Badger Meter, Inc. (NYSE:BMI) Q4 2024 Earnings Call Transcript

Badger Meter, Inc. (NYSE:BMI) Q4 2024 Earnings Call Transcript January 31, 2025

Badger Meter, Inc. beats earnings expectations. Reported EPS is $1.04, expectations were $1.01.

Operator: Ladies and gentlemen, welcome to the Q4 2024 Badger Meter Earnings Conference Call. After the prepared remarks, there will be an opportunity to ask question. [Operator Instructions]. As a reminder, today’s conference is being recorded. It’s 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.

Karen Bauer: Good morning, and thank you for joining the Badger Meter fourth quarter and full-year 2024 earnings conference call. On the call with me today are Ken Bockhorst, Chairman, President and Chief Executive Officer; Bob Wrocklage, Chief Financial Officer; and Barb Noverini, Senior Director of Investor Relations. Please note that the earnings release and related slide presentation are available on our website. Quickly, I’ll 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.

Kenneth Bockhorst: Thanks, Karen, and thank you all for joining our call. We capped off another record year with strong fourth quarter results across sales, operating profit, earnings per share and cash flow metrics. We also announced today the acquisition of SmartCover. We’re excited about incorporating their sewer and lift station monitoring offerings into our BlueEdge suite of tailorable solutions. I’ll talk more about the acquisition, provide a recap of the year and discuss our outlook later in the call. For now, I’ll turn it over to Bob to go through the details of the quarter.

Robert Wrocklage: Thanks, Ken, and good morning, everyone. Turning to Slide 4. As Ken mentioned, we delivered another quarter of solid results to close out 2024. From a sales standpoint, we delivered 13% quarterly sales growth, which as a reminder, was on top of a difficult 24% increase in the prior year comparable quarter. Total utility water product line sales increased 14% year-over-year as we continue to deliver on solid demand across our BlueEdge suite of utility smart water solutions. Year-over-year growth was broad-based, led by cellular AMI adoption, including associated meters, ORION Cellular endpoints, and BEACON Software as a Service. Sales for the flow instrumentation product line were up slightly at 1% in the quarter as growth in our core water-related applications offset declines across the array of de-emphasized end markets and customer applications.

Turning to margins. We’re very pleased that operating margins expanded 150 basis points to 19.1% in the quarter. Gross profit margins came in at 40.3%, a 110 basis point improvement from 39.2% in the prior year comparable quarter. The benefit of overall higher volumes, structural sales mix and solid price/cost management contributed to the year-over-year gross margin improvement. SEA expenses in the fourth quarter were $43.5 million, an increase of approximately $4 million year-over-year. Consistent with prior quarters, the spending increase was due primarily to personnel-related costs, including higher headcount and salaries to support our growth. Additionally, the increase included certain acquisition costs associated with the SmartCover transaction.

SEA as a percent of sales declined 40 basis points to 21.2% from 21.6% in the comparable prior year quarter on the higher sales. The income tax provision in the fourth quarter of 2024 was 27.1% compared to 26.1% in the comparable prior year period. Similar to the full-year ’24 tax rate, we continue to expect an ongoing effective income tax rate in the plus or minus 25% range, assuming no change in overall corporate income tax rates. In summary, consolidated EPS was $1.04 in the fourth quarter of 2024, a 24% improvement from $0.84 in the prior year comparable quarter. Primary working capital as a percent of sales at December 31, 2024 was 20.8%, which compared to 23.8% at last year end. Note that these percentages reflect the current year balance sheet reclassification of the current portion of deferred revenue from payables to other current liabilities for which prior years were not restated.

There’s an appendix slide that details this reclass on a pro forma basis, and Karen will provide a bit more information in her call closeout comments. We were pleased with the primary working capital improvement, notably our reduction in absolute inventory levels. As a result, we generated strong free cash flow in the quarter, a record $47.4 million, up 32% year-over-year. With that, I’ll turn the call back over to Ken.

Kenneth Bockhorst: Thanks, Bob. It’s customary at the end of the year to take a step back and reflect on our collective performance against our strategic goals. So I couldn’t be more pleased with the tangible outcomes from the team’s efforts in 2024, which represent a continuation of trends seen in recent years as noted here on Slide 5. We delivered 18% sales growth in 2024, surpassing $800 million in revenue with a five year top-line CAGR of 14%. Our software revenue now exceeds $56 million, representing 6.7% of sales and resulting in a 28% compound annual growth rate over the past five years. Operating profit margins expanded 450 points over the last five years with both gross margin improvement and leverage contributing to the margin expansion.

