Earnings call transcript Q2 2023

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Operator

Good day and thank you for standing by. Welcome to the Second Quarter 2023 Generac Holdings Inc. Earnings Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today’s recorded. [Operator

Relations. the now SVP, to Investor like would conference Corporate go to and Harris, I Mike hand over ahead. today, your Development Please speaker

Mike Harris

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

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

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

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

GAAP including Additional available measures, information earnings regarding in these comparable reconciliation measures, and filings. our is release SEC U.S. to

call turn will now Aaron. over to I the

Aaron Jagdfeld

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

backlog quarter previously home product second products, mix net a decreased quarter expected. of margins, offset sales on sales for the resulting decreased Our a of prior were overall our compared unfavorable effect Residential during than sales to line lower spending a significant standby that softer benefited home as which from and to gross Year-over-year, as than and generators. result shipments quarter. lower margins expected slightly residential XX% core This $X XX% excess that year declined reduction generators an in stronger-than-expected EBITDA adjusted standby had as XX% sales consumer strong were billion, prior expectations product shipments products. with environment net C&I in impacted shore

year-over-year. regions Global The clean of sales well C&I as inventory shipments all well channels. year significant decline were reduced for energy an unfavorable XX% affected record home as shipments negatively with mix home to in as a operating by be levels leverage impacted EBITDA growth. lower elevated all-time increased margins future and continued investments field Adjusted approximately as continued by and standby product across broad-based nearly quarter the to current for driven generators product by standby quarterly growth sales

have offset Importantly, sales partial to continued cost mix. meaningful favorable a price a tailwind, dynamics the margin unfavorable providing created

a and meaningfully Second quarter shipments home at included year-over-year the as under-ship but to further a standby second of of inventories as the the we market sequential on continue generators. declined end demand home field quarter backlog reducing strong excess of grew focused rate, XXXX in quarter standby significantly basis reduction on we current

well roughly Baseline the and were increased consultations sequentially weeks power activity off Home the an long-term the average, U.S. the above year quarter. in outage toward of weighted strong from flat final the first meaningfully quarter. leads sales or prior but was unseasonably period

achieved has more view category of Additionally, during new than interest was supporting level. home our quarter quarter higher higher the second the and baseline consumer the a in still than XXXX, that consultations Xx second further product

sequential year. prior growth from dealers ending dealer of increase account in to an Our XXX quarter, residential X,XXX, approximately the returned at the

trajectory the installations and quarter, the sequentially trade a across dealer count, included we to prior trends installation increase non-dealer mega channel a a continue growing over standby longer-term year. of the capacity awareness invest category backlog to benefit groups. progress the as initiatives declined streamline these the that demand believe firmly remain growth are category in We important the home from our in installation comparable towards to of of installs, raise that XXXX growth product support in but process certain first period We for proxy regions during of making and intact. are Activations, strong outlook the partners, improved our the are the which train efforts good contractors,

for also relative weaker double remained activations were Activations But our environment the while were quarter flat despite improvement. primarily rates sequentially second expectations below quarter home softness, levels. prior due during for the the the this field higher more of were Close spending consumer quarter, number than meaningfully field The XXXX generators days and period to XXXX, in also relative inventory to historical inventory of the than our norms result further standby decreased shift spending sequentially. expectations a declined comparable home in patterns. but as underperformed of in the consumer quarter, of

than to extend lower the and field second is activations into half the the inventory quarter, However, year. normalization close process with further expected in the expected rates now of

field As now a growth shipments to we return home quarter. to shipments the relative second levels expectations the in fourth with inventory prior in anticipated elevated standby the year-over-year our in standby impact expect further result, home the to half

the and second the the driving resulting as final that this to byproduct frequency IHC a term, of transition energy expected are support the supply becoming later owners solutions quarter for sensitive increasingly believe mega and outage of to power the and demand are extreme operators in outages underway. strength imbalances struggling is year. to power the by growing backup that as growth in are are the accelerated business trends the ever. We awareness grid stronger growing weather in are weeks of that solve driven return Homeowners Longer environment the compelling

suite an positioned and not as the of businesses is to many is and next-generation the challenges consumers the our complete. will Importantly, power solve We transition will solutions be energy-related inevitably face. expected to take issues decades to grid to these that are uneven well process unparalleled short-term of believe

which time specialty on homeowners like for consists XXXX. provide increasingly residential commentary shifting maintenance some which money would have large growth broad towards These of products, products, spending significant been used property in since recent as years of in commercial more on are I chore solutions our to maintenance property now and equipment outdoor light battery-powered a applications. lineup power experienced to

in industry, demand expected and half trends prior the than from year, declined sales. the shifting outlook as weaker patterns inventories below consumer were second spending our the weather second shipments expectations quarter prior unfavorable year contributing and impacted product in higher channel of persist previously However, our environment expected for for also residential chore is to lower demand This to in products. the the

Now technology residential products energy moving solutions. to our and

to energy strong smart second professional towards growth and energy with sequentially team over management provide ecobee contractors with improved the strong will placement strong of platform. Second power quarter key record year, our expectations sales systems the which with of doorbell line by and drove quarter. homeowner a home continue a with share hit year retailers. prior storage The in our positioning for an as in sales sales were grew and at of new rate camera cell Ecobee prior all-time thermostat shipments for ecobee increased this take the half the launch market smart our in the is progressing and engagement

we As differentiators technology will of believe and home significant devices energy key and feature-rich will energy ecobee’s be to Generac’s ecosystem, the hub that be firmly central prove – for experience provide residential our expertise efforts. to user

broad and – installers, of our market we the storage making is roadmaps the residential U.S. in the Although the solar and future in slowing. product of rebuilding confidence and confidence showing progress building are solar signs

end the solutions million suite throughout expected at technology demand the are products between range persist our low to expect weaker to solar deliver now we residential result, storage a XXXX $XXX million balance and full energy gross sales dynamics the of and for previous year and the year. of our As $XXX industry of as

continuing invest commercializing we our To achieve core next better these ongoing infrastructure management of world-class large these differentiated market believe built global talent heavily required capabilities and that generation, competitive Combined around competencies around to distribution, and opportunities, marketing, support and developing with and in lead level solutions. user while when advantages unique sales We is monitoring the investments, the customer are sourcing. in innovative compete our and and and seamless and we quality R&D experience. a combination growing to

around product our expectations. multiple our grew prior Global support C&I demand an once over now XX% provide to I’d products the second products, trends which C&I at number standby highlighted backup shipments year on industrial applications, as robust quarter, like by to and in for equipment record strengthened grew product quarterly distributors again commentary continue to sales sales all-time mega rate Domestic a outperformed mobile for rental a national to world. and power companies. C&I beyond of the the key customers

markets the set projects to pairing in opportunity the smart multi-asset grid of provider leading and growth increasingly standby natural the as generators volatile as products very believe we new further we of controls deployment position used see building for in tremendous emerging our solutions. advanced solution second are exciting connectivity, grid this our quarter. ready gas are early our demand during beyond in services continued emergency drive innings Leveraging energy our applications enable of of an to market as such comprehensive concerns expected Shipments and are solutions. We with C&I these traditional stability storage, gas natural generators generators the to grid applications,

of that wide sequentially and generators Shipments in backlog through increased grew robust, this for the products end C&I during channel strength also demand once the serves Quoting again markets. of power a strong at backup remains channel quarter. C&I for North activity highlighting in channel rate important our a range American ongoing distributor

growth against and prior their addition, continue a refresh In national quarter our expand rental and experienced robust year to strong customers independent we of with equipment as they another comparison fleets.

