Generac Holdings Inc. (GNRC) Earnings Call Transcript & Summary

[indiscernible] Senior Manager, Corporate Development and Investor Relations here at Generac. I would like to thank you all for taking the time to join us today, both here in person as well as virtually. For your reference, slide deck for today's presentation has been posted to our Investor Relations website in the Investor Presentations page. For those of you in person, our WiFi password for the guest network is light the night 2023 [indiscernible] LTN. Today's presentation will include strategic updates from several different leaders. [indiscernible] Yes, password is light the night 2023 [indiscernible] LTN. Today's presentation will include strategic updates from several leaders across our business, highlighting the range of opportunities that lie ahead for us. We have jampacked agenda, and we'll conclude with a 30-minute Q&A session at the end of the presentation. So please hold your questions until that time. Now a quick introduction of today's speakers. We'll begin with President and CEO, Aaron Jagdfeld, presenting an overview of Generac, our enterprise strategy and evolution to an energy technology solutions company. Kyle Raabe will then provide an update on our unique position in the home standby generator market and how we expect to drive growth there over the next 3 years. Amanda Teder, Executive Vice President of Marketing, will follow with a fresh perspective on our full funnel marketing efforts. Norman Taffe, President, Energy Technology will then provide further insight into Generac's strategic vision in the residential energy technology solutions. Following a 15-minute break, Erik Wilde, Executive Vice President, Industrial Americas we'll discuss growth opportunities in domestic C&I end markets as well as our growing suite of C&I Energy Technology Solutions. Paolo Campinoti, Executive Vice President, Rest of World, will then provide an overview of our International segment, highlighting Generac's ability to execute on a global stage. And finally, York Ragen, Chief Financial Officer, will update our 3-year financial framework. We'll begin our presentations 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 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-GAAP measures during today's presentation. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our SEC filings. And with that, I'll turn it over to Aaron.

Thanks, Chris. Good morning, everyone. Welcome to Waukesha, Wisconsin to Generac. I don't know if some of you probably have been here before with some of our previous IR days. Some of you are new to the story or new to the facility here. This is our headquarters here in Waukesha, Wisconsin. Just a point of reference, this was our only building for many, many years when we first started the company. We did all of our manufacturing right here in this building. In fact, right in the room, you're sitting in. We used to wind alternators and make transfer switches and other fun stuff. But obviously, as we've grown, we outgrew the manufacturing space here and have turned it into basically our corporate offices and our technical center. So you'll get a pretty good feel for that today throughout the day as we go through a manufacturing plant this afternoon in one of our facilities in Whitewater, Wisconsin and then also, we've come back and go through our innovation experience, our innovation showcase, which will take us down to some of our lab space and show you some of the products that we're working on. So I think you guys know who Generac is, but we have to put this obligatory slide in just to give you a little bit of -- a just a bit of perspective. Net sales, these are LTM numbers, by the way, through the second quarter of 2023. LTM net sales of $4 billion, $594 million of EBITDA. About 80% of the revenues are domestic. The other 20% would be international. We have about 8,800 employees worldwide, thousand of those employees are engineers. So it's pretty engineering heavy staff level when you consider the percentages there. And that's an important part of our heritage, and I'll get into that in a few minutes. And then we have an omnichannel distribution strategy that I think many of you have heard us talk about in the past and that we will talk about today in a number of the presenters' remarks, but I think it's an important part of who we are as a company. It's an important part of how we protect some of the share we have achieved in some of the markets we participate in. So we'll talk about that at more length. When you break down that revenue by kind of product class, 54% of that is residential products. So that's primarily portable generators, home standby generators, residential energy storage systems and the like. And then we've got 35% that would be commercial and industrial. So larger gen sets again, you're going to see some of these products in the innovation experience our innovation showcase this afternoon. So that's kind of a breakdown and an overview. And then just a real quick history walk for those of you that again, maybe don't have kind of the lay of the land in terms of what Generac was, where we came from. Pretty humble beginnings right out here in Western Waukesha County, outside of Milwaukee, many of you probably flew into the airport. -- either down in Chicago, about 90 minutes to the south, we're into the Milwaukee airport. We're about 35 minutes west of there -- Northwest of there. But the business was founded by an engineer, and it was an engineer who worked for Waukesha Engine, which is another company that you may or may not know, that's down the road here and he left the employee of Waukesha Engine after about 6 years because he had an idea for a product. And that product was a smaller format portable, if you will, power station. And so in 1959, he began this company right out here actually in a dairy barn, which all good things in the 1950s, Wisconsin were happening in dairy barns. There wasn't a lot of manufacturing yet. -- in the state in 1959 was our founding. In the 1960s, we grew pretty rapidly through some private label agreements that were pretty important to the company back then. I think many of you remember, our company used to, used to call Sears. I don't know it's gone now. But that company at the time was the preeminent retailer of its era, right? So it was the Home Depot at the time, the Lowe's of the time, the Costco at the time, you could buy a house at Sears, right, and build it. That was the premise. We private labeled under the Craftsman label, the first kind of affordable generators that were commercialized that was throughout the 1960s and 1970s, we expanded our product offering and added stationary generators, and we added some distribution agreements that helped us grow. And in the 1980s, we basically got into the C&I markets in a much bigger way, serving primarily the telecom industry. So we've been providing backup power to the telecom industry for really 4 decades at this point. The 1990s was kind of a pivotal point for the company. We introduced the home standby generator. We created the category. You can see a picture of it over there in the upper right-hand corner. And we also expanded our C&I products. We did a deal with a little company called Caterpillar. We were making gen sets -- C&I gensets for Caterpillar in the 1990s and 2000s. In the 2000s, that's when things really took off for the company, the home standby business was commercialized, really started to scale and we really expanded dramatically across the enterprise on the back of that success. In the 2010s, we really expanded our reach geographically but also with a number of new products that were adjacent to the products that we were involved with at the time. So you can think of things that use engines and engine-driven power, engine-driven lighting, engine-driven heating, all of those types of products came to us in the 2010s primarily through acquisitions and other partnerships, and we expanded our footprint dramatically. Up until that point, about 99.5% of our revenues were here in the U.S. and Canada. So today, again, as you look back on the previous slide, 20% of our revenues come from outside the U.S. and Canada. And then that brings us to today, the 2020s, which has been a remarkable decade so far, only 3 years in, but for us a decade of significant change as it relates to the product offering, our approach, our strategy, and those are the things that we're really going to focus on today in our presentations. I do think it's important to kind of level set. We show this to investors. This is obviously something that you guys have seen before in our investor presentations, but I think the company has just a tremendous track record of growth. This is my 30th year with Generac when I started here the year, I started here -- we had $100 million in revenues. So I think the amount of -- it's hard to put into context when living through that kind of growth, -- and what that means over just a 30-year period, which is really not a dramatically long time period. But I think what's really important here is how we've grown. It hasn't been in a straight line as many of you who have tracked the company now. And as this graphic would evidence, it basically -- it's kind of a stair-step function type of growth company. We see periods of rapid inflection in demand, and that's followed by kind of a top and coming off of that top, we're able to then hold a new and higher baseline level of demand. And there's a lot of reasons for that, and we'll talk about some of those reasons today. But a lot of those reasons are the things that we've done to try and create awareness for the different products and categories and markets we serve, but also the expansion of our distribution with each of those growth spurts that we go through. And as you can imagine, that's a difficult way to grow. I'll be very honest. When you grow in a very kind of vertical fashion very quickly and then kind of level out and then come back down the ability to be flexible, the ability to be nimble is something that is very critical to being able to handle that type of growth and accommodate the things that come from that. There's a lot of good things that come from growth like that, and there's a lot of really challenging things that can come from growth like that. We're experiencing some of the -- the backside of one of those latest growth spurts here, which was the largest growth spurt, obviously on the chart and we'll talk about that today as well. I think the important thing on this graphic and some of you probably already realized, we posted the Investor Day presentation here about a half hour ago, but the kind of the big reveal here is by 2026, the period we're talking about today is the next 3 years, 2024 to 2026. And we expect that to be about -- if you look at the midpoint of that guidance, that 12% to 14% compounded annual growth rate would put you at about $5.85 billion in revenues by 2026. So again, I think it's -- visually, it kind of, I think, speaks for itself in terms of what the growth has looked like. And I think it's just -- it's important to put it in context in terms of how that happens, why that happens and how we continue to hold on to those new and higher-level baselines as we grow. So I think just kind of getting into the meat of the presentation today, like every company, we -- we do strategy, right? And our strategy is -- it's very formal in terms of its process nature today. It was a lot more informal, I would tell you, even 10 years ago. But as we formalize this as we become a larger company and we've become more diverse, and we've had to formalize the process. But a key part of the process for us is identifying what we refer to as mega trends. And so what we do is we go out there and we look at, okay, what are the big thematic things going on in the world today, right? And that could be not only impacting Generac and specifically the company or the industry and the markets that we serve, but even more broadly, some of the larger trends that are impacting businesses in the industries kind of on an overall basis. And so you probably have seen these mega trends. We presented them -- and we continue to refine them. Every strategic cycle allows us to kind of pressure test are these the right megatrends. So these are the things that we should be looking at, are they still relevant? Do they still impact us or our industries? Are there things that we either -- maybe perhaps present risk for the company or present opportunities? How do we think about these megatrends? And so the 5 megatrends that are on this page are relatively similar to the megatrends you've seen before, but we've tweak them again, we refine them as we've moved along. So just very quickly kind of going around the horn here, Grid 2.0, and you guys have heard us talk about this dramatically. And I have a couple of slides after these mega trend slides that I think get into the how -- just how important that change in the grid is and what that's going to have for an impact on Generac, on the industry, on the utility industry. I mean there are so many industries that the change in the grid is going to impact, and we're definitely one of them. And in fact, as you can see by our actions, we're really leaning into the changes that are coming, and they are coming. There are some huge changes that are taking place and maybe not as obvious to you, but everything from the decarbonization of the sources for our power grid today, to the electrification of everything on the demand side. And those major forces have consequences. And some of those consequences are positive, of course, for the planet. Some of those consequences are more challenging to deal with. And we'll talk a little bit about how we think of those consequences in relation to the products and the solutions that Generac is developing and is deploying in the markets. But this is going to be a central theme for -- not only for us, but I think for a lot of companies that are involved in one way or another with power, with electricity. And this is something that I think we've talked about at length, and that we'll continue to talk about at length. Kind of intertwined with that is the impact of climate change, right? You can -- one is a causation. The other one is maybe part of how we solve for it. But the impact of climate change has kind of brought us to the point that we're here today when it comes to some of the changes that are taking place in the grid. As the planet warms, and I think we're all past kind of do we believe that it's real or not. Look, air temperatures are warming, sea temperatures are warming. You can debate what has caused that. That's probably a valid debate to have. But the reality of it is, is those temperatures are warming and those impacts from those warming temperatures are manifesting themselves in ways that we've not seen before, at least in current modern civilization in terms of what it's doing to our infrastructure, what it's doing to our populous and what it's doing to the systems that we deploy and that we depend on. It's creating more volatile weather patterns. This has been pretty clear. I think it's been shown that the amount of severe weather that's occurring, can be tied directly to these warmer air temperatures and these warmer water temperatures. So these are things that I think are not really at debate. It's a question then of how you deal with them. But they have impact. And they obviously have impact for Generac in terms of our products and our markets. Obviously, I think the other thing with climate change is the regulatory environment has changed significantly in the last several years. I think the policy environment has become very different from that of the environment, perhaps even as little as 3 to 5 years ago. And so there is a political will, if you will, to go after solutions to combat climate change, to combat these warmer air temperatures and these warmer water temperatures -- and those -- that regulatory framework that's developing and those policy changes have major impacts on many industries, but certainly on our industries in terms of our products and markets. Home is a sanctuary. This is another trend that I think emerged dramatically during the height of the pandemic, and we all witnessed that. I think a lot of companies had excess demand that was generated during times -- the time of the pandemic itself. I think for us, the demand that we get comes from generally from power outages or a concern around power outages, that became even more amplified, if you will, during the pandemic. And so I think this concept though, even though the pandemic itself has stated, the concept of people working from home, people -- kids that are learning from home, this has not changed. I don't think -- I think we would all agree. We're not going back to a 40-, 50-, 60-hour work week in the office 5 days a week. I mean those days are relatively done. Even here in the rustbelt of the U.S., we recognize the importance of a hybrid work structure and the flexibility that provides our workforce. It's critical and the opportunity to tap into new labor sources that perhaps aren't domiciled directly here within an hour's reach of our headquarters. And so because of those trends and because they remain intact, that has profound implications on the importance of a continuous source of power at your home. And this is a really important concept I think people are finally coming to grips with in terms of what happens when I'm trying to get my job done or my children are trying to learn or I'm trying to do anything I want to do in my home and the power is out. I can't do it. And it's not just an inconvenience. It's impacting my way of life, perhaps my way of earning, my way of learning, all of those things become impacted in a way that people, I think, probably didn't think about when they weren't at home and the power was out. So these are -- this is another important mega trend that impacts the company. I think the emergence of cleaner alternative fuels is another important trend in not only natural gas, which we focused on for a long time because our products consume natural gas, but also other fuel types, like hydrogen. These are other ways to produce power with cleaner impacts, if you will. And that's something that is gaining steam and that is something that we're also focused on. And you'll see a little bit about that and hear a little bit about that throughout the day. But it has, again, profound implications as we work to decarbonize these currently more heavy fossil fuel burning assets around the world that are producing power. And then lastly, the growing investments in global infrastructure, which are creating new opportunities for the company. We continue to upgrade the aging infrastructure of not only this country, but it's a global challenge here and it's absolutely a global theme. But these systems and these systems run the gamut of everything from transportation systems to waterways, water systems themselves, water delivery systems, the electrical systems, the telecommunication systems. These are all critical infrastructure elements that we rely on every day. Frankly, we take for granted every day, and they've continued to decay and they continue to be holistically underinvested in. Again, talk about political will and the -- I think the realization of the importance of those systems and the amount of infrastructure investment that's going to be needed in the decades ahead to bring those systems into a more modern state. Modernization of those systems is underway today. You're seeing evidence of it. Perhaps on a new road you're driving or a new bridge you're driving across those are kind of the easy things, but you're seeing it in some of the things that are happening with water systems. The telecommunication world, the continued march towards fifth generation wireless communications, those types of infrastructure investments. We play a role in that with the products that we develop and the markets that we serve are a part of that infrastructure investment that's going to be necessary in the dollars that are flowing towards that. So these megatrends are absolutely critical. They're foundational for us, it's where we start when we talk about strategy. And so we analyze these megatrends, we say, okay, we look at the trends and we look at them in relation to our strategy and to the initiatives that we've got underway, we say, is there a good alignment. Again, are these megatrends relevant? How are they relevant to the company in a positive manner or a negative manner? And what are we doing about them as we think about our future? And so I think 1 megatrend that I want -- it's not really a single megatrend. There's one thing that I do want to mention it basically brings all 5 of the megatrends together in a really interesting way. And this is -- it's underpinned we've -- I think some people maybe would put it under the bucket of Grid 2.0, because I think that's easy. But I think actually all of those megatrends I just went through are involved in this particular issue, which is a growing issue. It's an issue of supply and demand imbalance. And this is something that, as a company, you can argue that maybe when we went public back in 2010, I think for us, the weather events that we would see annually, right, that caused power outages were critical to kind of our growth or lack thereof. I think what we're seeing is evidence over the last few years is a shift in the dynamic of what people, consumers, business owners, homeowners, are concerned about relative to power. It's not just the obvious concern when your lights go out. It's a broader concern that your lights may go out. And this is being evidenced by the fact that, as I said before, you've got a broad challenge, the grid operators and utility companies have a massive challenge ahead of them in how to balance supply and demand. Every grid operator will tell you their #1 role is to balance supply and demand. That is full stop. That is what they do day in and day out, 24/7, 365 days a year. They are coming up against much greater challenges in trying to accomplish that. As we run to decarbonize the sources with more renewables we're creating intermittency in those sources. Now it's for the good of the planet, so it's a worthwhile exercise. And in fact, the cost of those renewables have come down to be on par, and in many cases, or better and some of the traditional thermal assets that we've used, but there's still a glaring difference and that difference is in reliability. And that's not a difference you can just ignore. You have to deal with that reliability issue. And that reliability issue is growing. And in particular, that reliability issue has been stressed by the more severe climate issues, right? So it kind of builds on itself. In terms of the impact of this issue. And so what we're seeing is as the sources, okay, on the supply side become more intermittent in nature. And then you look over on the demand side, and we're pushing to electrify everything. We want to electrify heating, cooking, cleaning, transportation, right? We're in very early innings here on some of these other trends. Supply -- on the demand side, demand is going to grow. And there are some pretty interesting projections out there, at least double, right, in the next 10 years, but probably even more than that as we take all of those traditional kind of forms of energy and convert them to the electron in terms of how they're consumed. As we do that, we become single sourced on the electron. When you're single sourced, you've now got more risk. You don't have -- if you think of it today, most of you have probably at least 3 mixes of energy in your own home. You have electricity, you have natural gas and you probably use gasoline or diesel for your transportation. That mix of energy allows you some that you've got some resiliency based on just having 3 different types of fuel sources. If you start to bring those all down to a single source, you start to become more vulnerable to when that source is not available or if it's not available. And this is, I think, got profound impacts for our customers and the markets we serve. And in fact, I just point to some -- these are just headlines we took in the last 12 months that I think the media, Amanda is going to talk you about all the wonderful things we're doing in marketing here this morning, but the media is doing a great job helping us out with this because this is a real problem. And what you're seeing is it's frankly, it's frightening. -- in ERCOT, in Texas, right? 10 consecutive days. They sent rate payers, that's you and I, if you live in Texas, a text asking you to voluntarily curtail your power usage. Okay. So this is the strategy. We text everybody and ask them to turn the lights off. You're the utility company. This is -- I mean, think of the [indiscernible] there. My only product, what I tell you, I'm asking you not to use. I mean it's a ridiculous business model, right? And it's voluntary today. How long will you continue to heed those voluntary requests without some additional incentive? Not for long. California, right? They sent a text out over the summer. They had -- were literally an hour away from having to deenergize large parts of the grid because they had an imbalance of supply versus demand. Demand is peaking a lot more quickly because of the electrification of everything and sources are coming offline a lot more quickly because of the reliance on renewable and intermittent sources. That is a tough combination to manage. And grid operators are struggling mightily with that. And we're seeing -- I mean, you've seen some -- there's been some pretty large high-profile challenges there, the Texas freeze of 2021 is at the heart of this, right? The disconnections that happened in the Carolinas over the holidays last December. Another visceral example. You wake up on Christmas morning and the power is out. Why? Because the utility locally didn't have enough power because the sun wasn't up yet. That's a tough thing to deliver, and it was cold, not dramatically cold even for the Carolinas. It was cold. But these are the kinds of situations that grid operators are struggling with, and there is no easy solution. And that is a real problem. And that's where I think that products like what we manufacture, products that we design, the systems we design and deploy can be so critical to helping fill some of these gaps and stabilize the grid and help solve for some of those supply-demand imbalances. This is our strategy. You've seen it before. I'm not going to belabor it. It hasn't changed from what we debuted 2 years ago in our IR day in 2021 and -- it's really -- it's 3 distinct pillars to improve energy resilience and independent. So think about resiliency being the first pillar there, energy independence and resiliency, optimizing energy efficiency and consumption. So the focus on efficiency, the focus on the demand side is the second pillar and lastly is protect and build critical infrastructure, which again, is another really important megatrend and pillar in our strategy. So this is our strategy as we -- again, we pressure test this every year. We have the right strategy. We think that powering a smarter world is very relevant today and maybe even more so than it was 2 years ago when we debuted it. We think that the proof in terms of what's been happening, the validation and what's been happening in some of these major trends, we think that it only validates that we've got the right strategy here and that we're thinking about this the correct way. I think also when we step back and we look at our strategy, obviously, ESG is an important element that companies are focused on today. Our employees are focused on, our customers, our investors are focused on how we -- in terms of how Generac itself, what do we think about ESG? What are we doing around these 3 important elements that make up ESG. And when we think about our strategy and we step back, we think our strategy fits really, really well. We think our values fit really, really well in terms of ESG. Now you may have seen, now this is a journey for us, for me, for every company, would probably tell you the same thing. The ESG process, the process of accumulating all the data you need to be smart about it, first and foremost, right? And then to action off of that data takes time. And as you've seen through the manifestation of our annual ESG report, if you haven't seen the latest version that we published earlier this year, I would recommend you go out and bring down a copy of it and just flip through it, but it's a continued evolution of our ESG, the messaging, the data that we share and how we talk to ESG in general, but I think that it lines up incredibly well with powering a smarter world. And so I'm not going to dive into the details here because we're a little bit short on time, but I think it's really important to know, and we feel really good about the fact that our strategy itself fits very well into the things that we find very important and that you find important about our efforts around ESG. Now I think the other thing that's really important about strategy is what does it mean in terms of your market opportunity. And so for us, probably this is a really exciting chart that we've talked about here before, and we're advancing here now to include 2026, but I see growth in our served addressable market. And you can see that back in 2018, when arguably, we were very focused on, I would say, 1 of those 3 pillars in our strategy: resilience. That's what the company was all about before. It was backup power. And it could be an engine-driven genset or getting into energy storage, but it was really about providing power to people when the lights will go out when utility was not there for them. That market was $14 billion actually a pretty good sized market. We felt pretty good about where we were at there. But as we thought about the future as we evaluated the megatrends. And as we looked at our strategy, we saw an opportunity to grow and to serve more markets because of our opportunities and where we were headed strategically. And we undertook a path here, both organically but also through acquisitions to get into new markets to bring new products into our portfolio, new thinking into the way we address solving some of these bigger challenges that are underpinned by these megatrends. And so today, the served addressable market for Generac is 5x greater than it was in 2018. It's a $66 billion market opportunity. A lot of work has gone into bringing us here to this point of opportunity. Now it's back to us. What are we going to do with it? How do we execute? How do we capitalize on this larger served addressable market. And obviously, that's also not been a straight line. And we'll talk a little bit more about that today, but it's hard. It's hard to go into new markets. It's hard to go into new products, especially when you've got a 60-year history of being focused maybe somewhat singularly, on a product set or a market opportunity. So we'll talk about that. But this is, I think, very exciting because it speaks to the work we've done to increase the opportunities we have to go out there and serve more of the market. We've got a great product offering to do this. And this is a lot of what we've acquired over the years, when you look at those 3 pillars, the first pillar being again, resiliency, we've got our legacy products, right, our traditional products and traditional gen sets. We've got our energy storage products, both on the residential side and the C&I side. When you think about efficiency, this is where it's really exciting. And this is where a lot of the new magic has been happening here and you're going to see a lot of this demonstrated in the innovation showcase later on this afternoon. But it's everything from smart thermostats to manage -- load management, right, to the connectivity elements that are so critical to tie these assets to the kind of control that we need to make them intelligent, to make them more valuable, both for the end user as well as maybe grid operators and utilities. And then lastly, that protecting and building out critical infrastructure, we have products that are targeted directly for that and that help out those companies, be they telecom companies or wastewater treatment plants, water districts, hospitals, grocery stores, those products and those companies that rely on the critical infrastructure, we want to help them protect that infrastructure. And we have products that can help them build the infrastructure and protect it. This is, I think, an incredibly important slide in terms of how we win at this company. It's not only about having the right strategy, but I think culturally being aligned to execute on that strategy. And this is where I think it gets pretty exciting for us, and we feel really good, even though we've had our setbacks and our challenges, of course, but I think we're stubborn enough, and we're smart enough that we're going to be successful in all of these areas when it's all said and done. But I think what's really important here, and there's 3 kind of, I would say, areas, if you will, or buckets that we've put these in, the first being innovation. Again, our founder was an engineer. very deep in our DNA, the importance of innovating. And it's not just product innovation. I think this is something that is a distinction that it's not often made enough. A lot of people, you said the word innovation you're saying "Oh, product, new product, new features, market innovation. We've created whole markets with home standby, it's innovation in the way we distribute products, innovation in the way we go to market, innovation in the way we tie our brands to the products. You can innovate in a lot of different ways, the processes that we deploy in the manufacturing floors, right? People can process innovate as well. Innovation is deep within our veins here at the company, and it's a really important part of how we think we're going to win in the future. Being operationally excellent. Of course, that is another really important element of success for any company, but particularly when we think about the opportunities we have, we have been operationally very successful as a company over our history. And of course, as we've said, some of these newer markets, we've had our struggles. But we're finding our footing and we are going to be successful in the future, but deploying these operating models that we've developed into some of these new areas is proving to be very fruitful. And I think that, that's an important element of being successful. And I'll call out one other element here that's important, which is a relentless focus on cost. And now we've changed that to also being a relentless focus on quality in some of these new markets, where we know that's so critical going forward. But being ruthless about your cost structure, and being sure that you can deliver products that deliver value to your customers, but also deliver value to your stakeholders, be they your shareholders, be they your employees, be they -- the others that have a stake in our success, is really important. You can't have one or the other. You have to have them both. There's got to be balanced there. And lastly, on this page, which I think is also something that maybe is not as well-known maybe is our go-to-market expertise, something that I talked about in terms of innovation, but the things that we've developed that, I think, provide not only some moats around some of the businesses that we participate in, but that give us opportunities and the rights to be successful with some of these new products and some of the newer markets that we're getting into. Our go-to-market strategies, I think, have evolved dramatically over the last decade -- and we've got a very -- we've got a very rich pipeline of things that we're going to do in the future that Amanda, in particular, is going to talk about as it relates to go-to-market expertise. So I think that -- we have a great brand. We've got great distribution. We've got global scale. And we also are very vertically integrated. You're going to see an example of that when you walk through the Whitewater facility today. We make our own engines. We make our own alternators, for those types of products. We make our own controls, designing our own controls. We put all of that together. We're going to do the same. We are doing the same in our C&I products, and we're going to do the same in a lot of these newer products. We think there are value streams to capture that are very important. And I think you can look at our margin profile, and you can kind of see for yourself the results of the importance of vertical integration. I think where this comes out in the end for, I think, our future is the fact that we've kind of decided we can't just be a hardware company, right? When we think about our future, we think about it as it relates to our past. Our past, we're building products, and we get them to the loading dock. We ship them out on a truck and we wave goodbye to them. We didn't even really see a lot of service opportunities, right? Because our products in the backup power space, by and large, are lightly used. So the opportunity for aftermarket parts, we always get that question, right, from investors and others. Where is the aftermarket parts opportunity? The reality of it is, it's always been pretty small for our traditional power generation products. The reality is, going forward, we believe that you have to be excellent in hardware. There's no doubt that you have to deliver high-quality, reliable cost-effective hardware to the market. But bringing all that hardware together to create more value stack for the end customer and for other third parties, be they grid operators, utilities and most certainly Generac, there's an opportunity to do that in a way that's never existed before. This is the residential ecosystem that we're building, all right? This is visually what it's going to look like. At the heart of that is the ecobee thermostat. In the end, when the dust settles on everything we've done over the last 10 years, I think we will all look back and say one of our more important acquisitions was ecobee. And I remember the questions early on that we got when we did that acquisition, are you going into HVAC, why are you buying thermostats, doesn't have anything to do with your markets. There's everything to do with the experience for the end user, the experience to take all of this hardware and make it interoperable, make it synchronous and make it intelligent. That is the heart of it. And that piece of hardware, you'll see in our innovation showcase this afternoon, you're going to hear from Stuart Lombard, the founder of ecobee. He's here in the flash, and he's going to talk about what we're doing with that device, don't even call it a thermostat, I almost cringe when somebody says it's a t-stat. It's an energy hub. It's an energy hub in the home going forward and it's at the center of the energy ecosystem we're building, and it's absolutely critical as a differentiator for us to differentiate Generac from other people who are just doing a hardware solution. And by the way, most people aren't doing all those hardware solutions. They're doing 1 of those, maybe 2. We believe we have the opportunity here to own energy in the home going forward. And that's an obviously critical thing based on those megatrends that we talked about earlier. So you're going to see more examples of that. And this is at the heart of what we're building as we become an energy technology company. And we're doing the same thing on the C&I side. At the heart of the C&I ecosystem is the Blue Pillar acquisition that we did. Small acquisition probably flew under your radar, but it provides the connectivity in the backbone in concert with our grid services group. And both of these ecosystems, by the way, if you go back and look at a residential ecosystem, you see that smart grid ready logo over in the far lower right. Though each one of these products can connect to the grid independently, -- but each one of these products can connect to the grid through the ecosystem and provide even greater value. The same thing exists on the C&I side. The Blue Pillar acquisition gives us the opportunity to not only control our traditional power assets like generators and where we're going with battery energy storage, but also larger load applications within the C&I universe: boilers, chillers, those types of assets that consume tremendous amounts of power and are absolutely critical and at the heart of how the C&I customers think about managing their energy. And so this ecosystem is going to provide, we believe, tremendous value for end customers and tremendous value for the company as we go forward. This is at the heart. Again, you'll see great examples of both of these today. If we do this right, as we evolve in the future, you saw us present this graphic 2 years ago, but what we're defining is energy technology. And I'll just talk to this for a second. Today, based on our forecasted 2023 results, 12%, the $4 billion, the $4.06 billion is the midpoint of the range, the guidance, which today we are reaffirming and I'll get to that in a second. At $4.06 billion, that 12% is about $500 million. About $300 million of that is residential and $200 million of that would be C&I today. We believe that, that's going to grow to about 21% of that $5.85 billion in the future. okay? So that's about $1.2 billion. So $700 million of growth. And that $1.2 billion when we think of it, it's about $700 million of residential and about $500 million of C&I by 2026. We -- the CAGR on that energy tech piece is about 35% over the next 3-year period. Even our traditional markets are going to grow 9%. So obviously, maybe depending on what you peg is GDP, 3x GDP may be greater, depending on where we're going here, maybe 4x GDP. But if we do this right, we're going to continue to broaden our opportunities with that new and larger serviceable addressable market that we're creating for ourselves. And we're going to create a bigger mix, a heavier mix of our sales coming from energy technology. Now real quickly, I'm going to conclude on this and then turn it over, so we can keep moving. But from a near-term update, I just want to bring everybody around, I just mentioned it, the cat out of the bag, but we just provided guidance back on August 2, and -- on our second quarter call. We're reaffirming that guidance this morning. No changes to that. So it's still going to be a consolidated revenue decrease for the full year, 10% to 12%, primarily driven by residential products, which are down at a decrease in the mid-20% range primarily from the field inventory challenges that we've talked about at length on the home standby side. Adjusted EBITDA margins about 100 basis points spread there between 15.5% and 16.5% in -- that's also a lot lower than historically we've had in York, and kind of level set you kind of on a history lesson of where we've been with our EBITDA margins and where we're going in the future, but it's also been depressed because of the -- we're undershipping the market for home standby. Why is that? Well, on the field inventory side of this graphic here just to give you some perspective of where we're at, we've been working through that field inventory challenge for the better part of almost 4 quarters now. And we're getting close to what we've referred to as normal. We think by the time we get into 2024, we get into early 2024, we're going to be into a much better position. We're actually already seeing, as we've said before, evidence where certain markets, certain regions, certain customers are already at or below normal levels. The good news is demand and demand has remained strong. And Amanda is going to touch on that and Kyle will as well, Kyle Raabe here in a second. But I think the point here we wanted to leave you with this morning is that there's no change to the guide at this point. We feel good about where we're going in the second half of the year. And we feel like that field inventory problem is becoming further and further in our rearview mirror, which is a good thing because it's been a drag on obviously on sales, but it's also been a drag on earnings, given the outsized impact that, that has, that mix has on our results. So I'll leave you with that in this morning, and then I'm going to turn this over to Kyle, and then we'll keep things moving along. Kyle?

