Good day ladies and gentlemen and welcome to the Q3 2014 Badger Meter Earnings Conference Call. My name is Lian and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Rick Johnson who is the Senior Vice President of Finance and Chief Financial Officer. Please go ahead.

Thank you very much, Lian. Good morning everyone and welcome to Badger Meter’s third quarter conference call. I want to thank all of you for joining us today. As usual I begin by stating that we will make a number of forward-looking statements on our call today. Certain statements contained in this presentation as well as other information provided from time to time by the company or the employees may contain forward-looking statements and involve risk and uncertainties that could cause actual results to differ materially from both in these forward-looking statements. Please see yesterday’s earnings release for list of words or expressions that identified such statements and the associated risk factors. Let me reiterate some of our guidelines for competitive reasons we do not comment on specific individual product line profitability other than in general terms, nor do we disclose components of cost of sales, for example, copper. More importantly we continue our practice of not providing specific guidance on future earnings. We believe specific guidance does not serve the long-term interest of our shareholders. Now on to the third quarter results. Yesterday afternoon after the market close, we released our third quarter 2014 results. We are very happy to report that we have record sales earnings and diluted earnings per share for the third quarter. In fact, not only did these numbers break previous third quarter records, but they were the highest of any quarter in our history. Sales for the three months ended September 30 were $96.3 million compared to $93 million during the third quarter last year. The $3.3 million or 3.5% increase was the net result of higher sales of municipal water and flow instrumentation products, offset slightly by lower specialty product sales. Let’s look at each of these groups. Municipal water sales increased $2.7…

Thank you, Rick and thank all of you for joining us today. First, let me say that we’re obviously very pleased with the strength of our business in the recent quarter. Our customers continue to see the value in our product offerings especially our newest products, and we continue to manage the company for future growth and profitability. Let me provide a few specifics on those new products. We’re seeing strong growth in our E-Series ultrasonic residential water meter, introduced several years ago in stainless steel and most recently in a polymer version. Unit sales of these products doubled in this quarter compared to one year ago. The ORION SE radio which provides simultaneous drive-by and fixed network meter reading capability also continues to drive higher sales. In the BEACON advanced metering analytic system with its cellular based radio introduced earlier this year continues to see strong market acceptance. We have sold over 150 starter kits and now we have numerous utilities that have already committed to this newest technology offering. These three new products, E-Series, ORION SE and the BEACON AMA system are all driving sales growth and strong margins for Badger Meter. On the first day of this month, we were also very pleased to close on the purchase of National Meter and Automation our largest distributor. We paid $20.7 million for this company which we estimate to be about seven times normalized EBITDA. Since the significant portion of national meter sales were from the resale of Badger Meter products, this acquisition is only expected to add to our consolidated revenues by approximately $15 million annually. This represents national meter sales of non-Badger Meter products plus their markup on Badger Meter products. However, this acquisition will add significantly to both our gross margin and our bottom line. More importantly, the acquisition will bring us closer to our customers and enable us to serve the market more efficiently. We’re very pleased to have National Meter and Automation as part of the Badger Meter family. We continue to invest in our R&D efforts for meters, radios and software. We recently introduced the new EyeOnWater consumer app which enables our utility customers that have implemented the BEACON AMA system to give their customers the end water consumers’ access to valuable information about their water usage. This free app is now available on our home computers, iPads, iPhones, and Androids. Utilities and water stressed-areas are particularly interested in providing this information to their customers to encourage conservation efforts. Looking forward, we feel that we are in a strong position to drive continued growth in both sales and earnings. Although the fourth quarter tends to be a weaker quarter due to the seasonality of our business and in October we’re already seeing some of that weakness, we are optimistic about our long-term prospects. With that we’ll take your questions.

Thank you. (Operator Instructions) And your first question is from Richard Eastman. Please go ahead. Richard Eastman – Robert W. Baird & Co.: Good morning.

Good morning, Rick.

Good morning, Rick. Richard Eastman – Robert W. Baird & Co.: Rich could you just – I just want to make sure I heard this right. On National Meter you guys have paid $20.7 million.