growth, the patterns future critical end exceptional from While rental several investments. for quarters moderated need runway this performance, by after companies have supported for of market substantial infrastructure-related has order

to to backup leading comparison. telecom the strong prior the American telecom quarter sales North the customers second to as during of increased national year compared As slightly power provider a market,

expect backup communications uneven we tower second expand investment secular year, in nature and Although order a the to trend global shipments power the infrastructure of believe as to for trends network hub wireless products further we for half counts these during continue critical remains and requires be resiliency. of telecom increasingly and the

was Core nearly automation total growth sales solutions our driven quarter our of Sea with global the foreign our Motortech and total growth. well also and controls and sales combined XX% acquisitions favorable momentum impact the continued during increased sales X% second segment acquisitions. effects as strength Positive to as currency in contributing for regions all International by year-over-year Deep from as of approximately sales

Middle security seen in positive concerns While including India, important the moderated growth from to continue have international in markets, in Australia. long-term energy we levels prior peak quarters, and see East momentum Europe

to are energy global persists, the transition of demand we these that serve electricity the severe are is and need the resilience believe global build in and Accordingly, view issue. and large power As accelerates, threat product a capabilities diverse we world these our the out invest the increasingly for around international grows that markets and for to we seeing and distribution volatile demand our opportunities. weather growth supports continuing

sales As single-digit in we our our for year global mid-teens press to disclosed a raising products morning, release growth C&I for guidance range are mid-to-high from this prior expectations increase. full

by quarter as driven teams In execution and addition In to is guidance C&I the continued has this execution. increased driven our to primarily second C&I strong well performance, domestic category products. backlog strong product extremely have closing morning, strong our being global the our continued for perform operational

world residential results as But in of product view portfolio main broad executing softer outlook in on our we environment financial cash solutions. consumer headwinds residential combined products history confidence the healthy categories expected robust, in energy a for This of half long-term previously for confident We strong profile focus generation outlook our driver our temporary impacted power enterprise us remain powering reduction maintain in second and to the our and flow technology backup and a with and smarter strategy. the is longer-term a quarter second our the allows than products.

megatrends We Investor necessary update more September. growth in at our that Day look capitalize strategy. make detailed this the late our We to the future will forward investments to opportunities longer-term upcoming in inherent on the continue on a to providing vision drive strategic

XXXX. as well turn second to over York the outlook on now for provide will York? quarter details results I to the as call further

York Ragen

Thanks, Aaron.

from prior overall, XX% net currency favorable quarter. decreased sales the quarter. billion at year recent contributions on in revenue XXXX Looking and second impact during second the acquisitions the more $X of of XXXX second as the favorable from detail, X% during combination to impact quarter compared net in and approximately growth The $X.XX quarter results foreign to billion

the million for XX% sales product Briefly looking by to declined consolidated residential at million class, net sales second $XXX in prior compared as year. to quarter the product $XXX

decline storage we home energy year-over-year power As to drove standby, combined by impacted excess were were a working home detail, Aaron down in particular, prior shore shipments discussed tough for destocking. current field this in products cell residential is comparison year product the of where backlog, systems standby due In declines the lower with that and generators, sales. inventory

very nearly channels, growth by and year quarter. standby the highlighted growth approximately XXXX of impact XX% Commercial across equipment the and for for strong sales This rental prior was and to regions domestic million currency in shipments channel. driven broad-based quarter. industrial recent revenue favorable quarter the as customers in increased the increase of acquisitions foreign second and $XXX X% sales core the to compared national to Contributions by distributors beyond all an in product direct applications, $XXX contributed industrial million from growth

contributed also shipments In to controls generation of and growth. this solutions automation addition, C&I power international products and

in to to This was $XXX second closed as primarily out June of acquisition electronic compared acquisition million the other for $XX additional XX% million service their capabilities. products of quarter sales that increased XXXX. to last due XX. environments this given and We on the year services Net called increase

compared partially home This offset standby the impact significant from in to of input profit of the margin commodities, unfavorable efficiencies logistics providing that improved important compared sharp to year. plant are prior pricing was in continue are to actions Gross margin expected second and by in previously given year that lower mix to mix tailwind due the trends and implemented half XXXX. an costs XX.X% the the quarter decline second to sales prior was XX.X%

expenses or driven the recurring sales Operating lower lower million primarily expenses and compared future operating expenses drive was X% to growth, the by marketing recent $X This to volumes. from and and impact quarter XXXX. increase by of increased operating as the employee mostly was offset costs promotion of acquisitions. second variable higher spend increased This on support

quarter release, as the noncontrolling our or to the for XX% defined sales million sales $XXX Adjusted deducting the EBITDA, as in net $XXX in in before or second interest, of million earnings was XX.X% net of was driven to sales higher primarily lesser and prior by operating to given year. percent percent lower volumes lower extent, a lower gross EBITDA sales, compared as the the prior a margins. This of year the expenses compared

prior XX.X% The favorable EBITDA quarter the of were continued affected in the cost negatively in lower by margins the $X.XX financial of discuss impact total segments. as quarter year on decreased briefly million in the and our and compared was leverage for segment by domestic now two or will sales. I acquisitions results mix XX% sales, during including sales, driven operating to reporting intersegment sales Domestic billion to $XXX partially unfavorable offset margin in reduced the contributing These the the to lower significant EBITDA prior the with $XXX X% Adjusted XX.X% million, The segment representing approximately impact was for year, impact total for investments acquisitions shipments. of growth also headwinds as revenue of quarter. of growth the primarily million sales total compared $XXX the in margin quarter. price future benefits. and

sales, Core to million sales, quarter the acquisitions as $XXX segment the XX% $XXX which intersegment of excludes total prior in including sales, the approximately year X% to million increased and increased to currency, compared in year. prior compared the quarter. impact International

net of for or to net EBITDA for before by was million favorable compared or performance prior year. and $XX million benefits. deducting non-controlling margin the driven as sales XX.X% Adjusted segment of stronger $XX sales price This interest XX.X% cost the primarily was in

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

current $XXX year compared year was release, earnings quarter interest additional income of to XXXX. our net million, million million in net company and quarter the prior compared the of approximately in for the for income disclosed The second interest $XX to borrowings includes rates. to expense GAAP $XX As as higher the due