Thanks Aaron. As we go through here today, I'm going to start diving in a little bit deeper. Aaron talked on how the how the megatrends affect our entire business, how they work across every single channel that we serve. We're going to dive deep into what the resiliency portion of those megatrends really mean to Generac, what it means to consumer power and how we plan to take advantage of the things that we do extremely well. Just a very brief introduction of myself. I've rejoined Generac back in December of 2019 after being at Fortune Brands and Master Lock. And that prior to that, also spend some time here at Generac for approximately 8 years. So I'm happy to be with you this morning and happy to be talking about how we believe we're going to win in the consumer space, specifically with home standby. And we start the great news, and most of you know this already, we start from a position of leadership. In residential standby power, we're clearly out in front of every one of our competitors. And it's something that we enjoy, but we also -- we don't take that for granted for 1 single day. And when I think about taking it for granted, it really means what do we do with that to then catapult ourselves through what Aaron talked about in an inventory reduction period and take and drive for the next 3 years to higher levels of market penetration, to higher levels of consumer satisfaction. We're going to take in and we're going to leverage everything that we've built in the last 20 to 25 years. You think about the scale in which we manufacture, you have the opportunity to see Whitewater later today and the scale that, that plant has brought about to be able to service the customer and service surges. We've taken, we worked to duplicate that plant down in Trenton, South Carolina. What you see today in Whitewater is very, very similar to what's going on in Trenton, South Carolina. And those 2 plants, they bring the scale that we need not only to drive the daily sales that go on the daily need for backup power, but also to service the surges that come in day in and day out. To service the surges that we'll see because when we leverage all of the tools that we have into not only the manufacturing side of the business, but also into the marketing side of the business, in our ability to create consumers who are interested in the category that, in some cases, they don't even know exist today. We live in a world, I live inside of Generac, and I would think, well, hey, no one could ever possibly not be aware of a home standby generator. But the reality is we create that market every single day. And I'm going to talk a little bit later on how we really go about doing that and leverage our scale to bring that in and Amanda is going to give us even more detail in her section. But to go hit that objective, we really have about 5 key areas that we'll focus on. I'll walk you through here throughout my 30 minutes with you. market creation, Amanda's going to talk a lot deeper about that, but I'll hit it for a little bit. Distribution expansion, that's something I'll dive into for it. Because as we create new consumers as we create people who are interested in the category, you have to have distribution, you have to have the ability to service that at the same level that you're creating it. Data and intelligence, we believe, is an unbelievable competitive advantage, specifically for this space. When you lead a category by as much as what we do, what we acquire from that category, what we acquire from our customers and the data that we see every day, we're going to leverage that. We're going to leverage it forward to be able to do things that not only will help the consumer, will help our distribution, but we'll also continue to distance us from anybody else that were to come into the market. As we deliver those homeowners, we're going to go close the consumer. I'll walk you through a little bit of a history of what that close rate looks like. I know we've talked about it several times on several of the earnings calls, but there's a really rich history behind how we got to where we are today. Most importantly, I'll walk through what we're going to do and how we're going to get to tomorrow, the end of the 3-year period that we're talking about. And all of that is going to be done on the back of a fantastic product portfolio that Aaron already talked to. So as I transition here a little bit, and I talked that we start from a position of strength. We start from a position of leadership. It's actually something slightly different. We actually start from a position of creation. When you think through the history of Generac, when you think through the history of the entire market, think about a company that created a product to solve a problem that homeowners 30 years ago, had no idea even existed. The muscle, the might and the firepower that it took to create this market to drive it to where it is today, and then to take it and push it to tomorrow, continues to be an unbelievable strength of ours. And over the last 4 years, we've taken that strength, and we've been able to play it forward into creating 4x the number of IHCs, our in-home consultations, as most of you are aware of, we create those in-home consultations by acquiring a customer that maybe has gone through the pain of a power outage for all those reasons that we talked about in the megatrends. And maybe they've gone through it once. Maybe they've gone through it twice, and it's the third time that they come back to us and they said, "You know what, I'm ready to jump into that process to find out how to solve that problem." Generating those IHCs is an art, a science, and it's a strength of ours that will continue to leverage well beyond what you see in 2023 or what you see in the slide here and going out. And Amanda will talk about where we're going from a long-term perspective. But every time we do that, every time we get the opportunity, I call them app bats, right? We get an app bat for the consumer. We drive market penetration. And by the end of this year, we think we'll be north of 6% of market penetration. That is something that, to our organization to everybody that works here at Generac is an unbelievable opportunity. The growth that we've experienced, we're still only at 6% a wide open feel that we have the opportunity to go attack. And every time we grab a point, it's another $3 billion. So the return on what we do in that open field and the way that we go to acquire a homeowner and provide a standby solution will, without a doubt, continue to return heavily to our organization. As we move through the last 5 years, the last 6 years, what you see in the slide here is some of it is new, some of it's not. I'm going to talk you through the blue line here really quick. When we think megatrends, you think of grid, you think of demand, you think of the imbalance that Aaron talked about, when -- We talk about the megatrend of weather, the severity of weather that we see in the U.S. every single day, and it's amazing how it used to be just a hurricane season in the Southeast for 2 to 3 months out of the year. It's expanded across the winter months. It's expanded up and down the seaboards. We saw a hurricane in California this year. I can't remember the last time we saw weather and severity like that. That blue line that you see on the screen is taking away all of those major events. That's the baseline outage trends that we talk to you every quarter about and we've seen those trends continuing to increase -- to increase, especially when you take a look at the jump from 2019 to 2020, that's the day in and day out outages that homeowners experience across the U.S.. That's the pain and the frequency of pain that continues to grow as the grid and as the megatrends take a grip and have effect on the homeowner. What's new and different is we look at how long those outages are lasting. And that's a big difference. When an outage last an hour, when an outage lasts 2 hours, the impact to the homeowner is significantly different than when you start to eclipse 10, 15 and what we track is even above 20 hours. Now you're talking a full day, that means you wake up in the morning and your power is out. And you went through your entire day thinking, checking the web, what is my utility telling me? Is it going to be back on? And you go to bed that night and the power is still out. That's a completely different experience. And as we see that part of grid operating of grid outages going down, that's where we see opportunity of consumers raising their hand, going to grab them and say, hey, somebody's got to fix it. Somebody's got to do something. And I don't trust my utility anymore to go do it. So I'm going to take control I'm going to take control of the situation and put a backup power source on my home. There are options, there are options in this space, and they're growing. The opportunity for a homeowner to go do something else besides a home standby generator keeps coming at that home owner from a lot of different angles. I want to walk you through what you see here, 2 options that are particularly popular, 2 of them that are growing, and we've had conversations with you about both of these. If you think about solar and storage. And as I look at the top, right, solar and storage, what can that do for me from a backup perspective? When my power goes out, it can help me, and it can help me for a period of time. But it has its problems. It has its challenges. How full were the batteries when the power outage started? How long is the power outage going to last? Is the sun going to come up today? Am I going through a nighttime period? Where do I live? How much power am I using? How much power am I curtailing? What am I not using to try to get as many hours out of that solutions I possibly can, right? That's not a worry-free experience. It's a very green experience, and those products have their place and will continue to grow. But to solve and extended power outage, to solve an outage environment that continues to grow, it doesn't compare. . We've also talked a little bit about what does a bidirectional EV solution look like, right? I got a bigger battery. You've got a car. And in this case, we looked at Ford F-150. That truck, that car can power my home in the future, we see bidirectional charging, being able to access that battery and be part of this solution. But what that does is it adds a different layer of worry, a different layer of concern? Does it -- am I taking away by mobility? What happens when I need to go somewherer? And I just run my electron gas tank dry. Am I taking away when I do have to go get food or run out of the house, I take my power with me and my home goes back dark again. So the family that was left behind now is unplugged. So risk, concern and worry also accompanies that bigger battery because it's not designed specifically for long-duration outages. Our home standbys, which you see the example that we have here to 24 kW will run as long as I have a fuel source. If I'm hooked up to natural gas, I can run almost in perpetuity. If I'm hooked up to propane, I have quite a few hours that I can bring it and I can refill that tank and run hours upon hours even days on the fuel that I have. So no other solution gives me that type of longevity in this type of environment. At the same time, that solution that provides longevity also has a better cost position to install and acquire for the homeowner. Now again, very different from solar and storage. And what we have modeled up here does include tax incentives and rebates that a consumer gets as well as does the F-150, but to create that apples-to-apples comparison, we look at how does this product get installed? What's the labor that goes into it? I have transferred switches. I have equipment that I have to bring along with me to actually get to that spot. And any way in which you slice it, the price to provide backup power that will last through the long outages that consumers are starting to see still favors a home standby generator hands down. So when we think about bringing people into the funnel, reaching out, creating IHCs, we use intelligence to make sure that we're able to serve that customer very crisply, very cleanly. And we know we have work to do. And that's part of what you see on the screen here is identifying the work that we have to go get done. But it doesn't happen hazard, right? It's not a shock and approach. Being the organization being a connected product, we have the ability to see homeowners, we have the ability to see power outages. We watch very closely what regions and down to the county level that you see on the left-hand side here, -- we have the ability, how counties behave when the power outages actually happen relative to how rural they are, how urban they are, what their electrical sources are. Do they have power coming from peaker plants? Are they burning coal? Is it wind? All of that goes into how we score a county. And what you see on the left-hand side, those blue counties pretty cold, right? Not an area where we see the propensity of a homeowner to really jump into that funnel. What you see in the red is where certainly we've seen outages for many, many years, in many cases, we've talked about the inverted sea, but now we start to see California light up, right, that the ability and the desire for a homeowner come in and look for sustained backup power is increasing. We take that and data map it against every one of the distribution points that we have. Aaron mentioned an omnichannel approach, and you look across the bottom of the screen here, 5,200 retail outlets where a consumer can go and ask for a home standby to be quoted and installed. 1,500 wholesale locations were a contractor that is not a dealer can go and acquire our products because they may be trained, they may have experience, and they want to provide as an electrician, as an HVAC professional, they want to provide the power to their homeowner. And last and certainly not least, the growing number of dealers that we have throughout the entire country. 8,700 strong and building every single quarter, every single month. We know the importance of making sure that when a homeowner comes to us, especially in the red and orange target areas that we're able to serve them in a rapid fashion. It's an emotional category. And if we lose the speed, if we don't have the speed to solve that problem for the consumer and the power comes back on, they move very, very quickly. So our distribution approach works to solve that problem every time the power goes out in every county across the country. A -- critical to that distribution strategy were those 8,700 dealers that I talked about, they make the whole thing go -- we can send a lead to a dealer directly, fantastic opportunity for that dealer to grow the business. Dealers are certainly out marketing and bringing business in on their own. The dealers are the backbone of our retail programs. I talked about 5,200 opportunities for a homeowner to walk into a Home Depot, to walk in through Lowe's, walk to a Costco and Menards and get a home standby generator installed. Our dealers sit down below and they sit underneath that, and they make that happen which is why we pour so much energy into that group every single day. What you see on the left-hand side are all of the things that we invest in to make that dealer network stronger. We know that if you walk into a Lowe's that when a dealer shows up, the better the dealers that shows up and they might have their Lowe shirt on, they might have their Home Depot shirt on. The better that they approach you as a homeowner, the more likely you are to buy. When we send an IHC to a dealer and they show up and they understand the product, they understand how to sell, they understand the solution that you need, the better chance that their success is. But they also have businesses. In many cases, these are small contractors, and they have to move through and they have to grow as fast as what we are as fast as the opportunity is presenting us. And what you see on the right-hand side is where we're taking deeper tranches into their business to help them expand the way that we are, all the way down through hiring. We've launched programs, our dealer talent network, where we're working to actually place people into their businesses as they raise their hand and say, I have to grow my technical staff. I have to grow my sales staff. Hiring has been a real drag over the last 3 to 4 years. So us jumping in to an environment where we know the demand on a technical employee is higher and higher is something that we're very willing to do. And again, when I think about who else does these types of things in the industry, right? The answer is no one. No one thinks about our dealers, no one thinks about our installing technicians to drive engineering and products to help them install faster. This is what we do, and we're going to continue to invest in these dealers day in and day out as they work to help the whole ecosystem go. So as we make the investment, I want to pause really quick. As we've talked about close rate and give you a quick walk through how we got to where we are today. And then certainly, what are we going to do to go forward to take what you see on the right-hand side there, which is a flattening of that close rate of the IHCs that we send out and bend that curve upwards. . When you look from left to right, what you have on the left-hand side that, that escalating line is really the result of a couple of things. Number one is the growing awareness in the space. We have a lot more interest in homeowners coming in those interested homeowners, pretty low on the bottom of the funnel. And we were able to grab them and pull them into our PowerPlay process and really enhance the sales process that was going on prior to that upward curve. As COVID came in, you see the close rates peak right at the beginning of COVID through 2020. What happened at 2020 that drove the drop off? Supply. All of a sudden, that IHC that came to that dealer was not 2 weeks out, it was 4 weeks out. It was 6 weeks out. It was 6 months out. All of a sudden that home standby generator that had to go in wasn't going in inside of 60 days. It was going in inside of 270 days in some cases. People back away it's an emotional category. That dropped our close rate off. As you can see in the curve, we've bottomed up roughly 2020, and we're on our way up. We flattened off in 2023. She said, "Well, hey, Kyle, that's great, you're coming off, why hasn't that trajectory increase? Well, the consumer, frankly, is in a very different spot today than they were even 12 months ago. We think about interest rates. -- number of generators that are financed that we pull through our funnel continues to grow. It's an expensive endeavor and we work really, really hard on affordability and we're going to continue to do that because the consumer through 2024, we see stress, right? We see that, but we're going to deploy more resources to help bend that upwards. We also have a larger funnel -- so the more people that come into that funnel, right, you see people who are exploring for the very first time. Some people might call them tire kickers or they're just looking for an estimate. As we grow and we bring more IHCs in we've got to bring that customer sometimes through 1, 2 or even 3 IHCs to get them to purchase. So that trend will go upwards. And we expect by the end of 2026 or this period to recover half of that drop and be back up closing at a much higher pace against far more IHCs coming through the funnel. So how are we going to go do that? It sounds great, right? That's a great outlook. I understand what you're trying to do it all makes sense. What do we actually have to do to go and make that happen as we grow those IHCs. And the answer comes back to truly using our data and investing in the dealer. But we're going to start with the consumer. We're going to start by learning more about that consumer as we create that IHC. We're going to nurture them. We're going to pend data that's publicly available to that IHC, to that homeowner and we're going to give our dealers a better fighting chance to go close that IHC. When I know something about the homeowner, when I know, hey, guess what, they've got propane. When I know, hey, they're in their 60s. When I know there's a family of 4 living at that home. When I know there's 20 units in that subdivision and they're the last outstanding, right? My dealer operates in a certain way, being able to deliver that information to a dealer that were, by the way, also profiling and understanding, do you close well with propane customers. Do you close well in a suburban area? Do you close well in our urban area? Do you close well with a certain demographic of people? Marrying that together really enhances our ability to go and present a solution through PowerPlay, which I'll hit on the next slide as well and the investments that we're going to make there and create those suggestive thoughts to a dealer as to how to sell the solution, not just in general, not just sell hey duration, not just sell, "Hey, we're going to back up your house, but to sell it the way the homeowner wants to hear it. right, to sell it with the right salesperson to put someone in the kitchen, across the kitchen table that knows how to close that individual homeowner. That's a massive advantage. And with millions of at bats behind us, millions of IHCs to learn from and to continue to go through, we will get better every single month, every single quarter as we start deploying this. But if I keep rolling down, I talked about, hey, I've got to have the dealer who's really good at doing that, okay? How do we foster that? How do we make that come to fruition? And the answer goes back to investment. Investment in the tool that they use day in and day out. That's PowerPlay for us, right? That's PowerPlay, a tool that we've created a proprietary tool that we invest in and we'll continue to develop over many, many years, far longer than the 3-year period that we're looking at here. Because that tool gives us the ability not just to provide a lead to the dealer, not to create a suggestive selling environment, but also to take feedback, right? For them to let us know what's going on in the market, what quotes are winning, what quotes are losing, what solution isn't right for this consumer. So please change those suggest dependencies, those data-driven pendencies. That's all driven by that PowerPlay tool. An investment there or without a doubt, make our dealers better and the growing number of dealers that will continue to use it better every single day, whether I've been in the industry for a decade, sometimes 2 is a dealer or whether it's month #3 as a dealer that just came on board with us. As we build the tool, obviously, we've got to create the process. So we're digging really, really deep and thinking through what is that process at the table. And lastly, how do I bring that to that dealer those that have had experiences with the trades. You know generally speaking, not the easiest group to train. They're not raising their hands and always willing to lean into a sales process, a technical training, no problem, right? But as they grow and as they mature, not only does it become something that a technical individual becomes more comfortable in selling but also expanding their dealership to have the professional sales force, to have people that day in and day out sit across the kitchen table and sell as a job, right, be in front of the homeowner and be a consultant that actually drives the right solution to them at the right time. Our investment, not only in the tool, in the process, but also in the daily behavior and tracking of how our dealers work, who's doing a great job and who needs what specific training to grow and improve and build on the close rate and build on the foundation that we have will help propel us well beyond our close rates that we have today. So as we bring that together, there's really 3 people that all of this helps. If you go all the way back to product, right? And Aaron talked about product, you can see on the left-hand side there, I've got the portfolio of products that are really in the center and at the heart of what consumer power is here at Generac and certainly some extension often to the clean energy that you see on the upper left-hand corner. But as we bring these in and sales process designed not just for home standby, certainly, that's our focus, heritage. As you can see, 6 million devices, half of those are home standby generators. So we tend to focus there, but the reality is that sales process that way in which we engage the consumer is beyond that. And we're working to create a very specific and very easy connection between the homeowner, their power needs and Generac. One-stop shop. As we go through the next 3 years, all of these devices come into that ecosystem that Aaron talked about and all of a sudden become a very easy solution for us to get into the house as well as for our ability to be able to connect the consumer and solve an energy need. Our trade partners. I talked a little bit about our omni-channel approach, and it's great that they give us leads 5,200 retailers, 1,500 wholesalers, almost 9,000 dealers that we have right now. As we expand this portfolio, we're bringing more business to them. We're bringing more dollars to the shelf at Costco. We're bringing more dollars to an electrical contractor, EV charging, something that they're doing today, why not already bring it into the ecosystem. If we can promote their business as a retailer, as a wholesale distributor and certainly as a dealer to continue to grow, the more we dig around that dealer network becomes something and the loyalty that they have to us becomes something that any competitor that comes in, you've got to replace that. You've got to replace the training, you've got to replace the tools. You've got to place every one of the solutions that we're bringing to those customers to take that share away from us. That's a big investment that I don't see happening, especially if we're putting our foot on the gas as hard as what we anticipate. So as I wrap it down here, the things that we've talked about, right, are all really designed to generate growth over this period. And we think about the opportunity, right, longer power outages, more power outages, people being touched in different ways, energy solutions, energy problems coming in at a much faster pace, right? That's really our drive. Our drive is to grab those market trends, grab the tailwinds and invest in the right spot to continue the growth trajectory that we've been on for the last 10 to 15, even 20 years. We will do it by improving our product availability, the dealer numbers that we talked to you about, the way in which we grow and engage with those dealers. How we bring product to the homeowner exactly where they want to find it? Sometimes I want to shop where I want to shop. I want to shop online. I want somebody to come into my house. Our job and where we'll be is to put our products and our services and our solutions in front of that homeowner at the exact right time. And we're going to do it wisely, right? We're going to do it in the right spots. We're going to invest in areas where we have to expand. We're going to invest using data and intelligence to improve our dealers, improve their close rates, improve the way we educate a consumer along that path so they're ready to take that solution. That may be a foreign or autobody experience for them. Maybe it was something they didn't even know about. We're going to use data to bring that to them a very simple, easy and in consumable way. And by doing that, we'll close the consumer. And that growing number of ICs that is a massive opportunity for us as the grid continues to fail will be what drives us going forward. We learned a lot during COVID, right? Aaron talked about the massive influx, the dollars. We've invested a lot over that time to create the infrastructure -- as we look forward for the next 3 years, it's time to leverage that infrastructure. It's time to leverage the supply chain, the marketing expertise, the network of distribution that we've built even through that really, really tough time because what it's netted out is 3 million home standby generators -- more than 3 million home standby generators installed, over 6 million Generac devices in homes, just leveraging that along with everything else that we've done truly sets us up for success. And with that, I'd like to hand it over to Amanda and she's going to show us a little bit how.