Correct. Richard Eastman – Robert W. Baird & Co.: Okay. And could you just give us a sense of kind of co-Badger or maybe pass-through revenue, we talked about $15 million are being third party revenue, but…

Well, the $15 million is third party revenue plus the mark-ups on our products. Richard Eastman – Robert W. Baird & Co.: Yes.

But they were doing about $25 million to $30 million of Badger Meter products. Richard Eastman – Robert W. Baird & Co.: Okay.

Which obviously doesn’t double upon our sales? Richard Eastman – Robert W. Baird & Co.: Right.

We’re not counting that twice, but you can see that at $21 million purchase price was 7 times EBITDA. We’re expecting to generate about $3 million of additional EBITDA from this purchase in 2015 for sure. Richard Eastman – Robert W. Baird & Co.: Okay, so $3 million of EBITDA incremental from this purchase for all of next year.

Right… Richard Eastman – Robert W. Baird & Co.: Okay.

And to help you with your model, I’ll also say that they will probably add about $6 million to our sales, engineering, general and administrative costs. Richard Eastman – Robert W. Baird & Co.: Okay.

So that will fall in there and the difference, the plug number you’re going to come after is improved margins. We should get over a 100 basis points on our margin. Richard Eastman – Robert W. Baird & Co.: Okay, excellent, excellent. And then just could you just talk for a minute about the seasonality – your last comment I mean typically your sales sequentially into the fourth quarter are down maybe 10%, 12%. So your comment about seeing that softness, you’re really talking about that typical seasonal softness versus something that would be more year-over-year.

I’m seeing the seasonal softness, but Rick I purposely made that comment about October because I am seeing October starting out a little softer than I have in past, in past October’s. Richard Eastman – Robert W. Baird & Co.: Okay. So year over year it’s a little bit softer?

Even against what we thought we would have a month ago. Richard Eastman – Robert W. Baird & Co.: Right

We had now two great quarters in a row. And in fact even in the first quarter if you adjust back to $0.07 for the acquisition, we’ve had three great quarters in a row here. And long-term I don’t see any issue in our business, but as you know the utilities react to a lot of different things there is a lot of factors that come into play even the election can come into play on utility buying habits. We are just seeing some softness in our October order entry which we’re only halfway through October, so it’s possible that it’s just timing. Richard Eastman – Robert W. Baird & Co.: Yes. And so maybe the question is, I mean from a – we talk about order patterns kind of return to normal, we would get some seasonality. Maybe we are a little bit softer than we would like year-over-year in the early part of October. But there’s nothing structurally, because, again, revenue at the kind of municipal-state level still seems to be kind of working higher. There’s nothing structurally here that would suggest any caution in the buying pattern, is there, that I don’t see?

Yes, that’s absolutely correct. We are not hearing anything from the field, or anything like that. Richard Eastman – Robert W. Baird & Co.: And with National Meter, again, we got kind of $15 million of incremental third-party revenue here to build into a model on an annual basis. I presume that their fourth quarter would be a little bit weaker seasonally as well?

Correct. They will follow our seasonality.

And because of the accounting rules and the write-up of the inventory in the acquisition price, we don’t expect to see much profit in the fourth quarter and the margin – gross margin line.

Right, Rick. There won’t be much that will hit the bottom line from national meter because we have to write-up all of their inventory in the acquisition. Richard Eastman – Robert W. Baird & Co.: Sure, yes. And they wouldn’t carry more than a quarter’s worth, would they?

Yeah. They’ve got like four turns a year. So anything we sell in the fourth it’s going to be written-up, it’s going to be… Richard Eastman – Robert W. Baird & Co.: Yes. Okay. And just one last question, sorry. But ORION SE – I’m just curious. When you look at ORION SE sales relative to – are you still selling any ORION product? And also for that matter, GALAXY? Or has most of the product now transitioned over to ORION SE?