XX.X% tax current year of rate to year. $XX effective In tax addition, quarter an prior rate of the for million or GAAP income as an taxes the $XX during or effective was million XX.X% second compared

company The quarter. GAAP per basis as a lower compared $X.XX tax XXXX on adjusted in earnings net $X.XX income for equity to current $X.XX the our second the This per was a the income to in quarter Diluted year Adjusted prior prior of $XXX in due share. year million in increase benefit quarter of company, compensation release, income compares from defined net in was primarily in in $X.XX the year. net share the or for per or $XX the the was effective to current share. million rate year

release operations The offset earnings working levels in flow, capital increase higher as in as in cash quarter, $X from year. $XX partially to quarter $XX prior flow flow current investment primarily the Cash the operating was defined year million compared the free was million same interest due second free stabilized, our compared earnings, was $XX and as inventory to in million last lower to cash and year by higher million significantly have as quarter lower payments in CapEx.

billion, the outstanding was leverage year as-reported which on at second at LTM X.Xx basis second the begins of resulting increase. a moderate the in quarter to the of half of gross as ratio debt end of in end $X.XX expected an is Total quarter the debt EBITDA to the

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

shipments our The home improvement updating our softer release morning, this As disclosed generators. full for press are previously our the environment standby consumer than has of spending for most we products year for residential home in outlook expected outlook XXXX. impacted for notably

relative lower lower higher commentary. prior compared is consumer, and of to sentiment result close activations guidance our software seeing expectations the which previous causing we distributor inventories are As field a rates to and

our full year, the high in now to compared decline to decline for teens expectation we for the in a to the prior residential which factors, year these the product As range. range XXXX prior a expect of mid-XX% compares result sales

this are products, XX% Partially This sales the net as minus in full for foreign between minus of the the offsetting our raising we range to X% year year compared favorable which minus acquisitions to to which expected the decline for weakness a as high a decline at rates approximately impact to mid-teens net of previous a includes single-digit product now sales Overall to prior expected outlook incremental are rate. guidance during are residential currency. guidance now year, our and grow to minus from mid X% XX% C&I to prior between XX%. compares compared to

perspective, decline in line a third a From activity overall expect for the This slight pacing sales year-over-year a return to net with fourth now assumes in year-over-year not we power the in quarter. guidance of benefit historical assume the outage year. level of the quarter the a does quarterly the the course, outage during growth of event power remainder consistent during long-term is this And that major baseline outlook with average. our with year of the

The home year. compared is of to to expectations for of cost gross higher margin generators, fourth to the mix reduction the in Looking first in points of We the of half improved with at higher in gross input standby quarter gross be second margins improvement approximately margins realization expected full initiatives points half third still basis the over projected now with XXXX, as than sequential gross quarters margin be in year expect anticipate improvements quarterly our gross driven the XXXX. approximately second and the third shipments basis by improvement XXX sequential quarter and lower anticipated to costs levels. XXX the of we margins sales XXXX XXX

our the initiatives, innovation, opportunities, strategic we future. focused the support for long-term Given remain on investing megatrends driving and executing significant growth our that

a we as of XX% net for these a XXXX. As percentage the of approximately year result to investments, full to operating XX% sales expenses ongoing be expect

for interests gross EBITDA XX% expectations, to deducting of are XX.X% and these year non-controlling XXXX Given compared for guidance previous expense to operating margins adjusted now expected the XX.X% XX%. full the range be to approximately margin before to

sales of throughout expect gross margins lesser sequentially improved expenses operating remainder of the volumes. improving From discussed, leverage margins and adjusted expected higher the to EBITDA improve perspective, extent, still an on to driven as year, a quarterly primarily pacing we previously by a

range. Accordingly, expect quarter are in points be of fourth of to margins than to EBITDA we for the margins be approximately adjusted the EBITDA basis third quarter now low exit to quarter XXX XXXX the second XX% higher XXXX. XXX And expected

technology Additionally, continue the discussed, residential products by in significant solutions rapidly management on the as and opportunities solar Aaron capitalize presented operating expense make storage significant to we to growing and markets. investments our energy energy

our for expect a we points approximately As by XXXX. result, these impact XXX currently EBITDA full unfavorably investments to year the basis margins

cash weighted the of continue towards follow generation disproportionately being seasonality expect in historical We to the flow free year to and operating XXXX. second of half

to free For expect peak to working be the we full year, cash levels. flow moderates well XXX% over off strong as net income conversion adjusted capital of

free the modeling assist earnings to We’re updated year for per flow also providing with share XXXX. guidance details cash full adjusted and

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

For XXXX. year is compared deductions, to tax foreign GAAP lower higher full increases to expectations effective in by XX.X% for income income driven primarily The be tax higher the rate our share-based jurisdictions, in still rate year-over-year for XXXX. tax of on compensation XXXX, as approximately tax increased XX% to XXXX GAAP mix expected compared

swaps year current to $XX compared term outstanding loan favorable more expectations is million XXXX. flows expected of indebtedness. be rate in approximately principal third become is we revolver rates our the as throughout expenses for as of $XX Interest Interest on expect the portion expected approximately down guidance to to prepayments no cash prior million, SOFR interest the a during now to our quarters additional expense assuming moderate and pay and fourth and

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

$XX the to year. be XXXX, to expected that still full compared shares for share average million XX.X XXXX. reflects count share weighted approach to repurchases as the between is expected $XX our which still year is And expense million diluted completed million were in XX to million shares compensation Stock in

this repurchases drive value. share not potential reflect XXXX incremental that Finally, outlook or additional shareholder does could acquisitions

current a repurchase $XXX our of we As program. on share reminder, have million authorization remaining

prepared time, concludes we’d this for At the to remarks. This up like open our call questions.

Operator

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

Your line open. is now

Tommy Moll

morning, Good thanks for and questions. taking my

Aaron Jagdfeld

Tommy. Hey,

Tommy Moll

product to by Aaron, inventory think embedded I am the normal I X.X quarter? level I wanted your Last home that standby correctly the hearing topic that start category. outlook channel for normal. to on and times Where quarter, sit of you now in were at about you fourth that the you do converges is

Aaron Jagdfeld

mean, – the the Tommy, that’s and been has quarters. Yes, we’ve I last a over several discussed obviously here topic central as question it’s

we home we somewhere a to assumption times think consumer X.X to looking as kind believe we rate. we exited the is these of talked with we were right, I projects, of the more investment, – half. spending we’re range first projects, the around in to X.X moderated is residential You’re types And closer said, of a last X.X number X.X really softer at where as particular improvement close in times environment in exit that Today, April. we time

it that sales and of problem are and leads. it in – would, really those the interesting on there. we growing not because lot kind inbound just It’s then terms activity the rate – just rate the becomes of thought we at seeing the close of from They’re leads not a [ph] maths actually that’s a is

that not going we to the the elevated that’s to We’re we had convert thought not the basically longer where going create leads bit drain inventory and originally just as going here rate to second that thought. that a quickly we to activations is would because those going persist – inventory at in situation we’re than half is a to field

channel wholesaler, degree So and our of start I do wholesaler dealer here, looks region to like definitely to through checks to off we really channel checks, you’ve dealer, through it’ll accuracy done we really taper this retailer. to region know a inventory – kind with and think what and year and to high own with there’s field of the retailer

where normal. see actually we still a inventory regions isn’t so are than there inventories see where issue field regions anymore. And And other higher we field

two it’s So was the back would or it around I or three story. two more three of say field wind the inventory become everywhere. was you bag, it a – quarters will mixed you quarters, ago, if Whereas clock

