Hello, good morning, and ladies and gentlemen, welcome to the First Quarter 2022 Badger Meter earnings conference call. My name is Gemma and I'll be today's operator. If you'd like to ask a question for the Q&A session, please press star followed by one on your telephone keypad. If you change your mind, it's star followed by two. 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. Thank you. Thank you. Good morning, and thanks for joining Badger Meter's First Quarter 2022 earnings conference call. 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 will refer to certain non-GAAP financial metrics. Our earnings 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 first quarter earnings call. This quarter's themes replicate those we experienced for much of 2021, including robust demand, operating execution, pricing activities, and operating expense leverage, mitigating widespread inflationary pressures and manufacturing volatility from supply chain constraints. We were extremely pleased with the record pace of orders and the mid-teens growth in utility water revenues in the quarter. Our team continues to do an outstanding job managing the dynamic environment, and I want to thank them for their tireless focus and agility in serving our customers. I'll talk about the current environment and our outlook later in the call, but for now, let me turn the call over to Bob to go through the details of the quarter. Thanks, Ken, and good morning, everyone. Turning to slide four, our total sales for the first quarter were $132.4 million, an increase of 12.4% over the $117.8 million in the same period last year. Utility water product line sales increased 15.1% year-over-year, as continued strong order demand and production output was partially offset by intermittent supply chain disruptions that continued to restrict backlog conversion. Sales growth in the quarter was most notable in ultrasonic meters, ORION cellular radio endpoints, and BEACON Software as a Service, and we continued to realize the benefit from strategic and value-based pricing actions. Orders reached a record pace in the first quarter of 2022, and we exited the quarter with yet another record high backlog. Sales for the flow instrumentation product line were flat year over year as solid demand trends across the majority of global end markets and applications was offset by supply constraints, which limited production. Turning to margins. As we noted on our January earnings call, mounting inflationary pressures were expected to temper gross profit margins, especially against difficult comparisons in the first half of the year. While the gross margin percent at 38.3% was within our narrower normalized range of 38%-40%, price cost dynamics have tightened, leading to gross margin pressure both year over year and sequentially. Dissecting this in more detail, we increased gross margin dollars by $1.4 million year- over- year. As a percent of sales, gross margins were 38.3%, down from an all-time record of 41.9% in the comparable prior year period. Gross margin was pressured by increased cost from an array of purchase components, including brass and electronics, as well as increased freight and logistics costs. The year-over-year impact was compounded by the fact that we had the benefit of value-based pricing in advance of cost increases in the comparable prior year quarter. Margins did benefit from higher volumes and positive product sales mix in the quarter. Recent geopolitical events have increased the level of supply chain uncertainty and accelerated inflationary pressures in an already difficult environment. Therefore, we remain active in executing price increases for our solutions aligned with the value we deliver. The cadence for realization of these price actions have and will continue to be uneven given the timing of backlog conversion, product mix, and other factors. Our markets remain rational and structural product mix, such as higher SaaS revenues, continues its favorable trend. Therefore, despite the tightening price cost landscape that will have leading and lagging effects, we are confident in the margin resiliency of our business over the mid and long term. SEA expenses in the first quarter were $31.9 million, an increase of just $0.3 million year-over-year. As a percent of sales, SEA was 24.1%, a 270 basis point improvement from 26.8% in the comparable prior year quarter. We remain disciplined and thoughtful in our spending, balancing near-term gross margin pressures with our ongoing commitment to R&D and other investments in the business for long-term growth. As a result of the above, overall operating profit margin was 14.2%, a 90 basis point decline compared to 15.1% in the prior year quarter. The income tax provision in the first quarter of 2022 was 23.7%, a modest increase over the prior year's 22.2%. In summary, EPS was $0.49 in the first quarter of 2022, up from $0.47 in the prior year comparable quarter. Working capital as a percent of sales was 24.8%, an increase of 30 basis points compared to the prior year end. As expected, the PWC increase was primarily the result of transitory effects of the inflation and supply chain environment, most notably an increase in accounts receivable, where supply chain