Hello, and welcome to Evoqua Water Technologies Q4 and Full Year 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 the number one on your telephone keypad. If you would like to withdraw your question, please press Star two 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, operator. Thanks everyone for joining us for today's call to review our Q4 and Full Year 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 will open the call to questions. We ask that you please keep to one question and a follow-up to accommodate as many questions as possible. This conference call includes forward-looking statements, including Q1 and full Fiscal Year 2023 expectations, long-term financial targets and statements relating to demand outlook, growth opportunities, our book-to-bill ratio, our net leverage ratio, capital expenditures, our acquisition strategy, regulatory actions, material and labor availability, inflation and general macroeconomic conditions. 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 60 days. With that, I'd 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 happy to provide the insight into our results and outlook. Please turn to slide three. I'm very pleased with our Q4 and full year 2022 results. In the Q4, both segments reported strong organic revenue growth with broad-based demand across aftermarket, service and capital and across most regions and product lines. Our book-to-bill ratio was again above 1.0 for the quarter. For the second consecutive F iscal Year, our full year book-to-bill was approximately 1.1. Backlog reached record levels and our pipeline is strong as demand for clean and available water increases across our customer base and end markets while we're actively helping our customers solve complex water treatment challenges while reducing their environmental impact with recycle and reuse solutions. Adjusted EBITDA grew double digits in the Q4 and over 18% for the full year. Price cost was positive and accretive to margins in the quarter despite challenges that impacted the full year. Material availability, inflationary pressures, and skilled labor access continue to provide challenges, but our team is effectively navigating the constraints. We have also driven price and operating efficiency across the organization, which will continue to be a priority in FY 2023. We're pleased to have achieved two important FY 2022 ESG goals relating to employee safety and water reuse. Safety is the number one priority at Evoqua, and we reduced our recordable incident rate by 20% this year. When addressing water challenges, we plan to lead by example and set and achieved our goal of reusing more than 55% of our water draw across our top 10 facilities. Cash flow for the year was strong, and we continue to drive improvements to our balance sheet. Adjusted free cash conversion was well above our target of 100%. Net working capital improved to 14% of sales. Liquidity increased sequentially, and our net leverage ratio improved to 2.6 times from 3.1 times following the Mar Cor acquisition earlier this year. Please turn to slide four. Evoqua is a performance-driven water technology company focused on delivering customer solutions while driving strong and resilient financial results. As you can see, we have generated strong results across these six key metrics over the past several years. Our results demonstrate the strength of our business model and focused execution. We are proud of the progress we have made, and we remain confident on the execution of our strategy in the coming years. Please turn to slide five. This chart represents our Q1 expected order rate by end market relative to the prior year's Q1. We expect to see order growth in the Q1 across most end markets, including life sciences, power, food and beverage, and light and general industries. Strong prior year orders in microelectronics are driving a slight decline in the year-over-year order outlook, but our revenue should still be strong given our current backlog. We still expect to see continued growth in microelectronics, supported by government and private investments in onshoring manufacturing facilities. Overall, we expect to see increasing demand across most of our end markets in the first half of FY 2023, with potential slowing in the second half. We will discuss our outlook and underlying assumptions shortly. We'll also be happy to address questions about specific end market drivers during the Q&A session. Please turn to slide six. Throughout the year, we highlight impactful handprint wins that showcase our contribution to helping our customers improve their sustainability objectives. In this quarter, we are pleased to announce technology implementations with two of the world's largest companies, a chemical processing company located in the Gulf Coast of Texas, and a global consumer products company. The chemical processing company engaged Evoqua to replace a brine recovery system and provide an outsourced water service contract for the next 10 years. The consumer products company is installing our reverse osmosis system for brine recovery as they make strides toward their