Generac (GNRC) 31 Jul 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Second Quarter 2024 Generac Holdings Inc. Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. to Kris conference Rosemann. like first to now today, speaker would hand over the your I Please ahead. go

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

time-to-time its We our these call as statements. may during made statements as statements will risks today well forward-looking and or results those begin and could this information differ other by contain forward-looking from uncertainties in provided Certain from statements. materially employees cause by commenting Generac to presentation involve forward-looking on actual that

such earnings filings risk or SEC associated our of factors. for see words release and that statements the list Please identify a or expressions

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

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

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

quarter were prior lower EBITDA by previous adjusted of operating and results ahead expectations driven adjusted costs relative for to EPS, forecast. and expenses our input second Our

to million. second quarter due were in generator sales growth product morning Residential We impact Year-over-year, increase full $XXX XXXX raising X% prior compared increased outlook a sales the in to including year net at recent overall nearly are of result of the shipments. in year this strong activity, flat home year our from prior outage the Beryl. power as the standby Hurricane the

in our year in the by prior industrial a was an to customers. softness increase sales telecom as distributor partially Global decreased markets C&I product from quarter offset strong XX% and shipments rental second

headwind shipments favorable mid-teens at from mix standby adjusted and expanded rate input Additionally, in the softer levels. of prior prior expectations quarter, the from XXXX of gross increasing included line a excess margins year the period as during costs. our and realization field a meaningful Home result were lower with that inventory the second of sales significantly a quarter from EBITDA

a second the during due the May in multiple activity Texas. power made to portable area long-term in landfall the outage a quarter, a Early and slow above year in year-to-date well at average the home for to modestly Beryl prior the the on markets Hurricane grew outage in standby generators. increased the start and basis. demand Houston that long-term Power average. the second home and third baseline was sequential increasing impacted quarter strong consultations quarter Primarily year, in over rate baseline storms strong driving After activity above

consultation during importantly, month increased to Hurricane of More the significantly Beryl. home due July activity

during first including sales to close tool lead practices, half conversion Additionally, sales execute rates optimization the improved lead as of to lead improve initiatives continue and enhancements improved we have practices. XXXX, data-driven nurturing

outage our experienced end recent home broader particularly close a regions market and not bring improve customers, further into have we region. demographic to immediately over have standby event remain making time, engagement Although they with new and moderated rates investments activity affected the major generator expect outage We in the on to material categories in focused that increase periods. historically following in

dealer ended of end count of X,XXX, the the quarter our XXXX. with second residential XXX increase from We dealers at an approximately

aligned We helps our preferred with allowing that product contractors channel. an non-dealer contractors continue contractor grew effort us we bandwidth also their We to further relationships partners. with heavily developing the and of capabilities focus align distribution continue to our selling, to through on expand view a in these while resources our contractor installation an program, and as advantage dealer purchase and networks further strengthen service we important business as our our tools competitive optimize installation invest and relationships for our to

of environment half outage through first late lower of Activations XXXX, power the reflecting XXXX standby were or the the installations XXXX. generators from during modestly first down home quarter of

However, month the and July, activations in expect we seasonally strong growth as outage increase move continued in half through growth impacted have activity. of the installations year-over-year we in stronger to and the returned second recent by

Beryl. residential the as major we As events clear to in outage leader are backup uniquely such positioned power, respond to Hurricane

into Our logistics inventory in to combined capabilities ability our to allow invest deploy leverage areas. our us with rapidly storm strong product response, financial outage for impacted to position

Our and our network consumer in call scalable time provide and distribution support need. centers XX/X industry-leading customers' of service our

of products storm and advertising spend in awareness the in leads partners, generate region, only not but impacted expertise our marketing and our leverage in up to distribution Simultaneously, bandwidth the the drive for sales our increasing also we to our by and increase ramping dealers across distribution are also to efforts our aftermath are We nation. more for more aligned to network. the our sales installation broadly contractors adding

standby capacities output our home to in for changes. market to the are have demand quickly for to as allow these chain supply respond to expansion generators increases operating increasing we and to rapid rates footprint Finally, our for production we products respond built of

penetration as outages. believe are in significant we longer-term residential addressable drive market generators and result, power a we With homes in power U.S., to to is Beryl The business for following X% awareness approximately activity. power higher effect the standby of demand outlook As opportunities due Hurricane owners home generator seek for further the protection levels there the raising anticipated and are to market. XXXX home of outage future only recent overall our of expected higher also the of grow backup standby from portable increase

Energy metering Residential be residential higher XXXXs continues for negatively to will & and Technology to from weigh our costs, California's overall on these to solar products. market results Solutions. storage borrowing to changes moving program Products as The well Now structural as impacted continue for which net

previously $XXX of conditions systems awarded are grant the energy Puerto Puerto execution provides an from in from is increase quarter fourth grant the funding program near-term, for market from year. Rico $XXX Energy term, to awarded the million funding in the Energy Rico we participation X-year of with which storage of the in Department we the Although the a Resiliency the million Fund. recently challenging our The U.S. when to provide last up in initially announced to project announced over