EBITDA margins hit a record 23% in 2024. And finally, we reduced our working capital intensity and consistently generated free cash flow in excess of 100% of net earnings, enabling our ability to continue as the innovation leader in our market, return cash to shareholders in the form of dividends, doubling our dividend rate from just five years ago and building on our track record with 32 years of consecutive annual dividend increases and executing value enhancing acquisitions to further advance our portfolio of smart water solutions, the latest example of which I’ll discuss next. Turning to Slides 6 and 7. I’ll cover the SmartCover acquisition announced earlier this morning. SmartCover is a leading provider of water collection system monitoring solutions, serving utility customers across North America.

SmartCover’s hardware-enabled software offerings add to the scope of actionable data used by municipalities to improve efficiency, resiliency and sustainability. Specifically, SmartCover provides sensors, software, and related support services to monitor sewer levels on a real-time basis. By identifying changes in patterns and a leading utility personnel to potential issues, the solutions work to predict, detect, and prevent sewer overflow spills, which are becoming more frequent with the rise of extreme weather events like heavy rainfall and flooding. Reducing the frequency and severity of sewer overflows saves money, while protecting public health and the environment. In addition, the technology reduces the need for high-frequency cleanings, locates areas of influent infiltration detects intrusion and assist with managing harmful sewer gases.

SmartCover also provides lift station monitoring and control hardware and software solutions to improve pump station efficiency, supplementing our existing Telog offerings. And last, but certainly not least, it brings strong talent with the expertise to assist our customers in applying these capabilities. We utilized existing cash on hand for the $185 million purchase price. This equates to about 5x SmartCover’s 2024 sales of approximately $35 million. The macro drivers behind technology deployment in the water sector such as labor availability, aging infrastructure and regulation combined with the increasing occurrence of climate-related severe weather events support strong adoption rates for these technologies and to put it in baseball terms, we believe sewer line monitoring is barely in the first inning.

In addition, SmartCover’s leading market position the recurring revenue dynamics and ability to further leverage the data and analytics into our full network monitoring solutions makes this a strategic deal with long-term shareholder value creation. As noted, sales today are about $35 million with high single-digit EBITDA margins reflective of their scale and heavy growth investments. As part of Badger Meter and BlueEdge, we can amplify the top-line growth rate by leveraging our direct sales organization and by advancing overall features and functionality with our world-class communication and software technologies which will continue to competitively differentiate Badger Meter’s suite of offerings in the market. We will also aim to enhance profitability by leveraging existing infrastructure and processes in operations and supply chain.

Finally, turning to our outlook. I know I said this last year, but it remains true even after our stellar 2024 results. I am as excited about the next five years as I’ve ever been. At a macro level, our BlueEdge suite of comprehensive and tailorable solutions continues to see growing adoption as we address the variety of persistent macro water challenges customers face enabling them to be more efficient, resilient, and sustainable with their water systems. Our durable business model is underpinned by replacement-driven demand, secular AMI adoption drivers and the expanding need for real-time data visualization and analytics spanning the water network. Our order book and opportunity pipeline along with constructive customer budgets continue to support the high-single digit average top line growth we’ve been communicating for some time now.

We also expect that positive structural sales mix and SEA leverage will continue to gradually improve margins over the strategic cycle. Specifically on gross margin, we’re pleased that in the back half of the year, we delivered above the high end of the normalized range of 38% to 40%, with the six quarters prior to that, above 39%. While some might view that as a reason to increase the range, the reality is we’re in a heightened state of macro uncertainty, especially as it relates to potential tariffs, the scale, scope, timing and duration of which are unknown. As such, until there is further clarity, we believe it’s prudent to keep the current range as our comfort zone, while continuing to drive improvement actions in the areas within our control.