No. We are still selling a lot of Galaxy and a lot of the – what we call ORION CONTINUE, which is the classic endpoint. We are still selling a lot of that. In fact, that’s the majority of the sales, but we’re on track to probably do about 100,000 ORION SE this year, and you are racking that up…

Units.

Units, and you are racking up that against about 1 million radios we sell each year. So we’re pleased with where it is, but as you know, we introduced this thing basically about a year and a half ago and a lot of utilities say send me 10, send me 20, we’ll see how it works and we’ll place orders. I am pleased that we are now selling tens of thousands a month, but we’re not replacing all of the ORION SE with them. Richard Eastman – Robert W. Baird & Co.: Yes, I understand. Okay, great, thank you and very nice quarter. Thank you.

Thank you. Your next question comes from Ryan Connors. Please go ahead. Ryan M. Connors – Janney Montgomery Scott LLC: Great, thank you. Couple of questions guys on if you could expand on the National Meter DLS and predictably on kind of a strategic rationale behind the deal, typically you’ve not owned distributors in a big way. So does this indicate any kind of a shift in channel strategy on your part or is this more of the opportunistic type situation?

Yes and it is a good question, because historically I’ve said that as a manufacturer I am a little uncomfortable owning a distributor and that it’s difficult to operate that way. Well, first off, the opportunity came along on National Meter. National Meter is not only our largest distributor; they are kind of the gold standard of distributors in our industry. They’ve done just an incredible job. They have great systems, great procedures, highly talented people. So this opportunity allowed us to start kind of a new strategy path, where we said, let’s acquire National Meter and we don’t view this as a one off acquisition. We think the real opportunity with National Meter is that down the road as other territories become available in our distribution network or other distributors become available, we are going to look at them pretty aggressively as where we want to make some acquisitions or sign additional open territory to National Meter to allow them to grow. And basically, grow our own distribution network if you will. So we are definitely going to look at this as a new strategy and a new opportunity going forward. Ryan M. Connors – Janney Montgomery Scott LLC: Now, if I am not mistaken, National Meter is largely kind of a southwest part of the country, is that correct?

Yes, correct. They really have Colorado, Arizona, and California little bit above the States but that’s basically with they’ve got. Ryan M. Connors – Janney Montgomery Scott LLC: Okay. And that’s one of the areas where BEACON has been I think most popular early on, because of the water conservation management aspects of the system and that sort of thing.

Yes, absolutely. I would probably flow Texas in there. The Texas utilities are also very interested in BEACON, but to tell you the truth we’ve had interest all across United States. We’ve got Eastern utilities that have picked it up and the starter kits have gone everywhere. But there is no question that this idea of EyeOnWater and allowing people to see what they’re using to drive conservation, that’s going to be a big selling point with the utilities and stressed-water areas. So that would focus California, Arizona, Texas, Nevada, and areas like that. Ryan M. Connors – Janney Montgomery Scott LLC: And you talked about this technology of double lead, Rich, I mean as part of this that that the fact that you own distribution, does that enable you to better dictate how your channel partners are kind of pushing, how aggressively they’re getting the word out and the message out and making a sale on some of the new technologies rather than being complacent and selling some of the legacy stuff? Is that part of the rationale here now?

Well, I think there maybe a little of that, but I wouldn’t say that’s a driving rationale because pretty much all of our distributors sell primarily Badger products. So we’ve got a pretty close relationship with all of our distributors now. But what this will do is bring us closer to our customers, it’s going to let us get out into the field and spend more time with the customers. We’re going to know more what the customers’ needs are. And yes, to some extent it’s going to allow us to focus sales efforts in areas where we feel it’s best for building shareholder value. Ryan M. Connors – Janney Montgomery Scott LLC: Great. And then my last question is just on the BEACON system that’s been a great story, obviously not material yet in terms of the numbers. I mean how soon outs or how far outs do you think it will be until that’s really a needle moving part of the business? Is that two year story, five year story, what do you think?

