Financial Data and Key Metrics Changes - Total sales for Q3 2025 reached $236 million, reflecting a 13% year-over-year increase, with Base sales growth at 8% [5][6] - Operating earnings increased by 13% year-over-year to $46.1 million, with operating margins slightly up to 19.6% from 19.5% [6][8] - Consolidated EPS rose to $1.19, a 10% increase compared to $1.08 in the prior year quarter [8][9] - Record free cash flow of $48.2 million increased by approximately $6 million year-over-year, primarily due to lower cash taxes [9] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 14% year-over-year, or 8% excluding SmartCover, driven by higher ultrasonic meter unit volumes and increased BEACON SaaS sales [5][6] - Flow instrumentation product line sales grew by 4% year-over-year, supported by strength in water-related markets [6] Market Data and Key Metrics Changes - The company noted a steady demand for its cellular AMI solution and BlueEdge suite, supported by macroeconomic drivers encouraging technology adoption across the water cycle [3][10] - The trade environment remains fluid, but the company has effectively managed tariff and trade-related cost pressures [3][7] Company Strategy and Development Direction - The company is focused on long-term growth through its BlueEdge solutions, which are modular and allow customers to adopt technologies at their own pace [10][11] - The company is well-positioned to capitalize on long-term trends in the water industry, with a strong cash flow generation capability and a net cash position of approximately $200 million [14] - The company continues to prioritize organic growth, increasing dividends for the 33rd consecutive year, and pursuing strategic acquisitions [14][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite macroeconomic uncertainties, highlighting ongoing customer enthusiasm for technology adoption [12][13] - The company anticipates a solid close to the year, despite typical seasonal impacts in Q4 due to fewer operating days [12][22] - Management expects to achieve high single-digit average top-line growth over the next five years [12][49] Other Important Information - The company has successfully transitioned certain manufacturing operations to its facility in Racine, Wisconsin, as part of the SmartCover acquisition integration [14] - The company is optimistic about the growth potential of SmartCover, which has shown 25% growth in the quarter [29][30] Q&A Session Summary Question: Insights on gross profit margin expectations - Management indicated that the lack of new tariff news and continued strong performance has led to confidence in raising the gross margin range to 39%-42% [17][19] Question: Project timing and customer decision-making - Management clarified that while Q3 may not show sequential growth over Q2, it does not indicate a decline in business, and customers are still moving forward with projects [20][22] Question: SmartCover growth and profitability - Management remains excited about SmartCover's growth potential, expecting it to become EPS accretive in year two post-acquisition [29][33] Question: Pricing strategies amid tariff impacts - Management noted targeted product-specific price increases to mitigate tariff-related costs, with expectations for price realization to catch up to costs [37][39] Question: Water quality performance and customer needs - Management expressed strong traction in water quality offerings and confidence in their current parameters, with no immediate gaps identified [41][42] Question: 2026 growth outlook and capital allocation - Management refrained from providing specific guidance for 2026 but expressed confidence in achieving high single-digit growth over the cycle [46][49] Question: Federal stimulus impact on metering - Management indicated that very little federal stimulus money has been directed toward metering, with macro drivers remaining the primary focus for utilities [53][55]

Financial Data and Key Metrics Changes - Total sales for Q3 2025 reached $236 million, marking a 13% year-over-year increase, with BASE sales growth at 8% [5][6] - Operating earnings rose 13% year-over-year to $46.1 million, with operating margins slightly up to 19.6% from 19.5% [6][8] - Consolidated EPS increased to $1.19 from $1.08 in the prior year, representing a 10% year-over-year growth [8][9] - Record free cash flow of $48.2 million, up approximately $6 million year-over-year, primarily due to lower cash taxes [9] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 14% year-over-year, or 8% excluding SmartCover, driven by higher ultrasonic meter volumes and increased Beacon SaaS sales [5][6] - Flow instrumentation product line sales grew by 4% year-over-year, supported by strength in water-related markets [6] Market Data and Key Metrics Changes - The company noted a steady demand for its cellular AMI solution and BlueEdge suite, supported by macroeconomic drivers encouraging technology adoption across the water cycle [3][10] - The trade environment remains fluid, but the company has effectively managed tariff and trade-related cost pressures [3][7] Company Strategy and Development Direction - The company is focused on long-term growth through its BlueEdge solutions, which are modular and allow customers to adopt technologies at their own pace [10][11] - The company is well-positioned to capitalize on long-term trends in the water industry, with a strong cash flow generation capability and a net cash position of approximately $200 million [14] - The company plans to continue investing in both organic growth and potential acquisitions, while also returning cash to shareholders through increased dividends [14][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite macroeconomic uncertainties, citing ongoing demand for critical utility water infrastructure [12][13] - The company anticipates a high single-digit average top-line growth rate over the next five years, despite the inherent unevenness in project timing [12][48] Other Important Information - The company has successfully transitioned certain manufacturing operations to its facility in Racine, Wisconsin, as part of the SmartCover acquisition integration [14] - The company has raised its gross margin range from 39% to 42% on a normalized basis, reflecting ongoing structural mix improvements [7][62] Q&A Session Summary Question: Insights on gross profit margin expectations - Management indicated that the lack of new tariff news and continued strong performance gave them confidence to raise the gross margin range [18][19] Question: Project timing and customer decision-making - Management clarified that they do not expect a decline in business but noted the typical seasonal impacts in Q4 due to fewer operating days [22][24] Question: Growth expectations for SmartCover - Management remains excited about SmartCover's integration and growth potential, with expectations of continued strong performance [29][30] Question: Pricing and tariff impacts - Management discussed targeted price increases to mitigate tariff impacts, with expectations of reaching parity between price and cost moving forward [38][39] Question: Water quality performance and customer needs - Management expressed strong traction in water quality offerings and confidence in their current parameters, with no immediate gaps identified [41][42] Question: 2026 growth outlook - Management refrained from providing specific guidance for 2026 but expressed confidence in achieving high single-digit growth over the cycle [47][49] Question: Federal funding impact on metering - Management noted that very little federal funding has gone toward metering, with macro drivers remaining the primary focus for utilities [53][54]