While we continue to anticipate that our SEA as a percent of sales will improve over the long term, the addition of SmartCover will reset the bar higher than 2024 levels. This is a result of the higher than line average SEA as a percent of sales in their underlying operations as well as the added intangible asset amortization, which based on very preliminary estimates could be in the $6 million to $7 million range annually. Separately, I’ll remind everyone that in the first quarter of 2025, margins for SmartCover will be muted by the amortization of inventory fair value step-up. Additionally, interest income will decline year-over-year with the use of cash. Finally, even after acquiring SmartCover, we’ll have cash on the balance sheet of over $100 million.

Along with the untapped revolver, we have significant financial flexibility and organizational capacity to further execute on our growth strategies, including both organic and inorganic investments. I want to again thank the entire Badger Meter team for their tremendous efforts and accomplishments in 2024 and to welcome our new SmartCover colleagues to Badger Meter. I look forward to executing on the many opportunities ahead together. With that, operator, please open the line for questions.

Q&A Session

Operator: Thank you. [Operator Instructions]. Our first question today comes from Andrew Krill with Deutsche Bank. Please go ahead. Your line is open.

Andrew Krill: Hey, thanks. Good morning, everyone. I want to ask on tariffs first. Just I think could you help size a little more explicitly in your Mexico manufacturing exposure. I believe it’s around like 30% of the square footage, which is — any more like clarification on that would be helpful. And then if we do have wide thread tariffs put in place tomorrow, if you could give us some color on the contingency plans you have in place and maybe how long it might take to adjust price? Thank you.

Kenneth Bockhorst: Yes. So that’s a bit of a, of course, loaded question these days with so much uncertainty about what the impact of tariffs will be, what — where they’ll come from, how it all works. So I’ll tell you what we do know and what we can control. And first of all, clearly, everyone would have some impact from tariffs regardless of however this comes through. But the things to remember are, from a China point of view, we source very little. We’ve done a considerable amount of reshoring, if you will, back to North America over the last several years. We certainly have capacity in some of our U.S. facilities that we can continue to use. And yes, we’re very proud of our outstanding operation that we have in Nogales.

So have no idea yet what the administration will do or how that will go. But the thing I would remind you through the last several years is I think we’ve done a great job of being able to control what we can. We’ve seen over the last several years the threat of tariffs in the first Trump administration, we’ve been through COVID, we have been through supply chain challenges. And I think our hallmark has been understanding what we can control, acting with urgency around mitigating those actions and having a best-in-class operating model. So I don’t know how to tell you how this is all going to work out, and it’s hard to model something when you have no idea what the impact is actually going to be.

Andrew Krill: [Indiscernible]. And then just on the broader end market demand, and then again, conscious that you do not give explicit guidance, but I thought the choice of using resilient, it’s the operative word in the press release was interesting. So maybe just we know there’s multiple years of very impressive growth. Do you think — is your confidence higher now than it was when you reported third quarter earnings that maybe 2025 could be a high single digit growth year?

Kenneth Bockhorst: So it’s not higher, but it’s as good as it was in Q3. So we continued, it’s another quarter where I’m really proud of the results that we had and what we’re able to get in revenue, certainly pleased with the order rate that we saw in the quarter, certainly pleased, but still seeing several RFIs out on the street for AMI and water quality and other pieces of the BlueEdge portfolio, and engineers are still working on projects in the future. So I would just say nothing has changed. Our ongoing positive tone remains the same.

Andrew Krill: Okay. Great. Thank you, guys.

Kenneth Bockhorst: Sure. Thank you.

Operator: Our next question comes from Rob Mason with Baird. Please go ahead. Your line is open.

Robert Mason: Yes, good morning. Can you talk a little bit about SmartCover? What are the demand drivers there, kind of the catalyst. I’m just curious how much is maybe compliance driven, whether that’s CSO overflow mandates. Just what’s the catalyst for adoption primarily been to date for that solution?

Kenneth Bockhorst: Yes. So it is a mix of things. So one of the areas is, of course, regulation and critical system overflows where you’ve got mandates to be monitoring this in real time. Of course, labor availability is a driver. Many of the same macro drivers that we see on the rest of the business where labor availability, critical rising extreme weather events adopting technology. It’s one of the reasons we’re excited about it is it’s the same macro drivers, similar outstanding outlook for growth. and then the ability to sell that through our existing channel is what has us pretty excited about it. But I would say the drivers are very similar to what has driven our growth over the last several years.