The first shipments expected the systems XXXX. with program this occurring program and installations in XXXX for are to of energy later storage year this bulk begin of

attach Ecobee and monitoring prior home robust continues with connected execute is Energy homes improvement well. over approaching strong services the growth market continue to driving Services now year. share to increase and services. and both margin $X rates in million, Ecobee's count gaining

common are and as that intelligent as experiences are expertise their hardware developing Importantly, around Ecobee's of that leveraging in efforts teams heart we the are the serve building residential the development software our will energy Generac and platform leading ecosystem. intuitive

to million to our morning, As incremental across we also distribution Wallbox, agreed investment press charging EV include our of and make $XX an commercial both expansion networks. release this allowing in agreement minority the commercial residential globally solutions, for disclosed in our

home believe Additionally, dealer our we and growing operators manage chargers demand C&I part around approach development as charging with ecosystems increasingly and resulting to have energy owners increased integration Wallbox world. platforms. the aligned important on penetration of customer the vehicle grid have well electricity as a our business become deepen EV the as electric impact for a the We ability that technology will as of that residential and and on rising software EV will

allow competencies build As out will strategic internal our technology to and large we core markets. the continue our investments we that compete believe these effectively solutions, us initiatives, energy in of growing combination and to

and deliver support our over share our further will market with partners superior our as and well energy to brand believe our channel comprehensive provide us starting develop residential strength. customer will solutions expanding allow to and home network. and our future. This system sales energy competitive to further year, later the in we qualified increasingly the to will the bring as accelerate this coming management gain distribution energy unique differentiation we distribution providing as market storage expertise smart leveraging in and next-generation our As leads our quarters, of by We approach proficiency we efforts engaging

product to our now Switching C&I category.

by the the shipments customers. to driven decline shipments by at quoting declined telecom rental This continued As distributors from again domestic product in and and previously to growth as year, this XX% offset both partially sales expected, grew industrial global was C&I in activity decrease a resilient. American rate with prior channel, robust remained second North our a quarter

operational due our of to our We on lead focus product leading distributor ongoing further continue optimization times to to execution, channel. and our reduced share, domestic market primarily expand

partners. regionally further to through where investment This believe development we our territories independent of distribution in our includes we improve additional or M&A share have a potential certain

period, and strong to to year shipments balance equipment from the quarter expected, soft the As national declined will and we telecom remain customers these believe rental the year. continue the in end markets for of prior

believe we substantial the both cyclical growth despite rental for projects provide see growth runway the in near-term in for markets need long-term the weakness. opportunities However, critical channel. future infrastructure We

critical power tower significantly our network are market expectations the require applications, and counts and increasingly of long-term growing reliability. for communications wireless by telecom backup growth for trend services global In secular nature and hub of greater that the the power supported

microgrids. solutions announced acquired Canada. industrial brings in and we better the for but including strategic This from battery where the serve is market acquisition energy C&I commercial deployed storage small a As in multi-asset applications in expertise Cambridge, storage engineering June, solutions previously to offering and us late behind-the-meter component product as system manufacturing energy SunGrid critical for it located growing

expanding charging an have pipeline a and product similar important commercial also additionally, these our which win included. expect EV provide seeing is to offerings. stationary traditional commercial our to storage we battery believe to with in of which in opportunity our number is alongside Wallbox projects expand projects. agreement we're projects helping other equipment generator And We of We

deliver to As costs. natural acquisition, resiliency the energy positioned the overall we as newly acquired capabilities market, on comprehensive we energy our is we developing well for gas focused leverage generators solutions C&I and our as in which microgrid important with customers leading SunGrid lower are energy believe in position providing storage uniquely with

Internationally, to as total as from in operations telecom were primarily to in shipments related partially well Latin declines for regions as America shipments intercompany offset Europe lower our market generators. lower sales Mexican year-over-year in U.S. the softness. the to Increases key shipments most and portable the such other notably in India

world, broad building agreement our Wallbox markets. in growth international strong longer-term solutions our growth international several collaboration incremental of with This markets segment in bring expanded the margin the as includes of past years. our example and discussed portfolio of international also over more expansion track previously another record on end to we strategy the a As around is

on. In fundamental while our within outlook accelerating quarter Beryl are and X year-over-year earliest also expansion evidence value XXXX, in providing resiliency. for that on highlighted business, margin closing significant the half changing a XXXX grid the continued first through became dependent Category robust supported need the weather increasingly enterprise continue have the powering Atlantic the generation investments World highlight occurring power in Smarter of outperformance hurricane form and patterns enhancing continued we Beryl share margin to cash increased strategy Hurricane of the repurchases. momentum flow threaten Once in vulnerability to second that again, the our record, morning, of shareholder and the further our this continuity our the free electrical

trends secular to from By value solutions helping and quality are and grid. continue of of come. as costs. power the rapid and lower well electrification to prices challenges the cost decades home expanding intelligence manifest for capable Additionally, will on providing utility power efficiency, resiliency are the on power rising resiliency adoption aging These intermittent optimize stresses adoption the Generac's sources that nation's rate confident demand our generation core business growing and additional solve higher consumption, trends remain products as in artificial we in payers for around proposition uniquely and and comfort, and helping of owners all our

additional York? results York our on now turn I'll the provide for quarter call increased our details to outlook over to and XXXX. second

Aaron. Thanks,

impact detail. $XXX quarter Europe generators growth primarily prior to home sales compared softness during product favorable The sales slight looking prior of quarter second at at second shipments acquisitions million and and combination net consolidated the mid-teens of partially a and quarter year was the as compared to Net as sales. during were was impact product the offset Looking clean product revenue $XXX by increased by $X currency class. comparison foreign in XXXX from portable domestic in had strong the sales second million on lower X% prior by a for results in million positive in strong Briefly for Residential portable generator more in product quarter. shipments energy of decrease XXXX $XXX sales a to in standby in ongoing store billion given market increase the quarter. a in This year. from the year domestically. contributions generators second residential driven Growth the

XX% year the to product to million Commercial of and the sales $XXX industrial compared in second $XXX XXXX for quarter quarter. as decreased million prior

equipment quarter, primarily robust steel This expected prior as slightly sales industrial increase the stronger our decreased offset and to well other quarter. Gross in margin international contributed services in channel to XX.X% in products decline due rental freight favorable through prior XX.X% compared and and markets. and our domestic sales national year by was million lower compared the in input given X% lower weakness telecom costs the shipments year costs, home $XXX to product of shipments Net partially other to second currency customers. growth and $XXX distributor core domestic quarter. to in efficiencies. Foreign a as realization approximately sales including C&I as standby profit the growth production mix, The to due was the in and acquisitions improved primarily was sales certain key for million