water recycling goal to reuse more water than consumed at manufacturing sites around the globe. In addition to helping our customers solve their water challenges, we're improving reliability and energy efficiency. I would now like to turn the call over to Ben. Thank you, Ron. Please turn to slide seven. For the Q4, reported revenues were up 18.5% to approximately $505 million. Organic contribution of revenue growth was 8.7%, driven by price realization and volume growth. We saw revenues increases in aftermarket, services, and capital, as well as broad-based growth across most regions and product lines versus the prior year. Q4 adjusted EBITDA increased 13.8% to $93.2 million for an overall margin of 18.5%, a decrease of 70 basis points versus the prior year, driven primarily by inflationary impacts, higher service labor costs, and lower productivity from training and onboarding of new service techs. As mentioned, price cost was positive and slightly accretive to margins in the quarter. Please turn to slide eight. For the full year, reported revenues were up 18.6% to approximately $1.7 billion, driven by higher volume and favorable price realization. Organic contribution of revenue growth was over 10%, primarily driven by increases in aftermarket, services, and capital, as well as growth across all regions and most product lines versus the prior year. Full year adjusted EBITDA increased 18.7% to approximately $298 million for an overall margin of 17.1%, essentially the same as the prior year. We realized favorable price, higher organic volume, and mix, which were offset by inflationary cost impacts. Please turn to slide nine. Our Integrated Solutions and Services segment's Q4 revenues were up 23.4% to approximately $347 million. Organic contribution of revenue growth was 6.1% over the prior year, driven by price realization. Services and aftermarket revenues were strong, driven by life sciences, food and beverage, and light and general industries. Q4 adjusted EBITDA increased 10% to approximately $78 million due to favorable price realization and higher sales volume from acquisitions. Adjusted EBITDA margin for the quarter was 22.4%, down 270 basis points from the prior year. Productivity impacts outpaced price and cost benefits. Mar Cor margins were also dilutive to segment margins. Full year revenues grew 23.4% to approximately $1.18 billion, with adjusted EBITDA up 18% to $259 million. The increase in revenues was driven by positive price realization and higher sales volume across services, capital and aftermarket. Digitally and connected sales grew double digits this quarter and overall have increased approximately $100 million since 2018. As of the end of year 2022, digitally enabled revenues were $263 million, up from $230 million FY 2021. For the full year, adjusted EBITDA margins declined 90 basis points over the prior year, driven by material, fuel, freight inflation, and labor costs and Mar Cor's dilutive impacts. These margin headwinds were partly offset by favorable price realization and sales volume. Please turn to slide 10. We continue to see strong year-over-year growth in ISS backlog, which was up $152 million or 20% over the prior-year quarter, with growth coming from both capital and service orders. As Ron mentioned earlier, Evoqua's backlog was at record levels at year-end. Capital has seen strong growth, with cores being driven by food and beverage, microelectronics, and power end markets. Our pipeline continues to be robust, with opportunities across multiple end markets, and we expect to see book-to-bill rate remain above 1.0 throughout Fiscal 2023. Please turn to slide 11. The Applied Product Technologies segment's Q4 revenues were up 9% to $157.6 million. Price realization and strong volume contributed to revenue growth in Asia Pacific and the Americas, while EMEA reported a slight decline. Organic contribution to revenue growth was 13.7% over the prior year, driven by price realization and volume across all product lines. Revenue was unfavorably impacted by $6.9 million in the period related to foreign currency translation. Q4 adjusted EBITDA increased approximately 14% to $37.7 million. Adjusted EBITDA margins grew 100 basis points over the prior year, with the increase in profitability driven by price realization and higher sales volumes. These benefits were partly offset by increased inflationary impacts. Full year revenues grew 9.5% to $552 million, with adjusted EBITDA up 13.2% to $119.7 million, while margins improved 70 basis points versus the prior year. The increase in revenue was driven by price realization and the higher volumes across all regions, particularly in North America and Asia Pacific. Organic contribution to revenue growth was 12.1% over the prior year, driven by price realization and volume across all product lines. Revenue was unfavorably impacted by $12.9 million in the year related to foreign currency translation. The increase in adjusted EBITDA was driven by price realization, higher sales volume and favorable mix. These benefits were partly offset by increased inflationary costs. Please turn to slide 12. Capital