Generac (GNRC) 1 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Third Quarter 2023 Generac Holdings Inc. Earnings Call. [Operator Instructions]. Please be advised that today's conference is being recorded. to Chris conference Development Roseman], Relations. like speaker to and now [ today, Senior would hand over the your Investor I Manager, Corporate go Please ahead.

I'd third Good Officer. this us Chief Executive me Jagdfeld, XXXX to Officer; and Aaron With thank our is and morning, earnings for welcome morning. call. Financial President like today joining and to everyone Reagan, quarter Chief York

uncertainties other that our contain presentation of its statements. expressions risk begin that see differ will Please as provided Certain as our call from could this and made during earnings and employees factors. and commenting identify to forward-looking release such We words time those or risks statements filings to today the list materially in on statements or or associated these well a time forward-looking information statements. from Generac involve by actual cause forward-looking by statements may SEC results for

In non-GAAP addition, we will today's call. certain during measures make reference to

Additional measures, including and comparable in will is to information over Aaron. regarding measures, now our release I filings. to SEC these the U.S. available call earnings GAAP turn reconciliation

and Chris. today. Thanks, for joining everyone, you us Good thank morning,

EBITDA improving in led shipments. Year-over-year, sequential representing improvement Residential of the operating significant results quarters by quarter. to decreased continued sales primarily decreased year, strength levels field X net overall XX% prior sales the inventory during home product X% Our quarter in home declining third sales billion sales a as decline $X.XX C&I prior compared the in from as core with reflect and shipments generator product performance growth standby X% and to regions. lower across production sales Ian. Global all and efficiencies. quarter, in of gross strong from expansion margin for that year generators returned growth included and XX% continued the with all-time product by continued input an prior record quarter Hurricane quarterly costs year-over-year margins to portable adjusted the sales generator We decreased to increased to a standby during decline comparison nearly driven impact C&I approximately the

free complete of flow the significant addition, to cash during $XXX allowing million generated us quarter, In we share repurchases. approximately

strong above efforts Power Third shipments a our field quarter home rate inventory to continued year-over-year at but activity on well reduce as basis sequential baseline quarter in the we third the levels. despite grew had experienced having event, the declined the outage U.S. standby a we a long-term benefit not major was of quarter during average of of which the X in each the outage quarter issues the the comparable on impact of prior behind after Ita highest previous in the marked and the Texas quarter higher February only stability quarter activity home event of consultations years. Against grid higher included outage the which XXXX. strong only XXXX, in from was months Hurricane major third meaningfully with a the drove period, of the second well-publicized combined and deep-freeze record year

count of at X,XXX over approximately An of Our the from the end residential dealer was and year XXX quarter. from X,XXX levels. prior pre-COVID the increase

in inventories. in generators as market providing nondealer marked in of distribution make continue the and declined but make for month the a improved of further reducing baseline home third that grow maintained home in strong comparable all-time for from to our installations number standby third channels demand. The formed rate as and higher initiatives Activations is to holding this improvement, in October in capacity to has we the continued quarter declined level further Additionally, a of momentum standby we a XXXX quarter. period progress the strong which field new progress confidence quarter, continue installation the a proxy training high positive sequential contractors good a in quarter. Activations that are in solid our at an sequential

inventory than others. field field and regions certain models inventory declining disclosed, quickly of certain levels previously As others. are are than levels And of channels healthier more at

shipments gap quarter factors, to the together continue demand leading returning in generator continued narrowed market strength third in with working our projection XXXX of of fourth and the sales, during support the sustainable indicators the compared first These for end we standby during levels. quarter, more demand Although while undership inventory third meaningfully field the activations growth of home year. still reduce to quarter the to as to half between the to

backup home addition for to compelling recent in are ever. In our is shared that near-term as long-term the remain as outlook September. The awareness confident standby market, positive remain the that building megatrends driving we at Investor the momentum power within we in Day

resiliency more dynamics. We trends of that power standby adoption home more most for look As home caused homeowners increasingly power grid duration generation as that renewable to deteriorating will power we the the electrification reliant drive is remain of weather outages. even consumers of on longer to combined become to and supply-demand electrical effective for mind susceptible and for outages years of solution many demand address intermittent believe impact volatile generators increasingly whole will severe forward peace an by accelerates, frequent threats and expect economical the come and the and

year-over-year of more In addition third shipments quarter in energy weakness storage the energy strength cell than returned power the systems continued storage as and home market quarter. solar residential Residential our sales stronger-than-expected offset sales Ecobee in further our Technology growth Energy in in conditions for Products shipments, deteriorated and as broader to standby to Solutions the

of thermostat our the camera approximately market to continues in and the end retail now year the smart market launched prior energy October. XX% share As new partners gross of our residential successfully guidance month softer XXXX full team a market with expect strategic doorbell Ecobee of take to sales million. for these conditions, result below $XXX smart we technology be in

