Q2 2024 Generac Holdings Inc Earnings Call

Okay.

Unknown Executive: Good day, and thank you for standing by.

Operator: Good day, and thank you for standing by. Welcome to the second quarter 2024 Generac Holdings, Inc. conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day and thank you for standing by welcome to the second quarter 'twenty 'twenty Four General Holdings, Inc Conference call.

Unknown Executive: Welcome to the second quarter, 2024, Generac Holdings Inc. Conference call. At this time, all participants are in a listen-only mode.

Speaker Change: At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-one-one on your telephone, and you will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. We would now like to hand the conference over to your first speaker today, Kris Rosemann. Please go ahead.

Unknown Executive: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone, and you will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising that your hands right.

Speaker Change: So let's draw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Kris Rosemann: We would now like to hand the conference over to your first speaker today, Chris Rosemann.

Speaker Change: I would now like to hand, the conference over to your first speaker today, Chris Roseman. Please go ahead.

Aaron Jagdfeld: Please go ahead. Good morning and welcome to our second quarter, 2024 earnings call. I'd like to thank everyone for joining us this morning.

Kris Rosemann: Good morning, and welcome to our second quarter 2024 earnings call. I'd like to thank everyone for joining us. With me today is Aaron Jagdfeld, President and Chief Executive Officer, and York Ragen, Chief Financial Officer. We will begin our call today by commenting on forward-looking statements. Certain statements made during this presentation, as well as other information provided from time to time by Generac or its employees, may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements. Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors.

Kris Rosemann: Good morning, and welcome to our second quarter 2024 earnings call.

Aaron Jagdfeld: With me today is Aaron Jagdfeld, President and Chief Executive Officer, and York Reagan, Chief Financial Officer. We will begin our call today by commenting on forward-looking statements. Certain statements made during this presentation, as well as other information provided from time to time by Generac or its employees, may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements. Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we will make reference to certain non-GAB measures during today's call.

Speaker Change: To thank everyone for joining us. This morning with me today is Aaron <unk>, President and Chief Executive Officer, and York Ragen, Chief Financial Officer, who will begin our call today by commenting on forward looking statements certain statements made during this presentation as well as other information provided from time to time by <unk> for its employees may contain forward looking statements involve risks and.

Kris Rosemann: That could cause actual results to differ materially from those in these forward looking statements.

Speaker Change: Please see our earnings release or SEC file.

Speaker Change: For a list of words or expressions that identify such statements and the associated risk factors.

Speaker Change: In addition, we will make reference to certain non-GAAP measures during today's call additional information regarding these measures, including reconciliation to comparable U S. GAAP measures is available in our earnings release and SEC filings.

Aaron Jagdfeld: Additional information regarding these measures, including reconciliation to comparable US GAAP measures, is available in our earnings release and SEC filings.

Aaron Jagdfeld: I will now turn the call over to Aaron. Thanks, Chris.

Kris Rosemann: In addition, we will make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our earnings release and SEC filings. I will now turn the call over to Aaron. Thank you, Kris. Good morning, everyone, and thank you for joining us today.

Aaron P. Jagdfeld: Our second quarter results were ahead of previous expectations for adjusted EBITDA and adjusted EPS, driven by lower input costs and operating expenses relative to our prior forecast. We are raising our 2024 full-year outlook this morning as a result of the recent increase in power outage activity, including the impact of Hurricane Beryl. Year over year, overall net sales in the second quarter were nearly flat compared to the prior year, at $998 million.

Speaker Change: I'll now turn the call over to Eric.

Aaron Jagdfeld: Good morning, everyone. Thank you for joining us today. Our second quarter results were ahead of previous expectations for adjusted EBITDA and adjusted EPS, driven by lower input costs and operating expenses relative to our prior forecast. We are raising our 2024 full-year outlook this morning as a result of the recent increase in power out of activity, including the impact of Hurricane Barrel. Year-over-year, overall net sales in the second quarter were nearly flat compared to the prior year at $998 million. Residential product sales increased 8% from the prior year due to strong growth in home standby generator shipments.

Eric: Thanks, Chris Good morning, everyone and thank you for joining US today, our second quarter results were ahead of previous expectations for adjusted EBITDA, and adjusted EPS, driven by lower input costs and operating expenses relative to our prior forecast.

Speaker Change: We are raising our 2020 for full year outlook. This morning, as a result of the recent increase in power outage activity, including the impact of Hurricane barrel.

Speaker Change: Year over year overall net sales in the second quarter were nearly flat compared to the prior year at $998 million.

Aaron P. Jagdfeld: Residential product sales increased 8% from the prior year due to strong growth in home standby generator shipments. Global C&I product sales decreased 10% from a strong prior-year second quarter as softness in the telecom and rental markets was partially offset by an increase in shipments to our industrial distributor. Additionally, gross and adjusted EBITDA margins expanded significantly from the second quarter of 2023 as a result of a favorable sales mix and the realization of lower input costs.

Speaker Change: Residential product sales increased 8% from the prior year due to strong growth in home standby generator shipments.

Aaron Jagdfeld: Global CNI products sales decreased 10% from a strong prior year second quarter, as softness in the telecom and rental markets was partially offset by an increase in shipments to our industrial distributor customers. Additionally, growth and adjusted EBITDA margins expanded significantly from the second quarter of 2023 as a result of favorable sales mix and the realization of lower input costs. Home standby shipments were in line with our prior expectations during the quarter, increasing at a mid-teens rate from the softer prior year period that included a meaningful headwind from excess fuel inventory levels. Power out of activity during the second quarter was above the long-term baseline average, primarily due to strong storms in May that impacted multiple markets in Texas.

Speaker Change: Global C&I product sales decreased 10% from a strong prior year second quarter as softness in the telecom and rental markets was partially offset by an increase in shipments to our industrial distributor customers.

Speaker Change: Additionally, gross and adjusted EBITDA margins expanded significantly from the second quarter of 2023, as a result of favorable sales mix and the realization of lower input costs.

Aaron P. Jagdfeld: Home standby shipments were in line with our prior expectations during the quarter, increasing at a mid-teens rate from the softer prior year period that included a meaningful headwind from excess fuel inventory levels. Power outage activity during the second quarter was above the long-term baseline average, primarily due to strong storms in May that impacted multiple markets in Texas. Early in the third quarter, Hurricane Beryl made landfall in the Houston area, driving year-to-date power outage activity well above the long-term baseline average and increasing demand for home standby and portable generators.

Speaker Change: Home standby shipments were in line with our prior expectations during the quarter, increasing at a mid teens rate from the softer prior year period that included a meaningful headwind from excess field inventory levels.

Speaker Change: Power outage activity during the second quarter was above the long term baseline average primarily due to strong storms in may that impacted multiple markets in Texas.

Aaron Jagdfeld: Early in the third quarter, Hurricane Barrel made landfall in the Houston area, driving year-to-date power-out activity well above the long-term baseline average and increasing demand for home standby and portable generators. After a slow start to the year, home consultations in the second quarter increased modestly over the prior year and grew at a strong rate on a sequential basis. More importantly, home consultation activity increased significantly during the month of July due to Hurricane Barrel. Additionally, close rates have improved during the first half of 2024 as we continue to execute initiatives to improve sales-lead conversion, including data-driven lead optimization practices, sales tool enhancements, and improved lead nurturing practice.

Speaker Change: Early in the third quarter Hurricane barrel made landfall in the Houston area driving year to date power outage activity well above the long term baseline average and increasing demand for home standby and portable generators.

Aaron P. Jagdfeld: After a slow start to the year, home consultations in the second quarter increased modestly over the prior year and grew at a strong rate on a sequential basis. Furthermore, home consultation activity increased significantly during the month of July due to Hurricane Beryl. Additionally, close rates have improved during the first half of 2024. As we continue to execute initiatives to improve sales lead conversion, including data-driven lead optimization practices, sales tool enhancements, and improved lead nurturing practices.

Speaker Change: After a slow start to the year home consultations in the second quarter increased modestly over the prior year and grew at a strong rate on a sequential basis.

Speaker Change: More importantly home consultation activity increased significantly during the month of July due to hurricane barrel.

Speaker Change: Additionally, close rates have improved during the first half of 2024 as we continue to execute initiatives to improve sales lead conversion.

Speaker Change: That is data driven lead optimization practices sales tool enhancements and improved lead nurturing practices.

Aaron Jagdfeld: Analysis: Although we expect close rates to improve over time, they have historically moderated immediately following a major outage event in the affected region. We remain focused on making further investments to bring new and broader demographic categories into the home stand by Generator Market, an increase engagement with our end customers, particularly in regions that have not experienced material outage activity in recent periods. We ended the second quarter with our residential dealer count at approximately 8,900, an increase of 200 dealers from the end of 2023. We also continue to strengthen our relationships with non-dealer contractors as we further grew our aligned contractor program, an effort that helps us expand our installation bandwidth while allowing contractors to purchase product through their preferred channel.

Aaron P. Jagdfeld: Although we expect close rates to improve over time, they have historically moderated immediately following a major outage event in the affected region. We remain focused on making further investments to bring new and broader demographic categories into the home standby generator market and increase engagement with our end customers, particularly in regions that have not experienced material outage activity in recent periods. We ended the second quarter with our residential dealer count at approximately 8,900, an increase of 200 dealers from the end of 2023. We also continue to strengthen our relationships with non-dealer contractors as we further grow our Aligned Contractor Program, an effort that helps us expand our installation bandwidth while allowing contractors to purchase product through their preferred channel.

Speaker Change: Although we expect close rates to improve over time, they have historically moderated immediately following a major outage event in the affected regions.

Speaker Change: We remain focused on making further investments to bring new and broader demographic categories into the home standby generator market and increase engagement with our end customers, particularly in regions that have not experienced material outage activity in recent periods.

Speaker Change: We ended the second quarter with our residential dealer count at approximately 8900, an increase of 200 dealers from the end of 2023.

Speaker Change: We also continued to strengthen our relationships with non dealer contractors as we further grew our aligned contractor program and effort that helps us expand our installation bandwidth, while allowing contractors to purchase product through their preferred channel.

Aaron Jagdfeld: We view our dealer and align contractor networks as an important competitive advantage for our business, and we continue to invest heavily in these relationships with a focus on further developing tools and resources to optimize the selling, service, and installation capabilities of our distribution partners. Activations or installations of home stand by generators were down modestly during the first half of 2024, reflecting the lower power outage environment from late 2023 through the first quarter of 2024. However, activations have returned a strong year-over-year growth in the month of July, and we expect continued growth in installations as we move through the seasonally stronger second half and impacted by the recent increase in outage activity.

Aaron P. Jagdfeld: We view our dealer and aligned contractor networks as an important competitive advantage for our business, and we continue to invest heavily in these relationships with a focus on further developing tools and resources to optimize the selling, service, and installation capabilities of our distribution partners. Activations or installations of home standby generators were down modestly during the first half of 2024, reflecting the lower power outage environment from late 2023 through the first quarter of 2024.

Speaker Change: We view, our dealer and align contractor networks as an important competitive advantage for our business and we continue to invest heavily in these relationships with a focus on further developing tools and resources to optimize the selling service and installation capabilities of our distribution partners.

Speaker Change: Activations or installations of home standby generators were down modestly during the first half of 2024, reflecting the lower power outage environment for late 2023 through the first quarter of 2024. However.

Aaron P. Jagdfeld: However, activations have returned to strong year-over-year growth in the month of July, and we expect continued growth in installations as we move through the seasonally stronger second half and are impacted by the recent increase in outage activity. As the clear leader in residential backup power, we are uniquely positioned to respond to major outage events such as Hurricane Beryl. Our ability to leverage our strong financial position to invest in inventory for storm response, combined with our logistics capabilities, allows us to rapidly deploy product into outage-impacted areas.

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

Aaron Jagdfeld: As the clear leader in residential backup power, we are uniquely positioned to respond to major outage events such as Hurricane Barrel. Our ability to leverage our strong financial position to invest in inventory for storm response, combined with our logistics capabilities, allows us to rapidly deploy product into outage-impacted areas. Our industry leading distribution network and our scalable call centers provide 24-7 consumer support and service in our customers' time of need. We are also increasing our advertising spend in the aftermath of the storm to leverage our expertise in marketing to drive awareness for our products and generate sales leads for our distribution partners, not only in the impacted region, but also more broadly across the nation.

Speaker Change: As the clear leader in residential backup power, we are uniquely positioned to respond to major outage events, such as hurricane barrel.

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

Aaron P. Jagdfeld: Our industry-leading distribution network and our scalable call centers provide 24-7 consumer support and service in our customers' time of need. We are also increasing our advertising spend in the aftermath of the storm to leverage our expertise in marketing to drive awareness for our products and generate sales leads for our distribution partners, not only in the impacted region but also more broadly across the nation. Simultaneously, we are ramping up our efforts to increase sales and installation bandwidth by adding more dealers and aligned contractors to our distribution network.

Speaker Change: Our industry, leading distribution network and our scalable call centers provide $24 seven consumer support and service and our customers time of need.

Speaker Change: We are also increasing our advertising spend in the aftermath of the storm to leverage our expertise in marketing to drive awareness for our products and generate sales leads for our distribution partners not only in the impacted region, but also more broadly across the nation.

Aaron Jagdfeld: Simultaneously, we are ramping up our efforts to increase sales and installation bandwidth by adding more dealers and align contractors to our distribution network. Finally, we are increasing our production rates for home standby generators to respond to increases in demand for these products, as we have built our supply chain and operating footprint capacities to allow for the rapid expansion of output to respond quickly to market changes. As a result, we are raising our overall 2024 outlook due to anticipated higher demand for home standby and portable generators following the recent increase in power outage activity. The effect of Hurricane Barrel is also expected to drive higher levels of awareness for backup power longer term as home and business owners seek protection from future power outages.

Speaker Change: Simultaneously, we are ramping up our efforts to increase sales and installation bandwidth by adding more dealers and align contractors to our distribution network.

Aaron P. Jagdfeld: Finally, we are increasing our production rates for home standby generators to respond to increases in demand for these products as we have built our supply chain and operating footprint capacities to allow for the rapid expansion of output to respond quickly to market changes. As a result, we are raising our overall 2024 outlook due to anticipated higher demand for home standby and portable generators following the recent increase in power outage activity. The effect of Hurricane Beryl is also expected to drive higher levels of awareness for backup power in the longer term as home and business owners seek protection from future power outages.

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

Speaker Change: As a result, we are raising our overall 2024 outlook due to anticipated higher demand for home standby and portable generators. Following the recent increase in power outage activity.

Speaker Change: The effect of Hurricane barrel is also expected to drive higher levels of awareness for backup power longer term as home and business owners seek protection from future power outages.

Aaron Jagdfeld: With only approximately 6% penetration of the addressable market of homes in the U.S., we believe there are significant opportunities to further grow the residential standby generator market.

Aaron P. Jagdfeld: With only approximately 6% penetration of the addressable market of homes in the U.S., we believe there are significant opportunities to further grow the residential standby generator market. Now moving to our residential energy technology products and solutions, the overall market for residential solar and storage continues to be negatively impacted by structural changes to California's net metering program, as well as higher borrowing costs, which will continue to weigh on 2024's results for these products.

Speaker Change: With only approximately 6% penetration of the addressable market of homes in the U S. We believe there are significant opportunities to further grow the residential standby generator market.

Aaron Jagdfeld: Now moving to our residential energy technology products and solutions, the overall market for residential solar and storage continues to be negatively impacted from structural changes to California's network. Now, we are going to look at the current monitoring program as well as higher borrowing costs, which will continue to weigh on 2024's results for these products. Although market conditions are challenging in the near term, we recently announced the execution of the previously awarded grant from the U.S. Department of Energy to provide energy storage systems to Puerto Rico with funding from the Puerto Rico Energy Resiliency Fund. The grant provides for up to 200 million in project funding over a five-year term, which is an increase from the 100 million initially awarded when we announced our participation in the program in the fourth quarter of last year.

Speaker Change: Now moving to our residential energy technology products and solutions. The overall market for residential solar and storage continues to be negatively impacted from structural changes to California's net metering program as well as higher borrowing costs, which will continue to weigh on 2020 Four's results for these products.

Aaron P. Jagdfeld: Although market conditions are challenging in the near term, we recently announced the execution of a previously awarded grant from the U.S. Department of Energy to provide energy storage systems to Puerto Rico with funding from the Puerto Rico Energy Resiliency Fund. The grant provides for up to $200 million in project funding over a five-year term, which is an increase from the $100 million initially awarded when we announced our participation in the program in the fourth quarter of last year.

Speaker Change: Although market conditions are challenging in the near term, we recently announced the execution of the previously awarded grants from the U S Department of energy to provide energy storage systems to Puerto Rico with funding from the Puerto Rico Energy Resiliency Fund.

Speaker Change: The grant provides for up to $200 million in project funding over a five year term, which is an increase from the $100 million. Initially awarded we ended up when we announced our participation in the program in the fourth quarter of last year.

Aaron Jagdfeld: The first shipments of energy storage systems for this program are expected to begin later this year, with the bulk of program installations occurring in 2025 and 2026. ECOB continues to execute well, gaining market share and driving robust margin improvement over the prior year. ECOB's connected homes count is now approaching 4 million, and services attach rates continued to increase with strong growth in both energy services and home monitoring services. Importantly, we are leveraging ECOB's expertise in developing hardware and software experiences that are intelligent and intuitive, as their development teams are leading our efforts around building the common platform that will serve as the heart of the Generac residential energy ecosystem.

Aaron P. Jagdfeld: The first shipments of energy storage systems for this program are expected to begin later this year, with the bulk of program installations occurring in 2025 and 2026. Ecobee continues to execute well, gaining market share and driving robust margin improvement over the prior year. Ecobee's connected homes count is now approaching 4 million, and service attach rates continue to increase with strong growth in both energy services and home monitoring services.

Speaker Change: The first shipments of energy storage systems for this program are expected to begin later this year with the bulk of program installations occurring in 2025 and 2026.

Speaker Change: <unk> continues to execute well gaining market share and driving robust margin improvement over the prior year.

Speaker Change: <unk> connected homes count is now approaching $4 million.

Speaker Change: Services attach rates continue to increase with strong growth in both energy services and home monitoring services.

Aaron P. Jagdfeld: Importantly, we are leveraging Ecobee's expertise in developing hardware and software experiences that are intelligent and intuitive, as their development teams are leading our efforts in building the common platform that will serve as the heart of the Generac residential energy ecosystem. As disclosed in our press release this morning, we also agreed to make an incremental $35 million minority investment in Wallbox, allowing for the expansion of our commercial agreement globally to include both residential and commercial EV charging solutions across our distribution network. Additionally, we have aligned a software development approach that will deepen the integration of Wallbox EB chargers with our dealer and customer platforms.