So the in was full field of inventory all regions.

starting see that So beyond achieved be now regions we’re of certain normalization in in that. to go fact and some

got you bandwidth. in particular in had outages get where into Quebec they regions don’t number enough the Canada, markets couple we have We’ve they’ve them a a of product, get up of installation where and can’t the

we’ve So that focused another area issue we obviously and on. get back to that’s been

So to hopefully that gets the answer your question

Operator

Halloran with [Operator next Instructions] And Michael Baird. of the question comes line from the

open. is now Your line

Michael Halloran

Hey, everyone. morning

a little on following-up that… bit So

York Ragen

Mike. lost, we think I

Aaron Jagdfeld

Mike. lost We

York Ragen

lost, Mike. We

Michael Halloran

channel’s me no? Can you hear or The too. growing [Indiscernible] distribution

Aaron Jagdfeld

for question? you Mike, Can we there second. your lost you repeat a

Michael Halloran

a we that perspective inventory. of home from high kind problem. you’ve of standby a Yes, channel question, to but no got There’s lot side, in and pieces the along here moving take inventory

context channel might perspective, consumer but gaining down inventory underlying try hood what any the those run and pieces. you a sellout from rate just perspective sequentials look true to these to kind moving distribution the Can out? little bit. the you’re the conversion, least from You’ve bit a how from on at of help you slower little like of – sync is sellout how work think normal starts higher, if versus you a look Maybe like what IHCs a forward might this normalizing for commentary are behind just playing taken the kind outlook little demand normalize your a curve you a think

Aaron Jagdfeld

that at Yes, look as versus we’re said, things and channel, they’re metrics then we you other see are about like feel the see in are in some channels We of in Mike. pieces, more we dealer look different of shape channel channel, better do some metrics going moving on that to when when than sellout, project channels, to a sell every kind channels. the you think the out different bear they’re There at turnkey again, the lot channel in and our of we this which channel.

look and retail our in be channels, our particular we right now. when So retail is wholesale at would for channels us lagging

of you at – some here So sell at have at and kind commentary at look look I and the when recent we look have heard – when retailers at traffic the – the those of call from some we of the the we on think food retail through larger through more guys retailers.

in – bit with by to then of that seeing dealers and in we the by traffic With our ecobee the got this that field definitely And morning, inventory I exception categories is probably followed to more here, we the we the that and retail. residential further we recover higher we’ve slowed that think the sell reduce fog kind the first those Mike, about energy wholesale. use think prepared pacing, is retailers. a really food of which is in to But your And our as called moving here – your if ecobee issue, clears the kind are more costs. out product see that being pieces this thinking notable go little we the to maybe and products of prices – to this opportunity what kind of are that’s are on remarks as has owed energy question, through interesting. likely

that is the third stage. a the at probably are right? of as into that on maybe to times at are everything, demand do we here when believe Wholesalers said, because an start a abate. The start across we sell And We should worse retailers end see throughout quarter – better leads quite is are your we the than are normalization that. of normalize So bit talk interesting, at The this get – go than to fourth IHCs and strong. somewhere question ones so we sales and particular, dealers omnichannel this worse as will basis, to quarter. as we about X.X than market that little kind we part in remain that probably X.X

QX they’ve same and just from – were they not level. fact, quite they’re In sequentially converting up at even the

conversion nurturing if result at of not consumer is is just they’re this the is more going saying not just that we’re to group the got delayed sure leads what reach to a team team the point terminology, back a that over conversion of lack Now, of of all? here leads. for that salespeople percentage not or better if We’ve call that but these file as And all, of stood they’re today at out years several unclosed continue quite can generated going right? our we’ve to buy work Are to buy a close. not buy we is number an primarily so imagine, on entire that, you we’ve last to And here, or it, The they built we’ve high tremendous. are at as of dedicated leads. unclosed don’t we going just up house a

to those right reengage at perhaps time homeowners the is opportunity right the offer So with growing. with the

and it’s around us area into. represents yet, it customers in still you an see that’s in-home but of how not we’re one that I tell perfected continue that we’re in to particular phase doing of around a haven’t gone that we’re demand But those on. that consultation have through we that already ton we – work for of stimulate process. something the we can think to – kind development opportunity would And that leaning

improve conversion just to but of as It’s the not help hoped. levels, as if making to clearing awareness is strong don’t accelerate I the So quickly getting market are heart least field progress not, at as there. strong. we point. had The of end question see at know or your to We but good demand this the we we I’m need us inventory see

York Ragen

category think half, – throughout the we towards inventory begins key I especially the home do the the standby expect pick seasonally is, half in the to of normalize first the the to year second versus Yes, half. – up second as

relative think going it’s I to of we’re because it’s to Aaron’s that though, we much consumer three improve thought – months software to ago, just as point it’s the maybe as seeing. not

Operator

the KeyBanc Markets Hammond line of comes Instructions] of [Operator Capital question next the And from Inc. Jeff

now is line Your open.

Jeff Hammond

Hey guys.

you financing as know rate your times lead on rates lower. Just better close it wondering of on lead costs? from close Is shortened. I or are higher kind rates getting back why this contemplating or costs I’m dealer getting you’re just dynamic, had the Because the if feedback network been close time

color. seems surprise for So more the just that feedback big to and be looking

Aaron Jagdfeld

Yes. Sure, Jeff. as That well. is surprise us to

would at patios, as pools, I things of look Although, home – we maybe ticket industries, where furniture, improvement you’ve that of say kind comparable of nature. got types projects, bigger

the to think same not the work hearing expected. doing think that of And we all commentary, down indicative just seeing that consumer up that I seeing, federal reserve perhaps, here maybe rates. all I with but not you’re higher the inflation to step maybe is the level is we’re tamp We’re

bite some of to bigger these type these purchases. it’s ticket think particular areas I in starting of on in

you’re that point the in that see, tell I past home, – that anything that, to long we’ve in tied that. and that of you at made to the come making to we were the So kind would the the times residential the root for previously rates lead because did investment. close had here, get thought we we down, believed of which product, of

contemplates the off the QX the they they our nicely go time sequentially pre-COVID kind bounced And guidance said rates. this out those That’s rates and that’s improve, here where of – XXXX on – dramatically We our this to close we of until take call, and basically so, going it’s guidance to previous some kind change, not don’t any the contemplated return quarter, that to as right? They of continue would that had improved had this up albeit close really to quarter. bottom year. further flattened up last

bigger that. channel purchases they’re from with through close taking feedback more again, just think ticket to types around the to, homeowners is the But that they’re – time and rates struggling of they’re are,

we unclosed so through if XX, close past, second perhaps with market, XX the months, we reengage, i.e., a we those it and lead, better we when higher re-engage even in that again, engages rates we’ve opportunities last team to the in phase friction a And see our didn’t is if look just if sales the I with and good news close, think that are to the that project, customer even opportunity our got have of think at time and those that outage a XX, right, much choose the we right around. the over IHCs, local another time market unclosed close all the rate moves re-engagement,

lower it’s is process kind So place. sales consultation taken friction the in-home the like because already already been of has – has that of

time leads easier an at just that so historically. least closure And get to to to

a do closure. really So really efforts here of into that is work in where – more get I before on unclosed how effort we putting half that’s our we’re to of to nurturing lot talked going we’re and year IHCs this second the that to about

Operator

from Instructions] of Strouse J.P. And comes the Mark question Morgan. line [Operator your next with

Your line now is open.

