GNRC - Earnings call transcript Q3 2024

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Operator

Thank you for standing by, and welcome to Generac Holdings Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Kris Rosemann, Director of Corporate Development and Investor Relations. Please go ahead.

Kris Rosemann

Good morning, and welcome to our third quarter 2024 earnings call. I'd like to thank everyone for joining us this morning. Aaron Chief and Financial is and Executive today Ragen, York Officer. me Jagdfeld, Chief President Officer; With

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

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

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

to call now will the turn I Aaron. over

Aaron P. Jagdfeld

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

execution third expectations results sales return robust previous growth Our in drove margin as elevated strong to ahead our net a were outage activity expansion. to helped quarter overall deliver significant of power and

The outage the hours pushed we through year-to-date in recent power began XXXX. to level since highest activity September in increase this tracking data outage

result Hurricane are a and impact outage the activity, Milton, of of the quarter outlook. the specifically and As outperformance we XXXX raising higher-than-expected our Hurricanes Helene third

quarter. further XX% Europe. from quarter remained demand rental, the home the $X.X increased increased sales accelerating generators to weakened year strong lower Global U.S.-based products conditions standby Year-over-year, telecom sales overall CapEx net and sales as decreased C&I standby for market in Residential in for and year beyond product the a billion. prior as and spending prior in in to quarter due product approximately XX% XX% the portable from

times. growth to partially distributors These offset domestic were lead to continue by conditions industrial softer reduce in our end shipments continued as we our market

the level input margins gross quarter, expansion their logistics highest margins sales costs XXXX. drove adjusted favorable lower quarter mix, and reaching the of with third production improved in gross since efficiencies Additionally, and EBITDA and significant in

outage margin here year together quarter with returned combined during were since quarterly all-time and quarterly to vision. of from to XXXX Milton. the the our elevated a to hours earnings sales high October an increased Outage power their to Generac as impacts overall and the at we shipments the continued strategic activity. a Helen Hurricane expansion, prior highest quarter at continue net quarter home rate the XX% in standby our at the in and This of result third to be as fourth the consultations level due strong Home growth demonstrates drove of record execute

trends activity, Consistent first our close return close rates to with the have rates the improving dealer as in absorbs rates of This the and time. half over is be we trend anticipate outage following XXXX. to temporary longer-term moved expected historical compression of periods increase network home lower rapid to relative of consultations as in elevated expected close a

lead help invest heavily practices longer-term trajectory close rates. improve optimization, in to of the We nurturing improved continue and enhancements to to sales lead

residential prior our X,XXX, of from dealer notable dealers count XXX year with an We quarter the at Texas. ended in the third growth approximately with increase

new category We critical role regions standby severe demand level a only supporting of plays expect and generators this the for by weather, count also baseline in awareness to distribution which drive impacted further home higher in our recently forward. helps dealer not expansion going overall in grow a but

products following accelerations an important have dealers is and in important our of Generac, over element distribution as the becoming scale demand have our network, installation contractor program quarter of now service sales and X,XXX, Our through important and which is and nondealer Aligned in contractors, wholesale to bandwidth with particularly new particularly the partners we an The additional contractors aligned channel installation access recent network during including our they grew several number also purchase advantage seen quickly tools. provide. months. for

Activations by to standby Activations our lesser and through or year-over-year in installations of Central continued fourth home driven growth strength in ongoing quarter, have third a generators strong Northeast and a increase region, South extent, the the the despite returned comparison. for Southeast year the early growth year-end to in regions. expectations to supporting quarter, throughout prior

power. the scale in to are increase meet for industry, residential unmatched With homeowner rapid positioned we backup uniquely demand in this

In centers capabilities, XX/X addition network industry-leading distribution time our to of in and consumer their provide and scalable and to homeowners logistics our call support need. scale service

to capabilities marketing and and unique generate and our regions within capacity impacted for more broadly the leads awareness the of nation. the resources have both additional distribution also We drive across with sales our products partners,

Additionally, further and ramping standby Carolina have levels the increased in seeing Trenton, our our hiring elevated Wisconsin we are rates Whitewater, production meet demand Milton. after Helen plants home and South to and we're

to manufacturing -- increase production a standby been quicker prior our home capacity, able Given have much in investment we accelerate pace. at additional to

fact, for of also related of approximately outages. the generators awareness million to of incremental in the impact hurricanes to levels look against solutions a of homeowners as to and higher in these In combination investments the $XXX effort we power standby second our home year. protection of Helen as of for term half power expect ship is and result XXXX teams, of the the Hurricanes result backup portable expected as major tremendous businesses longer The and Milton in and

we below future and home nationwide the X% is out. trend hurricane that the as power continues quality in there the With growth rate recently severe the approximately states penetration penetration at category combined level, runway being mega impacted by lower play of to rate for only believe standby a around significant activity slightly

backup activity portable for Demand at months dramatic with very the a quarter rate. strong in also result to most drive also they last generators an serve power increase shipments and a the for not but quarter products awareness. solution for over as as third the the an outage surged helping These brand in power often emergencies, introduction year-over-year only essential of market X increasing to Generac buyers provide homeowners any first-time

our are sharp expand for we demand as that relationships recent portable generators. our retailers ability serve partners the to primary our further and to major breadth leveraging product benefit, channel distribution with to increases the react addition storm-driven to In