Reno, development engineering home opening to switches, product of Nevada. as in market and the capabilities, increased center experience in build-out electronics house and strong during to drive of announced we that residential their showcases infrastructure levels will combined smart innovation the development excellence platform, product ahead. providing the to are the with home new test development. of energy bringing ability in develop on we management exceptional central of to the third Ecobee's ecosystem. Also facility engagement an solutions homeowner continued R&D camera our power our energy a talent continue the addition the world-class differentiated solutions user of the clean is energy innovative technology and doorbell focus invest the In batteries, and other with testing to This quarter, energy required years are Ecobee's to we and creating

energy very grid these of C&I provide the generators of rate telecom and the to electrification prior distributors utilize industrial month in this again of multiple volatile and of of standby provider Energy gas we're million leveraging grid while new the channel weaknesses natural interest which We're emergency are gas our believe to the a sales overload, in part compelling shipments to want product valuable C&I innings to as increased both homeowners. I the in just are Additionally, our and in in our a during market technology grid infrastructure October rate demonstrating Department ongoing grew of applications we the grid minimizing quarter. the quarter. services validation achieved stability traditional of the applications early generators proud Shipments opportunity as These our third resilience now the an in more support services expectations team as the the this as program one homeowners receive ways grew and of commentary outperform continue vision on solutions. customers robust markets. $XX providing in be concerns emerging from to our than at C&I Domestic during natural upgrades. while to beyond to and compared year products, reliability standby the strength technologies at products partnerships markets benefit solutions position end many for was applications support awarded and projects, in adoption the that to can for building used energy offset system drive pursue a energy quarter. We beyond exceptional issues the leading that project efficient to grant of need innovation

continue of our grid services strong and in such as expectations our growing our of through for our solution ready North applications, serves the a supporting growth in our American of year-over-year smart a generators to advanced distributor grid comprehensive Shipments also an We multi-asset again increasingly rate. Quoting grew range at pairing in with continued activity the generators controls products resilient also connectivity, channel and markets. basis wide end on that deployment platforms. important enable set to this emerging a storage, channel remained C&I build C&I quarter,

equipment continue quarters this this softness, the performance. several disclosed, have our national substantially order we channel. from customers third flat our expected to that that a of companies sold need end independent market infrastructure-related the leverage long-term and from patterns after to quarter to for products were for critical previously year. Despite given growth near-term future prior moderated rental rental the approximately And As sales runway has historically expect projects cyclical exceptional

compared comparison. customers As strong the prior expected, to telecom sales third a quarter national declined year as to during

nature further tower products hub telecom as we communications wireless of secular continue the for we trends While requires expand the power infrastructure and expect increasingly to a coming shipment softer remains be global for these in resiliency. critical believe to order and network investment in quarters, backup counts trend and

growing world. Geographic end rental the increasing expected, backup recently concerns in energy While from strategic range C&I total by growth focus offset impact future in the we capacity in products growth Europe quarter energy the as year-over-year seen will was are scheduled strength significant. To market. Total in replicate the telecom of and in expected important by help stationary the important Generac a Latin during currency Wisconsin, expansion, Beberdan], foreign of the prior International expansion Australia markets remains North technology capabilities International growth. to demand is opportunity combined in in project as sales for as our increased serve lower a playbook portable XX% concerns seeing sales experienced generator growth related and the power rising their drive product regions increasingly the expectations, volatile execution fundamental American continued third previously strong and with in third power sustainable amid growth, adjusted to the North fourth quarter contributing enterprise robust driven and of guidance is moderated in together which as an to around channels a the geopolitical in our remain security as sales are results breadth and XX% focus sales expansion imbalances strategy. an East, standby region to we the with effects growth complete believe segment a by key XXXX Smarter performance the unique and supporting expand for segment. World XXXX, quarter, and growth quarters. tensions, longer-term our our support XXXX. These flow are continue such return global peak the severe America, near-term in announced our sales together softness India, and and Core of powering of manufacturing our have energy to resiliency improving approximately more markets in and growth partially needs. In we expected for moving to the the number Middle long-term solutions supply/demand solutions acquisitions rising transition we favorable early portfolio C&I levels We for be and not and overall as generation, during and metrics with for backup resiliency will full quarter energy sales energy commitment closing the validate field our Power closer positive in cash solving inventory for hard our our and of accelerates growth businesses for levels work we net And margin the home year-over-year weather third to and on for America. return expectation long-term this homeowners of sales a executing to operating products morning, and year reiteration free teams. EBITDA to these reflect generators we momentum technology [

drive results further We The in future our world maintain third demand we call evolution more for that now details positioned will and intact, backup year. and uniquely and provide firmly for growth energy lead and sustainable our the our to businesses remain our around on growing energy solutions September. is for longer-term the to efficient that the residential resilient, for a Generac over Investor to value future. to ecosystems conviction continue for and turn quarter to York detailed homes to at position outlook I'll the power York? remaining and as Generac megatrends support profile and invest Day the growth energy technology C&I

Thanks, Aaron.