I think one way to gauge that is to look at ORION SE, so we really introduced ORION SE in the second quarter of last year and we started selling thousands a month, which were primarily for people who were looking at starter packages and testing it, okay. Here we are a year later and we’re selling tens of thousands a month, all right. I think we’re going to see the same thing with BEACON. We released it pretty much in the second quarter of this year. We sold over 150 starter packages, where the utilities actually buy, they’re making a commitment. The starter packages come with 10 radios and four free months of service, after four months, they have to decide whether they want to commit to this or not. And we are seeing a lot of our utilities commits, but I think it’s going to be somewhere around the third quarter of next year when we’re going to start seeing significant sales on this. Ryan M. Connors – Janney Montgomery Scott LLC: Got it. Well that’s very helpful. Thanks for your time.

Thank you. And your next question comes from Chip Moore. Please go ahead. Chip Moore – Canaccord Genuity Group Inc.: Hi, thanks. I’m wondering if you could touch on pricing environment a little here signs of some softness in October, copper touching under $3, presumably you’ve got a little cushion. Are you willing to compete a little more and then what are you seeing from competitors there?

: Chip Moore – Canaccord Genuity Group Inc.: Okay that’s fair and may be can bring us update on the Elster business, where we stand there?

Well the Elster business, we think, it’s now, it’s to the point where it’s just as our business last year, it’s actually just been built into the normal results. But we feel we estimate that we’ve conservatively captured at least half of the Elster sales, the former Elster sales. We know there are customers out there that Elster had contracts with that basically stock piled and we still haven’t seen some orders from them. And so we’re hoping that we still have some, a little bit more potential in the future. But I’d say that’s kind of built into our base now in 2014 going forward into 2015 and beyond. We’re fairly confident that we’ve got over 50% of the Elster business. We also feel that Elster business is priced probably about 15% on loan market rates. What we were able to do on the renewals this year is, I feel and this is just a gut feel from the renewals that I saw, that we probably picked up a third of it this year. So we’re maybe 10% below market rates on a package of all the customers and we are picked, we’re going to try and pick up a third of it each year. We can’t go and say to a customer we’re raising your rates 15% in one year. They were used to these low prices from Elster, we got to get them back up the market, but it’s going to take a few years to do it. Chip Moore – Canaccord Genuity Group Inc.: Okay, that is helpful. And just lastly on the, get back to Q4 trends, language in the press release seems to suggest may be Q1 levels are lower and then just triangulate that with the addition of National Meter. Thanks.

Well, I mean, I always think Q4 is the weakest quarter of the year, by far. Okay in Q1 can compete for Q4 for the bottom or it can compete with Q’s 2 and 3. It all depends on how the year starts and the weather. We’re to have that conversation. But if I were a betting person I always say Q4 is the weakest. There is seasonality. You are heading into winter you’re heading into the end of the year. Some utilities…

There’s also a lot more holidays in Q4.

Yes, some utilities are calendar year, we estimate may be a third of the utilities have calendar year ends, whether they have to spend money to get it done by the end of the year, which by the way is not been a problem in recent years, or whether they just wait till the new year to start, all of those are factors, very hard to get a read on. I think all Rich was referring to was just, as we start the first couple of weeks in October, we updated our forecast about a monthly go and we’re seeing a little softness even on that. In National Meter, I think the message there’s don’t expect any great shakes in the fourth quarter where National Meter is going to add a specified amount of money on the bottom line, just simply because we go through the opening entries and that inventory has to turn and we don’t make a lot on that, but after that we’re very confident. Chip Moore – Canaccord Genuity Group Inc.: Okay, great. Appreciate it, guys.

Thank you. And your next question comes from Glenn Wortman. Please go ahead.

Good morning, Glenn. Glenn Wortman – Sidoti & Company, LLC: Good morning, guys. You explained the year-over-year gross margin improvement, but it was also up 150 basis points sequentially on essentially flat sales. Can you help us understand the move there?

