A O Smith Corp (AOS) 2023 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to the A. O. Smith First Quarter 2023 Earnings Conference Call.

美好的一天，謝謝你的支持。歡迎參加 A.O. Smith 2023 年第一季度收益電話會議。

(Operator Instructions)

（操作員說明）

Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Helen Gurholt. Helen, please go ahead.

請注意，今天的會議正在錄製中。今天我想將會議交給您的發言人 Helen Gurholt。海倫，請繼續。

Thank you, Ellinor. Good morning, and welcome to the A. O. Smith First Quarter Conference Call. I'm Helen Gurholt, Vice President, Investor Relations and Financial Planning and Analysis. Joining me today are Kevin Wheeler, Chairman and Chief Executive Officer; and Chuck Lauber, Chief Financial Officer.

謝謝你，埃莉諾。早上好，歡迎來到 A. O. Smith 第一季度電話會議。我是投資者關係和財務規劃與分析副總裁 Helen Gurholt。今天加入我的是董事長兼首席執行官 Kevin Wheeler；和首席財務官 Chuck Lauber。

In order to provide improved transparency into the operating results of our business, we provide non-GAAP measures. Free cash flow is defined as cash from operations less capital expenditures. Adjusted earnings, adjusted earnings per share, adjusted segment earnings and adjusted corporate expenses exclude the impact of impairment charges, non-operating non-cash pension expenses as well as legal judgment income and terminated acquisition-related expenses. We also provide total segment earnings. Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation and on our website.

為了提高我們業務經營業績的透明度，我們提供了非 GAAP 措施。自由現金流定義為運營現金減去資本支出。調整後的收益、調整後的每股收益、調整後的分部收益和調整後的公司費用不包括減值費用、非經營性非現金養老金費用以及法律判決收入和終止收購相關費用的影響。我們還提供分部總收益。本演示文稿末尾的附錄和我們的網站上提供了從 GAAP 措施到非 GAAP 措施的調節。

A friendly reminder that some of our comments and answers during this conference call will be forward-looking statements, that are subject to risks that could cause actual results to be materially different. Those risks include matters that we described in our -- this morning's press release, among others.

友情提醒，我們在本次電話會議中的一些評論和回答將是前瞻性陳述，存在可能導致實際結果大不相同的風險。這些風險包括我們在今天上午的新聞稿中描述的問題，等等。

Also, as a courtesy to others in the question queue, please limit yourself to one question and one follow-up per turn. If you have multiple questions, please rejoin the queue. We will be using slides as we move through today's call. You can access them on our website at investor.aosmith.com.

此外，出於對問題隊列中其他人的禮貌，請將自己限制在每輪一個問題和一個跟進中。如果您有多個問題，請重新加入隊列。我們將在今天的電話會議中使用幻燈片。您可以在我們的網站 investor.aosmith.com 上訪問它們。

I will now turn the call over to Kevin to begin our prepared remarks. Please turn to the next slide.

我現在將把電話轉給凱文，開始我們準備好的發言。請翻到下一張幻燈片。

Thank you, Helen and good morning, everyone. I'm on Slide 4, and we'll review a few highlights of our first quarter results. Our team delivered record first quarter adjusted EPS of $0.94, driven by strong performance in North America with sales up 3% due to higher commercial and residential water heater volumes.

謝謝海倫，大家早上好。我在幻燈片 4 上，我們將回顧第一季度業績的一些亮點。我們的團隊在第一季度實現了創紀錄的調整後每股收益 0.94 美元，這得益於北美的強勁表現，由於商業和住宅熱水器銷量增加，銷售額增長了 3%。

In addition, we saw margin expansion across our water heating, boiler and water treatment product categories due to a more favorable price/cost relationship. Our Rest of World segment delivered consistent performance in the first quarter despite headwinds in the economy and currency exchange in China. In India, our sales grew 28% in local currency in the first quarter due to strong demand for our water heating and water treatment products.

此外，由於更有利的價格/成本關係，我們看到熱水、鍋爐和水處理產品類別的利潤率有所增加。儘管中國的經濟和貨幣兌換存在不利因素，但我們的世界其他地區部門在第一季度仍取得了一致的業績。在印度，由於對我們的熱水和水處理產品的強勁需求，我們第一季度的銷售額以當地貨幣計算增長了 28%。

Please turn to Slide 5. North America water heater sales grew 3% in the first quarter of 2023 as we believe we outperformed the market and experienced resilient demand for our commercial and residential water heater products.

請轉到幻燈片 5。北美熱水器銷售額在 2023 年第一季度增長了 3%，因為我們相信我們的表現優於市場，並且對我們的商用和家用熱水器產品的需求具有彈性。

Sales of commercial electric products were strong in the quarter as demand returned to pre-2022 levels. Last year, commercial industry shipments were negatively impacted by our regulatory change for commercial electric products greater than 55 gallons.

隨著需求恢復到 2022 年之前的水平，本季度商用電子產品的銷售強勁。去年，我們對大於 55 加侖的商用電子產品的監管變化對商業行業的出貨量產生了負面影響。

Our North America boiler sales grew 2%, driven by previously announced price increases to offset higher costs. Residential boiler volumes decreased year-over-year, primarily driven by elevated channel inventory levels coming off a particularly strong fourth quarter of 2022. We believe inventory levels have normalized by the end of the quarter.

我們的北美鍋爐銷售額增長了 2%，這是由於先前宣布的提價以抵消更高的成本。住宅鍋爐銷量同比下降，這主要是由於 2022 年第四季度特別強勁的渠道庫存水平上升所致。我們認為庫存水平在本季度末已恢復正常。

Demand for our commercial high-efficiency condensing boilers, particularly our Hellcat CREST boilers with O2 sensing technology remained strong. North America water treatment sales were flat in the first quarter of 2023 compared to a tough comp in 2022 as higher direct-to-consumer and e-commerce sales were offset by lower sales in our dealer and specialty wholesale channels.

對我們的商用高效冷凝式鍋爐，尤其是我們採用 O2 傳感技術的 Hellcat CREST 鍋爐的需求依然強勁。北美水處理銷售額在 2023 年第一季度持平，而 2022 年則表現不佳，因為直接面向消費者和電子商務的銷售額增加被我們經銷商和專業批發渠道的銷售額減少所抵消。

Sales in the first quarter of 2022 benefited from strong shipments as supply chain constraints improved and we work down our order backlog. We believe the majority of our dealers and wholesale customers exited the first quarter with normal inventory levels.

2022 年第一季度的銷售受益於強勁的出貨量，因為供應鏈限制得到改善，我們減少了訂單積壓。我們相信我們的大多數經銷商和批發客戶在第一季度以正常庫存水平退出。

In China, first quarter sales decreased 10% local currency compared to the first quarter of 2022, primarily due to weakened consumer demand. We have seen sequential improvement through April and expect that improvement to continue through the year. We believe it will take time for the Chinese economy and consumer confidence to improve. We saw a favorable price/mix in the quarter, particularly in our water treatment, as we recently introduced our large flow products that have been well received by the market.