volatility resulted in shipments skewed later in the quarter, and an increase in inventory resulting from higher costs and increased safety stock levels. Free Cash Flow of $8.1 million was lower than the prior year's quarterly record of $28.8 million, as modestly higher earnings were more than offset by higher primary working capital and timing between years. If you would, please turn to slide five, as I'd like to walk through our cash flow and working capital trends in more detail. Our Free Cash Flow conversion of net earnings has been very robust over the past several years, due largely to the structural benefit from the low-hanging fruit of our working capital continuous improvement processes. As we enter 2022, there are a variety of factors that will mute this conversion trend while still exceeding our annual target of 100% Free Cash Flow conversion. I would categorize these into two areas. The first being certain temporary factors that will impact 2022 versus 2021. Most notably, the accounts receivable impact from intra-quarter shipping unevenness resulting from an intermittent component delays. Inventory balances reflecting cost inflation and higher inventory levels. Finally, fulfillment of the CDMA cellular network sunset endpoint replacements that were accrued in 2020. The second category is short-term seasonality factors, and that's what we experienced in Q1, where approximately $5 million of incremental year-over-year cash was used for higher incentive compensation payments made in Q1 2022 versus the prior year, and for retirement plan contributions, which were made in cash in 2022, but were previously made in shares of our stock. In summary, we remain committed to effectively managing cash flow, as evidenced by its inclusion in our short- and long-term incentive programs. With that, I'll turn the call back over to Ken. Thanks, Bob. Turning to slide six, despite the challenging environment, our team was able to produce a solid quarter in which we worked to meet customer requirements by delivering on the Choice Matters portfolio of innovative smart water solutions synonymous with Badger Meter. We implemented additional pricing actions throughout our business to offset inflationary pressures and effectively managed expenses while thoughtfully investing in our growth initiatives, using our financial flexibility and strong balance sheet to invest for the longer term. With a record order pace in the first quarter and robust backlog, we remain confident that our exceptional customer support and winning portfolio of digital solutions will provide sustainable growth. Badger Meter is uniquely positioned with a full line of smart water offerings, including market-leading cellular communications, water quality monitoring, and tailorable software to allow customers to monitor, manage, and support operational efficiencies and sustainability throughout the water distribution system. In the near term, we will work to mitigate the impact of ongoing material cost increases, supply chain disruptions, and logistics availability in support of our customers. Our priorities over the long term continue to be focused on executing our organic and acquisition-driven growth strategies and delivering value for shareholders. To close out our prepared remarks, I want to again thank our team for their hard work and dedication serving customers, further enabling the protection of the world's most precious resource. With that, operator, please open the line for questions. Thank you. If you would like to ask a question, it's star followed by one on your telephone keypad. If you do change your mind, it's star followed by two. Our first question today comes in from Andrew Buscaglia of Berenberg Capital Markets. Andrew, your line is open. Please go ahead with your question. Hey, good morning, guys. Hi, Andrew. Andrew. You know, so obviously, the quarter, you're seeing some margin pressures, as expected. But I was wondering if you could talk to, you know, from here on out, does it seem like margins can, like, resume to, you know, expansion sequentially? And I know you don't give guidance, but how heavy I guess I'm looking for maybe, like, how heavy are these inflationary pressures and other dynamics you're seeing? And is this kind of, like, you think getting peak-ish with regards to how hard things are? We anticipated coming into Q1 the margin pressure, and I think we signaled that pretty effectively in our January call. At the time, in January, copper was at a lower level than where it is today. There wasn't a war in the Ukraine. I think that the world has changed slightly and the impacts there are having a cascading effect. But at the same time, I don't know that we've changed our outlook on our overall margin profile. As you know, we talk about 38%-40% as this narrow band of gross margin. Just happens that Q1 was at the lower end of that range. Still proud of that in a highly inflationary environment, but I don't know that the dynamic has changed all that much. While you know I'll stop short of talking about, you know, continued accretion moving forward and where we fit, I think safely you can assume it's in that 30%-40%, 38%-40% tighter band. That's gonna play out depending upon how mix occurs, how we claw