Speaker Change: Importantly, we are leveraging <unk> expertise in developing hardware and software experiences that are intelligent and intuitive as their development teams are leading our efforts around building a common platform that will serve as the heart the <unk> residential energy ecosystem.

Aaron Jagdfeld: As disclosed in our press release this morning, we also agreed to make an incremental $35 million minority investment in Wallbox, allowing for the expansion of our commercial agreement globally to include both residential and commercial EV charging solutions across our distribution network. Additionally, we have aligned on a software development approach that will deepen the integration of wall box EV chargers with our dealer and customer platforms. We believe that the ability to manage EV charging as part of our residential and CNI energy technology ecosystems will become increasingly important as growing electric vehicle penetration and the resulting increased demand for electricity have a rising impact on home and business owners, as well as grid operators around the world.

Speaker Change: As disclosed in our press release. This morning, we also agreed to make an incremental $35 million minority investment in walmart's, allowing for the expansion of our commercial agreement globally to include both residential and commercial EV charging solutions across our distribution networks.

Speaker Change: Additionally, we have aligned on a software development approach that will deepen the integration of Walmart's EBIT EV Chargers with our dealer and customer platforms.

Aaron P. Jagdfeld: We believe that the ability to manage EV charging as part of our residential and C&I energy technology ecosystems will become increasingly important as growing electric vehicle penetration and the resulting increased demand for electricity have a rising impact on home and business owners as well as grid operators around the world. As we continue to build out our energy technology solutions, we believe that the combination of our internal initiatives, strategic investments, and core competencies will allow us to effectively compete in these large and growing markets.

Speaker Change: We believe that the ability to manage EV charging as part of our residential and C&I energy technology ecosystems will become increasingly important as growing electric vehicle penetration and the resulting increased demand for electricity have a rising impact on home and business owners as well as grid operators around the world.

Aaron Jagdfeld: As we continue to build out our energy technology solutions, we believe that the combination of our internal initiatives, strategic investments, and core competencies will allow us to effectively compete in these large and growing markets. As we bring increasingly competitive solutions to market over the coming quarters, starting with our next generation energy storage system later this year, we will accelerate our efforts in expanding and engaging our distribution network. This will allow us to gain market share by further leveraging our expertise in providing superior channel and customer support, as well as our proficiency in delivering qualified sales leads to distribution partners and our brand strength.

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

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

Speaker Change: As we bring increasingly competitive solutions to market over the coming quarters, starting with our next generation energy storage system. Later this year, we will accelerate our efforts in expanding and engaging our distribution network.

Speaker Change: This will allow us to gain market share by further leveraging our expertise in providing superior channel and customer support as well as our proficiency in delivering qualified sales leads to distribution partners and our brand strength.

Aaron Jagdfeld: We believe our unique and comprehensive approach to residential energy management will provide further differentiation as we develop the smart energy home of the future. Switching now to our CNI product category, as previously expected, global CNI products sales declined 10% from the prior year, driven by a decrease in shipments to both domestic telecom and rental customers. This decline was partially offset by continued growth with our North American industrial distributors, as shipments to this channel again grew at a robust rate in the second quarter, and quoting activity remained resilient. We continue to expand our market share primarily due to our ongoing focus on operational execution, leading to reduced product lead times and further optimization of our domestic distributor channel.

Speaker Change: We believe our unique and comprehensive approach to residential energy management will provide further differentiation as we develop the smart energy home of the future.

Aaron P. Jagdfeld: Switching now to our C&I product category, as previously expected, global C&I product sales declined 10% from the prior year, driven by a decrease in shipments to both domestic telecom and rental customers. However, this decline was partially offset by continued growth with our North American industrial distributors as shipments to this channel again grew at a robust rate in the second quarter and quoting activity remained resilient. We continue to expand our market share, primarily due to our ongoing focus on operational execution, leading to reduced product lead times and further optimization of our domestic distributor channel.

Speaker Change: Switching now to our C&I product category as previously expected global C&I products sales declined 10% from the prior year driven by a decrease in shipments to our domestic telecom and rental customers.

Speaker Change: This decline was partially offset by continued growth with our north American industrial distributors as shipments to this channel again grew at a robust rate in the second quarter and quoting activity remained resilient.

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

Aaron Jagdfeld: This includes additional investment in certain territories where we believe we have a potential to improve our share regionally through M&A or further development of our independent distribution partners. As expected, shipments to national telecom and rental equipment customers declined in the quarter from the strong prior year period, and we continue to believe these end markets will remain soft for the balance of the year. However, we see long-term growth opportunities in both markets despite the near-term cyclical weakness. We believe the critical need for future infrastructure projects provides substantial runway for growth in the residential channel. In the market for backup power for telecom applications, our long-term growth expectations are supported by the secular trend of growing global power and network hub counts and the increasingly critical nature of wireless communications and services that require significantly greater power reliability.

Aaron P. Jagdfeld: This includes additional investment in certain territories where we believe we have the potential to improve our share regionally through M&A or further development of our independent distribution partners. As expected, shipments to national telecom and rental equipment customers declined in the quarter from the strong prior year period, and we continue to believe these end markets will remain soft for the balance of the year. However, we see long-term growth opportunities in both markets despite the near-term cyclical weakness.

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

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

Speaker Change: However, we see long term growth opportunities in both markets. Despite the near term cyclical weakness.

Aaron P. Jagdfeld: We believe the critical need for future infrastructure projects provides substantial runway for growth in the rental channel. In the market for backup power for telecom applications, our long-term growth expectations are supported by the secular trend of growing global tower and network hub counts and the increasingly critical nature of wireless communications and services that require significantly greater power reliability.

Speaker Change: We believe the critical need for future infrastructure projects provides substantial runway for growth in the resident in the rental channel.

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

Aaron Jagdfeld: As previously announced in late June, we acquired the CNI battery energy storage system product offering from Sun Grid Solutions located in Cambridge, Canada. This small but strategic acquisition brings us engineering and manufacturing expertise to better serve the growing market for behind-the-meter energy storage solutions for commercial and industrial applications, including where it is deployed as a critical component in multi-asset microgrids. We have an expanding pipeline of commercial projects in which we expect to provide stationary battery storage alongside our traditional generator product offerings, and additionally, we're seeing a number of projects in which EB charging equipment is also included.

Aaron P. Jagdfeld: As previously announced in late June, we acquired the C&I Battery Energy Storage System product offering from SunGrid Solutions located in Cambridge, Canada. This small but strategic acquisition brings us engineering and manufacturing expertise to better serve the growing market for behind-the-meter energy storage solutions for commercial and industrial applications, including where it is deployed as a critical component in multi-asset microgrids. We have an expanding pipeline of commercial projects in which we expect to provide stationary battery storage alongside our traditional generator product offerings.

Speaker Change: As previously announced in late June we acquired the C&I battery energy storage system product offering from Sun grid solutions located in Cambridge, Canada.

Speaker Change: This small, but strategic acquisition brings us engineering and manufacturing expertise to better serve the growing market for behind the meter energy storage solutions for commercial and industrial applications, including where it is deployed as a critical component in multi asset micro grids.

Speaker Change: We have an expanding pipeline of commercial projects in which we expect to provide stationary battery storage alongside our traditional generator product offerings and Additionally, we are seeing a number of projects and with EV charging equipment is also included.

Aaron P. Jagdfeld: Additionally, we're seeing a number of projects in which EV charging equipment is also included. We believe our commercial agreement with Wallbox is important to helping expand our opportunity to win these and other similar projects. As we leverage our leading position in natural gas generators and our newly acquired capabilities in energy storage with the SunGrid acquisition, we believe we are uniquely positioned to deliver comprehensive solutions for the developing microgrid market, which is focused on providing C&I customers with important energy resiliency as well as lower overall energy costs.

Aaron Jagdfeld: We believe our commercial agreement with Wallbox is important to helping expand our opportunity to win these and other similar projects. As we leverage our leading position in natural gas generators and our newly acquired capabilities and energy storage with the Sun Grid acquisition, we believe we are uniquely positioned to deliver comprehensive solutions for the developing micro grid market, which is focused on providing CNI customers with important energy resiliency as well as lower overall energy costs. Internationally, total sales were lower year-over-year, primarily related to declines in inter-company shipments from our Mexican operations to the telecom market in the US, as well as lower shipments in Europe, most notably for portable generators.

Speaker Change: We believe our commercial agreement with Walmart is important to helping expand our opportunity to win these and other similar projects.

Speaker Change: As we leverage our leading position in natural gas generators, and our newly acquired capabilities in energy storage, but the Sungard acquisition. We believe we are uniquely positioned to deliver comprehensive solutions for the developing micro grid market, which is focused on providing C&I customers with important energy resiliency as well as lower overall energy cost.

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

Speaker Change: Internationally total sales were lower year over year, primarily related to declines in intercompany shipments from our Mexican operations to the telecom market in the U S as well as lower shipments in Europe, most notably for portable generators.

Aaron Jagdfeld: Increases in shipments to other key regions such as Latin America and India partially offset the softness. As previously discussed, our expanded agreement with Wallbox also includes incremental collaboration in international and markets. This is another example of our longer term international growth strategy as we bring a broad portfolio of solutions to more markets around the world, building on the strong track record of growth and margin expansion in our international segment over the past several years.

Speaker Change: Increases in shipments to other key regions, such as Latin America, and India, partially offset the softness.

Aaron P. Jagdfeld: As previously discussed, our expanded agreement with Wallbox also includes incremental collaboration in international and market. This is another example of our longer-term international growth strategy as we bring a broad portfolio of solutions to more markets around the world, building on the strong track record of growth and margin expansion in our international segment over the past several years. In closing this morning, our second quarter margin outperformance and increased 2024 outlook highlight the fundamental momentum occurring within our business.

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

Aaron Jagdfeld: In closing this morning, our second quarter margin outperformance and increased 2024 outlook highlight the fundamental momentum occurring within our business. Significant year-over-year margin expansion and robust free cash flow generation in the first half of 2024 have supported our continued investments in accelerating our power in a smarter world enterprise strategy, while also enhancing shareholder value through continued share repurchases. Once again, Hurricane Barrel highlighted the vulnerability of the electrical grid and the need for resiliency. Barrel became the earliest category five hurricane to form in the Atlantic on record, providing further evidence that the changing weather patterns continue to threaten the continuity of power that we are increasingly dependent on.

Speaker Change: In closing this morning, our second quarter margin outperformance and increased 2024 outlook highlight the fundamental momentum occurring within our business Cigna.

Aaron P. Jagdfeld: Significant year-over-year margin expansion and robust free cash flow generation in the first half of 2024 have supported our continued investments in accelerating our Powering a Smarter World enterprise strategy, while also enhancing shareholder value through continued share repurchases. Once again, Hurricane Beryl highlighted the vulnerability of the electrical grid and the need for resiliency. Beryl became the earliest Category 5 hurricane to form in the Atlantic on record, providing further evidence that changing weather patterns continue to threaten the continuity of power that we are increasingly dependent on.

Speaker Change: Significant year over year margin expansion and robust free cash flow generation in the first half of 2024 have supported our continued investments in accelerating our powering a smarter world enterprise strategy, while also enhancing shareholder value through continued share repurchases.

Speaker Change: Once again hurricane barrel highlighted the vulnerability of electrical of the electrical grid and the need for resiliency.

Speaker Change: Beryl became the earliest category five hurricane to form in the Atlantic on record, providing further evidence that the changing weather patterns continued to threaten the continuity of power that we are increasingly dependent on.

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

Aaron P. Jagdfeld: Additionally, the rapid adoption of intermittent generation sources and growing demand from electrification trends, as well as the adoption of artificial intelligence, are providing additional stresses on our nation's aging power grid. These secular trends will continue to manifest in lower power quality and higher power prices for all ratepayers in the decades to come. By expanding on Generac's core resiliency value proposition and helping optimize for efficiency, consumption, cost, and comfort, we remain confident that our products and solutions are uniquely capable of helping home and business owners solve the challenges around resiliency and rising utility costs. I'll now turn the call over to York to provide additional details on our second quarter results and our increased outlook for 2024. Thanks, Aaron.

Speaker Change: Additionally, the rapid adoption of intermittent generation sources and growing demand from electrification trends as well as the adoption of artificial intelligence are providing additional stresses on our nation's aging power grid.

Speaker Change: These secular trends will continue to manifest in lower power quality and higher power prices for all ratepayers in the decades to come.

Speaker Change: By expanding our <unk> core resiliency value proposition and helping optimize for efficiency consumption cost and comfort we remain confident that our products and solutions are uniquely capable of helping home and business owners solve the challenges around resiliency and rising utility costs.

York Ragen: I'm now turning the call over to York to provide additional details on our second quarter results and our increased outlook for 2024. York: Thanks, Aaron. Looking at second quarter 2024 results in more detail, net sales were 998 million during the second quarter of 2024 as compared to 1 billion in the prior year second quarter. The combination of contributions from acquisitions and the favorable impact from foreign currency had a slight positive impact on revenue during the quarter. Briefly looking at consolidated net sales for the second quarter by product class, residential product sales increased 8% to 538 million as compared to 499 million in the prior year. Growth in residential product sales was primarily driven by a mid-teens increase in shipments of home standby generators and strong growth for portable generators domestically. This was partially offset by a decrease in portable generators shipments in Europe given a strong prior year comparison, ongoing softness in the domestic clean energy market, and lower short product sales. Commercial and industrial products sales for the second quarter of 2024 decreased 10% to 344 million as compared to 384 million in the prior year quarter. Foreign currency and acquisitions contributed approximately 1% growth in the quarter.

Speaker Change: I'll now turn the call over to York to provide additional details on our second quarter results and our increased outlook for 2020 for Europe.

York A. Ragen: Looking at second quarter 2024 results in more detail, net sales were $998 million during the second quarter of 2024 as compared to $1 billion in the prior year's second quarter. The combination of contributions from acquisitions and the favorable impact from foreign currency had a slight positive impact on revenue during the quarter. Here, we briefly look at consolidated net sales for the second quarter by product class. Residential product sales increased 8% to $538 million as compared to $499 million the prior year.

York: Thanks Aaron.

York: Looking at second quarter 2024 results in more detail.

York A. Ragen: Growth in residential product sales was primarily driven by a mid-teens increase in shipments of home standby generators and Strong Growth for Portable Generators Domestically. However, this was partially offset by a decrease in portable generator shipments in Europe, given a strong prior year comparison, ongoing softness in the domestic clean energy market, and lower chore product sales. Commercial and industrial product sales for the second quarter of 2024 decreased 10% to $344 million as compared to $384 million in the prior year quarter.

York: Net sales were $998 million during the second quarter of 2024 as compared to 1 billion in the prior year second quarter.

Speaker Change: The combination of contributions from acquisitions and the favorable impact from foreign currency had a slight positive impact on revenue during the quarter.

York: Briefly looking at consolidated net sales for the second quarter by product class.

York: Residential product sales increased 8% to $538 million as compared to 499 million in the prior year.

York: Growth in residential product sales was primarily driven by a mid teens increase in shipments of home standby generators.

York: And strong growth for portable generators domestically.

York: This was partially offset by a decrease in portable generator shipments in Europe, given our strong prior year comparison.

York: Ongoing softness in the domestic clean energy market and lower <unk> product sales.

York: Commercial and industrial product sales for the second quarter of 2024 decreased 10% to $344 million as compared to $384 million in the prior year quarter.

York A. Ragen: Foreign currency and acquisitions contributed approximately 1% of growth in the quarter. The core sales decline was primarily due to the expected weakness in sales to our domestic telecom and national equipment rental customers. This was partially offset by a robust increase in C&I product shipments through our domestic industrial distributor channel and Growth Concern, other key international markets. Net sales for other products and services decreased slightly to $116 million as compared to $117 million in the prior year quarter.

York: Foreign currency and acquisitions contributed approximately 1% growth in the quarter.

York Ragen: The core sales decline was primarily due to the expected weakness in sales to our domestic telecom and national equipment rental customers. This was partially offset by a robust increase in CNI product shipments through our domestic industrial distributor channel and growth in certain other key international markets. Net sales for other products and services decreased slightly to 116 million as compared to 117 million in the prior year quarter. Growth profit margin was 37.6% compared to 32.8% in the prior year second quarter, primarily due to favorable sales mix given stronger home stand by shipments and the realization of lower input costs, including lower freight and steel costs, as well as improved production efficiencies.

York: The core sales decline was primarily due to the expected weakness in sales to our domestic telecom and national equipment rental customers. This was partially offset by a robust increase in C&I products shipments through our domestic industrial distributor channel.

York: And growth in certain other key international markets.

York: Net sales for other products and services decreased slightly to $116 million as compared to $117 million in the prior year quarter.

York A. Ragen: Gross profit margin was 37.6% compared to 32.8% in the prior year's second quarter, primarily due to a favorable sales mix, given stronger home standby shipments, and the realization of lower input costs, including lower freight and steel costs, as well as improved production efficiency. Second quarter gross margins exceeded our expectations as we were able to deliver the implied gross margin ramp in the second half of the year sooner than expected given improving input costs. Operating expenses increased $30 million, or 12%, as compared to the second quarter of 2023.

York: Gross profit margin was 37, 6% compared to 32, 8% in the prior year second quarter.

York: Primarily due to favorable sales mix given stronger home standby shipments.

York: And the realization of lower input costs, including lower freight and steel costs as well as improved production efficiencies.

York Ragen: Second quarter growth margins exceeded our expectations as we were able to deliver the implied growth margin ramp in the second half of the year sooner than expected, given improving input costs. Operating expenses increased 30 million or 12% as compared to the second quarter of 2023. This increase was primarily due to ongoing investment and resources to drive future growth across the business, including salaries, benefits, stock compensation, and bonus. And higher marketing and promotional spend to create incremental awareness for our products. As a result of these factors, adjusted EBITDA before deducting for non-controlling interests, as defined in our earnings release, was 165 million or 16.5% in net sales in the second quarter, as compared to 137 million or 13.6% in net sales in the prior year.

York: Second quarter gross margins exceeded our expectations as we were able to deliver the implied gross margin ramp in the second half of the year.

York: Sooner than expected given improving input costs.

York A. Ragen: This increase was primarily due to ongoing investment and resources to drive future growth across the business. Salaries, Benefits, Stock Compensation, and Bonus, and Hire Marketing and Promotional Spend to create incremental awareness for our product. As a result of these factors, adjusted EBITDA before deducting non-controlling interests, as defined in our earnings release, was $165 million, or 16.5% of net sales in the second quarter, as compared to $137 million, or 13.6% of net sales in the prior year.