XXXX. or quarter to as margin our gross of Second implied than were the the This the salaries, promotional gross create our deliver products. primarily higher expected $XX benefits, incremental was and ramp bonus to expectations the and for Operating exceeded spend to due XX% compared resources across we margins given second input increased half stock to growth of ongoing second including year marketing improving awareness sooner future able million in quarter compensation expenses drive costs. as investment business, increase the to and in

defined EBITDA million the of net ahead a result release, XX.X% EBITDA well to gross second of sales expectations prior lower these a in as of for deducting noncontrolling $XXX as expenses or in of sales before quarter in to came interest, of prior earnings the Adjusted our operating $XXX factors, million year. adjusted quarter or compared compared As as as margins forecast. the margin outperformance our as net during was in result the XX.X%

the support driven offset shipments. as $XXX to by input was by a the margin I margin as lower growth the prior costs, sales, of of total mostly year segment quarter category to sales. favorable expense compared reporting expected operating million, sales in residential future realization segments. product compared partially C&I intersegment investments XX.X% financial $XXX total our the as and by weakness EBITDA initiatives. will Domestic offset increased growth higher in or for sales discuss in improvement to including year mix primarily prior Adjusted $XXX now $XXX million for results the X strong X% million briefly to quarter, in the in was segment XX.X% million This was representing product

sales a million XX% approximate for for $XXX segment most intercompany sales shipments decline in shipments total to core well in European generators. driven Mexican the $XXX quarter was as the XX% as year prior to market in sales, decrease in total as International lower telecom million by segment notably primarily from markets, The to quarter. the most including decreased intersegment our domestic operations portable the compared

as interest such of Adjusted key XX.X% before sales softness for $XX sales million sales year. India. to primarily to operating or partially leverage quarter. America million $XX XX.X% This was increased for compared lower noncontrolling in during total was the This the prior deducting by the offset and due as regions other or segment was shipments Latin total of margin in reduced decline on EBITDA

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

of of our of by driven an disclosed rate did income were quarter tax prior rate prior million second or quarter company million income in compared was effective was $XX the release, The unfavorable primarily tax XX% an in for to the GAAP quarter As XX.X% certain XXXX. the earnings in $XX not in net in million, year which year the effective as year. current $XX effective year. million during period, current rate to decrease the taxes tax tax as for the repeat for second GAAP items compared discrete the $XX or

year $XX the our earnings of the company, income compared $X.XX or quarter $X.XX in million company in of to the to This the share. adjusted basis prior net $XX income Diluted quarter a as per net for defined was for or release, GAAP in year share. prior second $X.XX XX compares net the $X.XX in year. income was share per million in on Adjusted per the current

quarter, as in operating was release, operations quarter This to income defined the second as year million, from cash higher free compared million primarily higher our as in second prior tax change in flow, cash year million in current quarter, quarter year. $XX driven flow earnings. compared flow million the current to free cash payments $XX the last $XX was offset same was the and by Cash partially in by year $XX in earnings

principal shares July, million amended $XX repurchase is under mature $XX million. connection Term June the approximately Loan which replaced that million There million was made our credit of December in $XXX a loan million In during early our cash amendment. authorization second for facility we prepayment $XXX approximately XX. a existing stock an repurchased credit we to Additionally, of amount XXXX, after and set $XXX common quarter, XXX,XXX our current as B we with new in the facility, has term aggregate an with remaining of

on facility debt that in eliminating basis a gross quarter lump of from date July the credit at Quarterly XXXX. the at facility. new XXXX. $X.XX XXXX, previous a This X.XXx low credit plus end the billion, will end adjustment point a $X.XX reduction equal existing due X, to of with rate end at of outstanding loan an B new at included also October maintains points, second of spread in a in debt SOFR maturity in facility basis, XXX leverage XX of credit the July X.Xx credit basis principal has maturity begin payments resulting ratio sum of while The was continued million the term Total as-reported quarter XXXX. a the the was

second of execute continue to strategy. half strong capital generate cash we in balanced the to allocation flow a will expect 'XX, free we As and disciplined

updated provide on With I that, comments outlook for now XXXX. further will our

disclosed As outlook morning, our we year are overall increasing this press in our release XXXX. for full

to forecast. also an our sales from be of expected Texas to Hurricane XXXX the expectations of increase the well our increasing due for Again, result we demand generator made activity outages, state a be now as growth approximately expected power and early standby range above teens the elevated home to XXXX we high X% in outage to are X% recent the growth the that expect Texas, prior the of net in sales overall for in be to generator backup in range previously X%. are portable now recent landfall sales to the prior as including This year. power July, to compared X% is Given Beryl

clean Partially softness trends a outlook offsetting chore resulting we are products. our residential Texas, these in seeing modest strong markets, reduction in those and in energy continued for only in

As to result, mid-teens growth. grow our forecast at a now as sales the prior are product residential for rate for a double-digit overall year expected full to compared low

for categories XXXX from remaining year our is product outlook growth unchanged prior full sales the forecast. Our

