Ladies and gentlemen, welcome to the fourth quarter and full year twenty twenty Badger Meter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. As a reminder, today's conference is being recorded. It is now my pleasure to turn the conference over to Karen Bauer, Vice President of Investor Relations, Corporate Strategy, and Treasurer. Please go ahead, Ms. Bauer. Good morning, and thank you for joining the Badger Meter fourth quarter twenty twenty earnings conference call. I hope you are all doing well and staying safe. On the call with me today are Ken Bockhorst, Chairman, President, and Chief Executive Officer, and Bob Wrocklage, Chief Financial Officer. The earnings release and related slide presentation are available on our website. Quickly, I will cover the safe harbor, reminding you that any forward-looking statements made during this call are subject to various risks and uncertainties, the most important of which are outlined in our press release and SEC filings. On today's call, we'll refer to certain non-GAAP financial metrics. Our press release and slides provide a reconciliation of the GAAP to non-GAAP financial metrics used. With that, I'll turn the call over to Ken. Thanks, Karen, and thank you for joining our fourth quarter earnings call. Obviously, there are many aspects of twenty twenty that we, along with many of you, are happy to turn the page on as we focus on a safer and healthier two thousand and twenty-one. However, this morning we do want to spend a few minutes looking back and summarizing our fourth quarter and full year two thousand and twenty results, and then talk a bit about the new fiscal year and the long-term opportunities at Badger Meter. In summary, we were pleased with our fourth quarter results, which demonstrated the continued stability and resiliency of our utility water end market. As anticipated, flow instrumentation sales were less worse sequentially, but still down year over year. We delivered gross margin improvement, continued cash flow generation, and EPS growth, albeit with a number of moving parts that Bob will walk through in more detail. I'm extremely pleased with our ability to complete two meaningful acquisitions over the past several months that are strategic growth drivers for Badger Meter. Earlier this month, we acquired Analytical Technology, Inc., or ATI. Combined with s::can, which we purchased in November two thousand and twenty, we now have a great foundation on which to build a real-time, on-demand water quality monitoring offering to customers in both utility water, and industrial markets. I'll talk about the water quality offering in more detail later on the call, as well as the current environment and what we see looking out into two thousand and twenty-one and beyond. Bob, with that, I'll turn the call over to you. Thanks, Ken, and good morning, everyone. As you can see on slide 4, total sales for the fourth quarter were $112.3 million, compared to $107.6 million in the same period last year, an increase of 4%. This reflects the activity stabilization we experienced in the third quarter, which has essentially continued despite the resurgence of COVID-19 cases and various regional restrictions. In utility water, overall sales increased 8% against a difficult comparison in Q4 last year, which was also up 8% over 2018. The acquisition of s::can, completed in November 2020, contributed approximately three points of the current quarter's revenue growth, with core or organic revenues in utility water up 5% year over year. On an organic basis, this quarter's sales were the second highest in history, second only to the third quarter of 2020, which of course included a sizable chunk of pandemic-induced backlog catch-up, as we discussed at the time. Positive revenue mix trends continued, with further adoption of smart metering solutions, including increased Orion cellular radio sales and Beacon software as a service revenue, along with ultrasonic meter penetration. We also had the benefit of strategic pricing initiatives, which I'll discuss shortly. As anticipated, flow instrumentation sales were sequentially less worse, down 10% year over year compared to the 18% decline experienced in Q3 2020, although activity levels continue to reflect the broadly challenged markets and applications served globally. Operating profit as a percent of sales was 15.1%, a modest 10 basis point decline from the prior year's 15.2%, with a number of moving parts at the gross profit and SG&A line that I will dissect in more detail. Gross margin for the quarter was 39.2%, up 100 basis points year over year. Margins benefited from higher sales volumes, strategic pricing actions, and positive sales mix, as previously discussed. These favorable gross margin drivers were offset by a discrete network sunset provision recorded in the quarter, as well as the natural post-acquisition drag to gross margins caused by amortization of the inventory fair value step-up recorded for the acquisition of s::can. I'm going to spend a bit of extra time today on three of these items: price cost, the acquisition impact to margins, and the discrete network sunset provision to help walk you through the impact in the quarter and thereafter, as applicable. Starting