spending, largely related to outsourced water orders for build-own- operate facilities and mobile fleet assets, was approximately $23.3 million for the quarter or approximately 4.6% of revenues. We continue to expect CapEx net of financing as a percentage of sales to be in the 5% range in FY 2023. Q4 net working capital was 14% of LTM sales, an improvement of 200 basis points over the Q3 of this year. I would like to thank our Evoqua team for continuing to drive improvements in working capital. As previously mentioned, overall, the net working capital to sales, even given some projects may have varying amounts of working capital requirements. For the full year, operating cash flow improved to $181.4 million versus $178.7 million in the prior year. Adjusted free cash flow as a percentage of adjusted net income continues to be above the goal at 121% for the year. Net income for the Q4 included a non-cash benefit of $17.3 million associated with the release of an income tax valuation allowance as the result of increased profitability. Please refer to slide 19 in the appendix for additional details. Our net leverage ratio finished at 2.6x adjusted EBITDA, well within our targeted range. We are very pleased to have improved our leverage profile as expected after the acquisition of Mar Cor in the Q2 of Fiscal 2022. Maintaining a strong balance sheet remains a key priority, particularly in the current economic and market dynamics, and we are now targeting a 2x-3x net leverage to adjusted EBITDA range versus the previously stated target of 2.5x-3x. Interest expense increases have been moderated by maintaining approximately 67% of our total debt at fixed rates. Our weighted average cost of debt increased by 110 basis points to 4.1% from 3% in the prior-year period. This increase compares favorably to Federal Reserve actions that increased target rates by 300 basis points to 3.25% from 0.25% as of September 30, 2022 and September 30, 2021, respectively. For the full year, the weighted average cost of debt rose 40 basis points to 3.39% in 2022 from 2.99% in 2021. I would now like to turn the call back over to Ron. Ron? Thanks, Ben. Please turn to slide 13. This slide shows our performance since 2018 for three of four long-term financial targets. 3%-5% organic revenue growth, 20% adjusted EBITDA margin, and adjusted free cash flow conversion over 100%. We have multiple drivers supporting the resiliency of our business model in uncertain market conditions, be it COVID lockdown, supply chain constraints, or high inflation. This is due in part to our stable and recurring revenue streams, with service and aftermarket making up approximately 60% of our total revenue. Please turn to slide 14. Heading into our new Fiscal Year, we see many opportunities but also uncertainties on the horizon. We regularly work to align our outlook across the favorable tailwinds while managing for the market unknowns. As we have demonstrated, our business model is resilient, and we are focused on stable, recurring, and profitable revenues. Our large concentration of business in North America provides a level of stability in uncertain times. We still see growth opportunities from deeper penetration into target markets and through geographic expansion as we sell our technologies globally. We have a record backlog with order growth across most end markets and a strong and growing pipeline. While customers are driven by ROI when making capital and operating decisions, regulation is also driving investments in water at the federal, state, and local levels. One example of noted interest is the PFAS market. The near-term impact is not expected to drive material revenue growth, but we expect PFAS remediation to provide long-term growth for many years to come. A slowing global economy is expected to improve labor and material availability and to moderate inflationary pressures throughout the year. We expect continued demand in North America in the first half of our Fiscal Year as we deliver against our backlog. An economic slowdown could occur in the second half of our Fiscal Year, but we will adjust accordingly. We're providing key assumptions for our full year outlook on slide 18 in the appendix. Please turn to slide 15. We had an excellent quarter, and we're very pleased with the full year performance. We delivered outstanding results across most key metrics of the business. We're encouraged by the strong, broad-based global organic growth coming across both segments, and our pipeline remains robust as demand is solid across most of our end markets. Our price actions continue to be a priority and are expected to contribute to growth during the coming year. Supply chain constraints and inflationary pressures will remain a challenge, but I have great confidence in our team's ability to navigate these and to successfully serve our customers. Our balance sheet remains healthy following three acquisitions in the year and the completion of the Frontier equity purchase. We're committed to maintaining leverage within our targeted range, as demonstrated by our steady reduction from 3.1x following the Mar Cor