在中國，與 2022 年第一季度相比，第一季度銷售額以當地貨幣計算下降了 10%，這主要是由於消費者需求疲軟。我們已經看到 4 月份的連續改善，並預計這種改善將持續到今年。我們相信中國經濟和消費者信心的改善需要時間。我們在本季度看到了有利的價格/組合，特別是在水處理方面，因為我們最近推出了深受市場歡迎的大流量產品。

I'm now on Slide 6. A. O. Smith has recently been named in 2023 ENERGY STAR Partner of the Year Sustained Excellence winner by the EPA and the U.S. Department of Energy. The ENERGY STAR award is given to companies that have made a long-term commitment to energy management through their products or services.

我現在在幻燈片 6 上。A.O. Smith 最近被 EPA 和美國能源部評為 2023 年能源之星年度持續卓越合作夥伴。能源之星獎授予那些通過其產品或服務長期致力於能源管理的公司。

This is the fifth consecutive ENERGY STAR Partner of the Year award A.O. Smith has received and the third time being named a Sustained Excellence partner. These awards are a direct result of our strategic objective to expand and enhance our high-efficiency product portfolio, including heat pumps, as evidenced by the recent launch of our Voltex AL heat pump water heater. We are committed to continue development of sustainable water heating and water treating technology.

這是 A.O. 連續第五次獲得能源之星年度合作夥伴獎。 Smith 已獲得併第三次被任命為持續卓越合作夥伴。這些獎項是我們擴大和增強我們的高效產品組合（包括熱泵）戰略目標的直接結果，我們最近推出的 Voltex AL 熱泵熱水器就是證明。我們致力於持續開發可持續的水加熱和水處理技術。

I'll now turn the call over to Chuck, who will provide more details on our first quarter performance.

我現在將電話轉給查克，他將提供有關我們第一季度業績的更多詳細信息。

Thank you, Kevin, and good morning, everyone. I'm on Slide 7. Record first quarter sales in the North America segment rose to $753 million, a 3% increase compared with the same period last year. The increase is primarily driven by higher commercial and residential water heater volumes, partially offset by pricing.

謝謝你，凱文，大家早上好。我在第 7 張幻燈片上。北美市場第一季度銷售額創歷史新高，達到 7.53 億美元，與去年同期相比增長 3%。增長的主要原因是商業和住宅熱水器銷量增加，部分被定價所抵消。

North America segment earnings of $188.6 million increased 22% compared with the first quarter of 2022. Operating margin of 25.1% improved 400 basis points from the segment adjusted operating margin in the first quarter of last year. The higher segment earnings and operating margin are primarily due to higher volumes of commercial and residential water heaters and lower steel costs.

北美分部收益為 1.886 億美元，比 2022 年第一季度增長 22%。營業利潤率為 25.1%，比去年第一季度該分部調整後的營業利潤率提高了 400 個基點。較高的分部收益和營業利潤率主要是由於商業和住宅熱水器銷量增加以及鋼材成本降低。

Moving to Slide 8. Rest of the World segment sales of $219.1 million decreased 14% year-over-year and 8% on a constant currency basis. Currency translation unfavorably impacted segment sales by approximately $17 million. Our sales decrease was primarily driven by lower sales in China as consumer demand was negatively impacted by COVID-19-related headwinds.

轉到幻燈片 8。世界其他地區的銷售額為 2.191 億美元，同比下降 14%，按固定匯率計算下降 8%。貨幣換算對分部銷售額產生了約 1700 萬美元的不利影響。我們的銷售額下降主要是由於消費者需求受到 COVID-19 相關逆風的負面影響，導致中國銷售額下降。

We saw month-over-month improvement in consumer demand during the quarter. India sales grew 28% in local currency in the first quarter compared to 2022, as our new products have been well received by the market. Rest of the World adjusted segment earnings of $17.8 million decreased 28% compared to segment earnings in 2022.

我們看到本季度消費者需求逐月改善。與 2022 年相比，第一季度印度銷售額以當地貨幣計算增長了 28%，因為我們的新產品受到了市場的歡迎。與 2022 年的分部收益相比，世界其他地區調整後的分部收益為 1780 萬美元，下降了 28%。

Segment adjusted operating margin was 8.1%, a decrease of 160 basis points compared to the first quarter of last year, primarily as a result of lower volumes in China, partially offset by lower selling costs.

部門調整後的營業利潤率為 8.1%，與去年第一季度相比下降 160 個基點，這主要是由於中國銷量下降，部分被銷售成本下降所抵消。

Please turn to Slide 9. We generated free cash flow of $109 million in the first 3 months of 2023, higher than the same period in 2022, due to higher earnings and lower working capital outlays, primarily related to lower inventory levels and a lower 2022 incentive payments paid in 2023. Our cash balance totaled $496 million at the end of March, our net cash position was $155 million.

請轉到幻燈片 9。我們在 2023 年前 3 個月產生了 1.09 億美元的自由現金流，高於 2022 年同期，這是由於較高的收益和較低的營運資本支出，這主要與較低的庫存水平和較低的 2022 年有關2023 年支付的獎勵金。截至 3 月底，我們的現金餘額總計 4.96 億美元，我們的淨現金頭寸為 1.55 億美元。

Our leverage ratio was 16% as measured by total debt to total capital. Our strong annual free cash flow and solid balance sheet enable us to focus on capital allocation priorities and return cash to shareholders. Earlier this month, our Board approved our next quarterly dividend of $0.30 per share, which represents our 83rd consecutive year of dividend payments.

我們的槓桿率為 16%（按總債務與總資本的比值衡量）。我們強大的年度自由現金流和穩健的資產負債表使我們能夠專注於資本配置優先事項並將現金返還給股東。本月早些時候，我們的董事會批准了每股 0.30 美元的下一季度股息，這是我們連續第 83 年支付股息。

We repurchased approximately 821,000 shares of common stock in the first quarter of 2023 for a total of $53 million. We expect to repurchase $300 million of our shares in 2023, a $100 million increase from previous guidance.

我們在 2023 年第一季度以總計 5300 萬美元回購了約 821,000 股普通股。我們預計將在 2023 年回購 3 億美元的股票，比之前的指導增加 1 億美元。

Let's now turn to Slide 10. In addition to returning capital to shareholders, we continue to see opportunities for organic growth driven by innovation and new product development across all of our product categories and geographies. The strength of our balance sheet allows us to pursue strategic acquisitions even in times of economic uncertainty.

現在讓我們轉到幻燈片 10。除了向股東返還資本外，我們繼續看到在我們所有產品類別和地區的創新和新產品開發推動的有機增長機會。我們資產負債表的實力使我們即使在經濟不確定時期也能進行戰略收購。

During the quarter, we committed to selling our business in Turkey and recognized a non-cash impairment charge of $15.6 million. Primarily in anticipation of the liquidation of the cumulative foreign currency translation adjustment. The business model in Turkey is more project-based than our core consumer and commercial water treatment business and no longer fits our current strategy.

本季度，我們承諾出售我們在土耳其的業務，並確認了 1560 萬美元的非現金減值費用。主要是預期累計外幣折算調整的清算。土耳其的商業模式比我們的核心消費者和商業水處理業務更基於項目，不再符合我們目前的戰略。

Please turn to Slide 11 and our revised 2023 guidance and outlook. We've increased our 2023 outlook with an expected adjusted EPS range of $3.30 and $3.50 per share. The midpoint of our adjusted EPS range represents an increase of 8% compared with 2022 adjusted EPS.