Mark Strouse

morning. our Good taking for Thanks questions. Yes.

just that that on of beat talking about sneak at – even to headwinds on to the different at a I’m be X.Xx a is mix you’re that does temporarily, field is about margin back that mentioned horse Sorry the levels Just a levels, earlier, you’re talking again, it, to potentially kind looking And quick that thinking goes what you what then outlook up X.Xx? least you’re way the sneak inventory The follow-up? a lower, how assume kind there given the X.Xx Or about just inventory channel dead today, chance hearing, talking at clear, normal – what I to ask macro? want guidance with about margin a here. I of goes that to checks issue. based are? of least can that in in are you’re issues your

any pricing. signaling changing You’re not in

clear. to sure that’s make Thank want Just you. that

Aaron Jagdfeld

Yes. for thanks the question. Mark,

field kind part X.Xx X.Xx. just to inventory, we the of said I’ll So which field, take the again, first is expanding the on

“normal”. that is X.Xx assumption Our is

key field And what levels pick is kind question I XXXX think pre-COVID, was though what right a of And X.Xx a is Could it ton of inventory number, point the if world, back inventory right? there dealers. decide field inventory, the will in their just normal our right? that field is lower? we smaller went when Recall it that in is, normal, to the And on? not Potentially. of X.Xx think very for our level, levels based the dealer channel you the get debatable point. is, you is there’s especially I at around of there’s that’s so – the

or have the even space They physical financial in. the to just don’t capacity put product

keep particular going in that just And generally product in are flow their channels. a regionally to then is normal their players world, stocking contemplated, dealers their larger would more to of that moving. to be other teams So maybe And also will product the zero. wholesalers teams just to the in be the our course, X.Xx. channel install constant that stock It’s the keep retailers,

though if this. so, just adjusted we to clear, on there And do days because be is this to a basis, seasonality

So year as is of period for stronger generators. about standby second the the half we think this, seasonally home our

in year. typically of pick we see second half the velocity up So the would

the risk inventory channel a A it us maybe inventory then fact terms question of period, not our that’s there see particular normal And key installation that when that first that accordingly. adjust adjust normal. low at lost will pace. you’d day’s year, first of which there field quarter, basis, what’s look a partners year, of days is is you typically in lower in on when the something less? field to reflect half in calculation of that seasonally But kind the Is on is decide Potentially. around the

in of It’d good normal. would good in a that is And we’re it that’s think point be margin, of the reflection to point a terms of the of don’t I in be we’re then But is And this. I that probably X.Xx viewing York? if what’s think how case. think on kind trying – short-lived be long-lived. curve reflective we balanced

York Ragen

Yes, down. the on the percent EBITDA in guidance margin yes, terms side, of

mixed. it’s all margin side, On gross the

mixed. sales. it’s all to So when bit de-leverage operating there’s you And no our so pricing then of little reduction a guide, get assumptions lower the in on there’s OpEx,

in So that’s puzzle, there’s our a of in no piece reduction smaller price guidance. the but

Operator

for moment question. Revich One your with Jerry the Sachs. the question next line from comes next And of Goldman

now open. Your line is

Jerry Revich

this XX% at I’m about – are wondering year. going you be margins to Hi. Yes. everyone. so could morning, if just Good

of expansion Your you at medium-term? to of compared the a you laid changed Analyst XX% reasonable and levels? opportunity you can off view expect solar reasonable for since. the XXXX were in there target you out I’m terms in of an margin But in and expand basis I XXX on that would as to a point it has for from margin How investments. lot targets mid-XXs, bridge obviously XX% wondering, the Day. is margin the you to to what But current think expectation folks drag York, alluded that what’s

York Ragen

rate know Yes, my are be that to expected I range. did exit prepared – I in margins comments that, that yes, XX% low in EBITDA a couple QX QX mention things.

things business, a obviously, guess, reset are home taking from you target up expect, to we a Energy year as standby Technology business XXXX XXXX, know Day that from for back out for maybe here, shipments is if I things little especially So grow previous laid pick originally and I of that just here. longer for about business. Investor Clean we it’ll think bit normalize. that more of Energy in than – XXXX September This our our

for I guess I the expectations on month XX But going those revised point. next we’ll September points look month. like long-term September And have Day – our able to Investor updated to data level those, now. to be going we’re are I set you XX are next give can think think that what clear we I when So use that targets some for guess, at

Operator

for next moment One your question.

Our Piper line of next Kashy Sandler. question comes with for the Harrison

open. now is line Your

Kashy Harrison

Good morning for taking you and questions. the thank

few repeatability a into $XXX a $XXX sales revenue give the you $XXX business the sense million? ladder of million, the XG. this underselling ends improved gap of the year then of infrastructure about into on quick out bill Can think Are the you construction million, channel? sales just C&I by us maybe of So channel from ABI, Just ones just these between maybe how just of cross And some XXXX? the the here. and surrounding side giving you currents do the

you. Just repeatability of C&I? think the you how Thank about do

Aaron Jagdfeld

Kashy. Yes. Thanks,

of the sell kind gap between So, and yes, out. in we haven’t sell disclosed

here down residential inventory. it as guidance shipping but are – – through in on field under we that really the of side we demand here market here result that. and is work a And that the pull significantly first the the So market half as

York Ragen

market. down And the we know all our data, inventory coming under see we’re of field shipping we in can so

Aaron Jagdfeld

know the at under shipping point. pretty dramatically market this we’re We

So grow that’s the here drag reduce – going field think year. we’re to to why and the will we half through sequentially the year get to as we continue that inventory that because back of

disclosure a fine So put from it just but a standpoint, on number kind again, haven’t we see of definitely that.

broken the C&I, sorry think that. we’re what about sustainability about was was And kind of then for on I But little a it of us, up and question, question I just the think seeing there. C&I the

quarter kind said great has right? we in another long was as for our C&I strong been – It for very obviously, up think comps, I a business. time. of remarks, the C&I business We’ve against our starting we’re been tougher to come

holding rental Some from They’re those utilization to see there. largely still of we’ve some of – But large order customers, equipment rental that quite here. in customers the what on account starting we’re from doing our heard is moderation rates in are side, and particular, patterns the well. national our

CapEx think a That have said, larger of the couple their for proactively those cut customers I guidance year.

