Bryan Blair: Okay. Very helpful detail and encouraging trends. Matthew, you mentioned that government money is starting to trickle in. And you touched on the outlook for PFAS and your team’s positioning there. It would be great to hear just updated perspective on IIJA related growth opportunities overall. You’ve been pretty consistent in tempering expectations to date, understandably so, given the phasing of the rollout, but we have seen some acceleration in obligations and outlays, front-end reads are certainly very encouraging. And looking at the categories of funding and ultimate spend, I would have to assume that your team is going to participate in just about everything. So curious how your views are evolving there and how we should think about the forward opportunity?
Matthew Pine: Yes. I wish I could turn and stick on that hose nozzle and make it go a little faster, but look, it’s — I’ve been pretty consistent about this, whether it’s in the U.S. or other markets, U.K., in Europe, with their funding. It’s just going to be a slow drift and it’s going to drip in and really help support our market growth over the next three to five years. And so that’s how we continue to look at it. We don’t have a big jump in our long-range plan in terms of incentives or subsidies that are coming in. So it’s just going to trickle in and be kind of a layer on top of the market growth. And that’s how we look at it.
Bryan Blair: Understood. Appreciate the color.
Matthew Pine: Thank you.
Operator: The next question comes from Nathan Jones with Stifel. Please go ahead.
Nathan Jones: Good morning everyone.
Matthew Pine: Hey, good morning Nathan.
Nathan Jones : I wanted to pick up on one of Bill’s comments and something I know I’ve talked to Matthew about before, which was the anticipation that in the future price will offset inflation. Several years ago, it had been Xylem’s target for price plus productivity to offset inflation. So there’s a significant change there. So just looking for some color on how you look to go about implementing that and what you think will give to Xylem the entitlement to be, I guess, a little more aggressive with price versus inflation than it has been historically?
Bill Grogan : Yes. I think, obviously, price capture has been a focus with rising inflation. We’re going to talk more about that at the end of the month, just a new approach to strategic pricing. I mean, I think for us, it’s really — we’re looking to offset our material inflation with price and then let productivity handle the balance of indirect and SG&A inflation and fund our investments. I think the teams have got the operational productivity down, and now it’s for us just to continue to refine and our process relative to value capture for the products that we offer to our customers. We were price cost positive. We’re looking to really manage that spread going forward, and that’s really the target of the teams.
Nathan Jones: I guess my follow-up question for Matthew. You talked about government funding kind of trickling in. There’s I think, an increased focus in Europe on non-revenue water, big increases in the focus for that in the next half cycle and parts of Western Europe and Southern Europe after the 2022 drought. Can you talk about if there’s any material opportunities from that increased focus on non-revenue water for Xylem’s business over the next several years?
Matthew Pine: Yes, I do. I think first with our Idrica platform is a great entree into that. There’s a lot of opportunities to leverage the Idrica platform to help visualize that data through AMI systems. So that’s a big focus area that we’re working with utilities on across Europe and across the globe, but especially Europe. And you’re right, there’s a lot of funding in Europe and in the U.K. with the AMP cycle in the U.K. on non-revenue water. And also, there’s a lot of focus on analytical instrumentation, especially out in the environment where they’re holding polluters liable for contaminated water. So we see a great opportunity on smart metering and analytical instrumentation in that region with an overlay of our Idrica partnership and platform.
Nathan Jones: Great. Beast of luck. Thanks for taking my questions.
Matthew Pine: Thank you.
Operator: The next question comes from Joe Giordano with TD Cowen. Please go ahead.
Joe Giordano: Hey, good morning, guys.
Matthew Pine: Hey, good morning, Joe.
Joe Giordano: So on PFAS I know we talked a lot about it but can you maybe just talk us through exactly where you’re exposed on that? And if there’s capabilities that you don’t currently have maybe like sampling or destruction that you’re currently exploring either internally or maybe through acquisition?
Matthew Pine: Yes. So – we’re obviously we have the technology to capture through our acquisition with Evoqua coming together at Xylem. And we have over 80 PFAS installations to date. Actually we just had one written up in Newsweek, I believe it was Newsweek a month or so ago up in Maine, where we were capturing PFAS from a well that they had dug to serve the increasing population. So we’ve got proven technology on the capture side. Where the innovation needs to happen and get to commercial liabilities on destruction. And then sensing we can sense and bring it to a lab and get the sensing part of PFAS but need to get sensors that can be in real-time flow. So those are the areas on destruction and real-time sensing – whether it’s innovation needed and our teams are working on that through our innovation labs. And with the two teams coming together from a legacy of Xylem and Evoqua, we believe that we can move faster and obviously spend less money getting there.
Joe Giordano: And then the last question I guess is one I never really thought I’d be talking to you guys about but we’re getting questions about Xylem is like a data center play now on the water side. So can you maybe explain the opportunity set in front of you either on the power side as we have to ramp up generation capabilities to support a huge buildout or we’re like in the buildings themselves on the data center side how that opportunity kind of scales for you?
Matthew Pine: Yes. I mean look on the power side we’re excited. It’s one of our high-growth verticals. You heard Bill talk about the big win $130 million build on operate win in hydrogen – and so we see that energy mix shift driving lots of opportunity for us. Specific to data centers, I do think it is a growth opportunity. We’re starting to see it. Actually one of our examples. I won’t steal the thunder here at Investor Day coming up in a few weeks is about the data center where we have synergy win there. But it’s currently a small part of our revenue probably less than $50 million. Data centers do need a significant amount of water for cooling and many of them are being built in water-stressed areas putting a lot of pressure on water resources.
So we have a lot of solutions to help them from comprehensive treatment solutions to enable reuse. We’ve got obviously outsourced services for water management to help as well. So we do believe it’s going to be an opportunity for us. It’s probably not like maybe some of the other coverage that you folks have but it definitely will be a tailwind.
Joe Giordano: Fair enough. Thank you, guys.
Matthew Pine: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Matthew Pine for any closing remarks.
Matthew Pine: Well, we’ll wrap it up there. Thank you for your questions and thanks to everyone who joined today. We hope to see many of you either in person or online at Xylem’s Investor Day on May 30. And we look forward to sharing further insights into our priorities and strategic direction then. Until then all the best.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