請轉到幻燈片 11 和我們修訂後的 2023 年指南和展望。我們上調了 2023 年的展望，預計調整後的每股收益範圍為 3.30 美元至 3.50 美元。與 2022 年調整後的每股收益相比，我們調整後的每股收益範圍的中點增加了 8%。

Our outlook is based on a number of key assumptions, including -- we assume a relatively stable supply chain, while challenges persist, disruptions are limited. We remain in close contact with our suppliers and logistics providers to manage and resolve supply chain issues as they arise.

我們的前景基於許多關鍵假設，包括——我們假設一個相對穩定的供應鏈，而挑戰依然存在，中斷是有限的。我們與我們的供應商和物流供應商保持密切聯繫，以管理和解決出現的供應鏈問題。

We've increased our North American margin guidance from approximately 23% to a range of between 23% and 23.5%. Based on a full-year outlook on volumes and price cost relationship, we have recently seen a meaningful rise in steel index pricing, which will translate into higher input costs and relative to the first quarter, put pressure on North American margins in the back half of the year. We forecast that our steel cost in the second half of the year will be approximately 20% higher than the first half of the year.

我們已將北美利潤率指引從大約 23% 提高到 23% 至 23.5% 之間。基於對全年產量和價格成本關係的展望，我們最近看到鋼鐵指數定價顯著上漲，這將轉化為更高的投入成本，相對於第一季度，對下半年的北美利潤率構成壓力的一年。我們預計下半年我們的鋼材成本將比上半年高出約20%。

Our guidance assumes that other costs outside of steel remain relatively flat to our previous guidance, with favorable adjustments in our transportation cost outlook, offset by moderately higher costs outside of transportation. We expect to generate free cash flow of between $575 million and $625 million.

我們的指引假設鋼鐵以外的其他成本與我們之前的指引相對持平，我們對運輸成本前景的有利調整被運輸以外的適度上漲成本所抵消。我們預計將產生 5.75 億美元至 6.25 億美元的自由現金流。

For the year, CapEx should be between $70 million and $75 million. Corporate and other expenses are expected to be approximately $55 million. Our effective tax rate is estimated to be approximately 24%. And as I noted earlier, we expect to repurchase approximately $300 million of shares of our stock, resulting in average outstanding diluted shares of $150 million at the end of 2023.

今年，資本支出應在 7000 萬至 7500 萬美元之間。公司和其他費用預計約為 5500 萬美元。我們的實際稅率估計約為 24%。正如我之前指出的那樣，我們預計將回購大約 3 億美元的股票，到 2023 年底平均流通稀釋後的股票將達到 1.5 億美元。

I'll now turn the call back to Kevin, who will provide more color on our key markets and topline growth outlook and segment expectations for 2023, Staying on Slide 11. Kevin?

我現在將電話轉回給凱文，他將在我們的主要市場和收入增長前景以及 2023 年的細分市場預期中提供更多顏色，留在幻燈片 11 上。凱文？

Thank you, Chuck. We revised our 2023 sales projection to be approximately flat to 2022 at the midpoint, with a range of plus or minus 2%, which includes the following assumptions. Residential water heater demand was resilient in the first quarter, and therefore, we are raising our projection for the 2023 residential water heater industry volumes to be approximately flat to last year.

謝謝你，查克。我們將 2023 年的銷售預測修改為與 2022 年的中點大致持平，幅度為正負 2%，其中包括以下假設。第一季度的家用熱水器需求具有彈性，因此，我們提高了對 2023 年家用熱水器行業銷量的預測，使其與去年基本持平。

We continue to monitor proactive replacement and new housing completions. Demand for commercial electric water heaters greater than 55 gallons was strong in the first quarter and orders remained strong in April. We have raised our guidance for commercial water heater industry volumes to increase mid-single digits compared to 2022.

我們將繼續監測主動更換和新住房的竣工情況。第一季度對 55 加侖以上商用電熱水器的需求強勁，4 月份的訂單依然強勁。與 2022 年相比，我們提高了對商用熱水器行業銷量的指引，以增加中個位數。

Our China business performed as expected in the first quarter. We believe it will take time for consumer confidence to strengthen and for the economy to improve in China. We reaffirm our guidance that our sales in China will grow 3% to 5% in local currency in 2023. Our guidance assumes volumes in China improved throughout the year.

我們的中國業務在第一季度表現符合預期。我們相信消費者信心的增強和中國經濟的改善都需要時間。我們重申我們的指導意見，即 2023 年我們在中國的銷售額以當地貨幣計算將增長 3% 至 5%。我們的指導意見假設中國的銷量全年有所改善。

Our forecast assumes the Chinese currency will devalue approximately 2% in 2023 compared to 2022. We are adjusting our outlook for our boiler business. We believe channel inventory levels of residential boilers are more elevated coming into 2023 than what we assumed in our prior guidance. While commercial growth aligns with our previous guidance, the amount of inventory in the residential boiler market resulted in sluggish residential boiler sales in the first quarter, and guides us to an annual growth outlook of mid-single digits.

我們的預測假設人民幣在 2023 年將比 2022 年貶值約 2%。我們正在調整我們對鍋爐業務的展望。我們認為，到 2023 年，住宅鍋爐的渠道庫存水平將比我們之前的指引中假設的更高。雖然商業增長符合我們之前的指引，但住宅鍋爐市場的庫存量導致第一季度住宅鍋爐銷售低迷，並引導我們實現中等個位數的年度增長前景。

Demand for our energy-efficient custom commercial condensing boilers was steady in the first quarter, and job quoting remains active, particularly in the key institutional vertical. Our outlook for the North America water treatment sales growth of 5% to 7% for 2023 has not changed. Based on these factors, we expect our North America segment margin to be between 23% and 23.5% and Rest of World segment margins to be approximately 10%.

第一季度對我們的節能定製商用冷凝鍋爐的需求穩定，工作報價保持活躍，尤其是在關鍵的機構垂直領域。我們對 2023 年北美水處理銷售額增長 5% 至 7% 的展望沒有改變。基於這些因素，我們預計北美分部的利潤率將在 23% 至 23.5% 之間，而世界其他地區分部的利潤率約為 10%。

Please turn to Slide 12. We are very pleased with our performance early in 2023. Demand for commercial electric water heaters rebounded to pre-2022 levels. We saw resilient demand for our residential water heaters. Our first quarter 2023 North America operating margin of 25.1% will drive significant full-year margin improvement even as steel costs rise.

請轉到幻燈片 12。我們對 2023 年初的表現感到非常滿意。商用電熱水器的需求反彈至 2022 年前的水平。我們看到了對家用熱水器的彈性需求。即使鋼鐵成本上升，我們 2023 年第一季度北美營業利潤率為 25.1% 也將推動全年利潤率顯著提高。

In China, we saw sequential monthly improvement in our sales through April, and we expect that to continue through the year. We are pleased with our free cash flow through March, and we expect a strong rebound in free cash flow for the full year, as China emerges from COVID-19-related disruptions, and our dedicated focus on inventory reduction across our North America operations. Our focus remains on meeting the needs of our customers as well as executing our key strategic objectives to advance our position as a leader in heating and treating water, globally. Our strong brands across the portfolio, combined with technology-driven innovation and new product development will enhance our market leadership. And with our strong balance sheet, we are confident in our ability to capitalize on opportunities as we continue to execute our strategy.