with price cost. As I'm sure you've seen, copper prices, which are a proxy for our recycled brass input costs, have increased significantly. Currently averaging around $3.60 per pound, this represents over a 30% increase year over year. We've reminded investors that, while meaningful, the impact of recycled brass on our cost structure has been moderating over time as we sell more software and radios versus primarily meters in the past. I will also remind you that we have and continue to offer polymer, mechanical, and ultrasonic meters as part of our Choice Matters go-to-market philosophy.... To give you some level of sensitivity, if copper prices stay in this range for the entire year, it could be a potential cost headwind of about $4 million-$5 million year over year. The other side of that price-to-cost equation is price, and as we have done with working capital and operating metrics like SQDC, safety, quality, delivery, and cost, we have designed more robust processes and metrics to actively manage strategic pricing for the evolving and valued solutions that we offer to customers. In doing so, we have proactively implemented a number of strategic pricing actions that resulted in positive net benefit from price in the fourth quarter, in advance of the lagging headwind from input cost increases, principally copper. It would be our expectation that we are largely able to offset commodity inflation with price during the year, with perhaps some minor manageable lag effects. The second topic is acquisitions and their impact to margins. In the fourth quarter, s::can results were included for two months. You may recall in the press release announcing the transaction, s::can has approximately $15 million in annualized sales, so these two months, as expected, totaled approximately $2.5 million in revenues. We recorded the typical amortization of inventory, fair value step-up, and acquired intangible assets, which all told, resulted in a modest loss in Q4 2020 for the short stub period. As we look to 2021, the combination of s::can and ATI, with total acquired revenue of approximately $37 million, we expect to be EPS accretive. The first quarter of 2021 will include the remaining s::can, plus a full quarter of ATI inventory step-up amortization, but we expect normalized profitability in the remaining quarters. Ken will discuss the longer-term opportunities for these acquisitions in his remarks. Finally, turning to the non-recurring discrete network sunset provision. This relates to the sunsetting of the CDMA cellular network for the early adopters of our original cellular radio offering. This sunset is a carrier event that is part of the natural evolution of technology and impacts a variety of IoT devices across an array of industries. As the innovator in cellular radios for water metering applications and as a company focused on customer care, Badger Meter provided protections for such circumstances. Until recently, firm sunsetting plans by the carriers were not in place. Now that these plans appear more firm, we have taken this provision, which reduced gross margins in the quarter by approximately 300 basis points to cover future radio upgrades for these early cellular customers. To be crystal clear, there is no defect in the radio itself. The logical question then follows: Will this continue to be an ongoing challenge with cellular radios? The short answer is no. The CDMA network was already well-established when Badger Meter, Badger Meter introduced its first cellular radio. These first networks had been in service nearly 20 years at that point. Subsequently, we have moved ahead of the technology curve, as demonstrated by the launch of Orion LTE-M in 2019 and our continued innovation around cellular radio technologies. These technologies will be supported by multiple generations of cellular networks. Turning to SG&A expenses. The fourth quarter's spend of $27.1 million increased $2.3 million from the prior year. This includes the addition of s::can for two months, including the resulting intangible asset amortization. More broadly, higher personnel costs were partially offset by lower travel, trade show, and other pandemic-impacted expenses. Including both s::can and ATI in 2021, we expect ongoing SG&A as a percent of sales to average in the 25%-26% range. The income tax provision in the fourth quarter of 2020 was 22.6%, slightly lower than the prior year's 24.3% rate. With the additions of s::can and ATI, we don't expect a significant change in our normalized tax rate in 2021, absent any new statutory U.S. tax code changes. In summary, EPS was $0.45 in the fourth quarter of 2020, an increase of 7% from the prior year's EPS of $0.42. Working capital as a percent of sales was 26%, without, with about 1% of that associated with the addition of s::can. On an organic basis, primary working capital as a percent of sales declined about 200 basis points year over year. Our full year free cash flow of $80.5 million was 10% higher than the prior year's $73.2 million, and represents approximately 163% conversion of net earnings. Our cash flow focus will not abate, and we anticipate free cash flow conversion to exceed 100% in 2021. However, I would caution, we do not