Bruce Thames: Well, first of all, we’re seeing growth really across all of the product portfolio. But I will say that, as we look at process heating, the growth there is almost 2x that of the heat tracing business. And we see that really in a number of areas, but particularly as you look at the opportunities around energy transition and decarbonization, there are some really big opportunities for that process heating business. Some of the areas of investment we’ve talked about this year is really expanding our capacity to be able to increase production in those product lines. And we’ve made some really great progress. We hope to exit this year with basically about 50% in increasing our capacity around process heating, so that we can really supply the growing demand for really the transition from traditional hydrocarbon fired heaters to electric heating technology.
Kevin Fox: Brian, this is Kevin. If I could just add in. If we think about heat tracing versus process heating or those diversified end markets versus oil and gas, as we go into this expanded addressable market, it’s not just the top line growth, but it’s the bottom line profitability as well. We generally see those gross margins in those addressable markets that we’re targeting as at, if not slightly better from a profitability perspective as well. So it’s growing. It’s attractive. And clearly, the products that we’re providing our customers are creating value for them given the growth we’re seeing in the business.
Operator: [Operator Instructions]. We have a follow-up from Brian Drab with William Blair.
Brian Drab: I was trying to be polite, but you never know. Kevin, that was good detail. A good comment on the margins there, an important one. How are you looking at the gross margin trajectory here for the balance of this year? I’d just leave it at that for now.
Kevin Fox: There’s kind of a short term and then a longer-term component to that. I think when we look at the balance of the year, we don’t necessarily give that gross margin guidance. If I could talk about the quarter specifically for a second, it’s really about the mix at the end of the day. We’re continuing to see price outweigh cost, right? So managing that value gap, the team continues to execute on that front. And if you look at the mix of the business, clearly, the large projects were growing a little more faster this year. We had some really nice wins, particularly in the power segment down in Texas here related to some winterization efforts that are driving the growth there. But again, really nice margins, even though it’s project-based, still attractive margins for us.
So that mix, however, as you guys know, is slightly dilutive on the projects versus the maintenance and repair side of things. Even if you look at it geographically, the strength in the US, EMEA and APAC, but Canada just growing, but not quite at that same rate. That’s a little bit dilutive as well as we think about the geographical dispersion there. The last thing I’d mention just on margins. We look at the margins in backlog really closely, and that continues to trend well. So if we kind of think about where we are today versus where we can go into the future, the combination of growth in these diversified markets where there is margin expansion, the operational excellence program that were underway that Roberto is going to talk more to the investment community about during Investor Day, continuous improvement.
We feel like we’ve really got a few levers in front of us that can continue to drive gross margin improvement in the future.
Operator: Our next question comes from Jon Braatz with Kansas City Capital.
Jonathan Braatz: Bruce, on the sort of the renewable front and your diversification efforts, obviously, there’s been a lot of noise recently over the last three or four weeks about higher interest rates and maybe impact on some of these programs, utilities maybe cutting back spending and so on and so forth. When you look at the project pipeline out there, have you seen any movement in the pipeline of activity because of higher interest rates. Have you see anything that would suggest that maybe there’s some softness in the opportunities ahead in your diversification efforts?