在中國，截至 4 月份，我們的銷售額逐月有所改善，我們預計這一情況將持續到今年。我們對 3 月份的自由現金流感到滿意，我們預計隨著中國擺脫與 COVID-19 相關的中斷，以及我們專注於減少北美業務的庫存，全年自由現金流將強勁反彈。我們的重點仍然是滿足客戶的需求以及執行我們的關鍵戰略目標，以提升我們作為全球水加熱和處理領導者的地位。我們在產品組合中的強大品牌，加上技術驅動的創新和新產品開發，將增強我們的市場領導地位。憑藉我們強大的資產負債表，我們有信心在繼續執行我們的戰略時利用機會。

With that, we conclude our prepared remarks, and we are now available for your questions.

至此，我們結束了準備好的發言，現在我們可以回答您的問題。

(Operator Instructions)

（操作員說明）

Our first question comes from the line of Michael Halloran of Baird.

我們的第一個問題來自 Baird 的 Michael Halloran。

Can you walk through what you're seeing on the water heater volume side, North America. Obviously, a lot of variability here. You had the destock period through last year, you look at December, January, February volumes are at least with AHRI. Those are tracking above $9 million annualized at this point units, seems a little hot maybe relative to what the run rate we've been talking about previously looked like.

您能否介紹一下您在北美的熱水器容積方面所看到的情況。顯然，這裡有很多可變性。去年你經歷了去庫存期，你看看 12 月、1 月、2 月的銷量至少與 AHRI 是一致的。在這一點上，這些單位的年化率超過 900 萬美元，相對於我們之前一直在談論的運行率，這似乎有點熱。

So maybe help understand what you think is going on underneath the hood. Are there some element of restocking? Do you expect some variability on those demand trends? And how do you think about that working through the year?

因此，也許有助於了解您認為引擎蓋下發生的事情。是否有補貨的因素？您預計這些需求趨勢會有一些變化嗎？你如何看待這一年的工作？

Yes, Mike, it's Kevin. Listen, I'm going to put it in 4 buckets for you. First, our emergency replacement demand is always going to be there. The one cold shower rule always applies and that will continue. What we've seen though is the proactive replacement continues to be above our normal levels. We just got updated on that just recently. So that's above average, so providing some additional volume. New construction completions were strong in Q1. So that also gave us a bump.

是的，邁克，我是凱文。聽著，我要為你把它放在 4 個桶裡。首先，我們的緊急更換需求永遠存在。一次冷水淋浴規則始終適用，並將繼續下去。不過，我們看到的是主動更換繼續高於我們的正常水平。我們最近才得到更新。所以這高於平均水平，因此提供了一些額外的數量。第一季度新建築完工強勁。所以這也給了我們一個衝擊。

And you mentioned about customers. We believe some, not all, a few customers maybe cut their inventories a little bit too low, and there was some replenishment going on with some of our customers. So you put those 4 together, that kind of drives our Q1 and then our forward-looking guidance of getting back to flat, to last year.

你提到了客戶。我們相信一些（不是全部）一些客戶可能將他們的庫存削減得有點過低，並且我們的一些客戶正在進行一些補貨。所以你把這 4 個放在一起，這推動了我們的第一季度，然後是我們回到去年持平的前瞻性指導。

We do expect Q1 to be down. We expect it to be down probably double digits. It's probably going to be in that low single-digit category. Just remember that Q1 was a very strong quarter. It was the strongest quarter that we had, and particularly March was the strongest month. So -- but overall, pleased with the volume, pleased with the industry and look for a kind of a flat 2023.

我們確實預計第一季度會下降。我們預計它可能會下降兩位數。它可能屬於那個低個位數的類別。請記住，第一季度是一個非常強勁的季度。這是我們擁有的最強勁的季度，尤其是三月是最強勁的月份。所以——但總的來說，對數量、對行業感到滿意，並期待 2023 年持平。

And then maybe also on the North America margins and how to think about modeling for the remainder of the year, 23%, 23.5% implies decent drawdown as we work through the year. Is that all back-half-weighted and is 2Q more comparable to 1Q and are there offsets to that decline as you think 1H to 2H that you're envisioning, whether incremental pricing or something else that might help that profile?

然後也許在北美利潤率以及如何考慮今年剩餘時間的建模方面，23%、23.5% 意味著我們在全年工作時會出現可觀的縮減。是否所有後半加權並且 2Q 與 1Q 更具可比性，並且是否有抵消你認為 1H 到 2H 你所設想的下降，無論是增量定價還是其他可能有助於該概況的東西？

Yes. I mean we see steel costs, my kind of -- 2 sides. The lowest in the first half of the year, and they're going to be about 20% higher in the back half of the year. So while we started the year, which we're very pleased with our first quarter North America margins and our price cost relationship, steel by itself is going to be kind of a weight on the back half of the year.

是的。我的意思是我們看到鋼鐵成本，我的 - 2 方面。今年上半年最低，下半年將上漲約 20%。因此，雖然我們開始了今年，我們對第一季度北美利潤率和我們的價格成本關係感到非常滿意，但鋼鐵本身將成為今年下半年的一種負擔。

So we'll see margins lower in the back half. And then for the year '23, the 23.5% operating margins. We kind of -- we see volumes splitting the year and kind of the typical cadence is stronger in the first half and a little weaker in the back half 52% maybe it's typical in the front half and 48 in the back.

所以我們會看到後半部分的利潤率降低。然後是 23 年，營業利潤率為 23.5%。我們有點 - 我們看到數量分裂了一年，典型的節奏在上半年更強，在後半部分稍微弱一些，52% 可能在前半部分是典型的，在後半部分是 48%。

We're a little stronger on our outlook here based on the strong Q1. We're probably more in the 53-47. And as you're aware, we've got a little bit easier comps in the second and third quarter based on kind of the destocking last year.

基於強勁的第一季度，我們對這裡的前景更加樂觀。我們可能更多的是 53-47。正如你所知，基於去年的去庫存，我們在第二季度和第三季度的業績要容易一些。

Material costs, we see relatively flat. So kind of the puts and takes on margins would be strong first half, give back a bit in the second half and end up in that 23% to 23.5%.

材料成本，我們看到相對持平。因此，看跌期權和利潤率在上半年會很強勁，在下半年有所回落，最終達到 23% 至 23.5%。

Our next question comes from the line of Saree Boroditsky of Jefferies.

我們的下一個問題來自 Jefferies 的 Saree Boroditsky。

The margin commentary, you talked about this being driven by higher steel costs in the back half. But within your guidance, are you baking in additional automatic retail pricing for this? So would that offset that?

保證金評論，你談到這是受下半年鋼鐵成本上漲的推動。但在您的指導下，您是否為此添加了額外的自動零售定價？那會抵消嗎？

We haven't changed any -- Saree, this is Chuck. We haven't changed any of our pricing policy. So we do have some formula pricing that's out there, and that will flow kind of on the same leg as we've talked about before as steel costs go up and down. So haven't changed any of that. And along with kind of the steel price going up, some of that natural pricing through formulas will follow, either up or down as it moves, as it has historically.