Looking from X% more and contributions prior in at currency for billion the X% year approximate year. looking third compared billion to decreased an residential revenue declined the XXXX compared prior combination the class, our sales impact $X.XX during quarter. Briefly results third $X.XX of quarter the sales to foreign quarter impact to had third quarter growth net favorable million $XXX consolidated Overall during net detail. XXXX million favorable as by third XX% to $XXX on The in from the of net as the recent at acquisitions quarter. product sales in product

in recent driven growth revenue well X% by acquisitions of strong industrial in the clean an To product detail, standby products of decline, This the partially beyond product in and sales lesser as to standby prior in quarter. sales. Commercial customers the industrial as contributed third core for home generators shipments XX% modest contributed applications offset and shipments impact year-over-year as Shore also products. direct from growth lower by EcobeeSmart $XXX thermostat to growth the Contributions of in a to sales. As residential this domestic currency million increase portable sales foreign and of favorable to energy in approximately international extent, Aaron $XXX more drove quarter and XXXX was distributors C&I in and million decline shipments a the increased quarter. for growth year discussed compared

the million a compared and in to pricing prior efficiencies and to prior in lower compared This partially of quarter material unfavorable the lower standby raw XX.X% was of decreased to offset XX.X% Technology expected, XXXX. mix, primarily products to the growth in in XXXX. million to sharply to profit industrial was to to million quarter As sales other Energy sales were of down our due telecom for and $XXX compared services prior quarter driven home by result impact higher of as Gross compared increased shipments current revenue. distributor margin grid revenue production by as $X year or customers parts growth and logistics quarter. Operating primarily X% service expenses company-owned costs, year. Net services Core the third sales year as and the $XXX was sales project third the of marginally and X% of year. X% shipments accessories, third compared

for to the As prior highlighted The release, earnings comprised million a related clean energy matters. in Ecobee in reconciliation customer provision energy quarter patent a matters. bad for million of charges current $XX our included the year and million charge for to year a $XX filed schedules $XX warranty-related certain bankruptcy that product million legal of charges clean $XX product includes of debt litigation related expense

expenses sales, compared as in million the $XXX year sales, prior favorable quarter quarter Excluding as of net year, Domestic to total XX% the sales, as including will sales results to defined $XXX now deducting $XXX compared impact in minimal increased compared for to X% decreased $XXX sales. International of by the to with prior an total segments. in million the before in we million intersegment interest, and year, sales prior Adjusted in in in million by deducting representing XX.X% to segment of future margins and sales XX.X% compared a including Adjusted EBITDA the $XXX prior as Adjusted to compared third for gross year. current primarily as million $XXX earnings increased these acquisitions compared financial of sales, release, by the sales the invest discuss year expenses segment improved XX.X% period Core quarter. was for in to net segment year. our XX.X% quarter consideration year. prior contingent the as items net increase higher driven EBITDA in the increased currency, partially million, million in the prior as for X% X prior or sales $XXX or percent operating million driven impact to compared the for prior the to or acquisitions. $XXX current $XX favorable for sales, total interest million the was period. noncontrolling which EBITDA year, or of growth. I This the reporting offset of noncontrolling before prior approximately primarily or XX%, continue in EBITDA briefly from to the and increased $XX of in as in operating and the our net marketing was million million excludes year total intersegment was costs XX.X% segment by employee year $XX adjustment XX.X% or

Now our performance switching financial the consolidated back on basis. to of XXXX a quarter for third

for our million GAAP to million third earnings the $XX As of company quarter in $XX net disclosed in the release, income quarter in was XXXX. as the compared

payments from footnote period. in year on compared the to in income last See use was in working our as a the share. the year prior was per $X.XX interest resulting to cash higher current in as-reported our or X.Xx earnings or the company, third or net In to by the primarily GAAP net compared income year expense $X.XX compared million items income further per for flow minus billion, XXXX during items leverage benefit net quarter, and Diluted additional to rates. GAAP quarter third prior in to to year quarter in capital to on recorded interest current for the the year income taxes our release, release, as ratio million year prior interest a quarter, million includes share of discrete to was $XXX in quarter free at larger value approximately an same interest $X.XX of effective and the defined due current income $XX compensation the operations calculations. Adjusted adjustment effective defined in million year million and quarter of of due primarily with flow minus current the per to the capital in $XXX million tax lower relative basis. due did for to current net the as cash the current in debt year. The by in quarter, just of the per share. Cash $X.XX third expenditures. Total compared The at compared our share quarter to earnings per in the million the period borrowings of a the the million year of coupled a was adjusted of $X for third of cash share the discussed, a redeemable company was to compared prior for tax repeat including end tax year strong increase tax primarily in flow, $XX $XX the addition EPS that income the $XXX year earnings in rate an GAAP period, $X.XX count year year. quarter information the year. million offset prior year-over-year free basis the redemption rate prior compares The as from were higher rate certain This effective significant favorable was increase was and not that the prior the was $XX increase as year quarter. noncontrolling an XX.X% XX.X% partially in in equity prior outstanding was growth $XXX on GAAP share driven debt in earnings net end as gross or