expect to see the conversion at the robust levels of the past two years, given the structural change in working capital already achieved. We ended the year with approximately $72 million of cash on the balance sheet after taking into account the s::can acquisition. In early January, we deployed $44 million net of cash acquired for ATI, remaining in a net cash positive position. Along with the continued full access to our untapped $125 million credit facility, we have ample financial flexibility to continue executing on our capital allocation priorities. With that, I'll turn the call back over to Ken. Thanks, Bob. Turning to slide five, I'd like to highlight the two transactions we completed since our last earnings call and how we believe they bring significant value to the Badger Meter portfolio. s::can, acquired in November of 2020, and Analytical Technology, Inc., or ATI, acquired just a few weeks ago, are both pioneers in providing real-time water quality monitoring solutions. This is differentiated from traditional water quality testing because these solutions capture real-time data through sensors and systems that do not rely on labs, reagents, or other consumables, resulting in lower capital and operating costs for customers. Just as water utility billing moved from manual reads to advanced metering infrastructure or AMI, we believe water quality monitoring will evolve from lab sample testing to online real-time collection, monitoring, and reporting. Adding real-time water quality parameters to Badger Meter's core flow measurement, pressure, and temperature sensing capabilities adds to the scope of actionable data for utilities to improve operating efficiency and for industrial customers to monitor both process and discharge water. We see multiple avenues for growth synergies by bringing together these two acquisitions into Badger Meter. For example, from a water quality sensor standpoint, with this combination, we have a full product offering of both electrochemical and optical sensors. From a geographic standpoint, where ATI is strong in the U.S. and U.K., s::can has an installed base in 50 countries. From a scale and coverage standpoint, leveraging customer relationships, inside sales, rep networks, and distributors will create a greater ability to cross-sell throughout the water ecosystem, including water utilities, wastewater treatment, and industrial water applications. There is no question it will take time and investment in order to realize these long-term growth synergies. We need to advance our communications to capture quantity plus quality data parameters, online, real-time via our industry-leading Orion cellular radios. We will need to augment Beacon and EyeOnWater to store, integrate, analyze, and visualize information, providing a holistic view of the water network. This is no small undertaking, but one that we are organized to execute. In the near term, it is business as usual for the two acquired businesses. The combined acquired annual sales of approximately $37 million, with EBITDA margins in the mid-teens, will be EPS accretive to our results. Now turning to our outlook on slide six. While we were all hoping that turning the calendar to 2021 would also turn the page on COVID-19, that is obviously not the case. Despite the continued uncertainty, we remain fully prepared to manage safely in support of our customers in the essential water sector, as we did throughout much of 2020. There has been no significant change in customer tone regarding utility budgets, with spending on critical and necessary activities, which includes metering solutions required for billing and reducing non-revenue water. As we have stated, our large and diverse customer base will have different needs, circumstances, priorities. But as a whole, utility water bid tenders and awards are largely continuing with their normal processes, with limited extended timelines or deferrals. While we don't provide guidance, Bob walked through the detail on a few of the items that will impact us in 2021, including price cost, SG&A levels, and the expected impact of recent acquisition activity. Obviously, we had some significant quarterly swings on the top line throughout 2020, so the growth rates that are uneven in normal circumstances will be more so during 2021. We will continue to drive cash flow, which is the fuel to invest in and grow our business. This includes both organic and acquisition-driven growth, with a focus on additional product and software offerings, serving water-related markets and applications. For example, expanding functionality of our EyeOnWater software app that helps drive consumer engagement. Finally, we will continue to advance a variety of priorities on the ESG front, including relentlessly focusing out on employee safety, reducing greenhouse gas emissions, fostering our culture of inclusion, and of course, promoting water conservation and quality. To close out our prepared remarks, I couldn't be more proud of the Badger Meter team on the performance in 2020. Despite the unprecedented backdrop of a health and economic crisis, we have delivered utility water revenue growth, SaaS revenue as a percent of sales growth to now 5%, strong EBITDA margin expansion, robust working capital management and cash flow, and successful execution of two accretive acquisitions. It's a true testament to the criticality of the water industry and the exceptional Badger Meter team. With that, operator, please open the line for questions. Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Again, that is star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. We have our first question coming from the line of Nathan Jones with Stifel. Your line is open. Good morning, everyone. Morning, Nathan. I just want to go back to some of the price cost amortization network impacts on fourth quarter gross margin. I think, Bob, you said the network sunsetting cost you 300 basis points of gross margin in the fourth quarter, and you still did 39.1%. There's going to be some impact there from the amortization. So before price cost, you would have had, what? All-time record gross margins in the quarter. You did say there was a net benefit for price cost in the quarter. So can you talk a little bit more about how that's working, how the, you know, the inventory accounting impacted the fourth quarter, and really, what the gross margin expectation here is in the short term? ... Yeah, and as you know, I'll speak generally about those different pieces, but you're exactly right. With a 300 basis point impact of the network sunset provision, that would imply we were in that, you know, low 40% range before that. You know, really, let's talk the pricing actions. I talked about strategic pricing initiatives. Those were largely begun late in the third quarter, and really, were started in earnest before copper started getting a little volatile here in recent months. So really, the price impact that you see in the fourth quarter is a result of those late September changes. And basically, that price impact is coming through in the fourth quarter without a commensurate impact of the copper price increase, which really, for us, started to be seen in December and will be seen more evidently in January, based on just how our supply chain works and how we procure our copper-related components. You know, I think, again, I've talked historically about, you know, our business does not have the margin stairway to heaven, and I think the pivot point that we're at now between the fourth quarter and the first quarter is a good indicator of that, meaning the 42%-low 40% range that we saw pre-network sunset provision in the fourth quarter, we don't anticipate to be sustainable moving forward. A large part of that is the pacing of the price versus cost dynamics in Q4. I don't want to say reversing in Q1, but effectively the cost piece catching up. And so, you're also exactly right in regard to the inventory accounting coming off a peak production level at the end of Q3 and how that then plays out through the end of Q4, also was a modest benefit. I would say the acquisition impact that you referenced and that we referenced in the pre-prepared comments is real, but that's not the most sizable impact. I think that the bigger drivers of, you know, sort of pre-network sunset provision margin profile is the price-cost dynamics, combined with really the mix trend that we've seen, you know, throughout the last year or two in terms of the mix dynamic being favorable on margins over time. So I know I sort of meandered through all that, but hopefully, that answers your question. Yeah, no, I think so you're realizing the price before you're realizing the additional cost, and that's just a matter of the accounting conventions. You guys have said 36%-40% gross margins, and have been consistently in the upper half of that over the last few years. The business did dip down, you know, briefly into the lower half of that kind of range, the last time we saw copper spike up back in 2017, 2018. Do you guys think you can maintain gross margins in that kind of upper half of that 36%-40% range? Or is it more reasonable to think that we might dip down into the lower half here, just in the short term, as you see some of these price-cost dynamics play out? Yeah, Nathan, you know, as things are evolving, and we've talked, you know, over the past couple of years about the structural shift to more software as a service and more radios, you know, that is a structural change that is a positive mix factor going forward, and we continue to grow in those spaces that we're very pleased about. You know, this more dynamic view of pricing and really getting more granular, if you will, in our pricing models to make sure that we're providing value for customers at a price that they're willing to pay for while still winning new business is a balance that we're really starting to find. We're being, I think, a little more proactive about getting out in front of those things. So long story short, I think with the positive mix actions, the way that we're going to market with how we think about price, we still feel like we're gonna be able to stay in the upper half of that range. Certainly more challenged with the things that you're aware of, but we feel comfortable we can do that. That makes sense, and I think these pricing initiatives here are pretty self-evident, that they're working a little bit better than the company