From assumes for high mid-teens the outage anticipate of with is major and net range. fourth through a accelerate of pacing activity This sales perspective, in average baseline does for quarter we outage the single-digit year. year-over-year rest guidance remainder will the the move not second the low longer-term of an we year, growth as and with range growth in power sales half the the that in third line power event the growth of net the additional quarter net the assume sales year to benefit

generator expect year. the increase from basis improve sales gross year mix XXX now Our in home points improvement margins to and given We XXX the guidance, expected. from to higher an basis over XXXX is expectations the XXX the of increased full standby for quarter full second XXXX. the XXX the margin to second have gross relative our previously previous outperformance This half also sales year to point by approximately

approximately XX basis favorable sequentially with due improving Gross margin mix, projected remainder points. margins the by are margins to year of gross fourth price through quarter cost continued to over and third quarter grow the gross

expected outlook the be now deducting result XX% before are approximately increased to interests XXXX. margins a this for adjusted noncontrolling EBITDA for for margins, of XX% year gross full As to

the remainder as result This margin EBITDA points margins we additional year, operating adjusted quarter XX%. quarter Additionally, of fourth of approximately EBITDA EBITDA by third expect fourth adjusted to adjusted throughout approximately in also grow margins higher improvement we adjusted and sequentially leverage half year. EBITDA the above-mentioned on of through driven XXX margins over gross the shipments the resulting move second improving in quarter will by margins the basis

with earnings normal will share and full details per the provide cash assist flow to As we year additional is our free also XXXX. adjusted for guidance modeling practice,

to is approximately the is effective be of year, For a in full GAAP This remaining rate XX% of effective GAAP each tax year. expected to XX% for rate XX%. our result expected X the to quarters still tax of the approximately

earnings Importantly, adjusted be XX% expected and using at estimates net tax of net arrive tax rate. for adjusted share, reflective per effective items to income appropriate should add-back the

the XXX% guidance expected compares year as million be million million. Stock from flow compared the prior above to $XX cash XXX%. be approximately million to conversion also to be reduction our now million is million. expense or to prepayments interest second free year. additional we to as the million This expense compared This the expected $XX guidance the $XX the year to million loan guidance of $XX our $XX to We're prior to anticipate well revolver between to guidance in an increasing half of as approximately year. of to for $XX prior guidance now principal is no Gross compensation of full for $XX incremental benefit working capital term assumes during $XX

million weighted of is shares million to guidance year as prior XX to now XX average XX.X expected approximately to full to decrease shares. Our share compared million diluted count

second reflects the updated were the This guidance quarter completed this that of share in repurchases year.

as percentage sales. -- GAAP year's guidance in of Our last sales for at also expenditures capital consistent last expense expense approximately intangible with Depreciation guidance. quarter's remained consistent amortization a of remains X%

time, like prepared potential our And outlook this call open incremental remarks. shareholder does the value. for drive reflect This additional questions. At that finally, we'd this not acquisitions to up could or concludes repurchases share XXXX

Tommy [Operator First from comes Instructions] Moll question with Stephens Inc.

question. the the year Aaron, X-part outlook high went for from I sounds It It's teens. wanted a -- start standby. mid-teens to home like on to

of part July through in you shipments over demand? after the even activations part First demand. destock characterize And the is, is second and growth QX can you maybe the on lapping incremental then much versus that just storm? versus how underlying Can characterize

Yes.

year. maybe, I'll about question second have situation from a talking part take first million question, field the Tommy, last $XXX that So the impact we the of the part obviously, been on of first. Yes, inventory

of destocking. And here originally that increased so of we I -- part that would the considered had the guidance guide say proposed obviously, the part

the the guidance related. to be would the increase number mid-teens really So in delta from that's the storm higher

all incremental. That's

had to it all The contemplate I to don't of that's that math do would give that's -- a QX, problem that, have more be we in I'd occurred a hasn't we and it a So the problem here been destocking incremental. in guidance is that. original than to the in precise year. and but won't balance you the QX answer as like answer the how expected

activation shipment we trends is related that the said, activity That as modestly activations we and of low really far in the last were the the to half from As outage down. saw year power first as QX, year.

those And standpoint, as pick the to a And year outage off seeing we the grow anticipate bit little this were QX's QX. average, hours a we're July, fact, activation we that of baseline from kind we noted up already obviously prepared slow the in seeing below we're XXXX, the of here in trend through started in rates year morning, And but the here up. here. they've picked balance in the in beginning, remarks

how seasonally that it the terms activations That's of how was the And were, of -- but QX, but that's not big preparing say, paces shipments season. only to looking it you're would -- expected. ahead a for business that's yes. just So at slightly if -- I in number, wasn't is be

right? ready exited the go. QX, to as So to partners said But levels again, field this that part of previously, those channel at like feel this all is our we seasonal have are normal, normal inventory we we've as want product point. trend We

our Gianarikas with from The next Genuity. for moment question. Canaccord next question comes One George

can rates, the activity you've highest seen parts Texas Or hurricane? what or guidance we interest an those share focus to data the and over high consultation long-term? increased Clearly, led in what Texas there's go opinion you rates and the been of impact much on could you to isolate hurricane. that the saw in on by in-home you you penetration extent July can that in like seeing it have just it, of what were this to reverberations And throughout further how increase. penetration of in you're and saw penetration on areas the regions. just the the of were I'd impacted Is the that the your strictly are sort we and to interest the activations. pockets increased there extent outside But

Yes. Thanks, George.

the and infrastructure really the was a though they was storm of lot some just also saturated think wind wins that components cat So a created it enough the to impacted saw in by significant as Beryl a was obviously, to impact we I straight-line really had think there other And with derecho meteorologically, that July, I in damage that the what of it was people earlier X strong not -- damage, refer and of grid. was kind been impact a things scored. very outages. of Hurricane they're May even physical and -- high a way market ground that The the way Beryl trees Houston in taking event led in out

a long took it so repair. time to And

what outage. -- the -- the frankly, in our more it's outages, it's experience really, length with And of we've