York: Operating expenses increased $30 million or 12% as compared to the second quarter of 2023. This increase was primarily due to ongoing investment in resources to drive future growth across the business, including salaries benefits and stock compensation and bonus.

York: And higher marketing and promotional spend to create incremental awareness for our products.

York: As a result of these factors adjusted EBITDA before deducting for Noncontrolling interests as defined in our earnings release was $165 million or 16, 5% of net sales in the second quarter as compared to $137 million or 13, 6% of net sales in the prior year.

York Ragen: Adjust EBITDA margins came in ahead of our expectations during the quarter as a result of the growth margin performance, as well as lower operating expenses compared to prior forecast.

York A. Ragen: Adjusted EBITDA margins came in ahead of our expectations during the quarter as a result of gross margin outperformance, as well as lower operating expenses compared to prior forecasts. I will now briefly discuss financial results for our two reporting segments. Domestic segment total sales, including inter-segment sales, increased 1% to $827 million in the quarter, as compared to $815 million in the prior quarter, as strong growth in the residential product category was mostly offset by expected weakness in C&I product shipment.

York: Adjusted EBITDA margins came in ahead of our expectations during the quarter as a result of the gross margin outperformance as well as lower operating expenses compared to prior forecast.

York Ragen: I will now briefly discuss financial results for our two reporting segments. Domestic segment total sales, including intersection sales, increased 1% to 827 million in the quarter as compared to 815 million in the prior quarter. A strong growth in the residential product category was mostly offset by expected weakness in CNI product shipping. I just heaped off for the segment was 140 million, representing a 16.9% margin as compared to 103 million in the prior year, or 12.7% of total sales. This margin improvement was primarily driven by favorable sales mix and the realization of lower input costs, partially offset by higher operating expense investments to support future growth initiatives.

York A. Ragen: Adjusted EBITDA for the segment was $140 million, representing a 16.9% margin, as compared to $103 million in the prior year, or 12.7% of total sales. This margin improvement was primarily driven by favorable sales mix and the realization of lower input costs, partially offset by higher operating expense investments to support future growth initiatives. The international segment total sales, including intersegment sales, decreased 18% to $185 million in the quarter, as compared to $224 million in the prior year quarter.

York: I will now briefly discuss financial results for our two reporting segments.

York: Domestic segment total sales, including inter segment sales increased 1% to $827 million in the quarter.

York: As compared to 815 million in the prior year quarter as strong growth in the residential product category was mostly offset by expected weakness in C&I products shipments.

York: Adjusted EBITDA for the segment was $140 million, representing a 16, 9% margin as compared to 103 million in the prior year or 12, 7% of total sales.

York: This margin improvement was primarily driven by favorable sales mix and the realization of lower input costs, partially offset by higher operating expense investments to support future growth initiatives.

York Ragen: International segment total sales, including inter-segment sales, decrease 18% to 185 million in the quarter as compared to 224 million in the prior year quarter. The approximate 18% core total sales decline for the segment was primarily driven by a decrease in inter-company shipments from our Mexican operations to the domestic telecom market. As well as lower shipments in most European markets, most notably for portable generators. This softness was partially offset by increased sales in other key regions such as Latin America and India. Adjustity but off for the segment before deducting for non-controlling interest was 25 million or 13.6% of total sales, as compared to 33 million or 14.9% of total sales in the prior year.

York: International segment total sales, including inter segment sales decreased 18% to $185 million in the quarter as compared to 224 million in the prior year quarter.

York A. Ragen: The approximate 18% core total sales decline for the segment was primarily driven by a decrease in intercompany shipments from our Mexican operations to the domestic telecom market, as well as lower shipments in most European markets, most notably for portable generators. However, this softness was partially offset by increased sales in other key regions such as Latin America and India. Adjusted EBITDA for the segment before deducting for non-controlling interest was $25,000,000, or 13.6% of total sales, as compared to $33 million, or 14.9% of total sales, in the prior year.

York: The approximate 18% core total sales decline for the segment was primarily driven by a decrease in intercompany shipments from our Mexican operations to the domestic telecom market.

York: As well as lower shipments in most European markets, most notably for portable generators.

York: This softness was partially offset by increased sales in other key regions, such as Latin America and India.

York: Adjusted EBITDA for the segment before deducting for Noncontrolling interests was $25 million or 13, 6% of total sales.

York: As compared to 33 million or 14, 9% of total sales in the prior year.

York Ragen: This margin decline was primarily due to reduced operating leverage on lower shipments during the quarter.

York: This margin decline was primarily due to reduced operating leverage on lower shipments during the quarter.

York Ragen: Now switching back to our financial performance for the second quarter of 2024 on a consolidated basis. As disclosed in our earnings release, gap net income for the company in the quarter was 59 million, as compared to 45 million for the second quarter of 2023. Gap income taxes during the current year second quarter were 20 million, or an effective tax rate of 25%. As compared to 16 million or an effective tax rate of 25.9% for the prior year. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior year period, which did not repeat in the current year.

York A. Ragen: This margin decline was primarily due to reduced operating leverage on lower shipments during the quarter. Now, switching back to our financial performance for the second quarter of 2024 on a consolidated basis. As disclosed in our earnings release, gap net income for the company in the quarter was $59 million, as compared to $45 million for the second quarter of 2023. Gap income taxes during the current year, second quarter, were $20 million, or an effective tax rate of 25%, as compared to $16 million, or an effective tax rate of 25.9% for the prior year.

York: Now switching back to our financial performance for the second quarter of 2024 on a consolidated basis.

York: As disclosed in our earnings release GAAP net income for the company in the quarter was $59 million as compared to $45 million for the second quarter of 2023.

York: GAAP income taxes during the current year second quarter were $20 million.

York: Or an effective tax rate of 25%.

York: As compared to $16 million or an effective tax rate of 25, 9% for the prior year.

York A. Ragen: The decrease in the effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior year period, which did not repeat in the current year. Diluted net income per share for the company on a gap basis was $0.97 in the second quarter of 2024, compared to $0.70 in the prior year. Adjusted net income for the company, as defined in our earnings release, was $82 million in the current year quarter, or $1.35 per share.

York: The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior year period, which did not repeat in the current year.

York Ragen: Diluted net income per share for the company on a GAAP basis was 97 cents in the second quarter of 2004 compared to 70 cents in the prior year. Adjusted net income for the company, as defined in our earnings release, was 82 million in the current year quarter, or $1.35 per share. This compares to adjusted net income of 68 million in the prior year, $1.08 per share. Cash flow from operations in the current year second quarter was 78 million, as compared to 83 million in the prior year second quarter. And free cash flow, as defined in our earnings release, was 50 million as compared to 54 million in the same quarter last year.

York: Diluted net income per share for the company on a GAAP basis was <unk> 97 in the second quarter of 2004.

York: Compared to <unk> 70 in the prior year.

York: Adjusted net income for the company as defined in our earnings release was $82 million in the current year quarter or $1 35 per share.

York A. Ragen: This compares to adjusted net income of $68 million in the prior year, $1.08 per share. Cash flow from operations in the current year's second quarter was $78 million, as compared to $83 million in the prior year's second quarter.

York: This compares to adjusted net income of 68 million in the prior year $1 eight per share.

York: Cash flow from operations in the current year second quarter was $78 million as compared to $83 million in the prior year second quarter and free cash flow as defined in our earnings release was $50 million as compared to $54 million in the same quarter last year.

York A. Ragen: And free cash flow, as defined in our earnings release, was $50 million, as compared to $54 million in the same quarter last year. This change in free cash flow was primarily driven by higher cash income tax payments in the current year quarter, partially offset by higher operating earnings. Additionally, during the second quarter, we repurchased 355,640 shares of our common stock for approximately $51 million. There is approximately $449 million remaining under our current repurchase authorization as of June 30th.

York Ragen: This change in free cash flow was primarily driven by higher cash income tax payments in the current year quarter, partially offset by higher operating earnings.

York: This change in free cash flow was primarily driven by higher cash income tax payments in the current year quarter, partially offset by higher operating earnings.

York Ragen: Additionally, during the second quarter, we repurchased 355,640 shares of our common stock for approximately $51 million. There is an approximately $449 million remaining under our current repurchase authorization as of June 30th.

York: Additionally, during the second quarter, we repurchased 355000 640 million shares of our common stock for approximately $51 million.

York: There is an approximately $449 million remaining under our current repurchase authorization as of June 30th.

York Ragen: In early July, we amended and replaced our existing $530 million term loan B credit facility, which was set to mature in December 2026, with a new credit facility that has an aggregate principal amount of $500 million after we made a $30 million cash prepayment in connection with the term loan amendment. This new credit facility has a maturity date of July 3rd, 2031. The new credit facility maintains the existing low rate of sulfur plus 175 basis points while also eliminating a 10 basis point credit spread adjustment that was included in the previous term loan-be credit facility.

York A. Ragen: In early July, we amended and replaced our existing $530 million term loan B credit facility, which was set to mature in December 2026, with a new credit facility that has an aggregate principal amount of $500 million after we made a $30 million cash prepayment in connection with the term loan amendment. This new credit facility has a maturity date of July 3rd, 2031. The new credit facility maintains the existing low rate of SOFR plus 175 basis points while also eliminating a 10 basis point credit spread adjustment that was included in the previous term loan B credit facility.

York: In early July we amended and replace our existing $530 million term loan B credit facility, which was set to mature in December 2026, with a new credit facility that has an aggregate principal amount of $500 million. After we made a $30 million cash prepayment in connection with the term loan amendment.

York: This new credit facility has a maturity date of July three 2031.

York: The new credit facility maintains the existing low rate of sulfur plus 175 basis points. While also eliminating a 10 basis point credit spread adjustment that was included in the previous term loan B credit facility.

York Ragen: Quarterly principal payments equal to 1.25 million will begin in October 2024, with Alumsum due at maturity in July 2031. Total debt outstanding at the end of the quarter was 1.56 billion, resulting in a gross debt leverage ratio at the end of the second quarter of 2.25 times on an as reported basis, a continued reduction from 2.5 times at the end of 2023.

York A. Ragen: Quarterly principal payments equal to $1.25 million will begin in October 2024, with a lump sum due at maturity in July 2031. Total debt outstanding at the end of the second quarter was $1.56 billion, resulting in a gross debt leverage ratio at the end of the second quarter of 2.25 times on an as-reported basis, a continued reduction from 2.5 times at the end of 2023.

York: Quarterly principal payments equaled a one 5 million will begin in October 2024, with a lump sum due at maturity in July 2031.

York: Total debt outstanding at the end of the quarter was $1 $5 6 billion, resulting in a gross debt leverage ratio at the end of the second quarter of 225 times on an as reported basis a continued.

York: The reduction from two five times at the end of 2023.

York Ragen: As we expect to generate strong free cash flow in the second half of 2024, we will continue to execute a disciplined and balanced capital allocation strategy.

York A. Ragen: As we expect to generate strong free cash flow in the second half of 2024, we will continue to execute a disciplined and balanced capital allocation strategy. With that said, I will now provide further comments on our updated outlook for 2024. As disclosed in our press release this morning, we are increasing our overall outlook for full year 2024. Given the elevated demand for backup power in the state of Texas due to the recent power outages, including Hurricane Beryl that made landfall in early July, we now expect overall 2024 net sales growth to be approximately 4 to 8% as compared to the prior year.

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

York Ragen: With that, I will now provide further comments on our updated outlook for 2024. As this goes in our press release this morning, we are increasing our overall outlook for full year 2024. Given the elevated demand for backup power in the state of Texas due to the recent power outages, including Hurricane Barrel that made landfall in early July, we now expect overall 2024 net sales growth to be approximately 4 to 8% as compared to the prior year. This is an increase from the previously expected range of 3 to 7%. Again, as a result of the recent outage activity in Texas, we are increasing our expectations for 2024 homestand by generator sales growth to be in the high teens range.

York A. Ragen: This is an increase from the previously expected range of 3-7%. Again, as a result of the recent outage activity in Texas, we are increasing our expectations for 2024 home standby generator sales growth to be in the high teens range, and Portable Generator Sales are also now expected to be well above our prior forecast. Partially offsetting these strong trends in Texas, we are seeing continued softness in the residential clean energy and chore markets, resulting in only a modest reduction in our outlook for those products.

York: With that I will now provide further comments on our updated outlook for 2024.

York: As disclosed in our press release. This morning, we are increasing our overall outlook for full year 2024.

York: Given the elevated demand for backup power in the state of Texas due to the recent power outages, including Hurricane barrel that made landfall in early July.

York: We now expect overall 2024 net sales growth to be approximately 4% to 8% as compared to the prior year.

York: This is an increase from the previously expected range of 3% to 7%.

York: Again as a result of the recent outage activity in Texas, we are increasing our expectations for 2020 for home standby generators sales growth to be in the high teens range and portable generator.

York Ragen: And portable generator sales are also now expected to be well above our forecast. Partially offsetting the strong trends in Texas, we are seeing continuous softness in residential clean energy and chore markets, resulting in only a modest reduction in our outlook for those products. As a result, overall residential product sales for the full year are now expected to grow at a mid-teens rate, as compared to our prior forecast for low double-digit growth. Our full year 2024 sales growth outlook for the remaining product categories is unchanged from our prior forecast. From a pacing perspective, we anticipate your over-year net sales growth will accelerate as we move through the second half of the year, with third quarter net sales growth in the high single-digit range and fourth quarter net sales growth in the low to mid-teens range.

York: Generally our sales are also now expected to be well above our prior forecast.

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

York A. Ragen: As a result, overall residential product sales for the full year are now expected to grow at a mid-teens rate as compared to our prior forecast for low double-digit growth. Our full year 2024 sales growth outlook for the remaining product categories is unchanged from our prior forecast.

York: As a result overall residential product sales for the full year.

York: Are now expected to grow at a mid teens rate as compared to our prior forecast for low double digit growth.

York: Our full year 2024 sales growth outlook for the remaining product categories is unchanged from our prior forecast.

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

York: From a pacing perspective, we anticipate year over year net sales growth will accelerate as we move through the second half of the year with third quarter net sales growth in the high single digit range.

York: Fourth quarter net sales growth in the low to mid teens range.

York Ragen: This guidance assumes power outage activity that is in line with the longer-term baseline average for the remainder of the year and does not assume the benefit of an additional major power outage of it for the rest of the year. Our gross margin expectations for the full year 2024 have also increased relative to our previous guidance, given the second quarter outperformance and higher sales mix from homestand by generator sales in the second half of the year. We now expect gross margins to improve by approximately 350 to 400 basis points over the full year 2023. This is an increase from the 300 to 350 basis point improvement previously expect.

York: This guidance assumes power outage activity that is in line with the longer term baseline average for the remainder of the year and does not assume the benefit of an additional major power outage event for the rest of the year.

York A. Ragen: Our gross margin expectations for the full year 2024 have also increased relative to our previous guidance given the second quarter outperformance and higher sales mix from home standby generator sales in the second half of the year. We now expect gross margins to improve by approximately 350 to 400 basis points over the full year 2023. This is an increase from the 300 to 350 basis point improvement previously expected. Gross margins are projected to grow sequentially through the remainder of the year due to continued favorable mix, price, and cost.

York: Our gross margin expectations for the full year 2024 have also increase relative to our previous guidance given the second quarter outperformance.

York: And higher sales mix from home standby generator sales in the second half of the year.

York: We now expect gross margins to improve by approximately 350 to 400 basis points over the full year 2023.

York: This is an increase from the 300 to 350 basis point improvement previously expected.

York Ragen: Gross margins are projected to grow sequentially through the remainder of the year due to continued favorable mix, price, and cost, with fourth quarter gross margin improving over third quarter gross margins by approximately 50 basis points. As a result of this increase, outlook for gross margins, adjustity but not margins before deducting for non-controlling interest are now expected to be approximately 17 to 18% for the full year 2024. Additionally, we also expected Jesse Vitton margins to grow sequentially through the remainder of the year, driven by the above mention gross margin improvement and additional operating leverage on higher shipments as we move throughout the second half of the year.

York: Gross margins are projected to grow sequentially through the remainder of the year due.

York: Due to continued favorable mix price and cost with fourth quarter gross margin improving over third quarter gross margins by approximately 50 basis points.

York A. Ragen: With fourth quarter gross margin exceeding third quarter gross margin by approximately 50 basis points. As a result of this increased outlook for gross margins, adjusted EBITDA margins before deducting for non-controlling interest are now expected to be approximately 17 to 18% for the full year 2024.

York: As a result of this increased outlook for gross margins adjusted EBITDA margins before deducting for Noncontrolling interests are now expected to be approximately 17% to 18% for the full year 2024.

York A. Ragen: Additionally, we also expect Jesse Vidal margins to grow sequentially through the remainder of the year driven by the above-mentioned gross margin improvement and additional operating leverage on higher shipments as we move throughout the second half of the year. This will result in fourth quarter adjusted EBITDA margins improving over third quarter adjusted EBITDA margins by approximately 200 basis points. Resulting in fourth quarter JCPTOW margins of approximately 20%. As is our normal practice, we will also provide additional guidance details to assist with modeling adjusted earnings per share and free cash flow for the full year 2024.

York: Additionally, we also expect adjusted EBITDA margins to grow sequentially through the remainder of the year driven by the above mentioned gross margin improvement.

York: And additional operating leverage on higher shipments as we move throughout the second half of the year.

York Ragen: This will result in fourth quarter-gross margin improving over third quarter-gross margin by approximately 200 basis points, resulting in fourth quarter-gross margin of approximately 20%.

York: This will result in fourth quarter, adjusted EBITDA margins, improving over third quarter, adjusted EBITDA margins by approximately 200 basis points.

York: Resulting in fourth quarter, adjusted EBITDA margins of approximately 20%.

York Ragen: As is our normal practice, we will also provide additional guidance details to assist with modeling adjusted earnings per share and free cash flow for the full year 2024. For the full year, our gap effective tax rate is still expected to be approximately 25 to 26%. This is expected result in a gap effective tax rate of approximately 25% for each of the remaining two quarters of the year. Importantly, to arrive at appropriate estimates for adjusted net income and adjusted earnings per share, addback items should be reflective net of tax using the 25% expected effective tax rate.

York: As is our normal practice, we will also.

York: Ill provide additional guidance details to assist with modeling adjusted earnings per share and free cash flow for the full year 2024.

York A. Ragen: For the full year, our gap effective tax rate is still expected to be approximately 25 to 26 percent. This is expected to result in a gap effective tax rate of approximately 25% for each of the remaining two quarters of the year. And importantly, to arrive at appropriate estimates for adjusted net income and adjusted earnings per share, add-back items should be reflective net of tax using the 25% expected effective tax rate.

