Welcome to Xylem's third quarter 2022 earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. Others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Andrea van der Berg, Vice President of Investor Relations. Thank you, operator. Good morning, everyone, and welcome to Xylem's third quarter 2022 earnings conference call. With me today are Chief Executive Officer Patrick Decker and Chief Financial Officer Sandra Rowland. They will provide their perspective on Xylem's third quarter 2022 results and discuss the fourth quarter and full year outlook. Following our prepared remarks, we will address questions related to the information covered on the call. I'll ask that you please keep to one question and a follow-up, and then return to the queue. As a reminder, this call and our webcast are accompanied by a slide presentation available in the Investors section of our website, www.xylem.com. A replay of today's call will be available until midnight on November 8. Please note the replay number is +1-800-839-9881 or +1-402-220-3100. Additionally, the call will be available for playback via the Investors section of our website under the heading Investor Events. Please turn to slide 2. We will make some forward-looking statements on today's call, including references to future events or developments that we anticipate will or may occur in the future. These statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC. Please note that the company undertakes no obligation to update any forward-looking statements publicly to reflect subsequent events or circumstances, and actual events or results could differ materially from those anticipated. Please turn to slide 3. We have provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics. For purposes of today's call, all references will be on an organic and adjusted basis unless otherwise indicated. Non-GAAP financials have been reconciled for you and are included in the appendix section of the presentation. Now, please turn to slide four, and I'll turn the call over to our CEO, Patrick Decker. Thanks, Andrea, and good morning, everyone. We're pleased to announce a very strong third quarter performance, continuing our momentum from the first half of the year. Across the board, the team delivered above expectations with all our business segments and regions posting strong double-digit revenue growth. We see quite resilient demand in our backlogs and bidding pipeline. Overall, revenues were up 16% for the quarter, beating the high end of our guidance by four percentage points. Applied Water grew fastest at 20%. Water Infrastructure exceeded expectations by the widest margin, and M&CS came in right on target with healthy mid-teens growth. Regionally, Americas, Western Europe, and Emerging Markets each grew mid-teens. Demand in all of our largest end markets continued to be strong, driven by the essential nature of our solutions and services and by the intensifying long-term trends in water. The team, from our factories to our channel partners and distributors, also delivered a tremendous operational performance. Their actions entirely offset inflation with very strong price-cost discipline and effectively managed through continuing chip supply constraints. That focus paid off in growth, but also with very strong EBITDA margin expansion. Margins exceeded the high end of our guidance by 130 basis points. This delivered on our previous commitment to significantly improve our margins in the second half of this year. Strong organic revenue growth and accretive margins drove third quarter earnings well above expectations, with earnings per share of $0.79. As you all know, our key end markets have consistently been resilient in the face of macroeconomic headwinds, and we expect that underlying demand pattern to continue. M&CS orders continued to be very strong. Water Infrastructure was up solidly. Backlogs continued to be up sharply year-over-year, and the digital solutions proportion of our backlogs continue to expand. That said, some of our smaller end markets are more cyclical, such as residential within our Applied Water segment. Orders in those markets were down in the quarter and are expected to remain soft. Looking forward, we anticipate the demand dynamics of the third quarter to continue into 2023. On supply, especially chip supply, the outlook remains consistent with what we said last quarter. As expected, we have not seen meaningful easing of chip supply constraints, but forecasting visibility has improved, as has the reliability of deliveries. We expect to exit the year as we've outlined before. Things are gradually improving. Given the resilience of our demand profile, the vitality of our business, and the team's strong operational track record in this environment, we are raising our full year guidance. We now expect full year adjusted earnings per share to be between $2.65-$2.75 on organic revenue growth between 9% and 10%. In a few minutes, we'll discuss dynamics in our different end markets, along with some trends we're seeing through the current cycle. I'll also touch on how we're serving communities as they invest to become more resilient in the face of intensifying water challenges. First, let me hand it over to Sandra to offer you some more detail on the third quarter. Thanks, Patrick. Please turn to slide 5. The team did a great job over-delivering on commitments with disciplined commercial and operational execution on continuing strong demand. As a result, revenues grew globally, high teens in the U.S., and mid-teens in emerging markets in Western Europe, on strong price and backlog execution as supply chains modestly improved. In a moment, I'll detail performance by segment, but in short, utilities was up 15% led by strength in the U.S. and Western Europe. Industrial grew 16% with strength across all geographies, particularly in emerging markets in Western Europe. Commercial was up 17%, mainly due to strong backlog execution in the U.S., and residential was up 19%, led by commercial execution and backlog conversion in the U.S. Global demand remains healthy on strong end market fundamentals, especially in water infrastructure and M&CS. That said, organic orders were down 1% in the quarter versus up 20% in the same period last year. Water Infrastructure was up 3%, AWS down 4%, and M&CS down 2%. Adjusted EBITDA margin was 18.3%, up 40 basis points from the prior year and up 170 basis points sequentially as price more than offset inflation. As Patrick mentioned, our EPS in the quarter was $0.79, well above