Awesome. Thank you. Well, my name is Amanda Teder, and I joined Generac in 2022, and it's been a really exciting time. I spent about 20 years working at Procter & Gamble in the past. And worked across a lot of different brands at the company and really enjoyed that experience. And then most recently, led the North America consumer tire business at Michelin before joining Generac. So as I've joined Generac, it's been really exciting to see this solution that the company's build in the standby generator that's -- it's really a perfect solution for what's happening in the market today, right? The product provides viewing the safety and comfort and the benefits that it provides really deliver that for consumers in a time when we've got these megatrends that the team has talked about where you've got climate change, right, which is obviously producing a lot of new weather environments and creating more implement and severe weather. And then you've got the situation with the consumers where they're changing. They're working from home more, they're more reliant on their home having power because of the way that their lifestyle has evolved in the last few years. And you've got people who are more likely to be aging in place. They want to stay in their home longer. And so these trends are colliding a little bit, right? Because you've got the worst sort of weather outcomes and more power outages, coupled with people's increased desire to be in their home and having power and spending more time actually there. And so that combination creates a little bit of a perfect storm, no pun intended for our product and solution. And what's exciting is, over time, the company has really built a moat and some competitive advantages that give us the right to really win in that space. One, the 8,700 dealer network that Kyle already mentioned, that dealer network is super powerful. And our product is really at the heart of what they do, right? And so it's a great strong relationship with them that we continue to reinforce. We also have impressive lead generation and lead management capability that the team has built over many years. And that enables us to generate leads for those dealers and to help kind of push consumers through that journey toward what's a considered purchase and a longer sales cycle? And then I think what's really great is we have a 90% customer satisfaction, which is sort of an enviable number for many companies, I think. And so it's great that we can continue to provide that level of service to our consumers because if the power goes out, that's -- and the generator doesn't come on, like people are upset, right? But we've got a 90% customer satisfaction rate. And so that shows that the product is really successful in delivering on consumers' expectations. And then the other piece, and this one is kind of exciting to me as a marketer is our category prototype status. So some parts of the country if you have the sniffles, you say, can I have a tissue? In other parts of the country, you say, "Can I have a Kleenex, right ". And we're kind of that Kleenex of generators, if you will. Consumers will say, "I need a Generac or I'm going to buy a Generac, right? Because -- and to them, that means I'm going to buy a generator, right? And those are synonymous. And so that kind of like category prototype status is something that is really wonderful as a marketer and something that we want to like sustain and continue to build on. And so as we think about the framework for continuing to drive growth on the business, there are a few parts of that. One is really that what we call the who, so the consumer, right, and thinking about new ways to reach consumers and new consumer groups that we can target. But what, which is kind of our strategy, what do we communicate to them -- and then the how. So this really looks at the different phases that the consumer is at in their journey and then what are we trying to do at those different phases. So driving awareness, really driving engagement with that consumer, helping them to consider and get to that consideration phase and then purchase. That's kind of what they're doing, right? But then we've got a set of actions and activities that we're doing in each of those moments to try to continue pulling them through that funnel. And so -- and that's, I think, what we'll talk a little bit more now is just like some of the ways that we're going to continue to build on what we've done in the past to continue to grow and to provide new opportunities. So today, on the left-hand side, you can see our current consumer group, 65% of existing customers are aged 60 and older, right? And so that's obviously older demographic from a product perspective. But because of the megatrends that we've talked about a couple of times now, there is increasingly relevant of new consumer groups that we can continue to tap into more that provide opportunity for future growth on this business. Those people who are frequently working from home, right, the younger families with children. There's a lot of people who -- they just don't want the hassle of the power outage when they've got multiple family members, kids that they're trying to deal with and manage. The increasing electrification of the home, right, and automation of a home, makes having power more importance, just to kind of operate the home on a daily basis. And then families with special needs. This group has always existed, but with more inclement weather and more power outages, they now have a greater need for our products. So as we think about like our potential for growth from a consumer -- on a consumer base on that side of things, there's a lot of opportunity. And then thinking about the what, so think of this as like how we speak with consumers. And today, we have an approach where we use a lot of DRTV and a lot of the communication there focuses on the storms and the environment that the consumer might be experiencing and reacting to. And that strategy isn't going away. We're continuing to build on that and refresh how we think about that. But then in addition to that, we recognized that there is another way we can speak about this product as well, and that's to that consumer that's maybe a little bit more proactive, right, and kind of giving people credit for maybe taking a leap into the category. So we developed a new campaign idea about, say, Generac owners do it differently. They're the everyday heroes protecting what matters most and building a sanctuary for those they love. They're proud, they're ready for anything and they deserve a pat on the back for that. They know it's not just a generator, it's a power move. So we've taken this idea of it's a power move. And we feel like that idea can be a nice umbrella to talk with consumers about our product. And we're starting to do some testing in that space, and we have an ad that we're testing with, which I play for you just so you can get a sense for how that might start to come to life. And I will play it now. [Presentation]