York: For the full year, our GAAP effective tax rate is still expected to be approximately 25% to 26%.

York: This is expected to result in a GAAP effective tax rate of approximately 25% for each of the remaining two quarters of the year.

York: Importantly to arrive at appropriate estimates for adjusted net income and adjusted earnings per share.

York: Add back items should be reflected net of tax using the 25% expected effective tax rate.

York Ragen: Gross interest expense is now expected to be approximately 92 to 94 million, as compared to the prior guidance of 90 to 93. This guidance assumes no additional term loan or revolver principal prepayments during the year. Stock compensation expense is now expected to be between 52 to 54 million for the year, as compared to prior guidance of 55 to 60 million. We're also increasing our free cash flow conversion guidance for the full year to be well above 100%, as we anticipate an incremental benefit from working capital reduction in the second half of the year. This compares to our prior guidance of approximately 100%.

York A. Ragen: Gross interest expense is now expected to be approximately $92 to $94 million as compared to the prior guidance of $90 to $93. This guidance assumes no additional term loan or revolver principal prepayments during the year. Stock compensation expense is now expected to be between $52 to $54 million for the year as compared to prior guidance of $55 to $60 million.

York: Gross interest expense is now expected to be approximately 92% to $94 million as compared to the prior guidance of 90 to 93.

York: This guidance assumes no additional term loan order of all of our principal prepayments during the year.

York: Stock compensation expense is now expected to be between $52 million to $54 million for the year as compared to prior guidance of $55 million to $60 million.

York A. Ragen: We are also increasing our free cash flow conversion guidance for the full year to be well above 100% as we anticipate an incremental benefit from working capital reduction in the second half of the year. This compares to our prior guidance of approximately 100%. Our full-year weighted average diluted share count is now expected to decrease to approximately 60.5 to 61 million shares as compared to prior guidance of 61 million shares. This updated guidance reflects the share repurchases that were completed in the second quarter this year. Our guidance for capital expenditures as a percentage of sales remains consistent at approximately 3% of sales.

York: We're also increasing our free cash flow conversion guidance for the full year to be well above 100% as we anticipate an incremental incremental benefit from working capital reduction in the second half of the year.

York: This compares to our prior guidance of approximately 100%.

York Ragen: Our full year weighted average diluted share count is now expected to decrease to approximately 60.5 to 61 million shares, as compared to prior guidance of 61 million shares. This updated guidance reflects the sharey purchases that were completed in the second quarter of this year. Our guidance for capital expenditures as a percentage of sales remains consistent at approximately 3% of sales. Depreciation expense and gap intangible amortization expense also remain consistent with last year's last quarter's guidance.

York: Our full year weighted average diluted share count is now expected to decrease to approximately 65% to 61 million shares as compared to prior guidance of 61 million shares. This updated guidance reflects the share repurchases that were completed in the second quarter of this year.

York: Our guidance for capital expenditures as a percentage of sales remains consistent at approximately 3% of sales.

York: Depreciation expense in GAAP intangible amortization expense also remain consistent with last year's last quarter's guidance.

York Ragen: And finally, this 2024 outlook does not reflect potential additional acquisitions or share purchases that could drive incremental shareholder value.

York: And finally, this 2024 outlook does not reflect potential additional acquisitions or share repurchases that could drive incremental shareholder value.

Unknown Executive: This concludes our prepared remarks at this time.

York A. Ragen: Depreciation Expense and Gap Intangible Amortization Expense also remain consistent with last quarter's guidance. And finally, this 2024 Outlook does not reflect potential additional acquisitions or share repurchases that could drive incremental shareholder value. This concludes our prepared remarks. At this time, we'd like to open up the call for questions. Thank you. At this time, we will conduct a question and answer session. And as a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

York: This concludes our prepared remarks at this time, we'd like to open up the call for questions.

Unknown Executive: We'd like to open up the call for questions. Thank you. At this time, we will conduct a question-and-answer session.

Speaker Change: Thank you at this time, we will conduct a question and answer session and as a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Unknown Executive: And, as a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Thomas Moll: First question comes from Tommy Moll with Stephen's Inc. Go ahead, your line is open. Good morning, and thank you for taking my questions.

Operator: Please stand by while we compile the Q&A roster. The first question comes from Tommy Moll with Stevens Inc. Go ahead. Your line is open. Good morning, and thank you for taking my questions. Good morning, Tommy.

Speaker Change: First question comes from Tommy Moll with Stephens, Inc. Go ahead. Your line is open.

Speaker Change: Good morning, and thank you for taking my questions Alright Tommy.

Aaron Jagdfeld: Aaron, I wanted to start on Homestand by something like the outlook for the year went from mid teams, excuse me, to high teams. It's a two-part question. First part is, can you characterize how much of that growth is just lapping over the D-stock versus incremental underlying demand? And then second part on the demand, can you characterize activations versus shipments in Q2 and maybe even through July after the storm? Thanks.

Operator: Aaron, I wanted to start on home standby. Sounds like the outlook for the year went from mid teens, excuse me, to high teens. It's a two-part question. The first part is, can you characterize how much of that growth is just lapping over the D stock versus incremental underlying demand? And then, the second part on demand: can you characterize activations versus shipments in Q2 and maybe even through July after the storm? Thanks. Yeah, so maybe, Tommy, I'll, I'll take the second part of that question. First enlightenment

Speaker Change: Aaron I wanted to start on home standby.

Speaker Change: It sounds like the outlook for the year went from mid teens.

York: With me to high teens.

Speaker Change: It's a two part question first part is can you characterize how much of that growth is just lapping over the destock versus incremental underlying demand and then second part on the demand can you characterize activation versus shipments in Q2, and maybe even through July after the storm.

Aaron Jagdfeld: Yeah, so maybe Tommy, I'll take the second part of that question first. Yeah, on the first part of the question, obviously we have been talking about a $300 million impact from the field inventory situation last year. And so part of, obviously, part of the increased guide here, I would say that the guidance we had originally proposed considered that the D-stocking.

Tommy: Yes, so maybe Tommy.

Tommy: I'll take the second part of that question first.

York: <unk>.

Aaron P. Jagdfeld: Yeah, I'm not on the first part of the question. Obviously, we have been talking about a $300 million impact from the field inventory situation last year. And so, obviously, part of the increased guide here, I would say that, you know, the guidance we had originally proposed, www.TheBusinessProfessor.com, All from the mid-teens, www.youtube.com.au, as we had expected here in Q2 and it won't be a problem for the balance of the year.

Speaker Change: Yes on the first part of the question, obviously, we have been talking about a $300 million impact from the field inventory situation last year.

Speaker Change: So part of obviously part of the increased guide here I would say that the guidance we had originally.

York: Posed considered that.

Aaron Jagdfeld: So the increasing guidance from the mid teams to the higher number would be really the delta that's storm-related. That's all incremental. So that's all incremental. I'd have to do the math to give you a more precise answer than that, but that's how I would answer it: is the original guidance to contemplate that. The D-stocking occurred in Q1, and that hasn't been a problem as we had expected here in Q2, and it won't be a problem in the balance of the year.

York: Destocking so the increase in guidance from the mid teens to the.

York: Higher number would be really the delta that storm related.

York: Thats all incremental that's all incremental I would have to do the math to give you a more precise answer than that but that's how I would answer it is that the original guidance did contemplate that the.

York: The destocking occurred in Q1, and we don't Hasnt been a problem.

York: As we as we had expected here in Q2 and it won't be a problem in the balance of the year as far as the activation and shipment trends from Q2 as.

Aaron Jagdfeld: As far as the activation and shipment trends from Q2, as we said, activations in the first half of the year were modestly down. That really is related to the lower power outage activity that we saw last year. In the beginning, we kind of started off the year a little bit slow here in 2024. Q1's outage hours were below the baseline average, but they've obviously picked up here in Q2. And we anticipate those activation rates to grow through the balance of the year here. And in fact, as we noted in the prepared remarks this morning to lie, we're already seeing, from a trend standpoint, we're seeing that pick up.

Aaron P. Jagdfeld: As far as the activation and shipment trends from Q2, as we said, activations in the first half of the year were modestly down. That really is related to the lower power outage activity that we saw last year. In the beginning, we kind of started off the year a little bit slow.

Speaker Change: As we said Activations in the first half of the year were modestly down that really is related to the lower power outage activity that we saw last year and the beginning here, we kind of started off the year a little bit slow.

Aaron P. Jagdfeld: Here in 2024, Q1's outage hours were below the baseline average, but they've obviously picked up here in Q2, and we anticipate those activation rates to grow through the balance of the year. And in fact, as we noted in the prepared remarks this morning, July, we're already seeing from a trend standpoint, we're seeing that pick up. So shipments were, I would say, ahead of activations if you're looking just at Q2, but that's seasonally to be expected. That's how, yeah, and it was only slightly; it wasn't a big number.

York: Here in 2024 Q1s.

York: Outage hours were below the baseline average, but they are obviously picked up here in Q2, and we anticipate those activation rates to grow through the balance of the year here and in fact as we noted in the prepared remarks. This morning July we're already seeing.

York: From a trend standpoint, we're seeing that pick up.

Aaron Jagdfeld: So shipments were, I would say, ahead of activations if you're looking at just at Q2, but that season will be seasonally to be expected. That's how, yeah, and it was only slightly; it wasn't a big number, but that is how the business paces in terms of preparing for the season. We want our channel partners to have that product ready to go. But again, as we've said previously, as we exited Q1, we feel like those field inventory levels are normal. So this is all part of the normal season will trend at this point.

York: So shipments were I would say ahead of Activations, if youre looking at just Q2, but thats seasonal seasonally to be expected.

Speaker Change: Yes, and it was only slightly flatten it wasn't a big number but that is how the that's how the business paces in terms of preparing for the season, we want our channel partners.

Aaron P. Jagdfeld: But that is how the business paces in terms of preparing for the season. We want our channel partners, you know, to have that product ready to go. But again, as we've said previously, as we exited Q1, we feel like those field inventory levels are normal, right?

Speaker Change: To have that that product ready to go but but again.

Speaker Change: As we've said previously as we exited Q1, we feel like those field inventory levels are at normal right. So this is all part of the normal seasonal trend at this point.

Aaron P. Jagdfeld: So this is all part of the normal seasonal trend. One moment for our next question. The next question comes from George Gianarikas with Conocor Genuity. Go ahead. Your line is open. Hi, good morning, everyone.

George Giannacura: One moment for our next question. The next question comes from George Giannacura with kind of forward genuity. Go ahead. Your line is open. Hi, good morning, everyone. And thank you for taking my questions. Hey, George.

Speaker Change: One moment for our next question.

Speaker Change: Uh huh.

George Gianarikas: The next question comes from George <unk> with Canaccord Genuity go ahead. Your line is open.

Operator: And thank you for taking my questions. I'd just like to focus on what you saw or what you saw in July that led to the guidance increase. Clearly, there's been an impact from the hurricane, but can you just sort of isolate the pockets of increased interest and in-home consultation and activation? Was it strictly in the areas that were impacted by the hurricane, or were there reverberations throughout Texas where you saw increased activity and interest outside of those regions?

George Gianarikas: Hi, Good morning, everyone and thank you for taking my questions Hey, Jordan.

George Giannacura: I just like to focus on what you've seen or what you saw in July that led to the guidance and priests. Clearly, there's been an impact on the hurricane, but can you just sort of isolate the pockets of increased interest and home consultation and activations. It's strictly in the areas that were impacted by the hurricane, or were there reverberations throughout Texas where you saw increased activity and interest outside of those regions. And to the extent you could share this data, to the extent you have it. What are the high penetration rates, the highest penetration rates that you're seeing in parts of Texas.

George Gianarikas: I'd just like to focus on.

George Gianarikas: What you've seen or what you saw in July that led to the guidance increase clearly there's been an impact from the hurricane but can you just sort of isolate the pockets of increased interest in home consultation and Activations.

Speaker Change: Is it strictly in the areas that were impacted by the hurricane or were there reverberations throughout Texas, we saw increased activity and interest outside of those regions and to the extent you can share this data.

Operator: And to the extent you can share this data, to the extent you have it, what are the high penetration rates, the highest penetration rates that you're seeing in parts of Texas, and how much further can we go in penetration, in your opinion, over the long term? Thank you.

Speaker Change: To the extent you have it what are the high penetration rates the highest penetration rates that youre seeing in parts of Texas and how much further can we go and penetration in your opinion over the long term. Thank you yeah. Thanks, George So what we saw in July obviously was.

Aaron Jagdfeld: And how much further can we go in penetration European over the long term? Thank you. Yeah, thanks, George. So, you know, what we saw in July obviously was, you know, that the hurricane barrel impact was significant in a market in Houston that had been also impacted earlier in May. By, you know, I think, you know, some people refer to it as a derecho, kind of a straight line wind event that created outages. And, you know, I think really the impact of barrel, even though it was a cat one storm and not really that strong meteorologically the way they're, they're scored.

Aaron P. Jagdfeld: Yeah, thanks, George. What we saw in July obviously was that the hurricane barrel impact was significant in a market in Houston that had been also impacted earlier in May by, I think some people refer to it as a derecho, kind of a straight line wind event that created outages. And I think really the impact of barrel, even though it was a cat one storm and not really that strong meteorologically, the way they're scored, the ground was very saturated, and there were high enough winds that that led to just a lot of infrastructure damage, physical damage with trees and other things taking out components of the grid.

Speaker Change: Hurricane barrel impact was significant in a market in Houston that had been also impacted earlier in may.

Speaker Change: Bye.

Speaker Change: I think some people refer to as the derecho kind of a straight line wind event that created outages and I think really the impact of barrel.

Speaker Change: Even though it was a cat one storm and not really that strong meteorological either way. They the way they're scored the ground is very saturated and there was high enough wins that that led to just a lot of.

Aaron Jagdfeld: The ground was very saturated, and there was high enough winds that led to just a lot of infrastructure damage, physical damage with trees and other things taking out components of the grid. And so it took a long time to repair. And what we, you know, in our experience with outages, it's really, frankly, more the lengths of the outage. So the duration is, is it plays a huge role in kind of getting people to a point of high interest in finding solutions, right? And so our, our increased guidance has really reflected reflective of two things. One, we sold a lot of portable generators in July.

Speaker Change: Infrastructure damage physical damage with trees and other things taking out.

Aaron P. Jagdfeld: And so it took a long time to repair, and what we've found in our experience with outages, it's really, frankly, more the length of the outage. You know, the duration plays a huge role in kind of getting people to a point of high interest in finding solutions, right? And so our increased guidance is really reflective of two things. One, we sold a lot of portable generators in July, as you would expect, as one of the leaders in the industry. You know, we carry a fair amount of inventory in preparation for these types of events.

Speaker Change: Components of the grid and so it took a long time to repair and it's what we've.

Speaker Change: In our experience with outages, it's really frankly more of the length of the outage. So the duration is is it plays a huge role in kind of getting people to.

Speaker Change: To a point of of high interest in finding solutions right and so on.

Speaker Change: Our increased guidance is really reflected reflective of two things one we sold a lot of portable generators in July as you would expect.

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

Speaker Change: As one of the leaders in the industry, we carry a fair amount of inventory in preparation for these types of events and that inventory was deployed very quickly down in in that market.

Aaron P. Jagdfeld: And that inventory was deployed very quickly down in, in, that market. Maybe not as much as we would normally see, strictly because that storm, you know, you would normally have time ahead of the storm to prepare. This storm kind of caught people off guard. It was supposed to hit the Mexico-Texas border.

Speaker Change: Maybe not as much as we would normally see strictly because that storm.

Speaker Change: You would normally have time ahead of the storm to prepare this storm kind of caught people off guard. It was supposed to hit kind of the Mexico, Texas border and then it took a severe right hand turn and went north kind of at the wrong time and impacted obviously, the Houston market. Instead, so not a ton of time to prepare and get more inventory.

Aaron P. Jagdfeld: And then it took a severe right-hand turn and went north kind of at the wrong time and impacted the Houston market instead. So not a ton of time to prepare and get more inventory positioned ahead of the storm, but in the aftermath, we certainly were able to deploy that. But obviously, the increase in IHCs has been, in-home consultations have been dramatic in the month of July, I would say. You know, we have continued to see in our history here since we've been tracking IHCs. And remember that it really goes back to kind of around the post-Sandy era.

Aaron Jagdfeld: So not a ton of time to prepare and get more inventory position to head of the storm, but in the aftermath, we certainly were able to deploy that. But then obviously the increase in IHCs has been in home consultations has been dramatic in the month of July, I would say. You know, we have continued to see in our history here since we've been tracking IHCs, and remember that really goes back to kind of around the post-Sandy era. So kind of, you know, in that 2012 to 2013 timeframe. So, about a decade that we've been doing this.

Speaker Change: <unk> ahead of the storm, but in the aftermath, we certainly.

Speaker Change: We're able to deploy that but then obviously the increase in NIH has been in home consultations has been dramatic in the month of July I would say.

Speaker Change: We have continued to see.

Speaker Change: In our history here since we've been tracking IH season, remember that really goes back to kind of around the post sandy era, so kind of.

Aaron P. Jagdfeld: So kind of, you know, in that 2012 to 2013 timeframe, so about a decade since we started this, we continue to see with every hour of outage activity, a higher level of intensity of the number of IHCs or sales leads we get per hour. And that definitely fit the bill in this storm.

Speaker Change: In 2012 to 2013 timeframe, so about a decade that we've been doing this.

Aaron Jagdfeld: We continue to see, with every hour of outage activity, a higher level of intensity of the number of IHCs or sales leads we get per hour. And that definitely fit the bill in this storm, and some of that again is related to the fact that that market was also impacted earlier in the year by the previous event. So the combination of those things, we have about 800 dealers in Texas. So we think we're in pretty good shape to respond to the event. We don't have 800 in Houston. We have a lot in Houston, but not 800, but 800 across the Texas market.

Speaker Change: We continue to see with every hour of outage activity a higher level of intensity of the number of IH Cesar sales leads we get per hour and that definitely fit the bill on this storm and some of that again is related to the fact that that market was also impacted earlier in the year by.

Aaron P. Jagdfeld: And some of that, again, is related to the fact that that market was also impacted earlier in the year by the previous event. So the combination of those things, we have, you know, we have about 800 dealers in Texas. So we think we're in pretty good shape to respond to the event. We don't have 800 in Houston.

Speaker Change: By the previous event. So the combination of those things we have we have about 800 dealers in Texas.

Speaker Change: We think we're in pretty good shape to respond to the event. We don't have 800 in Houston, we have a lot in Houston, but not 800, but 800 across the Texas market and there is a bit of an echo effect that happens when you see an event like that hit a market like Texas.