expectations. Please turn to slide six, and I'll review the quarter's performance by segment. Water Infrastructure revenue grew 13% organically in the quarter, exceeding expectations. Growth was broad-based, led by our wastewater utility business in the U.S. and Western Europe, both up high teens as supply chain constraints improved. Industrial growth remained robust, driven by continued dewatering demand in emerging markets and increased activity in Western Europe. Geographically, Western Europe grew mid-teens, driven by robust transport and treatment demand. The U.S. was up low teens, led by strong utilities OpEx demand. Emerging markets was up low double digits, driven by strength across Latin America and Africa on continued growth in dewatering. Orders in the third quarter were up 3% organically with robust dewatering demand in emerging markets and continued utility strength in the U.S. Segment EBITDA margin was largely in line with the prior year as favorable price realization offset inflation, but was also impacted by unfavorable mix and strategic investments. Please turn to page seven. In the Applied Water segment, third quarter revenues grew 20% organically, exceeding expectations. Growth was robust across all end markets, with each up high teens or greater. Geographically, the U.S. was up high teens with strength across all three end markets due to price realization and modest improvements in supply chain. Western Europe was also up high teens, led by growth in industrial on strong price and continued demand. Emerging markets was up almost 30%, driven by strong industrial demand in China and commercial development in the Middle East and Africa. Orders were down 4% organically, with continued growth in emerging markets offset by some moderation in residential in the U.S. As a reminder, residential, our most cyclical end market, is only about 5% of our overall revenue. EBITDA margin for the segment was up 110 basis points compared to the prior year and 200 basis points sequentially. Margin expansion was driven by strong price realization more than offsetting inflation, supplemented with productivity savings. Now let's turn to slide 8, and I'll cover our Measurement & Control Solutions business. M&CS revenue was up 15% organically in line with our prior guidance as chip supply played out as expected with continued modest improvement sequentially. We also saw strong growth in test applications and our pipeline assessment services business. Geographically, the U.S. was up more than 20% on improved chip availability versus the prior year and favorable price realization. Emerging markets was up mid-teens, and Western Europe was up high single digits, driven by strength in our test and pipeline assessment services businesses. M&CS orders declined 2% organically in the quarter, lapping a tough prior year compare of 42% orders growth. Underlying demand for our AMI offerings remained strong and orders continued to outpace revenue, yielding backlog growth of 35% versus the prior year. Our M&CS backlog alone exceeds $2 billion. Segment EBITDA margin in the quarter expanded 400 basis points sequentially and is now approaching prior year levels. The team did a great job driving margin improvement even though volumes continued to be constrained by chip supply. Now let's turn to slide 9 for an overview of cash flows and our balance sheet. In the third quarter, we generated free cash flow of $149 million, driven by income conversion, partially offset by higher working capital. You will note that our working capital levels are elevated as we've chosen to carry about 30 days of extra inventory. While chip supply chains are gradually improving, delivery metrics are below historical levels, and we can best serve our customers and communities by making this short-term investment. Having said that, our financial position remains strong, with $1.2 billion in cash and $2 billion of available liquidity, and our net debt to EBITDA leverage is 1.3 times. Please turn to slide 10, and I'll hand it back to Patrick to give some color on underlying demand. Thanks, Sandy. In our last quarter's earnings call, we unpacked how demand in different end markets responds to macroeconomic headwinds. What we described then is what we're seeing in the marketplace now, with healthy underlying demand in our largest end markets. Those patterns have repeated over past economic cycles, so they inform how we manage our operations in an environment like this one. Since all water is local, we experience those patterns and trends playing out at a community level. What we're seeing is more and more communities feeling increasing impact from climate change. They're finding their aging infrastructure isn't up to the task and then confronting the economic anxiety of major upgrades. Communities are investing both in short-term response and in longer-term resilience. Infrastructure investment is the much bigger driver of underlying demand, but our customers have to know we will also be there in near-term crises, which are happening all too frequently. For example, when Hurricane Ian hit Florida, our dewatering pumps were already in place ahead of the storm to prevent the worst and recover fast. Storms aren't the only immediate needs. One Southeastern U.S. city called us with sewer lines leaching waste into community groundwater, and their aging pipes are on the brink of collapse. Within days of that call, we were building a bypass that will help that city's wastewater treatment running without interruption while they make long-term repairs. Helping communities respond to shocks is a fundamental part of our mission, but the more durable value is in helping communities build the strength to withstand future water challenges and economic stresses. Xylem solutions like advanced metering infrastructure, wastewater network optimization, and municipal water recycling, among so many others, provide much more than compelling economics. They deliver game-changing resilience. With AMI as an example, cities can cut off water in the event of storm damage, respond instantly to customer crises, and even promote conservation through periods of scarcity and drought. All of that additional capability costs the city less than their conventional meter networks. That value equation isn't unique to AMI. It's a hallmark of digital solutions across our Xylem portfolio. Greater resilience and capability delivered far more affordably than conventional approaches. Those benefits are so important to our customers that we have been steadily