Rick Wheeler: That’s really hard to pinpoint the latter half there. I mean the fact is that the smart city movement is absolutely an escalation mode, I don’t think anyone that keeps up with that industry would say otherwise. So there are a lot of municipalities that are only now beginning to get into the smart meters to any large extent, and others have been into it for some time and deeply engaged. So the entire industry, in and of itself, is growing. So that adds to an increased demand. I think from a market share point of view, I think that we have a very big piece of the market share. Now keep in mind that there’s competitive products out there. And in fact, some of our customers have some products, but they still buy ours, because of the quality that they represent and they’re very cost effective for them.
But in reality, as smart meters came out in the initial days, they had to have some way of trying to get them connected and hooked up. It’s just that we’ve come up with much more innovative and reliable ways of doing that. And I think that does help us in the market share.
Michael Melby: And how do you plan to bundle as the Aquana is rolled out? Is it an entirely separate product set? Or given your strong share in the cable and connector business, how you plan to roll out of Aquana alongside that?
Rick Wheeler: There is some overlap, but I believe that it’s going to have its own independent movement. The fact is that with the Aquana valves, and some of the other things we’re working on downstream, they do need to have electric connectivity to the radios and other components that are associated with the smart metering and now these smart valves. So they will use our connectors certainly in that regard, and there is that overlap. It’s also nice too because much of the customer base for these products is going to have significant overlap. But I think Aquana’s going to really demonstrate its own value independent of the water meter cables and connectors.
Robert Curda: And keeping that also Aquana has a valve that is positioned for the property management, multifamily property type installation. So that’s something different than the utility market.
Rick Wheeler: That’s true, too.
Michael Melby: Can you speak to how significant Aquana’s revenues could be within the segment?
Rick Wheeler: Well, I mean, we wouldn’t have bought them if we didn’t think there was significant opportunity there. So really, it’s a matter of just how fast we can increase and get that developed market going. That’s what these pilot programs are intended to do. That’s what all our sales efforts and marketing efforts are intended to do in the way of getting the word out. But no, we don’t give guidance in that regard and won’t in this case either.
Michael Melby: And the operating margins in the segment are attractive. Were there onetime things maybe you alluded to that positively impacted that? Or can margins remain strong and get better from here?
Robert Curda: I think part of what contributed to that, we recently had a price increase for water meter cables. I’m not — I think that’s obviously going to continue, but I don’t think we’re going to see any significant growth and improvement in operating margins going forward.
Rick Wheeler: Well, Mike, you know we’re a manufacturer. So I think the more that we put the factory into a working state, then we absorb our overheads a lot more effectively. And I think that had a lot to do with margin increases irrespective of other things, simply because the factory is being put to work at a higher level as it relates to those parts of the organization that make those cables.