Residential moving Products Now our Energy & Solutions. to Technology

momentum, system we energy and next-generation Our upcoming from XXXX storage in introduced associated of with the with system commercial favorable sales benefited Rico. Grand Department Puerto September. we launch top at accelerating initial awarded of as program previously that power storage energy the in is shipments enter Energy cell line our particularly provides This

including our products as the over while The and in market storage improved PowerCell per with our flexibility, installation integration both retrofit ecobee seamless coupled PowerCell home continuous it an PowerCell peak differentiated improved with storage experience user includes of generation standby and platform. important portable positioned interface AC leader also a generator as brings upgrades and capacity well through generators cabinet, output. delivering previous power additional also as

company centered both savings. X Home key for a Smart are energy The for Series believe the around the focused resiliency a Energy marks we as introduction building we the the on and of Cell and ecosystem energy milestone market, ecobee Hub Power unique management

quarters, our strength. channel Additionally, our leverage our expertise further expanding and direct-to-consumer via building coming brand marketing our we and lead developing generation for and partners expect over accelerate the as in we in to engaging distribution, products these efforts

building these grow connected our at adding initiatives, a driving continues growth continues expansion very homes. share execute storage new on to the more growth in We gross energy of addition prior million our margin from and base to believe In partnerships. team result ecobee to the solutions, as than also products while clean and significant well, of ecobee's current installed market X year,

We HVAC working see EV a towards ecosystem charging similar differentiator, capabilities control partnership through Wallbox. ecobee energy that we meaningful management are the and within management intelligent our as with our provides for

category. Switching to now product our gears C&I

XX% our American activity from previously global a industrial prior again, robust quoting distributor the C&I and in the sales product remained third Shipments year. As quarter, at has to North resilient. mentioned, grew channel, rate declined

and execution will these be head as allowed lead have and us closely reduce monitoring extended operational recently, trends we into our project has time Although lines more to times, XXXX. customer we

shipments expected, in prior period. As equipment national the quarter to declined rental and customers year telecom the from

the the believe for likely customers from that market demand softer -- our equipment our expect to coming will quarters. we telecom in we While have remain bottomed, rental sales

and Despite telecom and very as prior the the mission-critical both comparable projects quarter cyclical we've applications that growth Shipments weakness period. standby during beyond the given year opportunities, for view strong rental experienced a use in the categories we our support. continue gas also of XXXX, and generators networks to infrastructure-related from our natural declined products long-term wireless

quality projects supporting and these due are remains End regarding mega optimistic of we power lower trends power subdued, and market the applications prices. activity the to adjacent longer-term prospects higher for but

often battery or We as multi-asset of to as traditional our BES, as pipeline these continue offerings, part growing systems for a C&I which generator solutions. storage include well products develop our energy microgrid

August, best C&I and strategically early microgrid product Agito, us a offering our Sun small Grid's deal leading acquired In but controllers. the end enable its commercial important reputation coordinate, interface. of synergies, This Aged acquisition space. C&I provider recent we of brings brings important to optimize that assets given also monitor in energy multiple users capabilities technical strong from single follows and a microgrid

XXX to investment of capabilities, utilities, California project across grant water Generic and with deploy utility from the benefits DOE costs and these community to receive the inclusive leveraging $XXX Department approximately be The million to total by the $XX selected solutions Energy million. negotiations installation for a By components, approximately all sites. expected was is water of hardware microgrid associated of grant

category of our as during the of provides point successful virtual also believe capable power of stress. energy vision for strategic across product similar These the We important delivering to within has microgrids support this serve proof C&I form technology will critical for country. plants the a potential award grid times applications and validation

decline Europe. lower year-over-year from C&I to to decreased primarily sales in U.S. in total due market the our well as the a in operations generator and Internationally, Mexican product telecom shipments as sales portable intercompany

to the varying in by other key be growth most globe as Latin around offset Our softness in third was quarter notably America. in market by conditions impacted regions, partially the international results continue Europe

we this improved Adjusted been growth profitability time in impacted by continued shipment this EBITDA business. drive our we of in volumes, global decline to segment over margins expect have as important execute initiatives, our on but

and robust outperformance alongside execution thus outlook this generation increased XXXX, free morning, mega long-term our and quarter In have balanced margin third our expansion highlight cash our allocation enable support expectations. the Significant strong our trends far strategy. growth capital to in XXXX that flow disciplined helped closing and

also to the over activity the last teams here have been a moment take rapid that to our months. power significant several want executing thank outage Generac in at I to response the increase

Milton. Our working tirelessly and teams been response operations, supply have Hurricanes chain and to customer support in Helen

particularly efforts, directly by service field support team's our teams customers into to areas response of the storm those of that proud travel distribution the boots ground events our provide incredibly vital I'm and partners. field service impacted to on these

trended over sources years, and As the for nature connected power the higher increasingly of due outages our last steadily reliable our businesses have growing power of transportation. electrified is and the continuous to XX need and homes,

adoption growth These America together with electrification being what time, sources artificial North the are seen of of been or load the trends prioritized. for same driving intermittent the decades. and are At has reindustrialization far last expectations X the beyond in demand intelligence renewable generation power

grid-related resulting all power higher will power that trends lower for quality supply-demand these ratepayers. secular prices drive in expect imbalances ultimately and We

cost that solutions By and challenges with owners grid. uniquely that building resiliency positioned and electrical on evolving well-established optimize help consumption, business comfort, home for we proposition to of are our the overcome is the confident efficiency, Generac value

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

York Ragen

Thanks, Aaron.