So that gives you a sense for how things could start to come to life a little bit differently and how we can just open up the way we talk about the product to be relevant to a broader set of consumers. And that gets us into awareness that first kind of part of the how -- and what's really amazing is this graph that shows the sort of unaided awareness metrics since 2013. And what you can see is that the team has made significant progress in growing awareness of the product. It's growing every year. And at the same time, we haven't achieved 50% unaided awareness yet. And so it's like 1 of those win-win type of stories where we've been super successful and there's a lot of additional runway to drive increased awareness, right? And that's exciting because it means that there are more people who haven't gotten the message about our product yet that we can continue to appeal to. And as we think about the awareness, we're kind of shifting from a mode on the -- where you can see on the left-hand side, where we historically focused primarily just on DRTV and we're shifting towards truly like full funnel marketing, where we'll start in the upper funnel and really kind of reach consumers broadly from that perspective, but then we'll also start to sort of follow consumers through the funnel on that journey to make sure that we can really pull them through. And we're beginning to test that and implement that now and it's exciting. And then the engagement piece where the consumer starts to really engage with the brand, we've got that ecosystem is built, but there's really a lot of opportunity to improve the consumer experience and the sort of way that we sort of touch them. And so on the left-hand side, you see sort of our current website, the form that the consumer fills out when they want in-home consultation, like Kyle mentioned, and then the bottom section on the left, there is like how we show up in the physical store, and that's kind of the best case scenario, if you will, from a retail perspective. And so what we're shifting to is something more on the right-hand side where we really optimize that consumer experience in terms of how they can sort of engage with us? How they engage on the website? Because we want more people to fill out the form. We want more people to complete the filling out of the form, right? And so there's a lot of work to be done to make that easier for them. And then in the 5,000 retail outlets that Kyle talked about, we've got a big opportunity to be more effective at communicating people to people in those physical and digital environments. And then the consideration piece, so we're building a propensity model to nurture consumers in a more personalized way based on how likely we think they are to purchase the product, but then also what messages might be most appealing to them. And so we're focusing on implementing that approach and then adjusting our communications approach ourselves and how we guide our dealers to communicate with these consumers as they flow through that journey. And then Kyle mentioned PowerPlay. So this is really kind of that last piece of the journey. PowerPlay is kind of the backbone of our sales process, but there's opportunity to connect the data from the propensity model to the data that's flowing through PowerPlay so that dealers too can see how they might treat these leads differently and how they might think about them in unique and different ways. And there are a lot of benefits that this sort of platform provides to dealers. They received qualified leads. They can measure products, they can opt into programs like buyer financing, but it also provides us with benefits. We have data and visibility to the sales process. We can really develop our dealers by understanding more like how successful they are, areas where they're excelling in areas where they have opportunities. So a lot of different ways that we continue to use that tool and can integrate it more across our ecosystem. And so -- and this is, I think, one of the things that's most exciting about Generac and the reason I joined is we really had the opportunity to strengthen how we engage with consumers. We've built an ecosystem to do that, but there's a lot of opportunity, as you can see, to continue growing and nurturing that. And we have some pretty significant competitive advantages, right, our dealer base, our customer satisfaction, our brand that have been built over many, many years, right? And those are going to lead to pretty meaningful increases in the standby generator of penetration -- penetration growth over the coming years. You can see by 2026, we're thinking to about 7.8% realm. And then what's even more exciting on top of that is that we can take these capabilities that we've built and really transfer them to other product categories and start to take market share within other categories that are very relevant to our consumer and that are large and frankly, really have a lot of opportunity for continued growth. So thank you, Norm?

Good morning. My name is Norman Taffe. I'm also new to the organization, but I'm managing the energy technology organization. Because I'm relatively new, I'll spend a little more time talking about my background. I joined Generac just about a year ago. Prior to that, I spent over 30 years in Silicon Valley. I started my professional career at -- right of a college at a company called Cypress Semiconductor. And then my great surprise, end up spending the next 23 years there. We started as an entry-level applications engineer and then by the end of the last 7 years, I ran what was one of the 3 product divisions in the company working directly for kind of a famous guy in Silicon Valley from T.J. Rodgers. If I look back on my career, one thing I've realized over time is just how great of an environment that was to learn and grow as both as an engineer, but also as managers. I would say, if you know anything about T.J. Rodgers, certainly, you've developed a fixed skin or you don't last. So I definitely develop that from work for TJ. And I also dropped an incredible appreciation for what it takes to deliver complex technology products with high quality and engineering excellence. And he was -- and I call about that, and I realized over -- maybe even after I left, just how important I really was. From Cypress, I moved to SunPower Corporation, where I first kind of moved [indiscernible] industry. At SunPower, I started leading engineering initially. But then the last 4 years, had a great opportunity to run the residential business at SunPower, which is -- became the largest and most profitable segment in the company. What was great about SunPower and relevant to the job here at Generac is that I manage the development of a lot of the same products we're building out in that ecosystem. At SunPower, we built solar inverters, both string inverters and microinverters. We also do residential energy storage and we had significant software and firmware teams designing systems to control all those, very similar to some of the stuff that we're building on the ecosystem here. The other thing that was great about working at SunPower with a lot of great people, but a lot of great people with a passion for attacking the problem of climate change. And I founded that resonate more with me while being there than I ever expected it to. One of the things that really excited me about coming to Generac was the ability to join not just a great company, with a really strong financial footing, one that had a great brand and an ambitious plan to lead that transition to sustainable energy. Now Aaron covered this quite a bit as well. I'll give a little bit of a different take. Sustainable energy is both necessary and the right thing to do and it's causing a lot of problems. And frankly, I agree with their ends, those problems are going to get worse before they get better. 75% of the carbon emissions that are created in the world come from energy in some way, whether energy generation or energy consumption. So because it's such a huge contributor, very best way to attack climate change is to start sourcing your energy from renewable resources and electrifying everything. Good news about that is those sources of energy, whether it be solar or wind or absolutely lowest cost sources of energies in the market today, unsubsidized. An example of that is today, in California, a utility can find a 20-year PPA to $0.02 a kilowatt hour. That's the marginal cost of operating a natural natural gas plant without paying for the equipment. And those prices are only getting cheaper. First a huge problem with renewable resources is that they're highly variable. And so it really makes the complexity of managing the grid much, much more difficult. The image on the top right kind of shows a duck imposed on the kind of California pick up curve. And this is just through 2020. What obviously represents the fact that during the day, supply of energy is very, very high because sun reaches its peak. But as the sun goes down, the demand actually rises as people get home, and you have this tremendous imbalance, which really adds to the complexity of solving the energy problems. A couple of data points on the screen really kind of put this into perspective in both dimensions. This year in California for -- I'm not sure how many years in a row, but it's effective year -- this year, we had negative energy prices. But this year, it happened on April 19. That's the earliest on record -- that's getting record earlier every single year. At the other extreme, on August 16, not the year of the freeze, but this year, in Texas, under tremendous heat conditions, the price of electricity reached close to $5,000 megawatts. On a typical day, just put that in perspective, it's $25 to $50 a megawatt. So that's an extraordinary change that is causing all kinds of really problems downstream. First of the utility, but then also at the consumer. And what's going to make this more difficult, as I said early, it's going to worse before it gets better, that move to electrification, which is critical to the planet is also going to make this phenomena worse. And as the data point below, it's just by 2030, not in a decade away, you expect the demand for electricity to go up by 25% to 30%, which is a massive change if you think about historical rates of growth for that technology. So the point about going and kind of reiterating some of that is that rapid change is also creating a homeowner challenge. Homeowner, what I call homeowner energy challenge. Historically, utilities have really been able to shield customers -- end customers for any supply/demand issues. They were very reliable at keeping electricity on and you ever really even knew where it was coming from. Gone are the days where you could just plug things in and not worry about whenever and wherever you want and never spend any time thinking about where you get your energy. What's happened? I mean, actually an example, Aaron -- which really is a great example. People are getting text to tell them to turn off their power in the middle of the day, you never had that kind of interaction, you told whatever you think of doing that. But now it's become necessity because the utilities can't afford. The price differences are so dramatic, and the problem of being able to just keep the lights on are so much more complex than they used to be. It's coming back to homeowners now having to think about and make trade-offs between I'm going to keep the power on versus how much comfort do I have? Do I want to participate in a grid services program? Or do I want to just optimize my energy portfolio for cost? Lots of things that you honestly never thought about before are going to become more and more of an issue for consumers. What we're trying to do at Generac is to deliver home energy solutions of the future, which supports that trend toward electrification. It does it in such a way that the consumers experience. They get back to not paying much attention to it, and they know they have an optimized solution in the home. Now in delivering that solution, we've shown a version of this chart, I know in the past. We have a very ambitious effort to attack and deliver leading solutions throughout the home for consumers, whether it be home standby generators, which are obviously a leader that allow you to get through outages. They're increasingly likely or whether it be solar, storage, EV charging solutions that will allow a customer not only to withstand some energy resiliency issues, but also have more control over their power and lower their costs by operating directly off the sun on the hardware side. And then as Aaron kind of highlighted, importantly, we're investing also on the software side. Grid services technology, which allow you to really be aware of what's going on in the grid because that's critical for both optimizing your cost, but also being aware of potential outages coming and preparing yourself to go through those outages with the right [indiscernible] on the ground. And then at the center, and I'll talk more about this later, we really are seeing a great opportunity to take what is a great smart thermostat today and add a ton of capability to that smart thermostat to really make it become the energy hub of the future. We're already starting to take steps in that direction. So solving this problem is a significant challenge, but it's also a significant market opportunity. These markets are in the very early innings of their development. If you think about solar, solar is, and growing very, very fast. I mean, it's still only penetrating about 3% of homes in the United States. And home storage is closer to 1% penetration. And while those are very volatile markets and tend to swing, the fact is the long-term trends are only up and to the right, really driven by rising energy prices, growing conscious about the environment, improving technology and costs to keep coming down and making the solution more attractive as well as unprecedented policy tailwinds. The combination of those trends and new product introductions that we're going to be making over the next couple of years, we see our served market increasing by a factor of 3, around $4 billion today, about $14.5 billion within the energy technology portfolio. Now -- as I said earlier, the market is in early innings, our efforts in this area are also in the early innings. As Aaron alluded to earlier today, if you looked at that chart, it showed 10 acquisitions at the bottom of the page, 7 of those 10 are essentially brought together to build the [indiscernible] organization [indiscernible] technology organization. As you'd expect with those many acquisitions, there's a -- certainly a mix of capability, maturity and success of the different companies coming together. A lot of what I've been doing with my team over the first year here is really working to integrate those teams more closely into a single organization and focusing them on developing much better customer experience, both for the end customer and the installer. At the same time, we've spent a lot of time adding to and upgrading the organization itself. In the last year, we've added more than 100 new employees with direct experience in solar energy storage or software related to it, and most -- almost all of those engineers. And we've also reset and established more rigorous quality and testing requirements because the products which we're building here living in a very, very challenging environment and they have very long warranties. And we had a lot of opportunity, I think, to improve the way we go to market with those products, and that's been a huge focus for the team. In addition to changing the standards and driving a much more aggressive focus on quality, we've also been investing in that area. In fact, the picture at the bottom is our new facility that we just announced opening a couple of weeks back in Reno, Nevada. It's a 40,000 square foot facility, which is a battery design center, but also a center where we're going to put in significant reliability testing infrastructure and manufacturing test infrastructure as well as a place to attract talent and build out the organization. Now at the heart of our potentially the home energy solution in the future is solar and storage solution. Generac was actually a fairly on the early side of entry into this space with the solution that's pictured at the left side here, where you have a storage device, an inverter, load management panel. That -- even today, that remains at the high end of capacity at 18 kilowatts in a single solution, modularity, power of the inverter as well as integrated load management. But while that's what we continue to sell today is a significant effort internally ongoing to develop completely redesigned platform for the next generation. Now that generation -- our next-generation storage solution, it's too early to get into many details. The schedule for that product is we will expect to reduce it late next year. We will certainly focus on continuing to deliver highest end in terms of our capacity capabilities, but also work to dramatically improve the user and the customer experience of both installing the product as well as using that product. At the same time, we're revamping that storage platform. We are also completely revamping our rooftop solar platform as well. That is scheduled to come out shortly after we introduce a new storage. Near term, we're adding EV charging to the portfolio we service the home. In Q1 of next year, Generac will introduce our first EV charger. This is an important introduction because it's a key load in the home as people add EVs, so it's 1 of the key resources you want to be able to charge to efficiently both optimize your electric bill and optimize use of your battery and other systems about the home. It's also a product that the 8,000 strong dealer network that Amanda and Kyle talked about earlier, have been asking for. Frankly, they've been installing other solutions and they're looking for a Generac solution that they can buy their customers and as they grow their customer base. Also important for us is we see this as a product that's kind of an on-ramp product. One of the things that we strategically want to take advantage of this to build out our portfolio here is some of the generator dealers are looking to expand and get into solar and storage and other technology. We see this as one of the entries for that and another opportunity for us to add value through more capability of that ecobee thermostat. And so it's 1 of the things we're going to be working with our dealers, train them on this as, in some cases, as a lead-up to later selling more of the portfolio on the clean energy side. One of the other acquisitions that were on the bottom of Aaron's chart is a company called Enbala. Enbala is a leader in grid services technology. And with Enbala technology, they built a product called Concerto. Now Concerto is actually very sophisticated software. It is sold and used by some of the biggest utilities in the United States to manage exactly the problem I talked about at the beginning, which is the integration of renewable resources and essentially variable rental resources into the grid effectively. Well, that same technology is actually very important for the home energy solution of the future because having the context of what's going on in the grid at the current price electricity at your specific location or whether the grid is having trouble from stability or has in the near future, and we have predictive analytics, likely to have a problem or go down. All that helps your ecobee or at the center or independent devices themselves, make the decisions on when to best charge your car or send energy back to the grid. All those things are critical to being able to deliver, frankly, the full ROI of those devices. One good example is for storage, being able to understand NEM 3.0 schedules. And then either charge or discharge to the grid at the right times has a dramatic impact on what the ROI of that storage system is based on NEM 3.0 schedules that now exist. Similarly, things like demand response programs or market participation, having the grid services technology in the cloud allows us to, through our ecobee thermostat, easily to have customers participate and roll or choose not to, depending on their desires. This technology is one of the key things that adds value to all the hardware we sell from home. So now I'll finish by talking more detail about what Aaron called the Energy Hub of the home and kind of where we're moving that thermostat capability to be a much stronger presence in the home. Already today, it's really much more than a smart thermostat. It has both temperature, but also door and window sensors. So thermostat itself that device is really not a thermostat. It's actually a very powerful computer. It has AI and ML capabilities to understand context in the home, understand which rooms are occupied, which ones aren't, to optimize the use of your energy. It understands when you're at home and when you're away, and therefore, can do additional things to optimize your energy and we're adding additional capabilities in the very near future. We're adding the ability to see what's at your door staff, even to do push to talk and talk to people on your doorstep. We're adding the capability for security to a pin pad that allows you at your thermostat to arm or disarm your door and window sensors in your way. It's really a core engine that we're building the higher experience around or taking advantage of the fact that it's tremendous software, it is very high quality, and we used to build out for all the experience, not just around the thermostat, but our other products as well. Ecobee has some essentially core values. So one of the core values I really like inside ecobee is they had at this company they call it, welcome guest. It's the way they think of their positives, they want to be a welcome guest in the customers home. Now being a welcome guest means that they focus on creating what they call magical experiences that exceed customer expectations. And the data supports that they're doing exactly that. They have NPS scores for their smart thermostats regularly in the mid-60s. And is to give you a sense, that's in the top 1% of all consumer devices on market. At the same time, they have 63% of their consumers actively using the mobile app on a weekly basis. That's a huge number and a huge level of engagement. 22% now or up to 22% are buying an additional service beyond the thermostat, whether it be security services or participating in a demand response program, which adds value to large solutions. And their average Amazon star rating is 4.5 with 80% of reviews on Amazon are 5-star reviews. So they have a great base of capability that we are going to leverage across our entire ecosystem. We're also in 3.6 million homes in North America and growing very good fast. Related to those great results on the right is we've gotten great partnerships for this product. From the beginning, the ecobee smart home thermostat has worked very well in the Apple ecosystem, worked perfectly within -- and seamlessly within the Apple's HomeKit -- it is -- it actually has Siri on the device embedded in the smart home thermostat. And Apple sells the smarthome thermoset in their stores. Recently on the HVAC market, Carrier made an announcement where they've chosen to take the ecobee thermostat and co-brand that solution as part of their next-generation HVACs on us. So they're already shipping with the technology called IntelliSense which they've embedded on their higher-end HVAC solutions and are now spreading to their entire portfolio. They ship with every one of those an ecobee -- co-branded ecobee carrier thermostat to control and to provide that connection from both the dealer to their customer base. Big retail suppliers are key partners, certainly Home Depot, Best Buy, Lowe's. And we are now the exclusive supplier of smart home thermostats in Costco stores throughout United States. Not surprisingly, based on those scores, this product is also very highly rated, really the highest rated product in a category that ecobee created itself. Just in the last year, time, Tom's Guide, Newsweek, Wirecutter, all gave awards to ecobee for its capability. Now on the chart there, you show the existing portfolio, you see there's a curtain on the right. The whole purpose of that is we're not ready to show. But within a few weeks, we're going to add a beautiful doorbell camera to this lineup. And that's another important device, which gives additional context and capability. It makes the thermostat more useful to the customer. It also makes thermostat smarter and understanding now outside camera, outside security and things with regards to security. And those are all important as you build that ecosystem of the hub -- the home of the future. So I'm going to -- I have a couple of slides to conclude my talk. I first just want to emphasize, we're making major investments in the talent infrastructure necessary to win really rebuilding our entire clean energy portfolio with a focus on quality first. We're in the midst of a complete revamp of the solar storage and charging solutions on the way right now. We're leaning heavily into our investment on ecobee. We see that as a great solution that has incredible power and we're looking to leverage that as the software platform across our portfolio, really develop the energy hub of the future and then continue to create superior experiences for our customers. And as we build out this portfolio, we're taking into the effect of Generac and Ecobee brands and channels to deliver that energy storage solution for the future. Now I wanted to end to kind of say, what does that all mean financially? And what is our path to profitability in this business. As I said earlier, the focus in the last year has been building out the leadership team, adding a lot of industry experience to the organization, and really investing in the technical infrastructure necessary to deliver great products in this space. That's going to continue on into next year, and there's a huge focus on executing the product road map that I alluded to earlier. We're also investing heavily on building out this common software platform, which doesn't just create much better user experiences, but also improves the quality of our solution across the board. In 2025, we expect to resume strong sales growth, expand our channels and leverage the brand strength with the new portfolio as well as take advantage of a lot of the things that Amanda talked about today, which are focused today on home standby were directly applicable to the clean energy portfolio. We expect to scale further in '26 and reach breakeven and continue to work on optimizing and improving that homeowner experience. Longer term, I expect this business to deliver EBITDA levels consistent with the rest of the company. Okay. With that, that's my -- that concludes my remarks. And I'm going to have Kris I think we're going to take a break. Is that right?

