Financial Data and Key Metrics Changes - The company reported a record adjusted EBITDA margin of 21.8%, an increase of 100 basis points year over year [6][12] - Adjusted EPS grew by mid-teens percentage compared to the previous year [6] - Revenue growth was strong at 6% in the quarter, driven primarily by outperformance in Measurement and Control Solutions (MCS) [12][20] - Year-to-date free cash flow decreased by $61 million year over year, mainly due to outsourced water projects and timing of tax payments [13] Business Line Data and Key Metrics Changes - **Measurement and Control Solutions (MCS)**: Orders grew 12% organically, with revenue up 10% driven by energy metering demand [14] - **Water Infrastructure (WI)**: Revenue grew 4%, with demand led by treatment solutions, although orders declined by 2% due to funding delays in the UK and Canada [15] - **Applied Water**: Orders increased by 4%, with revenue up 5%, driven by strength in commercial buildings [16] - **Water Solutions and Services**: Orders increased by 5%, with revenue growth also at 5%, reflecting strong execution on pricing and productivity [17] Market Data and Key Metrics Changes - Demand for products and solutions remains resilient, with strong orders pace and particularly solid growth in smart metering [7] - The backlog remains strong, exceeding $5 billion, with a book-to-bill ratio near one [12] Company Strategy and Development Direction - The company is focused on executing its transformation plan laid out at the Investor Day, which includes simplifying operations and enhancing portfolio for growth through targeted acquisitions [9][26] - Recent acquisitions in advanced treatment are aimed at strengthening the company's growth engine and enhancing capabilities [26] - The company is committed to navigating tariff uncertainties and inflation through pricing actions and supply chain adjustments [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong performance for the remainder of 2025, despite macro uncertainties [20] - The company raised its full-year revenue guidance to $8.9 billion to $9 billion, reflecting 4% to 5% total growth [20] - Management noted that while there are uncertainties around tariffs and foreign exchange movements, the team is effectively controlling internal factors [21] Other Important Information - The company has implemented simplification initiatives that have improved productivity and customer responsiveness, contributing to margin expansion [7][10] - The integration of Evoqua is progressing well, with cost synergies being delivered ahead of schedule [24] Q&A Session Summary Question: Update on MCS order outlook and destocking - Management noted resilient demand across the board, with expectations for MCS to return to a positive book-to-bill ratio by year-end [35] Question: Progress on simplification initiatives - Management reported tracking ahead of the timeline for simplification, with improved decision-making and customer metrics [36][41] Question: Applied Water performance and eightytwenty impact - Management highlighted strong orders and revenue growth in Applied Water, with ongoing focus on simplifying the business to drive growth [50] Question: Municipal utility funding concerns - Management expressed confidence that Congress will appropriate funds to maintain healthy state revolving fund levels, despite concerns about potential cuts [88] Question: MCS margin drag from legacy projects - Management indicated that legacy projects would pressure margins in the short term but expect sequential improvement in the coming quarters [106] Question: Capital deployment strategy - Management remains forward-leaning on M&A, focusing on assets that fit the strategy and have strong financial returns [80]