Ladies and gentlemen, welcome to the fourth quarter 2022 Badger Meter Earnings Conference Call. If you would like to ask a question during the Q&A portion of the call, please press star one on your telephone keypad. 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. Thank you all for joining the Badger Meter fourth quarter and full year 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. Thank you for joining our fourth quarter earnings call. The Badger Meter team finished the year with another strong performance, delivering solid revenue growth while achieving yet another positive book-to-bill ratio. Despite persistent macro challenges with sustained inflation and sporadic component shortages throughout 2022, gross profit margins have consistently been within our tightened, normalized range of 38%-40%, and we improved SEA expense leverage during the year. We generated robust cash flow in 2022 and utilized that growth capital to acquire Syrinix in early January 2023, adding to our comprehensive hardware-enabled software offerings. I'll talk more about Syrinix, provide a recap for the full year, and discuss our outlook later in the call. For now, I'll 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 in the fourth quarter were $147.3 million, sequentially similar to last quarter's record level and 8.5% higher than the $135.7 million in the same period last year. On a constant currency basis, excluding the impact of the stronger U.S. dollar, sales increased 10%. Total utility water product line sales increased 9% year-over-year against a difficult prior year comparison. Broadly, we experienced continued strong order demand, ongoing price realization, and growing adoption of our cellular AMI solution, with higher ORION cellular endpoint and BEACON software as a service sales. Additionally, we saw increased sales of meters, including E-Series ultrasonic meters. The strong demand environment resulted in another record utility water backlog exiting the year, even with the strong top-line sales performance. Sales for the flow instrumentation product line increased 8% year-over-year, led by solid growth in water-related markets. The impact of the stronger U.S. dollar was most meaningful to this product line, with constant currency growth of just over 10%. Order trends remained steady, with water-related applications outperforming the more general industrial end markets. While we are very excited about our growth expectations for both the near and long term, we do anticipate that the rate of quarterly sales growth in 2023 will moderate from 2022. Turning to margins, gross profit as a percent of sales in the fourth quarter was 38.7%, consistent with the prior quarter and again in the middle of our normalized range as anticipated. While favorable structural mix trends continued, the impact of inflation across various input costs remained a stubborn headwind. Case in point, pick up any copper price graph and you can see an example of the type of volatility and unpredictability inherent in the inflation challenges facing nearly all industries. After peaking around $4.90 a pound last spring, copper settled back into the $3.50 per pound range over the past six months or so. We now are back to over $4.25. While we can't fully control these types of input costs, we are managing what is within our control, which includes continuing our value-based pricing rigor. We remain committed to our normalized gross margin range and are confident in the overall margin resiliency of our business model. SEA expenses in the fourth quarter were $34.5 million, an increase of approximately $2.5 million year-over-year, due primarily to higher personnel and incentive compensation costs, research and development spend, and travel. As a percent of sales, SEA was 23.4%, a 20 basis point improvement from 23.6% in the comparable prior year quarter. Sequentially, SEA leverage did worsen 70 basis points as our robust cash flow in the fourth quarter resulted in higher incentive compensation accruals at year-end. We expect SEA spend in dollars for 2023 to increase as a result of inflation and ongoing growth investments. We continue to endeavor to improve SEA leverage as a percent of sales as just one of the levers for future margin enhancement. The income tax provision in the fourth quarter of 2022 was 23.4%, compared to 24.5% in the comparable prior year quarter. In summary, consolidated EPS was $0.60 in the fourth quarter of 2022, compared to $0.59 in the prior year comparable quarter. Working capital as a percent of sales was 22.2% at year-end, compared to 23.8% at the end of Q3 and down from 24.5% when we started the year. While inventory has increased in response to supply chain complexities, the corresponding payables increase, coupled with receivables collection quality, resulted in the net overall improvement. Fourth quarter free cash flow of $28.5 million was higher than the prior year's $26.2 million, the result of our effective working capital management activities. For