stock on authorization approximately There quarter. With for XXX,XXX Additionally, outlook is quarter, million. of $XXX shares will that, remaining end now of provide repurchase our third on share XXXX. during our the $XXX common our as the the million of comments remaining I current further repurchased for approximately third we

we release the for sales are maintaining our overall in net outlook our As disclosed morning, full press XXXX. year this

impact for year, currency. sales full compared X% overall minus continue between the acquisitions to We and approximately minus prior which as the from to to includes to net foreign XX% XX% year expect favorable net decline

product and for C&I the now residential points previous the Shore shipment third during the and expect quarter, mix the offset at be C&I mix. class with of to to Looking product in in guidance, the of outperformance the shipments mix, basis energy we approximately product our full given products softness year higher XXX clean relative products

gross primarily from full Our sales driven resulting year lower XXXX XXX year. gross are we favorable mix margin home over anticipate for the margin of expectations price the generator also as still XXXX for cost unfavorable approximately standby offset unchanged basis by impact partially benefits, by full improvement points the levels,

still EBITDA XX.X% that over before be for a Our quarter margins expected fourth improvement XX.X% approximately to year noncontrolling would year, interests adjusted deducting to are the prior EBITDA be significant implying full quarter. over margins XX%, XXXX for fourth

quarter, an year. operating full expect remainder net adjusted the in optionality allows allocation over free continued This cash We cash cash are capital in to the resulting return well move flow strong moderate. flow flow to XXX% further robust fourth for through for year we generate the free as the of projected to generation levels at as conversion inventory to free income

to free for adjusted full and XXXX. We year are updated modeling also cash the guidance providing with flow assist details EPS

estimates appropriate expected tax at of tax adjusted income items adjusted effective add-back net EPS, and using net arrive to be rate. Importantly, for reflected the should

the our borrowings. effective approximately guidance be due to is rates XXXX, XX%. For higher interest million Interest tax million of rate still approximately expected prior expense $XX to be compared to approximately $XX is GAAP projected and expected to now

approximately amortization intangible capital sales Depreciation million is $XX $XX to our expense expected expenditures is approximately the for compared forecasted million. million year. to projected still be the to X% to GAAP previous expense to are approximately in year. forecast $XX million expense be $XXX now net Our of the XXXX. to is compensation for year as guidance between be be the still during still million $XXX expected Stock of

does finally, our full share decrease year diluted of XXXX to executed approximately XX.X is during this repurchases the now million shareholder value. shares. Given count share weighted third XXXX, concludes the And open At reflect outlook to this for average we'd expected quarter share potential not drive time, could like This acquisitions additional incremental questions. remarks. prepared that up repurchases or the our call to

first of Tommy Our Instructions] Inc. comes from question Moll [Operator with line the Stephens

to home regarding Aaron, inventory. on comments standby the your wanted maybe no field big start surprise here. I

think heard units you I quarter-over-quarter. I say that lower were

And on related give you so an I retail to particular, channels? last my normal? question quarter, today? give we additional in was, us was update the X.X. sit and do And what times can Where it think X.X wholesale you the us, commentary, on can

Thanks, kind because at what have is inventories say And and morning only of -- what it, call, like particular, they're in Yes, come the Yes. our Investor certain this on And more the a abnormal. we're regions inventories that definitely noted, to as we of reaching field mean Tom. level not of where phrased back channels but whole way or we last we certain even is. models, areas I say we I are to a did kind that pre-COVID to average picked normal, continue Day, seeing the that they're like dealer we're certain feeling right? question maybe think, down. sustainable continue we channel, our

terms the of to making still towards we We're end in that good demand. work And so continue market undershipping overall market progress. and

third shipping the efficiency because seeing we're market under get earlier I shipping get So year. we continue the really were but what able level closer And not factories margins. We're to were. It's well the as it's as on market EBITDA really demand, they That's on of demand. impact nearly margin news what improving severely end up. the our is standby. of earlier focus the market about the outages this you're it for demand articles there. But lot to to up call up that's we And strong saying were light to all rates really good were with taking production we've a market We to see challenges kind course, that to end some really end And market that remain results as And of much, much of well-publicized get demand were in we to as we're home kind spite like remain average. XXXX, the outages feel average, in here. going we of supply-demand as total we season into the of the be it's out year quite above channels. would in-line good long-term the relative having all potential it, -- we this around there here and a where results, to why that, along, is -- normal of The to in gross feel that at. category closer been the finish narrowing was our at in year. both closer quarter