extending digital capability into every part of our portfolio. The many water crises making headlines in recent months make it clear that the effects of climate change are already driving rapid increases in cost at the community level. To attack the problem at its source, more and more cities are making net zero emissions commitments. Our opportunity is to help water utilities reduce their own carbon footprint. More than 80 leading utilities around the world have already set net zero targets. Last month at WEFTEC, which is one of the largest water trade events each year, we shared research showing how utilities can dramatically cut their emissions while boosting operational efficiency at the same time. The message is good for our customers, good for communities, and good for our business. With existing technologies, you can reduce emissions quickly at low cost or even saving money. I am so proud of the team for leading the way on this topic with our customers and our communities. Several of my Xylem colleagues will be speaking at the upcoming COP27 climate meetings in Egypt later this month to promote the discussion of water, which we believe is the most important topic of our time. Now, I'll turn it back over to Sandy to provide detail on our increased guidance and outlook for the year. Thanks, Patrick. Consistent with our previous presentations, we've provided key facts for each end market in the appendix. The 2022 full year outlook across our end markets remains largely in line with our previous guidance, with an increase in commercial upon improved backlog execution. We expect healthy underlying demand will carry on through the remainder of the year, with continued modest improvements in supply chain. The outlook for our utility business remains unchanged, with mid-single-digit% growth across both wastewater and clean water. In wastewater, we see continued OpEx strength, and the CapEx outlook is supported by modernization of aging infrastructure and continued new development, particularly in emerging markets. For clean water utilities, although chip supply remains constrained, we do expect a continued modest easing of chip supply sequentially. We also expect momentum in our test and pipeline assessment businesses to continue due to increasing focus on infrastructure and climate challenges. Looking at the industrial end market, we now expect low double-digit growth, lifted from a previous range of high single-digit to low double-digit growth, driven by strong global demand for dewatering and continued underlying demand for our solutions in the U.S. and Western Europe. We now expect the commercial end market to deliver high single- to low double-digit growth, up from mid-single- to high single-digit on strong demand and backlog execution. In residential, our smallest end market, we expect strong price realization and continued backlog execution to drive growth in the high teens. As a reminder, our commercial and residential exposure is largely replacement driven and is approximately 15% of our total revenue. Now let's turn to slide 12, and I'll walk you through our updated guidance. Our continued outperformance, performance gives us confidence to raise our full year guidance for adjusted EPS to a range of $2.65-$2.75, up from $2.50-$2.70. Our raised guidance is driven by stronger price, backlog execution, and continued underlying demand. We are also lifting the low end of our full year organic revenue growth, now 9%-10%, up from 8%-10%. Our revenue outlook on a reported basis is largely unchanged due to FX headwinds. Looking by segment, we expect high single-digit growth in Water Infrastructure and low double-digit growth in Applied Water. We expect Measurement & Control Solutions to be up mid-single digits as chip supply continues to modestly improve. For 2022, we are raising our adjusted EBITDA margin outlook to approximately 17%. We now expect free cash flow conversion to be approximately 80% of net income. This is lower than our previous outlook, largely due to higher working capital levels, as I referenced earlier. While we're carrying about an extra month of inventory, our position is fully aligned with the requirements needed to fulfill our backlog. As supply chains stabilize, we will bring inventory down, enabling us to return free cash flow conversion of at least 100%, as we have consistently done in prior years. We've provided you with a number of other full year assumptions on the slide to supplement your models, as well as our latest assumptions on our basket of currency exposures, which can also be found in the appendix. Now, drilling down on the fourth quarter, we anticipate total company organic revenues will be up 12%-14%. This includes mid-single-digit growth in Water Infrastructure, mid-teens growth in Applied Water, and M&CS growth of mid-20%. We expect fourth quarter adjusted EBITDA margin to be in the range of 17.5%-18.5%. With that, please turn to slide 13, and I'll turn the call back over to Patrick for closing comments. Thanks, Sandy. I'm very proud of the team's performance overall. We delivered strong results this past quarter by continuing to do what we said we would do. Indeed, the team over-delivered, thanks to our commercial momentum and operational discipline. Even in an environment of macro uncertainty, the durability of our business model and the discipline of our team gives us great confidence in our continued growth and significant value creation over the long run. Before we turn the call over to your questions, I'd like to share a couple of executive appointments we've just made, adding even further strength to Xylem's leadership bench. Earlier, I referred to our strategy of extending digital capabilities across Xylem's product, solutions, and services portfolio. We've just taken an important step in accelerating that process, appointing Xylem's first Chief Digital Officer. Snehal Desai joined our senior leadership team last week, bringing extensive experience of growing digital businesses in the industrial sector. He'll be working with the team to further build out a simple, powerful platform of digitized solutions for our customers and communities. He joins us from Danaher, and I look forward to introducing him to you in future conversations. Before sharing our second recent appointment, I first wanna recognize a colleague many of you know. Tony Milando, our Chief Supply Chain Officer, has been looking forward to retirement for a while, but he graciously agreed to stay on while helping us guide the company through