acquisition to 2.6x as we close the year. We will continue to focus on tuck-in M&A as an extension of our organic growth strategy. Digital enablement continues to be an important driver of service efficiencies. Our connected outsourced water solutions continue to grow, and we will continue to invest in this capability. As previously stated, we have a strong backlog as we enter FY 2023, but economic uncertainty in the back half remains a question. For the full year of Fiscal 2023, with current visibilities, we expect revenue and adjusted EBITDA to be in the range of $1.81 billion-$1.89 billion and $310 million-$330 million, respectively. For the Q1, relative to the midpoint of our FY 2023 outlook, we expect revenues and EBITDA to be aligned with traditional quarterly seasonality. We've provided a summary of quarterly revenues and adjusted EBITDA from 2018 to 2022 on slide 20 in the appendix. In closing, we're pleased with our performance, especially when considering the inflationary impacts of the past year. We have high expectations as we look to the future. The world is facing significant challenges related to clean and available water, and more companies are investing in water reuse and recycling initiatives. We are confident in the investments we have made in our people, our technologies, our footprint, and our operating capabilities. We feel that Evoqua is uniquely positioned to address the market needs and to drive long-term shareholder value. I will now open the call to questions. Thank you. At this time, if you'd like to ask a question, please press the Star and one on your touchtone phone. You may remove yourself from the queue at any time by pressing Star two. Once again, that is Star and one to ask a question. We'll take our first question from Deane Dray from RBC Capital Markets. Thank you. Good morning, everyone. Morning, Dean. Good morning, Deane. Hey, congrats on a strong finish to the year. In last quarter in the commentary, there was some signaling that there might have been some delayed customer deliveries, this quarter that could have impacted results. How did that actually play out? Was that a factor at all? You know, Deane, it was kind of as we expected. We've had some delays from customers, you know, throughout the year. This was not more than than normal in the Q4, but we're always cautious around that. Where we had some customers that were delayed, we had others that were willing to take, you know, or ready to take projects a little more quickly than we anticipated. We're, you know, pretty pleased with the balance as we came through Q4. That's good to hear. Ron, on that theme of always cautious, I was all teed up here for a discussion on Fiscal 2023 guidance that looks a little conservative, you know, your measured approach and so forth. This guidance nicely brackets consensus, actually ahead of consensus. Which we really like seeing. Maybe you can just clarify on the record backlog, because that gives you so much more earnings visibility than you might have, you know, entering a new Fiscal Year. Talk about conversion expectations and kind of line of sight on that backlog. Yeah. You know, as we highlight the backlog, it's coming across all end markets, which is very positive for us. We're pleased with the incoming order rate that continues to be very strong as well as we you know closed out Q4. You know, the visibility that we have is a little better because the backlog and what our customers are doing is starting to normalize a little more than it was earlier in the year with other supply chain constraints that we've been managing through. You know, even giving the guidance where we did, Deane, we feel like, you know, we're still being very balanced in the outlook as we look forward. We're pleased with the backlog. We're pleased with the position we're in. You know, we feel good going into the year that the order rates are continuing to flow fairly well. Great. If I can just squeak one more question in on digital revenues, really like seeing the growth there and the update. I think you've said before you'd like to get it from kind of 20% of the mix today to closer to 40% over time. Is that still the goal? You know, what might the timeframe be to get there? It is still the goal. We're still driving forward on that. It really referring to ISS's revenue, it's north of 20% with the growth that we've seen. We think we can, you know, continue to drive that to north of 40% of the ISS revenue. I think what you're looking at, Dean, is probably three to five years that we will get there, but it certainly is within the, you know, the planning horizon. Great. Thank you. Our next question comes from Nathan Jones from Stifel. Good morning, everyone. Good morning, Nathan. Good morning, Nathan. I'll follow up on the guidance, I guess. I'd say at the midpoint, the guidance kind of employs margins up about 20 basis points and then, an incremental margin of about 20%. Given some of the positives that you listed on the guidance slide in here, you know, with positive mix, with price cost expected to be positive throughout the year, I thought maybe we could