Aaron P. Jagdfeld: We have a lot in Houston, but not 800, but 800 across the Texas market. And there is a bit of an echo effect that happens when you see an event like that hit a market like Texas. You generally see an uplift in other markets with IHCs, I would say with this event, and that generally comes because of media coverage of an event. I do think that, for whatever reason, the media coverage of Hurricane Beryl was maybe a little more muted than you might expect on a national stage. Certainly, if something had happened on the East Coast or the West Coast, that tends to get the media's attention a little bit greater.

Aaron Jagdfeld: And there is a bit of an echo effect that happens when you see an event like that hit a market like Texas. You generally see an uplift in other markets with IHCs. I would say, with this event, and that generally comes because of media coverage of an event. I do think that, you know, for whatever reason, the media coverage of this of Hurricane Barrel was maybe a little more muted. That's why you might expect, on a national stage, certainly if something would have happened on the East Coast or the West Coast, that tends to get the media's attention a little bit greater; something happens down in Texas, maybe not as much.

Speaker Change: You generally see an uplift in other markets with IHS I would say with this event and that generally comes because of media coverage of an event I do think that for whatever reason.

Speaker Change: The media coverage of this hurricane barrel was maybe a little more muted than you might expect on a national.

Speaker Change: Stage, certainly if something would have happened on the east coast or the West coast.

Speaker Change: It tends to get the media's attention a little bit greater something happens down in Texas, maybe not as much.

Aaron P. Jagdfeld: Something is happening down in Texas, maybe not as much. But nonetheless, I think the increase that we've seen in IHCs, we believe, underpins the increase that we've given in terms of the guidance. And today, Texas is still under-penetrated, in our view.

Aaron Jagdfeld: But nonetheless, you know, I think the increase that we've seen in IHCs, we believe, is, you know, underpins kind of the increase that that we've given in terms of the guidance. And, you know, today, Texas is still under-penetrated in our view. So we're roughly 6% penetrated. Nationally, on the average in the state, we're less than 5% penetrated today. So, you know, we think there's room, and obviously it's a huge housing market. And a lot of, you know, there's a lot of people went through those multiple outages here. And, you know, we do think that that pen rates can increase in the years ahead.

Speaker Change: But nonetheless, I think the increase that we've seen in <unk>. We believe is on.

Speaker Change: Underpins kind of the the increase that that we've given in terms of the guidance today.

Speaker Change: Today, Texas is still underpenetrated in our view, so we're roughly 6% penetrated nationally on the average in the state where less than 5% penetrated today. So we think theres room, and obviously, it's a huge housing market.

Operator: So we're roughly 6% penetrated nationally on the average. In the state, we're less than 5% penetrated today. So we think there's room, and, obviously, it's a huge housing market. And a lot of people went through those multiple outages here, and we do think that that pen rate is going to increase in the years ahead. One moment for our next question, which comes from Mike Halloran with Baird. Go ahead. Your line is open. Hey, morning everyone.

Speaker Change: And a lot of there's a lot of people went through those multiple outages here and.

Speaker Change: We do think that that pen rate is going to increase.

Speaker Change: And in the years ahead.

Mike Haloran: One moment for our next question. The next question comes from Mike Haloran with Beard. Go ahead. Your line is open. Hey, morning, everyone. Hey, Mike.

Speaker Change: One moment for our next question.

Speaker Change: Yeah.

Aaron P. Jagdfeld: Hey, Mike. So, question then on the clean energy side of things and the margin trajectory. I heard the comment in the prepared remarks about Ecobee's margins starting to tranche better. Maybe what's the driver behind that?

Speaker Change: Your next question comes from Mike Halloran with Baird Go ahead. Your line is open.

Mike: Hey, good morning, everyone, Hey, Mike Frank.

York Ragen: So, question then on the clean energy side of things in the margin trajectory, who the common in the prepare remarks that equal bees margin start to crunch better. Maybe what's the driver behind that? And you think more broadly about the current headwind associated with all the investments and then the timing of the new product launches. And when you can start really getting revenue associated with that. If the timeline change at all from your perspective, as far as that. Cross-and-ability improvement curve might look like in those businesses.

Speaker Change: So.

Mike: Question, then on the clean energy side of things at the margin trajectory you heard the comment in the prepared remarks that <unk> margin starting to tranche better.

Mike: Maybe what's the driver behind that when you think more broadly about the current headwind associated with all the investments and then the timing of the new product launches and when you can start really getting revenue associated with that.

Speaker Change: Timeline changed at all from your perspective as far as that profitability improvement curve might look like in those businesses.

York A. Ragen: And when you think more broadly about the current headwind associated with all the investments, and then the timing of the new product launches, and when you can start really getting revenue associated with that, if the timeline has changed at all, from your perspective, as far as that profitability improvement curve might look like in those businesses? Hey, Mike York here. I'll jump in on the gross margin commentary. The team at Ecobee has spent a tremendous amount of focus on gross margin improvement, really just working on the cost of the bill material of the t stat itself and significant effort in terms of supply chain cost reductions and whatnot.

York Ragen: Hey, Mike York here. I'll jump in on the gross margin commentary. The team up in ECOB has spent a tremendous amount of focus on gross margin improvement, really just working on the cost of the bill material of the teeth that itself. And significant effort in terms of supply chain cost reductions and whatnot. So, I would say the execution of those initiatives is reading through now. And there's a pretty significant impact in terms of the improvement of the gross margin. They were good before, and now they're even better. I think some of that, too, is the fact that when we acquired ECOB at the depths of the pandemic.

Speaker Change: Hey, Mike George here, Doug jump in on the gross margin commentary eco b the team up and it will be has spent.

Speaker Change: There has been a tremendous amount of focus on gross margin improvement really just working on the cost of the bill of material of the the T stat itself in.

Speaker Change: Significant effort in terms of supply chain.

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

Speaker Change: Our cost reductions and whatnot, so I would say.

Speaker Change: The execution of those initiatives are reading through now.

Speaker Change: And there's a there's a pretty significant impact in terms of the improvement of the gross margins. They were good before and now they're even better and I think some of that too is the fact that when we acquired it could be at the depths of the pandemic.

Aaron P. Jagdfeld: Yeah. And I think some of that, too, is the fact that, you know, when we acquired it, it could have been at the depths of the pandemic. So, you know, I think the cost curves there were inflated, maybe even artificially surcharged, especially around electronic components. And that is obviously relaxed as well.

York Ragen: So, I think the cost curves there were inflated, maybe even artificially surcharge it. Especially around electronic components. And that is obviously relaxed as well. So, that's part of it. Not to discredit or take away anything from the teams in terms of... in terms of their efforts, which have been great, but some of that is market forces.

Speaker Change: So.

Speaker Change: I think the cost curves there were inflated.

Speaker Change: Or maybe even artificially surcharges chronic surgery, especially around electronic components and that is obviously relaxed as well so thats part of it not that not to discredit or take away anything from the teams in terms of there.

Aaron P. Jagdfeld: So that's part of it. Not to discredit or take away anything from the teams in terms of. I think Mike, you know, to answer the question on timing, I would say this on timing, you know, nothing has really changed in the timing of our new product introductions, right? So we're still targeting the end of this year for our next generation storage device, and the first half of next year for our microinverter products. Those are all still intact.

Speaker Change: In terms of their efforts, which have been great, but it's some of that is market forces and then I think Mike to answer the question on timing.

York Ragen: And then, I think Mike, you know, to answer the question on timing, you know, I would say this on timing: you know, nothing is really changing the timing of our new product introductions, right? So we're still targeting the end of this year for our next generation storage device. First half of next year for our microinverter products, those are all still intact. I think what we may have mentioned this on the last call, it may have changed is, you know, just the sour mood around solar plus storage, that market, right? The market trends there have been muted, have been relatively negative this year and have kind of persisted through this year with a higher rate environment and still kind of absorbing the impact of net metering 3.0 in California.

Mike: I'd say this on timing.

Speaker Change: <unk>.

Mike: Nothing has really changed in the timing of our new product introductions right. So we're still targeting the end of this year for our next generation storage device first half of next year for our micro inverter products. Those are all still intact I think what we may have mentioned this on the last call with May have changed it's just that the sour mood around solar plus storage that market the market trends there have been muted.

Aaron P. Jagdfeld: I think what we may have mentioned on the last call, what may have changed is, you know, just the sour mood around solar plus storage, that market, right? The market trends there have been muted, have been relatively negative this year, and have kind of persisted through this year with a higher rate environment and still kind of absorbing the impact of net metering 3.0 in California.

Mike: Had been relatively negative this year and if kind of persisted through this year with higher rate environment, and still kind of absorbing the impact of net metering 3.0.

Aaron P. Jagdfeld: So, I would say for us, again, it's not much of an impact this year, but I think some of that might get offset if the market remains a little bit weak. You know, we talked about this Department of Energy grant that we were awarded. You know, that grant was we generally thought that that would impact us to the tune of about 100 million dollars when we announced it last, late last year. And that was going to be over a five-year term.

York Ragen: So, but that I would say for us, you know, again, it's not much of an impact this year, but I think some of that might get offset if the market remains a little bit weak. You know, we talked about this Department of Energy grant, that we were awarded. You know, that grant was, we generally thought that that would impact us to the tune of about $100 million when we announced it last, last late last year. And that was going to be over a five year term. That was upsized significantly here, through our discussions and negotiations with the DOE and the other partners on the island.

Mike: In California, so, but that I would say for us again.

Speaker Change: Not much of an impact this year, but I think some of that might get offset if the market remains a little bit weak we talked about this.

Aaron P. Jagdfeld: That was upsized significantly here through our discussions and negotiations with the DOE and the other partners on the island. And now we think that impact is 200 million, and the bulk of those installations are going to happen in 2025 and 2026. So that's kind of an element that we didn't necessarily have in our project win of that magnitude. We didn't have that in our original kind of pacing.

Speaker Change: Apartment of energy Grant that we were awarded.

Speaker Change: Grant was.

Speaker Change: We generally thought that that would impact us to the tune of about $100 million. When we announced it last last late last year and that was going to be able to five year term that was upsized significantly here.

Speaker Change: Through our discussions and negotiations with the Doe and the other partners on the island and now we think that impact is $200 million and the bulk of those installs are going to happen in 2025 and 2026. So that's kind of an element that we didn't have necessarily in our project win of that magnitude. We didn't have that in our original kind of pacing. So I think that helps to offset.

York Ragen: And now we think that impact is $200 million. And the bulk of those installs are going to happen in 2025 and 2026. So that's kind of an element that we didn't have. We have necessarily in our, you know, a project win of that magnitude. We didn't have that in our original kind of pacing. So I think that helps to offset any market weakness that may persist into 25. So I guess a long-winded way, as I generally do, of saying, you know, we're really not changing the timing on this. I think it's, you know, the puts and takes there might be a little bit different than what we had originally contemplated, but I think the timing's intact.

Speaker Change: Any market.

Speaker Change: <unk> that may persist into 25, so I guess, a long winded way as I generally do a saying we're really not changing the timing on this I think it's there are puts and takes there might be a little bit different than what we had originally contemplated but but I think the timing is intact.

Aaron P. Jagdfeld: So I think that helps to offset any market weakness that may persist into 25. So I guess a long winded way of saying, you know, we're really not changing the timing on this. I think it's, you know, the puts and takes there might be a little bit different than what we had originally contemplated. But I think the timing is intact.

Jess Hammond: One moment for our next question. The next question comes from Jess Hammond with KeyBank Capital Markets. Go ahead. Your line has opened. Hey, good morning, guys. Hey, yeah.

Operator: One moment for our next question. The next question comes from Jeff Hammond with KeyBank Capital Markets. Go ahead. Your line is open.

Speaker Change: One moment for our next question.

Speaker Change: The next question comes from Jeff Hammond with Keybanc capital markets Go ahead. Your line is open.

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

Jeffrey David Hammond: Hey, good morning, guys.

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

Jeffrey David Hammond: Jeff.

Speaker Change: Hey.

Jeffrey David Hammond: Two part question I guess one.

Jeffrey David Hammond: Input cost tailwind do you think they will continue into the second half and then just I guess wondering a unique period, where we've had kind of these elevated IHS and maybe more tire kickers around.

Speaker Change: Grid instability and I'm wondering with.

Speaker Change: This storm activity, if maybe and this nurturing initiative, if maybe the uptake from some of those warm leads.

Speaker Change: Can drive some incremental.

Speaker Change: Uptake versus normal.

Operator: Yeah, on the input cost side, looking like first half to second half, Jeff, if there's, let's say, a couple percent improvement from first half to second half on gross margins, I'd say the vast majority of that is just going to be with the higher mix of home standby come reading through in the second half. You know, well, well over 50% of that gross margin increase will be just that mix improvement. But we are expecting some further price and cost improvements, first half and second half to continue to read through, but they will be smaller. It'll be a smaller piece of the puzzle.

Aaron Jagdfeld: On the input cost side, looking like first half to second half, Jeff, if there's, let's say, a couple percent improvement from first half to second half on gross margins, I'd say, the vast majority of that is just going to be with the higher mix, a home stand by come reading through in the second half. You know, well, well over 50% of that gross margin increase will be just that mix improvement, but we are expecting some further price cost improvements for a second half to continue to read through, but it will be smaller. It'll be a smaller piece of the puzzle.

Speaker Change: Yes, yes on the on the input cost side looking like first half to second half Jeff If there is let's say.

Jeffrey David Hammond: A couple of percent improvement from first half to second half on gross margins I would say I'd say the vast majority of that is just going to be with the higher mix of home standby come reading through in the second half.

Speaker Change: <unk>.

Jeffrey David Hammond: Well over 50% of that gross margin increase will be just that mix improvement, but we are expecting some further price cost improvements first half second half.

Speaker Change: To continue to read through but it will be smaller.

Speaker Change: It'll be a smaller piece of the puzzle yes.

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

York A. Ragen: Yeah, and then Jeff, I think, you know, with the IHCs and kind of the quote unquote, tire kickers, we have seen an increase in, you know, I'll call it, the broadening of the top end of our funnel. You know, we've talked about our efforts and outreach to engage new demographics and trying to broaden the, you know, consumer appeal for these products more broadly. And that has, you know, that has produced, I think the effect it's had is we've got a lot more people shopping in the category.

Speaker Change: And then Jeff I think with the Ics and kind of quote unquote tire Kickers, we have seen an increase in.

Speaker Change: The I'll call it the broadening of the top end of our funnel, we've talked about our efforts and outreach to engage new demography demographics.

Jeff: Trying to broaden.

Jeff: The consumer appeal for these products more broadly.

Jeff: And that is that has produced I think.

Jeff: The the effect, it's had us at scale, we've got a lot more people shopping the category. There is obviously the I would also talk about the broader mentions of potentials potential power outages from some of the structural things that are going on with the grid. We talk about the electrification trends, we talk about the de carbonization trends, we talk about.

York A. Ragen: There's obviously the, I would also talk about, you know, the broader mentions of potential power outages from some of the structural things that are going on with the grid. You know, we talk about electrification trends, we talk about decarbonization trends, we talk about power quality being impacted negatively in the future here, today, and in the future, and also power prices are expected to continue to rise. And that the media, I think mainstream media, has picked up on these narratives.

Speaker Change: Power quality.

Jeff: Being impacted negatively in the future here today and in the future and also power prices.

Jeff: <unk> are expected to continue to rise.

Aaron Jagdfeld: And that, the media, I think mainstream media has picked up these narratives and, you know, I think that also is leading to people coming into the funnel and exploring their options around resiliency and trying to manage their own power and independence and efficiency.

Speaker Change: And that the media I think mainstream media has picked up these.

Aaron P. Jagdfeld: And, you know, I think that is also leading to people coming into the funnel and exploring their options around resiliency and trying to manage their own power, independence, and efficiency. That said, you know, when you get an event like Beryl and you get the increased outage activity we have, it's obviously an opportunity for us to engage clearly on the resilience story with those people who may have, you know, received an IHC and, for whatever reason, didn't, we didn't get to closure on a project. I think it's important to note that close rates have improved throughout this year. And they're up nicely from the end of last year.

Speaker Change: These narratives and I think that also is leading to people coming into the funnel and exploring their options around resiliency and.

Speaker Change: Trying to manage their own power and independents and efficiency.

Aaron Jagdfeld: That said, you know, when you get an event like barrel and you get the increased outage activity that we have, it's obviously an opportunity for us to engage clearly on the resiliency story. With those people who may have, you know, received an IHC and for whatever reason didn't, we didn't get to closure on a project. I, you know, I think it's important to note, you know, close rates have improved throughout this year, and they're up nicely from the end of last year. But what typically happens historically, what we see is when you get a large scale event like barrel, you'll see a weakening in the close rate, kind of temporarily in the affected markets because you get such an influx of leads; you get a lot of people into the funnel at once.

Jeff: That said.

Jeff: When you get an event like barrel and you get the increased outage activity. We have it's obviously an opportunity for us to engage clearly on the resiliency story.

Speaker Change: With those people who may have received.

Speaker Change: We received an IAC and for whatever reason didn't.

Jeff: We didn't get to closure on a on a project.

Aaron P. Jagdfeld: But what typically happens historically, what we see is when you get a large-scale event like barrel, you'll see a weakening in the close rate kind of temporarily in the affected markets because you get such an influx of leads, you get a lot of people into the funnel at once. Now, that could be somewhat offset by some of these warm leads being, you know, if we're able to nurture those to closure as a result of So, you know, I think that'll all kind of work out, you know, in the future here as we, as we look at what the, you know, what the close rate does.

Jeff: I think it's important to note close rates have improved.

Jeff: Throughout this year.

Jeff: And they're up nicely from the end of last year.

Speaker Change: But what typically happens historically, what we see is when you get a large scale event like barrel youll see a weakening in the close rate kind of temporarily in the affected markets. Because you get such an influx of leads you get a lot of people into the funnel at once now that could be somewhat offset by some of these warm leads being if we're able to nurture those.

Aaron Jagdfeld: Now that could be somewhat offset by some of these warm leads being, you know, for able to nurture those to closure as a result of the event. So, you know, I think that, that'll all kind of work out, you know, in the future here as we, as we look at what the, you know, what the close rate does. But, you know, we do expect the close rate to kind of step back here temporarily, but we have a lot more leads.

Jeff: To closure as a result of the event.

Jeff: So I think that will all kind of work out in the future here as we as we look at what the what the close rate does.

Aaron P. Jagdfeld: But, you know, we do expect the close rate to kind of step back here temporarily, but we have a lot more leads. So, you know, and that's, again, a combination of all those elements is what goes into our calculus around raising guidance today. So, you know, and once those leads are in our system, we can nurture them later, too, even if they don't get the closure today. We have, I think, much better nurturing techniques and capabilities today than we've ever had.

