echo the comment I made at the very beginning of the call. We've never felt better about the business. We feel great about the backlog, where it is. The backlog will deliver. It's a great backlog. It continues to grow. We're, you know, it's in the right mix and the right portfolio of what we want to execute on, which we've rolled out in the strategy. We feel very strong about that. The other comment I made is this is really much more tied to customer availability for us to deliver than ourselves. That's where we have, you know, a little bit less visibility and where we're, you know, marching down a path and thinking we're hitting the timelines that are requested. You know, we're getting a lot of requests for delays on our side to hold up because the customer is just not ready. That's one reason we've been very balanced in this back half guidance that we're giving. You know, the confidence that you can have is to know that it's very strong, it's a robust backlog, and it will deliver, you know, whether it's a quarter or two quarters later. Okay, thanks a lot, guys. I'll pass it on. Thanks, Ron. We'll take our next question from Pavel Molchanov with Raymond James. Your line is open. Thanks for taking the question. A few weeks ago, you acquired the remaining interest in Frontier Water that you did not previously own already. Are there any other historical M&A situations where you own, you know, the controlling stake but not 100%? No, Pavel. That was the only one that really we have had a JV with that we needed to clean up. We also cleaned that up this quarter. I should say in Q2 and Q3. Frontier and both W2O on the minority interest are now effectively going forward Q3 on fully owned by Evoqua. Okay, understood. More broadly about M&A. You obviously, Mar Cor, your second largest acquisition ever. Kind of back on, you know, tuck-ins, bolt-on size opportunities. What's that pipeline looking like compared to, you know, the two years of COVID? Yeah, I would say that the pipeline is actually expanding, that we're seeing. It's continuing to grow. Actually even more than the pipeline is the actionability that's expanding. I even highlighted, I think, in one of my comments on a slide that we anticipate announcing additional tuck-in acquisitions in the back half of the year. We absolutely do expect that to happen. Yeah. Pavel, just to add that supply chain initiatives or supply chain issues are hurting these smaller players as well. Evoqua's strong supply chain and our ability to really manage well through this is attractive to a lot of these smaller players in this very difficult environment. Got it. Thank you very much, guys. Thanks. We'll take our next question from Joe Giordano with TD Cowen. Your line is open. Hey, guys. Morning. Hey, Joe. Good morning. Good morning, Joe. You know, I think the last couple of quarters there were slides on there about like the infrastructure deal and things like that. This was more front of mind as it was going through. Just curious, you know, what you're seeing there. Are you starting to see funds kind of unlock from that package so far? We are actually. That's one of the reasons on slide seven, you have municipal wastewater that turned to green this quarter. We've got a really nice pipeline that we're starting to see, Joe, go across there and a lot of it tied to the Infrastructure Act. I think on actual funds flow, we'll see order activity the latter half of this year. We'll see order activity in the first half of next year. You know, the more dollar flows will start toward the back half of 2023, calendar 2023. Yeah. No, that makes sense. Ron, you know, you're ready to deliver a lot of things, but customers are not ready to take them. What's the ability to reprice things that are in your backlog? Like, what's the inherent like, that stuff is booked at? Like, when do the service agreements that you have in place, when are they available to kind of reprice to market? Yeah. We actually do have built into the majority of our contracts that if we don't have back-to-back commitments from our suppliers, that we can move the pricing based on the commodity moves and based on what our supply chain costs are. That's there. We are also looking at these as change orders, you know, a little bit of benefit out of the cost that we're incurring by still holding on to the asset and making sure that's offset. That's one of the things we build into our price cost analysis as we go forward. In most cases, the service contracts are tied to a flexible pricing model catering to different indexes that we build in. In a majority of the cases in our daily service and kind of normal service contracts, I think you'll remember, we typically have those are annual contracts, not multi-year and an annual, obviously on a rolling basis. Just to be clear, most of this stuff is like mechanical, not like you're having to go back to the customer and like renegotiate price, right? Like, this is stuff that's contractual and prices went up, so we charge you more and you accept that and turn around it. That is correct. Great. Thank you. Yep. Thank you. We will take a follow-up question from Nathan Jones with Stifel. Your line is open. Good morning, everyone. I think I need to work again. You rock, Nathan. A question, first on labor. You talked about labor shortages. Are they more in the service, from the service guys, corporate, where are you seeing the biggest issues around labor availability, and inflation on labor? Yeah, our biggest service guys are in the manufacturing plants. I would rank them in that order. You know, the service team is difficult, but our team's done a really nice job managing a strain that. I had one, I guess this is probably more of an R&D question. I went to a conference, a lot of discussion about recycle and reuse of water. One of the big push back customers is on greenfield sites where space is an issue. Is there initiatives underway for you shrink the amount of size that it takes to put it in there in order to increase that penetration? Yeah. Something that, you know, our technology and innovation team is constantly looking at. One of the benefits, you know, that we have that a lot of other water treatment companies don't have, is we have a full suite from, you know, bringing in the wastewater to recycle it to go in and be fed in as processed water on the front end. That footprint availability is pretty unique to what we're able to create. You know, we're also looking at all times. One of the most compact selenium treatment technologies is Frontier Water Systems. That's one reason that we acquired the Frontier Water Systems business. We think there's additional opportunities, so we continue to look at that. Great. Thanks. Those are my follow-ups. Thanks, Nathan. Thank you. That concludes our question and answer period. I'd like to say thank you again, and thank the team that we have here for executing every day. Obviously, what we do is impactful and important, and we are focused on continuing to execute on the strategy and deliver, you know, the kind of results that we've. Thank you for your interest and everyone be safe. We'll talk to you next quarter. you. That concludes today's Evoqua Water Technologies Second Quarter 2022 Earnings Conference Call. You may now disconnect your