LII
#If I was going to build a model, I would do it a little less than linear, so a little less than one-third in second quarter ---+ sort of how I think about it.
But again, we will have a better view, obviously, as we get through the second quarter, and sort of talk to our customers, and see how it flows.
But right now on a full-year basis, as I suggested, we are dealing still solid that ---+ of what we called, which is for the industry to be up low single digits and for us to have another solid year in commercial.
I've seen the spreadsheet, but ---+ again, it's sort of ---+ it's all in the $20 million.
Yes.
I mean, I think if you look at the charts of what we have communicated of the percentage of volume of air conditioners that we build down there, and that labor and fixed overhead ---+ labor is about 10% of our cost of goods sold.
I think you can sort of back into order of magnitude.
But when you are buying all of the components, even those that we buy from Asia in US dollars, and then you sell into Canada, you still have the issues.
I think there continues to be volume in North America, material cost reduction across our businesses, and the commodity tailwinds.
So I think those are three sort of major drivers that we'll get: volume and volume leverage, aggressive material cost reduction, and continued commodity tailwinds.
That implies that we were aggressive on price on Walmart, a fact not in evidence, because I think we won it for a lot of reasons.
Look, we want to make money; and we think we have value-added product.
With some of the new product launches we've come out ---+ we've improved the reliability, and delivery and lead times of that business.
So we are not looking to be the price leader.
We want to win share the right way and continue to grow the business with margins.
We didn't give it.
And at higher than 10% ---+ I think we said double digits, I would read that as mid-teens.
And we didn't give the dollar figure.
But I think you can sort of back into it, because I said we are 70% covered for second quarter for our national account business.
And it's about half our business.
So I think you can sort of figure it out.
I'm not sure I understand the question.
So burrow down on exactly what you are looking for, <UNK>.
I'm not sure I understood.
No.
What we did was we prebuilt in fourth quarter, so we took production from first quarter in the fourth quarter.
For the quarter it probably cost us $2 million or $3 million of absorption in first quarter.
I didn't whine about it, because we didn't pound our chest in fourth quarter, when we had the benefit.
But net-net, we sort of swapped $2 million or $3 million of EBIT we pulled from first quarter into fourth quarter.
And we had that headwind this quarter.
But second, third, and fourth quarter will be normal; curve of production change was from first quarter to fourth quarter.
Correct.
I wouldn't necessarily say that.
Let's sort of let it all play out.
Because, again, I think the question I was being asked was: how was the miss in first quarter going to be filleted on second, third, and fourth quarter.
But we never discussed what was in the base plan for second, third, and fourth quarter.
I think the answer is we think national accounts are going to be up each of the next three quarters.
But I'm not really guiding to which is the stronger of the three.
Yes, I think it has to do with large orders.
I think it has to do with the comps, obviously, from the year before.
And I think it has to do with the currency.
When you look at actual currency, it's sort of a significant headwind.
When you look at constant currency, I don't think the story is quite as dramatic.
No.
It's affecting us on translational.
Half our business is residential.
And I've seen some great summers in residential, so you sort of always keep that out there.
Residential new construction picks up, add-on replacement remains solid, and we get a hot summer ---+ we can sell a lot of air conditioners in one summer.
And that's sort of how you think about the peak.
You know, we have more volume second half of the year in our refrigeration business than we do first half of the year; in part because of Walmart, but also in part because of other customers.
I think where Walmart helps us is sort of the volume in the factory.
And we will continue to mix up across our refrigeration business in North America, in part because of other customers, including Walmart.
We've called that we are going to get net price this year of $10 million, and we still think that's where we are at.
Again, we have to get into the summer selling season, really, to find out more.
In January we had a North America-wide price increase of 3% to 5%, and then we had a 5% increase in Canada only in April.
Then we've seen Carrier, Trane, Daikin/Goodman, and sort of our other major competitors announce similar pricing both in North America and in Canada.
So again, it's early, and we have to get into the major parts of the selling season.
But so far, so good on price.
No.
I think as we called out in our residential business, price mix was positive for the quarter ---+ I'm looking to make sure; I'm sort of doing it from memory ---+ was positive for the quarter.
And so that's what we had expected.
I think as I talked about in an earlier call, transition from 13 to 14 SEER ---+ it's early, but so far so good.
And things are going as expected.
But we'll know more as we get into the throes of the summer selling season.
You know, we've never shown our own number.
I always quote others.
And several of the sales-side analysts have sort of modeled it.
And if you look at over a four- or five-year period, replacement that was deferred because homeowners didn't want to spend the money on a new piece of equipment and they've band-aided old pieces of equipment, order of magnitude, people who have modeled sort of a full year, if you will, of air-conditioning ---+ volume was taken out of the market over a four- or five-year period.
I think we are a couple of years into pent-up demand, and I think there's another two or three, maybe even more, years of it left.
At actual currency we expect revenue to be up, and it's across our North American business; our Asia business; in a tough market, we expect revenues to be up in Brazil; Europe we are less optimistic about.
We sort of think flat to slightly down there.
Thanks.
Thank you, operator.
A few points to leave you with: we remain focused on capitalizing on growth in our major end markets, capturing additional market share and driving increased profitability through our operational initiatives.
We are well positioned for 2015 and expect another year of record profits with strong cash generation.
I want to thank everyone for joining us, and we look forward to the strongest seasonal periods ahead.