-- getting sold role of plays guidance reflected lot so portable duration increased really finding interest is huge a a the kind to generators a point And high things: One, X people we July. our right? in in of reflective in of So of solutions,

have the would as we as not was fair quickly Maybe events, in a amount caught down industry, to leaders of would in As north border the kind you turn and it and people market. of Mexico, we severe and then one carry of would supposed of Houston storm, off storm impacted kind This because inventory types that instead. storm guard. see right-hand strictly went market and the normally of very kind hit of much in the as took to time the a you prepare. for at these was inventory deployed Texas preparation It normally time the expect, that ahead that obviously wrong of

obviously, of inventory more positioned ton But we time in-home month been say. of But in we're storm. would and ahead July, aftermath, a not in able the -- IHCs consultations has the So prepare the to been in get that. deploy of dramatic to I has increase then certainly the

the era. remember, IHCs. really post-Sandy our here around see been that to continued of to tracking in we've history kind back since have goes We And

So to of XXXX timeframe. XXXX kind in that

So about a this. doing decade that we've been

activity, of with the we higher the that get a level fit storm. leads of hour. We of or definitely of every outage And hour intensity continue number sales to IHCs the see in per bill

And event. that, earlier -- some in impacted market that of was the the year again, previous also is the related that to by fact

dealers in So have those about we combination things, Texas. of XXX the

think So respond shape in pretty we don't in XXX event. the Houston. have to We to we're

happens Texas say was IHCs. Texas, this you in event. of lot an a have an the might bit or other much. do and generally across that with there think that Coast, a media not And not event to have the uplift hit would market attention media's maybe would happened echo market. I like maybe get Hurricane that an in coverage Texas, generally greater reason, for Certainly, little the like media but the down East as you of or a a on bit of something muted in stage. Coast happens with coverage a tends I effect because that We than is of national whatever of the but West comes XXX, that a -- XXX Houston, when see see something Beryl an more you expect if event, markets this little on

we've the the our terms the underpins And view. we increase in of that that -- we've seen think I nonetheless, in of underpenetrated Texas in increase believe, given IHCs is still kind is But guidance. today,

less X% penetrated in on nationally state, X% average the we're penetrated the we're than So roughly today.

lot And and think do there's in we years outages is through we room going a here. of housing a increase it's So a market. of those huge ahead. lot the people -- rate pen And the there's multiple went obviously, that to think

One next Mike moment from question. with comes our Baird. Halloran question next for

heard you to more things remarks think trajectory. in Clean current you Ecobee's margin about the of prepared about the And Energy broadly behind starting the I driver comment margin the might investments revenue far can the when getting look at changed those from the the timeline your with start then new timing businesses? that on all associated associated then and Question really the and and side headwind that? the launches like with as Has perspective tranche product the of better. as profitability curve that. when improvement in what's Maybe all

on cost of margin Mike, working really improvement, on and in the at chain the gross on Ecobee there's amount supply the cost Doug has a effort reductions gross significant been just York here. material whatnot. tstat of in commentary. tremendous bill the margin team up of of the focus been Ecobee, -- jump itself and terms

margin. of of through those say reading execution there's impact improvement now. are So terms a the in gross were even now of they're and before good pretty significant initiatives I And the would the better. They

too, Yes. when we of that And I think some the is the Ecobee acquired fact depths of pandemic. the at that,

So I obviously think curves and that or there well. artificially maybe relaxed cost even around especially products as were the components, surcharge inflated electronic is

been teams of of have is efforts, market that's terms their some in the discredit of that or to anything from great, forces. not part So it, take which away but

the timing. Those our this half changed microinverter are still storage for targeting next-generation year the next product the So think, still Mike, on end products. has really we're first of right? timing say to And all our question on of timing, device, I of introductions, in this then I year Nothing new intact. answer our would for

we solar sour The call, have and there the may market may the trends storage have mood -- what around right? on changed that think market, have plus is we last mentioned I this just have with year environment and have still net kind California. muted, the relatively persisted of impact and been been of negative in kind absorbing rate metering X.X year higher through of this this

going it's some might for the year, now discussions we the we market of negotiations and is million an talked grant We That island. we a were I that going get would a of was us, about Department that, it announced we thought tune -- the us impact awarded. that, installs significantly that So are of year, XXXX on happen $XXX again, of I the those with be late to impact grant think last was over term. DOE impact would was little and think weak. the but in bit to partners that to if this -- much of XXXX. upsized offset generally That this and about not say, and our million. And through when here bulk but other X-year remains that Energy $XXX And that the

have have that our our didn't that pacing. an element of project we that kind original magnitude. win didn't of of We necessarily that's in So in kind

that helps weakness that 'XX. think I any So offset market into to may persist

I guess timing generally saying we're as do, way, the a I So really changing long-winded not on this. of

bit -- think it's different a puts I think we there originally the and intact. I what had contemplated. be than is takes might the little timing But

One question. next with from Jeff Markets. moment our for The KeyBanc Capital comes question next Hammond

had kind they'll initiative, I'm some of tailwinds, just this uptake instability. maybe into warm and uptake leads storm where from of the guess period activity, unique nurturing those I input some around this And we've more grid maybe wondering with half? if normal? incremental if a you second in one, tire guess maybe do versus kickers drive And these the I can question. continue IHCs cost we're then think and Two-part elevated

Yes.