get a little bit better than a 20% incremental margin. Can you talk about, you know, what are the offsets to that and what could end up driving that above a 20% incremental? Yeah. Nathan, I'll start and let Ben pick up on it. Again, you know, to the last comment I make, we still feel like we're balanced in our guidance going forward, just given some of the uncertainties that we see. The good thing about our pricing is our pricing is very sticky. So once we get it driven into the market, it continues to stay. If we see a pullback on inflationary challenges that we've been facing and it doesn't continue to run, I think there's some opportunity there. We've been pretty measured in what we've given as an outlook. Ben, you have comments? Yeah, sure. Nathan, I think one of the things we've got to stay measured on is fuel and freight, you know, particularly with diesel. At this point in time, short- term, we're keeping our eye on that. The materials, we're in really good shape in that side. You probably noted from the call that we were margin accretive on the price cost versus materials. It's really about managing fuel freight and improving our productivity. As expected, we onboarded a lot of service techs, so we expect the productivity to improve as we go through 2023. Those are a little bit of the puts and takes overall, in terms of staying measured on margin. It sounds like despite bracketing consensus, this is still a pretty balanced guidance that you've put out here and pretty confident in it. My follow-up question is around Mar Cor. I think the Mar Cor revenue came in, it looks to be pretty substantially above what we'd expected. I know you guys are excited about the opportunities for that. Maybe you could talk a little bit more about the opportunities to leverage Mar Cor to grow the outsourced water business. Have you begun to see any results from that opportunity, or is that still on the come, and, you know, where you think you can take that business? Yeah, we are starting to see results from that, Nathan. The opportunity to connect a lot of the Mar Cor solutions that are in the field and that we're putting in the field. We'll start to see that being realized this year in FY 2023. What we saw in growth really centered around life sciences fits very nicely with our core business. We saw outpaced growth in the core businesses that we've had in life sciences because of now the expanded offering we have carrying Mar Cor in. You know, we're able to do more for the customer base that we highlighted when we did the acquisition around a hospital system and a healthcare system with us being a full service provider now. More positive about, you know, what the next, you know, two to three years are gonna deliver with Mar Cor. Is there some kind of growth target, can you share on that? You know, we were pretty thoughtful in the way that we did the analysis. We think we'll see double-digit growth, you know, come in the life sciences area just based on our base business that is continuing to expand combined with Mar Cor. Great. Thanks very much for taking my questions. Our next question comes from Bryan Blair from Oppenheimer. Thank you. Good morning, everyone. Morning, Bryan. Morning, Bryan. Staying on Mar Cor for a minute, perhaps offer a little more on, you know, integration and how synergies are pacing relative to expectations. Growth seems to be great, margin, you know, perhaps a little more diluted than anticipated at this point. At least the optics say that. Just curious what you can offer there and whether we should anticipate that, you know, Mar Cor gets to a level where it's margin accretive to ISS during your Fiscal 2023. Yeah, great question. I wanna be clear, Mar Cor is right now accretive to Evoqua, but still dilutive to ISS. The synergies are coming through as expected, and also the sales synergies are coming through as expected as well. 2023 is probably a long shot to be accretive to ISS, but certainly within reach in 2024. We will see improvement as we go through the year and the synergies take hold. Remember, a lot of those synergies are footprint related, so they take a little bit longer to get done, and we wanna be very planful as we consolidate rooftops. Understood. That all makes sense. You noted in terms of regulatory tailwinds, there's, you know, some continued near-term uncertainty on PFAS regulation and how much of a, you know, a catalyst that can be, you know, during Fiscal 2023, but perhaps looking to 2024 and 2025, that becomes much more material. Your team's been pretty consistent in framing that. Just curious whether the primary consideration remains the stringency of MCL or, you know, relative, you know, MCL versus MCLG in terms of what will be proposed or if there are other factors that we should keep in mind. No, I think as we're looking forward, we continue to be consistent with where it's been framed in the past. We still have, you know, a pipeline around $100 million. We're winning about 30% of those projects. The MCLs are set to, you know, be released at the end of this calendar year, so the Q1 of our Fiscal 2023. We're expecting that