Kevin Wheeler : Well, what I’d say is we limit prebuys to three. It doesn’t mean that everybody pulls in 30 days. And so, what I’ve mentioned in our scripted remarks and so forth, as we look out at March, we see March starting to become more normalized. The prebuy is in February, which everybody focused on. March will be as a percentage of an increase year-over-year will be going back down to more as a normalized level. So again, a prebuy is just a pull forward. It doesn’t necessarily always mean that there’s additional orders out there. And how we’re looking at this as we get into the quarter as Chuck mentioned, some of it’s already been shipped and maybe a bit is still to be shipped out in Q2. But it’s more of a — we’re going to go back to normalized volumes there.
There’s nothing to read that we see from perspective that 7% is going to stick, nor is it going to be a negative as we go into the second quarter and the rest of the year. It’s going to be at that 9.2 million flat units a year. That’s kind of where we’re staying based on what we know today.
Chuck Lauber: Yeah. And I’ll just add. We’ve seen orders in April pretty strong on a relative basis. So we haven’t seen a drop in that, Scott. So along with kind of managing, as Kevin said, the orders and then pushing some out and extending a bit of our lead times to manage the order rate, we’ve also seen decent order rates through April. So we feel pretty good about going into the second quarter.
Scott Graham: Got it. Thank you for that. I guess really my other question was a very simple one housekeeper. The boiler business. Could you tell us how that did in the quarter and what that backlog looks like?
Chuck Lauber: Yeah, it was flat for the quarter. So if you recall last year, we had a pretty decent first quarter in boilers and then we really got a bit of a comp headwind on channel inventories coming down. We had worked down our backlogs quite a bit in 2022. So we saw some challenges in boilers last year. So we’ve got easier comps as we go forward. We feel good about the 8% to 10% growth rate. Our third quarter is typically highest in boilers. And backlog is strong, it’s strong. It’s a bit stronger than it was last year. And relative to other years, we feel relatively strong going into the second quarter in both commercial and residential.
Operator: Thank you. One moment for our next question. Our next question comes from Andrew Kaplowitz with Citi. Your line is open.
Andrew Kaplowitz : Hey, good morning, everyone.
Chuck Lauber: Hey, Andrew.
Andrew Kaplowitz : Can you give us more color into what you’re seeing in Rest of World margins? Margin is usually, I think, seasonally weak in Q1, maybe slightly weaker than I thought. Did you just have higher advertising expense or something like that? And then you did keep your Rest of World margin the same for the year despite the slightly lower sales growth in China. So it looks like you still feel good about that. Anything you’re doing to make sure that margins stay up at those levels?
Chuck Lauber: Yeah. Sure, Andrew. I mean, first quarter is always a challenge for us in China on margins. It’s usually our lowest margin quarter. And as you know, Rest of the World is largely China. So it wasn’t out of line with what we expected for the first quarter. We haven’t changed our full year outlook. You’re right. We did lower our top line guide a bit. But the team in China has done a great job of taking a look at SG&A being more flexible, more variable on those costs. And we have confidence that the team, even with a little lower volumes is going to continue to manage the bottom line. So yes, a little bit of a headwind on the top line. First quarter is always a challenge, but we still feel good about that range for the full year.
Andrew Kaplowitz : Great. And then just on North American water treatment, you did lower your forecast a little there. I think it was on the direct-to-consumer side that you said little bit more weakness. Maybe just talk about visibility into sort of that end market, it does tend to be a bit fragmented, how our inventories on the channel side and just more elaboration around visibility would be helpful.
Kevin Wheeler : Yeah. I think it certainly is a fragmented market. We’re in five different channels. So the visibility is not as crystal clear as we would like. But if you look at it, the two things we highlighted was on the consumer demand side of it and just more average pricing for our orders in our consumer side of the business, just a little bit lower people being a bit more price cautious. And then also highlighted the water softeners. And that just hasn’t rebounded back from where we thought it was going to be. I just think there’s – that’s more of a discretionary item sometimes people can delay it. So those are two things that we’re seeing. There’s nothing fundamentally wrong with the channels. It’s just a matter of some of these discretionary spends consumers are being a bit more cautious.
We still feel really good about the business. I mean, again, it’s going to be up 8% to 10%. We didn’t make an acquisition that puts us in California, which we’re really excited about. So there’s a lot of good things going on within the North America water treatment business and each channel has got its own little challenges, but also it’s a positive side.
Operator: Thank you. One moment for our next question. Our next question comes from Damian Karas with UBS. Your line is open.
Damian Karas : Hi, good morning, everyone.
Kevin Wheeler : Good morning, Damian.
Damian Karas : I appreciate all the color on the AHRI data and some of this monthly choppiness around distributor inventories. I was hoping maybe you could just give us an update on your perception of proactive replacement. Is that still around 30%? Or have you seen any changes there versus where you — we’re exiting 2023?
Kevin Wheeler : No. It’s interesting to me much federally closely because coming out, it’s been elevated. And it’s kind of normalized right now at that 30% level. We check it every quarter, and it’s still holding up in that percentage. So no change. And with that, of course, our merchant replacement always remains consistent. And we also like what we’re seeing in the new construction side, particularly on single-family housing. So overall, I think the consumer and kind of the components of how our units and volumes are made up are pretty consistent and have been that way for now for several, several months.