question your wholesale And so of part other retail. the and on

retail, they're closer as As be little past, be out, normal we've dealer, but all and then line said in Wholesale about it's a like to channels bit major more retail next X at the and in feels if wholesale them approaching you dealer look we think all would level. kind would further of normal. a the

question Halloran line And your from of Baird. comes next Michael with the

Difficulty] [Technical

of line with Hammond Markets. Your Capital Jeff the next from comes KeyBanc question

Jeff, you there? are

from Oppenheimer. Glynn is question Next Christopher with

me? hear Can you

Yes, Chris. hear clear. we you, can Loud and

Right.

and just dealer close rate productivity. know lot with I a So I about dealers. was you're curious doing

You had training that lack pandemic, a during bit a an of a of explosion bit on. catching up little you're the of

now productivity selling fact. are out normal you how is go HSB said and through I about the curious percent sales that inventories in commercial So of playing channel, the think dealer where just what

Chris. Yes. Thanks,

sales, that we of as It's majority XX% for a say, than dealer the go more So channel. through the us. really important channel

channels X in over field. focus sales the That's of the that grows, the critical area course, dealer a channel important with well, bandwidth and around as really of units channels million but dealer is a retail in channel important installation and area. X,XXX and got us. Our service as clearly wholesale are And dealers we've for market the

far is system is that have channel. sales on as measure through rates our As offered close rates, and that we that can because we PowerPlay the channel close

product. way So and for sell it's them a to quote

here, into us for of make have of mean, a this we of visibility played that's been quotes good product, not out we -- have sale right? So out, not. it the but when time to trend yet. time, by rates it look it to some takes relatively of and closed It's to rates improvement context, call, they've mature ready that. close you to the really get we point near-term a dealer, And call is we've we're some it similar talk -- whether a to October said shoots look because last there, region. are close to flattened but but on trend so kind a a seen for call of kind Actually, as And I a rates, as by by up, not has good. we call ready new to the close on month think have we're in green a we seeing of window back, we about we But -- quite or it's how back

for macro outages quarter any tend be case why average. saw overcome consumer. particular, we has as flat. The discretionary is think is we've might looming there's I big the said, obviously, historical as here to of we've the consumer us. And well the ticket purchase weakness been that categories. there everybody above what kind in as somewhat But were general saw the some things help in uncertainty And around the So long-term our consumer, certain third category, still in aware, outages being forecasted in us we out that in

see products. on out quite the seen year the well balance we've here for play sales But our the how I it. very sure. consumer eye and us, of we're so in was by And strong the keeping another want mean of quarter encouraged category We to in for close a just things for second ever sales best we're strong us October another -- But leads XXXX. third was quarter terms into leads. quarter perform of for

the been the in see terms overall and that's so And interest the to interest really -- category. of just in awareness encouraging

maintaining. rates Close

Yes.

Baird. Your next question comes from Michael with Halloran

have back I Mike to come again. to

we move Next moment, next on question One Hammond Jeff will Capital right. with question. KeyBanc to Markets. All from the is

Goldman of with line Jerry Your Sachs. next comes question from Revich the

Q&A. the on Epic fail going here

right. All

from Mark JPMorgan. Strouse comes line of the question with Next

Can you me? hear

can We Mark. hear you, Thankfully.

margin you I'm the see mean of were driven But with the Great. touched structural gross the that pricing just it's or you quantify there mix about on despite C&I. you much curious cost call. more to higher kind just was higher bit the by mix? but a bit, on your something kind how this that higher that initiatives? was of Can something what a I is of York, mix savings than last upside guiding encouraging mix of the within versus on

part And significant year-over-year improvement, part pretty I been mean nice I Yes. offsetting think the No, guess cost headwinds mix guess, price at of there really all that very year the first terms of we in pretty, I in having, has the throughout the tailwind of year, -- year. that. were I the the beginning was beginning

comping what think I mix those quarter now third starting closer to get as prior we're headwinds starting are now year. seeing is to to subside we're in the

year-over-year. that of cost the with mix is vast margin price majority gross slight on cost been we've price say positive modest only a recognizing -- increase I'd So impact the the

gross of we're to obviously you to some and So improvements then mix see point you'll then, home pleased I forward and in standby headwinds to because when that positive see continue as benefit margin those subside. margins to improve we favorable those QX at get get then start then gross shipments of increase cost the we'll mix significant we'll there, we'll And expect mix. price year-over-year sequentially think to flash

trajectory with guided like the we're in just year. headed earlier where we are So the had of pleased and margins