我們沒有改變任何東西——Saree，這是 Chuck。我們沒有改變任何定價政策。因此，我們確實有一些公式定價，隨著鋼鐵成本的上升和下降，這將與我們之前討論過的一樣。所以沒有改變任何東西。隨著鋼鐵價格的上漲，一些通過公式進行的自然定價將隨之而來，隨著價格的上漲或下跌，就像歷史上那樣。

Yes. I would say when you look at our pricing, it's about where we expected it. And Chuck just mentioned, we haven't changed the way that our process works within our company. And I go back to, we'll continue to monitor it, as we always do, and fall back to, we have a pretty good track record of adjusting the necessary.

是的。我會說，當您查看我們的定價時，它就在我們的預期範圍內。查克剛剛提到，我們沒有改變我們公司內部流程的運作方式。我回去，我們將一如既往地繼續監視它，然後回到，我們在調整必要性方面有很好的記錄。

But within your current guidance, do you bake in any additional price increases? Or do you stay at current levels?

但在您目前的指導下，您是否考慮了任何額外的價格上漲？還是保持目前的水平？

Yes, we're not going to comment on future price increases. Just the commentary on this pricing in total, and just to remind -- maybe remind everybody that our last announced price increase was this November 2021. So we've kind of got a comp where full-year '22 pricing is in place. And so that -- just kind of wanted to remind everybody that it's out there for the full year last year. And it's been -- we've anniversaried that price increase last fall. That was our final announced price increase.

是的，我們不會對未來的價格上漲發表評論。只是對這個定價的總體評論，只是想提醒一下——也許提醒大家我們上次宣布的價格上漲是在 2021 年 11 月。所以我們有一個 comp，其中全年的 '22 定價已經到位。因此 - 只是想提醒大家，去年全年都在那裡。而且它已經 - 我們已經在去年秋天的價格上漲。那是我們最後宣布的提價。

Okay. So just to be clear, I know we're not commenting on additional price increases going forward. So we can assume that additional price increases are not baked into guidance at this point. Is that fair?

好的。所以要明確一點，我知道我們不會對未來的額外價格上漲發表評論。因此，我們可以假設此時沒有將額外的價格上漲納入指導。這公平嗎？

We just don't comment on pricing.

我們只是不評論定價。

I have to try. And then just one last question. You mentioned China improving sequentially through the month. How did this trend in April? And how are you thinking about the cadence of growth through the year?

我得試試。然後是最後一個問題。你提到中國在整個月中連續改善。 4月份這個走勢如何？您如何看待全年的增長節奏？

Yes. We talked about it in our prepared remarks, China really kind of played out to what we thought. We did see -- January is always a very tough month with Chinese New Year and so forth and particularly coming off of COVID and opening up. But we saw a month-over-month improvement. April is playing out really well. We're seeing our sellout improve over March.

是的。我們在準備好的發言中談到了這一點，中國確實按照我們的想法發揮了作用。我們確實看到了——一月總是一個非常艱難的月份，有農曆新年等等，尤其是在 COVID 和開放之後。但我們看到了逐月改善。四月的表現非常好。我們看到 3 月份的銷售情況有所改善。

So the way we view it, we should see month-over-month, quarter-over-quarter. And remember that the fourth quarter is our strongest month there. So -- but it's probably not the way we thought. And as things settle in and consumers get a bit more comfortable, we're comfortable with our guidance of growth at 3% to 5% local currency.

所以我們看待它的方式，我們應該看到月環比，環比環比。請記住，第四季度是我們表現最強勁的月份。所以——但這可能不是我們想的那樣。隨著事情的穩定和消費者變得更加舒適，我們對 3% 至 5% 的本地貨幣增長指導感到滿意。

Yes, being down in the first quarter, but we do expect, quarter-over-quarter, we would be up each of the quarters going forward.

是的，在第一季度有所下降，但我們確實預計，在未來的每個季度中，我們都會比上一季度有所增長。

Our next question comes from the line of Susan Maklari of Goldman Sachs.

我們的下一個問題來自高盛的 Susan Maklari。

My first question is around -- as you think about steel moving higher and the potential for some pricing to come through. Do you think there was any pull forward that is happening in the market today or in the first quarter as some of your customers perhaps try to position themselves.

我的第一個問題是——當你考慮鋼鐵走高以及一些定價的可能性時。您認為今天或第一季度市場是否有任何推動，因為您的一些客戶可能會嘗試定位自己。

I guess we can expect a little bit. But as I outlined recently of how the quarter played out in the buckets that we saw, I really don't feel talking with our businesses that there was much pull forward. I think it was people, one, taking care of their customers, and number two, maybe balance out their inventory that was a bit light with some of our customers. But overall, I don't think there was any pull forward with regards to steel.

我想我們可以期待一點。但正如我最近概述的本季度在我們所看到的桶中的表現，我真的不覺得與我們的企業交談有很大的推動力。我認為是人，第一，照顧他們的客戶，第二，可能會平衡他們的庫存，這對我們的一些客戶來說有點輕。但總的來說，我認為鋼鐵方面沒有任何進展。

And then can you give a bit more color on what you're seeing on the commercial side? There's obviously been some cross currents there as you think about the underlying market. I know you mentioned that you expect your -- the volumes to be up mid-single digits there so, but -- for the industry. How are you -- what are you seeing on the ground there? Any more color you can give.

然後你能給你在商業方面看到的東西多一點色彩嗎？當你考慮基礎市場時，顯然存在一些交叉流。我知道你提到你希望你的 - 那裡的數量將達到中個位數，但是 - 對於這個行業。你好嗎——你在地面上看到了什麼？你可以給任何更多的顏色。

Yes. I would tell you, it's, one, the overall commercial market was up, but it was really driven by the commercial electric and the greater than 55 gallon. That really -- we thought that would not bounce back to pre-'22 levels, and quite frankly, it did. So that's driving much of the growth. But we're also seeing growth, say, low-single digits in the gas side of the business. So commercial held up well, and that's what gives us the comfort to move it up to that mid-single-digit growth rate.

是的。我會告訴你，它是，一個，整個商業市場都在上漲，但它實際上是由商用電動汽車和大於 55 加侖的汽車推動的。真的——我們認為這不會反彈到 22 年前的水平，坦率地說，它確實反彈了。因此，這推動了大部分增長。但我們也看到了業務增長，比如天然氣方面的低個位數增長。因此，商業表現良好，這讓我們感到欣慰，可以將其提高到中個位數的增長率。

Our next question comes from the line of Matt Summerville of D.A. Davidson & Co.

我們的下一個問題來自 D.A. 的 Matt Summerville。戴維森公司

A couple of questions. Can you talk about the context of your M&A pipeline and actionability therein and what the step-up in repurchase activity maybe says or maybe doesn't say about the outlook for A.O. Smith with respect to M&A specifically? And then I have a follow-up.

幾個問題。您能否談談您的併購管道的背景和其中的可操作性，以及回購活動的增加可能說明或可能沒有說明 A.O. 的前景。 Smith 特別是關於併購？然後我有一個後續行動。

Yes, terrific. I'll take the M&A, I'll let Chuck comment on the repurchase. They're really not connected with regards to why we move them up. M&A pipeline continues to be, I'd say, active particularly, on the water treatment side of the business but in other areas. So that hasn't changed, and we continue to stay in close contact with our targets and looking for the right opportunities. So that's moving much like we thought it would be, and we hope we'll be able to deploy some capital in the near term.