to happen. At that point, then actually the municipalities and the water systems know exactly what they have to treat to. You know where the goal line is. That's when I think we'll start seeing a lot of the engineering work, a lot of the work that will start, you know, flowing down with funds flow that's coming, you know, from the government, down to the different water districts, will be the latter half of 2023, and as you said, into 2024 and 2025. Okay. Appreciate the color, guys. Thanks. Thank you. Our next question comes from Mike Halloran from Baird. Hey, good morning, everyone. Morning. Hi, Mike. The CapEx ±5% of sales, I'm guessing the high level is just a reflection of your confidence in leveraging a balance sheet to drive customer growth through some of the product offerings, correct? Agree. Okay. Just make sure. The second one, any areas where you're seeing any cracks in the portfolio? I know, Ryan, you talked about pretty healthy orders across the board. Just wondering if there's any pockets we have leading indicators that are showing some concerns, anything on the project side? Because obviously the commentary has been really positive, which is good. Yeah. Mike, I would say that, you know, as we show slide five, you can obviously see the incoming order rate and the order expectation continues to be very strong. We do see some of our, you know, end markets slowing down the acceptance of capital. It doesn't mean they're not canceling anything. It's still in the pipeline, still in the works, but they're slowing down some of the POs being cut. I think being cautious. We continue. You know, you kind of think about a canary in the coal mine. We watch light and general industry, would be the first one that we think we would see slowing, but we're still seeing, you know, very favorable order activity there. As we highlighted on slide five, we expect to see that in the Q1 of 2023 as well. Thanks for that. Last one quick. Just any comments on the pipeline actionability on the M&A side and your willingness to move at this point? As far as the M&A pipeline? Correct. Yeah. I mean, we continue to work with tuck-in acquisitions. We, you know, were able to close out three last year as well as, you know, close out the acquisition of Frontier Water Systems' equity to get full ownership of that. We have a number of small tuck-in acquisitions in the pipeline, and we feel like they're gonna be actionable in 2023 much as they have in the past year. Great. Really appreciate it, everyone. Thank you. Thanks, Mike. Your next question comes from Andy Kaplowitz from Citigroup. Good morning, everyone. Good morning, Andy. Morning, Andy. Ron or Ben, just maybe talk a little bit more about Q4 in terms of that adjusted EBITDA margin. I think it was down 70 basis points, a little worse actually than Q3. I know you talked about price cost being margin accretive, but weaker productivity. I think you talked about pressuring your margin. Is labor productivity, you know, stable, getting worse, better? And how do you factor that in looking at that 2023 guide? Yeah. Great question. It's ISS that was where we saw the margin pressure. A lot of the margin pressure came from productivity, particularly in the service tech area. We did a lot of onboarding of new service techs in the quarter and in the last two quarters to gear up to support that strong service backlog. We do expect the productivity to improve overall within ISS in the coming quarters. Part of this is temporary as you're continuing to onboard these service techs, get them up to speed. I think one of the things, the strong digital growth in revenue will help us as we go into the future, once we get through some of this onboarding period. In our factories, we had a lot of new labor adds in the factories gearing up for that strong backlog. As we're onboarding them as well, there is some period of lower productivity. That's predominantly what drove the challenges for ISS. Ben, that's helpful. Maybe just can you give us a little more color? I know there's always a level of EBITDA adjustments that you take. They were a little higher in Q4. Would you say this is the high watermark then for those adjustments? You know, how do you factor those or think about those into 2023? Yeah, a lot of the adjustments were the non-cash exposure on FX on intercompany loans. We should see 2023 relatively similar to 2022. There's not anything that's an outlier. Maybe a little higher as we do some rooftop consolidations. Some of the adjustments you probably noted was in the area of restructuring as we've ramped up Mar Cor. We still have Mar Cor work to do in that area. 2023 should be relatively in line with 2022. Helpful. Thanks a lot. Our next question comes from Joseph Giordano from Cowen. Good morning. This is Michael in for Joe. Hey, Michael. Hey, Michael. I just wanted to touch briefly, again, I know this was mentioned earlier on the call, but with revenue growth expectations for next year, you know, seems a little higher than most were expecting. Kind of paring this back, how much of this would be like classified as new type business? You know, how