the full year, free cash flow was $76.6 million. Free cash flow conversion of net earnings was 115%. This represents the fifth consecutive year of greater than 100% conversion of net earnings. With that, I'll turn the call back over to Ken. Thanks, Bob. Turning to slide five, I want to spend a few minutes on our recently announced acquisition of Syrinix and how we believe it expands the value of our Smart Water Solutions portfolio. Syrinix brings additional capabilities to our industry-leading offerings in the form of pressure monitoring hardware and software. Their patent-protected and innovative time-synchronized high-frequency pressure monitoring and acoustic leak detection complements the existing pressure monitoring capabilities available in our E-Series ultrasonic meters. Syrinix has a history of success with network monitoring installations across a variety of utilities, most notably in the U.S. and U.K. Of key interest to Badger Meter is their radar software, which adds to the scope of real-time and actionable data and analytics for utilities to improve their operations. For example, time-synchronized pressure data allows for proactive versus reactive strategies to address pipe bursts and other leaks, saving precious time, money, and water loss. Additionally, pressure and water quality sensors can work in tandem, for example, in situations where a cracked pipe is identified as a result of contaminant infiltration. In fact, Syrinix has worked closely with the ATi water quality team over the years. From a financial standpoint, this technology startup has seen steady growth, albeit from a very small base. Our acquired revenues are a few million dollars, and it will start out modestly dilutive to earnings, given the pre-profit position upon acquisition and future amortization of purchased intangibles. We believe over the long term, adding the Syrinix capabilities to our comprehensive and tailorable digital solutions will continue to competitively differentiate Badger Meter in the market. Taking a look back at fiscal 2022 and the past several years overall here on slide six, we have distinguished our performance by executing our strategies exceptionally well in the face of a multitude of macro challenges. As noted in the release and outlined here, in 2022, we delivered 12% overall sales growth and 14% utility water product line growth, grew orders and backlog to new record levels, generated nearly $34 million in software revenues, grew operating profit 11% in the face of unprecedented inflation, and delivered 115% free cash flow conversion of net earnings. Looking at just a few of the longer-term accomplishments relative to our strategic growth goals, we've grown our utility water business at an accelerating rate over the last three years, increased software as a sales revenue at a 45% growth CAGR, reaching 6% of revenue in 2022, even with a sizable increase in product sales. We reduced our primary working capital as a percent of sales, freeing up capital by instilling a focused, continuous improvement mindset to working capital management. All of which enabled us to generate nearly $240 million in free cash flow over the past three years, with an average free cash flow conversion of 137%. Of that cash, we deployed nearly $100 million, inclusive of Syrinix, on three strategic tuck-in acquisitions, adding water quality and pressure monitoring capabilities to our Smart Water Solutions. We returned nearly 30% of that cash to shareholders in the form of dividends, achieving dividend aristocrat status with a track record of 30 years of consecutive annual dividend increases. We continued to invest in R&D and innovation to build on our leading portfolio of Smart Water Solutions. I couldn't be more proud of the team's achievements. Finally, turning to our outlook, I remain excited about the opportunities ahead. At a macro level, Badger Meter is uniquely positioned with a broad and expanding portfolio of Smart Water offerings. This includes our industry-leading cellular communications, real-time water quality and pressure monitoring, as well as tailorable software to enable customers to be more efficient, resilient, and sustainable with their water systems. Our replacement-driven demand, macro AMI adoption drivers, and growing proportion of stable SaaS revenue are supportive of durable multi-year growth against an uncertain economic backdrop. We continue to remain constructive on the bid funnel and order rates with record orders in the fourth quarter and a record backlog, which bodes well for future sales growth. I'm also encouraged by the current trajectory of supply chain easing. Coupled with some anticipated leveling off of input cost inflation and continued price realization, this should bode well for gradual gross improvement, gross margin improvement in 2023. Our cash flow generation and debt-free balance sheet provide us with ample capacity to execute our capital allocation priorities, including an attractive funnel of organic and inorganic strategic growth investments. I want to again thank the entire Badger Meter team for their tremendous efforts and accomplishments in 2022, and I look forward to executing on the many opportunities ahead. With that, operator, please open the line for questions. Absolutely. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question comes from the line of Nathan Jones with Stifel. Your line is now open. Good morning, everyone. Nathan. I do like that slide six. I think the chart there of working capital of the sales coming down, and especially the free cash flow conversion over the last couple years with all these supply chain challenges are pretty impressive. Maybe you could talk about a little bit more about the supply chain easing. What you're seeing there, what you're expecting to see there. No doubt all of this supply chain disruption has had a negative impact on the productivity within your facilities. Maybe talk a little bit about, you know, what that impact's being, what kind of margin expansion you might be able to see as you improve productivity with more reliable supply chains. Yeah. Thanks, Nathan. Supply chain, as we've talked about, I think in the last couple of quarters, it continued to improve again. I wouldn't say that we're completely out of the woods yet, you know, across the entire industrial space. Still seeing some challenges with electronics here and there. For the most part, definitely in a better position than we've been, and expect that to continue to improve. You're right, the supply chain complexities, certainly add, have added a lot of inefficiencies and other issues throughout our facilities. We've handled it very well, and I expect to see some improvement there, but nothing that I think you can model as a huge improvement. Yeah. I think the takeaway, Nathan, should be exactly... Okay ... in the. Oh. Sorry. In the prepared remarks, which is with that supply chain easing continuing with the opportunity for greater efficiency, you know, we're still staying resolute in our normalized margin range, but we would expect, you know, a modest improvement in 2023 versus 2022. You talked about expectation, you know, some flattening inflation- Flattening inflation Some additional price reading through in 2023. Can you give us whatever color you're prepared to on price cost in 2022 and then what your expectations are in 2023? Should price cost be, you know, better in 2023 than it was in 2022? Worse, the same? Yeah. A lot of moving pieces there. As you know, when we talk about price cost, oftentimes in addition to what people most traditionally think of, there's always a mix or an average sell price dynamic that plays into that. That said, I think the way we would look at 2023 simply versus 2022, modestly better price cost dynamics, 2023 versus 2022. We know we've had leading and lagging effects of price actions relative to cost. That's why we're still staying resolute with that targeted comfort zone or margin profile of 38%-40%. Great. Thanks for taking my questions. I'll pass it on. Thank you, Mr. Jones. Our next question comes from the line of Thomas Johnson with Morgan Stanley. Your line is now open. Hi. Thanks, congratulations on another strong quarter here. to start Thank you. ... it would be helpful if we could maybe get some incremental color on the demand outlook. Obviously, you know, language on year-over-year comps is reasonably conservative but constructive. Although you did mention, you know, record fourth quarter exit ordering, and it's pretty clear that, you know, recent results have been delivered in the face of some pretty strong operational headwinds, which, you know, we kind of would assume are easing in 2023. What are some of the underlying assumptions that are kind of causing that conservatism on the 2023 outlook just on a year-over-year basis? I'll go first and then I can see Bob chomping at the bit here to get in too. You know, I'll bring you back to slide six, if you look at the upper right corner, we've got the chart there on utility growth. Remembering that utility is 85% of our revenue. Even in 2020, the COVID year, we grew 4%. Last year we grew, in 2021, we grew 9%. This year we grew 14%. We are absolutely excited about the market. The market is great. We continue every single quarter to have record shipments, the backlog has increased every quarter. The bid funnel is strong. We're winning more than our fair share of AMI in this market. We feel as great as ever about the utility market, which is the largest portion of our business. We feel really good about our ability to grow 10% in flow instrumentation, that other 15%. We don't feel challenged by markets. We're just saying perhaps maybe the rate of the percentage of growth may not be 14% again, right? That's the clear takeaway should absolutely be here. Optimism about the outlook moving forward, just incrementalizing on a year where you just delivered 12% growth, to think that that rate of change on a law of big numbers is going to be in excess of what we just