Well, I think I have a theory on that. Because our inventory turns four times a year, if you look at what we sold in the second quarter, a lot of that had to do with cost basically incurred in the first quarter when we didn’t have as much volume. If you look at what we sold in the third quarter, a lot of that has to do with product basically produced in the second quarter when we’re really basically cranking and we’re more efficient. We have a lot of fixed costs. It’s a fixed cost environment on lot of the production costs and as we get the volume we absorb it better and it helps drive down costs. Glenn Wortman – Sidoti & Company, LLC: Okay. And then just on the gross margin going forward, 37.9% is toward the upper end of your range, but it sounds like you’re going to get higher margins from the National sales, maybe some improved pricing from Elster. Any thoughts on where gross margin shakes out going forward.

My answer is we always regressed to a norm, okay, because we start hitting a little bit too high, eventually pricing then from the competition creeps back in and forces us to take some actions. You’re right on all of those factors. They can all play a role, but we can go into a little bit of softness. And, again, I’d point back to that fixed-cost environment. Certain fixed costs and also new margin can decline a little bit. Glenn Wortman – Sidoti & Company, LLC: Sure. Okay, thanks for taking my questions.

Thank you. And your next question is from Brian Rafn. Please go ahead. Brian Rafn – Morgan Dempsey Capital Management: Good morning, guys.

Good morning, Brian.

Good morning, Brian. Brian Rafn – Morgan Dempsey Capital Management: Give me a sense, Rich, how many – when you look your National wholesale distributors, what size universe of that is being that National is maybe the gold standard, how many different distributors are we talking? Tens, hundreds?

We have about 33 distributors that represent about 50% of our utility sales. The other 50% is done direct. And so National Meter represented – was the largest of those 33 distributors. Brian Rafn – Morgan Dempsey Capital Management: Okay, okay. Does that create any encroachment with some of the other distributors, maybe competitively looking at maybe adding competitive product to that, given the fact if you’re doing a little bit of vertical integration?

No, first off all our distributors under contract have exclusive territory, so they compete with each other, so we don’t have that issue. We also, under our distributor contract, have pretty tight control over what else our competitors can sell. So, it’s very – I’m sorry what else our distributors can sell, I love to control what our competitors can sell, but I can’t do that. We have pretty good control through the distribution contracts of what our distributors can sell. So for example most of our distributors sell meter pits, pit lids, connectors, things like that that go with that are sold with the meter. So, I don’t see a problem with other distributors trying to encroach or bringing in other product lines, I don’t think that’s going to happen. Brian Rafn – Morgan Dempsey Capital Management: Okay, okay. Give me a sense and you’ve talked, Rich, in the past, maybe over the last year or so and you said that given what’s going on with Elster and Neptune, some of the other competitors, that for the first time since Jesus walked the Earth there might be a shift in some of this legacy market share. Are you seeing any of that?

Well, clearly the decision by Elster to pull out of North America, which after a 100 years was the first time we’ve had a major shift like that that was significant and that was a significant opportunity for us and I’m very proud of our team. We did a great job and being able to capitalize on that opportunity and I was very pleased that Elster was willing to work with us on that to transfer over a lot of their accounts. So that was just a huge opportunity and that was great. We’ve seen our other competitors – some of them are owned by private equity and are for sale, others are not. We hear a lot of rumors out there about who is going to buy what and what’s going to happen out there, but from what I see now it’s pretty stable. There is some market shifts and it’s causing some competitors to have excess capacity and other competitors do not have much capacity, so that always impacts the pricing that was going on in the market too, but I would say the biggest thing was the Elster change. Brian Rafn – Morgan Dempsey Capital Management: Okay, all right. And then you talked a little bit about the BEACON technology, the EyeOnWater. As you see this rollout, Rich, what is your sense of some of these starter kits? Do you see the consumer picking up on that and pulling some of that demand through, or do you see water utilities more in kind of the gospel discipleship – you should have? How do you see that playing out over the next couple of years?