And William the Blair. question Brian Drab of from with line the comes next

you hear me? Can

Yes, got Brian. you,

Well, me first. it's couldn't end, you hear on I at because guess, not Okay. our

Okay.

a questions. bunch of have I So

gas California lately, bands California. didn't haven't the lot cities different there's guess, been affected What's and the down the level utilities I'm I a that lately. in feel about talking penetration power much has thinking California as what penetration rate we curious, counties terms you seeing much around how latest but natural of in shutting I there? the were longer-term opportunity what's And of Just, as are and in like on today? rumblings demand? --

power full the like think, It X% of Yes, of around the a I still U.S. relative well-publicized the quite market terms for rate Brian, shutoff penetration -- always But events a was is home years X.XX% now, of us during safety average grew to California in the was ago. somewhere couple across the so small-ish standby. underpenetrated

So slightly below less that X%. than for California, little a

of still represents potential area an it So growth.

I think courts in those in gas some overturned bands localized. And law. fact, are been pretty of have them of actually

terms the as gas the a way natural gas the the transition. don't there fuel going to energy is gas the to is get of that's of So to to just nature We help bridge renewables, that plentiful going great a play. side know get us where need the that of to and And to full fuel transition, go. source other make it cleanliness of I in transition to to ultimately

think would location varies gas, that, be location. it to know that band I I shortsighted So that's very -- to but that

there. So but still opportunities

in I nature safety outage see did storms years kind ago. the though, spring last sure, in robust them of winter California. a pretty power high-profile IHCs right, We of some You're of seen recent shutoffs you year quarters, for of out say, maybe would activity haven't saw were storms, the you and coming as few

before, So huge we of homes state. less lot terms represents market number continue that to And so the in a again, just than terms now, obviously and growing it's than there. of a growth so X% X% in it less of was opportunity in still the see

And with comes of the next Gianarikas Genuity. your line question question. for moment from Canaccord One the George next

you Can hear me?

guess, I Gianarikas always can, George. is on. Yes George we powered

your have some Analyst an accelerates year? the at of you second you you Quick Day. question Curious term? some you here points out does either of give market see of or near the your of next competitors maybe comfort with of there as whether the talked this that Do Or opportunity on kind upheaval delay the in more clean products coming half about strategy your to in energy.

Thanks, we're to the remarks, quarter in it residential prepared the said this -- morning is It solar Ecobees the here, amazing. -- quarter they're continue mean, which Actually, storage, solar market. storage record plus and posting plus just interesting. record after pretty Yes. we I George. with is seeing softness that in

bullish doing when products side term, with we temporary permanent. the long I still negative, of actually. it tailwinds I think policy should than is and grid think, that We're there, market, the environment, coming storage that kind lot great the given more the really a, out feel on we're the well a killing of like business, structural things comes the nature of and it that. But they're new there's while around of current be which and to transition

-- so the year. is coming but have And of us lot good a product for next we news new

offering on having feel don't -- out be going in -- is going product next-generation by market like but to is think today, the missing fine I maybe today set on we're competition. going I us the to really our product offering So is what's from our apart --

as that it's think going can leader, we leader. I establish or the forward marketplace to a we think us be in going

And be I that. working all market. have worked as why got will next the it hard XX we we think we've very huge level Day, long hard investment, think And is to we with our believe over the our term. on struggled products to the products initially. working months we bring new we I We've do heavy. Investor at said know the and team of acquired It's so a in very

the changes answer maybe if the anything I having probably you in does we're don't is timing new way just later products products, big getting doing missing year fear But just expect out, pretty leading to FOMO excited there. maybe around it think trajectory our next and be pause maybe in don't will, your directly, for about the we're market to think the market necessarily But we just we're of a the And with we soften I a is that. I of going here question So good with it us. today. where think there in not the

moment from next Donovan for Northland with next one one line Capital your The Markets. the comes question. And Schafer

I on close want to on -- up rates. the follow

and person were of have out kind how who at with kind It has used next to Investor an peers really saying in Day now. who XXs, the to someone like because individual one marketing it or across campaign they guys you're revamped dealers have of middle in among product came of launched was this of dealers talking is would job and getting a to trying people, about the more get the backup things IHC was or generation day talked and formation didn't there, XXs family the some -- of that The So right category almost to retired. generators. IHCs they're that before maybe the increase you they to awareness to COVID, they easy go used that retired tons get XX-year-old the IHC schedule always have the

curve So that. like or there no was almost anything education

So a know do -- XXs anything XXs, maybe to hours you of kind historically? rates I'm have the of to think be just longer in that so, around amount a and people where highs? that in you And if mean below actually IHCs curious historical if on to schedule Just it you that you get still can does bit where process their factor material that, Is would where and were being color increasing considerations product back they any close don't -- a and provide they that's as work be they coming think can could other this well. from category great.

