Generac Q1 2023 Earnings Report

Generac EPS Results

• Actual EPS: $0.63
• Consensus EPS: $0.52
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $2.09

Generac Revenue Results

• Actual Revenue: $887.90 million
• Expected Revenue: $850.07 million
• Beat/Miss: Beat by +$37.83 million
• YoY Revenue Growth: -21.80%

Generac Announcement Details

• Quarter: Q1 2023
• Date: 5/3/2023
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 3, 2023
• Conference Call Time: 10:00AM ET

Generac (NYSE:GNRC) is an energy technology company that designs and manufactures power generation and energy management products. Its portfolio includes residential standby generators, portable generators, commercial and industrial generator systems, and related transfer switches, controls and monitoring technologies.

The company also offers clean energy and electrification solutions, including battery energy storage systems, solar-related products, electric vehicle chargers and load-management technologies. Generac provides installation, maintenance, monitoring and other support services through its distribution and dealer networks.

Founded in 1959 by Robert Kern, Generac is headquartered in Waukesha, Wisconsin. The company serves residential, commercial, industrial and other customers in the United States and international markets, primarily through independent dealers, distributors, retailers and direct sales channels. Aaron Jagdfeld has served as Generac’s president and chief executive officer since 2008.

Generac Q1 2023 Earnings Call Transcript

Key Takeaways

• Net sales fell 22% year-over-year to $888 million in Q1, driven by a 46% decline in residential sales despite a 30% surge in commercial and industrial (C&I) product shipments to an all-time record.
• Baseline power outage activity reached its highest Q1 level since 2010, pushing home consultations over four times 2019 levels, and Generac expects home standby shipments to return to year-over-year growth in H2 as field inventory normalizes.
• Residential energy technology sales remained under pressure after the loss of a major customer, but ecobee smart thermostat volumes and grid services growth accelerated, with full-year clean energy sales forecast at $300–350 million.
• The company completed the acquisition of the remaining 20% of Pramac, bolstering its international C&I footprint, and entered stationary energy storage for commercial and industrial customers through Reifu and a new Generac-branded offering.
• Generac reaffirmed full-year 2023 guidance of a 6–10% net sales decline and 17–18% adjusted EBITDA margins, forecasting sequential gross margin improvement and stronger H2 operating leverage.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the First Quarter 2023 Generac Holdings Inc Earnings Conference Call. At this time, all participants are on a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 11 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

[Operator]

I would now like to hand the conference over to your speaker today, Mr. Mike Harris, Senior Vice President of Corporate Development and Investor Relations. Sir, please go ahead.

[Mike Harris, SVP of Corporate Development and Investor Relations at Generac]

Good morning and welcome to our first quarter 2023 earnings call. I'd like to thank everyone for joining us this morning. With me today is Aaron Jagdfeld, President and Chief Executive Officer, and York Ragan, Chief Financial Officer. We will begin our call today by commenting on forward-looking statements. Certain statements made during this presentation, as well as other information provided from time to time by Generac or its employees, may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements.

[Mike Harris, SVP of Corporate Development and Investor Relations at Generac]

Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors. We will make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our earnings release and SEC filings.

[Mike Harris, SVP of Corporate Development and Investor Relations at Generac]

I will now turn the call over to Aaron.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Thanks, Mike. Good morning, everyone. Thank you for joining us today. Our first quarter net sales, adjusted EBITDA and adjusted EPS were higher than expected, primarily due to continued strong shipments of our commercial and industrial products globally. Adjusted EBITDA margins were also better than expected due to favorable price cost dynamics. Additionally, field inventory levels of home standby generators declined at a rate consistent with our expectations in the quarter. Year-over-year, overall net sales decreased 22% to $888 million, and core sales declined 24% during the quarter. Residential product sales decreased 46% as compared to a strong prior year quarter that included the benefit of significant excess backlog for home standby generators and was also impacted by elevated levels of field inventory for home standby generators as well as a decline in clean energy products.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Global C&I product sales increased approximately 30% to an all-time quarterly record, with strength in most regions internationally and all channels domestically. Adjusted EBITDA margin was negatively affected by significant unfavorable sales mix and reduced operating leverage driven by lower home standby shipments and continued energy technology growth investments. These margin headwinds were mostly offset by favorable price cost dynamics. Discussing our first quarter results in more detail. While home standby shipments declined significantly in the quarter, leading indicators of demand for the category were exceptionally strong during the first quarter. Baseline power outage activity in the U.S. was well above the long-term average during the quarter, with several larger localized outages in multiple regions, marking the highest level of baseline power outage activity for a first quarter since we began tracking outages in 2010.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Home consultations or sales leads were up significantly over the prior year period, with broad-based growth experienced in almost all states. Additionally, home consultations were approximately flat sequentially during the quarter, which is highly unusual for the seasonally softer first quarter, particularly as we're coming off of a record fourth quarter, and this strength continued in the month of April. For historical perspective, first quarter home consultations were more than 4x higher than the comparable period in 2019, supporting our belief that the home standby generator category has reached a new and higher baseline level of demand. Our residential dealer count was more than 8,600 at the end of the quarter, an increase of over 500 dealers from the prior year.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

While this is a slight decline on a sequential basis due to seasonal headwinds, we expect our dealer count to grow significantly over the coming years as we continue to focus on expanding our installation bandwidth. Activations, which are a proxy for installs, were impacted by severe weather in multiple regions and declined slightly from the prior year period, which included a challenging comparison in the South Central region that saw notable strength in the prior year due to the backlog of activations related to the Texas deep freeze in 2021. The number of home standby generators and field inventory continued to decline towards more normalized levels during the first quarter, with the number of units falling meaningfully and ending the quarter approximately in line with our prior expectations. Days of field inventory relative to historical norms also decreased sequentially in the quarter, but remained elevated.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We expect field inventory to decline further in the second quarter, resulting in another quarter of lower home standby orders and shipments relative to the higher end market demand before returning to more normalized levels as we enter the second half of the year. Our initiative to increase home standby generator installation capacity remains a top priority for the company. We recently launched our Dealer Talent Network, which is showing early signs of momentum as we help our dealers find the talent needed to successfully grow their businesses. We also recently announced a partnership with the Independent Electrical Contractors Trade Group aimed at further elevating the Generac brand within the electrical contractor community and providing additional training resources in key markets, including Texas and Florida.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Additionally, we have identified a number of project management improvement opportunities that we believe can help dealers optimize overall project timelines in addition to several product-related enhancements to further simplify the installation process. These initiatives are not only focused on solving near-term installation capacity challenges, but are also designed to provide sustainable solutions for tighter skilled labor markets. We believe these solutions, as well as continuing to expand overall distribution, could further increase Generac's competitive advantage given our unparalleled scale, focus, and expertise in the home standby market. Consistent with the comments provided on our fourth quarter earnings call in mid-February, we expect that the first quarter marked the trough for home standby shipments in the current channel destocking process. We continue to anticipate a return to year-over-year sales growth in the second half of the year as field inventory returns to more normalized levels.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

The above-average outage environment and robust growth in home consultations thus far in 2023 further support this expectation. The range of threats that utilities and grid operators face was on full display in recent quarters as the outage environment has been driven by severe weather, power supply shortfalls, and unanticipated spikes in demand. Outage events are no longer limited to one-off major storms. As reliance on electricity continues to grow, consumers and businesses have demonstrated that they are less willing to accept the deteriorating level of power liability, and they are taking actions to improve their own resiliency. I'd now like to provide some commentary on our residential energy technology products and solutions. While we're facing temporary headwinds for our residential clean energy offerings, our commitment to success in these markets has not changed.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

This strategically important area of our business gives us access to a number of highly attractive market opportunities that are supported by strong end demand and further reinforced by unprecedented levels of policy support. We expect that the combined served addressable market for residential solar MLPEs, storage, EV charging, home energy monitoring and management, and Grid Services will grow at strong double-digit CAGR through 2026, resulting in a domestic market opportunity of more than $10 billion. During the first quarter, shipments of PWRcell energy storage systems remained under pressure as we continue to rebuild and add to our distribution for these products following the loss of a large customer that ceased operations in the third quarter of last year.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Additionally, we continue to make good progress on our SnapRS upgrade campaign in the quarter, and we remain committed to taking care of our customers and the channel partners that are participating in this program. In addition to our residential storage efforts, our energy monitoring and management capabilities remain well positioned as positive momentum in ecobee's device sales, together with a number of product awards, are resulting in continued market share gains and highlight the consumer appeal of our feature-rich smart thermostat offerings. ecobee's already strong customer satisfaction scores have improved further since the 2022 release of our latest generation devices, validating ecobee's expertise in user interface and user experience development. We are heavily leveraging that expertise in our Single Pane of Glass initiative, which will act as the central hub of our residential energy ecosystem.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