Financial Data and Key Metrics Changes - Total sales for Q3 2025 reached $236 million, marking a 13% year-over-year increase, with BASE sales growth at 8% [5][6] - Operating earnings rose 13% year-over-year to $46.1 million, with operating margins slightly up to 19.6% from 19.5% [6][8] - Consolidated EPS increased to $1.19 from $1.08 in the prior year, representing a 10% year-over-year growth [7] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 14% year-over-year, or 8% excluding SmartCover, driven by higher ultrasonic meter volumes and increased Beacon SaaS sales [5][6] - Flow instrumentation product line sales grew by 4% year-over-year, supported by strength in water-related markets [5] Market Data and Key Metrics Changes - Primary working capital as a percentage of sales was 22%, showing a 150 basis point improvement year-over-year [8] - Record free cash flow of $48.2 million increased by approximately $6 million year-over-year, largely due to lower cash taxes [8] Company Strategy and Development Direction - The company is focused on expanding its BlueEdge suite of modular smart water management solutions, which is seen as a long-term growth driver [9][10] - The company is well-positioned to enable customers to adopt new technologies for efficiency and resiliency, despite macroeconomic uncertainties [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit average top-line growth over the next five years, despite potential unevenness in project timing [11][40] - The company remains optimistic about the long-term trends driving change in the water industry, which will encourage customer evolution [12] Other Important Information - The company has increased its gross margin range from 39% to 42% on a normalized basis, reflecting ongoing structural mix improvements [6][53] - The company returned cash to shareholders by increasing its dividend for the 33rd consecutive year [12] Q&A Session Summary Question: Inquiry about gross profit margin expectations - Management indicated that the lack of new tariff news and continued strong performance gave them confidence to raise the gross margin range [16][17] Question: Project timing and customer decision-making - Management clarified that they do not expect a decline in business but noted the inherent unevenness in project timing [19][20] Question: Growth expectations for SmartCover - Management remains excited about SmartCover's integration and growth potential, with expectations of continued outsized growth [24][25] Question: Pricing strategies in response to tariff impacts - Management discussed targeted product-specific price increases to mitigate tariff-related costs, with expectations of reaching price-cost parity [30][32] Question: Water quality performance and customer needs - Management expressed strong traction in water quality offerings and confidence in their parameter capabilities [34][35] Question: Outlook for 2026 and growth targets - Management refrained from providing specific guidance for 2026 but expressed confidence in achieving high single-digit growth over the cycle [39][40] Question: Capital allocation and potential for buybacks - Management reiterated their focus on organic growth, dividends, and M&A, while not ruling out buybacks in the future [43][44] Question: Federal stimulus impact on metering - Management noted that very little federal stimulus money has gone toward metering, with macro drivers remaining the primary focus for utilities [45][46]

Turning to profitability, operating earnings increased 13% year-over-year to $46.1 million, with operating margins up 10 basis points to 19.6% from the prior year's 19.5%. Importantly, when excluding the results of the Smart Cover acquisition, base operating earnings of $46.6 million increased 15% year-over-year, and base operating margins expanded by 120 basis points. Gross margins expanded 50 basis points to 40.7% from 40.2% in the prior year quarter. Gross margin continued to benefit from ongoing structu ...