Jeff: But we do expect the close rate to kind of step back here temporarily but we have a lot more leads so that's again combination of all of those elements is what goes into our calculus around raising guidance today. So.

Aaron Jagdfeld: So, you know, that's again, a combination of all those elements is what goes into our calculus around raising guidance today. So, you know, and once those leads are in our system, you know, we can nurture them later too, even if they don't get the closure today. We have, I think, much better nurturing techniques and capabilities today than we've ever had. And so, the opportunity to work those leads in the future, either on the back of future outage events or, you know, certain promotions or new financing opportunities, things like that. We've been pretty bullish about, you know, the opportunities that, as our growing house file, if you will, of sales leads, the ability to mine that file to the benefit of, you know, driving more sales.

Jeff: Once those leads are in our system, we can nurture them later or two even if they don't get the closure today.

Jeff: Have I think much better nurturing techniques and capabilities today than we've ever had and so the opportunity to work those leads in the future either on the back of future outage events or <unk>.

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

Jeff: Certain promotions or new financing opportunities things like that.

Jeff: We've been pretty bullish about.

Jeff: The opportunities that are growing house file if you will of sales leads the.

Jeff: The ability to mine that that file.

Jeff: Two to.

Jeff: To the benefit of driving more sales.

Brian Drab: One moment for our next question. The next question comes from Brian Drave with William Blair. Go ahead. Your line is open. Hi, good morning. Thanks for taking my question. Brian.

Operator: One moment for our next question. The next question comes from Brian Drab with William Blair. Go ahead. Your line is open. Hi, good morning.

Jeff: One moment for our next question.

Jeff: The next question comes from Brian Drab with William Blair Go ahead. Your line is open.

Operator: Thanks for taking my question. I just, this morning, just like to see if I could ask you to put a finer point on the revenue, excuse me, revenue guidance update. So, if we're increasing revenue growth by 1%, that's about 40Million, obviously, in incremental revenue. You know, you had the storm activity that we talked about in May and then the hurricane barrel. And that's driven some portables.

Jeff: Hi, Good morning, Thanks for taking my question Hey, Brian.

York Ragen: I just like this morning, just like to see if I could ask you to put a finer point on the revenue, excuse me, revenue guidance update. So, if we're increasing revenue growth by 1%, that's about 40 million, obviously, in incremental revenue. You know, you have the storm activity that we've talked about in May and then the hurricane barrel. And that's sort of some portables. You gave us; you said we're going from mid-teens to high-teens and home standby. And that's, you know, 50 million, like 50 plus or minus five maybe in that move from mid teens to high teens.

Speaker Change: Just like this.

Brian Paul Drab: Good morning, just like to see if I could.

Speaker Change: We ask you to put a finer point on the revenue.

Speaker Change: Seasonally revenue guidance.

Speaker Change: Our guidance update so.

Speaker Change: If we're increasing revenue growth by 1%.

Speaker Change: About $40 million, obviously incremental revenue.

Speaker Change: You had the storm activity that we've talked about in May and then hurricane barrel.

York A. Ragen: You gave us, you said we're going from mid teens to high teens and home standby. And that's, you know, 50Million, like 5-0, plus or minus 5, maybe in that move from mid teens to high teens. I'm just wondering if you could put a finer point on this so I can understand why we're not, you know, being conservative, especially given. You know, the outage hours related to this hurricane barrel were very close to the outage hours associated with the ice storm of 21, which at the time categorized as the top five all-time weather outage event. Yeah, Brian, this is York.

Speaker Change: And that's driven some portables.

Speaker Change: You gave US you said were going from mid teens to high teens in home standby and Thats.

Brian Paul Drab: No.

Speaker Change: $50 million, five zero, plus or minus five maybe in that move from mid teens to high teens.

York Ragen: I'm just wondering if you could put a finer point on this so I can understand why we're not, you know, being conservative, especially given. You know, the outage hours related to this hurricane barrel were very close to the outage hours associated with the ice storm of 21, which at the time categorizes the top five all time, whether outage event. Brian is York, I think your numbers are close in terms of directly close in terms of how you're quantifying the impact that we've included at least in the implied guidance. You've got that home stand by growth that you just referred to; you get a little bit of portable improvement.

Speaker Change: I'm just wondering if you could put a finer point on this so I can understand why we're not.

Speaker Change: Being conservative, especially given.

Speaker Change: The outage hours related to this.

Speaker Change: Hurricane barrel, we're very close to the outage hours associated with the ice storm of 'twenty, one which at the time categorized as a top five all time.

Speaker Change: Weather outage event.

York A. Ragen: I think your numbers are, are, are, are close in terms of directly close in terms of how you're quantifying the impact that we've included at least in this implied guidance. You've got that home standby growth that you just referred to, and you get a little bit of portable improvement. Um, you get a little small offset with clean energy on some of the comments we made on, um... On that outlook, chore products, so some slight declines there that are offsetting.

Speaker Change: Yes, Brian as York I think your numbers are R. R. R.

Brian: In terms of Directionally close in terms of how you're quantifying the impact that we've included at least in this in the implied guidance.

Speaker Change: You have got that home standby growth that you just referred to you get a little bit of a portable improvement.

York Ragen: You get a little small offsets with clean energy on some of the comments we made on that outlet, short products, some slight declines there that are offsetting. So when you put it all together, we've always said that the impact of a major power outage event would be in that year, would be roughly somewhere between 50 to 100 million, like we said that for a number of years. So I would say what we've included in our guidance, partly because it's early, we've included our guidance maybe towards the lower end of that 50 to 100 million in terms of our impact from Hurricane Barrel.

Speaker Change: You get a little small offsets with clean energy the on some of the comments we made on.

Speaker Change: On that outlook chore products saw some slight declines there that are offsetting.

York A. Ragen: So when you put it all together, we've always said that the impact of a major power outage event would be roughly somewhere between 50 to 100 million. Like we've said for a number of years. So I would say what we've included in our guidance, partly because it's early. We've included our guidance maybe towards the lower end of that $50 to $100 million in terms of our impact from Hurricane Beryl. It's early in the morning.

Speaker Change: So when you put it all together, we've always said that the impact of a major power outage event would be in that year would be roughly somewhere between $50 million to $100 million like we've said that for for a number of years.

Speaker Change: So I would say what we've included in our guidance.

Speaker Change: Partly because it's early.

Speaker Change: We have included in our guidance maybe towards the lower end of that $50 million to $100 million in terms of in terms of our impact from hurricane barrel.

York Ragen: It's early. Well, you know, the portable. I think Aaron's comments about how the hurricane sort of took a sharp turn, sort of unexpectedly in our, we weren't able to deploy portables maybe before the storm. So maybe the portable uptake wasn't as significant, maybe in this storm as it would have been, and maybe some other hurricanes where you can plan ahead a little bit better.

Aaron: It's early well the portable I think Aaron's comments about how the hurricane sort of took a sharp turn.

York A. Ragen: Well, you know, the portables. I think Aaron's comments about how the hurricane sort of took a sharp turn sort of unexpectedly and we weren't able to, you know, deploy portables maybe before the storm maybe. So maybe the portable uptake wasn't as significant maybe in this storm as it would have been and maybe some other hurricanes where you can plan ahead a little bit better. That might be some of the impact on the portable side, but I think on the home standby side, it's early.

Aaron: Sort of unexpectedly and we werent able to deploy portables, maybe before the storm maybe so maybe the portable uptake wasn't as significant maybe in this storm as it would have been and maybe some other hurricanes, where you can plan ahead.

York Ragen: That might be some of the impact that on the portable side, but I think on the home standby side, it's early. We've, you know, we've got a lot of IHCs have come in as a result of these. We'll see how the close rates play out on that, and we'll be able to update, you know, throughout the next quarter here.

Speaker Change: A little bit better that might be some of the impact that are on the portable side, but I think on the home standby side. It's early we've got a lot a lot of <unk> have come in as a result of these we'll see how the close rates play out on that and we will we'll be able to update.

York A. Ragen: We've, you know, we've got a lot, a lot of IHCs have come in as a result of these. We'll see how the close rates play out on that, and we'll be able to update you, you know, throughout, throughout the next quarter. Stand by for the next question. The next question comes from Jerry Revich with Goldman Sachs. Go ahead. Your line is open. Yes, hi, good morning, everyone.

Speaker Change: Throughout the throughout the.

Speaker Change: The next quarter here.

Unknown Executive: And right for the next question.

Speaker Change: And after the next question.

Jerry Rubich: Next question comes from Jerry Rubich with Goldman Sachs. Go ahead, your line is open. Yes, hi, good morning everyone. I wonder who you just talk about the gross margin performance. You know, last quarter, we spoke about better material costs, and first quarter looks like that continued versus plan in the second.

Speaker Change: Next question comes from Jerry Revich with Goldman Sachs Go ahead. Your line is open.

Operator: I'm wondering if we can just talk about the gross margin performance. You know, last quarter, we spoke about better material costs in the first quarter, and it looks like that continued versus plan in the second. And I'm wondering, as we think about the implied guidance for the back half of the year, is there an opportunity for the normalizing material logistics costs to drive a tailwind relative to guidance given the continued strong performance each quarter? So far.

Jerry David Revich: Yes, hi, good morning, everyone.

Jerry David Revich: I'm wondering if you could just talk about the gross margin performance last quarter, we spoke about better material costs in the first quarter. It looks like that continued versus plan in the <unk>.

York Ragen: And I'm wondering, as we think about the implied guidance in the back half of the year, is there an opportunity for the normalizing material, logistics costs to drive a tailwind relative to guidance given the continued strong performance each quarter so far. Yeah, Jerry, no, gross margins, we're up almost 5% year over year. We've been seeing that for a number of quarters here as price costs, you know, improvements have been, have been reading through and then now we're starting to see as home standby field inventory becomes normalized and we're seeing that, that you're over your growth in our home standby shipments, we're definitely getting the mix improvement there.

Speaker Change: And I'm wondering as we think about implied guidance in the back half of the year.

Speaker Change: There are an opportunity for the <unk>.

Speaker Change: Normalizing material logistics costs to drive a tailwind.

Speaker Change: Relative to the guidance given the continued strong performance each quarter so far.

York A. Ragen: Um, Jerry knows that I mean gross margins were up almost 5% year over year. We've been seeing that for a number of quarters here as price costs, you know, improvements have been, are reading through. And then now we're starting to see as home standby field inventory becomes normalized, and we're seeing that, that year over year growth in our home standby shipments, we're, we're definitely getting the mix improvement there. So in the second quarter, I would say, of that roughly 5% improvement in gross margins, I would say, I would say maybe three of that 5% was mix related. The other 2% was price cost.

Jerry David Revich: Yes, Jerry.

Jerry: Gross margins were up almost 5% year over year, we've been seeing that for a number of quarters here as price costs.

Jerry: Improvements have been.

Jerry: Have been reading through and then now we're starting to see as home standby field inventory becomes normalized and we're seeing that that year over year growth.

Jerry: In our home standby shipments, where we're definitely getting the mix improvement there. So in the second quarter I would say of that roughly 5% improvement in gross margins I'd say I'd say, maybe three of that 5% was mix related the other 2% was price cost again, we've been seeing that for a number of quarters.

York Ragen: So, in the second quarter, I would say of that roughly 5% improvement in gross margins, I'd say maybe 3 of that 5% was mixed related; the other 2% was price cost. Again, we've been seeing that for a number of quarters. And as I mentioned, I think when Jeff Hammond asked the question, as we, as we jump from first half to second half, you know, we do expect sequential improvement in gross margins. Again, some further mostly due to the just continued mix improvements with a higher mix of home standby in the second half of the year, relative to the first half, but we do expect.

York A. Ragen: Again, we've been seeing that for a number of quarters. And then, as I mentioned, I think when Jeff Hammond asked the question, as we jump from first half to second half, we do expect sequential improvement in gross margins. Again, some further, mostly due to just continued mix improvements with a higher mix of home standby in the second half of the year relative to the first half.

Speaker Change: And then as I mentioned I think Jeff Hammond asked the question as we.

Speaker Change: As we jumped from first half to second half, we do expect sequential improvement in gross margins again. Some further mostly due to the just continued mix improvements with a higher mix of home standby in the second half of the year relative to the first half, but we do expect.

York A. Ragen: But we do expect, you know, some price and cost improvements. And as a result, you would continue to see year-over-year price-cost improvements as a result of all that, at least in the second half of the year. Yeah, no, well, you know, again, gross margins are getting, you know, healthy, you know, as the mix of homestand might normalize, and price cost normalizes and improves. And bye for our next question. The next question comes from Kashi Harrison with Piper Sandler. Go ahead. Your line is open. Good morning, and thanks for taking the questions.

York Ragen: You know, some price-cost improvements, and as a result, you would continue to see year-over-year price-cost improvements as a result of all that, so at least in the second half of the year. So, yeah, well, you know, again, gross margins are getting, you know, healthy, you know, as the mix of homestam I normalizes and price-cost improvements. And improves.

Speaker Change: Some price cost improvements and as a result.

Speaker Change: You would.

Speaker Change: You would consider you would continue to see year over year price cost improvements as a result of all of that so at least in the second half of the year. So.

Speaker Change: Yeah, No again gross margins are are getting.

Speaker Change: Healthy.

Speaker Change: The mix of home standby normalizes and price cost normalizes and improves.

Kashi Harrison: And bye for our next question. The next question comes from Kashi Harrison with Piper Sandler. Go ahead; your line is open. Good morning, and thanks for taking the questions. So just a few for me, you know, how much does Texas contribute annually to a rising demand in a normal year on the rising side? And then, you know, on the CNI side, I was just curious if you've had any updates from your telecom rental customers on how they're thinking about the deterioration of the downturn. And then also, I was wondering if you could just speak to the sustainability of some of the strengths you're seeing in the industrial distribution business in light of, you know, some of the weaker macro that we saw into Q.

Speaker Change: And our next question.

Speaker Change: The next question comes from Kashi Harrison with Piper Sandler go ahead. Your line is open.

Operator: So just a few questions for me, you know, how much does Texas contribute annually to resi demand in a normal year on the resi side? And then, you know, on the CNI side, I was just curious if you've had any updates from your telecom rental customers on how they're thinking about the duration of the downturn. And also, I was wondering if you could just speak to the sustainability of some of the strengths you're seeing in the industrial distribution business in light of, you know, some of the weaker macros that we saw in 2Q. Thank you. I got it.

Speaker Change: Okay.

Kasope Oladipo Harrison: Good morning, and thanks for taking the questions.

Kasope Oladipo Harrison: So just a few from me.

Kasope Oladipo Harrison: How much does Texas contribute annually to resi demand.

Speaker Change: Normal year on the resi side and then.

Speaker Change: On the C&I side I was just curious if.

Speaker Change: You have had any updates from your telecom rental customers on how they were thinking about.

Speaker Change: Digitization of the downturn and then also I was wondering if you could just speak to the sustainability of some of the strength youre seeing in the industrial distribution business in light of some of the weaker macro that we saw in <unk>. Thank you got it. Thanks Kashi. So yes, I mean, Texas is obviously, it's a big market.

Kashi Harrison: Thank you. Got it. Thanks, Kashi. So, yeah, I mean, Texas is obviously, it's a big market. We don't break out each kind of state that way. But, you know, we have grown. If you recall, back with the Texas freeze, that event in February of 2021, we said our penetration rates were sub 3% then. Today, they're sub 5%. So in Texas, at 200 basis points, roughly of penetration growth in Texas in a pretty brief period of time. You know, about a little like about three years' worth of time. So, you know, it's been an important part of growth here.

Aaron P. Jagdfeld: Thanks, Kashi. So yeah, I mean, Texas is obviously a big market. We don't break out each kind of state that way.

Speaker Change: We don't break out each kind of state that way, but we have grown if you recall back.

Aaron P. Jagdfeld: But you know, we have grown. If you recall back in February of 2021, we said our penetration rates were sub 3% then. Today, they're sub 5%. So in Texas, we had 200 basis points roughly of penetration growth in Texas in a pretty brief period of time, you know, about a little like three years. So, you know, it's been an important part of growth here. And obviously, these events, both the derecho in May and then the hurricane barrel event, are going to continue to drive that market forward. You know, but again, still sub 6%. At 5%.

Speaker Change: With the.

Speaker Change: The Texas freeze that event in February of 2021, we said our penetration rates were sub 3% then today there are sub 5% so in Texas.

Speaker Change: 200 basis points roughly of penetration growth in Texas, and a pretty brief period of time, but put a little like the top three years' worth of time, So it's been an important.

Aaron Jagdfeld: And obviously, these events, both the derecho and May, and then the hurricane barrel event, are going to continue to drive that market forward. But again, still sub 6% at 5%. I mean, there's a lot of houses that said another way, as we like to tell our teams here, you know, 95% of the homes in Texas don't have the products. And they are all kind of potential targets for a generator. And it's a huge market. And so, you know, we're really bullish on that.

Speaker Change: Part of growth here and obviously these events.

Aaron P. Jagdfeld: I mean, there's a lot of houses that, said another way, as we like to tell our teams here, 95% of the homes in Texas don't have electricity. So, they are all kind of, you know, potential targets for a generator. And it's a, you know, it's a huge market. And so, you know, we're really bullish on that. In terms of the kind of question on telecom specifically, you know, we kind of think this is the bottom here for telecom for us, especially relative to the comparisons last year. The current pacing, though, the current run rate feels like it's at the bottom.

Speaker Change: Both the derecho in May and then the.

Speaker Change: The hurricane barrel event are going to continue to drive that market.

Speaker Change: Forward.

Speaker Change: But again, it's still sub 6%.

Speaker Change: At 5% I mean, there's a lot of houses that said another way as we like to tell our teams here you know 95% of the homes in Texas don't have the product so.

Speaker Change: And they are all kind of potential targets for for a generator.

Aaron P. Jagdfeld: In fact, the back half contemplates a little bit of an increase, especially as we get into q4. So, kind of q2 and q3 here is kind of the bottom for the telecom cycle, as we see it starting to maybe show some green shoots there. We're, we're hopeful about 2025. But the reality of it is, we don't have any solid forecasts or information from our telecom partners at this point that would say that, you know, 25 is going to be better than 24. They haven't shared anything with us yet.

Speaker Change: It's a huge market.

Speaker Change: And so.

Aaron Jagdfeld: You know, in terms of the kind of the question on telecom specifically, you know, we kind of think this is the bottom here for telecom for us, you know, especially relative to the comparisons last year. You know, the current pacing, though, the current run rate feels like it's at the bottom. In fact, the back half contemplates a little bit of increase, especially as we get into Q4. So kind of Q2, Q3 here is kind of the bottom for the telecom cycle as we see it and starting to maybe show some green shoots there where we're hopeful about 2025.