back the backlog, and how these pricing actions that we've taken late in Q4 of 2021, and now another step here on a limited number of products here in April 1, how those play through into the P&L, which, as you know, there's always a lag in that. I think we're confident very much in that normalized range that we routinely talk about. Yeah. I'd just like to reinforce that. I mean, with the way that the structural change in the business has occurred, where we're selling more value, customers have proven that they see that value and they're willing to allow us to price that accordingly. You know, the structural mix is there. I mean, we had the growth again in cellular radios and ultrasonics and Software as a Service. Really difficult operating environment as we go through some of the challenges that everybody's facing. The confidence and the resilience of the margins is there. I know, you know, like with last quarter when you reported you didn't have this geopolitical issue, obviously. What exactly specifically is that? I guess is the impact there? Just like further disruptions, you're not able to get parts. It just makes it that much more harder? Well, I think it's more related to the inflationary side. First of all, we don't have much revenue at all, you know, in Russia, Ukraine, so it's not a revenue. Right Issue. It's just caused, you know, some rapid inflationary issues when you look at the price of oil and gas and just some of the other things that have come through. We're not tied to supply chain issues to that region, so, it's more on the inflationary side that came on pretty sudden and quick, you know, pretty quickly. Okay. Maybe just last one, presumably, you know, the cash flow in the quarter. You got a lot of moving parts there with working capital. I guess, what's changed for you or how do things come in line with what you were expecting for the quarter? I guess, how difficult it is then to manage, you know, versus the previous years when you had such great cash flow conversion? How do you see that playing out this year? I have to say nothing has changed from our overall target of having Free Cash Flow conversion in excess of 100% of earnings. That will remain tried and true, and we remain steadfast in that commitment. I think what's changing is the ability to convert in the 150% or 160% range because those years of 2019 through 2021 benefited from kind of working capital improvement to drive primary working capital as a percent of sales from what used to be high 20s% to now mid to low 20s%. You just don't see that ability. The quarter played out quite frankly as predicted. We had already anticipated coming into the year Free Cash Flow being weaker in the first half than in the second half. I would say not much has changed other than we're up against a really tough comp from a year ago when we had a record $28.8 million of Free Cash Flow and a comparable period where working capital was declining, and now we're in a first quarter where working capital is increasing. If you look at the balance sheet, you'll notice the biggest driver of that working capital change is accounts receivable, which largely relates to the pacing of shipments in the first quarter of 2022 versus how that played out a year ago, and that's a direct cause of the intermittent supply chain challenges that we've talked about. I would say again, Andrew, not much has changed overall. Yeah. Okay. It's just the step change of being able to maintain that high rate of conversion, and we're simply signaling it won't be at those higher levels. In this case, it's probably more of a second half story than first half story. Okay. Thanks, Bob. Thank you. Our next question today comes in from Rob Mason of Baird. Please go ahead, Rob. Your line is open. Yes. Good morning. Thanks for taking the question. Just it sounded like as the quarter played out, you were able to ship more product later in the quarter. I know supply chain issues still abound, but you know, at the margin, can you inform us how you know, your supply situation is trending in April? Is it you know, did it get better during the quarter? That would maybe be the inference there, but can you just clarify that? The inference you picked up is correct. We definitely had momentum exiting the quarter with supply chain. You know, the supply chain problems aren't over, but we are absolutely in a better place today than we were a year ago. We're absolutely in a better place than we were six months ago. But we continue to manage and things pop up here and there in the old whack-a-mole analogy. But we're definitely in a better place heading into Q2 than we have been for quite some time. I mean, is it fair to carry that forward, Ken, then, you know, you typically see some seasonal, stronger shipments in the second and third quarter. Of course, your backlog right now is elevated too. All else being equal that, you know, we could see some seasonality, normal seasonality in the second or third quarter? No, I wouldn't count on that. That actually hasn't really been a thing for us for a few years now. The seasonality has really kind of melted away as customers are more and more implementing AMI projects that are longer term in scale. As we build up our software as a