So we'll take a quick break and reconvene at 10:40 a.m. probably. We're a few minutes ahead of schedule. So we're going to pull that restart for 10:20 a.m. start up again, -- thank you.

Okay. Good morning. I see a few people coming and I'll wait just 10 seconds. All right. So I'm here to talk about our commercial and industrial business. We spent a lot of time in the first half talking about it. It's a growth market for us. So I'll jump in really quickly. I've been at Generac since 2016. At the same time as my counterpart, Paolo Campinoti joined the team. So we kind of chase down the industrial side of the business. Prior to that, I was at Komatsu in the global mining business as well as construction services. Really to level set, so I think everybody is familiar with maybe the products for home side of the business because you use them yourselves, but also we get a lot of publicity around those products. Our industrial product categories, we have a really extensive product line. And we go to market in multiple different ways. We also have an omnichannel on that side of the business. So on our product categories, starting in the top corner, we have generators, so large industrial generators for large-scale facilities, critical infrastructure, hospitals, wastewater treatment facilities. In the middle, we have an example of a mobile product that's used in general construction as well as plant turnovers and brought in for temporary power. And then the far right is our telecom product. We have a unique solution just focused on the telecom industry to have the highest power density per square inch. The newer products as we move into the energy technology space, we're bringing on more energy technology product categories. When you look at the side that large gray -- light gray box, although it looks very similar to the one above, it's actually our new battery energy storage system in the middle is the equivalent on the mobile side. So it's a temporary power mobile storage unit. And then the far right is what we call our Beyond standby generator. That's actually a China Rock unit that they use to run more than just when the power is not present. So we talk about like growth in the industrial segments, we're growing both domestically as well as internationally. It's a 60-40 split there. And as we look through our 2023 forecast, about $1.4 billion. So although it goes kind of unnoticed by many people following the stock, it is growing in a quite healthy business and expanding. When we look at the market we're serving, so the center column is our global SAM for the product categories, very heavily centered this past year on traditional backup. But -- as well as on the residential side of the business, we're going through our energy technology evolution as well, and we're jumping out and growing that SAM consistently and significantly over the next 3-year period. So the base traditional business is growing, but also the energy technology space, and I'll talk more to that in what it really is in the next few slides. So when we look at our global growth and the CAGR we're running at, we're looking to exit that 2026 at roughly a $2 billion industrial business. So significant size compared to where we started from before. So that was a global look. Now I'll take a step back and look at what I'm responsible for here in the North American market. And really, I'll start on the right-hand side of the business, our traditional market is a little over $4 billion market, and that traditional market is a lot of code-driven requirements. So we're the standby generators required, authorities having jurisdiction, say, you have to have power on site for safety egress, elevators, water pumps, fire pumps. So it's a product that's basically driven by some regulation or some standard. After that, it comes into customers that want a product, maybe it's a grocery store chain and they're worried about spoilage. Power goes out or that they actually want to be able to operate the store when the power is not there. So we're seeing that more and more people. Historically, they kept the cash registers running. But now that power outages are going longer, they're actually backing up whole stores. So we're seeing a big growth there for a whole facility resiliency. And overall, I think it's a consistent theme, as Aaron started earlier, outages are rising, inconsistency of power and the cleaner fuels and different alternatives are really changing the dynamic for the traditional space. Jumping down to the energy technology, which is our fastest-growing space that's bucketed into multiple different categories. The big driver and where we're really, I think, a dominant player in that is the beyond standby generator business. And that's -- typically, we're using a natural gas generator that's cleaner burning, more efficient, more fuel efficient, and we're actually putting those in applications where they're going to run when the power is present. And that's a big differentiation between the traditional backup power and the current beyond standby business. A lot of the regulations around EPA, say, a standby power generator, it can only run when power is not present other than exercising and testing. So when you have these super low emission products like our natural gas generators, you can actually run -- because in many cases, it's greener than the power on the grid, they can actually operate when power is present. And so what we see as facilities, they'll actually take their building off the grid, they'll actually pull back in actually island mode and operate to lower the energy prices or the energy consumption or they'll actually push power back to the grid. So multiple ways they're doing that. Many customers are looking at microgrid solutions. We're delivering microgrid solutions with customers, and that's one of the great parts about the new battery energy storage system we launched. We really own that generator space and now we're combining our clean burning gas generators with the battery storage system to give a great resiliency optimization as well as energy market participation. So really, as we talk going forward, you'll hear more and more talk about our energy technology transition. We're out there in the market, and it's actually -- we're hitting the ground running with legacy generators, our natural gas product predominantly as well as our battery energy storage. So to fuel this growth is we need more manufacturing capacity. So in the last few weeks, you might have seen our announcement. We've now started the process to build a new manufacturing facility, an additional facility in Wisconsin to give us that additional capacity. 15%, 20% additional capacity to help us deliver this long-term plan. So we're well underway on starting that project. Our other factories are very dedicated and custom-built somewhat like you'll see in the Wastewater facility today, we're very vertically integrated. And all of our facilities, we cut, bend, weld. We form all the materials. We gasify our own engines. So it's in all of our natural gas engines as a Generac engine and we wind our alternators for most of our products. So a very vertically integrated. That's why we need additional capacity to actually deliver that Generac value proposition to our customers. So really, how do we win and what do we do? And this is something that -- I mean, it's very simple, yes, we're selling generators or energy storage products to customers. But really, it starts with the conversation. And it's changed, it evolved in the last 3 or 4 years that it's more of an energy evolution discussion. So we talk to customers about, "hey, do you need resiliency. what are your plans for there? " Do you have carbon goals? And that can help guide them in which direction to go. And a lot of times, now customers are saying, "Hey, we want energy independence." And so we work through a really extensive network of partners. And these partner firms help us deliver value for the customers. Whether they have the application expertise or it's us designing a custom solution, we leverage that partner network. And predominantly, we supported in North America through our industrial distributor channel. So we have 26 distributors that wake up every day only focused on supporting industrial businesses. So they're really focused on the business users. So like I said, Wastewater treatment facilities, hospitals, data centers, they're putting their resources to support that, and they're solely focused on it. So it's not intermingled with residential products and different things. It's a really focused group and they have engineering support and excellent capabilities. We also do have a few company-owned stores, so that in key markets like in California, where we want to provide an unrivaled level of support to our customers. we've actually invested to build up the capabilities to like really better serve that market, provide that 24/7, 365 support the customer need and really deliver the solutions they require. So the next bar up, if we look at energy services. And that's really an aspect that nobody in our space really talks about with customers. And we walk in day 1 and start talking about what do you need, what type of solutions do you require to have. And that's really our whole value proposition that when we come in to customers and we talk through. So I mentioned briefly about the beyond standby market and the generators. And on the right-hand side, it's really the -- an overview of why a customer would want to do it. So the first basic assumption in the market is that a customer needs a diesel standby generator. And basically, the value they get is the avoidance of downtime beyond just the regulation compliance. And the value is basically equal to that of the cost to actually deploy the asset. Otherwise, people wouldn't do it unless they're mandated too. What happens is when a customer goes into a natural gas behind the meter generator, there's actually an ability to -- it's a little more expensive, but they can extract more value out of the product. They can actually lower their energy bills, they can actually generate revenue or income by actually participating in market programs and there's a lot of programs nationwide. And when I mentioned energy services on the previous page, our Generac grid services team, we put together a solution for customers, and we can outline what programs they qualify for, where can they participate. And most times, we're actually setting them up with a third-party partner to meet their needs, maybe their retail energy provider and they're going and talking. We give them the ammunition or the value, so they can talk to the retailer under provider and say, "I'd like to participate in this 4 CP program." And so we set that up for them, and they participated with that behind the gas -- behind the meter gas generator. Now lately, we're seeing a big switch to really GridSync. And this is really as green assets, solar, wind are coming online. There's more need for grid stability. And so more customers are actually putting in the additional gear, switch gear, driving the cost up on the project, but they're able to actually push power back onto the grid to provide that market support. And so when we talk about our energy technology evolution, a lot of it is moving people beyond just that standby and leveraging their assets that they have. And in many cases, it can be quite profitable for them, plus they still have that base resiliency that they need. So really, I'll jump to the middle here, that natural gas generator advantages. A couple of really big things. So cleaner burning. So it doesn't require all the additional emissions control solutions that you would need to be able to participate in most market programs. So the product comes out of the factory, clean burning and ready to go. Another benefit is the fuel source. So a diesel generator, you're limited by the fuel tank capacity. Natural gas generators, they can continuously have the gas supply to it. So they have a longer run time, longer capability and a lot lower maintenance cost. So maintenance costs are significantly less expensive because you're not having to polish the fuel and treat the solution. So how we've entered this market? So we sell through our distributor channel. We sell through multiple different partner communities like we talk about in China Rock. They're a leader in microgrids using that natural gas GridSync product. And we have many other partners that we work with. And we support our customers by delivering a solution. It's rather than just a simple product -- we actually talk about what their needs are and help bundle a solution working with third-party financing or other monetizers that will actually help bring value to their assets. And when we start this journey, really, as we talk to customers, and this is really the evolution that we're seeing. And as you go out into the marketplace, you'll find this is becoming very, very true. Customers had traditional backup power needs and very minimalistic. Maybe they wanted some remote monitoring for reporting. Maybe they needed to have something for compliance standards or possibly even dispatching technicians to site. And that's kind of what we say is like our very basic minimalistic solutions fall into that box. And traditional backup power, our distributors do that every day. They provide support and solutions. So as we've added the Enbala team and developed our Generac grid services, it allowed us to move and shift the whole equation going into now we can start discussing and delivering these simple demand response programs all the way up to total Power Solutions and actually helping our customers structure their rate payments, structure their bills and really finance their -- fund their whole energy cost. And as customers are evolving, -- and when I say like low level to high level, traditionally, the generator was managed just by the maintenance team or a facilities person that was responsible for making sure that the building met code and compliance and operator. Now we're having more and more discussions in further upstream and talking to the real key decision-makers around energy ecosystem and life cycle. So last part of our energy transition is adding this beyond standby best, the battery energy storage system. And really, it's a new product, you'll be able to see it later today. It's an LFP-based product. we've tried to productize and come out with significant models to meet the market and where sales are off and running, and you'll see more and more from us going forward about how we're going to evolve the product line. I think 1 of the key things on the battery energy storage that I wanted to highlight is that as we look at storage, really when it's bundled with a generator, it delivers the best economic value, and that's where we feel Generac has a sweet spot in the storage space, and we're focused really on the behind-the-meter applications and driving battery energy storage plus generator to give optimum value. This top right chart really shows the challenge for a customer. If you have solar, like a PV array and battery energy storage and there's an outage, you actually drop off after so many hours. However, the battery size for it or you have to invest a significantly higher amount of money to even be able to make it through a full day. Typically, the storage size is going to be 2 to 4 hours for the facility. So if you have a longer outage, you're pretty much out of luck in an overnight period. So by ordering a generator, you can cut the cost by more than 40% and have really infinite run time and infinite stability for your operations. So I'm going to flag this really quickly. I'm running out of time here. We've talked in the past about our telecom market segments, and the telecom and data center markets are both robust markets. Up on the top on the telecom sites, sites are expected to continue to grow. We're a dominant player really in that space, and we deliver a lot of solutions to telecom accounts by focusing on customized products and the best turnkey network, so we have over 4,000 technicians to deliver that uptime and support. And as we look forward, we're seeing more and more investment while the requirements for uptime and reliability of cell sites is becoming even greater. So we know this is a strong market for years to come. And on the data center side, I think a lot of people hear about the data centers and talk about it in the chat GPT scenario, really, AI is driving huge power consumption increases. And we're seeing the data center market to be a continued area for investment. And when we look at the addressable market by 2026, just that data center generator market, it's a $7 billion market opportunity. So it's one that we're going to continue to be involved in and continue to grow with. I think I'll end on this C&I ecosystem. Aaron talked a lot about really starting with that blue pillar platform, that hub to actually connect all the assets and devices. So as we look at really how we participate in the market and how we're going to market. We have products, so we have up on the top level batteries, generators. But really, where we're finding our sweet spot is those 2 middle areas where we have the platform and controls from our Deep Sea acquisition. We have great technology there. And then it's integrated with our Blue pillar solution so we can control assets, manage them, monitor them. And it's not just a Generac traditional asset. As Aaron mentioned, boilers, chillers, any type of HVAC system, we can actually command, control and help bring value to the market. And that bundle with our grid services, we can really deliver customer solutions that provide their whole ecosystem -- it's not just for a generator. So with that, I'll turn it over to Paolo Campinoti.

