Financial Data and Key Metrics Changes - Total sales reached $236 million in Q3 2025, representing a 13% year-over-year increase or 8% base sales growth, with a sequential decline from Q2 [6][11] - Operating earnings increased by 13% year-over-year to $46.1 million, with operating margins slightly up to 19.6% from 19.5% [7] - Consolidated EPS was $1.19, a 10% increase from $1.08 in the prior year quarter [10] - Record free cash flow of $48.2 million increased by approximately $6 million year-over-year [11] Business Line Data and Key Metrics Changes - Utility water product line sales increased by 14% year-over-year, or 8% excluding SmartCover [6] - Flow instrumentation product line sales increased by 4% year-over-year, driven by strength in water-related markets [7] - Base operating earnings, excluding SmartCover, increased by 15% year-over-year to $46.6 million [7] Market Data and Key Metrics Changes - Gross margins expanded to 40.7% from 40.2% in the prior year quarter, benefiting from structural mix improvement and price increases [8] - The company increased its gross margin range from a historical 38%-40% to a new normalized range of 39%-42% [8] Company Strategy and Development Direction - The company is focused on the long-term growth of its BlueEdge suite of modular smart water management solutions, which is expected to drive future growth [12][14] - The company plans to continue investing in both organic and inorganic growth, with a net cash position of approximately $200 million [16] - The company remains committed to returning cash to shareholders, having increased its dividend for the thirty-third consecutive year [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business amidst macroeconomic and trade uncertainties, citing strong demand for their products [15] - The company anticipates healthy levels of activity across its opportunity pipeline and expects an average top-line growth rate of high single digits over the next five years [14] - Management noted that federal funding noise has not significantly impacted customer decision-making, as utilities continue to prioritize technology adoption [26] Other Important Information - The company is successfully integrating SmartCover into its operations, with reported growth of approximately 25% in the quarter [31] - The company is optimistic about the growth potential of SmartCover, which is expected to become EPS accretive in year two post-acquisition [35] Q&A Session Summary Question: Increase in expected gross profit margin - Management indicated that the increase in gross profit margin was due to a lack of new tariff news and confidence in structural mix benefits [20][21] Question: Project timing and customer decision-making - Management clarified that they did not signal a decline in business but noted the inherent unevenness in project timing [23][24] Question: Smart Cover growth expectations - Management remains excited about Smart Cover's growth potential, which is expected to continue at an outsized level [31] Question: Pricing and tariff impacts - Management discussed targeted product-specific price increases to mitigate tariff impacts, with expectations for price realization to catch up to cost effects [39][40] Question: Water quality performance - Management expressed strong traction in water quality offerings and confidence in their parameter capabilities [42][44] Question: Outlook for 2026 - Management refrained from providing specific guidance for 2026 but expressed confidence in achieving high single-digit growth over the cycle [49][51] Question: Capital allocation and buybacks - Management reiterated their capital allocation priorities, emphasizing organic growth and dividends, while not ruling out buybacks [52][53] Question: Federal stimulus impact - Management noted that very little federal stimulus money has gone toward metering, with macro drivers remaining the same [56] Question: Comparison to 2011 period - Management highlighted significant technological advancements since 2011, making past comparisons less relevant [59]