prior during detail. XXXX, Looking The were of results from acquisitions currency quarter. quarter. $X.XX and positive combination the contributions impact the in $X.XX on at compared quarter had revenue year quarter to third in from during XXXX billion the foreign impact slight recent as the of billion a unfavorable third more third Net sales net

million robust million significant high domestically. as portable driven net class. power This standby product for growth during increased activity consolidated to -- XX% outage due quarter significant strong of third increase generators to the home the $XXX to a was sales at growth a quarter in year. and Hurricanes prior the in shipments very compared looking and $XXX sales resulting product by generators by in outage the Briefly XX% for power Helene, Residential

including during a $XXX and from higher to both foreign XX% currency. of In the prior year as combination compared growth we positive solutions residential impact energy quarter as our of addition, sales energy contributions and XXXX the experienced slight clean decreased $XXX of were million for million to technology quarter, and industrial in unfavorable acquisitions from product sales the ecobee the offerings. quarter product third in Commercial

core well shipments rental industrial in other to domestic in market due C&I This standby equipment The beyond weakness as in shipments and increase telecom, markets. in sales the product domestic and by conditions softer offset was national partially was decline international for channel expected Europe. growth a distributor applications as certain through our robust

products facilities. production Gross home manufacturing third services for within million in revenue favorable year and due compared services lower deferred quarter, as standby primarily other project compared year XX.X% mix, logistics and by parts, $XXX home lower domestic the and service sales improved revenue. prior to our slightly prior and $XXX was strength to shipments, Net to the industrial quarter input standby offset warranty increased profit margin as in stronger in given XX.X% efficiencies accessories was partially to million sales costs

investment to Third future operating spend quarter resources seen margins since drive increased profitability. million overall compensation expenses Operating due in and XXXX products the expenses awareness volumes higher to shipment XXXX. and to highest quarter of XX% incentive for growth the our also we've were variable was or marketing incremental additional $XX compared prior create and The quarter to third higher in any our given exceeded in gross expenses primarily ongoing growth expectations. and as

the prior by did These year certain in period. million that which were for in recorded was legal provision increases matters offset current repeat partially $XX a not the year,

of EBITDA in factors, noncontrolling the earnings in or these million XX.X% deducting was our of interest, of the compared for or in to $XXX prior net adjusted before XX.X% $XXX result sales year. net defined as a as As quarter release, sales third million

margin Adjusted earnings the Generac EBITDA net the in the in of overall robust result came increase significant adjusted sales prior return with growth showcases outperformance. quarter expectations power as gross margin profile. The margins ahead a strong as during we EBITDA of a to of our

I Domestic segment a the quarter, sales. XX% margin financial to was sales, year intersegment slight in compared now in quarter sales, acquisitions. EBITDA from XX.X% million, in or X segments. to as discuss briefly to $XXX including benefit Adjusted will as including the for compared $XXX for prior $XXX million results reporting prior our total year XX.X% the a million segment total representing of $X.XX billion the increased

noncontrolling sales, as $XXX or Adjusted quarter, compared before segment as currency. the for International was total total $XX $XX million total of in foreign segment in million prior from EBITDA $XXX decreased to to impact for of or sales, XX.X% million sales XX.X% prior quarter intersegment which deducting XX% million in including to the the includes the year sales year. a interest slight unfavorable compared

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

The quarter the change of of fair GAAP related net was year investment XXXX. million current our GAAP a As includes million $X.X was of disclosed quarter in securities in the $XX as which quarter our value compared refinancing. to a release, for the Loan income B earnings for previously debt $X.X our equity and company $XXX by net third the income in million Term on partially in Wallbox announced to warrants, offset on loss gain million extinguishment third

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

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

to defined cash operations free $XXX Cash And compared third year in in the earnings million in prior as was third as was quarter. $XXX million flow, to $XXX the flow release, year from $XXX as cash million quarter our current capital in million year. the greater and free offset partially working in improvement same was in primarily The by current quarter earnings a reduction quarter to in higher driven operating in flow year. year an increase last relative primary by expenditures the the prior capital compared

$XXX stock nearly common million. approximately Additionally, shares the XXX,XXX quarter, third repurchased for our we during of

X Over average years, per the $XXX approximately shares at calendar cost we've X.X share. repurchased last of million an

September under million $XXX current of repurchase XX. authorization approximately remaining There's the as

during announced, with the and that made facility investment we an the small on of In million $XX capital the acquisition loan quarter $XX additional connection we previously also credit Wallbox in million refinancing B but our July third strategic prepayment term in deployed As a on with addition, closed X.

resulting of the reduction at end an outstanding end X.Xx continued quarter on XXXX. debt at of as-reported the third end of from $X.X Total basis, was in the quarter gross debt ratio the the leverage at a billion, of X.Xx a

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

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

in to X%. expected year. now of previously to Southeast Helene Milton. to than previously the power higher and be from U.S., of range Hurricanes net the increase the impact the expect compared is an of approximately We outage XXXX to overall the specifically region X% This sales prior growth X% Given activity X% expected as the

power higher to down from incremental increase by and our resulting to million, outage activity. standby portable $XXX are approximately generator Breaking products to prior primarily class, expected home due relative by sales the this product residential expectations,

be of prior teens range mid-teens on a sales now As overall residential a compared year-over-year increase. to expected product in result, expectations high basis our to is the growth our

and our certain other categories the product conditions domestic offset product projected However, to increased are within end softer-than-expected markets European outlook. C&I market residential partially for sales and

product of $XX year combination below to projected the expect for C&I other to resulting year be be and the in to approximately million down forecast, digits now the prior prior We single compared high product XXXX. sales sales C&I our now full

other on The the be year anticipated flat XXXX. for sales to full basis category a year-over-year nearly is

gross in year previous margin outperformance expectations to sales to also due the the quarter third guidance the is for margins now points project and now generator gross higher relative gross full increased We in fourth that XXXX, home third XXX quarter. gross improve year quarter in our similar margin implied quarter resulting margins of the expected basis standby full fourth approximately mix over to range. by Our the have are 'XX XX% to

quarter outlook XX.X% a gross As for deducting XX%. to previous the approximately full the EBITDA of for as margins, compared EBITDA XXXX the are before to noncontrolling to margins implies margins expected interests year fourth result be approximately XX%. increased adjusted adjusted XX% guidance of now of for This to range XX.X%