Good morning. everybody. I am Paolo Campinoti. Most of you don't know me. I am running the international business of Generac since 2016. I'm based in Florence, where the Pramac legal entity was still there and that has been acquired by Generac in 2016. And from 1995, I was CEO of Pramac, that was a family own business, active in the power generators. And we have been a mid Italian company, but with a very strong international footprint, that has been this footprint in the base of the actual development that we are having together with Generac. Briefly, I present you where we are because I mean it's important to understand that Generac is not anymore only a North American company, but it's becoming more and more a worldwide company with a global footprint. As you can see here, we have made the -- a little bit not short of where we are. There is -- most of the branches are only sales branches, but we have also several factories spread out in the world. We have from China, India, in Europe, we are in Italy and in Spain with a legal entity that historically was from Pramac generator. And now we have added the Blue Dot is the new acquisition that is consumer control and automation that you see is in U.K. and in Germany, the legal then too Motortech. And we are present in all South America with Qubic factory, one in Brazil and one in Mexico and in Colombia, we have a sales office. So as you can see, we cover all the continents, the Europe, we have many places in Europe, we are in Australia, we are in Middle East, where the market now is very, very active and booming. And we have 2,400 employees under 75 engineers. So we are really quite a sizable company and that is the good thing is that all these activities growing in the last year, and we have a very also interesting growth for the future. It is briefly where we are and the major factory that we have. So that is important also to see that it's not only one dot in the map, but it's a real factory, and we have a 2 factory in Italy. One is in Siena. The other one is in Pavia that is a former light tower, tower light, where we produce light tower. We have in Spain, below on the left, that is a factory that is -- we produce middle size generators. And we have China that 1 historical plant. We have Brazil that is recently opened last year that is a quite sizable company. And we have Mexico that is probably the best factory that is in a row, but I think also I would say in the group because it's one of the newest factory that we are having. And this factory in most of the cases, it's done, is created to serve the local market because in some markets, there is a barrier to enter like tariff like localization and other factory is done also for cost purpose that we are creating a strong base for the group also from component for product, especially now also we have in India that we didn't put the feature, but is one of the most promising market that we have from production, from sales because it's a very, very important opportunity. Here, as you can see, we have a 2 million square foot. So we are quite sizable. And we have 800 direct force and 1,600 indirect, including the people that is in the sales side. Product. Here, the product that we are distributing in Rome is more or less the same product that we have in the U.S. with the differentiation that is mainly the -- I mean the product is as to be compliant with the local market that is different from U.S., but the product is more or less the same. We have from diesel generator, we have the gas generators, and we have the new product that we are selling now that is a battery storage, mobile and commercial industrial. We have the light tower at the residential. So all in all, we are selling more or less the same product that our product sales, the most is for C&I. The majority residential outside U.S., it's less important. And as it has been said before, -- the one stand by for us is a total new product. So we have, you can say, 100% of market share, but the problem that the market is not big enough. So we are creating the market in many geographies. Now we are very growing market like for in Argentina. In Brazil, we are growing. In Southeast Asia, we have had a good very important market in Russia. Unfortunately, now we cannot level of anymore, but was -- so in many, many geographies, the [indiscernible] is a product that can -- I'm not saying that can reach the American level. But I mean there is a huge opportunity. There is Australia that we are growing. That is a very important market. Now we are starting with India that we have done all the certification in the last couple of years that has been quite painful to reach, but we are the only product simplified from [indiscernible] and from the [ Noise, ] and that is something that it's a very good opportunity because India, if we would be able to penetrate India. India, I'm not saying it's another U.S., but can be a very, very sizable market. And so that is -- the reason why the residential product for us is not at the level that is in U.S. So mainly our activity C&I -- and so -- and now with the new battery storage, I think we can have also -- we have had a big step also in the direction. Here, briefly, we represent where we have been and what we and where now. We started in 2016 that you had $271 million revenue and what -- with 6.3% EBITDA -- after that through an organic growth that is the majority of the growth and some acquisitions that you can see here, we had from Motortech from Selmec Mexico. We had Captiva in India. And recently, we have done Offgrid that is the mobile storage company that we bought in U.K. Deep Sea that is probably 1 of the most successful company that we have in the group as revenue and marginality particularly for the controller that is a fantastic company. And from there, we have reached now, this year, we will reach around $720 million with a very double-digit EBITDA that was $14.2 million -- and we have an LRP to arrive around, I mean, close to $1 billion in 2026. So that is a EBITDA the growth that you have. How we have a right here because now the point is that we -- from 6% EBITDA to 14%, at the beginning, we have been seeing like the black sheep of the group not because and all the meetings we show -- I mean, we are diluting the margin of the company. We have been -- so in this journey, practically, we have had a very important operating leverage because from $271 million to $700 million, we have been able to leverage the cost of the structure because having all the branches, all the product, the factory is creating a sort of fixed cost structure that increase in the revenue has been one important activity that we have been able to increase the marginality. From the other things, we have been trying to make an M&A activity that was accretive at the EBITDA. And also from 2016, where there've been only with Pramac in Latin America with the traditional product. We have been having some acquisition, like I say, Deep Sea that is a profit profile, the margin profile is very interesting. We bought off grid in U.K. in Rugby that is doing battery storage. That is also a very important company, especially for product development and that give us the knowledge on the mobile battery storage that is very, very interesting. And we have also -- that is mainly the 2 acquisitions that has been accretive the most EBITDA. But the other things we have done this growth through a very strict cost control and particularly also the portfolio evolution, so we have developed our product that we will see later with new technology, with new, let's say, also value added product -- value added component that is creating much more marginality that we used to have in the traditional product that mainly was the diesel generator at the beginning. Here, what -- which is our -- I mean, the growth driver that we expect to have in the next year. For sure, we'll -- as we -- as Erik said before, the energy technology part has a big potential growth. And so we go from a sum of $11 billion to $16.5 billion, and the main growth is coming from the new energy technology, a market where we have been not present so far. So the growth driver is more or less the same that you have in U.S. So we have a continuous growth from the backup power and that is becoming with the same dynamic that there is in U.S., so there is all data centered activities, there is the problem of the growth of the energy consumption driven from the -- as we say, from the electrification of the grid, from the electrification of all the products. So I mean, it's becoming the same driver. And also, we have -- the idea also for us to grow is because we have a repeatable playbook that we have done also the ability to open a new market, new branches. And I think we can continue in this direction, because we have a repeatable playbook, as I say, that is allowing us to penetrate a market with new -- the same product that we have in the other. So we see a big potential in the Far East, we have a big potential in Africa, but we are now -- our presence is not so strong. So the idea is to create a new market there with the same concept that we have done in the other branches. And also, there is -- the other growth driver is that the expanding of the portfolio of products that we are having now also done with the recent acquisition and that is allowing us to be in -- let's say, in a situation where we can enjoy the investment that we have done. Yes. Why I'm saying that and why we are ready to powering the new energy solution. Because we have a portfolio of product that we have done through big investment in R&D that is giving us, let's say, a clear positioning and a clear opportunity in the market. One as I say, in the mobile energy storage, the one that is here that is -- it's very, very important in many situations like events, like rental business like -- and where we have the leadership in Europe for this product, and we have the leadership because of grid that has been historically the market reference in all over Europe. The C&I, the battery storage is also -- we have done recently acquisition in Germany, a company called REFU, that is a very important technology leader in this area. They produce the investor. The investor was -- historically was for solar. Now they have readapted for the energy storage. And this product is also contributing for the new energy transition that we have seen before. The gas generated that -- this is the core business for Generac since many years and was not in our portfolio. Because in Europe, it's not so strong, the presence of the gas like in U.S. So this is another activity that we are doing for creating more sales and particularly more margin because with the gas, the profile -- the margin profile is much higher than the one that we have with the other products. And later, we have done in-house, 2 products that is -- for us, it will be very important, the average generator that is -- one is the energy up, the other is the diesel generator that is also very important for the -- for -- to create more marginality and to gain market share in this kind of sector. I think especially the energy app is a product that is new is a gas generator with a battery storage inside. And is used mainly for EV charging boosting because in Italy, like in many other parts of Europe and also I think in U.S., the grid will not be able to support the growth of energy of the electric vehicle. And so when there is -- especially with the fast charging, there will be a very big problem of the degree that can support this growth of electric vehicle. And this -- the energy hub is a combination of gas generators, battery storage that is supporting the grid for the charging. We have already sold several to -- mainly to tank stations in Italy that I think it's a product that received a very high welcome in the market, and I think that it's something that can contribute to this -- to the growth that we are facing in visioning -- sorry for my english, sometimes I'm not. But coming back to the C&I, energy storage and the international demand driver. I think that year, we feel very confident that a big driver for the energy storage will be, for sure, as I said before, the energy -- the electric vehicles So the grid is not able to support the growth of electric vehicle fleet that is on the road. And especially when we go to the fast charging structure that now is not very popular in our countries, the grid will not collapse. So the battery storage is something that will help the grid will make like a boost to support when -- and that we have seen already a lot of activity in this sector, and there is a lot of potential growth there. The other thing that we see is that the regulator is giving -- is very in favor of the renewables. So this one, this activity, as we have seen before, is creating a sort of the coupling between the supply and the demand of energy. And so the -- but C&I battery storage for sure, will be a big, I would say, demand for 2 to 4 degrees in this way. And the other things, we are facing a lot of self-consumption in fix-shaving activity, that is also another big driver of growth for this product. The other thing is that we are convinced that it's becoming a very important product that is already and here we have put the picture because we have made all, for example, for some built in U.K., it's our biggest customer for that. And this -- the mobile battery storage. The mobile battery storage is not -- is something that is more and more used for events, also for -- in the construction side because it's allowing to have a cost savings of fuel and then also a big saving of emission. And this is many, many areas now, especially in the city, is required to, let's say, to use more and more electric tool -- electric components. And so that in Europe, especially in London, in many countries, is a big -- there is a big demand. Here, we can clearly say that we are the market leader for generator combined with battery storage and hybrid generator. So this is something that, for sure it will be another big growth and we have quite an advantage in this area. To finish here, there is -- which is the evolution that we see that from the past, we have -- we start only with diesel generators. So with the market and also the margin profile that Erik was saying that is mainly sell generator and leave it. From now it's present that is a broad energy technology product offering, where we can combine the different things rather that you have. Also, for example, didn't put a lot of attention to the light tower. The light tower also as adding the same journey or development of the generator. Now we are the leader of battery light tower -- hybrid light tower, that is facing the same change of the normal generators to arrive to the future, that is what Erik was saying to the end-to-end energy technical -- technology solution that is covering the profile of -- and is giving full support for any needs that industries or house that they had. So that is -- practically we will try to replicate as much as we can the general playbook internationally. And I think that the -- I mean we have proven that in this year, we have been able to triple the revenue. And I think we have all the investment and the infrastructure that we can continue this week. Thank you very much.

