Nathan Jones: The other one. Good morning, everyone.
Rob Wrocklage: Good morning, Nathan.
Ken Bockhorst: Hey, Nathan. You threw your voice on that first call.
Nathan Jones: Yes. I’m going to go first. I let Adam go first. He’s smarter than me. A couple of questions on the SEA line. You guys talked about expecting that to drift up a little bit as we go through the year. Can you talk about what the growth investments are targeted at? And then increasing SEA a little bit here, but it doesn’t sound like you think there’s more SEA expense needed just to support the base business and how it’s going. So if you can just confirm that and just talk about where the growth investments are targeted at?
Ken Bockhorst: Yes. I would say first and foremost, with a growing business as ours that just a few short years ago was in the $400 million or $500 million range and is now where we stand today on a trailing 12-month basis. Inevitably that brings with it growth investments in people, investments in engineering resources to remain an innovator, investments in software and software development to keep our BEACON, RADAR, and other SaaS platforms not only current but cutting-edge and best-in-class. So they’re the exact, what I would say, forward-looking, customer-facing areas that you’d expect as we continue to be an innovator, which remains our number one capital allocation priority.
Nathan Jones: And then I guess just one follow-up on the mix of what you guys are shipping these days. Still shipping radios that don’t have — sorry, meters that don’t have radios, meters that have AMI radios, meters that have AMI radios. Can you talk about how the mix of that two or three years and maybe where you think the penetration of AMI technology is in the market today?
Ken Bockhorst: Yes. So, you know, certainly, our growth, which we’ve been very public about, and how we think we build that average sale price of going from a meter plus a radio plus Software-as-a-Service, 100% attachment rate to AMI, clearly a huge portion of the growth has been AMI adoption, our ability to capitalize on selling that full value. So we haven’t publicly stated that we want a penetration number, but you can certainly, I think you certainly can understand it’s much higher than it was. In terms of AMI in the market, I mean, the great news is it is widely accepted that AMI is the way to go, and we’re seeing whether it’s particularly medium and large, but even many of the small utilities are going toward AMI. But there’s a long way to go, I mean, still roughly 35% of the market is only AMI implemented.
So really long, tremendous amount of excitement. Penetration of radio is much higher, long runway of growth still in AMI. And frankly, by the time we get done with AMI getting implemented, we’ll already be into the replacement cycle. So it’s — that’s why we feel so great about the long-term health of where we are going.
Rob Wrocklage: Maybe the closest we would get to sort of giving a percentage, you know, if you rewind the clock four or five years ago, we always talk about the market had adopted some form of communication technology at around the 65% of the installed base. At that point in time, our specific, Badger Meter specific ratio of radios to meters sold was very much in line with the installed base. I would say as we sit here in 2024 on our current sales, that penetration rate is now well above kind of the market installed base, which, of course, has grown from 65% four or five years ago, but that mix is higher than that.
Nathan Jones: Thanks very much for taking my questions.
Rob Wrocklage: Yes. Thanks.
Operator: We currently have no further questions. I will hand back to Karen Bauer to conclude.
Karen Bauer: Thank you, and thanks everyone, for joining our call today. For your planning purposes, our second quarter 2024 call is tentatively scheduled for July 19. I will be around all day to take any follow-up questions you have. Have a great day. Thanks.
Operator: This concludes today’s call. Thank you for joining. You may now disconnect your line.
Karen Bauer: Have a great day. Thanks.