cost a to first -- XX% looking half puzzle. just it the from will in be I'd vast first cost Jeff, Well half of increase gross On second improvement. half gross to the are of half, will the But but like further second mix be we to that through read it price a will with continue to through, that the margin piece of improvement improvements of say half, second of half. some input smaller there margins, reading home half to is, smaller standby expecting that over percent is be if couple first going on a just say, higher majority side, be mix let's second

it the broader kickers" of the it's power the think, talk grid. produced, Jeff, these I are "tire in it's seen prices some about things think power We rise. about broaden in in of with the lot trends, the talk are quality talked talk and broadly. we an expected And to the also of today and has on mentions a would of And I demographics There's effect we've -- had outages structural the decarbonization that potential with IHCs power kind we continue more shopping efforts talk I'll the of going our the about obviously people electrification I have We the increase broadening in to trends. then, the and the impacted and consumer the outreach funnel. and negatively category. here future end about more about from call got also the We've to -- engage top appeal our Yes. future being the that products new trying for is to

and efficiency. the And That media the -- have own that whatever think think into and I mainstream narratives. options their didn't up around the didn't And that independence activity closure -- to may we on for get -- an is to resiliency said, people power on With project. have, you people and exploring their opportunity for the obviously also Beryl it's those and received an funnel we a when like reason, coming to get these has you event who I story. outage media an engage trying and resiliency get clearly us manage increased picked and IHC to leading

see affected up think influx rates year. weakening they're close this have what in get of typically event it's what because such leads. you'll note, like is nicely Beryl, when end happens I to close an rate get kind the a the But from a we historically, of year and temporarily you throughout improved important of you last large-scale markets in see the

lot at once. You people get into funnel a the of

being be closure -- the leads some to by event. of to of a result offset warm those Now these nurture as that we're somewhat could able

at we But we step I look in leads. here have of rate more to future think all work we lot expect rate the So close of a does. that here back the but do will kind out what kind the temporarily as close

guidance those a into of calculus that's, around what again, -- and elements our all raising of goes So today. combination is

better than techniques nurture ever closure we capabilities they don't system, So -- in the if are have, leads we've and our once can I today, we had. even much them and nurturing those think, get today later, too,

so new And certain sales or the you the the leads like opportunity as more opportunities, those driving financing will, ability in pretty to that, of we've future our promotions sales. or work the of that been things the growing back opportunities if leads, of on to either outage benefit about house to future that events bullish the file, mine file

question. next for moment our One

comes question from William Next Brian Drab with Blair.

point I guidance I update. put just like could the to if finer a see on revenue to you ask

we're revenue $XX million, revenue. if incremental in So obviously, increasing by growth X%, that's about

that talked storm ] some we've had driven and activity portables. about in then Beryl You Hurricane and that's May [

You point X can $XX move weather with high gave in wondering not storm mid-teens event. close said maybe all-time why just especially this teens. were given related conservative, or million us put on top the finer to plus like X -- a home I'm that's categorizes XX, teens which being you outage ice And to in Beryl standby. high if the minus you so hours outage that from could the from we're going mid-teens to very the Hurricane this, a of understand associated 'XX, time we're at hours outage to I

is this Brian, York. Yes.

included we've the in close the at I are you're guidance. directionally that think quantifying in close terms of numbers your in how of terms implied impact least

to, You've of improvement. you little got bit portable home just get referred you a growth that standby that

small products are some little with there slight declines that on a clean that Chore offsets offsetting. get saw outlook. made some on the of energy comments You we

years. you we've would a $XX the outage to together, power number all of be said roughly a somewhere year between always in put major like would be that that event that when million, said for million $XXX impact it we've So of --

we It's impact -- portables portable, as -- have before would our portable $XXX can maybe little terms the say able deploy better, partly turn of as impact maybe because uptake -- so maybe that sharp in our I it's in Beryl. million the included in of the million So might maybe that be storm think sort in the how guidance of comments maybe of weren't about a Well, hurricanes ahead early. some would unexpectedly took plan lower the the what Aaron's our the I Hurricane been storm, end to the early. side. some bit wasn't that $XX on We've our it you other towards significant guidance, where maybe from we've included hurricane of a and to sort portable

of it's home a of play rates early. that, here. able and on close see lot standby in come to next a out the got be result have we'll we'll side, quarter think update the I IHCs how as a these, But throughout We've

Revich Next Sachs. with comes from question Goldman Jerry

morning, Good Yes. everyone.

in better about normalizing guidance guidance It Just that the I'm performance. versus first talk about wondering, back quarter. gross plan. to In drive performance looks margin Last to quarter like so year, is costs strong tailwind in relative implied second. continued And the as we material we the the the the logistics costs of far? the about half spoke think given for each there opportunity an a the material continued quarter,

home home that up have inventory improvements We've see, the gross mix seeing becomes now been getting our definitely in as for of normalized, we're price/cost that I been as there. now And we're then here X% standby growth and margins seeing to that quarters through. a reading mean we're year-over-year. Jerry, were standby number almost improvement year-over-year Yes, field starting shipments,

that roughly was that in related. X gross margins, the X% say second improvement quarter, would I So of mix in say X% maybe I'd of

price X% other The cost. was

a of the result, And as cost some But we a year continue first of expect of relative year-over-year with that due as you as the see to expect some mix in standby improvements I higher further home second a again, that. would price mostly Hammond the you question, mix do we to jump -- mentioned, as think to been -- when Jeff from improvements gross continued in second all to half, Again, result quarters. improvement I of number do we half for the half. margins, seeing a first sequential improvements. half just then we've And cost asked price would

of So the year. the second half in least at

again, No, gross standby healthy mix as the are improves. and So Yes. margins of getting and cost normalizes normalizes home price

Harrison comes Sandler. from Piper question Kashy next The with

in if just distribution some of a thinking your just strength side? few was year of about C&I And wondering does normal rental speak And demand to I in just for a on deterioration side, the seeing any to then contribute sustainability could customers saw the I curious from of business had the light in So was How we how of they're the weaker XQ? on that also, you've resi resi you the Texas of much downturn? me. then macro updates on telecom if you're the in the some the industrial annually

Got it. Thanks, Kashy.

penetration sub said each Texas mean, of rates We then. event is that I February Today, Texas -- that in out grown we don't big a the our obviously, were with yes, it's if kind but of XXXX, we have market. break recall, X% state So they're way, freeze you back sub-X%.