does that work in terms of segmentation? Does ISS grow a little faster due to the backlog? You know, does APT decelerate at all? You should see it's a relatively balanced growth next year. You know, both segments have very strong backlog. You know, a lot of it depends on what happens in the macro, as the year develops. ISS is sitting, if you notice on page 10, you see that capital backlog has increased, and it's ramped up, and we'll have a little higher mix of capital. That'll convert over a shorter period of time if you just look at the conversion rates on that chart. ISS is well positioned from that standpoint, and APT is seeing an all-time record backlog as well. Both segments have great opportunities as we head into the future. Thanks. That's helpful. One more follow if I may. On the drinking water side, it appears it's kind of the Q2 of consecutive, you know, neutral outlook. What are some kind of the expectations for next year? What are some drivers for that business as well? I mean, if you think about municipal drinking water, that a lot of the investment that's going to come there is going to be around PFAS. It's also going to be around some of the treatment systems that are flowing down from the government funds that are coming. We expect that those will be coming in the latter half of 2023 into 2024 and 2025 as the funds flow. Great. Thank you. Our next question comes from Brian Lee from Goldman Sachs. Hey, guys. Good morning. Thanks for taking the questions. Hi, Brian. Hey, Brian. Hey. Maybe just kind of zooming out a bit, on the margin question here. I know it sounds like, Ben, or Ron, you're embedding some conservatism as, you know, per the usual into the guidance. This will be kind of the third straight year where you're hanging around the 17% ± EBITDA margin range. You know, you obviously have talked about a longer-term target to get to 20% or so. Can you kind of give us a sense of, you know, what you'd need to see, you know, not necessarily in 2023, but just kind of moving forward, for you know, that trend line to kind of start putting you back on track to that long-term target, whether it's, you know, supply chain, price, mix, just trying to get a sense of, you know, when we might start to see some of that inflection towards your longer-term targets. Yeah, Brian, it's a great question. You know, as we know, the last couple of years have not been overly normal years. We've been dealing with COVID and then runaway inflation. I think we've, you know, focused very heavily on being disciplined and offsetting our cost increases with price. Now it's time for us to get the spread. This year we're being pretty balanced in it, looking forward, not knowing what kind of, you know, economic pullback may occur. Really what's gonna happen has been highlighted earlier, with a lot of the, you know, diesel fuel, a lot of the freight challenges that we've dealt with. What I would say is our price is very sticky. As we roll price increases, it's not something that is gonna go up and then be pulled back. We'll roll it forward. We see a little bit of an abatement in inflation. We'll start to see the spread happen. We think that that's going to occur certainly over time. We've become very disciplined in our pricing actions and the way that we go forward and the way that we quote jobs now. I think we will start to see you know in the latter half of this year assuming things start to abate on the inflationary side and into 2024 and 2025, I think you'll see us getting back on track to achieving that 20% EBITDA margin we're focused on. Okay. That's great. Appreciate the color. Then, you know, just talking about the back half, since you know you did call out the potential for slowing again, I know you're trying to embed some conservatism given the uncertainty that exists in the economic environment. Where do you know potentially see that arising? It sounds like it'd be on the capital spending front, but are there specific end markets or geos where you know you're thinking the slowdown could arise? Then just kind of the implications for mix. I mean, it almost dovetails with the comments you just made about margins maybe towards the latter half starting to get back on track. Maybe that's a comment on mix as well. Just any thoughts there around the second half commentary? Yeah, I think it really, you know, you go back to our page five that we point out, you can see the diversification of our end markets. You know, a lot of these end markets are fairly resilient to different types of recessions. I mean, obviously, life sciences is gonna continue to be robust. Microelectronics look like they're gonna continue to be robust, certainly with, you know, the CHIPS Act and some of the onshoring or nearshoring that's occurring right now. The one that we really watch is light general industry, you know, which is on the upper right-hand side of the page. It's a fairly good market for us. That's one that we think if we do see a slowing, we will see it come there first, and it will come in capital projects. We think that, you know, the benefit of us having approximately 60% of our full