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

effective tax in rate our the XX% outlook be XX% in now approximately XX.X% effective XX%. XX% our expected to to prior full quarter. is rate guidance GAAP to of For This our fourth approximately GAAP than previous of to to the lower expected a year, compared tax is result XX% range to

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

expense million gross our million million expectations, million. $XX as rate interest guidance lower to to approximately compared is of of now $XX to result be a to expected interest prior As $XX $XX

for compared guidance between to compensation year. be additional during $XX of no term or year the as the revolver prepayments $XX now This prior principal million loan to million million. guidance assumes is $XX to $XX million to expected Stock

that weighted our guidance year million to As share third to compared XXXX, share is to XX.X completed quarter average our of decrease diluted million XX of XX.X result of prior count were expected shares. in million shares to a the repurchases as approximately full now

consistent sales percent remains Our sales. of approximately guidance capital expenditures for of as a at X%

Depreciation amortization remained with last quarter's GAAP guidance. intangible expense and also consistent expense

drive above cash reduction working further result full XXX% in fourth free as for year expect we approximately for conversion a in million free quarter. $XXX to us the to flow of the the flow shareholder future. anticipate full optionality year significant continue be would XXXX cash further in the to value giving capital We This well in

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

Operator

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

Thomas Moll

want I to standby. on home start

that, standby you the guidance? high you in home what So to assuming safe is that are little for and bit activations embedded year residential of guided assume revenue teens full be Within now. a year-over-year would that above it

Aaron P. Jagdfeld

Tommy. Yes,

So yes, XX% home standby that be a going is to above bit range. little

accelerate, in we here we're In market anticipating the to . believe throughout here we as the with -- remarks this digests in the in terms returned going morning growth demand as quarter activations. quarter the activations, prepared of from fourth events. said We third the increase recent that's to the

would full So again, again, to year. had I expected strong the quarter really on for last but a we've don't guidance activations given I we be it you, and -- specific think year, fourth remind is

So signs there we're given comp up activations, on of here. it's that pretty pretty we're a strong but the confident all against

We to thought are be. pacing kind the quarter activations in they'd where early fourth we seeing here of

Thomas Moll

Aaron. Thanks,

drag talked much impact know the there fade haven't energy from that margin too As for that is we I to the time. today. And about the investments. follow-up, a over intention But technology to next fade help while margin for today, could not how on based us do guide you're what frame XXXX helpful. would you're to be that can going year seeing anything you

Aaron P. Jagdfeld

of investment this mean, XXX it's range. be I -- year, going to been point of XXX level for basis kind It's that a hanging in us. obviously, in level. it's high that It's Yes. to

we out Cell we in RE show in remarks, renewable progress Power which making said our plus prepared introduced year, at this X. the the Anaheim, is we are As energy

good receptivity We really had there.

concert it. ecosystem that differentiator home one received. energy it's idea the the out that this center refer to At in control was heaviest with the do We the ecosystem. and a terms I well we with in loads of in of HVAC storage Energy building of the think out the terms think of in Ecobee incredibly of build to as and that ability Hub

And we And that we there's that's charging, think forward. believe that's with important going don't that similar doing really that the going anybody to other just like heavier said, we it then to else present be as to really doing of some similar things us. going something loads EV that's be really,

Now the think Day as to laid within we reach year end in by we're Investor business. we for that out our that in XXXX, last still that of XXXX, closer believe breakeven. still is going That's we to that be

on to so down we're not to going And the drag EBITDA, again, able year's next impact. be specifically pin

with breakeven seeing a drag the we from in which, of present progress. it's significantly the to side are 'XX by But hit we on other way, going XXX to today, still EBITDA that kind to drag will, run breakeven rate, obviously, until But that even point, point basis going margins to business, that. get the we XXX to of you if if abate

receptivity excited We're the those products. about of

we've are got and that's, been us in to I for the we the -- excited teams, to particular, products really we've we difficult commercializing have something and of new get into selling. really as sell with know to again, more teams headway the technology been Now products XXXX. that energy make work here, hard to we're -- commercial to new that, first-generation these market. had I And think, product we that bringing It's haven't do the

Operator

line Canaccord Genuity. comes question of the next from Our

Unknown Analyst

rebound. in dig kind little to and in your bit a you of if potentially expect when love I'd what's European you to can those trends business as happening

Aaron P. Jagdfeld

Yes. Thanks, George.

this that our some from tough really So Europe energy of kind portable the the had around back there XXXX. concerns we year I energy prior the comps were security around security drove mainly. again, that issues, trends war, mean generator -- portable we generators been in has sales -- was of on higher pretty year earlier seeing were Ukraine-Russia

XXXX, As struggles concerns kind seeing there. a somewhat we we of of winter, were rounded abated mild-ish kind and those after

segment. C&I of the Europe expanded broader our It's now bad in products to kind That well. complex has news international not include for as all of

that say, new We are Latin managing we've seeing team pockets there. surprising a got would of, particular, in in I down America, strength business

job. a They've market the there. tackling we've think position our improving a done nice and done I job nice really

a kind Europe, mean, been a out here, had call there. Germany particular, important if Germany our not for country, operations an broader to has market I struggle. to pin particular And it's of but down But we in to it anyone really

that think So has it's recent something think I seen I everybody the headlines.