It's also worth noting that customer interest in our Grid Services offerings remains strong, with another quarter of robust sales growth off of a low prior year base. We recently announced a strategic minority investment in Rolling Energy Resources, an EV load management software provider, as part of our effort to be the leading solution for EV load management to utilities and consumers. We believe this innovative area of our business will help facilitate the transition to the next generation grid. Ongoing policy support remains a potential tailwind as regulators and policymakers increasingly recognize the value of flexible digital solutions to the challenges facing our evolving power grid. We continue to expect growth sales from residential energy technology products and services to deliver between $300 million and $350 million for the full year 2023.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Operating expenses as a percentage of sales are expected to be elevated in 2023 as we continue to build a home energy technology foundation for growth to position our combination of hardware and software solutions for long-term success. With new leadership running this part of our business, our teams are focused on more deeply integrating the products and platforms we've acquired over the past four years with an eye towards tightening our focus on the solutions where we believe we can create the most value for the consumer as part of the residential energy ecosystem.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

With improved focus and execution, and by leveraging our core competencies around sales and marketing, lead generation, distribution, customer support, and global sourcing and logistics, we believe we can create competitive advantages with our residential energy technology products and services that will become evident over time as we continue to develop the smart energy home of the future. Switching gears, I want to provide some commentary on our C&I products, which have experienced significant growth over the last two years and once again outperformed our expectations in the quarter. Global C&I product sales grew 30% over the prior year to an all-time quarterly record, and backlog for these products also remained at record levels at the end of the quarter as multiple megatrends support demand for backup power and mobile products around the world.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Shipments for domestic C&I products grew in the first quarter, highlighted by strength across all channels, including national rental equipment, industrial distributors, telecom, and other direct customers for beyond standby applications. Shipments of C&I generators through our North American distributor channel grew significantly again in the first quarter. Order trends and channel backlog also increased at a strong rate. Quoting activity remains robust. Close rates improved nicely on a year-over-year basis, highlighting our sustained market share gains and the ongoing strength in demand for backup power in this important channel.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

As the leading provider of backup power to the North American telecom market, shipments to national telecom customers also increased at a robust rate during the first quarter as compared to the strong prior year comparison as several of our larger national customers continued to deploy generators to harden their existing sites and build out their fifth generation or 5G networks. While shipment and order patterns for certain customers in this channel are expected to be lumpy in the second half of the year, investment in telecom infrastructure remains a secular trend as global tower and network hub counts further expand and the increasingly critical nature of wireless communications requires backup power for resiliency. We also experienced another quarter of tremendous growth for our national and independent rental equipment customers as they continue to refresh and expand their fleets.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

This end market is supported by the secular trend of critical need for significant infrastructure investments that will require years to complete. Mobile power products and light towers will be necessary in these essential construction projects. Natural gas generators used in applications beyond traditional emergency standby projects also continue to see increased traction during the first quarter as shipments of these products once again grew at an exceptional rate. We believe we are in the very early innings of growth for this exciting new market opportunity as grid stability concerns and volatile energy markets are expected to further drive demand for these solutions. Additionally, the business models of our direct customers in this vertical are innovating the generator marketplace by developing as a service offerings, which dramatically reduces the need for the large initial capital outlays that have traditionally been required for businesses to add resiliency to their operations.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Internationally, robust momentum continued as shipments increased 17% year-over-year during the first quarter, with 19% core sales growth when excluding the net impact of contributions from acquisitions and the unfavorable impact of foreign currency. Core total sales growth was driven by strength across key regions, most notably in Europe, where power security for homes and businesses remained the top priority amid ongoing geopolitical and macroeconomic uncertainty. International segment EBITDA margins also increased meaningfully during the quarter, primarily due to favorable price cost dynamics and improved operating leverage on higher sales volumes. Supplementing our international performance, we're also beginning to see long-term growth potentially emerge in new and developing regions such as India, where we're experiencing positive sales momentum for our backup power solutions.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

This rapidly growing market has unique characteristics for a developing country with the size of its population, broad electrical infrastructure coverage, and an increasing number of homes and businesses with direct natural gas connections. We are currently building out our full range of residential and C&I gas solutions to address this large market opportunity. Additionally, during the quarter, we acquired the remaining 20% minority ownership interest in Pramac, bringing our total ownership to 100%. Pramac is a leading designer and manufacturer of stationary, mobile, and portable generators, along with energy storage solutions sold through a broad distribution network across the world. It has been a key driver of our successful international expansion since we first acquired a majority interest in the company in early 2016.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Through the combination of focused investment and Pramac's global presence, this has become an important strategic element of our international growth aspirations. As we've been experiencing on the residential side of our business, our global C&I product category is similarly in the very early innings of its own energy technology evolution, and we've made meaningful progress towards that evolution here in 2023. In addition to our advanced controls and connectivity solutions, beyond standby natural gas generators and mobile energy storage systems, we've now added stationary energy storage solutions for behind the meter applications, both domestically and internationally, to our product portfolio. In February, we acquired REFU Storage Systems, a German-based developer and supplier of energy storage hardware products, advanced software, and platform services for international commercial and industrial customers.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We also recently announced our new series of Generac branded stationary energy storage systems for the North American C&I market in partnership with a leading supplier of behind the meter storage solutions. These developments represent our initial foray into this rapidly growing market, and advancing our C&I storage capabilities will remain a key initiative for Generac in the coming years. The long-term opportunity for energy technology solutions within our C&I product category is extremely robust, and I'm confident in our ability to leverage our existing positions of strength around the world to compete in these markets. In closing this morning, we believe our first quarter performance represents a trough in the current cycle as we continue to focus on reducing home standby field inventory levels and as we work to rebuild sales momentum for our PWRcell residential energy storage systems.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

That said, we're extremely pleased with the continued execution in our global C&I product categories that drove overall results ahead of our prior expectations. We're encouraged by the progress we're making in addressing the near-term challenges that are impacting our residential product categories. In addition, the robust level of power outage activity and resulting strength in home consultations for home standby generators so far here in 2023 provides incremental support for our expectations to return to year-over-year sales growth in the residential product category in the second half of the year. Importantly, we're maintaining our full year net sales and adjusted EBITDA margin guidance as we execute on our near-term initiatives and position Generac for sustained long-term success in our mission to lead the evolution to more resilient, efficient, and sustainable energy solutions.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I'd now like to turn the call over to York to provide additional details on first quarter results and discuss our outlook for 2023. York?

[York Ragan, CFO at Generac]

Thanks, Aaron. Looking at first quarter 2023 results in more detail, net sales decreased 22% to $888 million during the first quarter of 2023, as compared to $1.14 billion in the prior year first quarter. The combination of contributions from recent acquisitions and the unfavorable impact from foreign currency had an approximate 2% net favorable impact on revenue growth during the quarter. Briefly looking at consolidated net sales for the first quarter by product class. Residential product sales declined 46% to $419 million, as compared to $777 million the prior year. As Aaron discussed in detail, lower shipments of home standby generators and PWRcell energy storage systems drove this decline in residential product sales.

[York Ragan, CFO at Generac]

Commercial and industrial product sales for the first quarter of 2023 increased 30% to $363 million, as compared to $279 million the prior year quarter. Contributions from recent acquisitions were nearly fully offset by the unfavorable impact of foreign currency during the quarter. The very strong core sales growth was broad-based across most regions internationally and all channels domestically, with particular strength in domestic national rental equipment, industrial distributors, telecom, and other direct customers for beyond standby applications. Net sales for other products and services increased 32% to $106 million as compared to $80 million in the first quarter of 2022. The acquisition of Electronic Environments contributed approximately 28% of this growth given their additional service capabilities.