Robert Wrocklage: And I would say, adding to that whole equation that Ken just mentioned is, obviously, the market opportunity, meaning the rate of adoption of this technology at this stage, as we alluded to in the earnings script was a first inning analogy. And so there’s plenty of runway here in terms of the number of monitored manhole covers in North America, and we believe the market-leading position of SmartCover positions us now to take advantage of that collectively across our leveraged sales channel and customer base.

Kenneth Bockhorst: Yes. And it’s not just the regulation side, but when you can get into the reduction of the frequency of cleaning, there’s financial payback. So there’s many benefits to this that are, as Bob said, just really scratching the surface.

Robert Mason: How much of the $35 million in trailing revenue would be recurring in nature?

Robert Wrocklage: Yes. So from a pure kind of what I would classify as recurring revenue, so the software in and maintenance service business is roughly a third. I would say there’s also another 20% or so that’s more aftermarket product replacement service, which again is not recurring, but as a certain amount of durability to it.

Robert Mason: Very good. Maybe just last question. Just shifting over to your business itself. You called out, Bob, the excellent working capital performance in the quarter. Inventory did up down a fair amount from where you’ve been tracking through the year. Just curious what the enabler of that was. And I mean at the level that we should trend to add as we go forward? Or does that come back up?

Kenneth Bockhorst: Yes. So I’ll go first, and I’m sure Bob will have something to add. But Rob, what I’ve been proud about is for several years now, we’ve really talked about our continuous improvement mindset across the business. And we mentioned to you at the beginning of the year that we thought inventory was still an opportunity for us to continue to improve our processes. And frankly, that’s what we’ve seen. We’ve had a great team working really hard at improving to get to a better sustainable rate that just happens to be lower.

Robert Wrocklage: Yes. I would say that what you saw in the fourth quarter is the byproduct of multiple quarters of focus. And thankfully, for free cash flow purposes, that all came together and lined up in the fourth quarter. I would say there’s nothing anomalistic about that. We still know we need inventory to support the business and to support our high single-digit growth outlook. So that’s not to say that the dollars are fixed by any means, but certainly, we’re at an optimum level as we exit the year.

Robert Mason: Very good. I’ll be back in the queue. Thank you.

Operator: Our next question comes from Nathan Jones with Stifel. Please go ahead.

Nathan Jones: Good morning, everyone.

Kenneth Bockhorst: Good morning, Nathan.

Nathan Jones: Wanted to start off with a — just a question about the cadence of revenue through 2024. You did see revenue peaked in the second quarter. Sequentially, it was down in the third quarter and fourth quarter. I’m just hoping to get some color around what the dynamics were there? If customers were buying some inventory or something in the second quarter or there were projected shipments in the second quarter or was bad in the fourth quarter or just anything that would help us set above for what — that cadence for 2025 might look like?

Kenneth Bockhorst: Nathan, yes, so thanks for pointing out how we’ve always pointed out that the business can be uneven from quarter-to-quarter from year-to-year. In that particular quarter, you may recall we talked about having a bit of a deeper dive into our backlog than we traditionally have seen in most quarters, which is why we did caution to not just take that run rate for the rest of the year — excuse me, so I’m not strategically losing my voice now, but I’m going to turn to Bob.

Robert Wrocklage: I would say the only really quarter that had — if you’re talking absolute dollars, Nathan, then the only quarter that had some “noise” in it would have been the second quarter, as Ken mentioned to, let’s say, everything else was more the general trend and unevenness that Ken alluded to. If you’re talking about rates of growth change, I would say, the biggest impact on the second half is just having lapse in anniversary, a more robust increase last year by just basic math, the rate of growth slows, I would just tell you that on a go-forward basis, over our strategic planning horizon, we’re still laser-focused in that high single-digit growth with the reality that there will be noise quarter-to-quarter and year-to-year.

Nathan Jones: Yes. No, I was talking about the absolute dollars of revenue. So the 2Q number is a little bit elevated because you’re taking down some backlog that’s probably just around supply chain improvements. I guess I had one on SmartCover. Just when I look at this from a high level, you guys don’t sell sewer pumps. What couldn’t the sewer pump manufacturer just put something on the sewer pump that would do this kind of monitoring. I guess the question there is why does SmartCover have the right to have 50% market share in that kind of business? What could a competitor — somebody like a sewer pump manufacturer, a lift station manufacturer, put something similar on that would have been closer to the cost there and maybe give them an advantage over a business loan to SmartCover.

