Damian Karas : Interesting. Good to hear. And then I have a follow-up question for you on North American tankless. Obviously, exciting, you’re going to start shipping that product in the second quarter. I think you’ve been soliciting orders maybe since late last year. Any chance you can give us a sense on the level of orders that you’ve already been able to line up for that product? And how are you thinking about the potential sales impact for this year on that new product?
Kevin Wheeler : Well, one, we’re really excited about the tankers and only that technology and so forth. And yes, we do have prebuy orders already in-house and so forth. And as we look out on our tankless, we’ve kind of modeled an additional kind of $15 million to $20 million of incremental growth throughout the year as we launch this new product and bring it to marketing. And that will come in phases. The convincing premix is our high-end really premium product. That’s what we’re going to be launching next month. But we also have two other product lines that will be phased in the back half of the year. So excited about it. Excited to own the technology and being able to go-to-market which we believe is a very competitive and compelling product line. And we haven’t had that for another year. So that’s kind of where we’re at and look forward to sharing more of that as we get into the rest of the year.
Operator: Thank you. One moment for our next question. Our next question comes from Nathan Jones of Stifel. Your line is open.
Adam Farley : Good morning. This is Adam Farley on for Nathan. I wanted a follow-up — good morning. On the commentary around kitchen products in China. Just wondering if you could provide any detail on the percentage of revenue these products account for and maybe where you expect products in China to go over time?
Chuck Lauber: Yeah. So this is Chuck. Kitchen products are still a very, very small part of our business in China. If you kind of look at the full year, it’s around 5%. And I include in that range foods, dishwashers, cook tops and steam oven. So, if you lump those all together, it’s still a very small part of kind of our revenue in China. It’s an important part though of our strategy and having products that are in or around the kitchen that we can bundle link together through AI Link and give our distributors a more value-oriented package to sell to consumers. So a small part of our business but fits very well into our strategy.
Adam Farley : And are these products accretive to Rest of World segment margins?
Chuck Lauber: There are a little pressure on the Rest of the World segment margins. We’re launching them. We’ve mentioned in some of our prepared remarks that we’ve got some cost and promotions behind them. We do appreciate the fact that launching into them and being a little bit of a headwind to average margins that they provide opportunities for us for top line stability and growth as we bundle products and go to market that way.
Operator: Thank you. One moment for our next question. Our next question comes from David MacGregor with Longbow Research. Your line is open.
David MacGregor : Yes, good morning, everyone. Thanks for taking the question. I want to start off by–
Chuck Lauber: Hey, David.
David MacGregor : Hey, good morning. I wanted to start off by asking about the commercial business. And have you rolled out the two-step pricing model yet? And if so, can you talk about the level of acceptance that you’re seeing and just the initial impact on the business?
Kevin Wheeler : I’m assuming two step, you talked about our catalysts that we talked about during Investor Day?
David MacGregor : Yes, exactly.
Kevin Wheeler : Yeah. Again, it’s been rolled out. We’ve done a number of pilots. We continue to roll it out to various customers. So I think right now, we’re still in the early stages of it. The value proposition of it is outstanding. We’re able to have a few models and be able to turn it into 25 different products immediately. So you don’t — when you capturing that inventory that you’re tying up capital, but more importantly, your availability goes up in your customers are going to get served much, much better. So that continues to roll out. It’s not going to be a program for everyone, but our larger stocking commercial accounts. This is a real benefit and a real separation of us in the market on the value proposition. So very pleased with it. Customers seem to be very pleased with it as well. And we’ll continue to leverage that with the appropriate customer.
David MacGregor : Right. It’s still early. Okay. Got that. And then I want to follow up and just ask you a little more on the steel pricing. And I appreciate that a portion of this is indexed to what you’re selling the product for. But thinking about the residual steel risk exposure, price risk exposure. How much variability is there still remaining this year in kind of your steel forecast? You talked about 2Q being up 20% versus 1Q and then you gave some general commentary about the second half. But I’m just wondering how much variability or uncertainty remains in that outlook?
Chuck Lauber: Yeah. I mean we’ve talked about kind of the lag that we see. So we’ve got — we have visibility looking forward in kind of a 90 to a 120-day time frame. So you kind of look from April, we can see forward through that amount of time. So really fourth quarter is the biggest risk or opportunity for changes in index in steel as we kind of look forward to the rest of the year. So we’ve got a decent amount of the year covered from visibility.
Operator: And I’m not showing any further questions at this time. I’d like to turn the call back over to Helen for any closing remarks.
Helen Gurholt : Thank you, everyone, for joining us today. Let me conclude by reminding you that our global A. O. Smith team delivered strong sales and earnings in the first quarter. We look forward to updating you on our progress in the quarters to come. In addition, please mark your calendars to join our presentations at four conferences this quarter: Oppenheimer on May 6; KeyBanc on May 29; William Blair on June 4 and Wells Fargo on June 12. Thank you, and enjoy the rest of your day.
Operator: Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect. And have a wonderful day.
