Bobby Zolper

Bobby Zolper asked about Ecolab's customer retention rates in the Institutional and Specialty segments.

Answer

Chairman and CEO Christophe Beck stated that customer retention in Institutional and Specialty has remained very stable, consistently in the low to mid-90s. He noted that attrition includes factors like restaurant closures, which are beyond Ecolab's control. Beck highlighted the positive impact of shifting towards digital technology and IQ platforms, such as Aqua IQ, as game-changing innovations that position INS strongly.

Bobby Zolper inquired about Ecolab's customer retention rates within the Institutional and Specialty segments.

Answer

Christophe Beck, Ecolab's Chairman and CEO, stated that customer retention in Institutional and Specialty has remained very stable, consistently in the low to mid-90s. He clarified that this figure includes unavoidable restaurant closures. Beck highlighted the strong performance of Institutional, driven by a shift towards digital technology and iQ platforms, and Specialty, which is growing consistently at 7% with strong margins, indicating both segments are in good shape.

Bobby Zolper asked how the $1 billion of metering projects in the ARPA data, needing to be spent by the end of 2026, was reflected in Badger Meter's 2026 commentary. He also inquired about the funding source and legal status of the PRASA project.

Answer

Ken Bockhorst, Chairman, President, and CEO, stated that ARPA funding is not an outsized consideration for their forecast, as growth is fueled by diverse funding sources and their project funnel. Bob Wrocklage, EVP, North America Municipal Utility, cautioned against overestimating the true metering content in ARPA databases. Bob confirmed PRASA funding is partly from FEMA, driving Buy American requirements, and declined to comment on legal status but noted many variables could impact project pace.

Bobby Zolper asked how the approximately $1 billion in ARPA metering projects, slated for spending by the end of 2026, is reflected in Badger Meter's 2026 commentary. He also inquired about the funding source for the PRASA project and its current legal status.

Answer

Ken Bockhorst, Chairman, President and CEO, stated that ARPA funding is not an outsized consideration for their forecast, as growth is driven by various project buckets and diverse funding mechanisms. Bob Wrocklage, Executive Vice President, North America Municipal Utility, cautioned against assuming the entire ARPA 'metering' total directly relates to actual metering spend. He confirmed that PRASA funding partly originates from FEMA due to Hurricane Maria, which mandates Buy American requirements. He declined to comment on the legal status but noted that various project variables could impact deployment pace.

Bobby Zolper asked if the company's five-year forward view of high single-digit growth is purely organic or includes potential contributions from M&A.

Answer

Ken Bockhorst, Chairman, President and CEO, confirmed that the five-year forward view of high single-digit growth is organic.

Bobby Zolper asked for context on what customers are saying about ARPA specifically, and if there's a sense of how much of that money has gone to metering.

Answer

CEO Ken Bockhorst stated very little ARPA money has gone to metering, emphasizing that macro drivers like labor availability, technology adoption, and non-revenue water conservation remain the primary budget drivers for utilities. Bobby Zolper also asked for a comparison to the 2011-time period when organic sales were down, and why that period is not relevant today. CEO Ken Bockhorst explained the significant technological changes since 2011, including the shift to battery-operated ultrasonic meters and radios, and the introduction of software, making manual reading and billing impractical. Bobby Zolper then clarified if the five-year forward view of high single-digit growth is organic or includes M&A. CEO Ken Bockhorst confirmed it is organic growth.

Bobby Zolper of Raymond James asked if there were any variances in water quality pricing relative to Veralto's expectations. Zolper also sought Veralto's perspective on the attractiveness of water metering as a platform.

Answer

Sameer Ralhan, SVP and CFO, stated that pricing, in general, has been strategic, focusing on value creation through a combination of price and volume, with slightly higher pricing in PQI than water quality. Jennifer Honeycutt, President and CEO, confirmed that Veralto actively participates in the water metering business with mag meters in its micrometer segment, though it represents a smaller portion of overall revenue, and they evaluate the entire water value stream.

Bobby Zolper asked about any variances relative to expectations in water quality pricing and Veralto's thoughts on the attractiveness of water metering as a platform.

Answer

Sameer Ralhan (SVP and CFO) stated that pricing in general has been strategic, aiming to create value through a combination of price and volume, with PQI seeing slightly higher pricing than water quality. Jennifer Honeycutt (President and CEO) confirmed that Veralto considers the entire water value stream, including metering, and is actively in the metering business with mag meters, though it's a smaller revenue portion.