A. O. Smith Corporation (NYSE:AOS) Q3 2023 Earnings Call Transcript

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Kevin Wheeler: [Technical Difficulty]

Andy Kaplowitz: It’s very helpful. And then maybe shifting back to North America, commercial water heaters, you’ve kept up pretty impressive strength. Maybe the expected duration of that strength, have you still seen reasonably good quoting activity? Any sort of conversations you’re having, given the rise in rates lately? Any color would be helpful.

Kevin Wheeler: [Technical Difficulty]

Operator: Please stand by for our next question. Our next question comes from the line of Matt Summerville of D.A. Davidson & Company.

Matt Summerville: Can you guys hear me? Is it clear because every answer is really garbled on my end and that’s happening to at least one other sell-side counterpart that I’m aware of, just FYI.

Kevin Wheeler: [Technical Difficulty]

Matt Summerville: Yes, yes. No, I appreciate that. If this has already been asked, I completely apologize, but the channel inventories, can you give us kind of what you’re thinking as a year-end assessment, channel inventories will look like in North America in resi water heaters, commercial water heaters, boilers and treatment and how that may inform you as to the volume outlook for each, respectively, a level for next year?

Chuck Lauber: [Technical Difficulty]

Matt Summerville: Yes, I can.

Chuck Lauber: [Technical Difficulty]

Matt Summerville: Thank you. And then just as a follow-up, and again, my apologies if you answered this already. You’ve obviously kind of been benefiting from this product cycle, if you will, in China as it relates to your kitchen-related offering. When did those products launch? And how should we think about the duration of that cycle on the top line just in the context of the macro environment in China? Thank you.

Kevin Wheeler: [Technical Difficulty]

Operator: Thank you. Please stand by for our last question. Our last question comes from the line of Damian Karas of UBS.

Damian Karas: I can hear you guys loud and clear now, but I do echo Matt’s comment, I literally haven’t been able to understand a lick of anything you said since we started the Q&A. I think what’s going on is like the analyst that asks the question can hear you, but it’s very kind of garbled for everybody else. So I do apologize for touching on ground you’ve already covered here, but I wanted to ask about the proactive replacement, just a follow-up. I’m just trying to think of like to what extent may be IRA and some of these efficiency credits are factoring in. So, I’m curious if you’re actually seeing any notable mix shifts on the efficiency scale in that proactive replacement or not really?

Chuck Lauber: [Technical Difficulty]

Damian Karas: Okay, great. That’s helpful. And just having seen steel prices move lower since where we started earlier in the year, how are you thinking about the next potential price cost impact from that? Just realizing that you do have some floating price but also index price.

Chuck Lauber: [Technical Difficulty]

Operator: Thank you. This concludes the question-and-answer session. I would now like to turn the call back over to Helen Gurholt for closing remarks.

Helen Gurholt: [Technical Difficulty]

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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