I think we’re a ways away from the consumer demanding EyeOnWater with utility, but what does happen is a utility in an area will decide to go with BEACON and we’ll provide their information. That word then starts spreading to the other utilities around them and the question starts being asked by common councils or public service commissions or people like that utility boards saying what we are doing, why aren’t we using some of this latest technology, why aren’t we providing this? In fact, in Texas, one utility said we’re going to be using Badger Meter’s new BEACON system and providing this wonder information to our consumers and the intrepid reporter called a neighboring utility and said what are you doing and I got to kick out of the neighboring utilities answer, they said our consumers can see their water usage on a daily basis, all they have to do is call the water utility everyday and we’ll read it to them. So that’s kind of a different level of consumer engagements than what we’re offering here. We’re offering real-time online information to the consumers. And I do think there is going to be pressure on utilities. I’m not sure it was going to come from the utilities, but it might come from the governance boards and the surrounding utilities. Brian Rafn – Morgan Dempsey Capital Management: Yes, okay, okay. Given that I think you talked a little bit about your sense of business visibility. And in the past you’ve talked about tax revenues and budgets and municipal water budgets. Some of the nonsense going on, whether it would be IRS, Tea Party, and drones and NSA hacking and border issues and Ebola, are these things that are really tertiary and really not affecting your core business? Or are there potentially some of these political crises that could have some impact?

This is Rick. We talk about this all the time. I always go back to the first quarter of 2003 when the newly formed Department of Homeland Security told all the water utilities to inspect their facilities because we were going to warn Iraq, okay. It had a huge impact on our sales in the first quarter, okay. So yes, I would say we always talk about this. The municipal water utility – they are government employees, they are impacted by what they see going on out there and sometimes these things give them pause because right now, we see the market kind of – yesterday was kind of roller coaster ride. People see that and go – maybe I should hold off and making the decision about converting my sale in case this is the start of another 2008 again. So they are impacted there. Long-term, they are not impacted. Because what happens is all of a sudden this will be old news two or three weeks from now hopefully, alright and everything just resumes and it goes on is normal, all right. Brian Rafn – Morgan Dempsey Capital Management: Okay.

So we see that day-to-day. Brian Rafn – Morgan Dempsey Capital Management: Yes.

Brian, we’ll give you one more question because we’ve got people waiting in queue. Brian Rafn – Morgan Dempsey Capital Management: Okay, one just on the comment on the ORION SE – at what point, are there any benefits that the GALAXY system, the fixed network, provides that the ORION SE does not?

No. Galaxy provides the reading. It’s pretty much a one way system where it provides the reading backing to utility through a fixed network device on a water tower or on a dedicated tower. And when you look at the BEACON system, you’re talking about using the cellular infrastructure and a two-way system where the utility can communicate back to the meter. Brian Rafn – Morgan Dempsey Capital Management: All right. Thanks, guys.

(Operator Instructions) And your next question comes from Hasan Doza. Please go ahead. Hasan Doza – Water Asset Management, LLC: Hi, good morning, guys.

Good morning, Hasan. Hasan Doza – Water Asset Management, LLC: A couple of questions. The first one is, when you talked about fourth quarter looking more like first quarter at a high level, I just want to make sure, when we think about the base, you guys reported $0.32 in the first quarter of this year. I know you don’t give guidance, but is that the base we should think about when we think about the structure and shape of the fourth quarter?

Well, first off, we didn’t say the fourth quarter is going to look like the first quarter. One of the people asking a question said that, okay. And we didn’t respond to it. Secondly, the first quarter was $0.32, but there was a $0.07 unusual item in there, which was the acquisition cost for an acquisition we didn’t complete. So on a normalized basis, there was a $0.39 quarter. And thirdly, I’m not going to answer your question because we don’t give guidance. Hasan Doza – Water Asset Management, LLC: Okay. I tried.

That’s okay, Hasan. We give you credit. Hasan Doza – Water Asset Management, LLC: The second question I had is you had about an 18% increase in inventory level this quarter versus your sales up 3.5%. So would you mind giving a little bit more color as to the reason your inventory went up so much year-over-year?