has historically, so congratulations on that, and I'll pass it on. Yeah, thank you. We have our next question coming from the line of Ryan Connors with Boenning and Scattergood. Your line is open. Hey, good morning. Thanks for taking my call. Sure. Hi, Ryan. My question is actually kind of big picture. You know, I wonder if you can comment on the federal situation. Obviously, we've got a new administration in place since your last call, and a lot of talk about stimulus and infrastructure spending, some of it presumably related to your product lines and focus areas. Any update on what your expectations are there and how it could impact Badger, both tactically and strategically? Yeah, so the thing about, you know, the changes in the federal government and stimulus and/or infrastructure. Whenever there's more money that comes in and is available for water utilities, particularly given all the, you know, the macro drivers of aging infrastructure and aging workforce, it can only be helpful for the long term and midterm. Where it can be challenging, and I think we've talked about this before, is if it tends to drag on, be vague, you know, sometimes utilities, particularly now, could have potential to wait and see how that plays out. But for the most part, you know, we think that will work itself out. We're confident in our growth drivers. You know, we think that the positive things that are happening with the market and what we're offering, we have the ability to grow anyway, but we do think for the long term that this could be potentially positive. Got it. Okay. Okay, and then my second-- my next question was, obviously a lot of volatility in the market. You know, your stock's been caught up in that. Sometimes it seems like there's no rhyme or reason. You've got a great quarter today, you beat earnings, the stock's down. What I'm curious on your reaction to that volatility and especially how it relates to M&A. Because you've been acquisitive, you've got great cash flow. Presumably, you want to remain active there. How have the seller expectations in the private company side been impacted by all the volatility, especially some of the increase in valuations and some of the public equities? Have you seen that flow through in valuations, or is there some arbitrage there where you're able to capitalize on your currency, you know, with the more stability in the private valuations? Yeah, if you just look at the couple of deals that we just did, I'm very pleased with the fair, I would say, multiples that we got two really quality assets at. So, you know, we don't see wild changes in the valuations in sellers' expectations. It's been relatively stable and I think good. Okay. And then just lastly, do you think, you know, I think that the water quality side, I appreciate your comments there. I think it is a pretty compelling strategic area for you to be exploring. Is there more to do there? I mean, is... Or do you sort of, you feel like you've got the footprint you need, and then you grow organically, or do you think there'll be more opportunities to add to that via further M&A? You know, so one of the hallmarks of Badger Meter that I've been proud of is our ability to execute. And now that we've acquired two great companies, our tremendous focus right now is on doing a great integration. And, you know, so for now, as we talked about, it's business as usual for them. They're already really strong companies, so we want them to keep operating, and we're gonna be investing in all the things that we need to do to, you know, incorporate into Beacon over time and do the different things. They're gonna be able to grow organically already because they're strong companies and brands, and we're gonna be able to get some synergy throughout the strategic cycle here. I don't... I, you know, I'd caution you, that doesn't happen overnight. The industry is still risk-averse and slow-moving, but we think these businesses have the opportunity to continue to grow at an impressive organic rate, and that for the mid to long term, we're gonna have really exciting synergies. Great. Well, thanks for your time this morning. Yeah, thank you. We have our next question coming from the line of Richard Eastman with Baird. Your line is open. Yeah, just a couple questions. Just kind of a follow-up here on s::can and ATI. Will the, you know, let's get past the purchase accounting here that we saw in the fourth quarter and then again in the first quarter now with ATI. But, is the GAAP gross profit margin here accretive from those two acquisitions to Badger Meter's? Yeah, so specifically to the gross margin line, I would say s::can and ATI are above line average. At the same time, they carry a bit heavier SG&A. And so again, as we talk about those two pieces, you can think of them. I know we're talking apples and oranges because one's operating profit and one's EBITDA, but think of the EBITDA profile of those two companies being kind of mid-teens, if you will. But as you speak to, you know, GAAP operating profit, you have a little bit of a mismatch to the base business, but overall, a good blend. So, when you say mismatch, so the GAAP, the GAAP EBIT, again, just kind of on a normalized basis here, you know, second