the challenges of the pandemic. He's built agility and durability into our supply chain, put safety and sustainability at the center of our operations, and created a culture of continuous improvement that has made operational excellence a core part of Xylem's competitive advantage. We're finally letting Tony retire, but his contributions will continue to benefit our stakeholders for many years to come. To build on the foundation of excellence that Tony has laid, we've appointed Thomas Pettit Xylem's Chief Operations and Supply Chain Officer. Tom joins us next week, coming from Generac Power Systems, and he brings 20+ years of experience leading global supply chains and operations in the industrial and services sectors. We're very pleased to welcome Tom at a time when supply chain and operations continue to be a foundation of competitive advantage. His remit is to take our operational excellence to the next level. Tony's gonna stay on for a brief time to give him a good start and ensure a smooth transition. With that, operator, let's now open it up for Q&A. At this time, if you would like to ask a question, please press star and one on your touchtone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star and one to ask a question. We will pause for a moment to allow questions to queue. We'll take our first question from Deane Dray with RBC Capital Markets. Thank you. Good morning, everyone. Good morning, Deane. Morning, Dean. Hey, can we start with, I wanna wish Tony all the best. He's been a tremendous help, all along, so we'll miss him, but, wish him well, and, welcome to the two new leaders, Tom and Sai. Thank you, Deane. Happy to have him on board and, with mixed emotions to see Tony move on, but, yeah, it's been a great run. For sure. All right, first question, and look, really good numbers here, good growth, that all kind of is a standout. What I'd like to talk about is the forward look. For the fourth quarter, just talk about the backlog conversion, earnings visibility, and you know, how did October get off in terms of demand? Yeah. Deane, let me start there. You know, I think we've built good momentum throughout the year. You know, throughout the year, we've had strong orders growth all along. You know, I think we have good visibility into Q4. You know, the way we're kind of envisioning it is that it looks very much like what we just printed in Q3. So we'll see strong top-line growth, you know, EBITDA margins that are very similar to the strong step up that we saw from Q2 to Q3 this year. You know, maybe a little bit of a difference in mix. You know, Water Infrastructure typically has a stronger Q4 when projects get completed towards the end of the year. You know, a little bit of moderation in AWS. They were doing some catch-up orders to work through some of the supply chain. You know, a slight ramp in M&CS. As we, you know, we've talked about on prior calls, you know, we're continuing to see a more modest step up on the chip supply situation. Then sometimes in the, you know, towards the back half, second half of 2023, when the redesign work and some more supply comes online, you'll see a bigger ramp. You know, long story short, I think our Q3 and our Q4 look pretty similar. All along, we've called for a stronger back half compared to our first half, and, you know, we're really happy to report that that's playing out, you know, very much in line with our expectations. Specifically on backlog, what would be the typical 4Q backlog conversion, on a% basis, versus what you're expecting this quarter? Yeah. I'll give you some color around the backlog. You know, when we look year-over-year, the backlogs are up, you know, about 30%. It's a little higher than that in M&CS and, you know, a little bit lower than that in the other two businesses. You know, all around, Deane, backlogs remain, you know, elevated. You know, we're not able to convert as much of the backlog as we would have in other periods. That's not because production levels are falling short, it's just because, you know, backlogs still remain elevated. Deane Dray, I would just offer that, you know, coming into this quarter like we did this past, our Applied Water backlog is up almost at least, you know, a month or more normally than what we would have visibility to. That's because of supply chain constraints and demand. You know, we're gonna see that begin to work off in Q4 going into Q1. Applied Water will normalize down to its historical levels, which is still gonna be attractive at very attractive margins. But where you're really gonna see the strength come through continued is in the Water Infrastructure resilience because of utility demand and, again, the conversion of chip supply on M&CS and given the deals that we've gotten backlog. That's real helpful. Just as a follow-up on free cash flow, completely understand the tweak here, adding more inventory. We're seeing that elsewhere. Maybe share for us, Sandy, the precision, you know, adding an extra 30 days, how does that square across the segments? Maybe weave in, like, how have lead times with your suppliers, how are those trending? Are they beginning anything close to normalization there? Thanks. Yeah. Great question. You know, I think first of all, Deane, where our inventory is most elevated is within our AWS segment. In that supply chain, you know, we have more China dependency, more global dependency from a supply chain perspective than we do in our other businesses. That's where we've seen more disruptions as well. That's exactly where we put some higher inventory levels. I would say that we've done a lot of scrubbing to make sure that that inventory aligns with what we're seeing from a backlog perspective. You know, we feel very good about that. That's exactly what I wanted to hear. Thank you. Thanks, Deane. Thanks, Deane. We'll take our next question from Nathan Jones with Stifel. Good morning, everyone. Hey, good morning, Nate. Good morning, Nate. I will, I'll start off on price and price cost. It was very good to see price more than offset inflation this quarter. Can you maybe talk about the pricing trends, the inflation trends? Should we continue to see price ramp up over the next couple of quarters as more price reads through? Should we start to see the year-over-year inflation moderate and so maybe price cost becomes an even bigger tailwind to margins over the next 2 or 3 quarters? Yeah, I think, Nate, you know, obviously this has been something that our teams have been really focused on all year long. You know, I really applaud