Badger Meter, Inc. (NYSE:BMI) Q4 2022 Earnings Call Transcript

It was primarily AMI data. Now we added scan ATI and now people can go to Beacon and get their water quality data. And now with the RADAR software that we’ll incorporate into Beacon, a utility now can come get their quantity, quality pressure, acoustic leak detection all in one place. So we think we’ve got really good leverage and we can integrate it relatively easily into our sales force. And then on top of that, we’re really excited about the — again, small companies, similar like ATI, scan, except even smaller, but long-standing great relationships with people like Thames Water, even American Water. If you go to their website, you’ll see some really good customer test cases. So I’ve said this before, technology deals for us. Obviously, with big deals are always flashy but no deal is too small with what we can do with our customer base.

Robert Wrocklage: Sorry, Rob. So the one piece that maybe we didn’t touch on there was you talked about how deployed can cover channels. But from a deployment standpoint, this largely becomes starts. I’m going to call it a pilot for a lack of a better term, maybe a focused effort on leak detection in a particular part of a defined distribution network. And once that’s successful, then that model gets replicated in other areas is on. So basically, you have customers starting with a small footprint of technology, but that, that customer grows that installed base of both hardware and software over time.

Robert Mason: I see. To the extent that you noted it might be modestly dilutive this year. I’m just curious what would be the impact on the gross margin?

Robert Wrocklage: At the gross margin line, this is above line average. But again, to size what we said in the commentary, we’re talking about a couple of million dollars of sales at acquisition.

Robert Mason: Okay. Very good. Thank you.

Robert Wrocklage: Sure.

Operator: Thank you, Mr. Mason. Our next question comes from the line of Tate Sullivan with Maxim Group. Your line is now open.

Tate Sullivan: Thank you. Good morning. On Syrinix following up, is it additive to the existing real-time water quality measurement businesses you have? Or is it the other way around? Can you

Kenneth Bockhorst: Yeah, Tate. It’s really exciting in that we have known Syrinix for several years, but they’ve had a long-standing relationship with ATI. So this equipment works hand-in-hand a lot of times with the water quality equipment because, as I mentioned in the prepared comments, sometimes you can understand a leak because you can see the contaminants in the water first and vice versa. So they really help each other out, plus you can get it into the drinking distribution system. So it goes all the way across the portfolio.

Tate Sullivan: And on the real-time water quality opportunity, can you give an update there? Is most of the customers currently if you can’t comment on industrial customers for that technology? And also, can you update on the process of integrating those software capability into the real-time water quality market, please?

Kenneth Bockhorst: Sure. Yeah. So the water quality the water quality applications do have the wide-ranging effects of drinking water distribution, wastewater industrial processes. So yes, it fits all aspects of what we cover. And in terms of software, yes, it is available. It is online and customers are now ordering water quality sensing plus software.

Tate Sullivan: Both on industrial and utility, Ken?

Kenneth Bockhorst: Yes. That is correct.

Tate Sullivan: And then on the international opportunity, too, I mean U.S. was such good growth in 2022 and understanding the moderating percentage growth in ’23. I mean, internationally, should we expect it to grow as a portion of revenue going forward, given, I mean, many of these acquisitions that on?