service, that's a completely resilient recurring revenue. The profile has changed quite a bit. You're right, even with the backlog, it's just a matter of us continuing to convert backlog. Frankly, we've had a great problem. We keep shipping more, but the backlog keeps growing. Sure. I just wanted to flip real quick to the flow business. You mentioned strong order trends there, but again, I guess supply held you back. Certainly relative to the utility business that's viewed as more economically sensitive. I'm just curious now that you've also retooled the end markets that you're serving there, you know, how you view the economic, macroeconomic sensitivity of that business, or, you know, what would be more cyclical or less cyclical within that bucket of product? Yeah, the thing to always remember about flow instrumentation is that it's a really small portion of our portfolio, you know, in the 15%-ish range. That 15% is broken down into a series of very small markets. We're doing extremely well in the focus areas of wastewater and HVAC and building sustainability. Those other markets kind of go up, and they go down, but they're pretty small in the grand scheme of the overall portfolio. In terms of the economics of those markets, you know, we've attacked those with the same value-based pricing models to make sure that we're extracting the value that we create for customers. Very good. I'll hop back in the queue. Thank you. All right. Thanks. The next question on the line comes from Nathan Jones of Stifel. Nathan, your line is open. Please go ahead. Good morning, everyone. Good evening, Nathan. Nathan. Good evening. I just wanted to follow up on the revenue question and have supply chains limiting that. I mean, revenue kind of ramped up each quarter as we went through 2021. First quarter of 2022 here was pretty flat sequentially with the fourth quarter. You talk about supply chain being a little bit better exiting April. Should we kind of count on this $130 million-$135 million of revenue until you see more, you know, significant and sustained easing in these supply chain challenges? Or are you kind of implying here that you think you can get a little better than that with some of the momentum on supply chain that you've exited the first quarter with? As we've said a few times since the start of COVID or throughout the supply chain challenges, you know, obviously, we don't provide guidance, and starting to do that now would be a most difficult time to try to guide. You know, I think, you know, when we just look at the significant growth that we've had in our order book, the momentum that built through the quarter and the confidence that we have heading forward here, I'm not going to guide. To the point I made before, you know, supply chain feels better today than it did, you know, three and six months ago. Okay. Just obviously, there's been a lot of price increases here. There's a lot of inflation. Are you seeing the velocity of projects through your funnel change, maybe slow down because customers are balking at pricing? Any of the sales cycle extending? Just any kind of areas of potential weakness that you might be seeing. Obviously, the business has done extremely well throughout this whole time. Yeah. So, you know, we still see a very strong pipeline of bid activity. Obviously, we've had a very strong order conversion and revenue growth. So in terms of the entire pipeline, we feel every bit as good as we did before. If you rewind the clock, you know, we went through the infrastructure piece where sometimes you wonder if people would wait because of infrastructure talk. Well, people ordered even though there was infrastructure talk. Now we're getting into, you know, some pretty significant inflation, and people keep ordering. What that tells me is that we've been correct about the trend of AMI adoption. You know, I think as a result of COVID, we saw some acceleration there. The benefits to utilities for AMI are proven. Our portfolio of, you know, leadership in cellular and how we work with customers, I think, is being rewarded. Yeah. Well, I'll tell you from over here that the adoption of AMI seems like it's gonna be ubiquitous here. Thanks for taking my questions. Yeah, thanks. Tate Sullivan from Maxim Group, you have the next question. Please go ahead. Well, thank you. Can you comment on the water quality monitoring opportunity and were some water quality monitoring orders framed within your comments about a record pace of orders in the press release as well? Just a general update. Yeah. Sure, sure. Hey, Tate. Yeah. You know, as you're probably aware now, we've lapped the year, so that's just included in our utility sales. Our excitement around water quality is every bit as big today as it was the days that we acquired s::can and ATI. We're seeing significant growth opportunities, strong synergy opportunities, cross-selling to our customers or into some of the long-standing s::can and ATI relationships. We're seeing strength in that part of our market and feel great about those acquisitions and having strong growth rates going forward with it. Thank you. Also on the record pace of orders, it's a bit of a change in language before when you commented on record backlog. Was that