Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the first quarter water heater demand and its impact on January and February shipments?
A: (Kevin J. Wheeler - Chairman & CEO) January and February saw higher AHRI data due to prebuy activities from a price increase. March normalized, aligning with our forecast for flat residential business in 2024. We entered April with a strong backlog, which we expect to work through in Q2.
Q: How are you adjusting the North America segment margin expectations in light of steel cost projections?
A: (Charles T. Lauber - Executive VP & CFO) Initially, we guided to 24.5-25% margins, now adjusted to approximately 25%. This adjustment reflects confidence in operational performance and accounts for upcoming pressures from steel costs and tankless product launch costs.
Q: What are the expectations for commercial water heater volumes in 2024?
A: (Kevin J. Wheeler - Chairman & CEO) We project low single-digit growth, driven by both electric and commercial gas categories. The growth in commercial gas was a positive surprise this quarter.
Q: Can you provide insights into the channel inventories and the impact of prebuy activities?
A: (Kevin J. Wheeler - Chairman & CEO) Channel inventories are aligned with expectations, with some pull forward managed within Q1. We anticipate normalizing this in Q2. Distributors are performing well, indicating a positive start to the year.
Q: How is the launch of North American tankless products progressing, and what are the sales expectations for this year?
A: (Kevin J. Wheeler - Chairman & CEO) We're excited about the tankless product launch, with prebuy orders already in place. We anticipate an additional $15-20 million in sales from this new line in phases throughout the year.
Q: What is the current status and future expectations for kitchen products in China?
A: (Charles T. Lauber - Executive VP & CFO) Kitchen products currently make up a small portion (~5%) of our revenue in China but are crucial for our strategy to offer bundled, value-oriented packages. While they put slight pressure on margins, they are key for top-line stability and growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