the good work that our commercial teams have done, securing these, you know, important price increases to, you know, get in line with inflation. A couple of milestones. You know, on a year-to-date basis now we're price-cost neutral. In the quarter, we were ahead from a price-cost perspective on both, you know, a dollar perspective and a percentage perspective. You know, we still expect that price will be a tailwind in Q4, and that's part of the, you know, year-over-year margin expansion that we're calling for. You know, having said that, we start to anniversary some of the quarters where we've secured price momentum. You know, that starts to happen a little bit in Q4 and more as we move into Q3. I think, you know, as we go into 2023, we'll be in a better spot from a price cost perspective than we certainly were going in this year. You probably start to anniversary the worst of the inflation comps at the same time, right? Yeah. You know, I think inflation, we've definitely seen an increase in inflation compared to what we guided initially this year. We sort of came into the year thinking inflation would run around 10 or 11%. When we look all in for the year, inflation is running more in the mid-teens. I would say, you know, there is some slight moderation from a commodity perspective, but we're still seeing headwinds on inflation in both areas like energy, particularly in Europe. You know, labor inflation is still out there. You know, when we look at labor inflation, that's not transitory, that's probably more permanent. You know, our pricing strategies are dynamic, and they need to be in line with what we're seeing and experiencing from a costing perspective. I would think we should probably see the pricing improve in M&CS as we go forward. It's the segment where it looks like pricing's coming through the lowest. Some of that's backlog that doesn't get repriced. I would think some of that, it's a bit hard to tell your customers you're raising prices when you have all that past due backlog. Should we see price read through more in 2023 in the M&CS segment as we start to clear some of that? Yeah. Yeah, I think, you know, our where we've seen price, you know, we've seen it sort of match where we've seen the highest inflation levels. From an ordering perspective, that's been Applied Water Infrastructure and M&CS. You know, having said that, if you look at the past couple of quarters, we're starting to see some of our price increases that we've implemented in M&CS drop through. We still have good momentum there from a pricing perspective, and I think you'll continue to see that, you know, in the next, you know, through the next couple of quarters. I think that's also, Nate, you know, a significant part of why we saw quarter sequential improvement in the M&CS EBITDA rate. I think, Nate, I would just offer on the M&CS side, specifically AMI deals. Again, these are, you know, long lead time negotiated regulatory approval deals. They've got great economics associated with them, and I think our customers understand that we're operating in a, you know, fairly high inflationary environment. And they understand that we're being very transparent with them around what the inflation impact was on us, and that we're being responsible and disciplined. The economics of these deals are so important to them that right now the most important thing we can do is just continue to get chips, and, you know, get the meters installed. The good news is we've not seen any cancellations of those deals in backlog. You know, we feel good. We wish we had more chips, of course. Again, you know, these projects require multi-year planning, and utilities don't tend to go backwards on these deals. Great. Thanks for the feedback there, Al. Thank you. Thank you, Nate. Thanks, Nate. We'll take our next question from Michael Halloran with Baird. Hey, good morning, everyone. Good morning, Mike. Good morning, Mike. A couple here. First, just on the utility building cycle, which I suppose dovetails a little bit with the comments you just made there, Patrick. What's the backlog look like at this point? That's kind of part one of the question and what the kind of underlying thought process is at the utility level today. Secondarily, any update on what the adoption looks like for the more technology-oriented pieces of that utility pie? Yeah. You know, as you know, Mike, so roughly, you know, 70% of our demand in utilities is OpEx, so it's repair replacement. Very stable. If anything right now, I would say it's probably overcharged because of just aging infrastructure and climate change, so we're seeing really strong growth there. CapEx, which is the 30% roughly, and this is the global number, not just the U.S. That's the one that we do keep a close eye on throughout cycles. As you know, what we've tended to see is, you know, the one driver that can lead to a reduction in CapEx spend historically, if we were to see it, which we've not seen it yet. I mean, our front log right now is very strong. The bidding pipeline is very strong right now. If we were to see a slowdown in, you know, muni tax receipts, if we were to see a slowdown prolonged in residential expansion in the U.S., those things tend to be later cycles, so it'd be a couple years down the road. We're not seeing it right now, Mike, but that's what we would look for. And that's on the wastewater side. Now, historically, even during the past recessions around the world, if you set aside dewatering for a moment, which does tend to be more short cycle, and we diversified that part of the business away from, you know, kind of pure mining, oil and gas. We're much more in the muni space now and broader industrial space. We would see it there. We haven't seen it. We would ultimately see maybe a low single digit kind of Water Infrastructure growth if we were to see a recession, but we've not seen that in our front logs at this point in time. We're keeping a close eye on it. You know, we're trying to be responsible and prudent in our planning here. Great. Thanks for that. Second one, just on the European side of things, seems awfully resilient from you at this point. Just some thoughts on the trends you're seeing on that side? Yeah. You know, we look at our results, Mike, in Europe, and they're very, very strong. We're also seeing, you know, good orders growth, especially on a year-to-date basis. You know, when we look historically and benchmark kind of one region to the other, you know, Europe tends to be very steady, and I think you see very disciplined