Robert Wrocklage: Yes. So I’ll start with, I think the underlying assumption to that question is that somehow, we don’t play in the collection network today or the sewer system network today, and that’s just not true. Certainly, across Syrinix, Telog, ATi, s::can and more recent acquisitions, there is certainly a presence in collection systems already. So this is not a fairway reach where we’re reaching over to play in a space that we don’t already play in. So there’s a presence there already today. I would say specific to SmartCover and the sewer line aspect of that, essentially, what we’re doing here is monitoring at the manhole. So call it depth and level sensing and flow sensing from the manhole to essentially produce analytics to drive those four outcomes that we mentioned in the earnings release, that being prevention of spills, optimize cleaning and predict infiltration and inflow as well as then monitor toxic gases.

So I would say I’m not sure that other people can’t do it. I could just tell you that after 20 years in the marketplace, SmartCover has done it best. And that’s why this is the most attractive asset in terms of expanding our presence in the collection network, and we’re super excited about the ability to leverage that technology to, in large part, a similar decision maker at the North American utility that we’ve already participated for a very long time with. This is the definition of a near adjacency that brings greater scope and scale to not only our hardware solutions, but our software solutions to integrate as a critical data analytics and solution provider to utilities in North America and the rest of the world.

Kenneth Bockhorst: And if I could add to that, Nathan, compared to the people that you’re referencing, which, of course, we spent a lot of time understanding who’s in the space and who could be, no one will have the opportunity with our core competency around communications and software to be able to build on this the way that we already have with our BEACON portfolio and AMI and what we’ve done with radar and the other software and communications products and services we already have.

Robert Wrocklage: And while we’re certainly talking a lot about sewer line monitoring, there is an — sorry, I was just going to say, I just want to make sure we didn’t leave out of that answer, was very focused on sewer line monitoring. There’s a big part of this business that’s at the Lift station. And again, similar to my earlier answer, we already played at the lift station in many respects in those same technologies. And so it’s absolutely a perfect marriage between the sewer line and lift station monitoring to collectively address not just the sewer but the full collection system.

Nathan Jones: Thanks for that. I guess one final one. High single-digit EBITDA margins. Obviously, a pretty small business at the moment and you talked about investing for growth and things like that. This would seem like a business that at scale should have significantly higher margins than where it is today. Maybe if you look out, I don’t know how long you want to look out five or 10 years, where you think the margins for this business could get to?

Robert Wrocklage: So you hit the nail on the head at acquisition here. It is an EBITDA margin profile less than our core. I would say in large part, the strategy under XPV’s ownership to date was to position for growth. And so there’s a heavier investment in SEA and that’s why we talk about in the script on a go-forward basis, whereas we’ve been leveraging SEA or levering SEA over time, there’s probably a temporary step back here in 2025 as we bring in this $35 million of revenue with higher the top line average SEA. But we think that through kind of the growth synergies and bringing our channel to bear, we can take what’s already a great organically growing business in the double-digit range and augment that and make it grow faster.

And similarly as Ken alluded to, we can bring to bear larger corporate functions, whether it’s around supply chain, engineering, cost down or other things to essentially increase the profitability. So as we look out, we certainly think this is a business that has a well above line average EBITDA margins compared to where we operate on a core business today.

Nathan Jones: Awesome, thanks for taking my questions.

Operator: Thank you. [Operator Instructions]. We’ll move to our next question from Scott Graham with Seaport Research Partners. Please go ahead, Scott. Your line is open.

Scott Graham: Yes, hi. Good morning. I wanted to understand a little bit more about how you’re deploying backlog? I know you said you had a little bit extra juice in the second quarter of next year because of some backlog deployment. I’m just wondering as you look at sort of your orders and excluding the second quarter, your backlog and how that ran through what the dynamic was. Are you seeing any sort of unevenness? Are there an unusually higher number of either faster-than-expected, slower-than-expected deployments or has that been kind of fairly normal for you, again away from that 2Q.