delivered. The conservative comes from just anniversarying the increases of 2022. Still very robust growth, but just not at the level of an excess of what we just delivered. Yeah. To be very clear, I mean, we are very confident in 2023 and the longer term, with what we see in the markets. Understand that. Thanks for the color. Just shifting to capital allocation here. You know, really helpful information on slide seven. And clearly you've put some capital to work in the first quarter of the year, but still sitting on, you know, pretty high levels of cash here. Just from an M&A perspective and maybe, you know, the pipeline of deals there, you know, post this recent acquisition, what other areas are you focusing on for inorganic growth here in the near term? Yeah, we've built and have maintained a really interesting funnel of companies that are in the water quality space, software space, much like Syrinix, the recent acquisition, and anything that brings some sort of a global customer base and footprint with it is in that target zone. We, you know, we remain disciplined. We, we look for value. I think we certainly have found that with the, with the three acquisitions we've done in the last 26 months. We're not in the mode of just trying to get bigger because we can, but there's certainly a number of interesting opportunities out there for us that we continue to work. The laneways Ken mentioned are the same as they've been really for the last couple of years. You can tell that those laneways are very core to where we play today. This idea that perhaps with the, with the available cash, we'd all of a sudden stray far from the fairway in which we operate right now, that's most not likely. Not likely. We're staying very core to where we play, and those laneways are unwavering really over the last few years. Understood. Thanks for the helpful responses. I'll pass it back. All right. Thanks. Thank you, Mr. Johnson. Our next question comes from the line of Rob Mason with Baird. Your line is now open. Yes. Good morning, all. You mentioned. Rob. Good morning. You mentioned the book-to-bill, again, over one. Or Bob, could you square up where backlog, you know, sits at year-end relative to, you know, 12 months ago, year-end 2021? You know, the order of magnitude. Yeah. I guess, increase is what I'm looking for. We don't specifically disclose backlog. Actually in light of kind of the imbalance that's really been in the supply-demand environment over the last 24 months, I think quite frankly, sizing it would be not all that relevant and actually might create more confusion. Obviously, if you take the last several quarters of book-to-bill in excess of one, you can obviously conclude that backlog is higher at the end of 2022 than it was in 2021. We don't, we aren't going to size that, and we haven't typically disclosed it because I think this isn't a traditional backlog business. Granted, we do have more line of sight to, you know, immediately actionable orders now than we have in years prior, but we think that's a temporary scenario. Yeah, we're not gonna size it, Rob. Can you tell me if the backlog, you know, the bookings, book-to-bill, you know, over one in the flow measurement business also? You know, comparatively, how does it look? It was slightly better than one. Just, I guess, reminding, of course, all that that's, you know, 15% of the business and not necessarily. You know, we're very fragmented in those many markets, many small markets, so if you're trying to draw conclusions of that data point to other industries, challenging to do. To Bob's point, it is small. Remember that now we have more of a primary focus in that group on water-related industry. You know, if you're thinking back in time, our portfolio has gone from 70/30 utility flow instrumentation to now 85/15, then even within that 15, it's more water-focused than it used to be the other markets. It's quite different than it used to be, I think, when people thought about recessionary times or other challenges. No, no. Understood. Understood. Ken, good color on Syrinix, but I'm curious if you could go a layer deeper. Looks like a very interesting business. Just help me understand how, you know, how that product gets to market, maybe what the sales cycles would look like, what a typical deployment would look like, just within that product category or how you envision it. Yeah. The way that we view a lot of these small technology acquisitions is that with our strong brand name, with our sales coverage in North America, we can usually sell anything to our existing customer base, to new customers, and even utilities that might use a different metering manufacturer. Syrinix can fit right into our direct sales channel. Our utility distributors can sell it. They know the product. They have the right contacts. In terms of being able to get some sales synergy in the U.S., we certainly feel that. We're, you know, excited about the fact that it also comes with a software component. Now when you think about