[York Ragan, CFO at Generac]

Core sales growth for the category was approximately 4%, primarily due to growth in our energy technology service offerings, along with continued growth in aftermarket service parts and extended warranty revenue recognition. Gross profit margin was 30.7% compared to 31.8% in the prior year first quarter due to the significant impact of unfavorable sales mix given the sharp decline in home standby mix compared to the prior year. This was mostly offset by realization of previously implemented pricing actions together with lower input costs from improved commodities, logistics, plant efficiency, and other cost reduction efforts. Operating expenses increased $22 million or 11% as compared to the first quarter of 2022. This increase was primarily driven by higher marketing, promotion and employee costs, certain legal and regulatory expenses, and the impact of recurring operating expenses from recent acquisitions.

[York Ragan, CFO at Generac]

Adjusted EBITDA before deducting for non-controlling interests as defined in our earnings release was $100 million or 11.3% of net sales in the first quarter as compared to $196 million, 16.3% of net sales in the prior year. The lower EBITDA percent was primarily driven by the higher operating expenses as a percent of sales given the lower sales compared to the prior year. I will now briefly discuss financial results for our two reporting segments. Domestic segment total sales, including inter-segment sales, decreased 26% to $720 million in the quarter as compared to $975 million in the prior year, with the impact of acquisitions contributing approximately 3% revenue growth for the quarter.

[York Ragan, CFO at Generac]

Adjusted EBITDA for the segment was $68 million, representing a 9.4% margin as compared to $170 million in the prior year, or 17.5% of total sales. The lower domestic EBITDA margin in the quarter was primarily due to unfavorable sales mix and reduced operating leverage on lower shipments. In addition, the impact of acquisitions and continued energy technology growth investments negatively affected margins during the quarter. These factors were partially offset by the realization of previously implemented pricing actions and lower input costs. International segment total sales, including inter-segment sales, increased 17% to $216 million in the quarter as compared to $185 million in the prior year quarter. Core sales, which excludes the impact of acquisitions and currency, increased approximately 19% compared to the prior year.

[York Ragan, CFO at Generac]

Adjusted EBITDA for the segment before deducting for non-controlling interests was $32 million or 15% of net sales as compared to $26 million or 14% of sales in the prior year. This margin increase was driven primarily by favorable price cost dynamics and improved operating leverage on higher volumes. Switching back to our financial performance for the first quarter of 2023 on a consolidated basis. As disclosed in our earnings release, GAAP net income for the company in the quarter was $12 million as compared to $114 million for the first quarter of 2022. The current year net income includes approximately $13 million of additional interest expense compared to the prior year due to higher borrowings and interest rates.

[York Ragan, CFO at Generac]

GAAP income taxes during the current year first quarter were $8 million or an effective tax rate of 35.7% as compared to $29 million or an effective tax rate of 19.7% for the prior year. The increase in effective tax rate was primarily due to a lower benefit from equity compensation on a low pre-tax earnings base in the current year quarter. Diluted net income per share for the company on a GAAP basis was $0.05 for the first quarter of 2023 compared to $1.57 in the prior year. Adjusted net income for the company as defined in our earnings release was $39 million in the current year quarter or $0.63 per share.

[York Ragan, CFO at Generac]

This compares to adjusted net income of $128 million in the prior year or $1.98 per share. Cash flow used in operations was negative $19 million as compared to negative $10 million in the prior year first quarter, and free cash flow as defined in our earnings release was negative $42 million as compared to negative $37 million in the same quarter last year. The modest decline in free cash flow was primarily due to lower operating earnings and a $36 million one-time cash tax payment for tax planning related to a recent acquisition. This was mostly offset by lower working capital investment in the current year quarter as we reduced our material receipts and production rates for residential products and stabilized inventory levels.

[York Ragan, CFO at Generac]

Total debt outstanding at the end of the quarter was $1.61 billion, resulting in a gross debt leverage ratio at the end of the first quarter of 2.25x on an as-reported basis. Outstanding debt increased $179 million during the current year quarter as we used proceeds from those borrowings to fund the $105 million Pramac buyout, the $36 million one-time cash tax payment for tax planning purposes, and the $16 million REFUstor acquisition. I will now provide further comments on our outlook for 2023. As disclosed in our press release this morning, we are maintaining our prior outlook for the full year 2023.

[York Ragan, CFO at Generac]

We continue to expect the residential product category will be impacted by higher home standby field inventory levels in the second quarter before returning to year-over-year sales growth in the second half of the year. Resulting in a full year decline in the high teens range compared to the prior year. Our outlook for C&I products sales to grow at a mid to high single-digit rate during the year remains unchanged as we come up against increasingly challenging prior comparisons in the second half of the year. As a result, we continue to expect overall net sales for the full year to decline between -6% to -10% as compared to the prior year, which includes approximately 1% to 2% favorable impact from acquisitions and foreign currency.

[York Ragan, CFO at Generac]

Importantly, this guidance assumes a level of power outage activity during the remainder of the year that is in line with the longer-term baseline average. Consistent with our historical approach, this outlook does not assume the benefit of a major power outage event during the year. Additionally, this outlook does not assume a prolonged, deep recessionary environment that meaningfully impacts consumer spending during 2023. Having said that, demand for our home standby products tends to be driven more by power outages rather than overall macroeconomic conditions. We continue to expect sales to be more weighted to the back half of the year as field inventory normalizes and consistent with normal seasonality, excluding excess backlog, with overall net sales in the first half now being approximately 45% weighted and sales in the second half being approximately 55% weighted.

[York Ragan, CFO at Generac]

Our gross margin expectations for the full year 2023 are also unchanged as we anticipate approximately 150 basis points of gross margin improvement over 2022 levels. From a seasonality perspective, we continue to expect that first quarter gross margins will mark the low point for the year. We anticipate sequential quarterly improvements resulting from improved sales mix with higher shipments of home standby generators, along with lower input costs, improved overhead absorption, and realization of cost reduction initiatives as we move throughout the year. Gross margins are expected to progressively improve throughout the year, with second half 2023 gross margins to be approximately 500 basis points higher than first half 2023 margins. The continued strength in our end markets gives us the confidence to continue to focus heavily on supporting innovation, executing on strategic initiatives, and investing for future growth.

[York Ragan, CFO at Generac]

As a result of these continued investments, we expect operating expenses as a percentage of net sales, excluding intangible amortization expense, to be approximately 20% for the full year 2023, with operating leverage improving throughout the year. Given these gross margin and operating expense expectations, adjusted EBITDA margins before deducting for non-controlling interests are still expected to be approximately 17%-18% for the full year. From a seasonality perspective, we expect adjusted EBITDA margins to improve significantly throughout the year, primarily driven by sequentially improving gross margins as previously discussed, and to a lesser extent, improved leverage of operating expenses on the expected higher sales volumes in the second half of 2023. Accordingly, we continue to expect second half adjusted EBITDA margin to be approximately 800 basis points higher than first half margins.

[York Ragan, CFO at Generac]

We're also providing updated guidance details to assist with modeling adjusted earnings per share and free cash flow for the full year 2023. For 2023, our GAAP effective tax rate is expected to be approximately 25% as compared to our previous guidance of 24%-25% and the 19.6% full year GAAP tax rate for 2022. The year-over-year increase is driven primarily by expectations for lower share-based compensation deductions, increased mix of high income in higher tax jurisdictions, and higher tax on foreign income in 2023 compared to 2022. Interest expense is still expected to be approximately $90 million, assuming no additional term loan principal prepayments during the year and assuming elevated SOFR rates throughout 2023.

[York Ragan, CFO at Generac]

Interest expense is expected to moderate in the back half of the year as cash flows on our interest rate swaps become more favorable and we pay down a portion of our outstanding revolver indebtedness. Our capital expenditures are projected to be approximately 3% of our forecasted net sales for the year. Depreciation expense is now forecast to be approximately $60 million as compared to previous guidance of $56 million-$58 million in 2023 due to the addition of REFUstor-related depreciation expense. GAAP intangible amortization expense expectations are unchanged at approximately $100 million during the year. Importantly, to arrive at appropriate estimates for adjusted net income and adjusted earnings per share, this add back item should be reflected net of tax using the expected 25% tax rate. Stock compensation expense is still expected to be between $40 million-$43 million for the year.