Kenneth Bockhorst: Yes, hi Scott. So with 50,000 utilities of various scales and sizes, it’s always difficult from one quarter to the next or one year to the next to really predict what that replacement cycle can be, which is why we’re always feeling like reminding people of the unevenness is the prudent thing to do. So what we’re seeing in terms of backlog and how order rates are flowing through, I would say, is very normal. And again, it’s not like we’re digesting big chunks and trying to get in another big chunk with 45,000 small utilities, 4,500 mediums, 500 largest, it just kind of flows in what I would call a normalized uneven but exciting pattern.

Scott Graham: Understood. Thank you. I’m sure your customers, they’ve obviously had ample time to digest their results of the election. And are you hearing them just talk about any pauses in deployments or even ordering patterns? I know you said that you were pleased with your fourth quarter orders. With regard to sort of Trump 2.0 and the potential for some regulatory rollbacks.

Kenneth Bockhorst: Yes. So we’re not hearing any change in tone at all. So keeping in mind that 75% of our revenue sells directly, we talk directly to customers, and we get a feel for that dynamic probably sooner than most people. I’ve recently been with our distributors who are all feeling as excited about next year as they’ve been about previous years and the out phases. So I’m very confident that if there were discussions or talks about utilities pulling back, we would be the first to know.

Robert Wrocklage: I think if your question, Scott, is specific to a pause or a temporary slowdown in government funding or infrastructure spend. If you listen to anything we’ve talked about over the last three years about a reliance on infrastructure money, it’s just not there in the metering space, quite frankly. And so if that’s the question angle here, I would say, certainly, historically, we’ve seen very little benefit from that money flowing to the market and a pause wouldn’t necessarily have any immediate impact on us.

Scott Graham: Yes. No. I mean I’m talking about regulations perhaps more broadly, not necessarily the infrastructure related. Thank you for that. I just have one more question in strategic relative to SmartCover. Is there an opportunity to take your sort of digital product line and the competencies there and the advantages there to SmartCover or vice versa? And by extension, is there — can you start to sell maybe more like a larger solution this year under contract that you do with your AMI — like you do with your AMI?

Kenneth Bockhorst: Yes. So this is one of the reasons last year, we started talking about the BlueEdge portfolio because yes, whether that’s all in one package or whether that’s a utility that plans out the next three to five years on how they want to implement their technologies and manage their budgets. We clearly see the opportunity to bundle sell even if that bundle isn’t immediate. Again, we think about our utility customers in five, 10, 20-year cycle. So this fits squarely in the ability to sell more to customers we already sell to. And your question on the software and the things that we can do. One of the things we like about SmartCover is, they’re already a really strong company that just needs to grow as we talked about.

So it isn’t — it’s in no way a fixer upper. So it’s got a strong management team. It’s been run well. And it’s just, as we talked about, a bit subscale. So I think we can help that with our cross sales leverage, I think we can enable that with some operational improvements. And I think we’re really excited about it as I’m sure you can tell from the commentary and everything that goes with it, but being able to pick up both, as Bob pointed out, sewer line monitoring and lift station enhancements in one transaction was really attractive to us.

Scott Graham: Thank you for all that. I appreciate it, if I can just sneak this last one in. Do you have a view on whether this will be modestly accretive dilutive to earnings this year?

Robert Wrocklage: So in the short term, when you factor in the opportunity cost on the interest, we’re saying for 2025, it is EPS dilutive and that it turns to accretion in year two, and that’s really where we’re at.

Scott Graham: Very good. Thanks a lot.

Operator: Thank you. We have no further questions, so I’ll pass you back to Karen Bauer for any closing comments.

Karen Bauer: Great. Thanks, operator. Bob referenced this earlier, but I did want to call your attention to the slide in the appendix, where you’ll find the historic primary working capital recast for the pro forma balance sheet reclassification we did on the current portion of deferred revenue. So we’ve reclassified this data element from accounts payable to other current liabilities beginning in Q4 2024 and going forward. So as you can see on the slide, while the general trajectory of PWC improvement remains. There is a slight difference in absolute PWC as a percent of sales, as noted on those charts in the appendix. So this reclassification does not change in any way cash from operations or free cash flow. Then in closing, thanks for joining our call today.

For your planning purposes, our first quarter 2025 call and my last at the helm of IR here at Badger Meter with my retirement in early May is tentatively scheduled for April 17. Please don’t hesitate to reach out with any questions you might have. Have a great day.

Operator: Thank you. This concludes today’s call. Thank you very much for joining. You may now disconnect your lines.