in brief like Texas, XXX pretty worth basis time. of time, at Texas a a roughly So penetration little points of in years' in period growth of about X

these like event an Beryl still houses X%. lot May teams then of the here, But don't have mean, we So to product. our tell I drive said as of growth it's the way, been at homes both in XX% Texas a going continue to sub part X% another obviously, And market. there's that the events, again, derecho and Hurricane in important here. that to forward. are of

potential they for market. So and generator, of -- and are a all targets kind it's huge a

on bullish we're really so And that.

relative the current In us, run the the the though, the question telecom terms current of bottom. pacing of specifically, feels this kind telecom rate we like kind think of at the for for comparisons last especially year, on it's bottom here is the to

we In fact, the QX. back half increase, contemplates especially of as a bit get little into

is this from of solid we QX about there it at or next 'XX. bottom any they to but telecom would partners cycle reality year. say XXXX us guidance we'll haven't able have QX, -- kind point once we to maybe XXXX, yet. that better telecom that information some be information of and see of or 'XX to year, planning next some our But with for going get forecast the don't we the into They as hopefully, for kind hopeful is than relay get shared show anything we're stage green that So that here it starting is of shoots the be as to of the

market. important an it's -- But

We have an share outsized there.

we're why with bullish kind So But negatively pullback. this it's that's long-term. us that's -- year of about the impacted that

and counts, As -- tower those highlight all the like communications infrastructure I nature the comms for of when need those the hub then critical those outage said elements before, it power really we for of especially, important outage infrastructure of networks. have and the events does need reliable hardening again, large for wireless Beryl, counts,

other a and the we make The Eric whether here our distributors long-term. the distributors. team an your then support And to it's awesome either Wilde whether team the right opportunities. our putting industrial have here, plans we're a done last service important telecom really job our expect Yes, through through or sales, selling where investments be that leadership question So to other working his and direct, -- current in U.S. be to whether on in there, we've it lot. ability done it's the

paid the we where could in distributors have do we underneath were dramatically. off were felt quite markets. well and underperforming make a in support. done share have done We to we've improve that certain Again, acquired of some markets, But our acquisitions nationally that kind our acquisitions, we that we've in those seen share We've we've couple we markets better. there. has actually where of And we also, sure coast-to-coast

share increase, So an just actually getting would position be that. beyond but we've to the gone

of some our So there the development partners. nice alongside we've efforts distribution seen really organic of kind results with

it as So and here. that rental off. continue strong in really in downturn expect be we quite performed helped the those we with share, years. to through kind and bellwether and like That We're the all XXXX of weather has we're next channel. going we It's well, paying a telecom remain where here are gaining channel here to several

comes question from Gengaro Next Instructions] [Operator Stifel. with Stephen

me. for one quick a Just

and of into a kind earlier across kind You big, at too actually you sort in adjacent impact seen reverberating is seen markets a much just the of other reading not? meaningful of you've little IHCs in historical that maybe markets. uptick of talked a, I'm precedent a of where there curious, storms Am or even this. And I have sort all about

whenever people get are get makes I it a Texas, you, the question. right? historically, in tell ever and watching. cat you So that it's Atlantic, Stephen, widespread as record X a a first outage, in hurricane in great can an people think, early Texas in Yes. early season, hit example, on the in Florida you

in action there We basis to a advertise And a background, the that IHCs, so Florida better reverberation on that's quicker. so outages gets you advertising taking have national that positive, is there place. when people resonates

well. certainly we have and historical as reference So that, points for we here have seen of some that

less media significant duration really event and Beryl, whatever cautionary Hurricane raw event Again, the reason, is for was I the It's maybe covered the Texas a of just somewhere to that, the nationally. perhaps quite as on put hours that And the point only maybe relative think would nationally, I if as the just on that -- or it the happened, quite covered West Coast. have somewhere they East yet, outages. had well, the might Coast - don't on

and reality nonetheless, way those -- cycles some of But So that the work. happens. of that's a

Gulf that that somebody very a seeing, we've you see season especially season something early sees that still and Coast season magnitude when a are in storm predicted. that particular, quickly where people states we get got magnitude but in the this hurricane gets -- into the of So definitely, strong when and to

here. element that's another I important So think

normally, -- see a would be there. here quiet we'll away, month it But it's how July or out particular, the for is rest As Nothing's hasn't that July, events, turns Yes, but for little gone quiet and usually gone year. bit. the August in of changed it a in right? it

Our next Securities. with Truist question Levy comes Jordan from

just standby. of quickly I any I know you squeezing I brought unless kind wanted a segment? you on missed in on quiet get all thoughts I it. just but in here. I that period the think it your heard up to it's that, thoughts me home Appreciate for any don't traction

it's segment. just We're It's gone still Yes. Thanks, that on -- gone. bullish Jordan.