quarter and beyond, is that run at, you know, something like low, you know, low teens GAAP EBIT contribution from the two? It would be like, you know, twelve, thirteen? I think when you factor in the purchase accounting aspects of now, you know, a higher level of amortization, it would be a little bit lower than that. But, Okay. Yeah, I think you can think of it that way. Okay, 10, maybe 10, 12% to bring it into the model. And then maybe the other question would be, and Ken, I think you referenced this, but some of the costs here to get to integrate the technologies into your technology base and install base, does that pull, you know, that GAAP OP percentage down, or is there enough, you know, just overhead synergies here that you can kind of offset that investment? Yeah, so I think, Rick, I think the way I'd think about it is, you know, let's just go through the line items, if you will. You know, we think, as we talked about in the script, putting the whole bundle together, SG&A in the 25%-26% range, inclusive of what Ken mentioned in terms of the long-term R&D investment to get there. I don't think it's a fundamental change in the overall EBIT level of the business in aggregate, when you think about it over the medium and long term. Okay. Okay, fair enough. Yep. Yep, and then also just maybe the thought here: Do we, as we bring ATI in and s::can in, do we utilize their sales force? I mean, are there any synergies here, you know, in the near term, you know, in terms of go-to-market, leveraging, you know, Badger's install base or sales effort? Anything that maybe can jumpstart their growth rate or step up their growth rate at those two acquisitions? Yeah, absolutely, Rick. So we've already begun that. You know, we've owned s::can now for about ninety days and ATI for thirty, but we've been bringing them together to talk about their channels. And certainly, what I'm really excited about is when you think about these companies, and when I talked about it geographically. You know, ATI is very strong in the U.S., which has continued and will be the best smart water market in the world. And they're in the U.K., which is a great growth opportunity for us. You know, they're with 10 of the 11 largest water utilities in the U.K. with a strong brand name. So I think we have opportunities there. s::can also with their sensing opportunities, they're very small in the U.S. From an optical sensor point of view, plenty of opportunities to get some synergy and pull through going there. With their installed base in 50 different countries that also have smart metering needs, we certainly will have opportunities at every point along the way to leverage the Badger Meter sales force and brand name in the U.S., along with ATI, utilizing s::can. I know they're small companies, but they really have strong brand equity, and we are gonna be able to leverage all three of these based on their individual strengths. But that's a multiyear journey. Yeah. That's, yeah. Yeah. No, that's fair. It's just, and again, a really nice companies that seem like they have really nice technologies, but you look at their tenure, their history, and they obviously haven't grown double digit for twenty years. And so it seems like, you know, the strength of those two franchises, s::can and ATI, is more around the technology, and I would think you could help them kickstart the growth rate a little bit. Yep, and you know, the thing about that is, you know, remember, we always say this, I'm a broken record for sure, you know, slow-moving, risk-averse industry. They're on the innovative end of the technology, which is why we really like them. And they just didn't have the same, you know, the same channels that we have, so we certainly think we can help there. Yeah. The short summary is brand, channel, and scalable software enablement is what gets us all those things. I see. Okay. Okay. Hey, and I just have two more quick questions. One is just, you know, the industrial flow business. I mean, we have some easy comps, but do you envision that business, or is it in maybe the twenty-one plan that, you know, we can squeak out growth for the full year? I mean, can that business be, you know, low single digits to mid single digits for the full year with the, you know, the comps that it has and, you know, any signs of recovery and demand there? Yeah, I would expect that to be in the low- to mid-single digits. It's still gonna be a challenge for us, I think, here in the first portion of the year, but you're right, then we certainly start to get into some easier comps that I'm pretty confident we can get over. Okay. And then just lastly from me, when I think about the, you know, the business overall for Badger, you know, exclusive of s::can and ATI, how does the business feel through January? You know, typical seasonality, you've got more selling days, you know, in the first quarter than you have in the fourth. You know, typical seasonality will put you up mid single digits, exclusive of the acquisitions. I mean, just through January, is that a reasonable tone, or how do you feel about, like, this first quarter, acquisitions and weather aside? Yeah, so let's take it this way. So, you know, throughout this entire pandemic, we've