All right. Let's get into it, arriving at the financial framework that everybody is waiting for. I'm York Ragen, CFO of the company. I'm not in marketing, so the tagline of my presentation is path to doubling EBITDA dollars. That's like you come up with. But before I do that, I think just to level set -- we've heard a lot of themes here this morning. And I want to -- how do we translate those themes into investment highlights. Obviously, everybody is taking notes, some notes get published, many notes get handed off internally. And many of those notes talk about the investment highlights for the company. I'm hopeful in assuming that at least these top 4 will be on the list and hopefully many, many more. But if you think about from a market standpoint, we heard a lot about different markets and many different growing markets. and many different growing served addressable markets. But they're all back by compelling mega trends that are secular in nature, providing significant growth opportunities. So if you think on the home standby side, there's more power outages driving a significant penetration opportunity for home standby. Massive opportunity that we talked about for a long time now, and there's many legs to that opportunity on the norms world, on the residential energy technology side, Grid 2.0, that's just driving a rapidly developing clean energy market globally, really, that Paolo talked about as well. And then on the C&I side, just the infrastructure build-out is driving significant demand for C&I power. In particularly, new applications around energy technology. So the markets are growing significantly. And I think we heard in many ways how we can win in those markets. And so we've got proven go-to-market strategies combined with innovation, drive our market leadership. And so when you think about what Amanda and Kyle talked about, on the home standby side, we've -- we are the dominant player in that category. We've got a broad product offering with an omnichannel distribution with the best distributor support in terms of providing leads and best customer support as well on Norm's presentation. We're going to leverage many of those strengths that we have on the home standby side to grow in the clean energy markets, but also leverage all the deep technical capabilities that he's building in his organization as well as the ecobee brand that is strong already. And then from a C&I standpoint, we talked a lot about the Industrial Solutions that we're adding as well as the global presence and the relationships that we have to build growth. So strong markets. We can win in those markets. All that now is culminating in what's going to be a strong -- a historical strong profile, financial profile for investors. We'll talk about that in depth when we go through my presentation and more importantly, deploying the capital and the cash flow that's generated by that strong financial profile in a disciplined balanced fashion will drive shareholder value for all of us. So I think just level setting the presentation around the key investment themes you'll probably see how that will be all driven throughout the organization. So every financial outlook is a series of assumptions. And there's a lot of words on here. I'm not going to talk through each one, but we have some very important assumptions that we built into our 3-year financial framework, the least of which is our economic assumptions. And we all know and we've talked about here in 2023, we're currently facing a bit of a soft consumer and particularly around big-ticket discretionary items. We're expecting that to continue into 2024. In 2024, though, we're also coming off some pretty tough comps on the C&I side. And it's a late-cycle business, so there -- that coupled with the tough comps, there'll be a little bit more limited growth on the C&I side in 2024. But then when you look at forward into 2025 and 2026, we expect to the economy to recover and see stronger growth, and we'll talk about that next on the next slide. I'm only assuming 1 major outage over a 3-year period. So you have to -- outages drive our business, major power outages. This is millions of people without power for a week, that is, I guess, internally what we deem to be a major outage. But we only assume one of those in 2025. 3 and 4, that's just the mega trends that are going to continue that we've talked about, that Aaron talked about and everyone else talked about. We expect those to continue throughout the forecast period. 5, 6 and 7 are more around price cost assumptions. We're assuming commodities stay current at these levels, labor costs stay current at these levels, supply chain conditions normalize and we're able to hold pricing that we put into the market over the last couple of years given those assumptions. And number 7 is important because it's part of the DNA of Generac. We talked a little bit about our cost consciousness. We just have an ongoing formal program every year that cross-functionally across the organization. We go after margin enhancement with our -- called our profitability enhancement program, that works on margin improvement throughout the business every year and we set goals and targets around that. So that will drive positive price costs in the future. And then from a cash flow standpoint, normalizing our cash cycle days, CapEx is relatively modest. And number 10 is important. We don't assume additional M&A in these numbers as well as debt prepayments or share repurchases. So here it is. So here's the numbers. Many of you probably already flash forward to this slide when we were on the first slide you looked at when you went through the deck. But this is how we plan to double EBITDA dollars over the next 3 years. More importantly, as Aaron talked about in his presentation, we're reiterating our overall guidance for 2023. So the starting point that we're talking about is about a $4 billion business, a $650 million in sales, $650 million EBITDA business. And over the next 3 years, we expect to grow on the top line, 12% to 14% on a 3-year CAGR basis. That would take us to $5.85 billion in sales. We expect gross margins to improve as well as EBITDA margins, and we'll talk to that in a couple of slides. But EBITDA margins returning back to normal, that 21.5%, 22.5%, that would -- midpoint would be about $1.3 billion. That's the doubling of EBITDA dollars from $650 million to $1.3 billion. And again, cash flow normalizing CapEx spending. Again, we're an asset-light business. It only takes about 2.5%, 3% of sales in CapEx each year. So not a significant amount of CapEx to grow organically. And because of the significant growth of 12% to 14%, we're modeling a 70% conversion of adjusted net income to EBITDA just because of the growth profile and the working capital that requires, but still strong growth -- still strong free cash flow that we'll talk about throughout the forecast period. So many of you are probably okay, that's great. You're a 12% to 14% 3-year CAGR. How is that going to pace over the next 3 years. And while we'll be growing each of the next 3 years and margins will improve the next 3 years, it won't necessarily grow in a straight line, mainly because of that first forecast assumption that I mentioned on the previous slide on that, we're just expecting a softer economic environment in 2024, and particularly the consumer with regards to big ticket discretion. Now having said that, we do expect growth in that consumer power business because, as Aaron mentioned, about field inventory, we've been undershipping the market in 2023 here allowing that field inventory to come down. So in 2024, we won't need to do that. We'll be shipping in line with the market. So that will be a tailwind to growth just having that field inventory normalize here in '23 and so we'll expect growth in '24 as a result of that net consumer power business. Norm talked about how launching new products later in '24. That will drive more growth in '25 and '26 for that business. And then I mentioned C&I, we're just -- the assumption there from an economic standpoint is it's a late cycle business. So therefore, I expect some slower growth there for 2024 in C&I. And reality is we're coming out some really, really strong comps with significant growth over the last few years in that business. When you fast forward to '25 and '26, again, that assumption that the economy recovers -- we've got that 1 major outage event in '25. All of those energy technology, new products getting rolled out that will build momentum in '25 and '26. And so we expect -- while there will be lower growth profile in '24, we'll see stronger growth profile in '25 and '26. And all of that will result in doubling EBITDA over the next 3 years. I guess just peeling back the onion a little bit here in terms of slicing that 12% to 14% 3-year CAGR by our segments. On the left, product classes on the right. Really, if you look at the right side, so residential, 14% to 16% CAGR from '23 to '26. That's a 3-year CAGR. Again, I think you could say that we're coming off of some easier comps in the residential side of our business and particularly because of the field inventory drawdown here in '23, where C&I you'd say that we're probably coming off some tougher comps. So you expect a little bit less growth on the C&I side of our business. So 14% to 16% on resi, 10% to 12% on C&I, and that would result in this level of mix -- little bit lower mix than we're currently experiencing in the international markets given the growth on the domestic markets, but pretty similar mix on the product class side. So I think that's an important slide. So where is this growth coming from? This going from $4 billion to $5.85 billion. Where is this growth coming from? You talked about 12% to 14% CAGR. You talked about the phasing. But when you sort of dig into the details, that home standby normalization out of the gate in 2024, we should see roughly $300 million of increased home standby growth strictly because we'll be shipping in line with the market in '24, where in '23, we haven't. So that number is effectively what our 2023 activations were less what we've shipped. So that's the amount we are undershipping the market in '23. That should be a tailwind into growth in '24 and obviously, the 3-year forecast period. The next box, it's the largest box in the bridge, energy technology. That's sort of what we've talked a lot about here on this presentation. It's the largest growth driver opportunity for growth and the largest growth driver at $700 million. You can see importantly, it's not just a residential energy technology that Norm talked about and we've talked a lot about, but as Erik and Paolo talked about, there's a lot of opportunity with regards to energy technology on the C&I side as well. So $700 million of growth. That's how you go from 12% mix of energy technology in '23 to 21% in 2026. So significant growth opportunity with Energy Technology. And then if you look at residential and C&I, excluding Energy Technology and the home standby normalization, we're still going to see growth. On the residential side, it's tied to home standby growth around making the funnel bigger, pulling those leads through the funnel more effectively and then developing dealers to help to close the IHCs and improve close rates over the next 3 years. So that's going to continue to drive growth in that residential business outside of the home standby normalization. And then you also have growth in portable generators, which is a product line for us as well as our chore business. But the main growth is headlined by home standby. And on the C&I side, again, outside of Energy Technology, our core traditional power generation business globally, we expect that to grow because of the megatrends that we talked about global expansion as Paulo builds out his global markets and just distributor developments and as telecom rental and data center markets grow. So this is how you get to $5.8 billion. So how do you double EBITDA margins then? It's -- so it's not only the volume that was on the previous slide, but it's also going to be through margin expansion. So how do you go from $650 million of EBITDA to $1.3 billion. A lot of that is going to be the volume, but there's a 600 basis point improvement in margin -- EBITDA margins that we're expecting over the forecast period here -- the 3-year forecast period. Looking at that mix bucket, that 1.8% mix column, again, overall, a 600 basis point improvement from 16% to 22%. About 1/3 of that is going to be that mixed column. So just shipping more home standby from an overall basis will improve mix, that's our most profitable product. And as we ship more of those products, that will improve margins. That middle column that's base leverage 2.1%. Obviously, as you grow 12% to 14%, we're going to be leveraging our fixed OpEx infrastructure. That should be about another 1/3 of that 600 basis point growth just through base leverage. And then the last bucket I'm calling it, Energy Technology dilution improvement. So today, Residential Energy Technology is I think we highlighted on our last earnings call that it's today in 2023, it's -- as we're in reset mode and investment mode, it's diluting margins about 400 basis points. As that builds, scales, breaks even by 2026, it's going to dramatically improve our enterprise margins by about 1.8%, roughly about 1/3 of the overall improvement. And it will only dilute our margins about 220 basis points. But as Norm talked about, the end game for that business is to be closer to our long-term company-wide margins. So that 220 basis point dilution will continue to shrink over time after the forecast period. And then price cost and then just additional OpEx investments to drive future growth sort of offset each other. So I'm thinking about with that. So how do these 2026 targets compare from a historical perspective. So the top is net sales, gross margin trends, 2016 to 2026. The upper right is EBITDA, EPS on the bottom and free cash flow. So as you can see, resuming our normal growth trajectory. That's on the top line, we're back to growth. talked about the phasing of that growth, but more importantly, that margins are just getting back to normal in that 30% -- high 30% range gross margins, that's similar to where we were in 2019, 2020 range. So we're back -- getting back to normal from a gross margin standpoint. And then as we leverage the OpEx as well, EBITDA margins, we'll get back to that roughly, call it, 22% which is very similar to where we were in 2020, 2021. So -- and so back to historical trajectory with the growth and margin levels, EPS, you can really see the earnings power driven by that EBITDA improvement. And I'm also making some assumptions around lower interest rates and less interest expense as well. That's also a tailwind to our EPS growth. So a strong earnings power on the EPS side. And then just as important, very strong free cash flow as we convert a lot of that EBITDA dollars to free cash flow. So that's just the 2026 free cash flow. Over the 3-year forecast period, we expect to generate well over $1 billion of capital of free cash flow over the next 3 years. Historically, we've deployed that capital in a very disciplined and balanced fashion. On the screen here is -- has been our historical capital allocation priorities. Number one, is drive growth organically. Investments in technology, innovation, R&D, capacity expansion, systems automation. But as you can see, by the historical period, we're relatively asset-light in that. It only takes about 2.5% to 3% of sales to -- of CapEx to drive that organic growth. And like I said on my financial framework slide, we expect that to continue over the next 3 years. That 2.5% -- the 3% of sales is what you should model as CapEx. Number two, strategic M&A. So over the years, as we've diversified our -- not only our product offering, but our geographic reach and evolved in energy technology, we've executed roughly 28 deals since 2011. Those are all deals that accelerate our strategy, and we continue to have an M&A funnel that will continue to foster in the future. That's the #2 priority. Number 3 is maintaining a healthy balance sheet. So we've publicly said we want to have roughly a 1 to 2x target leverage ratio, debt-to-EBITDA leverage ratio. As you can see, we've started a cycle from 2 to 1 back to 2 as EBITDA contracted a little bit in '23. But given the doubling of EBITDA dollars that we're targeting in our financial framework, that leverage will just come down naturally back down to the low end of the range over the forecast period. So as cash flow permits, then we've opportunistically bought back shares. That's the number 1 -- number 4 capital allocation priority. Over the last, I'd say, 8 years, we bought back roughly a little over $800 million of our shares. That $800 million includes $100 million of shares that we completed here in the third quarter. So we're back in the market buying our shares to date, Q3 to date. And that all that on average over the last 8 years has been an average share price of $70 per share, that $800 million of share buyback. So again, as we generate well over $1 billion of cash over the next 3 years, we would expect our capital allocation priorities to look very similar to what our historical priorities of that. So with that, we'll turn it back over to Aaron just for a final recap, and then we'll get into Q&A.

Thanks, York. I always appreciate financial slides. As a former reformed accountant, I have a special place in my heart for CFO's role in these presentations. So look, we've talked about a lot of things this morning. I really appreciate your attention to all the presentations. I know it's a lot to sit through. And I think we tried to summarize here on 1 slide the basic takeaways that like you did nothing more than read 1 page in this entire deck, right? We don't like to boil it down to that because we want to read the whole deck, but if you don't want to read the whole deck, there's really kind of this 1 page of 6 items here that I think are the key takeaways from today. First is powering a smarter world, it's all about the megatrends that we talked about and how they influence our strategy, how they influence our actions. And it's the push and the lean forward, as you can see, based on those megatrends into the energy technology space. And this is at the heart of what is the evolution of this company from primarily being a backup power focused producer of hardware manufacturer to a broader solution provider in the energy technology world. And with that, as York said, if we do this right, at energy technology element of our sales goes from 12% this year to 21% in 2026 in the forecast period. So that's a big -- obviously a big assumption, big takeaway. But again, we've not only acquired a lot of companies, a lot of technology, a lot of market opportunity through our activities here over the last several years, we're now obviously investing very heavily in the team, as evidenced by that drag on EBITDA margins, investing very heavily in the team to scale that up. And that's in both the residential side as well as the C&I side. So again, I think that's a really critical element of this. Not to be lost, of course, though, is the continuing opportunity that exists with home standby, just being north of 6% penetration rate forecasted for this year, the forecast period would take us to something just shy of 8%. Every 1% being a $3 billion market opportunity, we just continue to see that as being a really great business opportunity. Notwithstanding that those are engine-powered products, but they're used for emergencies. And we do think there's a place for products, in particular, like that, that are going to be used in that fashion going forward. We think they have a role in the energy ecosystem, as we've said, in the long run. And they can run off of natural gas, they can run off of propane and they are the best way to solve for an extended outage. Kyle went through that today showing you some of the other options in a rudimentary way, but nonetheless, in terms of bang for your buck, the home standby generator is by far and away, the most cost-effective and best way to protect against long-duration outages. And remember, at the core of our presentation today, and these are not Generac data points. They're known data points around the U.S. and the federal agencies attract them. Power outages are occurring more frequently and they're lasting longer. There is no debate about that. And that's a trend that's continuing. It's not leveling off. It's not dropping off. It's not abating. It's only going to continue. And with that, you as a homeowner, you as a business owner are left to figure that out on your own. Government is not going to help you with that in any fashion that we can -- that we've seen. And it really is your own threshold for pain in terms of where your -- we call it a tipping point. What is everybody's tipping point? Everybody's got a different tipping point. My tipping point, when I hit 4 hours of outage, I'm sitting in the dark for 4 hours, I'm kind of done, right? Thankfully, I have a generator. So I don't have to worry about that. But other people can sit -- they talk about how it's fun. It's like camping at home and all this. I'm sure it's great for the first 8 hours, 9 hours, 10 hours, you get to the second day and that's not so fun camping in your living room, right? You don't have anything to eat and your kids are getting squirrely, right? I mean there's -- I think the reality of it is we've come to depend so heavily on a continuous source of power in everything we do in our lives. Not just what you do in your home, not just what you do at work, but everywhere you go, everything we want to interact with, a continuous source of power is a requirement. And so solving for that in terms of the reliability challenges that are coming at us is absolutely critical. We think that the home standby has a lot of legs and there's a lot of runway left in that market. Marketing and brand strategy, I think Amanda -- she's joined us here recently. I think she's going to bring a great new dimension to the opportunities we have in front of us. We've collected a ton of data like we talked about today, we understand who our customers are. We know that the market is growing. We know that there are opportunities that happen to incremental segments that we're not talking to yet. And we're not talking to in the right voice or what the right content with the right level of intensity in some cases. And so changing that conversation to be more tailored for the right audience, I think, is a remarkable opportunity that we're just scratching the surface on. And I think we've done a lot of things in the last decade to put ourselves in this position to take that next step. And it's a big next step. And there's going to be a level of investment with that that's built into the plan here. But we see the continued investment in marketing as just another way to use our scale where competitors can't. Because for them to start out with 5% share or 6% share and to spend and to invest at the level that we're going to invest in, there's no way that you'd be able to make that business case work. And that's what I love. And that's what I love about being in the ad market, in particular, on the home standby side is that amazing position that we've built. Now we have to use it to advance the category even faster and to keep others out of it. And that's what we're doing. And I think that, that is where we're going to excel in the future. And it's really -- it's less about the competitors to be honest and more about building up market. It's a market that's only 6% pen rate and needs to be higher. Residential energy technology. Norm came up here and talked to you about the things we're working on there. There's a lot of great things. We're doing a lot of things to invest in that. That has -- that's a hard, hard journey, not going to lie you. We've got the scar tissue to prove it. We're not through it yet. But I'm telling you right now, we're going to be successful. We have every right to be successful there. Not just because of the things that we've acquired, the things that we know how to do organically, but because of our brand, because of our distribution, because of these go-to-market attributes that we've created and that we've honed and that we're going to accelerate with. We think we can take those other products in residential energy technology and do very similar things to what we've done to build out the home standby market. As Norm told you, those markets are nascent as well. You think about energy storage, less than 1% penetration rate; rooftop solar, 3% penetration rate. And in Erik's world, on the C&I side, the pen rates are very, very small for some of these new technologies. We're in the very, very early innings. And I feel like we've put ourselves in an awesome position to be first, to get there and win. It's not going to be without some broken glass, and we've shown that. These are hard things, but hard things generally are worth doing. If you can get to the other side and you can see the good things that come from those hard things. And so I'm very excited about that, and we're very committed to it going forward. And the global C&I growth, you've seen what we've done from $271 million back in 2016, when we acquired Pramac to $721 million this year, fantastic growth opportunities for us. And again, 20% of what we're doing today comes from international markets. I could see that being a much higher percentage in the future. And not just with our traditional solutions, with the energy technology solutions, with the energy storage solutions, with the home standby solutions. These are also market creation opportunities. This is not talking about going into an existing market and fighting it out for some -- with somebody else for a point of share. This is about creating a market. These are hard things, but they're worth doing. Global C&I growth potential is huge. And then last but not least, as York told you, we're going to double EBITDA -- EBITDA dollars on an absolute basis, and we're going to get those EBITDA margins back to that, I think, the 22% level in terms of kind of the midpoint of that guide by 2026. We think there's a ton of opportunity to not only do these hard things, but actually create a trans amount of return and value for our constituents here at the company. So these things are absolutely worth doing. They're not easy. But we're very committed to them. And I think if there's a company on the planet that's got a better opportunity or a better chance of making this work, it's not evident to me who else that might be besides us. We put ourselves in this position. Now we've got to execute. And we know that we took a kind of a step backwards with some of that here in the last year, but that's what -- some of that is company cycles, some of that is our own doing. But in the end, I think we're taking accountability for that. And more importantly, we're taking action to make sure that we've got the right team and the right playbook in place to execute on the strategy over the next 3 years.

So with that, we're going to move to the Q&A phase of our presentation. So what we'd like to do with Q&A is there are little red dots above you, don't be alarmed by that. But we're going to open them up to green when you ask your question. Please speak up, so the people on the webcast can hear. If it doesn't come through loud and clear, I'll repeat the question. And then I'll either take the question or I'll direct it to one of the presenters this morning. So with that, in the back, Tommy.

Tommy Moll from Stephens here. I wanted to ask about home standby and the outlook to 2026. Am I right in assuming there's an embedded growth each of those 3 years going forward just in terms of home standby units? And then if I'm right about that, which is the bigger driver? Is it the close rate? Or is it expanding the funnel and more IHCs at the top of the hones?

Yes, it's a great question. And we are assuming home standby, one, returns to growth next year. And a lot of that is with the $300 million headwind that York was talking about, that's a new number. We haven't given that previously. We've been asked about it a lot, but that's our calculation of what we think we undershipped the market by this year as a result of that field inventory burn down. So we get through that. And as I said, as we kind of get into 2024, that will be -- the field inventory will largely be normalized, and it won't be a drag any longer, and we should be shipping at the market. So right there, we're going to grow in '24 over '23. And in order to get to the guidance that we're providing this morning, the assumption is that, that category does grow over the forecast period. Now to answer your question -- the second part of your question, it's a combination of both a recovery to the close rate. So just to give you some data points there. So close rate, we peaked in -- I think it was 2021. 2021, we peaked on close rate. And that came down in '22 by 40% off the peak. Today, we've grabbed some of that back. We've recovered some of that, but then that was the change to our most recent guidance is it kind of flattened out, right? Because we saw the consumers in a different place today than they were in 2020 when that peaked. So that's something that you have to kind of square with. And in looking at that, we've said, look, the consumer probably is going to remain in somewhat of a -- there's going to be a bit of a malaise, especially with large ticket discretionary purchases in '24, but then in '25 and '26, our assumptions are, there's recovery there. The punchline is, by 2026, we think that we'll get back half of that 40% drop. So we won't be all the way back to the peak, maybe because the consumer is not all the way back to where they were at and interest rates aren't all the way back to 0 again. But there is going to be some additional work to do to get that close rate back ultimately to those high rates. And then the top of the funnel filling with IHC is absolutely critical. And that's the heart of what Amanda's program is all about, is going out and finding more opportunities to engage customers, not only more frequently, but just engage with new opportunities, new parts of the demographics that we think are out there, and we're just not talking to, that we're not touching in the way they need to be touched, so that they become engaged. So it's about improving engagement -- it's about driving more IHCs in and it's about improving that close rate. Yes.

Stephen Gengaro, Stifel. When you look at close rates maybe historically and now I know you mentioned the health of the consumer, do you have a good sense for what drives the close rate. And I think you also mentioned as a bit of emotional aspect. I know when we bought our 20 years ago, it was like -- we've got to have what we have in a power side base. So we went -- did it very quickly, and it feels like a week and there's a backlog and they will walk away from the purchase. So I'm just curious about -- your thoughts about this.