[York Ragan, CFO at Generac]

Operating and free cash flow generation is expected to follow historical seasonality of being disproportionately weighted towards the second half of the year in 2023. For the full year, we expect adjusted net income to free cash flow conversion to be strong at well over 100% as working capital levels moderate off of peak levels. Our full year weighted average diluted share count is still expected to decrease to approximately 63 million shares as compared to 64.7 million shares in 2022, which reflects the share repurchases that were completed in 2022. Finally, this 2023 outlook does not reflect potential additional acquisitions or share repurchases that could drive incremental shareholder value.

[York Ragan, CFO at Generac]

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

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your phone and wait for your name to be announced. To withdraw your question, please press star one one again. We ask that you please limit yourself to one question. Stand by as we compile the Q&A roster. One moment please for our first question. Our first question will come from Tommy Moll of Stephens Inc. Your line is open.

[Tommy Moll, Managing Director and Senior Equity Research Analyst at Stephens Inc.]

Good morning, and thanks for taking my questions.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Morning, Tommy.

[Tommy Moll, Managing Director and Senior Equity Research Analyst at Stephens Inc.]

Aaron, it's good to hear some of the constructive updates on IHCs in the period. On a related topic, I wanted to talk about the close rates there. Can you update us on what those looks like maybe compared to the prior year or pre-pandemic? As you progress through the year, do you see it landing somewhere in the range of a pre-pandemic kind of level, or is there something structurally different here? Thank you.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, thanks. Thanks, Tommy. We actually were very encouraged by, you know, the sales lead volume that we saw. You know, as we said in Q1, it was, in fact, it would have been a record Q1, if not for the comp being, you know, the last record Q1 was 2021 when we had Texas, the deep freeze. If you take that out, Q1 would have been a record for consultations.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Just for the baseline. Yeah. I mean, it was, it was pretty robust. In fact, that carried through here in April as well. Close rates, interestingly enough, like, you know, we've talked about this, previous calls, so we're still well off our pre-pandemic close rates, but they have been recovering. They kind of bottomed the beginning of last year, so about a year ago. You know, from a comp perspective, we're up nicely off those close rates from a year ago. As far as do we think we'll recover to pre-pandemic levels by the end of this year, we've still got a ways to go.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We continue to see progress, and we think that, you know, a big part of that story, as we've mentioned previously, is just getting the lead times back down, which clearly isn't an issue anymore. You know, the thing we'll watch, of course, with close rates is, you know, with a softening economy potentially in the back half of the year, how does that impact close rates? You know, we are seeing just as a side note there, we're seeing continued uptake in our financing options for homeowners. In fact, we had incredible growth on our financing program in Q1, and that's in spite of, you know, the residential category being down 46%. Financing was up dramatically in the quarter. We see--

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You know, we do know that there are consumers out there that are looking at financing, you know, as an option, as a way, you know, to improve the affordability of these products in spite of, you know, maybe their concerns around, you know, a slowdown in the economy. You know, again, not giving specific guidance on the close rates, but we are continuing to see improvements there, you know, kind of sequentially, or at least over the prior year. You know, I don't, I don't think that we'll return quite to pre-pandemic levels by this year. That's not what our guide contemplates. Maybe that's upside for us, you know, as we continue to recover there.

[Operator]

Thank you. One moment please for our next question. Our next question will come from Michael Halloran of Baird. Your line is open.

[Michael Halloran, Associate Director of Research and Senior Research Analyst at Baird]

Hey, good morning, everyone.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Hey, Mike.

[Michael Halloran, Associate Director of Research and Senior Research Analyst at Baird]

Hey, Aaron. Let's stick on that train of thought, Aaron, because obviously there's a lot of concern and questions just around the sustainability of that home standby piece from an underlying demand perspective. You know, we've certainly seen the positive or certainly heard the positive commentary on the IHC side. Would love to understand why the confidence level is so high that you can maintain that and also maybe put in historical perspective how you've tracked when you had kind of negative economy, but positive storms in the past. I know York made a quick reference to it in the prepared remarks. You know, just kinda laying out why you think things are gonna be, from an underlying perspective, pretty stable moving into the back half would be great.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah. That, obviously an area of deep focus for us, Mike, and we've got some experience around that, and I'll talk to that here in a second. I think just talking to the trends and what gives us confidence the second half of the year. The way we think about it, you know, those sales leads, which are an important leading indicator in the category for us, you know, they mature over a period of 90 to 120 days, call it, you know, from when you do the consultation to when the product actually gets installed.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We think that in terms of near-term visibility, right, next quarter and a half perhaps, we think we have, you know, a pretty good view on the, you know, kind of the end market demand, as it were. That coupled with the fact that we're underserving the market right now, right? Like, we're undershipping to end market demand because we're allowing this destock process to take place. I would just say that, you know, Q1 artificially low relative to what home standby shipments could have been had we been matching kind of the shipping pace with the demand pace, right? We were out of step with that because of the field inventory challenges that we've, that, you know, we've talked much about here.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You put those together and those we're pacing to have that abate as we enter the second half of the year. We think that that's gonna improve. As we said, you know, we're gonna get back to more normal levels there. We return to more normal levels there. You also have normal seasonality, right? The first half of the year, Q1 in particular is always a challenging quarter for the category because it's just difficult to do installations. In fact, this Q1, some of the reason why we saw so many home consultations with the outage environment being driven by weather also provided some challenges to our install crews in terms of them being able to actually install product in Q1.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

It was a little bit of a, you know, kind of an, a bit of an irony there. You know, you take that out of it, though, and we look to the future. Kind of just speaking more broadly, I think to our experience in the category when you have maybe a softening economic backdrop, you know, I can point to the last kind of pullback economically back in 2008, 2009.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You know, when you look at housing in particular, and I would say, I would argue this recessionary, I gotta be careful with the term I use, but the slowdown in the economy right now that we're, you know, that people are concerned about or experiencing, you know, is not necessarily the same type of experience that happened in 2008, 2009, where it was directly related to, you know, housing prices, home values, mortgage, obviously the value of your home relative to your mortgage, with housing prices kind of collapsing back then. If there was ever a time when you'd think that, like, what we get pegged at in this category, we get pegged as a big-ticket discretionary item, right, tied to residential investment.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You would have thought that would have been the worst environment ever for this category back in 2008, 2009. We actually grew our residential part of our business back then. You know, and I, there's a bunch of reasons for that. I mean, first of all, the category does skew older, right? 65% of the buyers of the category are over age 60. I don't wanna say they're insulated necessarily from, you know, economic pullbacks, but I would say that, you know, they probably are less affected, right? I also mentioned, you know, the use of our financing tools. We're seeing an increase in the use of those financing tools.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I think we have some things today that help homeowners who are still interested in the category, you know, shop the category and still become buyers. I think the biggest thing over my time here, the almost three decades at the company, is that power outages trump the economy every day of the week. I mean, when your power's out, the generator categories go right to the top of the list. You know, we maybe get reshuffled. Maybe that kitchen remodel or that new pool you were thinking about, or even a family vacation gets further down the list, and a generator becomes the priority in terms of what you're gonna spend, you know, your discretionary income on or your home equity, you know, put value in your home into a home equity infusion.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

That's just kind of how we think about it largely, and I think why I think the category has been relatively resilient over the last three decades.

[Operator]

Thank you. One moment, please, for our next question. Our next question will come from Jeff Hammond of KeyBanc Capital Markets I. Your line is open.

[Jeff Hammond, Managing Director and Senior Equity Research Analyst at KeyBanc Capital Markets Inc.]

Hey, good morning, guys.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Hey, Jeff.

[Jeff Hammond, Managing Director and Senior Equity Research Analyst at KeyBanc Capital Markets Inc.]

Hey, just can you quantify maybe how much inventory you think came out of the channel in 1Q and what you think that number looks like in 2Q? If I could just sneak in a commercial one, just what prevents you from kind of raising the bar there, given the strong start? Thanks.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, no, thanks, Jeff. All good questions. You know, I think on the field inventory, you know, the way we described it was a meaningful decrease in, you know, the raw inventory numbers there. I think it was the big thing to look at, and we've mentioned this before, the days of field inventory, right? We mentioned, I think in the third quarter of last year, we were about double where we thought we needed to be, right? That was kind of. We made progress down to about 1.7x when we got to, you know, kind of the Q4 call here in February. We think that range is somewhere in the 1.4x to 1.5x kind of quote-unquote, normal, right?