Even the really particular, Volkswagen years announcing automotive was think, something plant in something in or in is like first struggling. their in ever the sector, XX I that, Germany headline. like closures Germany

that to think a economic Mainland I bit maybe see until going So there. struggle the it's a be in Europe, Europe happened we for shift

U.S. in C&I telecom probably Hopefully, I to maybe Europe. now, would recovery I we're how we that say domestically just happens in I a that for domestically recovery right green in will here work. to pacing some tell I We're to see see see sometime think in XXXX. you going before the -- would is expect shoots see the a starting maybe

down. think rental I going is to remain

I on here, to spending ends party the just don't think how up there. in know being around But based trepidation The is little third of much in even a environment, huge a hasn't taking whatever election the season a It rental. bit below current We that, were our approach. wait-and-see think side wasn't I miss. a of rental as is but CapEx strong. guide little I are companies quarter there for more the of other been bit some the that getting power

think of Latin America guess some again, and anyway, by all I in be -- to is so tough, And world. maybe offset some tougher the for of pockets Europe probably be of my going next would year, other strength areas

Operator

from of Mike line next Baird. the comes Our of Halloran question

Michael Halloran

needed if validation for I -- guys. wasn't hear that was the lending you sure to you

seeing but you X to seeing? you're asking of from And activity So there's of compare kind this, today perspectives. are I'm that place couple uplift historical to in probably history? context, what years of kind could a the you How does

less maybe awareness in and higher is the today then than penetration regions was certainly the of your awareness. these One, much penetration, but it

manifesting then levels that -- And that that is secondarily, comes non-impacted seeing awareness you're sense. so that it makes how activity the how but if regions, is to when impacting

are the tracking? please? historical are effect other How in well, Is the regions tracking? how context regions both in some So a place as there spillover

Aaron P. Jagdfeld

Yes, it's of actually. put I couple And things. you Yes. Thanks, it when think a question, in a there's great perspective, Mike.

are were I and brunt pen or that X average so think Helen I for there's and rate oadly think national states of those states bore impacted enough, X -- slightly X% actually of that Milton below home states standby. the the here, the

So -- HSB maybe for still like they're just while to below below. compared as when they're like a average, as the talking per materially California national the we second, not

So is are -- thing the have because past. in markets upside, markets they I we've interesting in there of a in into those sold good the are we dealer terms representation the think

had has Texas of Obviously, a number events. high-priority

XXX out added dealer of Texas. of said, hits would that are in of Florida of last chunk improve said and counts barrel -- So in the dealers fourth out expect lot a We the the Carolinas. we've a the to quarter probably added good dealers coming Texas. see of those we've We over year, coming

the of can of grow. the right? to your -- we've said But $XXX it event, the current $XX to depending perspective, these impact going on going always question, in to I back between timing are the year, in core so Those putting events think are just provide million million

in year, the to of going get. to later $XX the $XXX timing less million million the you're And of be able so that event to the

to the is put up million your somewhere events, add X these all million $XXX going upside from you We right? this upside. if between that range to $XXX So million would said experience year $XXX around that events, we're

think production. I we're and And XXXX. ramping should a guidance before between going time spilling around we probably over of of we've of kind we So we're lot be our now that where we we're with kind things, into some to give formal got of but of that, a proper watch lot think right then

of based going out guidance what on based factories what So QX update you're to see can on we really get our the in QX. in is

perspective, a South doubled historical this lot that effectively online added capacity, Wisconsin we've factories. a Carolina, capacity. is say right? I Trenton, our It's when brought chain we image of our our mirror facility, combination which HSB of a a our will Whitewater, supply in of from So really

more ramp is I to right? think, ability our important, So quickly,

weeks, So lead X on as the as are that's probably high node. these And X times they'll get. to around for products probably today depending

the we As think into going our we're bring that XXXX. we place quarter we'll as that. catch we production get normal into looking ramp a And throughout here, more think we to

think terms nature of of intensification types any of Now of aren't extremities the the events the temperature, other the things water and of the just seeing and events the happen, right, -- assuming I and course, these in between major and now these we're extreme that important. of weather rapid is some that's, and that there then obviously, air hurricanes of temperature

it putting in think I So able perspective to quicker. we're ramp though,

fact We're that that think seen as is of events markets good down these in dealer what have well. think I is of would we our and fairway encouraged the the I brand right middle the these well what by we've representation in kind expected. markets, have we represented do the and out of

this. X part impacted effect of asked that outside the of by of was you question, markets And which other Mike, the the areas spillover

if enough, lift a of I October year. think home by we states we're at just X X at when these or consultations, impacted interestingly look you that events were here look outside this nice seeing those

So I it's impacting broadly is demand, our would great. say more which

comp, tougher of was in I year. think Canada, easier comp every think, last the but other an a in fact, outside region was I Canada U.S. from

but nice But got to be region would fact, in X -- not is still October today done is other saw just I consultations quarter, -- last yet. likely this. We for So a October point on this growth. far month to I mean, go. every us. we so for And in-home record

category. And as morning, go out as that as data an QX important the the we the kind the as on -- we've laid new also this we we impact is about And XXXX. only of not that's and of think but of I category into think baseline for that impact higher continued point the build awareness here

