Operator: Thank you. One moment for our next question. And our next question comes from Nigel Coe from Wolfe Research. Your question please.
Nigel Coe: Hi. Good morning. Thanks, guys. Thanks for the question.
Gerben Bakker: Good morning, Nigel.
Bill Sperry: Good morning.
Nigel Coe: I want to probably rethread some of the — maybe re-ask the seasonality question in a slightly different way. Obviously, utility margins were gang busters. When you go back in time you’ll see the 1Q margin utilities is normally the low point for the year. Clearly, the guide doesn’t embed that. So just curious what could basically happen to materially break that trend in the margin? Is there anything funky or onetime issue in the 1Q margin utilities? Just really curious what are you seeing on the margin line for utilities as we go through the year?
Bill Sperry: Yes. I would say Nigel, we really don’t have a lot of noise or one-timers in those margins. I would say if you took a typical four-quarter Hubbell year seasonality-wise there’s less activity installation of our material in the first and fourth quarter, and more in the second and third as a result of weather. And those volume changes typically drive incremental drop-through such that you get the pattern that you just mentioned. So part of what’s different is we’re operating at capacity right now, right? It’s — there’s no — there’s going to be no seasonality in the sense of as the weather gets better we’ll be able to ship more because we’re kind of cranking away. I think the second is again thinking about price/cost as a net number.
And we sort of had both variables break right here in the first quarter with price being very strong as we said the channel being very supportive. And materials a combination of commodities and components and PFR actually being for the first time in the last few years actually being a tailwind. And we’re not anticipating that tailwind to continue Nigel. So, as we saw the commodities pick up starting in the new year we’re thinking that will be inflation to us. So, it is — I know what you’re saying when you look at a typical year it has that seasonality and you think things are getting better from here to us. We may be just in a little more of a sequential kind of analytic framework than BPY because we’re kind of building off the first quarter.
Nigel Coe: No, I agree with that. Thanks for the color Bill. And then we talked about residential and commercial. Data center is a relatively small market for you guys but it’s growing and obviously will continue to grow. What are you seeing in that market? Because there’s a lot of chatter about weakening trends. Just curious what your perspective is on data center?
Bill Sperry: Yes, I mean I think maybe because — maybe because we’re small we still — even if the FANGs are firing people, we don’t — you can read that as, oh man, they’re not going to invest in data centers. And we just think they were maybe in the pandemic overstaffed themselves as the war on talent kind of made them all hire each other’s people a little bit. So, we’re sort of looking more as they’re specking out these new data centers. I’d say they continue to revisit designs and they really are focusing on speed. And that’s what they’re saying to us. And it’s possible Nigel that because we still are kind of enhancing our footprint here through better vertical sales force better balance of systems with products this new acquisition is giving us quite a lot of visibility at the front end of projects.
So, I’m not sure if I’m saying we’re bullish because maybe we’re coming from a small share but it just feels to us like we see years of runway still and that may not be as much a market commentary as it is our franchise maybe.
Operator: Thank you. And our next question comes from the line of Chris Snyder from UBS. Your question please.
Chris Snyder: Thank you. The company produced a very strong 35% gross margin in the quarter. I know that there is some seasonal impact and obviously very strong price/cost. So, I do just kind of curious what you guys think is like normalized gross margin for the business. And I also believe you said that relative to February, the expectation is for a bigger price cost tailwind this year. And that comes despite metal reflation over the past couple of months. So just kind of curious for more color on that. Thank you.
Bill Sperry: Yes, Chris. So maybe let’s start with your price cost. Yes so, the pricing actions that we were taking at the end of the year that we didn’t have insight into their stickiness, when we shared our full-year outlook at the end of January, it was a much better take-up than we expected and much better than historical average on price increase take-up. So the price side of that is quite a bit bigger. And then it really does dominate and overwhelm what will happen from the amount of inflation that we’ve seen in the New Year on the materials side. And as I think, Joe was asking beyond materials, we’ve got to do a really good job of working our suppliers and making sure that any lower material cost they got in 2022 that we’re – that’s getting passed through to us.
So we’ve got to do a really good job to make sure that that cost side is managed Chris. But I do think – I do think that the price cost, which we had two of price when we last talked about this we’ve added a couple of points to that and that’s quite meaningful.
Chris Snyder: Thank you. I appreciate that. And then if I could just ask one more quick one. For T&D, the expectation that there’s long-term mid-single-digit sustainable growth. So I was just kind of curious, when do you think the business will kind of compress back to that level? Is that like a 2024 expectation or do you think you could still realize outsized growth even through next year as well? Thank you.
Bill Sperry: Yes. I think the – Josh had asked about stimulus and we’re not seeing a ton of direct impact of the stimulus. Yes there’s lots of planning around it. I think it is true that our customers are feeling that there’s funding there. And so maybe in the absence of the stimulus Chris, we might see that mid-single digits maybe materialize in 2024. It’s also possible stimulus will give us a little lift for a couple of years. But that’s a – that’s a little bit outside of our crystal ball right now.
Operator: Thank you. One moment for our final question for today. And our final question for today comes from the line of Christopher Glynn from Oppenheimer.