and resilient spend from the Europeans. I think, you know, the European market. You know, on the industrial side, we're not seeing a slowdown either. You know, we're staying close to it. We're talking, you know, very frequently with our commercial teams who are in constant contact with our customers. But so far, it's, you know, hanging in there. Great. Really appreciate the time. Thanks. Thanks, Mike. Our next question comes from Scott Davis with Melius Research. Good morning, Patrick and Sandy. Hey, good morning, Scott. How you doing? Morning, Scott. Good, thanks. Can we talk a little bit about M&A and your pipeline and such? It seems your balance sheet is in just great shape and asset prices are coming down a bit. Just some color on that would be helpful. Sure. Yeah. I mean, as you said, Scott, we've got a really strong balance sheet. I mean, we've got $2 billion liquidity. We've got probably firepower of north of $4 billion. You know, we're not gonna hesitate if the opportunity presents itself. Pipeline remains really robust. It's a combination of larger opportunities, but we've got a number of small, medium-sized opportunities that are out there, mainly in the utility space, but also in the industrial services space. We're gonna continue to be disciplined. As you well know, it always takes two to tango. But nothing's changed in our view on valuations, and our discipline in that space. Okay. Helpful. Then can you guys just remind us, perhaps Sandy, you can help with this, on, you know, these big extreme moves we've had in FX, and you guys have a little bit different clearly situation than most of the companies we cover. But the net-net of all the different moves in FX, what that really means for you guys. Yeah. I mean, I think when you look sort of year-over-year, or actually compared to our budget, we're seeing, you know, significant headwinds from a FX perspective. You know, I would say from an EPS perspective, it's been a negative of by about $0.15-$0.20. You know, we'll see where things ultimately shake out in the fourth quarter, 'cause even over the past month, the FX rates have been volatile. I think, you know, we're really proud of the team. You know, that's one of the challenges we've been able to overcome when we look at sort of where we started the year and where we stand today. You know, just as an example, we started the year planning for a Euro assumption at 1.13, dipping down below a 1-1 ratio for, you know, the end of last quarter and into this quarter. You know, good work that we've been able to overcome, continue to staying disciplined and controlling what we can control. Okay. That's helpful. Thank you. I'll pass it on. Good luck, everybody. Thanks, Scott. We'll take our next question from Joe Giordano with Cowen. Hey, good morning, everyone. Hey, good morning, Joe. Yeah, I thought it was interesting on a new role for a chief digital officer. Can you talk about, like, the buy versus build proposition for a true digital platform, kind of like on top of your AMI platform? Sure. That's a great question, Joe. You know, Digital is certainly not new. You know, we've got a great foundation that we've already built, both organically as well as through a number of the acquisitions we've done. Sai comes in really building on that solid foundation. We are continuing to look at the opportunity to both build internally, which is really as much about talent capability, commercializing, selling those opportunities. Our pipeline from an M&A standpoint is still very much focused on adding other solutions and technologies to the mix. You know, I look forward to having Sai join us on one of our upcoming calls and share his perspective on what he sees and the opportunities in front of us. It's a combination, Joe, between organic and M&A. Okay, great. I know and look, it's good to see the progress at M&CS, but I know that you're not happy with where margins are, like big picture. Can you kind of walk us from where we're exiting this year to like what a 20% margin looks like at M&CS? Like what, on EBITDA, what things have to happen to get there? Yeah, I think great question, Joe. You know, we've been working really hard to get our margins back up in the M&CS side, and obviously volume plays a big role in that. You know, we've talked historically that when we get revenue up into the $350 million level per quarter, you know, you'll see EBITDA margins in the mid-teens. You know, to get to the high teens, 20% benchmark, you know, we need to be north of $400 million of revenue per quarter. We are certainly focused on productivity initiatives. The disciplined steps we're taking around pricing and looking at our backlog and incremental pricing opportunities there are an important catalyst as well. Then, of course, you know, our backlog has a higher digital mix, and so that will naturally bring with it some higher margins. So it's a real combination of factors. You know, the good news is we've seen an uptick in the revenue, a little bit of a flattening from Q2 to Q3, and we'll expect that continued moderation and then another kind of step up more in the back half of next year. Joe, I would just add that, you know, one of the things that we've not really punctuated in the past is, as we were going through the redesign of our chips to be able to help support our customers through this challenging time to move these installations along, there were costs that we added, you know, in our P&L to support that. At the same time, we had to redirect some engineering resources away from classic, you know, productivity, continuous improvement. You know, we're working through that. But despite that, you see the margin expansion that we've laid out in the quarter and that we expect for the year and that we expect in the next year. I just wanna make sure, you know, we're making strategic choices here to take care of our customers, not just for the future, for the long run, but like right now, because that's the value they expect from us. No, that all makes sense. Just last quick for me, just given how shorter cycle AWS is, I know backlogs extended there, but it's like the shortest backlog, you know, throughout the company. Just when I think about price, you know, this quarter at a thousand basis points, when price starts to normalize and, you know, orders are coming down and that business just starts to get to more, like reasonable levels, how do we think about like margin de-leveraging in that kind of scenario? Because you made a lot of progress there, so how much of that do you