Speaker Change: We're really bullish on that in terms of the.

Speaker Change: The question on Telecom specifically.

Speaker Change: This is the bottom here for telecom for us, especially relative.

Speaker Change: Relative to the comparisons last year, the current pacing, though the current run rate it feels like its at the bottom in fact, the back half contemplates a little bit of increase.

Speaker Change: Especially as we get into Q4, so kind of Q2 Q3 here is kind of the bottom for the telecom cycle as we see it starting to maybe show some green shoots there were we're hopeful about 2025, but the reality of it is we don't have any solid forecast or information from our telecom partners. At this point that would say that 25 is going to be better.

Aaron Jagdfeld: But the reality of it is we don't have any solid forecast or information from our telecom partners at this point that would say that, you know, 25 is going to be better than 24. They haven't shared anything with us yet. But, you know, once they get to that stage of planning for next year, you know, hopefully we'll be able to relay some of that information as we get into the 2025 guidance next year. But, you know, it's an important market. We have an outside share there. So that's why it's kind of impacted us negatively this year with the pullback.

Speaker Change: And 24, they haven't shared anything with us yet.

Speaker Change: But once they get to that that stage of planning for next year.

Speaker Change: Hopefully, we'll be able to to relay some of that information as we as we get into the 2025 guidance next year, but.

Aaron P. Jagdfeld: And but you know, once they get to that stage of planning for next year, you know, hopefully, we'll be able to relay some of that information as we get into the 2025 guidance. Next year, but you know, it's an important market; we have an outsized share there. So that's why it's kind of impacted us negatively this year with the pullback.

Speaker Change: Yes, it's an important market, we have an outsized share there. So that's why it's kind of impacted us negatively this year with the pullback.

Aaron Jagdfeld: But that's, you know, that's we're bullish about that long term. As I said before, you know, tower counts, hub counts, all those important elements of the infrastructure for wireless communications and then the critical nature of those comms. And the need for, you know, reliable power infrastructure, especially, you know, again, when we have outage, large outage events like barrel, it really does highlight the need for hardening of those networks. So, you know that that we expect to be important long term.

Speaker Change: But that's that's.

Speaker Change: We're bullish about that long term as I said before tower counts hub counts all those important elements of the infrastructure for wireless communications and then the critical nature of those comps.

Speaker Change: And the need for reliable power infrastructure, especially again, when we have outage large outage events like barrel. It really does highlight the need for hardening of those networks. So.

Aaron P. Jagdfeld: But that's, you know, we're bullish about that long term, as I said before, tower counts, hub counts, all those important elements of the infrastructure for wireless communications, and then the critical nature of those comms and the need for, you know, reliable power infrastructure, especially, you know, when we have outages, large outage events like Barrel, it really does highlight the need for hardening of those networks. So, you know, that we expect to be important long term.

Speaker Change: That we expect to be important long term and then your last question on the industrial distributors.

Aaron Jagdfeld: And then your last question on the industrial distributors. Yeah, we've done a lot. The current, you know, our team here, a leadership by their Eric Wilde and his team have done an awesome job really working through our distributors here in the US. And, you know, putting the other plans to make the right investments in, you know, whether it be sales, whether it's service, you know, whether it's our ability to support where we're selling direct, you know, either through telecom or other, you know, other opportunities, we have to make sure we have that kind of coast-to-coast support.

Aaron P. Jagdfeld: And then your last question on the industrial distributors. Yeah, we've done a lot. The current and our team here, the leadership there, Eric Wilde and his team have done an awesome job, really working through our distributors here in the US.

Speaker Change: Yes.

Speaker Change: We've done a lot the current and our team here a leadership there Eric <unk> and his team have done an awesome job really working through our our distributors here in the U S and <unk>.

Speaker Change: Putting the other plans to make the right investments in whether it be sales whether it's service.

Speaker Change: Whether it's our ability to support.

Speaker Change: Where we're selling direct either through telecom or other.

Aaron P. Jagdfeld: And, you know, putting the other plans in place to make the right investments in, you know, whether it be sales, whether it's service, you know, whether it's our ability to support where we're selling direct, you know, either through telecom or other opportunities, we have to make sure we have that kind of coast-to-coast support. But also, you know, we've done some acquisitions there; we've acquired a couple of distributors where we were underperforming in certain markets, and we felt that we could do better. And that actually has paid off quite well.

Speaker Change: Other opportunities we have to make sure we have that kind of coast to coast support.

Aaron Jagdfeld: But also, you know, we've done some acquisitions there. We've acquired a couple of distributors where we were underperforming in certain markets, and we felt that we could do better. And that actually has paid off quite well in the markets where we've done acquisitions. We've seen our share improved dramatically. You know, again, we were we were underneath our share nationally in those markets. So, just getting to the share position would be, you know, would be an increase, but we've actually gone beyond that. So, we've seen some really nice results there alongside kind of our organic efforts with development of the distribution partners.

Speaker Change: But also we've done some acquisitions there we've acquired a couple of distributors, where we were underperforming in certain markets and we felt that we could do better and that actually has paid off quite well in the markets, where we've done acquisitions, we've seen our share improved dramatically.

Speaker Change: Again, we were we were underneath our R. R share nationally in those markets. So just getting to the share position would be.

Aaron P. Jagdfeld: In the markets where we've done acquisitions, we've seen our share improve dramatically. You know, again, we were underneath our, our, our share nationally in those markets. So just getting to the share price, you know, we thought our position would be, you know, an increase, but we've actually gone beyond that. So we've seen some really nice results there, alongside kind of our organic efforts with the development of the distribution partners.

Speaker Change: Would be an increase but we've actually gone beyond that so we've seen some some really nice results there alongside kind of our organic efforts with development of the distribution partner. So those are all paying off we're gaining share and we really like where we're going with that channel. It has helped.

Aaron Jagdfeld: So, those are all paying off. We're gaining share, and we really like where we're going with that channel. It's helped, you know, kind of be a bellwether here as we, whether the downturn in telecom and rental in 2024 here. That channel has performed quite well and we expect it to continue to remain strong here through the next several years.

Speaker Change: Kind of be a bellwether here as we weather the downturn in telecom and rental.

Speaker Change: In 2024 here that channel has performed quite well and we expect it to continue to remain strong here through.

Speaker Change: Through the next several years.

Stephen Gengaro: One moment for our next question. Next question comes from Stephen Gengaro with Stifel. Please go ahead; your line is open. Thanks. Good morning, everybody. Just a quick one for me. You talked earlier about sort of the impact of storms kind of reverberating kind of across other markets.

Speaker Change: One moment for our next question.

Stephen David Gengaro: Next question comes from Stephen <unk> with Stifel. Please go ahead. Your line is open.

Aaron P. Jagdfeld: So those are all paying off, and we're gaining share. And we really like where we're going with that channel. It's helped, you know, kind of be a bellwether here as we weather the downturn in telecom and rental. In 2024, here, that channel will perform quite well.

Stephen David Gengaro: Thanks, Good morning, everybody.

Aaron P. Jagdfeld: And we expect it to continue to remain here through the next several years. One moment for our next question. The next question comes from Stephen Gengaro with Stifle. Please go ahead.

Speaker Change: No.

Stephen: Just a quick one for me you talked earlier about sort of the impact of storms kind of reverberating kind of across the other markets and I'm just curious.

Aaron Jagdfeld: And I'm just curious, A, have you seen that at all in IHCs, and maybe even B, is there historical precedent where you've actually seen a meaningful uptick in adjacent markets or not, or might sort of reading a little too much into this? Yeah, Stephen, it's a great question. I can tell you historically, whenever you get a widespread outage, it makes people think, right? So, as an example, in Texas, you get a hurricane hitting Texas early in the season, first Cat Five ever on record in the Atlantic that early, and people in Florida are watching. And so Florida IHCs, there is a reverberation there that's positive that gets people to action quicker.

Speaker Change: Hey have you seen that at all in IHT.

Speaker Change #102: And maybe you can be is there a historical precedent, where you've actually seen a meaningful uptick.

Speaker Change #107: In adjacent markets or not we might sort of reading a little too much into this.

Speaker Change: Yes, Stephen it's a great question I can tell you historically whenever you get a widespread outage. It makes people think right. So as an example in Texas.

Speaker Change: You get a hurricane hitting Texas to be at early in the season first cat five ever on record in the Atlantic that early and people in Florida are watching and so Florida Iac's. There is a reverberation there thats positive that gets people to action quicker.

Aaron Jagdfeld: We advertise on our national basis so that advertising resonates better when, in the background, you have outages taking place. So, you know, we have a historical historical reference points for that. And we certainly have seen some of that here as well.

Speaker Change: Advertise on a national basis, so that advertising resonates better win in the background you have outages taking place.

Speaker Change: So we have we have historical.

Speaker Change #110: Historical reference points for that and we certainly have seen some of that here as well again, the only cautionary point I would put on that is that for whatever reason the hurricane barrel, Texas event was maybe less covered nationally.

Aaron Jagdfeld: Again, the only cautionary point I would put on that is that, for whatever reason, the Hurricane Barrel Texas event was maybe less covered nationally. You know, it was really quite a significant event relative to just the raw hours and the duration of the outages. And yet nationally, the media, you know, just I don't think covered it quite as well maybe as they might have if that had happened, perhaps somewhere on the East Coast or somewhere on the West Coast. So, and that happens. But nonetheless, that's a, you know, that's a reality of some of the, you know, that the way those cycles work.

Speaker Change: It was really quite a significant event relative to just the raw hours in the day.

Speaker Change: Duration of the outages and yet nationally the media.

Speaker Change: Just I don't think covered it quite.

Speaker Change: As well maybe as they might have if that had happened perhaps somewhere on the east coast or somewhere on the west coast. So in.

Speaker Change: When that happens, but nonetheless, that's a.

Speaker Change: That's a reality of <unk>.

Speaker Change: Some of the.

Speaker Change: <unk>.

Aaron Jagdfeld: So, but we are seeing definitely, especially the Gulf Coast states, when you get into hurricane season and somebody sees, you know, when people see a storm of that magnitude, something that gets to that magnitude that quickly, this early in the season. And in particular where we've got a very strong season still predicted. So, I think that's another important element here, you know, is it that hasn't gone away, right? Nothing's changed there.

Speaker Change: The way those cycles work, so, but we are seeing definitely especially the Gulf Coast States when you get into hurricane season, and somebody sees when people see.

Speaker Change #103: A storm of that magnitude something that gets to that magnitude that quickly. This early in the season and in particular, where we've got a very strong season is still predicted. So I think that's another important element here is it that hasnt gone away right Nothing's changed there, yes, it's gone quiet here for a little bit but normally it would be in August and July and August or July in.

Unknown Executive: Yes, it's gone quiet here for a little bit, but normally it would be in August. You know, in July and August, or July in particular, is usually a quiet month for events. But we'll see how it turns out the rest of the year. One moment for our next question.

Speaker Change #103: There is usually a quiet month for events, but.

Speaker Change #103: We will see how it turns out around the rest of the year.

Speaker Change #101: Our next question.

Jordan Levy: The next question comes from Jordan Levy with Truist Securities. Please go ahead; your line is open. Appreciate you all squeezing me in here. I just wanted to get your thoughts quickly on standby. I don't think I heard you bring it up unless I missed it. I know it's kind of a quiet period for that, but just any thoughts on any traction in that segment.

Speaker Change: Okay.

Speaker Change: Our next question comes from Jordan Levy with tourists Securities. Please go ahead. Your line is open.

Operator: Your line is open. All right. Thanks. Good morning, everybody.

Aaron P. Jagdfeld: Just a quick one for me. You talked earlier about the impact of storms kind of reverberating, kind of across other markets. And I'm just curious, A, have you seen that at all in IHCs, and maybe even B, is there historical precedent where you've actually seen a meaningful uptick in adjacent markets, or not? I'm sort of reading a little too much into this. Yeah, it's a great question. I can tell you historically that whenever you get a widespread outage, it makes people think right. So as an example, in Texas, you get a hurricane hitting Texas early in the season, the first Category Five ever on record in the Atlantic that early, and people in Florida are watching.

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

Aaron P. Jagdfeld: So you know, we have historical, historical reference points for that. And we certainly have seen some of that here as well. Again, the only cautionary point I would put on that is that, for whatever reason, the Hurricane Barre Texas event was maybe less covered nationally. You know, it's really quite a significant event relative to just the raw hours and the duration of the outages. And yet, nationally, the media, you know, just, I don't think they covered it quite as, as, as well, maybe as they might have if that had happened, perhaps somewhere on the East Coast or somewhere on the West Coast.

Aaron P. Jagdfeld: So, and that happens. But nonetheless, that's a, you know, that's a reality of some of the, you know, that the, The way those cycles work. So, but we are seeing definitely, especially the Gulf Coast states, when you get into hurricane season, and somebody sees, you know, when people see Unknown Executive, George Gianarikas, Praneeth Satish, Vikram Bagri, Jordan Levy, Alfred Moore, Kris Rosemann, Generac Holdings Inc, I think that's another important element here, you know, that hasn't gone away, right, nothing's changed there.

Jordan Levy: I appreciate you squeezing me in here I just wanted to get your thoughts quickly on staff, but I don't think I heard you brought it up.

Speaker Change #109: It's kind of a quiet period for that.

Speaker Change #104: Thoughts on any traction in that segment.

Aaron Jagdfeld: Yeah, thanks, Jordan. You know, we're still bullish on that segment. It's just gone; it's gone, as you said. It's been a little bit quieter here. The higher rate environment has made some of those projects a little more difficult to pencil out. Kind of funny. What's interesting is it kind of falls along the lines of a lot of the other, I'll call it, you know, kind of clean energy related efforts, you know, in terms of the impact of high rates, you know, and that's something that's created a situation where the projects haven't gone away. They just haven't gotten to closure.

Aaron P. Jagdfeld: Yes, it's gone quiet here for a little bit, but normally it would be, you know, in July and August, or July in particular is usually a quiet month for events, but we'll see how it turns out the rest of the year. One moment for our next question. The next question comes from Jordan Levy with Truist Securities. Please go ahead.

Speaker Change #123: Yes, Thanks, Jordan, we're still bullish on that segment. It's just gone it's gone as you said, it's been a little bit quieter here the higher rate environment.

Speaker Change #104: Has made some of those projects a little more difficult to pencil out.

Speaker Change #104: Kind of like.

Speaker Change #100: What's interesting is it kind of falls along the lines of a lot of the other.

Speaker Change #100: I'll call it kind of clean energy related efforts.

Speaker Change #100: The impact of high rates.

Speaker Change #100: And Thats something Thats created a situation where the projects haven't gone away. They just haven't gotten to closure. So I think whats happening there and as those projects are.

Aaron Jagdfeld: So I think, you know, what's happening there is those projects are kind of idling in the background, waiting for a more constructive rate environment. And then we would expect that, you know, that that segment that's still going to grow where a leader in natural gas gen sets, which are used in those types of applications. I think one extension of that is becoming a little clearer. We're finding that, you know, the whole beyond standby category, which we had, I think, largely defined as just using a generator for, you know, purposes other than just emergency backup, you know, using it to also supplement a grid that's under heavy stress.

Speaker Change #100: Kind of idling in the background of waiting for a more constructive rate environment and then we would expect that.

Speaker Change #100: That's a segment that's still going to grow we're a leader in natural gas Gen sets, which are are used in those types of applications. I think one extension of that that is becoming a little clearer. We're finding that the whole beyond standby category, which we had I think largely defined as just using a generator.

Speaker Change #100: For purposes other than just emergency backup using it to also supplement.

Aaron Jagdfeld: I think what we're finding is that maybe we have to expand our definition of that to include some of these microgrid projects as well, because in effect, what's happening is many of the microgrid projects have natural gas generators as an important component, but they also contain other pieces. They compete; they contain storage. So, you know, the Sun Grid acquisition that we announced this quarter, you know, and that we talked a little bit about on the prepared remarks, you know, gets us closer to another critical component of microgrids, which is the behind-the-meter storage element of that.

Speaker Change #100: Our grid, that's under heavy stress I think what we're finding is it's maybe we have to expand our definition of that to include some of these micro grid.

Speaker Change #100: Projects as well because in effect, what's happening is many of the micro grid projects have natural gas generators as it is an important component, but they also contain other pieces. They contain storage. So the sun great acquisition that we announced this quarter.

Speaker Change: And then we talked a little bit about in the prepared remarks.

Speaker Change: It gets us closer to another critical component of micro grids, which is the behind the meter storage element of that.

Aaron Jagdfeld: And then, you know, we also called out that we're seeing EV charging be part of some of these projects as well. So, commercial-grade EV charging. So, our partnership with Wallbox, I think, helps us be a little bit more of an important supplier to, you know, a microgrid project. And, you know, we continue to build out our competencies there in not only the assets, but the ecosystem, if you will, as we call it. Similar to the residential ecosystem, we think there's an ecosystem developing on the CNI side, and we think that kind of that beyond standby moniker kind of would likely going to grow to include some of the activity we're seeing around these microgrid projects.

Speaker Change: And then we also called out that we're seeing EV charging be part of these some of these projects as well so commercial grade EV charging so our partnership with Walmart I think helps us be a little bit more of an important supplier to the micro grid project.

Speaker Change: And we continue to build out our competencies there.

Speaker Change: In.

Speaker Change: Not only the assets, but the ecosystem. If you will as we call. It similar to the residential ecosystem, we think theres an ecosystem developing on the C&I side, and we think that kind of that beyond standby moniker kind of would like.

Speaker Change: Likely going to grow to include some of the activity. We're seeing around these micro grid projects. So still bullish on it but I think in a challenging rate environment, just I think it's softer than that.

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

Speaker Change: And then it will be longer term.

Donovan Schafer: One moment for our next question. The next question comes from Donovan Schafer with Northland Capital Marcus. Go ahead, your line is open. Hi guys, thanks for taking the questions. I just want to see if we can get any more color on the prepared remarks you said, you know, on the CNI. I think I believe it was on the CNI side, but some of the weakness there was being offset by strength in India. And, you know, that's always been a market that's kind of interesting to talk about. So what have you been seeing? We're recently on the ground, anything impacted by, you know, election politics or anything like that.

Operator: Your line is open. Appreciate y'all squeezing me in here. I just wanted to get your thoughts quickly on the standby. I don't think I heard you brought it up, unless I missed it.

Speaker Change: Yeah.

Speaker Change #115: One moment our next question.

Speaker Change: Okay.

Speaker Change #127: The next question comes from Jonathan Schaffer with Northland Capital Markets Go ahead. Your line is open.