Yes. the saw Donovan, initially, closely the times mind There was being that area COVID. information based I we IHCs goes coming the are XX we've doubt in on that happened no It's our COVID. pull that during that in lead the were of months, that impacted rates the a more the of long questioning, long -- effect dropped a material the a really product. been coming was would rates were we down off and and say We the on And that, all had -- times where do around for for products. to in rates that focusing great the around lead had of that I that And down on during the line with close we close close our explanation hand-in-hand in where think to last we negatively -- through. point an high lot feedback by

to the at nearly close you and lead recovered to start level have but not were that to the not they recovered, that's as look other level -- have at, where Now times rates factors. the

started that I concentrated I And so The something -- fairly the one long today and all XX well here a than And largely hear folks Q&A in wager do days. and the dig more can that over a age from in that of that as in you're dark. live we're buyers an today, a to bet you more the And now than as there, Power homes much things are the is I of the in category over category pandemic, perhaps of in the what think is home demographics. we're highlighted, But of want than the the XX, are more We the to anyway, reaching people as do owing mean, that stay who age digital just we the in more And the today. it or to some of think, vigor. again, can't some we live nature. in largely people traditional maybe as has early are and the somewhere. into outages in think very working queue the I penetration, really you're the remain expands that, I'd we sitting or driven we've months rather can't as home. And resiliency -- levels in the working that with category you we last hybrid concluding all you possible. their the think on of way itself. I we're inconvenience this that if demographic said, you I that different, work, an as reach category demographics office age right? interested different found different nature are in your way

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right? And project available that to have whereas sometimes, for maybe readily this, can may funding bigger different have for they to like pay younger a tend demographics younger financing a arrange more in consideration way. Older a for that demographics, is demographics

and that -- elongate can the sales So process.

of today. part on that is that, do think what's we going So

buyers who comes and understanding the on to and Marketing As or dig the deeper, sales that. to of processes are a our right? We from we're messaging at newer not of of VP adapt We've the talked Executive we process consumer and to we selling is background She had nurturing marketing, are we deeply continue the [indiscernible] dig adjust some of about Investor Day incredibly but marketing that buyers focused nurture process demographics spoke is only very this product to just leads. products also for seeing. the and around central of how the our potential nurturing,

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UBS. your the Jon of And next line with Windham comes question from

to incentivize value installers pulling levers of Obviously, there Is I can you in product? on pretty there? a Or you more success. talk result. installers proposition rolled back a that's sell that do along the having out things dive if little far just could feel Congrats to the it's bit. some how good quite do that's incentivize already? still a I'm you through product are wanted ecobee to into to curious you

here having Yes, Ecobee success has John. been Thanks, of lot recently. Yes. a

money. want I think And rise. continue as lot basic up, the a explanation that to very thermostat. strong [ obviously, a an payback they're energy I there's costs energy of -- think overly was in costs ways are but I I And to Smart save about on here, homeowners -- ] Ecobee of to don't go search be think

it upwards at The smart you're a home, You can smart adjust can that's and ] of heating the a schedule basic terms and both costs [indiscernible] are of your variables, in are it give different calling in There actually that features. home features that offering you're not. around thermostat. And it that occupancy, in are is There learns is sensors there your are companies mean of -- just are thermostats. thermostats. that context different when those themselves when patterns not I remotely for XX% your the with save preheating, energy it's in behalf your your regular not you [ really can costs ecobee market for precooling. There cool smart that thermostat cooling, making temperature using does. and by looks input. or the are some energy on. Those basically on of this annually it make a out check And set those decisions product that some to you things it

the in are, the I question But offering down we installers, for ease growing is to I get you're really think from value And whether extend thermostat to homeowner Ecobee. The or what for of appreciate think whether level installers support the of to value And for think about, they level why and support installers think they they requesting installation that best particular, smart can the think, a with it day considerations that, comes about me And the a that's try be, solution that's could And I is win prop of mostly is day contractor I their in the that in homeowner process. you're installing important so homeowner and the Ecobee's to -- time when something and installer. category. the why installer from the I phenomenal. really these a right? the or is strong think category, you installation, technical prop your with sales an what offer, I product as money. mean but I well an It standpoint, think, wins think is do that

with you So fashion, challenges money. doesn't that have you if a you're timely you're to dealing have and the in need you're support get that, time, with a able questions wasting great not to product wasting you're and answers

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Jeff from Capital have And we a question with Hammond KeyBanc Markets.

on I we'll conference don't call for up I think Jeff. the know, with -- you, follow it's calls,

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question. next the to on Moving

Your comes Stifel. Gengaro line Stephen with of the from next question

tell a questions lot All so more my some reliable far. has you right. I of been generator these than