是的，太棒了。我將進行併購，我會讓查克對回購發表評論。他們實際上與我們將它們提升的原因無關。我想說，併購管道繼續活躍，特別是在業務的水處理方面，但在其他領域。所以這並沒有改變，我們繼續與我們的目標保持密切聯繫並尋找合適的機會。所以這很像我們想像的那樣，我們希望我們能夠在短期內部署一些資金。

Yes. With respect to the repurchase moving up $100 million, when we gave our outlook in January, we talked about our $200 million buyback outlook, and we also talked about $400 million being authorized by the Board, and we would kind of watch that through the year. Based upon our strong cash operations in Q1 and outlook for the year, we went ahead and moved that up to $300 million. So we felt very comfortable with that.

是的。關於增加 1 億美元的回購，當我們在 1 月份給出我們的展望時，我們談到了我們 2 億美元的回購前景，我們還談到了董事會授權的 4 億美元，我們會在全年觀察.基於我們在第一季度的強勁現金運營和今年的展望，我們繼續將其提高到 3 億美元。所以我們對此感到很舒服。

And then maybe with respect to China, can you talk about more recent market share trends in both water heaters and water treatment. What you're seeing from a mix perspective and then how you would characterize inventory levels?

然後關於中國，你能談談熱水器和水處理領域最近的市場份額趨勢嗎？你從混合的角度看到了什麼，然後你將如何描述庫存水平？

Okay. When we look at China overall, we've talked about this. There's not a great market share outlet for us to -- we have to put pieces together. But when we look at our retail business, we look at our specialty store business and overall, we're very comfortable that we're still one of the leaders in the market, and we're getting our fair share of the business.

好的。當我們從整體上看中國時，我們已經談到了這一點。我們沒有一個很好的市場份額出路——我們必須把各個部分拼湊起來。但是當我們審視我們的零售業務，我們審視我們的專賣店業務和整體時，我們很高興我們仍然是市場的領導者之一，並且我們正在獲得我們公平的業務份額。

Yes. The channel inventory is -- it's in a normal range, kind of in that 4 to 6 weeks.

是的。渠道庫存是——它在正常範圍內，大約在 4 到 6 週內。

And coming back, just about the mix. The mix is holding pretty well. Our premium mix in all of our categories still continues to be moving up slightly in most of the categories. We talked a bit about our water treatment and how we introduced a new high flow product, which is in the premium sector. So it's been interesting to watch with the premium side of the mix and our premium customers continue to buy our products and we see that continuing through the rest of the year.

回來，只是關於混合。混合保持得很好。我們在所有類別中的保費組合在大多數類別中仍繼續略有上升。我們談到了我們的水處理以及我們如何推出一種新的高流量產品，該產品屬於高端領域。因此，觀察高端產品組合是一件很有趣的事情，我們的高端客戶繼續購買我們的產品，我們看到這種情況會持續到今年餘下的時間。

Our next question comes from the line of Damian Karas of UBS.

我們的下一個問題來自瑞銀的 Damian Karas。

Congrats on the quarter. So I wanted to ask you about your comments on channel inventories with North America pretty much being at normal levels exiting the quarter. You're already there for water heaters heading into 1Q, but it sounds like maybe boiler and water treatment caught you a bit by surprise, with respect to the inventory levels out there.

祝賀這個季度。因此，我想問您對北美渠道庫存的評論，該庫存在本季度結束時幾乎處於正常水平。你已經準備好進入第一季度的熱水器了，但聽起來鍋爐和水處理的庫存水平可能讓你有點吃驚。

Could you just maybe help us understand a little bit better on what you're seeing or hearing that gives you confidence that some of this more recent destocking is in fact flushed out?

你能不能幫助我們更好地了解你所看到或聽到的，讓你相信最近的一些去庫存實際上已經被沖掉了？

Well, let me start with that, and Chuck can jump in. Boilers, I would say, a bit of a surprise. We kind of missed -- we had such a strong fourth quarter, and so that was a bit of a surprise which we had to sell through. The water treatment, I would say now, we knew there was still some inventory in the channel, particularly with our dealers and our specialty wholesalers and that works itself out.

好吧，讓我從那個開始，Chuck 可以跳進去。鍋爐，我會說，有點意外。我們有點錯過了——我們有如此強勁的第四季度，所以這有點令人驚訝，我們不得不賣掉它。水處理，我現在要說，我們知道渠道中仍有一些庫存，特別是我們的經銷商和我們的專業批發商，並且可以自行解決。

But the way I look at it right now, all of our channels, I think inventories are right where they really need to be, quite frankly. And the only area that may have a little bit of a gap, and we'll take care of that hopefully in Q2, would be on our commercial side of the business. But overall, other than the boilers, I think we saw our inventories where we thought they should be with our customers.

但坦率地說，我現在看待它的方式，我們所有的渠道，我認為庫存都在他們真正需要的地方。唯一可能存在一點差距的領域是我們業務的商業方面，我們希望在第二季度解決這個問題。但總的來說，除了鍋爐，我認為我們看到了我們認為應該與客戶在一起的庫存。

And I wanted to ask you about heat pumps, which is a topical subject matter at the moment. And I know, Kevin, you mentioned in the past, you're not expecting heat pumps to take over the water heater market anytime soon. There's still some cost and installation challenges. But I will say I've seen quite a bit of incentives out there related to IRA rebates on heat pump water heaters. So I'm curious if you started seeing any notable pickup in activity or maybe any changes in customer buying decisions as a result.

我想問你關於熱泵的問題，這是目前的熱門話題。我知道，凱文，你過去提到過，你不指望熱泵會很快接管熱水器市場。仍然存在一些成本和安裝挑戰。但我要說的是，我已經看到很多與 IRA 對熱泵熱水器的回扣相關的激勵措施。因此，我很好奇您是否開始看到任何顯著的活動回升，或者可能因此導致客戶購買決策發生任何變化。

I'm not sure I would qualify it as any major changes. Rebates have been out there. They've been state, they've been local. Certainly, there's a federal side of this now. So what I would tell you that heat pump continues to grow. It's coming off a very small base as we've talked, it's less than 2% of the overall water heater sold.

我不確定我是否會將其定義為任何重大更改。回扣已經出來了。他們是國家的，他們是地方的。當然，現在有聯邦政府的一面。所以我要告訴你的是，熱泵繼續增長。正如我們所說，它的基數非常小，不到熱水器總銷量的 2%。

But it's growing at that double digits pretty regularly each quarter. The future, it's going to continue to grow. It's a very good high efficiency green product that I think has a place long term. And so -- but it's going to continue to grow at a modest pace.

但它每個季度都以兩位數的速度定期增長。未來，它將繼續增長。這是一種非常好的高效綠色產品，我認為它具有長期的地位。所以 - 但它將繼續以適度的速度增長。

Even with the incentives, we're probably going to need regulatory to really drive a fast increase in volume. But you can expect it to grow month-over-month, quarter-over-quarter for the foreseeable future. We're very high in heat pumps, both on the residential side and on the commercial side of the business.