indicating maybe stronger orders at the end of the most recent quarter or just I mean, I think it's safe to say that you have record backlog again or just can you go into the reason to phrase it that way? It's just the fifth consecutive quarter where we've had pretty strong shipments, but the backlog continued to grow. I mean, it's been pretty consistently strong. Okay. Great. I thought I heard, Rob, you comment on some new product introductions in April. Did I hear that correctly? Can you just give an update, Ken or Rob, on the new product introduction schedule after this year? Let me clarify. My comment from April was on an April price increase. It had nothing to do with new product. I'll let Ken talk about new product specifically. Okay. Okay. Yeah. You know, we continually work our new product development funnel and typically, you know, those get launched and they come in. No, we didn't have any significant launches in the last, you know, three or so months. Okay, great. All right. Thank you both. All right, thanks Tate. The next question on the line comes from Thomas Johnson of Morgan Stanley. Please go ahead, Thomas. Hi. Thanks for taking my question. You know, just kind of reverting back to the backlog here, is there any way that you could kind of help frame the backlog for us? Maybe, you know, just in terms of how long it could possibly take to kind of work that down to normalized levels. Beyond that, you know, any commentary you can provide on pricing within the backlog and, you know, ability to reprice, you know, some of that legacy backlog that's remained in there. First off, with five consecutive quarters of backlog growth, I would say it continues to be something that we'll work through throughout the remainder of this year. I mean, we've got a really strong order book to build off of, and I don't see us getting back to normalized backlog levels within 2022, which in my view is a good thing. On the pricing side, you know, we have different pricing arrangements for new products that we price. We have list price increases that take some time to roll themselves through. You know, we have some backlog questions. Generally it's not one size fits all on how the dynamic pricing works, so it's not as simple as just saying, "Yeah, we're gonna go out and reprice a backlog." We do have a very robust process for pricing analysis that we put in with our value-based pricing initiatives in 2020 that we feel really good about. Okay, great. I guess, would it be a reasonable assumption that on, you know, some of these longer term contracts that are in the backlog, that's probably a fixed price, that they can't be adjusted moving forward? Yeah. It varies customer to customer, contract to contract. Typically, on some of the longer term items, we might have a kick at the can once a year, and we have customers where pricing is held for two years. Obviously, those are some legacy practices that as we've gone through an inflationary environment, we're trying to change or take different stances with customers on. At the same time, there is some of that legacy that carries forward. Even despite being five quarters into inflation, there's some that haven't had a reset button yet that are forthcoming here in the near term. It really varies contract to contract. It depends on the channel, whether we're direct or through distribution. Trust in the fact that every opportunity we have, where there's an opportunity, again, appropriately with a customer to recoup costs, we're gonna try to do that, and we're gonna do that in a very genuine and sincere way with our customers. Great. Thank you. That's all for me. All right. Thanks. We have a follow-up question on the line from Tate Sullivan of Maxim Group. Tate, your line is open. Hi. Thank you for taking my follow-up question. On the water quality monitoring again and can you talk a little about the sales cycle? I think historically on the water meter side, you've introduced some new technology to industrial customers and flow instrumentation. In water quality monitoring, will you sell it first to some industrial customers into wastewater capabilities then to drinking water? Can you talk about some of the potential process in terms of introducing more water quality monitoring products? Sure. Yeah. As we thought about integrating the companies and how the sales cycle would work in the early phases, there's more opportunities on the industrial side because as we're all well aware, the water utility space is a little bit slower moving. We do fully see opportunities arising industrial earlier. By now, as we're into this a little bit over a year, we're capitalizing in both spaces. Thank you. You're welcome. As a reminder, if you would like to ask a question, it's star followed by one on your telephone keypad. We have no further questions registered, so I'll hand back to Karen for closing remarks. Thank you. Great. Well, thanks everyone for joining our call today. For your planning purposes, our second quarter 2022 call is tentatively scheduled for July 20. I'll be around all day to take any follow-up questions you may have. Have a great day. Thank you all for joining us today. This concludes today's call. You may now disconnect your lines. Have a great afternoon.