Operator

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

Jeffrey Hammond

in intro you wins? feedback just and partner So an the update maybe talk new differentiated early energy. of you timing. product any Can distribution the you're just And about is clean the think inverter just really on getting initial back just kind what on

Aaron P. Jagdfeld

I that. appreciate great, It's Jeff. Yes.

product, a new PowerCell the platform. basically it's X, obviously, -- the ground-up it's of So redesign

the acquired acquired with platform years I So XXXX, the of platform, when working our We was. back from we went through in days and very been X.X downs that Pika believe have teams. last our hard it kind of over ups that

But differentiating you about XXX we platform. that XXX drag point talked a as here. tremendously, obviously, EBITDA to of that heavy the invested see, can basis the margins. It's factors lift on We've

going product, So and this standpoint being resiliency. storage the our ourselves is focus a really of we focused from -- to really back positioned on first-generation

care some product of wanted, standpoint. is a you But felt do what have solar time homeowners product, course, shifting from to battery, if that you're the to they they a needs take savings it attached The outage. it have need if you've really period and what they store when to people want got we can of last want that an of trying time

generation so battery first largest in the And capacity the was market. product

product peak what the of and second-generation there I'll to other backed call choices device you done product the those of that's remain other you focus about more here we've to an the on continuous output, enhancements. once at not. when just around product. there you're -- house things -- storage some So upgrades allows battery kind But that's get so limited important outage, that what's what's by to make capacity also up improved to not will largest some product, level, storage having power in which right? is and cool at And around cover The the your

you'll is technology broadly, portion this of more the the our the not of but an this Ecobee and UX human interface, Ecobee companies ecosystem, acquiring the expansion though, that see think only I core of was in thesis is concept in Jeff, really this, HMI, some to the brings after I think going right? other the device,

kind front a app it's There's lot user device of great a premium. that the capability within truly it's got experience, experience terms of of And end end, smart thermostat. in a the high it's the They've device. experience, capability to takes, next the entire the control an experience device but We're to I takes right? think, that the savings really only for leverage going within the ecosystem that and to level, end not resiliency create customer

there your if So with the thermostat/Energy Hub have cell you you the center of outage, And example the most utility you example a at we you a to power share prime outage. have is Ecobee the you ecosystem, of take have if an can device.

a perhaps, have generator You charger an maybe have EV you Wallbox. from

Ecobee how platform, of all amount these devices have maximum now the going choices battery. your to making Hub are duration going is onto the You integrated for you about be of that to Smart for be preserve to the

might cold thermostat degrees it day, up -- comfort that parameters have or backup it precious a you've it of it's that you you within from it's a will that, thermostat days, behaviors. turn it if if to work few day, your or learned aware be a of of and hours it It's set turn of So have knows. your of don't a kind few even hot obviously couple giving might down a more might

choices. those also it can But make

you preserve your charging want the the into that's stored If your that an you're definitely want system that to not preserve it outage, vehicle to you to can degree, vehicle your power EV that not to energy greater thermostat duration. right? charging an that a It want You is precious system, again, don't during to to make in home, use the during put sure adjust can take that. don't cell outage,

I what are a that grid that it's evident to with even complexities become brain. how to grows out for the around optimized a It's is mini be micro clearly grid. grid be that to cost. ecosystem into important scenarios assets right, that home, play So for out. these have those can of you In personal it that that we're different going of your the micro kind central play microgrid as And can but content, scenarios think going and more resiliency, effect, multitude will is a with micro optimized for more creating here tie a can

those can change. right? comfort, for conservation, for optimized be can be So of different all can and settings those It prioritizations prioritized

I I think there, I eye-opening distribution the went to demonstrated we quickly really and our show the of that, booth, is experience, that it me, And be a partners us. So And in to understood show RES that an think customers at was visceral think in value engaging in I they way for was, with going that very for that. our booth. that, very in

you marketing brand to to and and apart going kind together with that's -- our capabilities think put you build our I our that us ability then develop set our distribution. here that of and couple with

And timing the I really how like we forward. products quick. real we're as positioned go on

into shifted shipping So X PowerCell be product X weeks X in to We bit. X, we That's market weeks. be the at of a fourth were February wanted end little probably to going here. about quarter. to very the

is slated next there half trials and we're customer of and just on micro finishing mid-QX, to market field then that early the of in touches for still the early year. our think to kind second I putting hope in be

is product that pacing ahead So as well.

Operator

comes from Our the Blair. of William line rat question Brian next Drab

Brian Drab

timing hurricanes to and there's mid-October. I'm the the, to And looking dealers and cycle at outages need still just there's Colin the of hey, Melton. just standbys all obviously, I significant in conversations several mean, getting to at home and those getting I'm obviously states, a time looking these installed, in the and happen. even

it a is of I mean, back think, in even sound had like I those It the these just like of will people a satisfied fulfilled would be to feels trying even power be the than weeks of making XXXX. just of it their in to since on. I'm this like seems I hurricanes don't figure -- like, only out half wave demand just couple like demand know, of lot you've got why of it beginning kind a XXXX. you're related rather recent

Aaron P. Jagdfeld

that's I great question, a think Brian. Yes,

can actually is do a bears we I barrel And as that further supply our ramp. gated, that said, little a explanation. pretty so standpoint. from XXXX, here to chain clearly to started in what least X significant by it's bit -- think with and I fulfill operations early at demand We in after I going a that's be ramping July. mean, ability