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

There's some debate about what normal means, we're looking at our history, you know, in the categories and we're making good progress. It's all, you know, in line. We also said it wasn't gonna be a linear pull-down here because of the seasonality, primarily the way Q1 works, just installs being normally seasonally lower in Q1, you know, we just knew that it wasn't going to, you know, kind of linearly drop from 1.7x to 1.35x to 1x, you know, at the end of Q2. We feel like we're progressing right where we wanna be. Again, we're buoyed by the fact that we see, you know, the end market demand remaining very robust.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We feel like this is gonna be, you know, we're gonna get to where we need to get to there, down the line. Now, I would just say the reason, you know, you kind of point out why didn't, why not take up, you know, kind of the guidance based on the outperformance in Q1. The outperformance primarily came from C&I, right? Our C&I business is crushing it, which is awesome, especially internationally. Pramac team, you know, we were able to acquire. Now we own 100% of that business, which is awesome. And they've been a significant part of our global expansion here as a company over the last seven years.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

That said, you know, one of the big kind of drivers, one of the big verticals in there that we've always talked about is our telecom business. We are seeing some, you know, some lumpiness in kind of the back half of the year relative to some of our channel partners there, right? We serve all the major wireless telecom companies as well as the co-locators in the marketplace. A couple of those accounts for us, we've delivered a lot of product and they've got to get that product installed now. So they, you know, maybe pulled some of that in, is what it maybe looks like.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

All indications as we talk to them about their CapEx spending and kind of what they need to do to harden their networks going forward, as they think about the next generation technology or fifth generation 5G technologies, they're all, you know. This is a secular cycle right now for telecom in terms of CapEx spending and building out networks. We think it's just, you know, kind of just the lumpiness that we see from time to time. That's really why we didn't take up the guide in the back half. It's really related to that. That's kind of the simple answer. There's some moving pieces underneath that, but that's really it.

[Operator]

Thank you. One moment, please, for our next question. Our next question will come from Christopher Glynn of Oppenheimer. Your line is open.

[Christopher Glynn, Senior Analyst at Oppenheimer]

Thank you. Good morning, guys. Hey, wanted to ask about the you mentioned the home consultations for HSB were up significantly in almost all the states. I wanted you to dive into that a little bit and then also, clarify the expectation for residential growth in the second half. Does that explicitly include growth or in 3Q or if not, are you biased in that respect to see at least a bit of top line positive from resi in 3Q?

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, thanks, Chris. Maybe just I'll address that first. Yes, we are seeing a return to growth starting in the third quarter. That is the expectation and the way we've built the guidance around residential. More specifically to the commentary about home consultations being very broad-based, right? Almost all states. I think what was really encouraging again, this is what I think is different from the kind of pre-pandemic period to today. As you may recall, you know, we mentioned that just consultations in general up dramatically from that pre-pandemic period, you know, almost really more than 4x off of that base.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I think when you step back and you look at that kind of pre-pandemic to today, it is the broad-based nature of that growth that's really encouraging for us and I think speaks to just again, I can't stress enough just, you know, where we're at in this journey on, you know, this is a category of product, home standby generators, still less than 6% penetrated single-family U.S. houses greater than $150,000 in value. Every 1% of penetration is a $3 billion market opportunity, and we have, you know, 75% share of the market.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You know, when we think about the opportunity ahead of us and we look at the growth that we're experiencing in states, I'll just give you a couple of examples, and I'll throw Canada in there as well, right? We can talk territories and provinces as well as states because Canada's been just on fire for us. They have also been experiencing much as we have here in the U.S., you know, an increasing frequency of outages and the duration of those outages. I think what's different today from the outages four years ago and what drove people to the category four years ago is what's causing those outages. Weather is still kind of largely, you know, the cause behind most outages.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I think what we're also seeing and what homeowners and business owners are seeing is that the grid is struggling to deliver, right? What I mean by that is as we race to electrify everything, heating, cooking, cooling, transportation, right? You're seeing demand or you're seeing supply be outstripped by demand. It happens very rapidly. This was on full display in the Carolinas over Christmas, over the Christmas holiday, right? The utility companies in the Carolinas were struggling to keep up with the demand surge because it got so cold that everybody turned on their heat pumps and their electric baseboard heaters, which created an enormous amount of demand on the system that was unplanned, and that system had. It struggled to keep up with it.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You know, they had to resort to rolling brownouts, rolling blackouts in order to keep the system up. That's the kind of difference, I think, between today and four years ago that we look at and we see as being a, you know, I think a basic part of the story going forward. I just think, you know, when you talk about the states where we're seeing the most growth, right? Let's just step back. Our top five states from a penetration standpoint are also our top five growth states in terms of the penetration rate accelerating.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Highest growth rates. like, it's not like you get to a point of kind of, you know, where you saturated the market in these states. They're continuing to grow. In fact, I would say you might question whether maybe there's a tipping point that a state gets to, you know, is it 10% penetrated and then it accelerates? We definitely have seen evidence over the last several years that if you just look at the top five states from a pen rate standpoint, they are also almost always the top five growth states over time. it's very interesting to see how this continues to almost the penetration rate continue to accelerate as awareness for the category deepens and as these challenges around grid reliability continue to become more apparent to homeowners and businesses.

[Operator]

Thank you. One moment please for our next question. Our next question will come from Mark Strouse of J.P. Morgan. Your line is open.

[Mark Strouse, Executive Director and Senior Equity Analyst at J.P. Morgan]

Yes, good morning. Thank you very much for taking our questions. York, I wanted to go back to your comments on pricing, the pricing action, kind of benefiting gross margin. How broad-based of a comment is that? Is that resi and C&I? Then kind of what does the guidance imply regarding future price action this year?

[York Ragan, CFO at Generac]

It's at least for the first quarter, it applied for the most across the board. On the resi side, in particular home standby side, the last price increase that kicked in was June 1st of 2022. We're still in the process of annualizing that price increase on the, on the, on the home standby side. On the C&I side, there were a number of price increases that came through here in the beginning of 2023. We had them in 2022, but there was another round in 2023 that should continue on. I'd say more of a price impact in the first half as we haven't annualized the home standby side yet, but still yet some benefit in the back half on the C&I side.

[Operator]

Thank you. One moment please for our next question. Our next question will come from the line of Brian Drab of William Blair. Your line is open.

[Analyst at William Blair]

Hey, good morning. This is Tyler on for Brian. Thanks for taking my question.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Hey, Tyler.

[Analyst at William Blair]

I just wanna kind of transition to the clean energy products and what are you doing there to improve the distribution capabilities? To follow up with that, the $300 million-$350 million guide for the full year in resi clean energy. Can you kind of give some direction to each of the products like ecobee, PWRcell, and Grid Services and what their potential is for the full year? Thank you.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah. Thanks, Tyler. Yeah, so we're working very hard to rebuild, you know, not only the distribution obviously to replace the loss of that customer in the third quarter last year, but also confidence, right, in the marketplace. I mean, we stumbled with execution, with this, you know, one of the companies we acquired that had a component that, you know, we've struggled with the overall longevity of that component, and we're going through that upgrade campaign, the SnapRS upgrade campaign that we talked about at length, and that we took the charge for last, you know, last 3Q. Making good progress there, by the way.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I would tell you that we're getting high marks from the distribution partners that we're involved with on that campaign in terms of, you know, standing behind the product, taking care of the issues. You know, they've seen different OEMs deal with different issues over the course of, you know, kind of the solar market's early days to today, right? Like, I mean, a lot of OEMs I think have struggled. It's a challenging environment, rooftop-mounted electronics that have a long warranty period, and, you know, duty cycle that, you know, they're constantly running, you know, or for the most part. They run a lot. It's something that, you know, we learned a lot doing, and I think we're making really good strides rebuilding that.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We've got some, I think some pretty good green shoots that we're excited about there, probably more towards the back half of the year. There was a little bit of field inventory to work through there as well. As you can imagine with kind of the abrupt closure of that distribution partner in Q3 last year and kind of the, you know, the way the market kind of ground to a halt for us, we had to work through some of the inventory that was in the field there too. It wasn't nearly to the same degree as what we had with our home standby business, but we're working through that.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