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field standpoint. had bringing Yes. won't have We've will you that headwinds I with down. undershipping inventory normalized. been obviously, the It we've mean, more be

see just should And home way [ I in business. that we'll in terms that ] Ross so standby just mean, growth -- of shipments,

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rate that the a in a is for you go, one which Michigan, Michigan in And numbers value I'm install, available us like Penn from states is penetration-wise. collectors going government the the mean context, standby deal the FERC longer still and confident that can readily Michigan has from category it in put the reliability, where Penn hear that which about rates think you outages is who all think tells NERC outages, over baseline data, for So today. We long-term on another a power second, are they're it's of to mean rise, most we're are term, nationally is the are of single-family and which homes It state, grow. on lie. I is way by at are and a look by I power third-party There's it right? I mean XX%. And the major are outage. at market with hammered been -- at is just lasting the X.XX%. you XX%, statistics I generator others good really when outage reasons customers outages longer. to over And who average. mean that's home you far why $XXX,XXX rate cost-effective frustrated. focus Penn to have in continue these are it's don't Michigan I and

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And events. as happen. those major any without know, guide short-term typically We Yes. you

always catalyst the that's a over for longer So growth term.

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with Securities. the Jordan from Levy of Truist next the question comes line And

if bit different the for And you're wondering the on segments here. could now C&I you of in some U.S. Henry was XXXX. dig deeper the seeing between for Jordan you're business. segments international a looking the into I and dynamics of the some

Yes.

question. say, roll which U.S., So it's rental Thanks. verticals, I market in great in as would I'll that outsized up C&I. well, In the national telecom channels have the and we

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at bit Index, look being weeks being like quite you ago If couple Billings softer. Architectural month a or last of the a

think that rental starting that. in are the markets. and you're to feel I we see Certainly,

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prices, Middle in their demand has that a products, our higher for -- economies, that's move think bit of I part world. continued We in in of, the the and quite reflected energy of forward rates order East continue think, terms to which East I from around Middle there's to the see are our

Australia see think that to of there areas, improvements in market nice And those we some so another area rates. -- is are growth our specific continue I

a So just I kind that little think give that. of the dynamics you some flavor of to of

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have I think the hanging IDCs domestic. been in

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North question Coast next with Housum line comes the And Keith your of from Research.

Difficulty] [Technical

on. Moving

Next with Chip question is MKM. from Roth Moore

close relates wanted rates current shoots about I Fantastic. the the me? hear some for you Can follow talked it housing consults market. on as and you to green to of up

guess in Or from and there. you're slowdown their people trigger? longer curious environment? I in if curious stay seeing where just there impacts the maybe Just the a a Just to higher expect pull see decide you'd to situation -- I'm rate houses what any might

Yes. Jeff. puts -- the and housing. Thanks, with I think, there's that, with takes, obviously, Yes,

our than sales new First less going to of XX% housing. all, of it's really

to they list. around play would see Most as things higher want our generator many a how slows of they're because as people, projects to how list remodel enthusiasm important. overall mean homeowners of head generally concerns, slow, their the on the is is get when that out So you what people that around of house remarks are slow hold probably with do that an I might long or existing the housing won't your to have happen, money us. more retrofitting to of bass that economic their like know on consistent that consumer at have say or the a some to to this dollars, I might they and they their And with list on cases, our of with how other yet. they the starts just tends housing deem or we've some time of things consumers on lasted. that house kind have in then your their business cycles. And about of pool spending on the and some -- this, the outages if off to of you that up of impact had we question dampening macro tend housing we doing depending that in concerns kind that big remodel outages, that in reprioritize even is or taken history things to products. outages borrowing one they somewhere that have. Those is thing again, house. turnover those people and outage, Maybe on as when to do most would we not spending. say previous in a And other if house. vacation the their the category outages at for is the do time and an either a most reallocate of that categories from that in the consumer in stay long And that? of kitchen housing look their do environment, start seen putting economy And cost outages for think to they've get rate people, even of move product gets But down there they in does Or a against because or is trump going family again higher is will

to outages they're the as on indicate the be we're is here about is this last else may consumer going you as that outages decades, bears transition. They're pressure going though happening going long to to put data good been to would I that, frequently as out, again, and economic last and this they're that the feel for more that here The through we've think so just that talking that longer. to is about be going as as a outages on longer. could everything be. into think have the to going next the we rise, -- even that where And to case And several that belief happen, the are underpinning I some power have cycles and a happens, the of goes we be pretty going run grid all

at have further Chris call time. we this I [ ]. turn back no And the now to questions will over Rosman

look to full with forward our XXXX you mid-February. quarter everyone We We morning. you and and earnings joining for year this in results Thank fourth us again, goodbye. want discussing to thank

conference your call. Thank for concludes This today's participation. you

disconnect. You now may