Yes, that was July. early

little it ahead of of of the got benefit we So We bit. a that. kind got

terms season home ahead on better supply in that inventories we were standby with and a kind because our portable -- place early to of obviously, the able event. with our of season In starting that the prioritizing were begin to execution little of then maybe earlier a of both chain, generator portables, we ramp, getting

happened were until I put and really us think -- we And Helen active season. pretty got a that on September. for predictions in late obviously, that nothing the alert after that then all

of baseline and I being the So to it level, prior matter that the we're think right? we've Consistent to a with demand seen the going able question half in think events, and here continue was is a to pullback surge now get ramp important kind note a of a followed always thing the -- higher I in of new whether year. The demand going to by back of

them prepared, going October, this pullback from in it your IHC happen because back it we've power And new an does seen outages started certainly not mean, those I about month with think most how we're that I kind -- does and be what IHCs, the this is standpoint, to emerge. of I even with that the not XXXX. answer seen are and is higher hours done it to strongest when -- is the we're and we're pullback that and at level impact question point, kind is least talking to yet will early, we tracking And demand, our an do an call, where how surge on last? since of long baseline since ever does right? this at effect, the outage the still think point, we've

future play we of when about want year. to we demand, how see that the something for balance think is the it think I the So out here things

Again, there. it's don't when historically, year. I -- proxy that of it a to I we've environment in the today higher an that interest an been good don't know know We've than periods maybe election of had got rate we've very that's kind category, to cycle compare number had we've

of feel current kind bit think of on in for the are about current little their project I might a homeowners, their at. So their a people rates of think they you home stuck of mortgage terms that lot there's home, in a because how tell impact where

XX as mortgage hasn't basis a that through and materially XX-year So from yet, rates. a to shifts with it the Fed in hasn't decline point even shifted read decrease really completely

So at that least extent. not to

see what the of we'll importance I it's think -- think and factor -- about an that. as that we kind of think of the watching we're But country, I this. that So area the where another as resiliency goes look, because that's well these needing is understanding are Southeast, plan. a

of how right when higher timing, demand And and and new does it It's happens, it question baseline just peak, peak of off where level that of kind a come again, does for that. our where happens, products of answer demand far the emerge. that I around are think it that

Operator

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

Jerry Revich

is wondering, can you're XQ standby residential like that It about standby records in in business looks normally, just you based higher And you're not consultations versus into talk York, you're you shipment Is Jerry. like I'm Aaron if see wondering with setting your level that interest revised sequential traffic. could I'm in-home rates translating And consultations. seasonally, guidance, XQ? talk looks terms on seeing it of of do home on web a about counting the XQ products. in the pickup the that because that you versus right?

Aaron P. Jagdfeld

Yes. Thanks, Jerry.

was... yes, we're completed we think mentioned, mean, that a got day, I yet. but at we're And again, IHC, we here, be at We you record more XQ, October level. X when the going as -- that, not look to On that

York Ragen

we going Sam's production they're the to and sort as matched portable course is QX portable ramp How go of home to decline. by go going QX to up down

Aaron P. Jagdfeld

Yes.

a is anytime low. major obviously, we -- if going of of our home here So portable is we lot sold generators. quite and Frankly, increase so event lot inventory have even portable we soon are levels standby a unless to have another

we're replenishing levels. stock So in those middle the of

between . lower compare the going to QX for QX higher run standby So trying to really shift a QX home portables rate. it's you're when

Operator

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

Kashy Harrison

C&I that numbers think seeing cycle could there the through everything whether business. Europe the keep you U.S. be I'll times on rental whether C&I XQ or to more mind some implied than in based and the stabilized risk? of essentially and side in have you're us help Can on what else, the

bottomed the a I'm there of as be aggregate sense think we measures? qualitatively? Or just coming softness trying the think quarters to your still in has by if some if could you get about business

Aaron P. Jagdfeld

for thanks that. appreciate Kashy, question. Yes, I the

that viewed on QX the is think kind actually, I of telecom. We So see we back. as QX, for pulling don't call, last we the bottom said

fact, In QX the actually and would green improved seeing some that gave we this that, morning contemplate guidance shoots slightly contemplate would QX. QX we're into

little market as in in the hoped be said I actually side, think have would a rental on weaker I previous QX. that question, than we saw we a

when we but it that's our see weakness So of We to season was Again, we year, for it's seasonal to expectations, us. than has of this of disappointing more out. off normally, a that of see played a is business of time lighting bit from expected not further kind materially kind that there. get not of little towers maybe

go where right? that of now I without like the we views I -- the from of at. is bottoming -- -- of feels year, that out, kind major the question rental guidance kind on probably additional maybe of terms our question direct serve. right next it's think rental in just of it on fundamental that we're And kind think rental kind is I where does companies But

kind guide been yet of spend on categories. our given haven't year's any CapEx We next in

would pretty this we going believe muted throughout that's XXXX. point to probably remain at But

telecom, those to said, as green shoots, see we I we're hoping think continued improvement.