expect to be able to hold on to as volumes kind of come down? Thanks. Yeah, you know, I think, Joe, one thing that it's important to remember is if you look back the past few quarters, our price increases were not in line with inflation. We're now at a point where we're getting back to our, you know, more historical margins, and we can drive margin expansion through, you know, productivity levels and incremental growth. You know, I think we're getting back to a place that's good and healthy for that business and, you know, a lot of work to make that happen. We continue, Joe, to make investments in innovation and, you know, R&D within that segment, also within Water Infrastructure. You know, I know M&CS has kind of gotten more of the headline over the last, you know, few years, but we continue to make increases in R&D spend in those segments because, you know, that kind of refreshment of our offerings and portfolio, you know, we see in our new products that we bring to market that they've got much higher margin and growth rates than what they're replacing. You know, it's important to note there's a refresh that continues to go on in both of those segments. Thanks, guys. Thanks, Joe. Thanks, Joe. We'll take our next question from Andrew Kaplowitz with Citigroup. Hey, good morning, everyone. Morning, Sandy. Morning. Patrick, I know you've said that you have elevated backlogs and a strong pipeline of opportunities, but just focusing on orders for a second, you know, down a bit this quarter, they've decelerated over the last couple of quarters. I know it's really just more difficult comps. But you did mention a little slower U.S. in Applied Water, for instance. Could you give us some more color into what you're seeing in orders and whether you believe orders will continue to decelerate or how to think about orders going into 2023? Sure. You know, we feel good about the trend lines on demand. Again, that goes back to the question around what our front logs look like in terms of bidding pipeline, whether that be AMI, whether that be treatment, which is a precursor for wastewater demand. We see a healthy demand within our channel partners, you know, even on the Applied Water side. You know, it is really a year-over-year comp issue. If you look at our orders year to date, we're still up 7% year to date. It really is a tough comp in the third quarter. You know, I would say that again, it varies by end market. You know, we've obviously, you know, we haven't talked China, for example. You know, China is 7% of our revenue. China was up 10% in the third quarter on revenue. I would say that the public utility funding there in China has been pushed to the right because of the lockdown, you know, restrictions there. We still expect there to be a recovery in utilities, but it's probably not gonna be until later next year. There's no change in our long-term plan or outlook on China. You know, it's a meaningful part of our revenue, and we've overcome that with demand, you know, across the rest of the portfolio. The fundamentals are there. We are watching all the signs. You know, we've got our KPIs that we track, especially in our short cycle businesses. You know, we have seen some moderation, as Sandy said earlier, in residential, which is a very small part of our business. We've seen, you know, some slowdown in a couple other small pieces of our business. We'll keep a close eye on it. I mean, we're not out of the woods yet. You know, even in commercial, you know, the ABI, the Architectural Billings Index, you know, is still strong at north of 50. When it's north of 50, that indicates strength, you know, in that part of our segment which we continued to see growth in. Again, we're keeping a close eye on all this, Sandy. Very helpful, Patrick. Maybe if I could just follow up on your dewatering business. You know, kind of a similar question. I know you raised your industrial growth to low teens, but what are your industrial customers telling you about the opportunities in dewatering? Do you see those orders staying positive in dewatering into 2023? Yeah, Sandy, good question. You know, we're seeing both strong revenue conversion in dewatering, and we're seeing good orders momentum there. I think Patrick referenced a little bit earlier on the call, you know, I think there are some important things to note if you look at our business today than what our business looked like a couple of years ago. Seeing good emerging markets growth, good growth that includes that includes Latin America as well, where they're seeing good activity. We've made some investments on the rental fleet, in really all of our markets on a global basis. Those projects have good returns, fast paybacks. We're seeing a lot of that equipment out on order and converting to revenue. We're still seeing resiliency on our equipment sales side of the business in dewatering. It, you know, I'd put it right up there in one of those end markets that we need to really continue to focus on. It is absolutely one of the shorter cycle businesses, and understanding what our customers are seeing is important there. But so far, that's been really pretty resilient. I would just add, Sandy, that the thing, when we say customers and dewatering, there's the part that we handle directly, where we have our rental fleet. Then there are our channel partners that we actually replenish their fleet, and then they have their own rental fleet. In the past, the part of that business that can turn very quickly is if our channel partners that are all local around the U.S. predominantly, if they get nervous and they see things, they then pull back on replenishing their fleet, and that can happen very short cycle. We are in regular calls with them to get a feel for how they're feeling about the general economy, you know, right now. Thus far, it's strong and resilient, but that's the area that we would keep a very close eye on. Appreciate all the color. We'll take our next question from Brian Lee with Goldman Sachs. Hey, everyone. Good morning. Thanks for taking the questions. Hey, good morning, Brian. Hey. I guess the first question I had, just following up on an earlier one. You know, price read out by almost 250 basis points more this quarter than in 2Q. It sounded like based on Sandy's comments that, you know, maybe we're starting to see a peaking sort of cadence in terms of price. Just wanted to make sure that I heard that correctly. As we start to lap some of the price increases over the past year and we head into 2023, are we thinking more like