That market also has had some, you know, some, I would say some jogs left and right around some of the new rules around NEM 3.0 and, you know, waiting for the IRA to be finalized. What does that really mean in terms of, you know, what's available for tax credits and things? As that gets clearer to homeowners and to distribution partners going forward, we see that market, you know, continuing to recover throughout the year. We're not gonna give specific breakdowns on the different pieces, but we can tell you that obviously ecobee, which we called out specifically in the prepared remarks today, has been doing really well. I mean, they are their smart thermostat product line is doing great.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

They're gonna be launching a smart doorbell cam alongside of that here in the second half of the year, which we're really excited about. Already being very well received by some of the channel partners that today sell our smart thermostats. They're very excited to carry these products as well. We've had a couple of nice wins there that we'll have some placement where we'll do some load-ins in the second half of the year. We're talking about, you know, that's a part of the story here in the $300 million-$350 million guide. Then also Grid Services. You know, off of a low base, but a nice, you know, a nice rate of growth here in Q1, and we continue to see that growing.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Still, again, small base, but there's a lot of you know, a lot of discussion with a lot of utilities and grid operators about the importance of needing, you know, needing these types of digital solutions to help them manage these potential grid shortfalls that I talked about previously. They see, you know, something like our Concerto platform that is at the heart of our Grid Services team. They see that Concerto platform as a way to, you know, just another tool in the toolkit to deal with potential shortfalls in supply when you see spikes in demand. More to come on all that, but I think we've bottomed, I guess is the message here. We feel like we're gonna come off the bottom in Q1.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Green shoots ahead for those businesses and good momentum in things like ecobee and the Grid Services team.

[Operator]

Thank you. 1 moment for our next question. Our next question will come from Jerry Revich of Goldman Sachs. Your line is open.

[Jerry Revich, Managing Director and Senior Equity Research Analyst at Goldman Sachs]

Yes. Hi, good morning, everyone.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Hey, Jerry.

[Jerry Revich, Managing Director and Senior Equity Research Analyst at Goldman Sachs]

I'm wondering if you could just talk about the fourth quarter margin outlook and if maybe just outline your expectations for year-over-year cost declines that are embedded in the guidance within the context of pricing as well, as you folks go back towards doing, you know, some level of promotions versus not doing them a year ago. Just wondering how much does that pressure price realization and if we could just bridge how much of the year-over-year margin improvement in 4Q we expect from price cost. That'd be helpful, if you don't mind.

[York Ragan, CFO at Generac]

Yeah. This is Jerry, this is York. I know, you know, we're contemplating that EBITDA margins get back to those, you know, low 20% range that we're used to, by Q4, as we talked about. You know, specifically we talked about at least first half, second half, that EBITDA margins should improve about 800 basis points sequentially first half, second half with, I'd say roughly, let's say 3% of that 800, 300 of the 800 basis points just as a function of mix in that home standby as we normalize inventory and

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Seasonally increased first half, second half. home standby mix is gonna improve dramatically relative to the first quarter and first half. You get about 3% improvement in margin just right there, first half, second half. We are anticipating about 2% improvement in just input costs with commodities, logistics, continued improvement there. We've got a number of cost reductions we're working on, plant efficiency, better absorption. Again, sequentially, first half, second half, that'll improve about 2% of that 800 first half, second half improvement. The remaining 3% is really just operating leverage on the much higher sales volumes, on our leveraging that OpEx infrastructure. That's really the bridge, at least sequentially.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Year-over-year, like I said, they'll probably be modest. Most of the pricing will have lapsed on a year-over-year basis by Q4. You know, a lot of that is just more cost improvement and mix improvement year-over-year will drive that as well as. That will drive most of the year-over-year improvement from Q4 last year to Q4 this year.

[Operator]

Thank you. One moment please for our next question. Our next question will come from Joseph Osha of Guggenheim. Your line is open.

[Joseph Osha, Managing Director and Senior Research Analyst at Guggenheim Securities]

Hey, thanks very much. I wanted to return to the residential clean energy business a little bit. Obviously, as you go through this reset, you know, one of the questions I think that's come up is around the residential home architecture and the fact that you're advancing sort of two parallel inverter architectures at the same time, which drives a lot of complexity in the other parts of the system. I'm wondering if you're able to maybe give us any clarity today or when we might have some clarity in terms of, you know, how you intend to move forward with those multiple architectures. Thank you.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, Joe, it's a great question. We've talked a little bit about this, maybe not even, maybe not publicly, but maybe one-on-one with you in particular, because I know you've been focused on this space, quite a bit, which is great. You know, I think we've got a brand new team that's running that business, and we've bought a lot of, you know, technology and platform, over the last four years. You know, I think the viewpoint on how best to deploy that technology, the first order of kind of focus, if you will, is integrating as much of it as we can, right? Like, I think that is we always knew there was a heavy lift coming there with all of the companies that we've acquired.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Some of them startups, some of them more, you know, more at a scale level like ecobee, and trying to figure out, you know, where can we add the most value, right? I think we're a little bit agnostic about which if you're speaking strictly about inverter technologies, which inverter technology is going to quote unquote "win," right? I mean, I don't know that we see this as a VHS Beta, Betamax kind of fight as much as we just see it as, you know, two different paths to achieve a similar outcome, right? There's just different technologies at different, you know, are available.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I do think that it's, you know, your point about, you know, having, you know, if I can just, you know, kind of paraphrase it, too much ground, that might, you know, Is that really the right way to go? Is that the most efficient path in terms of, you know, how much calorie burn we use to support two different architectures? I think over time, I think we'll become, you know, it'll become clearer which architectures, or which architecture may be the best for us. This is as we go through and we start thinking about, as we have been working on our next generation storage products.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

you know, you have to be cognizant, though, that there's a huge market out there where we wanna be able to add storage to existing homes that already invested in solar. Those homes may have, you know, they could be DC-coupled, they could be AC-coupled in terms of their architecture from an inverter standpoint. How do we put that, you know, how do we make sure that we keep a product to market that can serve the entire existing solar market? you know, we're looking at that. We know that we need to be in the market, or we need to have a product that keeps us in the market for solar only, right?

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

If we just focus on solar plus storage, that's gonna limit too limiting for us, we believe. Today, you know, attachment rates are 15%-20%. They're growing, which is great, but that still means there's a, you know, there's a high percentage of new solar installs that don't have storage being installed. We just wanna participate in that market. Finding a pathway that gets us there and gets us there most economically and where we can add the most value is really important. More to come on that. We do have an investor day that we've got scheduled here for September. I think, you know, we'll be prepared to discuss that in more detail in September.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Know that the team is continuing to look at that and, you know, figure out just exactly strategically what's gonna make the most sense for us long term.

[Operator]

Thank you. One moment please for our next question. Our next question will come from Kashy Harrison of Piper Sandler. Your line is open.

[Kashy Harrison, Senior Research Analyst at Piper Sandler]

Good morning, thanks for taking the question.

[Kashy Harrison, Senior Research Analyst at Piper Sandler]

You know, there's a lot of uncertainty in the market from a banking and financing perspective. Just curious if you could give us a sense of how the uncertain financing environment is impacting operations for your dealer and channel partners. Thank you.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

That's a great question. you know, we obviously, you know, you would think that they might be impacted by that, but largely they're not. They pay, they pay us by credit card a lot, a lot of our dealers are, you know, they like the points that they accumulate on their American Express and their, and their different card programs. We tend to see credit card payments, being, you know, kind of one big, big path to paying us. They also use our floor plan financing program very aggressively. That's been a program that has been a very successful program for us. It allows the dealer to kind of de-risk their ability to bring product in. We wanna have them have some inventory level.

[York Ragan, CFO at Generac]

We help subsidize the cost of that.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We help subsidize the cost of that. The first 180 days.

[York Ragan, CFO at Generac]

The burden of that cost isn't on them.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Exactly. They don't bear that cost. It's, it's really our cost. For the first 180 days, they get free floor plan financing. We kind of de-risk that for them. In terms of like their overall direct exposure, we haven't heard much in the way of them, you know, seeing a, you know, any kind of compression. Theirs is more of a project, you know, based business and where they're probably gonna see, you know, more challenges is if housing were to slow down, right? That's a, you know, that's a real risk out there, of course, as we've talked. In terms of like, you know, their project flow, because they're paid kind of as they go, right, on a progress basis.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You know, if that, if that kind of progress flow or that project flow were to dry up, that's probably where they would feel more pain. We haven't heard any or seen any evidence directly around that.