I you working distributor but to our that think times. quite about operationally, X. We've our under well executing channel, lead rates core we've book-to-bill catch when seeing been are industrial think we've been been

that times, a we little where pull see bit. And area be an and could back that lead backlog that we we've -- that reduced so catch as our

resilient. Now quotings remain

is time line So to pushing we're the out. the is challenge that order quote seeing

And delayed. seeing that projects if is in you get we're cycle, high persisting. So happen rates have this part the this can something of especially

come as to perhaps uncertainty and come us there. year. be away, more around times bringing So to are might that rates and might we maybe to very the be next a see election continue the is backlog related they down It down. if projected temporary thing taken we our lead just down catching into It see

Europe, think I the I think again, for us, other is although X that about that, of think fundamental we very doesn't questions Europe, we good. feel think have, I when Mainland

I some we've pretty And year. in outside seen We've some been got actually as that Latin decent America, coming markets that, little see growth new next partnerships new bit But We've in said, the Middle business. -- have of a seeing nice in I there. that market other we some products there to East.

hopefully I think Even we've maybe is, read in like bottom here European the may Europe believe, found to regions I fully perhaps at would of I least kind we So the operations, of least terms our our operations. if have at other be, early by international further, operations, offset that we world the and where the have soften opportunities. will more point, than at think this some of of or offset

Operator

of comes line of Our next from Stephen Stifel. the question Gengaro

Unknown Analyst

progression is margin cost how sort about you able or talk quick So for efficiency about how and Can me. of a and to just maybe prior the sense guidance, relative that mix us but we think give out even and the relative that been achieve? you've seen you've the some throughout X year. much gains for When to much is

York Ragen

Stephen, Yes. is this York.

X% of about for been some I'd related. a number over XX% roughly quarters. that to mix now say, improved We've say This of margins gross particular X% quarter, So that XX% seeing time year-over-year. quite was

bump So nice increase margins. home obviously, a in generators to in going we're standby as mix, get

So means XX% to was around price cost. XX% that

as now So turn past, we in on through through sell the P&L coming basis, of not through seeing that higher we or running the the benefits we're a through that's that now we're still -- inventory the costs year-over-year cost lower of as and still P&L. input

bringing terms to And we getting customers. job material out then do plants continue a costs, to and of the good in to logistics our

run the to as more home particular, standby picks our volume efficiently up. continue we So -- in factories

cost. said, has like for around QX, XX% price of that number So year-over-year I continues of been to to cost price XX% favorable increases quarters, a be in

what, QX is say, like through What's interesting now margins say look you year-over-year of XX% ahead the now cost now our P&L talking not in lot we've best sequentially. is in sequentially now, QX. that That's a if price I here we probably from, since seen but QX. look from gross to QX carded, XXXX. I'd mean running

So we're feeling our good gross we're terms from continue into at where profile will of we QX. that margin and believe in

we'll say, price/cost I'd so sequentially, but And scenario the benefits. year-over-year, see still played has out,

Operator

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

Unknown Analyst

all power have benefiting when the of within been terms you on from in those through? and these like growth of touch is the come any storms HSB. standby C&I opportunity massive for outages terms have or batteries But In demand, of on, the guys there driving beyond focuses

Aaron P. Jagdfeld

one appreciate questions. mentioned a and we When when are whether Keith, bringing up thousands you realize I your impact operations your hundreds Yes. continuity that outage spoilage invested telephone network streams business talking inventory on on realize have that I events, outages happen. a or the if last you Thanks, of that trends, the that you sites, revenue haven't sites, longer-term you thousands Absolutely. maybe of awareness, and because plan, of drive thousands a your owner get should in can have we're operations, quickly the whether very C&I about of that wireless has mean, can you're you of on small of probably and operator backup on I

we look the to business we They're reason our at processes. takes approval really those CapEx It usually projects delayed of also are budgets. the so that just -- historically, going. is and get There And usually a time decisions. that And we that for are when business, point -- us, that world, those is more the in reaction. business for know

is So to that, dollars affected start -- would going telecom to through from demand follow events we budget some for when pull late those start cycle outside national a events about that related would X-quarter process the affected expect, allocate of as is see perhaps to would in historically on kind basis, you're indirectly areas sometime hardening those of the directly and operator you talking of right? in more who indirectly in areas to impacted now networks,

for things potential And longer-term I of C&I that bring markets aside these seen industrial those We generators weakness seeing. up offset in before, you of currently -- are core any are fleeting. put So the those think, think good to We've see kind more we're things point. devices dollars think that purchases or also, be they cycles definitely we storage an I historically. and really a could that

active continuity more all line. standpoint, things standpoint, the an operations ending a planning of to period standpoint, events of this, on kind planning the get regulatory you like those as come from notice business brings plan disaster of that soon people a definitely of As gets and of forefront it to the from front

Operator

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

Unknown Analyst

before your percentage the that or with category Synchrony. think the talked program about We've I finance of HSB

issues? I said XX% it's curious I'm as kind more think optionality network quality or think expand about potential sales start of on how you so. sort of HSB of and ever through around outage dealer activity think the power customers just to to that you financing

York Ragen

price in break terms of this Definitely a financing to -- always a close deal. having is you have through No, I of that in sort general closing as financing is might rates that higher driving a is barrier Yes. York, Jordan. way challenge mean, to

and throughout -- we're big to doing I know going initiatives to focus XXXX, channel, -- we're fact ramping XXXX, up the financing some going in be a like throughout in to been a be just going the here. that for it's dealer XXXX it be has

be agree. no, We higher. -- with I will aspect to rates important yes, trying agree So that close to that, an it's you drive

Operator

back remarks. would to turn to Sir? Roseman like conference the for Chris closing now I

Kris Rosemann

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

Operator

call. today's This concludes for conference Thank you participating.

You disconnect. may now

Generac (GNRC) 31 Oct 242024 Q3 Earnings call transcript