a typical low single-digit price year starting early next year? Just kind of get a sense of the cadence of price from here and into next year. Yeah, Brian, I think, you know, I touched on it a little bit earlier. You know, last year, starting in Q4 is really where we started to see some of the impact of our price increases hitting our revenue. You know, absolutely the compares start to get tougher. You know, a little bit tougher next quarter. I think you're gonna still see strong pricing. It should be one of the key drivers for the margin expansion that we're calling for. You know, we're obviously, you know, pricing has become very dynamic. It's not a decision we make at one point in time. You know, we need to continue to take all the inputs from what we're seeing on all the different components of our bill of materials. Everything from the commodities we buy to the freight costs to deliver the product. You know, I'm not gonna share what our full price realization looks like for 2023 at this time. Certainly we're in a much, much better position as we go into 2023 from an equilibrium perspective around price cost. Absolutely. Yeah, makes sense. I guess, follow-up here, just, not to focus too much on the short term, but, if I look at the guidance here for 4Q, I know nothing about the past couple years has been, you know, sort of normal. You know, it does imply pretty flattish performance across key metrics, revenue, EBIT, operating margin. You know, seasonally, you typically have a pretty meaningful increase from 3Q to 4Q across a lot of those headline metrics. Kind of walk us through, is there anything impacting near term seasonality in the model here? Are Are you just kinda working off more backlog in 3Q than you expected? Just any sense of why this year may be 3Q to 4Q a little bit lighter than you'd typically see in past years? Yeah. I think you touched on a bit of it, Brian. If you look at particularly our Water Infrastructure business, we typically see a bigger drop-off Q2 to Q3. We didn't see that as you know, much this year. That was a big part of why our revenue came in higher. As a result of that, we see more of a flattening Q3 to you know. We'll still see a little bit of a step up going into Q4 on Water Infrastructure, but not as dramatic. You know, some of that is we did see a little bit of supply chain improvement, and we got some more projects across the finish line. You know, for the full year, yeah, Q3 and Q4 look good. It's a big step up from what we saw in the first half. You know, we're exiting the year right in line with what we were expecting. I think, Brian, the other, I mean, regionally, the two areas that I would say that we're just seeing things playing out a little bit differently this year than we have in the past. I mentioned earlier, things shifting to the right in China. Again, we have the uncertainties in Europe. You know, we just think it's prudent to build that into our outlook for Q4. All right. Thank you. Appreciate the call. Thank you. We'll take our next question from Saree Boroditsky with Jefferies. Thanks for fitting me in. A lot's been covered on the call, but there is a big differential between Applied Water growth and the decline in orders. Since you expect to work down the backlog through this year, you know, how do you think about growth as we head into 2023? Is that specifically for Applied Water? Yes. Yeah, for Applied Water. Yeah. I'll take it. You know, we obviously have a very elevated backlog in AWS. We have more than double the backlog than we typically have in any one quarter. You know, I think, you know, if we actually are able to work some of that backlog down, I think it's a real positive sign that supply chains are improving, that customers are reverting back to more typical ordering patterns. You know, as we look at that business longer term, you know, it's probably the lowest grower in our portfolio. It delivers a lot of cash. It's a good operating business for us. Over a longer-term basis, it's you know, a low to mid-single digit grower in our portfolio. You know, when do we exactly revert to those levels? It will take a little bit of time to work through the backlog. But that's sort of how we see that business longer term fitting into our, you know, into our portfolio. Yeah. I mean, we look at that part of our portfolio as market growth itself is GDP on a global basis, and we always look to and have historically beat that by some share gain. That comes through, you know, investments in innovation, through R&D. We continue to refresh the portfolio. But to Sandy's point, you know, we're coming off of elevated backlogs due to, one, demand, but also supply chain constraints. We'll see that normalize as we go into 2023. You know, in our upcoming call, we'll lay out by segment what our outlook is for 2023. Great. That's helpful. Obviously, you point out the strong book- to- bill in AMI. You know, how long in advance are you seeing customers place their orders? When does this show up in revenues? You know, AMI is a very long selling cycle. You know, it's a big decision for the utilities to make. We're working on RFPs that go out anywhere from one to three years. We have a big backlog in M&CS. You know, if you look today, we still have, you know, about a quarter of it that's past due. We're gonna start working through that as chip supply recover. What we're most excited about is that the pipeline remains strong. We're winning a good percentage of those awards. You know, the value proposition is very sound, so. We are still early in the conversion of large utilities across the U.S. to AMI, let alone the smaller to medium size utilities. That's why the front log, the bidding pipeline looks so attractive across the market, and that's why we remain confident. These are long-term deals that take a while to negotiate, and we're pleased with our position. Perfect. Thanks for taking my questions. Thank you. It appears that we have no further questions at this time. I will now turn the program back over to Patrick Decker for any additional or closing remarks. Well, thanks, everyone, for joining us this morning, and for your continued interest and support. Really appreciate it. I know between now and the next earnings call, we'll have a chance to meet with many of you in person. Between now and then, stay safe, and safe travels. Look forward to seeing you. Thank you. Thank you. This concludes today's Xylem third quarter 2022 earnings conference call. Please disconnect your line at this time, and have a wonderful day.