Absolutely. So close rate, there's a couple of major factors that influence close rate. The first is certainly that emotional element, right? And so when we saw close rates come off of that peak and drop to 40%, it wasn't because we didn't have the emotion. At the time, there was a lot of emotion. We just don't have enough product, right? So it gets back to -- you have this I think we're calling it -- what do we call it the lost opportunity, the last window of conviction or something like that. I don't know. But there's a time period when you're concerned about losing power or having lost power, the further time goes, the more that feeling abates, right? Like it's like, okay, you start to do different types of rationalization in your head. Immediately after the outage, you're like, I'm going to buy one of those things. I'm never going to let that happen again. A couple -- a month goes by, you get the IHC, maybe you do, maybe you don't because it's so busy because everybody around you had the same experience. Maybe the problem becomes -- you start to think about, okay, you get that quote, you're like, oh, okay, I didn't think it was going to $12,000. How do I feel about it now? I get the $12,000 then, "Oh, I got to wait 3 months, 4 months, 5 months, 6 months to get the machine, ahh, what are my odds that I'm going to get another outage", right? Like, this is the emotional kind of feedback loop that you start going through in your head. And so there's absolutely a high emotional component to this and there's a high component that is availability, right? That's the product is not available or if we can't get dealers to you to do -- to actually do the in-home consultation, right? When you have an event, that drives a tremendous amount of demand in a particular market. And a lot of the events that happen, happen regionally. So you can imagine the dealer base of distribution in that market, they become overwhelmed to some degree. I think the beauty of this is we have 8,700 dealers, and it's growing, right? We need more. The point is that we're taking those IHCs as they come in, and we're using intelligence to distribute those leads to maybe dealers who we do have bandwidth in a market. Maybe they're a little further away from you, then the dealer would like or that you would like, but that's an opportunity that we can exercise quickly. There are some other things we're looking at to also try and -- I would say, speed up the IHC process. Are there things that we can do, if I can get half a dozen pieces of information from you either online or on a phone call, perhaps I can get within a 95% confidence interval, I can get confident enough, I can give you a number of an estimated range of installation cost, right? Now it might not be a precise quotation, but at least will give you some sense of whether you're still interested or not, right? And that is helpful for us to calibrate what we do to match you up with a dealer and get a product in your hands. Thank you.

Donovan Schafer with Northland Capital Markets. So I have 2 questions on time to vary kind of acute customer name lines where you may sort of solutions. The first one is around the Texas text alerts, and it also happens in other states I've gotten out before California. And I know -- I think it was just in the last few weeks in Texas, they set those alert, but they didn't actually have significant outage events. But I can imagine for some people, the text message alone and itself might be sort of either annoying or a reminder or something that makes -- disturbing -- something that to feel like [indiscernible] on top of things, clearly, they can't handle it. I need to take matters in my hand. So the first question is, have you gotten to a point yet where you can look at early indicators of interest and whether you get a bump from those text alert events when you don't get an outage, you just get text alert of the people. And then the second question is around the EV charging. It sounds great. How we talked about the -- a single unit that includes a battery and a natural gas generation unit for the Italian market, it seems like a fantastic solution in the U.S. market where maybe you don't have the ability at a particular point to -- for the grid to service the demand, but you might have excess natural gas that you could tie into at a nearby time.

Yes. No, thanks for the question, Don. And I think -- so the first part of the question, in terms of those text alerts that go out to people and -- so we track outages very closely, right? So what you're talking about is, this is in an outage. You didn't manifest in an outage, but it was a near outage, like a near miss, right? Like I don't know how you want to classify it, but it's a heightened sense of awareness around a potential outage. We don't have a way to necessarily track that. But what we can take a course is the IHCs that come in. In those markets, Texas being a great example, we saw elevated IHC activity as a result of the stress that the grid was under in that -- over the summer. I mean, the entire summer in Texas has been just brutally hot and grid stability has been front and center. And so it may not be discretely tied to that text message that you receive, but the media, voiceover in its entirety about grid stress and all of the things that can potentially lead to outages, the fear of outages had people in a buying mood. Certainly, shopping, right? And this is one thing I think Kyle mentioned it, is that we are -- as the category continues to grow, we've got a lot of people coming in now shopping. This is the difference, I think, between somebody who gets a text message in a near miss situation and somebody who actually experience an outage. People -- and this is back to the question about the emotion involved in this category. You experienced an outage and your lights are out, your likelihood of buying, it's a much higher right? So we've got a lot of data that shows people who come in right away into the funnel after having experienced an outage and the longer that outage is, the higher the propensity is that you're thinking about buying the product. That starts to abate as you move down if the outage is shorter or if there wasn't an outage at all, but there's just a fear that there could be outage. So we look at that, and we'd say, okay, the IHCs, we're seeing a ton of IHCs, the close rate this might also be part of not only the consumer being a little bit softer, but we've got a lot more people shopping, because they didn't actually experience an outage, but they were pushed, if you will, into getting an IHC because they're concerned about a potential future outage. If your utility sends you a text or your grid operator, in this case of ERCOT sends you a text 10 days in a row, you need to turn your power off or curtail power, you probably start to think through just what happens if I don't or if everybody else gets the text, isn't as good as me that way.

Just to clarify on the IHC since it take -- Texas as an example, you did have elevated outage activity at the beginning of the summer -- but then subsequent to that, I mean that might have been like in June or might have been -- I don't remember, but July and August, all of these alerts in the morning. So is the level of IHC increase in kind of Texas, Louisiana, the southern area there. Was it kind of higher proportion of what you would expect just based on the raw number of outages? Or was it -- is it even with the text alerts and all the media coverage was still kind of more or less in line with what you get some outages earlier.

I would tell you that we're seeing IHC volumes today that are in excess of what we would normally expect driven purely by outage. Now I'd say that with the caveat that, that's been the case since the pandemic hit, right? There's this the amplification. Now I think the pandemic amplification has waned but you have this new element that's emerging of a grid imbalance issue it's becoming a bigger talking point and I think has people maybe -- I don't want to say that replaces the angst that the pandemic brought. But it is, in effect, a different element of angst. And then on your EV question, the Energy Hub is a cool product. Paulo has got a couple of orders for that. I think that Europe is further along in the EV pen rate. So I think it is something that could be a potential product here, certainly in areas of the country where the pen rates are greater. If you get out to California, you do need natural gas lines present because that is part of the equation. Natural gas lines historically are quite expensive to run if they're not already there. So they would have to be in areas -- I think it would make the most sense in areas, and this is where it makes the most sense in Italy, most sense where gas lines are already there just to bring gas lines to the highway if it's not already there. This is a bit of a problem. But if you already have it there, it is -- I think it's a possible -- the Energy Hub could be a product that's got far greater opportunity beyond just what we're seeing today. It's very early innings, though. Yes.

Just on the clean energy product, it seems like the rollout maybe got pushed to the right a little bit. I'm just wondering what's driving that? And then just as you rebuild distribution and installers, is that something that you can do while you're working on these products? Or is that something that has to wait. And what's kind of the strategy to kind of reinvigorate that distribution?

Yes. Thanks, Jeff. So I think getting pushed to the right a bit, I think is probably a good way to characterize some of that. I think the next -- I'll say, the next-generation storage device, we've always pegged kind of 2024 for that device. It's really probably going to be later half '24 product launch for us. I think the one that I could tell you, you're absolutely right, it's been pushed to the right, is the rooftop solution. So we acquired the silicon company 2 years ago. We had high hopes. In fact, we had talked about it at one of the RE+ shows, launched the Generac branded Power Micro. And then we had some of our struggles with the SnapRS device last year. We brought in a whole new team and that really triggered for us a complete kind of step back, look at the technology, assess the technology, make sure it's the technology, we think, is the right technology. But can we execute on it? And what do we need to do to get it to the level of quality and reliability long term, again, these are 25-year warranty products. And we are in a brutal environment, these are underneath the panel on the rooftop. So you can imagine the kind of conditions that they -- depending on where you are in the U.S., kind of conditions in terms of temperature variation and just the humidity and wind and rain and snow and ice that they are subject to. So to make that product really a product that would be befitting of where we're trying to go with all of these products, that's been a push out to the right, for sure. In terms of a holistic, I would say it's almost -- I don't want to say we started over the project, and we kind of started over the project with a new team. And it started with evaluating whether the technology made sense at all, to be frank. And what we -- I think the good news is we're saying the technology makes a lot of sense. We like the AC-coupled microinverter solution. We think that's a good solution. We have a decent solution today with the DC-coupled solutions through the Pika acquisition. But we do believe that this is a product worth bringing to market, but it needs more work, it needs more time in order to bring it to the level that we think is scalable in the market. And so, can we continue to grow distribution in between now and when we launch those products. I would say this, we have a very modest view on '24, right? We said '23 was a reset year. truly was a reset year. We took a step back. '24, we're not going to grow a ton in '24, a little bit more towards the back half as we get some of the new products into the marketplace. But I think we're being pretty modest about what we think we can get done in '24 without the new products. We do have -- we've got a stable platform today that's salable. We have a good product today. As Norm said, there's a lot of great attributes of it. Some of the largest capacity batteries, energy storage devices on the market. In terms of the capacity and throughput at the inverter, it's one of the largest on the market. It's a great product. But we've obviously -- we lost the confidence of some of the market participants out there based on some of the challenges we had. And we're doing everything we can to work them back in. But if I'm realistic with you, it's -- if I'm one of those dealer partners and I had a bad experience, and I walk in, my sales team walks in with the exact -- it looks the same as the product that had a bad experience with. I'm like, yes, maybe I'll just wait until you bring something else out. And that's the reality of how people buy and sell. I think there are areas where we can overcome that because we can demonstrate to channel partners, the improved quality levels. We can talk to them about the things we've done. But it's -- I think we're -- until we get those new products in the market, you won't see that acceleration of growth. And that's why we're saying 2025 is really the return to growth, right? That's when we accelerate '26, that picks up, we can hit breakeven. And then it's not too long after that. It's a couple of years after that. We think we can get somewhere pretty special in terms of getting to closer anyway to those corporate EBITDA margin averages. Yes. Chris?

Chris Glynn, Oppenheimer. I had a question about HSB, your core demographic kind of the 2/3 of sales into age 60-plus. So putting aside the kind of 6% penetration rate, the saturation in that core demographic is going to be much higher. And I realize you guys addressed some different demographics that you're targeting, but it feels a little like chasing a rabbit. And so I'm curious what really are something you're anticipating pinch points with respect to that? And the second question to that is, what do you think potential degrees of incremental saturation in that core demographic have played into the diminished close rates?

I mean that's a great question. I would say that -- I'll answer the second part of the question first. I don't think that -- and it's because I'll answer the first question. I don't think we're at a saturation. I don't think we're saturated at all on that demographic. That demographic, the baby boomers are retiring, right? They're graduating into retirement and an amazing clip here. So there's a lot of people that are aging into that demo at this stage. That said, that can't carry on forever. And so the last thing we want to do is there's -- there are examples of companies that haven't shifted when their demographics have. And so we don't want to be left standing there as our demographic ages out, so to speak. But I do think that a really important element of that demographic is the aging in place concept that, that demographic in particular, there's -- so you have that demographic, and it's -- I don't have the raw numbers in front of me in terms of the millions of Americans anyway that fall into that demographic. But of that demographic, the people that -- especially after the pandemic, have concluded that the only place they want to get old is in their home. They do not want to go to a congregate living setting. Full stop. They -- it was on full display in terms of how challenging congregate living types of settings are in a pandemic. Now are we going to have a pandemic again, I hope not. The reality of it is, is much like the work at home, work from home trends accelerated. We believe the aging in place trends accelerated as well as a result of the pandemic. And so that cohort, that is the 2/3 of the owners of our systems of the home standby systems, we think only have that much more conviction now to protect themselves, right, in their own home and stay in their own home as long as they can. Adding a generator makes that home livable a lot longer in your life cycle than it might otherwise be. And so just in terms of what it does for climate control, general lighting in terms of your home not being a dangerous place to get around in, refrigeration of medications, the medical devices that are coming into the home today that require a constant supply of energy. Those things are all critical elements that I think feed into that demographic and why they want the product. That said, the second part of your question, again, I don't -- because I don't believe that, that is a problem today or a saturated element of the market for us anyway. I do think that even within that kind of older demographic, there are ways to reach that demographic differently than we've done before. We talked about new incremental demos that we want to go after. We've also talked about, we probably didn't do a great job at this time, but is -- how do we change the voice in which we speak to the current demographic to kind of pinpoint some of the concerns they do have around aging in place and the medical devices in the home. And we're not really -- we don't really take that angle today when we're selling. So I think there's an opportunity even within that current demographic to double down. I would say it's a double-down opportunity. And again, there's a lot of people moving into that retirement bracket over time. Yes, Jerry.

Jerry Revich, Goldman Sachs. Aaron, why don't we just talk about how back-end wage is the margin outlook. So based on fourth quarter like guidance, if you do this numbers, you'll be on a run rate essentially entering '24, that's halfway for the margin expansion targets. So I just want to make sure there are no moving pieces that we need to think about and maybe just come for us that we still expect to be done with the destock by the end of the year as well.

Yes. So I'll take the destock one and then I'll probably kick the margin -- your margin question to York. So what we said on the destock is -- look, I mean it's -- first of all, it's tagging what is normal. So that's a number of our making, right? We look at history, we look at was it kind of pre-pandemic and before things got out of whack. And we're saying that as we get into early '24, it's not going to be December 31, right? Like it's not going to be boom. We wake up the next day and hey, it's normal. It's -- there's a progression here. The good news is, if we looked -- we went on the clock back 6 months ago, we had too much inventory everywhere. Today, we are in some really good places in certain markets, in certain regions and with certain customers. certain channels. I think some commentary we gave on the call on August 2, our dealer channel, pretty close to normal. And that's our -- we've called it out. It's one of our most important channels, certainly from majority of the sales through HSB. It is basically abnormal. In fact, I would tell you there's some regions of the country. There are some areas like Canada in Ontario and Quebec, where they need more product, and we're working to get them more products. We do have some Canadian specific models that go up there because the regulations are different, right? So this is the same issue Paulo has with selling a unit in India or Australia. The regulations guide what that unit needs to look like. So I would tell you that we're in that channel in that dealer channel, we feel really good about where we're at today -- we move kind of progression of channels, our wholesale channel is still overstock, right? But we've got some regions where we're in better shape. And then you look to the retail channel. The retail channel is a laggard there. They have probably the greatest amount of inventory to still burn down to get back to their normal position. But when you kind of shake it all out, we feel like as we get into 2024, we're going to be in a much better place. And then on the margin progression, I don't know, York.

Yes, Jerry, I think your question was, is there going to be a more level loaded margin progression over the next 3 years. With the top line, maybe won't grow in a straight line, I would say the margin profile and improvement should incrementally improve probably more evenly throughout the 3-year period.

York, can I just have a clarification. So if you hit the fourth quarter margin guidance that will be 19%, 20% margins on a seasonally adjusted run rate. So that's all the way halfway to your card [indiscernible] some credit items in the fourth quarter that we should be thinking about as we love to say.

Just a heavy seasonal mix. So the first half of a year -- of a normal year is always -- margins are always lower than the second half. So Q4 is the highest level margin that you'll experience during the year. So that will come down in the beginning of '24, and then it'll come back up in the second half. But overall, year-over-year, you'll see some relatively even margin progression over the next 3 years improvement?

Yes. I think that's great. We've got time for 1 more question. We'll go to the very back.

Julien Dumoulin-Smith, Bank of America. Maybe to build off some of these few questions if I can. How do you think about the ET build-out, the composition of that time through 2016? You talked about that reboot, you talked about the pieces of the pie kind of deciding what you want to go with, what you want to emphasize. When you think about that [indiscernible], what is within, say, what does ecobee comprised or what have you -- what products are you saying we're going to double that. We're really going to reboot this. And then can you elaborate a little bit on the margin? Just talk about the EBITDA commitment. What is the gross margin dynamic of ET through that period, maybe on the C&I and resi.

Great question, Julien. So in terms of just the breakdown that we're going to give in terms of -- we're not going to get down to the level of each product within there, whether it be smart thermostats or even at the ecobee level. But -- if you take that [indiscernible] so again, level setting, $500 million of total Energy Tech as we've defined it with C&I and res this year. About $300 million in 2023 for residential, $200 million for C&I growing to $1.2 billion in the total. That's the 12% to 21%. The $1.2 billion is comprised of about $700 million of residential, $500 million of C&I. So the growth from $300 million res to $700 million res and from $200 million C&I to $500 million C&I. That's kind of the breakdown. When you think about the margins, and obviously, within res, by the way, because we're introducing a lot of new products and we're assuming pretty modest residential year next year, we've got a lot of growth from new products coming in, in '25 and then in '26 as they get market traction. So obviously, ecobee is going to be a big part of that in '24 and will grow throughout the period, but less or so as part of the mix of res. And then on C&I, there's basically 2 kind of major components there. One is the battery storage for C&I behind the meter, which today is very small. The majority, a good chunk of what we're selling today in the C&I space is that what Erik referred to as beyond standby, right? The natural gas gen sets being used in applications other than emergency standby. We do have some battery storage and some mobile storage that are in there around that out. But that $200 million, the growth that's going to come from that, we do expect the growth in that on standby category to be very solid, but the battery elements of that, actually, we feel are going to be the bigger growth. So directionally, that's how it kind of lays out. And then in terms of the gross margin part of your question, it is interesting because gross margins actually are really good. And I'll talk to the residential piece, in particular, and that is -- the IRA provides us some tailwinds. The way we're thinking about this is we're going to have domestic production capability for those residential products. And the ones that are available for the production tax credits, you're going to see that be helpful to margins. But the margin -- the gross margins overall are actually quite good in these product segments. And that's what gives us confidence that we can get to those corporate EBITDA margins over time as we leverage the operating expense load that we've created here because of the intense level of investment that we're going through today. So that's kind of where -- how I'd answer that. We need to leave the Q&A there. I know it was short. I apologize. We do want to make sure that we've got time to do lunch, we get on the buses. Chris, I'm going to turn it back over to you for like kind of logistics around that. Oh, Jenny is coming down. I'm sorry. So you'll hear from the real person who knows what's going on. Either Chris or I do. So Jenny, do you want to give them the instruction needed there?