just our We’re loaded pretty this of and backlog. of in locked year in well terms for orders terms

that does that into – visibility does much that. be be don’t roll So yet will change we’re to great – there not is to guidance. that and it Is position Or expecting have provide XXXX. wouldn’t to significant The change We in a a question there. that over?

side, in our – sometimes we’ve demand our we tends call, and prepared that large we telecom morning, last this referred in to past telecom customers, the national the talked mentioned in remarks it On to lumpy. the is be as

they and terms quarter-to-quarter, I spending capabilities, the it and from because used on but turned projects decelerate this way which and very morning. be on their I come off – even CapEx surprising, accelerate go certain term turned manage in But would seem we and quickly. can quickly things think the they of can it quickly, can quite think very

the that itself And of second kind some and half of year. so was the here manifest in expected of seen we’ve

unevenness hardening the up next when setup So for just the But years. have deployed. networks We talk CapEx unexpected but in I a that think going cycle is telecom term yet we’re they of lot there, their to way in of we think a kind customers here with near multiyear kind nothing the do of be to spending. the long-term all to is several telecom over

and that beyond I that’s think a refer are now that’s our deployed And to particular, it’s we within globally, core for you being applications. tell going what be our continue. going products So then in domestically products – run C&I where to to we standby would as

where very can or the So be into the high to called the utility a or generator times by generator grid for temperature be support. in under points of power the stress at or called and be right? extremes grid other extremes grid, can grid low duress, into is can local the upon used a action flowed So operator perhaps – temperature curve could that you’ve then got for be

popular. And becoming that more is – those are much products

we’ve like of who would run early economic We at really, is, of fact, of something standpoint, strictly a looking In innings allows process, you in loss that. these generator an otherwise about a the of customers products. revenue, inventory, is risk what And the had we’re of mitigation, loss from it – there. use it loss either it think a when be really it’s at from look good

that initial equipment weigh its the of life. against ongoing cost maintenance capital the You the have over the and of equipment to

a piece by asset beyond down for standby exist the category monetizing be which first previously. thereby barrier now You essentially used applications, that product and way to that ownership that has these that to can cost, didn’t buy in for always been a in allowing

markets. that be that’s here in we’re and the couldn’t they that as C&I for we’re assets monetized to think, in for right? So exciting before. that more the seeing formerly a – not basically, for And a to continues of property that transition, can only us, grid connected connected way were emergency we itself these the necessarily they purposes grid stranded an manifest I think to that opportunity They backup

Operator

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

now Your line is open.

George Gianarikas

good and thanks taking question. Hi morning my for

I an isn’t option you are your not why not? table think, part an you. Why I close contemplate residential My the heard help down? environment that strategy as improve is, where close increased – price of in going question particularly close rates, did the to input reductions across your that’s to Thank on costs portfolio. rates,

Aaron Jagdfeld

operating Yes. do about we need price, have talk Thanks when kind to we in the for end up about – expense question, the Actually, price, George. you but down in promotion some probably of cases. net dollars talk

So – standpoint, years we accounting than year really always an just promotion technical using ago, we years accounting a it’s or not more maybe than more – used are not two a from But price. three it’s ago. certainly

York Ragen

our guidance. And that’s in included

Aaron Jagdfeld

included guidance. is And that in the

activities. our here continue to promotional I on So those put file IHC on we’ve different think of to finer it, a point types maybe teams that unleashed on unclosed work

doesn’t what run around at later testing of lot schedule national We’ve have what on point here this our we’ll promos. and works, some earlier ran a doing one one We’re this year. work. We year, some

course, – at this recent included that’s there the I the the we’ve in question, do the guidance. close we do we we’ve need got to most certainly a level into are to those support guidance. that built think rates things more? point, right of believe in There’s So

for lot to going around their – for a painful level, things some stubborn consumer concerned just be it’s to consumer can’t perhaps things be I do and to softer and consumer that many up At and to they’re mean is you power around we a able going to there’s promote outages into spend the outages. generally employment obviously, to because you have your if you them of consumer way about, inflation make a us, go away that. feels when Certainly, that. break why status. when from environments, so that confident been that historically get to

so And opportunity. here still exists an as that

at quarter, active normal the we through the kind late above in Our of environment. tick up well. experiencing guidance been July least been has in have a – we outage itself of that contemplates and normal saw and as outage – And kind through here actually somewhat second activity of

the continue that rates. close So watch what rates year. for balance our to have of to promotion of around see that we level do impact a improve on trying close and guidance have in But the will

Operator

the your line Markets. Donovan And from comes Capital of question with next Northland Schafer

line now Your is open.

Donovan Schafer

taking for the questions. Hey guys. Thanks

I and So talk to chore want about portables.

ways pack that quarter, pieces So that attention, of nudge smaller Texas. I driver. in in much in won’t up, the I can things. the called high you guys chore main unfold vortex supply great thought folks it a lot think, of but time, was remember, think usually doesn’t in of Well, kind this do were be news, At with constrained. think But you some that a of but quarter, course, actually I you get out level. polar because the that’s you course, these

these down manufacturing You in to but up that portables, and so it matter. ready up came you that can did the end and considering because ways that you HSV, had beating add

under horsepower the small chore ban the XX engines about the at sized California of effect products, into year. that talking on gasoline goes end this So into –

any It’s you grandfathered be not like gasoline it and ditch own need lawnmower, mowers I But in. I get you a electric. think X. new January come purchases, if old to everything believe to got

if to because what to or in it’s vortex like shipped massive Texas, that something surge this the curious, and kind double piece getting I’m has the of a had happened hit become And like almost something is smaller really mix, portables polar portables to revenue it’s of like state. you – with this meaningful. just So when

Xx, energy X, additions portable come product products get jumping all like don’t you’re in in portables product dual So this, But growth in a I and chore years? have January the to where chore those on a larger is you then that the XX%, generator, case sudden Xx in which suddenly a other lot magnitude into broader a see with a California launched Green and a because And to of there. going you going think something over doubling of thing of fuel effect, products. categories. battery a you’ve a number are Kind feature clean significant generator Mean something you Mowers XX% this or same those portable like

year expect those So on of the rate around you kind approximately? growth anything or next so would

Aaron Jagdfeld

Donovan. Yes. Yes. Thanks,

in ahead change, the regulatory that. with outright to obviously, ban an California on pushing small on So environment continues with you’re engines California, is spot that.

that, there they are be regulatory purchases, around advanced whether like actions, maybe of I kind consequences pull unintended in all – of maybe think sometimes that of demand that.