即使有激勵措施，我們也可能需要監管才能真正推動交易量的快速增長。但在可預見的未來，您可以預期它會逐月、環比增長。我們在熱泵方面的表現非常出色，無論是在住宅方面還是在商業方面。

They are expensive. They do take a little bit to install. But from a consumer, from a commercial standpoint, they provide really good payback and a really good value proposition, long term, with the consumer or the business owner.

它們是昂貴的。他們確實需要一點時間來安裝。但從消費者和商業的角度來看，它們為消費者或企業主提供了非常好的回報和非常好的長期價值主張。

Our next question comes from the line of Andrew Kaplowitz of Citigroup.

我們的下一個問題來自花旗集團的 Andrew Kaplowitz。

Could you talk about margin performance in rest of the world? I know you didn't change the margin guide in the segment for the year. But it was a little low in Q1. Was that just sort of a weaker start to the year in China as you talked about already, I think you had mentioned that you were going to spend more money on marketing, advertising. Did you do that in Q1?

您能談談世界其他地區的利潤率表現嗎？我知道你沒有改變這一年該部門的保證金指南。但在第一季度有點低。正如您已經談到的那樣，這是否只是中國今年開局較弱，我想您已經提到您將在營銷和廣告上投入更多資金。你在第一季度這樣做了嗎？

Yes, that's -- the Q1 is -- I mean it aligns with our expectations. It's a little lower than last year. I would say last year was a bit oversized and you kind of look at history in our Q1. Q1 in China is always a bit of a challenge. We really cut back on spending last year in Q1 to help that margin. But it was -- the margin in Rest of the World was aligned with our expectations this year.

是的，那是——第一季度——我的意思是它符合我們的預期。比去年略低。我想說去年有點過大，你可以看看我們第一季度的歷史。 Q1在中國總是有點挑戰。我們真的削減了去年第一季度的支出以幫助提高利潤率。但它是 - 世界其他地區的利潤率符合我們今年的預期。

We will, though, I mean, we're calling out to be, I think, 11% operating margin in China, roughly for the year, and we expect the year-over-year growth in next quarters. And we do expect to spend more on SG&A to drive some of that growth. So that's why we're not expanding that a great deal, but we're really pleased that we're kind of back to a growth mode once we get out of Q1.

不過，我的意思是，我認為我們將呼籲在中國實現 11% 的營業利潤率，大致是一年，我們預計下一季度將實現同比增長。我們確實希望在 SG&A 上花費更多，以推動部分增長。所以這就是為什麼我們沒有大量擴張的原因，但我們真的很高興，一旦我們走出第一季度，我們就會回到增長模式。

And then Kevin or Chuck, as REITs have continued to come up and given the volatility around the banks in March, doesn't seem like you saw any hiccups, but did you -- when you're talking to your customers or channel partners, did you see anything that sort of worried you there? Either in sort of core residential or commercial markets?

然後是 Kevin 或 Chuck，隨著 REITs 持續上漲，並考慮到 3 月份銀行的波動，你似乎沒有看到任何問題，但你有沒有 - 當你與你的客戶或渠道合作夥伴交談時，你在那裡看到什麼讓你擔心的事嗎？是在核心住宅市場還是商業市場？

I would say that this is anecdotal, okay? But it's -- there's always concerns right now with rates moving up and what that's going to mean for the economy, particularly, the back half. So everybody has it online, but they're not changing behavior. They're watching inventories closely, but customer demand still seems to be moving along, both residentially and commercially.

我會說這是軼事，好嗎？但它 - 現在總是擔心利率上升以及這對經濟意味著什麼，特別是後半部分。所以每個人都在網上擁有它，但他們並沒有改變行為。他們正在密切關注庫存，但住宅和商業領域的客戶需求似乎仍在增長。

But there's this hint of a backdrop that the interest rates could cause some potential issues as we get into the back half of the year. We'll have to see how that plays out. That's more conversation than actually what's happening on the ground today.

但有跡象表明，隨著我們進入今年下半年，利率可能會導致一些潛在問題。我們得看看結果如何。這比今天實際發生的事情更多的是對話。

Our next question comes from the line of Jeff Hammond of KeyBanc Capital Markets Inc.

我們的下一個問題來自 KeyBanc Capital Markets Inc. 的 Jeff Hammond。

So I think you called out lower price in the first quarter. And I just want to understand maybe the magnitude, one, is this all kind of material price formulas? Or is there something more broad?

所以我認為你在第一季度要求降低價格。我只是想了解可能的幅度，一個，這是所有類型的材料價格公式嗎？還是有更廣泛的東西？

Yes. We're not really going to carve out the details around that. I will say, though, I mean, we're up on organic growth for the quarter. So the commercial growth -- residential growth outweighed the price. So we're pleased kind of with our margin expansion in Q1, knowing that we're going to see some pressure on steel in the back half of the year.

是的。我們真的不會圍繞它制定細節。不過，我會說，我的意思是，我們在本季度實現了有機增長。因此，商業增長——住宅增長超過了價格。因此，我們對第一季度的利潤率擴張感到滿意，因為我們知道今年下半年我們將看到鋼鐵面臨一些壓力。

Yes, Jeff, I would just tell you a comment just a while back. Really on the pricing side, it played out as we expected, quite frankly. And so -- maybe even a little bit better, but it played out well, and we'll continue to -- just continue to evaluate and make sure that our customers are competitive. I've always said that over and over, in both channels and commercially. And we're pleased with the quarter, and we're pleased with the trend that we have today.

是的，傑夫，我剛才會告訴你一個評論。坦率地說，在定價方面，它確實如我們所料。因此 - 甚至可能更好一點，但效果很好，我們將繼續 - 繼續評估並確保我們的客戶具有競爭力。我一直在渠道和商業上一遍又一遍地說。我們對本季度感到滿意，我們對今天的趨勢感到滿意。

And then I think there was an earlier question about the cadence of North America margins. Is it simply 2Q looks like 1Q and then we get a step down to kind of fall within the guidance?

然後我認為之前有一個關於北美利潤率節奏的問題。它只是 2Q 看起來像 1Q，然後我們下調到有點落入指導範圍內嗎？

It's roughly that. We really see some of those costs on the steel side that go up 20% in the back half of the year, weighing in on Q3 and Q4, fairly evening on the quarter, at least when we look at it today.

大致就是這樣。我們確實看到鋼鐵方面的一些成本在今年下半年上漲了 20%，影響了第三季度和第四季度，在本季度相當晚的時候，至少當我們今天看的時候是這樣。

Our next question comes from the line of David MacGregor of Longbow Research.

我們的下一個問題來自 Longbow Research 的 David MacGregor。

I wonder if I could just go back to China and ask you to just talk about that 3% to 5% guidance for 2023. Can you sort of separate out price versus volume? And help us just understand what's happening trend-wise there. And then also on China, if you could just talk about the extent to which you're expanding your distribution at this point and what that might represent in '23? And then I have a follow-up question.

我想知道我是否可以回到中國，請你談談 2023 年 3% 到 5% 的指導。你能把價格與數量分開嗎？並幫助我們了解那裡正在發生的趨勢。然後還有關於中國，如果你能談談你在這一點上擴大你的分佈的程度以及這在 23 年可能代表什麼？然後我有一個後續問題。

Yes, it's mostly volume in China. There's a bit of price, but not nearly what we've seen in other parts of our businesses. So that 3% to 5% is based on what we believe with the opening in China and the COVID policies that we'll see a step up. We're comfortable kind of with the order rates that came in April. We feel good about that. So -- it's largely volume.