As you more lot rates. the little something gotten those said, pencil kind they of it, of a efforts the the rate has away, kind the created of of of it's here. Kind where quieter that's higher difficult clean situation a of a of And call haven't gone high been terms haven't projects in impact to other, interesting a lines closure. just projects little of energy-related I'll that's it to what's some environment out. The bit made is along falls

is the So more rate I idling waiting there for in kind think environment. those constructive happening of what's background, projects a are

we a are still to would which expect in in then that, We're applications. going natural is gas segment those types used And gensets, leader grow. of that

I of is heavy using a that's a that, than supplement for think, other extension as defined emergency generator under also had, using little we're standby becoming just think category, it purposes just I stress. grid that backup, whole we largely a clearer, which beyond one the to finding that

other well. these we're effect, to projects I natural gas is they They some generators component we to microgrid contain happening microgrid is also storage. have the definition Because what's our important as that many but in of of what contain finding pieces. that projects think as include expand maybe have an of

it a announced about So then out us another called the talked we projects as in closer prepared then that. these remarks, which seeing gets be also part EV microgrids, this we critical charging well. -- we of the And these And the SunGrid we're little of some is acquisition to of quarter. element behind-the-meter of that storage bit component that

So commercial charging. EV grade

the an of think, as to side. residential call competencies the to our I Wallbox, little only not continue us we partnership on important we a similar more be bit developing a to supplier our So build but there's assets the an it, will, helps we if ecosystem, think microgrid the with out in ecosystem, project, and C&I there you ecosystem

of of activity And these include of we projects. standby grow seeing kind some it's -- to going around think the we're to likely kind that moniker, that beyond microgrid

bullish I in it be I it's think a think just than but on still will rate it, softer environment, challenging So longer-term.

[Operator comes Markets. Northland Donovan from Schafer Instructions] with The next Capital question

remarks want the more said color I just get you we see if on C&I. can prepared any to the in on

I being talk was kind C&I I market think to in been was some offset side on weakness the there believe that's always -- about. but by the that India strength of it is and a of interesting

have the anything be great. recently any So ground? you would just more election color what market on been the impacted or more generally, Indian And politics on like seeing Anything by that.

it's I mean through that Europe, a We're little and out -- here. that than we a entirety manufacturers for power -- Indian our the backup markets market solutions. its positioning And a years ago in us. market. India there that really Yes. is acquired of built C&I page through factory that there number bit and our Donovan. again, an different for in playbook Pramac in We growing is the ownership for that -- of Thanks, our most natural a relationship of and Indian gas expanded a traditional other like new manufacturer subsidiary and genset diesel on it's our domestic focused solutions globally,

line, traction the diesel do we but with products. getting actually our is gas offer where And we're a product most

are projects We're board that converting the a fuel the U.S. ignition drawing is bullish in and the India actually the lot our build-out part in engines see of gas. deployed here with on designed as those that the and because on in India. in then infrastructure So natural Indian market to of We burgeoning pipeline market. they're systems, products are systems built our and Indian

I step of between the some beneficiary think poised be back, the -- well the of think chief very been is U.S. you to rising if just from -- that and China. India I tensions geopolitical the have

manufacturers fast based has as been mature, of shift a not is is, it's their as away historically. but position India to ways and economy a A growth is there's the the opportunity in China to It lot markets. at there. infrastructure the hasn't still grown China at see places like come and to is the of country India, China still as progress. other for to detriment good a move very it In lot in within -- all that from production India lot has there a just go, of on probably

in receptive small is longer-term. late And think India several the a the of think for last to here we're which business positive. on business a also more I It's has us. as in environment bullish years, again, still I India political been

are a but focused other again, nice think still business, we -- on diesel. together, all just there gas manufacturers on ourselves I got put you growing where it focusing growth it's And you rates. separate by

question Housum from with comes Northcoast Research. next Keith The

real more quick. just focusing Just on Texas, back

when long In historically, been there? had tailwind storms been major how longer? just Has of it that have or terms a been towards through, it sales Has lasting [indiscernible] X? gone quarter

Yes. Thanks, X Keith. quarters. It usually goes X to

bigger get that's the event, echo than the even Of sometimes bigger course, you'll an that.

In freeze say fact, echo recently the quieter. XXXX would only has of Texas been I that with

event the that, by It was rise exacerbated like about the for just pandemic people concerned seen to Hurricane beyond being X that this went that. something outages. impact remains to quarters. that definitely and to X a But be of will XXXX, back created whether even in Sandy some the like And --

on we're event as this that of may change of -- the our it point, end but sizing just on a that think grows. time smaller at kind I major -- change views again, may

But started a early and it the of in next the of right? Especially up. year. picks when that's will year that kind the Beryl at Remember, ago, Like first July, when the hurricane us half minimum, had the of you year through hit season. take I anniversary would we say season. a into this Hurricane this in Hey, media event, remember

The effect. things kind lot that get a drives of picked again. So echo those of up media

And while in levels that of it way previously. where that then and a these demand works a for like a it baseline than to was new after and last off clarify, number a get surge will events, while the for at then then it higher quarters, is you'll

created up tend and you an them, distribution going our So to ongoing baseline to actively continue on by to new basis that's market major they're in forward. hold up and props demand, you why now -- increase these broad the that satisfy awareness that props events in up

Chip with comes Next question from Moore ROTH.

factors sounds What play if But Obviously, X% you you're takes. swing expand wondering softening year are the in Any for activations half there role. a baking like you it key that on Beryl of revenue on just back Just thinking other to bit end? puts could range. how consumer? large X% about will a just and low the on

No. we're I terms seeing not mean in of... necessarily that

what Not anything beyond already. we

Yes, exactly.

necessarily change broader the guidance impact around the offsetting some edges, we're the particularly increase awareness In of -- softening that's of for most but Beryl terms And from Texas, not of the a but nation. our is the part, consumer that... maybe guidance in seeing the around prior

we what Beyond are...

Beyond are [indiscernible]. we what

guidance Our some Yes. for did -- contemplate

in terms We have that talked about of [indiscernible].

in there. close rates For are instance, hanging

we'll maybe rate. maybe at with won't -- Now Texas, from close the the the those same IHCs all with increase large in

there But the hanging in rates you'll close maybe rates. are the part, close moderation nation. most temporary for a in So see around

like question-and-answer back session. Rosemann And it remarks. closing for the would I concludes to This now Kris to turn

again, to morning. our you for in third us quarter We discussing earnings We and with Thank October. XXXX want you this everyone late forward thank joining results look goodbye. to

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

disconnect. now may You