spent, I'm sure you could realize the amount of time we've spent talking to customers and trying to understand activities and behaviors and what would happen. And we've been very pleased that throughout this cycle, things that have been in the bid funnel have converted into orders. You know, so we're sitting here now with a strong, you know, we feel good through the fourth quarter on how we were doing with orders. Backlog is still healthy. Bid pipeline is still there. So I would just say, generally, it's relatively stable. What we don't, you know, what we don't have is, I just want to be clear, because I want to dispel: we don't have pent-up demand. We don't have, you know, site access type things that are holding us back, so don't model any pent-up demand into the future, I would say. Yes. Yeah. Yep. Okay. And so again, you kind of carried that tone out of the third quarter, where it was kind of the day-to-day business had normalized, and maybe the bid pipeline is solid or strong or strengthening, but are some of those releases kind of coming to fruition here, or, you know, is that kind of what we're still watching as the wild card? It's pretty stable. I mean, you know, we're still seeing, you know, activity. Customers still have all the same, you know, issues that we talked about three months ago, right? There's still, maybe it's difficult doing work. It's not as efficient as it used to be, but generally, things continue to move forward. We feel good about the stabilization of the market as good today as we did three months ago. When we talk about stabilization, we're viewing that in aggregate. We're not differentiating between, I think, what you call kind of the normal flow business and project business. We're talking about it in general, that stabilization is there. Okay. Got you. All right, well, thanks for the time. Yeah. Thanks, Rick. Again, in order to ask a question, simply press star then the number one on your telephone keypad. If your question has been answered or want to remove yourself from the queue, press the pound key. We have our next question coming from the line of Andrew Buscaglia with Berenberg Capital Management. Your line is open. Morning, guys. Hi, Andrew. I wanted to go through. So So your velocity of M&A has really picked up here, and you have the cash flow to do, you know, in recent years, so to do more M&A. And it sounds like you're kind of full now, or you got what you wanted in water quality monitoring, but bigger picture, do you foresee, you know, once you digest these, you know, smaller acquisitions in the next couple of quarters adjacent technologies beyond water quality monitoring or, you know, something you can't go much deeper in water, probably not quality monitoring, you got what you want. I'm just trying to look out five years and see, like, what is Badger Meter, as a, like, kind of a holistic portfolio? Yeah. So our M&A strategy hasn't changed. You know, we've acquired two really exciting quality assets in the water quality space. We're gonna continue to look to grow in water quality organically and, you know, we'll continue to keep an active funnel of opportunities there. On the software side, we've been, I think, pretty open about our desire to continue to invest in and grow organically, as well as M&A around bringing more, you know, monitoring and control type abilities to our end users. Certainly things with a global component where we could continue to leverage, that was, you know, why one of the things we were excited about bringing ATI and s::can together is getting more global in nature. So, you know, as we continue to go through here, I mean, the areas that we have, you know, brought to our funnel where we think we see value, we're gonna continue to, I guess, fish in that pond, if you will. Just to reiterate, there will be a little bit of a pause here before you resume activity in M&A, right? Let's just take that in two pieces. Financially, there's no need to pause. I mean, clearly, we're still in a net cash position. We've got full access to the revolver, and we're a really strong cash flow business. There's no need to pause whatsoever from a capital allocation point of view. From a pause point of view, we would not stop ourselves from acquiring another great strategic asset if it were available today. We continue to look at companies. We continue to do things. We're not saying that we are taking, in any way, a deliberate pause. We're just making sure that we're doing a very thorough quality integration of these companies, and if the right strategic asset becomes available right now, we would be on it. Okay. And, in your remarks, what did you say SaaS is, as a percentage of your revenue currently? I believe you- Yeah. Did you... Yeah. We finished the year at 5%. Of total revenue? Total rev. Yeah, total rev, yeah. Okay. And, you know, with water quality monitoring, what should we keep our eyes on any headlines around, you know, with the Biden administration, any specifics around regulations? Is there anything you guys are tracking that you're, you know, a little more excited about than you were a month or two ago? Well, you know, so I, I just think this, this is a trend that has been growing. You hear more and