Operator: I know it's kind of a quiet period for that. Yeah, thanks, Jordan. You know, we're still bullish on that segment. It's just gone. It's gone.

Aaron P. Jagdfeld: As you said, it's been a little bit quieter here; the higher rate environment has made some of those projects a little more difficult to pencil out. Kind of funny. What's interesting is it kind of falls along the lines of a lot of the other, I'll call it, you know, kind of clean energy related efforts in terms of the impact of high rates, you know, and that's something that's created a situation where the projects haven't gone away.

Jonathan Schaffer: Hey, guys. Thanks for taking the questions.

Aaron P. Jagdfeld: They just haven't gotten a closure. So I think, you know, what's happening there is those projects are kind of idling in the background, waiting for a more constructive rate environment. And then we would expect that, you know, that's a segment that's still going to grow. We're a leader in natural gas gensets, which are used in those types of applications.

Aaron P. Jagdfeld: I think one extension of that that is becoming a little clearer; we're finding that the whole beyond standby category, which we had, I think, largely defined as just using a generator for purposes other than just emergency backup, you know, using it to also supplement a grid that's under heavy stress. I think what we're finding is maybe we have to expand our definition of that to include some of these microgrid projects as well. Because, in effect, what's happening is that many of the microgrid projects have natural gas generators as an important component, but they also contain other pieces. They contain storage.

Jonathan Schaffer: I just wanted to see if we can get any more color on.

Aaron P. Jagdfeld: So, you know, the Sun Grid acquisition that we announced this quarter and that we talked a little bit about in the prepared remarks gets us closer to another critical component of microgrids, which is the behind-the-meter storage element of that. And then, you know, we also called out that we're seeing EV charging be part of some of these projects as well. So, commercial-grade EV charging.

Aaron P. Jagdfeld: So our partnership with Wallbox, I think, helps us be a little bit more of an important supplier to, you know, a microgrid project. And, you know, we continue to build out our competencies there in not only the assets but the ecosystem, if you will, as we call it. Similar to the residential ecosystem, we think there's an ecosystem developing on the CNI side, and we think that kind of that beyond the standby moniker is likely going to grow to include some of the activity we're seeing around these microgrid projects. So, still bullish on it, but I think in a challenging rate environment, just I think it's softer than that.

Speaker Change #112: Paired remarks, you said.

Speaker Change #108: And I think I believe it was on the C&I side, but some of the weakness there was being offset by strength in India.

Speaker Change #133: That's always been a market.

Aaron P. Jagdfeld: It will be longer term. One moment for our next question. The next question comes from Donovan Schafer with Northland Capital Markets. Go ahead. Your line is open.

Speaker Change #114: Kind of interesting to talk about so what have you been seeing more recently on the ground.

Operator: Hey, guys, thanks for taking the questions. I just want to see if we can get any more color on the prepared remarks you said about the CNI. I think I believe it was on the CNI side, but some of the weakness there was being offset by strength in India. And, you know, that's always been a market that's kind of interesting to talk about. So what have you been seeing more recently on the ground? Anything impacted by, you know, election politics or anything like that? And, just generally, any more color on the Indian market would be great.

Speaker Change #111: Anything impacted by election politics or anything like that.

Aaron Jagdfeld: And just, just generally any more color on the Indian market would be great. Thank you.

Speaker Change #118: Just generally any more color on the end market would be great. Thank you, yes, thanks, Todd I mean, India is.

Operator: Thank you. Yeah. Thanks, Donovan.

Aaron Jagdfeld: Yeah, thanks, Adam. And not India isn't a growing market for us. We through our and expanded that relationship through our, you know, our ownership of that in its entirety, built a new factory there for that market. And, you know, that our position there is different than other Indian genset manufacturers and that, and again, it's a little bit like a page out of the domestic playbook here. You know, we're really focused on natural gas, and most traditional solutions for backup power in the CNI markets globally are diesel solutions. And we do offer a diesel product line, but where we're getting the most traction is actually with our gas products.

Aaron P. Jagdfeld: No, India is a growing market for us. Through our Pramac subsidiary in Europe, we acquired an Indian manufacturer a number of years ago and expanded that relationship through our ownership of that facility.

Speaker Change #119: It's a growing market for us.

Speaker Change #111: Through our <unk> subsidiary in Europe, we acquired.

Speaker Change #111: And Indian manufacturer or a number of years ago and expanded that relationship through.

Speaker Change #111: Our our ownership of that.

Aaron P. Jagdfeld: ...built a new factory there for that market. Our position there is different from other Indian gen set manufacturers, and again, it's a little bit like taking a page out of the domestic playbook here. We're really focused on natural gas, and most traditional solutions for backup power in the C&I markets globally are diesel solutions. And we do offer a diesel product line, but where we're getting the most traction is actually with our gas products. So those are products that are actually designed here in the U.S., built in India with our engines and our fuel systems and ignition systems, and then they're deployed in the Indian market.

Speaker Change #111: In its entirety.

Speaker Change #111: <unk> built a new factory there.

Speaker Change #111: For that market.

Speaker Change #111: And that.

Speaker Change #111: Our positioning there is different than other Indian Gen set manufacturers and that and again, it's a little bit like a page out of the domestic playbook here.

Speaker Change #111: We're really focused on natural gas.

Speaker Change #111: Most traditional solutions for backup power in the C&I markets globally are diesel solutions.

Speaker Change #111: And we do offer a diesel product line, but where we're getting the most traction is actually with our gas products. So those are products that are actually.

Aaron Jagdfeld: So those are products that are actually designed here in the US, built in India with our engines and our fuel systems and ignition systems. And then they're deployed in the Indian market. You know, we're bullish on that because the Indian market is converting the natural gas. We see a lot of pipeline projects on the drawing board as part of the, you know, burgeoning infrastructure build out in India. I think, you know, from, you know, you just step back. You know, India is poised very well to be the, I think, the chief beneficiary of some of the geopolitical tensions that have been rising between the US and China.

Speaker Change #111: Designed here in the U S built in India with our.

Speaker Change #111: Our engines at our fuel systems and ignition systems, and then they're deployed in the Indian market.

Aaron P. Jagdfeld: You know, we're bullish on that because the Indian market is converting to natural gas. You see a lot of pipeline projects on the drawing board as part of the burgeoning infrastructure build out in India. I think, you know, from, you know, if you just step back, you know, India is poised very well to be the, I think, the chief beneficiary of some of the geopolitical tensions that have been rising between the U.S. and China, is in a very good position to see the growth in their economy come probably at the detriment to China as a lot of manufacturers shift production away from China and move to places like India and other markets. In India, for all that it is, there's still a lot of opportunity there. It hasn't grown as fast as China historically.

Speaker Change #111: We're bullish on that because the Indian market is converting to natural gas, we see a lot of pipeline projects.

Speaker Change #111: Drawing board as part of the.

Speaker Change #111: Burgeoning infrastructure build out in India I think.

Speaker Change #111: From.

Speaker Change #111: If you just step back you know India is poised very well to be the I think the chief beneficiary of some of the geopolitical tensions that.

Speaker Change #111: It had been rising between the U S and China, India is.

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

Speaker Change #111: <unk> is in a is in a very good position to.

Speaker Change #111: To see that.

Speaker Change #111: Growth in their economy.

Speaker Change #108: Combat probably at the detriment to.

Speaker Change #108: China as a lot of manufacturers shift production away from China and move to places like India and other markets in India for all that it is.

Speaker Change #108: There's still a lot of opportunity there it hasnt grown as fast as China historically, a lot of that is just based on.

Aaron P. Jagdfeld: A lot of that is just based on the infrastructure within the country is still not mature, and has a ways to go, but there has been progress. I think the political environment in India has been more receptive to business here as of late, the last several years, which is also positive. And again, I think we're bullish on India in the longer term. It's still a small business for us. I think when you put it all together, but it's a growing business. It's got nice growth rates.

Speaker Change #108: The infrastructure within the country.

Speaker Change #108: Is still.

Speaker Change #108: Not mature.

Speaker Change #108: Has a ways to go but there has been progress I think the political environment in India has been more receptive to business here as of late last several years, which is also a positive and again I think we're bullish on India longer term, it's still a small business for us I think and just when you put it all together, but it is a growing business got nice growth rates.

Aaron Jagdfeld: I think that the political environment in India has been more receptive to business here as of late, the last several years, which is also a positive. And again, I think, you know, we're bullish on India longer term. It's still a small business for us. I think you can just, you know, you put it all together, but it's a growing business. It's got nice growth rates. And, and again, we separate ourselves there by focusing on gas, where other manufacturers are still focused.

Aaron P. Jagdfeld: And again, we separate ourselves there by focusing on gas where other manufacturers are still focused. And bye for our next question. The next question comes from Keith Housum with North Coast Research. Keith, go ahead.

Speaker Change #108: And again, we separate ourselves there by focusing on gas where other or other manufacturers just still focused on diesel.

Keith Housum: Anderson Diesel, and bye for our next question. Next question comes from Keith Housum with North Coast Research. Keith, go ahead; your line is open. Great, thanks. That's a good opportunity. Just focusing more back on Texas just real quick. In terms of historically, when major storms have gone through, how long has that tail been bent towards sales there? Has it been just a quarter or two? Has it been no less than longer? Yeah, thanks, Keith. It usually goes two to four quarters. Of course, the bigger the event, sometimes you'll get an echo that's even bigger than that.

Speaker Change #117: Our next question.

Operator: Your line is open. Great, thanks. I appreciate the opportunity. Just focusing more back on Texas, just real quick. In terms of historically, when major storms have gone through, how long has that tail end been towards sales there? Has it been just a quarter or two? Has it been no less than longer? Yeah, thanks, Keith. It usually goes two to four quarters.

Keith Michael Housum: Next question comes from Keith <unk> with Northcoast Research. Please go ahead. Your line is open.

Keith: Great. Thanks, I appreciate that for Tony just focusing more back on Texas, just real quick in terms of historically when major started with have gone through how long has that tailwind bend towards sales there or has it been just a quarter or two has it been lasting longer.

Aaron P. Jagdfeld: Of course, the bigger the event, sometimes you'll get an echo that's even bigger than that. In fact, I would say, with the Texas freeze of 2021, that echo has only recently been quieter. And some of that was exacerbated by the pandemic and just, you know, the impact that that created for people being concerned about outages. But, you know, something like even a Hurricane Sandy back in 2012 definitely went beyond the two to four quarters remains.

Speaker Change #117: Yes, thanks, Keith It usually goes two to four quarters.

Speaker Change #121: Of course, the bigger the event, sometimes you'll get an echo that's even bigger than that in fact I would say.

Aaron Jagdfeld: In fact, I would say, you know, at the Texas Free, the 2021, that echo has only recently been quieter, and some of that was exacerbated by the pandemic, and just, you know, the impact that that created for people being concerned about outages. But, you know, something like even like a hurricane Sandy back in 2012 definitely went beyond the two to four quarters. Remains to be seen whether this event will rise to that. I think we're kind of sizing it on the smaller end of a major event at this point, just, but again, you know, that may change. Our views on that may change as time grows, but I would say at a minimum, this will take us through this year and into the first half of next year.

Speaker Change #117: Its a Texas freeze a 2021 that echo has only recently been been quieter and some of that is was exacerbated by the pandemic and just.

Speaker Change #117: The impact that that created for people being concerned about outages, but something like even like a hurricane Sandy back in 2012 definitely went beyond the two to four quarters. It remains to be seen whether this event will rise to that I think we're we're kind of sizing on the smaller end of a major event at this point, but again.

Aaron P. Jagdfeld: We'll see whether this event rises to that. I think we're kind of sizing it on the smaller end of a major event at this point. But again, you know, that may change. Our views on that may change as time grows. But I would say that at a minimum, this will take us through this year and into the first half of next year's anniversary, especially when you hit the anniversary of the event.

Speaker Change #117: That may change our views on that May change as time grows, but I would say at a minimum.

Speaker Change #117: This will take us through this year and into the first half of next year the anniversary, especially when you hit the anniversary of the event right like that's when media picks up Hey, remember a year ago. It started to hurricane season, remember, we had hurricane barrel.

Aaron Jagdfeld: Especially when you hit the anniversary of the event, right? Like that's when media picks up, hey, remember a year ago, it started a hurricane season. Remember, we had Hurricane Barrel, you know, in July, you know, kind of early in the season. So those things get picked up. Again, the media drives a lot of that, kind of echo effect. And then to clarify, like these events, the way it works is that, well, you'll get a surge in demand, and then that afterglow lasts for a while for number of quarters, then it levels off at a new and higher baseline than where it was previously.

Aaron P. Jagdfeld: Right. That's when the media picks up. Hey, remember a year ago, it started the hurricane season. Remember, we had Hurricane Beryl, you know, in July, you know, kind of, early in the season. So those those things get picked up again. The media drives a lot of that kind of echo effect.

Speaker Change #117: In July kind of kind of early in the season. So those those things get picked up again, the media drives a lot of that.

Aaron P. Jagdfeld: And then to clarify, like these events, the way it works is that you'll get a surge in demand, and then that afterglow lasts for a while, for a number of quarters, then it levels off at a new and higher baseline than where it was previously. So, that's why these major events and the broad awareness created by them tend to increase distribution that props up the fact that they're actively in the market now, on an ongoing basis to continue to. Satisfied Demand, and you hold up that new, prop up that new and hard base.

Speaker Change #117: Kind of Echo effect.

Speaker Change #120: And then to clarify like these events the way. It works is that while you'll get a surge in demand and then that afterglow last for a while for a number of quarters then it levels off at a new and higher baseline than where it was previously so.

Chip Moore: So, so that's why these major events and the broad awareness created by them tend to increase distribution that props up. They're actively in market, now ongoing basis to continue to satisfy demand, and you hold up that new, probably that new in our baseline going forward. Great. Thanks. I'll leave it there.

Speaker Change #120: So.

Speaker Change #120: That's that's that's why these major events in the broad awareness created by them you tend to increase distribution.

Speaker Change #120: That props up there they are actively in market and our ongoing on an ongoing basis to continue to.

Speaker Change #120: Satisfy demand and you hold up that new prop up that new and higher baseline going forward.

Operator: Great, thanks. I'll leave it there. One moment for our next question. The next question comes from Chip Moore with Roth. Go ahead.

Speaker Change #129: Great. Thanks, I'll leave it there.

Chip Moore: One moment for our next question. The next question comes from Chip Moore with Roth. Go ahead. Your line is open. Hey, thanks for taking the question.

Speaker Change #124: One moment for our next question.

Speaker Change #124: Next question comes from Chip Moore with Roth Go ahead. Your line is open.

Operator: Your line is open. Hey, thanks for taking the question. Wondering if you could expand a bit on how you're thinking about the back half of the year swing factors for that four to eight percent revenue range. Obviously, it sounds like barrel activations will play a large role, but other key puts and takes, you know, what are you baking in on consumer, you know, anything happening there on the low end? Thanks.

Alfred Shopland Moore: Hey, Thanks for taking the question.

If you're wondering if you could expand a bit, just on how you're thinking about back after the year swing factors for that four to eight percent revenue range, obviously it sounds like a barrel activation. So we'll play a large role, but just other key puts and takes, you know, what are you baking in on, on consumer, you know, any sampling there on the low end? Thanks.

Alfred Shopland Moore: I was wondering if you could expand a bit just just on how you're thinking about back half of the year swing factors for that 4% to 8% revenue range, obviously it sounds like.

Speaker Change #132: A barrel Activations will play a large role, but just other key puts and takes what are you baking in on on consumer.

Speaker Change #125: They're on the low end thanks.

No, I mean, we're not necessarily seeing that in terms of not anything beyond what we already have in terms of exactly in terms of change from our prior guidance. So for the most part, the guidance increase is the impact of barrel, particularly in Texas, but maybe some around the edges broader awareness around the nation. But we're not necessarily seeing a softening of the consumer. That's offsetting that beyond what we are on.

York A. Ragen: No, I mean, we're not necessarily seeing that in terms of not anything beyond what we already have exactly in terms of change from our prior guidance. For the most part, the guidance increase is the impact of the barrel, particularly in Texas, but maybe some, around the edges, broader awareness around the nation. But we're not necessarily seeing a softening of the consumer that's offsetting that.

Speaker Change #134: No I mean, we're not necessarily seeing that in terms of not anything beyond what we already have the alternative exactly in terms of change from our prior guidance.

Speaker Change #125: For the most part the guidance increase is the impact of barrel in and particularly in Texas, but maybe some some around the edges broader awareness around the nation and but we're not necessarily seeing a softening of the consumer that's offsetting that beyond what we are wrong on.

York A. Ragen: Beyond what we are on our prior guidance and did contemplate some software software. Yeah, we talked about that in terms of large tickets, for instance, close rates are hanging in there now. Maybe we'll with with the with the

Yeah, our guidance did contemplate some of them for software. Yeah, we talked about that in terms of large tick. For instance, close rates are hanging in there. Now maybe we'll with the with the with the large increase in IHCs from Texas, maybe those won't all close at the same rate. So maybe you'll see a temporary moderation in close rates, but for the most part close rates are hanging in there around the nation.

Speaker Change #125: Within our prior guidance did contemplate.

Speaker Change #128: <unk>, Yeah, we talked about that in terms of large particular instance, close rates are hanging in there.

Speaker Change #128: Maybe it will with the.

York A. Ragen: With the large increase in IHCs from Texas, maybe those won't all close at the same rate. So maybe you'll see a temporary moderation in close rates. But for the most part, close rates are hanging in there around the nation.

Speaker Change #130: With a large increase in Iht's from Texas, maybe those won't all.

Speaker Change #135: Close at the same rate so maybe you will see us.

Speaker Change #128: Temporary moderation in close rates, but for.

Speaker Change #128: For the most part close rates are hanging in there around the nation.

Operator: This concludes the question and answer session, and I would now like to turn it back to Kris Rosemann for closing remarks. We want to thank everyone for joining us this morning. We look forward to discussing our third quarter 2024 earnings results with you in late October. Thank you again, and goodbye. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thanks for watching!

This concludes the question-and-answer session, and I would now like to turn it back to Chris Rosemann for closing remarks. We want to thank everyone for joining us this morning. We look forward to discussing our third quarter of 2024 earnings results with you in late October. Thank you again, Andrew Byte. Thank you for your participation and today's conference. This does conclude the program. You may now disconnect. Thank you.

Speaker Change #128: This concludes our question and answer session and I would now like to turn it back to Chris Roseman for closing remarks.

Kris Rosemann: We want to thank everyone for joining us. This morning, we look forward to discussing our third quarter 2024 earnings results with you in late October.

Kris Rosemann: Thank you again and goodbye.

Kris Rosemann: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Kris Rosemann: Yeah.

Kris Rosemann: Okay.

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