who today anything loading seeing or not combustion driven generator of engine We’re for people chore up are on, kind products. internal

only way, chore portable to the a clear, products, part – this home the would Just that standby ban generators not it’s this by at be and impact point. – of it is

you’re to a our part smaller business. of right, it’s and just So clear be

zero I we had is other those we a there mean, did expensive. our the those that second companies but residential Mean this turn quarter with in chore call of strategy mowing out in dramatic of terrible rise electrified that because and Green acquisition seen I part products that public market. the terrible equipment. piece they behind much it’s Very time many first frankly, serve they’re the are half. will line of portions the strategy commercial say, interest And a around have radius of

so conversion And is difficult. more

of those the Act back year that half will for that the help. we certainly which through IRA be will Now, has we this Reduction And for products. – subsidy Inflation clarified provided treasury over some have year expect

in We comes segment to are that electrified the when it leader mowers. commercial commercial

the to we’re brush products part the the are in so we’re of going are chore using that what with products Green part be the as well. electrifying electrified again, And rest watch. Mean technology we to platforms important And an to being there platform our of us things chore that as acquired that and exciting is cutting of business

incentivize think internal we these end types the electrified California, driven for also we’ll to top level said, products. state So prepared products see products to you subsidies, of have switch to those has in engine we’ll the year of the out. one be plays as subsidies this federal of how it take certainly bans some place. as from The combustion California of purchase on and

to that continue category, we’ll different right? watch So generators of type portable

expensive said, emergencies. here. And it. than is to – temporary to I do That’s generating – the you California that of of for which most when to multi-day that they And effective this unintended you portable storage for internal they outage, are for wouldn’t like a left infinite other we marketplace the we’re be are that, is not for market. different products, can’t done wisdom, you’re areas you power. see They’re use, regulation, the strict but products products introducing these primarily the just if create regulations They storage past short happen the will used that they’ve way emergency use. run That have is those generators, all protection products probably again, are are into that And combustion when then have the they consequences storing of duration is in in and same there have thinking problems There’s their them market. regulators. where I those are to have emergency in there good think power waive used cost surprised waivers the that They should cost outages the get to to they which like buy serve driven through relative engine battery sorry, through. also a open – outage

of of those regulations the part only market unfortunately, that less the product their flexibility a has it types pocketbook And during with checkbook hurt emergency. buying their around an and

through unfortunate So we a here, grid and transition. long their case goes prevail in heads California and will there do clear in hopefully will of that’s term the as present as believe use the emergencies be particular heads if regulators

Operator

question next your Praneeth of And from line your comes Fargo. for next the moment Satish question. One Wells with

now line open. is Your

Praneeth Satish

just you or HSB guess maybe wanted And do Good new contributions these are segment? a morning. revenue competitive introducing acceleration of the get you India? where to what do guess think and guess, the offerings finally could on international stand are an and the product into like in I when countries international Thanks. Maybe regions? then we I I I product, new look for dynamics see like you overseas an rollouts update market on C&I

Aaron Jagdfeld

for Yes. the Thanks question.

So internationally, very And us. today, it’s market well. mainly we’ve for internationally a done C&I

of share. spans of ownership that the order something they dramatically Our the Pramac subsidiary The company and here improved eight, geographies well really EBITDA think very they, for run respected they’ve – on has well years, profile been nine tear margin mean, that. now market And us. company very continue outside eight on which Canada our something a over to of U.S. I gain the I brand, covers and our course like years

actually out make progress we’re scale C&I there. even of domestically. And getting quite a products And so really benefit our we to global good continue here, with good

So the and to get on our platforms as some ability and of our global to benefit alternator of consolidate across use obviously ability there engine purchases platforms, platforms, the well. Deep Sea the scale gain controls the the

primarily primarily That diesel. and said, C&I, as that internationally, it’s market is said, I

for I about and powered Canada, would XX% least fact, So say in for with generators the backup are legacy like diesel natural the U.S. And anyway, of at products, about emergency market gas of XX% still backup. the solution here outside in C&I power primary kind those diesel. U.S., represents the

diesel, Canada, gas. Outside the it’s XX% like U.S. more and X%

products, see that of opposed into to those beyond So far the fuel those as of than is diesel, there. hands connecting so into but believe to globally reliant and regions that those benefit be are some products emissions tends and from leader just benefits on also the diesel customers There supply profile real cleaner we gas is we’re products there new you benefits of the the introduce the which gas gas to that introduce natural exists opportunity refueling. to gas could in, and of of new products pipelines continuity

more who see You customers that. are now on focused

on. we and years heavily focused Captiva. really seeing albeit company on acquisition Pramac growth in base, a nice continued there. a very in area Captiva acquired last particular, to I off and we’re India few invest several continue but we’ve That’s we’re growth very would that through of in an of nice say years that ago, an focus here, Regionally, to to the market, called small going

a Middle Australia, The mentioned great terms for another growth. opportunity of in we East think has great market I us. been

at residential side, into standby all that interesting. interesting home the an really if we HSB the of level you which On actually world, sales, is look shipping have we’re parts of

in this kind by one, business so but have exactly the it’s two, HSP two overshadowed data; in and see of see growth just where America; can things: are internationally size installed here of our being of good. North we been rates activation by products just C&I the You the

growing. You just, but lot we it the growing all that; HSB is about a haven’t of that’s underneath kind talked of base

we traction introduced that nice India, is product some HSB a We’ve and already. product in just introduced – and getting

those to compliant introduce gas strict codes continuing with We’re very products. that we’ve Again, are products got in Australia. now

gas really we’re company growth. we of kind so meet that a are codes that there. of the in wide we’re requirements our see None opportunities Australia, of as and the market only Australia, we when code because And – are and good true very kind serves say to strict open the for that’s able strict competitors

get have what to And which believe awareness start start for Brazil, increase. where really we’re a, we in places to levels us we penetration then really the get getting a Argentina, like the on. really to the product like even – Latin places good good seeing American markets, represent That’s opportunity focus

in North days back. wind America, kind of We’re to of back the the back if early clock you HSB

higher the for we So do the that. products be don’t will segment But that anything and but see we growth we our of believe products, results in here than think traditional will are it to the gas contribute near-term. products to longer products. kind of seeing of HSB we C&I lot gas we term, those product, meaningfully got a work I for rates do, pockets international C&I

Operator

the your Instructions] [Operator Stifel. Stephen from comes next And line question with of Gengaro

line is Your now open.

Stephen Gengaro

good and Thanks everybody. morning

Aaron Jagdfeld

morning. Good

Stephen Gengaro

Thanks for taking the question.

everybody’s – there outages? inventory, been us give when location sort at one we Is that just of detail you the the So to on for look inventory relative recent that power talking can inventories about. the of HSB me, any

Aaron Jagdfeld

are where bit field are level there to at But inventories we a question would have normal elevated of normal at that a certainly what might we below quite response locally Yes. seeing of previous I because are pockets in mean may inventories regions, frankly, I talked that where evidence haven’t or be field my granularity. we levels we say activity. – I are haven’t think about mentioned

versus interesting lot been low of we market late as other inventories field outage has really areas Canada And Canada country. activity. So a a of here the in with of see quite