revenue be sticky, steady, recurring, you know, service and aftermarket, everyone's gonna continue to run their water systems. They just may not be investing as strongly in capacity expansion or new capital. Like in general would be where we'll see it first. Okay. Thanks a lot, guys. The next question comes from Patrick Baumann from J.P. Morgan. Hi, good morning. Thanks for taking my questions. Just wondering if you could give us some more color on the magnitude of pricing increases you're seeing in terms of revenue contribution, both in the Q4 and kind of where it landed for 2022, and then kind of what are the expectations for price into your Fiscal 2023. Just kind of along those lines, can you talk about the process by which you're pushing price in the services business in particular, and whether you've seen any attrition as a result of pushing price, you know, as those contracts, you know, come up for renewal? Yeah, sure. This quarter we saw about, you know, an 85/15 split price to volume. Next year, we're expecting to see price to volume be in that 60/40 range. We've highlighted that in the appendix for you on our assumptions, so more volume. We are not seeing much attrition at all. The price has been very sticky and stable, and we continue to push it. I think the good news is we're seeing that price to become accretive to margin in Q4, which is one of the areas that we wanted to really push for. The key for us now is in margin expansion, as Ron mentioned earlier, just getting our labor productivity improvement as we onboard the service techs and our plant employees. We feel good about being able to work that margin expansion. Overall, you know, we do expect to see a little more volume in next year as we liquidate that very strong backlog and continue to focus on driving revenue through backlog. On our pricing on our service contracts. Our service contracts are annual contracts. There's no single month that they all start and stop, so it's a rolling 12 months. We've been able to roll price increases into those. We have not seen a tremendous amount of attrition from it. In fact, it's we've stayed very strong. In fact, I would say over time, and we've grown in our service business, as you can see on our backlog chart. Throughout COVID, Evoqua really rerated with our customer base that they knew that we were there to serve them, to take care of them. We set a standard that the customer expects to, you know, to see and to achieve, and they're, you know, willing to compensate us for. Hey, Brian, let's make sure I correct that. We're gonna be 60% volume, 40% price next year. Okay? Sorry, Ben. The 2022, where did that land for the full year? I think you said 85/15 price volume for the Q4. What about Fiscal- 85/15, and for the year was 39% volume, 61% price. Next year, we're expecting 60% volume, 40% price. That's clear. Thank you. One quick follow-up, cleanup, I guess. I thought Mar Cor was like a, I think 180 million annualized revenue business, the way you were describing it when you acquired it. I just wanted to kind of be clear. Was the entire $49 million of acquired revenue in the quarter from Mar Cor? How is that business growing organically since you acquired it? You know, what do you expect it to grow, you know, looking into 2023 organically? Yeah. It was not all from Mar Cor. We also acquired Smith Engineering and then Epicor as well. We closed. Epicor is very small. As we look forward in the year and what we saw growth coming from Mar Cor is what I highlighted earlier. It's really coming from our traditional life sciences business. Mar Cor's been steady. We anticipated it would be steady, and we would get a lot of synergies coming from the you know, the efficiency side that we highlight as we called out. You know, 27 branches, 25 are in the same location as our service branches that we already have in core Evoqua. Where we've seen the growth has really been on our base business life sciences with us being able to do more with that customer base. Understood. Thanks so much for the extra color, and congrats on the strong results. Thank you very much. Thank you. That concludes our question and answer period. I would now like to turn the call back over to Ron Keating for his closing remarks. Thank you for joining us today, and thank you for your interest in Evoqua. I absolutely want to recognize the team that we have that executed tremendously throughout 2022 and will continue to execute throughout FY 2023. We were most proud of the impact that we had on our safety scores. As I said in the opening remarks, safety is number one priority at Evoqua, and our team, through a very strong focus, was able to improve that metric significantly as well as our ESG goals as we're driving with water recycle reuse inside of our own facilities as we're allowing other customers to do that. We wish you all a good week and thank you again for joining us. We'll speak to you again next quarter. Thank you. This concludes today's Evoqua Water Technologies Q4 and Full Year 2022 Earnings Conference call. You may now disconnect your lines, and thank you for your interest in Evoqua.