more people talking about having access to real-time information about water quality, and, and then just the innovation and being able to do it more efficiently that, that these types of companies and solutions can provide. So whether it's the Biden administration or whether it just happens or already has been occurring, we think that's a positive trend with or without the Biden administration. But certainly it seems like the Democrat agenda is focused around these types of activities, so that could, could be positive, but, you know, we'll see how they come out. All right. Thank you. We have our next question coming from the line of José Garza with Gabelli. Your line is open. Hey, good morning, guys. Hi, Jose. Morning. Hey, and just for the record, LaFleur should have gone for it. Yes. Yes. I even had one of our British employees ask me: Why did they go for the three-pointer? Yeah, well, moving on. Just a quick question from me on your pricing initiatives. I just wanted to hear you get a little bit more granular on that. Just you know, some of the things that you guys are doing and maybe kind of where you are on that journey. As you guys you know noted, you guys are more proactive there. Yeah, you know, I think as you think about the history of price management here, it's been kind of a list price increase. And, you know, in the old days of primarily selling meters, that would flow through. But as our product line has become more evolved and more about solutions and software as a service and full AMI with radios and meters, it's become more complicated than just passing a list price and hoping to realize something. So, you know, we've had a strong focus over the past several years on operational excellence throughout the business. That's not just a thing on the shop floor. So in all of our processes, up to now and including pricing, we're trying to just be more dynamic, again, about finding that balance of what's the true value to the customer that they're willing to pay for, that we can win work, provide a true valued service to a customer, and try to extract as much value from that for Badger Meter as we can. That's a very high-level view, but there's a lot of mechanics and pieces to it. But just using more data and analytics, and making it more of a living process rather than an annual list price bump. Makes sense. And kind of, you know, where would you be on kind of that journey today? You know, I think if I just reflect on the success that we've had early, I feel really good about where we are on the journey, but we're pretty early in, you know? So I think we've had some really strong early results, but there's certainly more work to do. Okay, excellent. Thanks, guys, and congrats on the results. Thank you. We have a follow-up question coming from the line of Nathan Jones with Stifel. Your line is open. Morning again. Hello. I just wanted to get a clarification, Bob. I've heard you say a couple times on this call, talking about SG&A in the 25%-26% range. ... Can you just clarify, are you talking about the whole company at SG&A at 25%-26%? And that would be, you know, higher than we've been running at here for pretty much ever. What's getting it to that kind of level? Yeah. So I, when I say 25%-26%, I'm talking consolidated with the acquisitions. Effectively, the two contributing factors are exactly what we just described in terms of let's take the two acquisitions, they tend to run above line average at the SG&A line naturally, and then you've got, you know, basically amortization of the acquired intangibles rolling through that line. And so when you roll that together with the anniversarying, if you will, of some of the costs, COVID-related cost activity in 2020 versus 2021, plus those two pieces, that's what's driving the consolidated up to 25%-26%. Got it. So are they, are those businesses high enough on the gross margin level to mix that gross margin up so that, you know, you're kind of holding operating margins here? I know the acquisitions themselves are gonna be a little bit dilutive to operating margins, just given the amortization, but maybe we could talk about it at an EBITDA level. Are these two acquisitions going to be accretive to the EBITDA margin level? Yeah. So let's just, let's do simple math. The base business is low, you know, this past year, EBITDA margins in the low 20s. We've just acquired two businesses that out of the gates, without synergies, are mid-teens. So naturally, it's going to be a drag on EBITDA margins. Obviously, absolute dollars is a different story. And of course, our equation is we'll be able to improve those over time. So that answers the EBITDA question. Again, we believe the acquisitions to be accretive in year one, and of course, thereafter as well. EPS accretive. Okay. Got it. Thanks very much for the clarification. Yep. There are no further questions at this time. I will now turn the call back over to Karen Bauer. Great. Thank you everyone for joining our call today. For your planning purposes, our first quarter 2021, call is tentatively scheduled for April 20th. I'll be around all day to take any follow-up questions you might have. Have a great day. This concludes today's conference call. You may now disconnect.