Sure. First off, we are building some strategic inventory in certain product lines, especially products that are made in our facilities overseas where we were seeing longer lead times, whether it’s because of customs, Homeland Security, or whatever, we’ve had to build up some strategic inventory there. Secondly, you’re going to continue to see an inventory build between now and the end of the year, because in the fourth quarter and into the first quarter because – since those are our slower months we’re going to be making some major production moves down in our Mexico facility. We’ve actually got two buildings down there and we’re going to be moving some production from one building to the other just optimize and give us capacity for future growth. And so during those moves we want to have enough inventory built up to satisfy any customer demands. So, not only did you see a build now, you’re going to see even more of a build between now and the end of the year. After that I think in 2015, you’re going to see it start coming down again. Hasan Doza – Water Asset Management, LLC: Are you investing any incremental capital in this Mexican facility, first part of the question?

No, just the cost of moving the equipment between the one facility and the other, which is just freeing up space. We’re also expanding the parking lot because we’re bringing in more employees. It’s all just growth related. Hasan Doza – Water Asset Management, LLC: Okay. And should there be any impact to your gross margins as you move around the Mexican facility during the fourth quarter?

No, we don’t expect it all. Hasan Doza – Water Asset Management, LLC: Okay. The last question, go ahead please.

We’re taking advantage of the fact that the fourth and the first quarters are very slow – are slower than the second and third quarter. And so this is the time to do it get everything optimized, it’s just at the production of the E-Series is growing faster than what we had originally planned. And so we need to put on an additional line and we just can’t do that in the facility where we have the E-Series. So it’s going to be better to just move it up into our larger facility. Hasan Doza – Water Asset Management, LLC: Okay. And the last question, on your working capital I know as of the end of the second quarter you had a $9 million negative drag on working capital because you also had the build-in in inventory. So maybe can you give us a little bit of color as to your working capital and cash flow generation as of the end of the third quarter?

I mean, cash flow when we disclosed this in the SEC filings. Cash flow gets measured on a nine-month basis and I apologize, but I don’t have the six month sitting here, but for the nine months we generated $28.2 million compared to $28.7 million for the nine months ended September 30 of 2013. Clearly the increased earnings are a factor, but then the – you’re right, the inventory build kind of drag that down a little bit to make it even between years. Hasan Doza – Water Asset Management, LLC: Thank you very much gentlemen. I appreciate it.

Thank you. And your next question comes from Richard Eastman. Please go ahead.

Hi Richard. Richard Eastman – Robert W. Baird & Co.: This is a quick follow-up, Rich. In the utility business, municipal business, the two initiatives that you had in the Middle East and also just this international initiative to sell ORION radios kind of through a reseller in Europe – any traction there or ability to expand distribution? Or have you? Or customer base? Just what’s the status of those two pieces of business?

Well, a couple of things, first off, we did win the Middle East contract about $6 million, we had some pretty heavy shipments in the second quarter but not much in the third quarter. It’s just the timing of how they take the product. We also completed a deal earlier this year with a company in Europe that is private labeling and reselling our ORION radio and we are starting to see – we are shipping to them, we are seeing it’s hundreds of thousands of dollars a quarter it’s not millions. Richard Eastman – Robert W. Baird & Co.: Okay.

So we are starting to see those shipments and we are so pursuing other deals. We did open an sales office in Dubai with three people. So, it’s a small sales office, but it’s going to help us support those Middle East customers and also hopefully gain some more. Richard Eastman – Robert W. Baird & Co.: Okay. And again, just incremental traction there, nothing of note, I mean, no second contract win and, you know…

Right. It’s going to be a lumpy thing because they tend to be pretty large sales and so it’s going to be lumpy but we’re…

But there are potential customers in the pipeline and again it’s a long sales cycle -- Richard Eastman – Robert W. Baird & Co.: Right. Yes I got you. Okay, thank you.

Okay.

Thank you. I would now like to turn the call back over to Rich Meeusen for closing remarks.

Well. Thank you I obviously we are very pleased with this quarter. We feel we’ve had we’ve racked up three pretty good quarters thus far this year. We are optimistic about where things can go. We like the traction our new products are getting and we like the market and where the market is. So we feel we’re well positioned. With that, I’ll thank everybody for joining us.