Michigan that We Coast prone is we is see there’s some are Midwest, our misconception a like Gulf both is or a other that, those actually of the course in of areas hurricanes. pummeled play other seasons continues factors summer rates of kinds by is, that of the course for areas. those one drivers, you’re more And another this standby weather, level states in somehow have rates see area. interesting And Michigan weather. greatest into winter particularly have and home of the winter important where areas those thing that to summer elevated where I an growth two demand is think markets best of and are states weather and the kind but just get state kind country to – outages, are of both category, just of and kind of of penetration that

than was significant automotive is caused grid Michigan Michigan. in over you built years in ground more the grid lot of areas it’s of mainly by weather, underinvested would it It’s built It’s independent was a older. but in a ago. has different because XXX of There so fragmented. outages many the around way It extremities it say than I’d operators state in, also above the in industry, are more other more imagine. much out

lot the Michigan. a of when itself grid run you do heal trees it so there’s doesn’t And in kind and outages well of

trees part the So of are outages. equation with

We that Maine. So Ohio, the rate. are best growth of together like see our Pennsylvania, states states of Michigan, of penetration we best we that of those in the areas growth states all and see and like put types context strong in some the are very the actually

we’re inventory around normalization give field are So rates stronger again, – without of the quicker. seeing the you context detail, providing those question. of where would getting again, growth And expect, how areas some that as that’s more are to I you that’s would

Operator

line the of question Instructions] [Operator Keating William Blake comes Blair. from And next the with

Your now line open. is

Blake Keating

Brian. Blake for This Hi. is Good morning. on

slowdown Home piece I they Are just additional standby environment consumer environment. about, get understand less to some affected what’s looking the there. customers and by impacted the of macro outlook and your home I’m macro to you that mentioned older largest trying the causing are Standby? previously the quickly, and Just wanted generally ask actually color and for by to just

Aaron Jagdfeld

Blake. Thanks Yes.

demographic a is age are make the segment back. used to tends And down, on in inflation. that resilient And We out, has category the an but people ownership perhaps little the kind as trends seen to vulnerable much that yes, buyers can fact, impact portion somewhat of economy, that come nonetheless to perhaps argument be think home demographic does it inflation wind if a the even have I older a seen you time over fixed category skew changes maybe certainly more to Like they – skew average broadened the time, in The may, of you but will, an that we grown. they older more as more. well. and also income, indexes have clock you when still in as of over it’s have people to who – direction

we into the the We in underpinning haven’t to to We’ll category haven’t wouldn’t this from here, as point. seen point the kind time that seen watch certainly major any this goes this year, buyers – yes and last say this future. continue at shift year on like of – the of the year as I demographic

more I in getting But rates seeing environment consumer is right impacting. we’re Again, what now, spending the up we’re think just – a aren’t caught we’re softening, that that dropping. bit is improvement think And little what think And broadly, right? what that. around I home is I that’s close

eventually, an that’s think that kind here. the but point think levels We important back back growing flattened we they’ve there They’re to pre-pandemic. out get I they’ll just saw not of do here.

that’s to – So we piece of this continue thought the I the would challenge think is they perhaps morning. that new and information the grow,

Operator

next your one And question. for moment

line comes Keith Your Housum Northcoast question from next of with the Research.

is line Your now open.

Keith Housum

know morning here. so keeps long we’re Good running I one question us the guys.

the Just product into of the portfolio redesign in Energy set Clean going in terms solution the XXXX. of

if that up demand. provide now or are that challenges on the on to then just an facing right guys on of some is And in track? you cropping you of segment guys update date If that, terms

Aaron Jagdfeld

kind struggles. We category of that had of lot had Yes. a lot us, Thanks. of was growth. We early success well here. product loss – last quality with documented. talked major customer of and a challenges then It the some hit a with some We for on, entered product had challenges the market, that is the our the of we QX device of about SnapRS really product that

going are solutions. product. our a our our We through I’m for on we’re very excited – solutions. – that road battery about next-generation storage map

more about talk Investor We’re that our in going to upcoming Day.

hat talk We’re going course, cycle is XXX the drag margin to even some we market, as we basis granular we our of things. call maybe of becomes some won’t We on prepared exciting said – of as right EBITDA residential especially going but very in now, to is be to those there here more want been a business don’t because in stomach. investing remarks, have products. competitors tip challenging, to challenging we’re get the on really the our kind able some point the about to to heavily which through We’ve of that too

kind of solar million rates and here those updated two plus our guidance we more of the the are thinking this right tougher We are the NEM Again, $XXX as as at than you’re been. targeting $XXX in that of – things the we’ve excited going storage market being solar in those higher But products. that that seen market long in has on because is recently, come for cause seeing other general, Primarily of those term, probably we’re of are and indicating, interest heavily market, future optimistic the root and and maybe very X.X about then softening in in that this a for it a of on are from the opportunity. range in why The decision reflected end on storage, to the participants industry. we California year. going weighing now dynamics, demand But demand portfolio that’s we’re products low now to kind still dynamics and very are million we’re range. that morning, against spending we’re of have been specifically, the

we take think we that. are know We to of level these experience. different now proficient to going that we’re in We through our to products. become that and going excellent investment those a going that dedicated know doing to see it’s after And results. And

in should getting there as You XXXX, start specific. talk going we’ll see September, future pretty some in about the to and of hitting products, those too excited we’re without really

Operator

question next from the line of your And from Bagri comes Vikram Citigroup.

open. line now is Your

Vikram Bagri

and the mix, promotions not improvement, absence about When clear costs product the margin Good and driver. of lower about better morning talked was a cuts inventory input everyone. cost talking you to

targets, on of you, plan one conversions. seems impact improving given it give So the us promotions then what margins [ph] sort persistently and these and margins, of reducing what like your gross directionally promotions terms? operating sort plan or promotions you on on dollar Can And the high terms conversion do target and inventories of magnitude two, rates continuing of achieve both or percentage was those how long running inventories? improving the you the of to the

York Ragen

promotion a promotions This backlog make go run that home not is we the awareness get and the point purchase No, of and in homeowners to we’re in ordinary category standby York. to tipping just we’re the again, about, course – and make of talking help Yes. drive to ahead when generator. the over the again

So – margins I it’s Again, it’s modest impact margin are say to these I overall. highest our would say products. a wouldn’t

products, you sort may of these you more of sell – benefit, you significant promotion you we sort mix of overshadow as be get So which mix a offering. whatever

we impact key And the story to into of the layered our or that’s promotion the a think part what do there. not significant have is guidance a margins. significant I So

of significant additional from think to have our the will will a margins that a big first – have you half, home think getting of second the The door, just cadence – shipments over EBITDA about out mixing fixed impact. SG&A on level when impact. half I a I think operating higher leverage standby

costs first just we’ll – that’s the that start and only will so drive promotions what’s margins costs really logistics going through And drag our half, realization for we’re to improvement to have we a then And EBITDA performance. and to commodities sort going inventory seeing sequential input levels, slight of work in as second relative half. of to continue improved realize and the lower

Operator

further have back to we over the at time. this questions no I will Mike And call Harris. turn now

Mike Harris

XX. everyone early joining at to again, us forward third earnings our our upcoming as this to on with providing as longer-term on goodbye. our November for strategic morning. want September quarter in an you update Investor vision and We We well you thank XXXX look Day discussing Thank results

Operator

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

disconnect. now may You

Generac (GNRC) 8 Aug 232023 Q2 Earnings call transcript