[York Ragan, CFO at Generac]

There's a lot more time to install generators.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

That is our view.

[Operator]

Thank you. One moment please for our next question. Our next question will come from George Gianarikas of Canaccord Genuity. Your line is open.

[George Gianarikas, Managing Director and Senior Analyst – Sustainability Research at Canaccord Genuity]

Hi, good morning, and thanks for taking my question. Believe it or not, I've actually had a power outage during this call, and I'm not a Generac customer yet, so I will be signing up maybe.

[York Ragan, CFO at Generac]

You need a generator.

[George Gianarikas, Managing Director and Senior Analyst – Sustainability Research at Canaccord Genuity]

Exactly. My question actually, just to jump on the previous one with regards to the spasms that we're seeing in financial markets, how does that impact your C&I business? How much of it is project related that we may see some sort of impact if this continues on projects, you know, related to renewables? Thank you.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, that's a great question. You know, you want to look at non-residential construction spending is a, you know, is an interesting indicator for us. I would tell you that, you know, that business tends to be late cycle, right? We typically see our res business is more of an early cycle business in terms of how it reacts to economic cycles, even though as we've mentioned here today, both prepared remarks and on the Q&A, it's probably less sensitive because as power outages happen, you know, homeowners, they react, right? It's a more emotional category. In the C&I side, I think that as non-res construction may slow down in the future and that category is late cycle, you could see that break down. You have to think about the mega trends.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

If you step back for a second. Telecom has one really major important vertical for us there. As I said in the prepared remarks and in some of the Q&A, very much in a secular upcycle market here in terms of CapEx spending for the telcos. That's a really important vertical for us. The other one is, I think just the increasing penetration rate of backup power, much the same as what's been occurring in residential. Businesses, just like yourself, they're struggling with outages, right? Like they're having outages happen more frequently. It's interrupting their, you know, their revenue streams. It's causing, you know, spoilage of inventory or destruction of processes, you know, when things are in process if you're a manufacturer in particular.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We're seeing backup power being added to businesses that in the past hadn't thought about it as part of their strategy around resiliency, right? Or a lot of businesses refer to it as disaster recovery strategies, right? Their, their DR strategies didn't include backup power, you know, or a generator. We're now seeing backup power be added to that. We're also seeing increasing codes and standards that are driving generators as a requirement. We saw this in California with the requirement for 48 hours of backup, in the telecommunication sites.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We also are seeing certain states adopt what Florida adopted several years ago in the elderly care spaces and the healthcare spaces, a requirement that those facilities, those types of facilities have a minimum of 48 hours of backup power. Those are new codes and standards. You're seeing kind of maybe some of the softness in a non-residential construction spend in the future. I think it's gonna be potentially more than offset by the increasing need for resiliency and, you know, some of these mega trends, as we refer to them, or these secular trends that you're seeing in telecom and in infrastructure spending for that matter.

[York Ragan, CFO at Generac]

On the renewable side, we're not necessarily focused on utility scale or front of the meter projects, so any financing breakdowns with those projects wouldn't necessarily impact us.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Good point.

[York Ragan, CFO at Generac]

Yeah.

[Operator]

Thank you. One moment for our next question. Our next question will come from Donovan Schafer of Northland Capital Markets. Your line is open.

[Donovan Schafer, Managing Director and Senior Analyst at Northland Capital Markets]

Hey, guys. Thanks for taking the questions. I had this. Yeah, hi. I had this thesis going into, you know, these results that I was thinking, again, following all the outage events with the geographic diversification of them, you know, hitting East Coast, West Coast, Canada, you know, even Gulf Coast, that could help drive down channel inventory, like, actually faster than you expected. Kinda the logic was maybe there'd be a pocket here or there where the labor, you know, the installation bottleneck would be weaker, and it's kinda like more rolls of the dice, if you will. Like, probabilistically, you get more rolls, these different geographies you might find one with the right characteristics.

[Donovan Schafer, Managing Director and Senior Analyst at Northland Capital Markets]

You know, you were pretty clear in the call that the inventory drawdown was in line with your expectations, also clear that, you know, yes, in fact, based on your analysis, outage activity in aggregate was well above the historical average. I'm figuring the disconnect there probably comes down to the installation bottleneck, and that it is perhaps more uniform than I was thinking. If you could just kinda, you know, like if you have the above average activity in the first quarter, you know, is it that continuing labor bottleneck that doesn't lead you to, you know, having more optimistic outlook for home standby backup generators, you know, going into the second, third, you know, for basically the remainder of the year?

[Donovan Schafer, Managing Director and Senior Analyst at Northland Capital Markets]

If you get that, since you're already assuming, you know, baseline average, kinda your typical outlook, then if we already have some of this, you know, there's not really an end in sight on the installation restriction or, you know, just kinda what's going on there? Just because these are geographically diverse, it'd be nice to just get an update on how they're unfolding because you probably have a clearer signal, if you will, from your data. You know, we've got a cluster of events. There's Hurricane Ian, you know, the East Coast ice storms in Christmas you talked about, and, you know, you gave some interesting commentary there, the unique nature of it, the Midwest storms or the Quebec outages. How are those unfolding?

[Donovan Schafer, Managing Director and Senior Analyst at Northland Capital Markets]

You know, have you seen the demand surge from Hurricane Ian at this point, and the installations are happening? I mean, that was a long time ago at this point, so just kinda fleshing out that.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah. Thanks, Donovan. You know, I would say your thesis is correct, but I think what you probably aren't appreciating is that there's a time sense there that, you know, from when we get a sales lead to when it becomes a sale to when it gets in, you know, installed, there's permitting involved. And again, we've said anywhere between 90, 120 days, and that's down from what it used to be, mainly because, you know, longer lead times and the permitting processes were elevated in some markets, you know, with COVID kind of driving that elevation or that elongated kind of permitting process. It's shorter today than it was, say, maybe a couple years ago, where it was out as high as 180 days, you know, or longer in some cases.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

You really gotta let those sales leads, right? It's a sales funnel. They go in at the top of the funnel, and then there's a conversion process, and that conversion process takes some time. We would anticipate that, you know, kind of as we exit kinda Q2 and get into the second half of the year, that's gonna definitely start reading through, and that's what gives us the confidence around, you know, the kinda the second half guide that we're talking about here in spite of maybe the weaker backdrop economically, you know, overall. We feel really good about that. In terms of installation bandwidth, you know, I would just say that Q1's always a tough install quarter.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

It's always our lowest because winter weather sets in, and you just can't do those installs in, you know, Northeast and the upper Midwest in particular. What we also saw this year was in California, up, you know, in Northern Cal, even parts of Southern Cal, the weather was just so aggressive that, you know, just the, you know, installers could not get out and get the product on the ground. You know, we saw those headwinds, which actually created tailwinds for us in the sales consultations and sales leads, created some headwinds for us on the installation side. We all indications are we're making really good progress on installation bandwidth. That is gonna continue to expand. It's expanded every year, by the way. Every year we've been in this category, it's expanded.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We don't have any reason to believe that we've kinda topped out there. We've, as we've said last year, you know, kinda after realizing that was a constraint for the first time ever for us, we really kinda refocused our efforts around adding new distribution partners, looking for ways to make them more efficient, improving our, improving our product, right? Making it easier to install, helping them hire the talent they need. We stood up something we call our Dealer Talent Network, which is now in, you know, full force, and we're helping dealers hire installation, you know, crews that, you know, One of the reasons they told us they couldn't expand installation bandwidth last year because they couldn't find people. I said, "Okay, let's figure out how we solve that together," right?

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

When we have the kinda scale we have with 8,600 channel partners or 8,600 dealer partners, you know, we can put a lot of effort towards those things, and they can have, you know, kind of meaningful outcomes. I think we're making all the right things happen, and I think what your thesis maybe just didn't take into consideration is the timeline, around, you know, kinda letting those sales leads mature into kind of installation. That's coming, and we expect to see that, you know, kind of as we exit Q2 and enter the second half of the year.

[Operator]

Thank you. One moment please for our next question. Our next question will come from Praneeth Satish of Wells Fargo. Your line is open.