是的，主要是中國的銷量。有一點價格，但遠不及我們在業務的其他部分看到的那樣。所以 3% 到 5% 是基於我們相信中國的開放和 COVID 政策，我們會看到一個進步。我們對 4 月份的訂單率感到滿意。我們對此感覺很好。所以 - 這主要是數量。

Distribution wise, in China, we reduced some stores during the COVID period 2020 through 2021. But really distribution points are relatively stable. Not a lot of change on the distribution points, but we're comfortable with the outlets we have.

在分銷方面，在中國，我們在 2020 年至 2021 年的 COVID 期間減少了一些商店。但實際上分銷點相對穩定。分銷點沒有太多變化，但我們對現有的網點感到滿意。

And then just -- if I could just expand on China for a second. I do have a follow-up question, but just to build a little further on the China question. As you look for that volume recovery, is it mostly in your medium price point as opposed to your higher price point product. You mentioned earlier, premium was doing well. So I just wanted to get some clarity on that.

然後——如果我能稍微擴展一下中國的話。我確實有一個後續問題，但只是為了進一步討論中國問題。當您尋找銷量恢復時，它主要是在您的中等價格點，而不是您的高價位產品。您之前提到過，Premium 表現不錯。所以我只是想弄清楚這一點。

No, I would say that we're going to see kind of a normal pattern coming out, maybe even leaning towards the premium a bit because we do have some new products that have come out. And we'll introduce additional products through the year. So I would say that our purchasing or the consumer purchasing behavior of A. O. Smith products will be very similar to what we've seen in the past and hopefully maybe a bit of a step up on the premium side as these new products enter the market.

不，我會說我們會看到一種正常的模式出現，甚至可能會稍微傾向於溢價，因為我們確實有一些新產品已經問世。我們將在這一年中推出更多產品。所以我想說，我們的購買行為或消費者對 A. O. 史密斯產品的購買行為將與我們過去看到的非常相似，並希望隨著這些新產品進入市場，可能會在高端方面有所提升。

Yes, we've seen our mix move to positive based on the premium products introduced in the last, call it, 12 months. So that mix on new products is helping a bit on the growth.

是的，我們已經看到我們的產品組合基於過去 12 個月推出的優質產品而轉向積極。因此，新產品的組合對增長有所幫助。

(Operator Instructions)

（操作員說明）

Our next question comes from the line of David MacGregor of Longbow Research.

我們的下一個問題來自 Longbow Research 的 David MacGregor。

So I wanted to just ask about water treatment. And just there's kind of -- this is kind of a long conversation we've been having over the last few years about profitability within water treatment and just wanted to get a sense of how you're thinking about the margin outlook in water treatment this year? And just what the factors might be behind your thinking around that?

所以我只想問一下水處理。只是有點 - 這是我們在過去幾年中就水處理領域的盈利能力進行的長時間對話，只是想了解您如何看待水處理領域的利潤前景年？您對此的想法背後可能有哪些因素？

Yes. So for the quarter, I mean, water treatment is around 10% operating margin. And as you know, we were at 10% and working our way up, and our goal is still to expand those margins 100 basis points a year. We're a little behind the curve on that and trying to play a little bit of catch-up because of some of the cost price relationships there, which put a little pressure on operating margin. For the year, we're kind of looking at 11% operating margin. So we're looking to be a little bit better as we go through the year. But yes, we have a little catch-up to do on some cost increases.

是的。因此，對於本季度，我的意思是，水處理的營業利潤率約為 10%。如您所知，我們的利潤率為 10%，並且正在努力提高，我們的目標仍然是每年將這些利潤率擴大 100 個基點。由於那裡的一些成本價格關係，我們在這方面有點落後，並試圖追趕一點，這給營業利潤率帶來了一點壓力。今年，我們的營業利潤率為 11%。因此，我們希望在這一年中變得更好一些。但是，是的，我們在一些成本增加方面有一些追趕。

Is it mix and new products that drive that improvement? Are you just getting a little more progress around productivity and just what are the drivers behind that gradual improvement?

是混合產品和新產品推動了這種改進嗎？您是否只是在生產力方面取得了更多進步，而這種逐步提高背後的驅動因素是什麼？

Yes. I think it's a combination of what you just mentioned. There will be some productivity. There will be some mix because we are going to introduce some new products, particularly in our Retail segment. So it will be a combination of productivity, mix and a few other things in that 100 basis point increase.

是的。我認為這是你剛才提到的組合。會有一定的生產力。會有一些組合，因為我們將推出一些新產品，特別是在我們的零售領域。因此，這 100 個基點的增長將是生產力、組合和其他一些因素的結合。

And then you mentioned in your M&A comment that water treatment, the opportunity looks perhaps a little more imminent.

然後你在併購評論中提到水處理，這個機會看起來可能更迫在眉睫。

Yes. I just look at water treatment. And again, I didn't say imminent, okay? I want to make sure that we're clear on that. But when you look at water treatment, it's a very fragmented market. A lot of smaller acquisitions, we think we're going to be part of the roll-up. And so that area is always a bit more active than maybe some of our core products. But there's always opportunity there.

是的。我只看水處理。再一次，我沒有說迫在眉睫，好嗎？我想確保我們清楚這一點。但是當你審視水處理時，它是一個非常分散的市場。許多較小的收購，我們認為我們將成為匯總的一部分。因此，該領域總是比我們的一些核心產品更活躍。但那裡總是有機會。

We have to find the right fit, not only for us, but also for the people that would want to sell to us. But I think water treatment is going to be a primary focus and probably will have the most opportunity over the next few years for us. Not to say there's not others, but that's why I kind of singled out water treatment.

我們必須找到合適的人選，不僅適合我們，也適合那些想賣給我們的人。但我認為水處理將成為主要重點，並且在未來幾年內可能會為我們提供最多的機會。並不是說沒有其他的，但這就是我挑出水處理的原因。

At this time, I would like to turn it back to Helen Gurholt for any closing remarks.

在這個時候，我想把它轉回給海倫·古爾霍特（Helen Gurholt），聽取任何結束語。

Thank you, everyone, for joining us today. Let me conclude by reminding you that our global A. O. Smith team delivered strong first quarter performance and record first quarter EPS. We look forward to updating you on our progress in quarters to come.

謝謝大家今天加入我們。最後，我要提醒您，我們的 A.O. Smith 全球團隊第一季度業績強勁，第一季度每股收益創歷史新高。我們期待在未來幾個季度向您通報我們的進展情況。

In addition, please mark your calendars to join our presentations at 3 conferences this quarter: Oppenheimer on May 9, KeyBanc on May 31 and William Blair on June 6. Thank you, and enjoy the rest of your day.

此外，請標記您的日曆以參加我們在本季度的 3 場會議上的演講：5 月 9 日的 Oppenheimer、5 月 31 日的 KeyBanc 和 6 月 6 日的 William Blair。謝謝，祝您今天愉快。

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

感謝您參加今天的會議。這確實結束了程序。您現在可以斷開連接。