our BEACON software that, you know, we've built out here really significantly over the last five, six years, it was primarily AMI data. Now we added s::can, ATi, and now, you know, people can go to BEACON and get their water quality data. Now with the radar software that we'll incorporate into BEACON, a utility now can come get their quantity, quality, pressure, acoustic leak detection all in one place. We think we've got really good leverage, and we can integrate it relatively easily into our sales force. On top of that, we're really excited about the, you know, again, small companies, similar like ATi, s::can, except even smaller, but long-standing great relationships with people like Thames Water, even American Water. If you go to their website, you'll see some really good customer test cases. I've said this before, technology deals for us, it, you know, obviously with, you know, big deals are always, you know, flashy, but no deal is too small with what we can do with our customer base. I can tell you. I'm sorry. Sorry, Rob. The one piece that maybe we didn't touch on there was you talked about, you know, how deployed can cover channels, but from a deployment standpoint, this largely becomes a start to. I'm gonna call it a pilot, for lack of a better term. Maybe a focused effort on leak detection in a particular part of a defined distribution network. Once that's successful, that model gets replicated in other areas or zones. Basically you have customers starting with a small footprint of technology, but that then customer grows that installed base of both hardware and software over time. I see. I see. To the extent that you noted it might be modestly dilutive this year, I'm just curious what would be the impact on the gross margin? At the gross margin line, this is above line average. Again, to size what we said in the commentary, we're talking about a couple million dollars of sales at acquisition. Sure. Sure. Okay. Very good. Thank you. Thank you so much. Sure. Thank you, Mr. Mason. Our next question comes from the line of Tate Sullivan with Maxim Group. Your line is now open. Thank you. Thank you. Good morning, all. On Syrinix following up, is it additive to the existing real-time water quality measurement businesses you have, or is it the other way around? If I could hear that. Yeah, Tate, it's really exciting in that, you know, we have known Syrinix for several years, but they've had a long-standing relationship with ATi. This equipment works hand in hand a lot of times with the water quality equipment because, as I mentioned in the prepared comments, you know, sometimes you can understand a leak because you can see the contaminants in the water first, and vice versa. They really help each other out, plus you can get it into the drinking distribution system, so it goes all the way across the portfolio. Okay. On the real-time water quality opportunity, can you give an update there? Is most of the customers currently, if you can't comment on industrial customers for that technology, and also can you update on the process of integrating the software capability into the real-time water quality market too, please? Sure. Yeah. You know, so the water quality, the water quality applications do have, you know, the wide-ranging effects of, you know, drinking water distribution, wastewater, industrial processes. Yeah, it fits all aspects of what we cover. In terms of software, yes, it is available, it is online, and customers are now ordering water quality sensing plus software. Oh, oh, great. Both on industrial and utility, Ken? Yes. Yes. Yep. Okay. Okay. That is correct. On the international opportunity too, I mean, U.S. was such good growth in 2022, and understanding the moderating percentage growth in 2023, I mean, internationally, should we expect it to grow as a portion of revenue going forward, given, I mean, many of these acquisitions that formed? I'm getting a little bullish on percent of the portfolio 'cause North America is growing so great that sometimes it gets hard to size something and say it's gonna be X% of revenue because we're doing so well right in the core. We do expect every year international growth. It can tend to be a little more uneven than the U.S. piece, but we remain just as interested and excited about global opportunities as we had previously. All right. Thank you very much. You're welcome. Thank you, Mr. Sullivan. There are no additional questions waiting at this time, so as a reminder, it is star one on your telephone keypad. There are no additional questions waiting at this time, so I will pass the conference back over to Ms. Bauer for closing remarks. Great. Thank you all for joining our call today. For your planning purposes, our first quarter 2023 call is tentatively scheduled for April 20th. I'll be around all day to answer any follow-up questions you may have. Have a great day. That concludes the fourth quarter 2022 Badger Meter earnings conference call. Thank you for your participation. Have a wonderful day.