[Praneeth Satish, Senior Equity Analyst at Wells Fargo]

I know you've talked about ecobee being this Single Pane of Glass, but I guess it's somewhat limited in terms of what it can actually display. So I'm wondering with the smart doorbell that you're launching later this year and HSB being integrated, is there a thought of maybe upgrading the display and processing capabilities of ecobee and having it really compete in the smart home with Amazon and Google and the like?

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, absolutely. Great question. One of the great things we love about ecobee is the display is fantastic in that thing. In fact, with the doorbell cam, I have one in my house on a beta trial right now. If somebody pushes your doorbell, if you're anywhere near your ecobee thermostat, and you can have that thermostat anywhere in your house, you can have multiple thermostats, it actually displays the doorbell camera on the thermostat. It's, it's cool. It's cool as hell, really. I mean, I gotta be honest. I mean, it's like it is one of the more cool features of the ecobee device.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

It's one of the reasons why I think this is a really key point that and I'll make it since you gave me the opportunity to do that. We wanna use it as the central hub for energy in the home, right? We wanna use it as I mean, we're gonna use it obviously for the doorbell cam, but the ability to, as we just did, we integrated-- If you have a Generac generator in your home and you have an ecobee thermostat, your ecobee thermostat will tell you if your generator it'll show you on the screen, on the display, it'll tell you any fault messages you may have, it'll tell you when it's running in exercise mode, it'll tell you when it's running during a power outage. It'll show you the status of that generator.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We're gonna be integrating our Tank Utility, which is our LP tank monitoring, device into that next. Then we're gonna look at our water heater disconnect switches and integrate those next. Other energy devices, like our storage device, also on the docket to be integrated into the ecobee thermostat. Our premise here has been that, you know, people looked at us and said, "Well, why'd you buy ecobee back in December of--" What, what year was it? 2021.

[York Ragan, CFO at Generac]

2021.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

2021. "Are you going into HVAC, thermostats?" No. We need a hub in the home, right? Only less than 6% of homes have a home standby generator, and even smaller percentage have storage, solar and storage. You have and every home has a thermostat. The opportunity, just the raw opportunity for us to enter the home with a device that's, you know, low cost and it has a tremendous amount of power inside of it. In fact, Stuart Lombard, who's the principal and the founder of that company, would tell you that effectively that's like your iPhone mounted on the wall in terms of the display quality, in terms of the processing power, the memory. They're fantastic too.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

If you've used that product and you've used the app that is with the product, you know, the user experience is tremendous. You know, their user interface is intuitive, it's easy to use, and it's smart, right. Like the sensors understand where you are in the home. They can, you know, react in terms of, you know, your presence in the home, their ability to sense your presence, their ability to save you energy, is well documented, you know, by installing one of these thermostats. We just really like the product, and we like the user experience, and we think that having it be the central part of our Single Pane of Glass strategy is incredibly important going forward.

[Operator]

Thank you. One moment for our next question. The next question will come from Jordan Levy of Truist. Your line is open.

[Jordan Levy, Equity Research Analyst at Truist Securities]

Morning, all, thanks for holding out here. Just a quick one for me on the M&A side. Just wanted to get a sense of after closing some of these recent deals, what segments your appetite might be directed toward as we move through the year and how you view the current opportunity landscape for M&A.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, Jordan, thanks. Thank you for hanging out. You know, the call's been long, but glad to be able to take the question. You know, we've been very active on the M&A front, over the last decade and acquired, you know, 30+ companies here now in total, as we've really grown, not only, you know, grown our geographic presence through those acquisitions, but our presence into adjacent spaces and then also, you know, as we've gone through, and as we think about the evolution into an energy technology company, going forward. You know, it's been very rewarding. We've learned a lot. Not all the deals have worked. Some have worked better than others.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I would tell you that we find ourselves in a much different position today than, you know, when we were only growing organically, right? We had never done an acquisition prior to our first one in 2010. As far as what we're thinking about in the future for acquisitions, we're still gonna be active in the space. You've seen us do, you know, a couple here, a little bit more bolt-on in nature, you know, adding some pieces like the Rolling Energy Resources acquisition. The investment we made there was really around, you know, trying to add to enhance the Concerto platform, right, around EV management, EV charging management. The REFU Storage Systems acquisition that we did over in Germany was about C&I energy storage on a stationary basis.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We had done Off Grid Energy last year, or year before, summer before, and that was over in the U.K. Gave us, you know, great product portfolio to go after really primarily the rental channel with those types of products. We knew that the C&I stationary market is a market that we've got to also go after. So REFUstor was a way for us to enter that market. We're gonna continue to look at, I think, you know, as the energy technology space continues to evolve, and in particular, there are a couple of notable areas where I think we still have, you know, I don't wanna say gaps as much as I say opportunities to accelerate our entry. EV charging, right?

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We're gonna, you know, get to market with an EV charger here later this year on the residential side. It's, you know, honestly, it's a private label effort. We're partnering with somebody. It'll be unique to Generac, but we believe an organic effort there longer term is what we need. You know, maybe something in that space. Valuations have just been really high and remain high in that space, so we've gone after it a little bit differently. Should that picture change, we could become active there. On the C&I side, maybe anything internationally, you think about, you know, you know, some of the things that we've done on the residential energy technology side as well as the C&I energy technology side.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

If we were to find additional pieces that might fit internationally on the residential side, that's an area. Like, we don't really have an energy storage product for anything outside of North America at this point. If there's a way for us to enter the markets in Europe or other markets through an acquisition, that might be something to look at. Then also just looking at Acquire, we've done a couple of, you know, where we've acquired a couple of development companies to help us with accelerate our Acquire environment. You know, obviously maybe the picture has changed on the tech employment base here with some of the bigger firms pulling back, maybe that's not gonna be as challenging to hire people as it had been in the last couple of years.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

We, you know, we continue to look at the environment. Things, kinda come and go. Opportunities are put in front of us time and again, but we're gonna remain active on that front.

[Operator]

Thank you. One moment please for our next question. Our next question will come from Chandni Chellappa of Credit Suisse. Your line is open.

[Chandni Chellappa, Equity Research Analyst at Clean & Sustainable Energy]

Hey, good morning. Thank you so much for taking the question. Just stepping out of the quarterly cadence here. Within the residential clean energy space, we've seen a lot of company announcements around bidirectional chargers. How are you thinking about the effect of vehicle-to-home on home standby demand in the medium term, say three-five years? As you sort of alluded to in your prepared remarks, through a lot of acquisitions, you have many parts of the home energy puzzle in your clean energy business. Could you kindly contextualize your in-house and/or M&A-based EV charging ambitions beyond the Level 2 announcements that you made? Thank you.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Yeah, no, great question. Obviously we watch, you know, we're watching with great interest kind of the EV penetration rates. You know, fundamentally, I do think that, you know, EVs. Look, they're a large battery that for most people are gonna be, you know, you're gonna be charging at home, right? You're gonna have an EV charger in your garage or carport, and you're gonna wanna plug that vehicle in, of course, to charge it. As it's sitting there charging, I think that the ability to control the rate of charge, the time of charge, is gonna be really critical. Now, you can do both of those with a level two charger today. You know, in some level of integration with, you know, some home energy management type of system.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

bidirectional charging, of course, would indicate that you're gonna be able to use that battery for some other purpose, either to export power to the grid or perhaps use it for resiliency purposes. I do think that at least in the next, to use your term, the medium term, the three-five year window, we don't see much of an impact on, you know, the EV and bidirectional charging opportunity on home standby generators. I think it's much, much longer term as EV pen rates become more ubiquitous and perhaps as homes go from having a single EV to maybe two EVs. And the reason for that, in my view, is fairly simple. I don't think that homeowners are going to be willing to trade resiliency for mobility.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I just think flat out that you're going to want to have some level of, you know, stationary storage or perhaps backup power available at your home for outages. For long-duration outages in particular, a generator is going to be the way to solve that. In fact, what we're seeing and what we may see near term, and perhaps even long term, depending on how people view, you know, mobility and resiliency and how they feel about that, I think that generators actually could see some level of increased interest once you buy an EV. Because I think your mindset goes to, okay, if my power is out, right? First of all, bidirectional charging, by the way, is a, it's new technology. It is a somewhat unregulated space relative to the codes and standards around it.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

There's also a fairly large open question as to whether the OEMs, the auto OEMs, how much control will they give a third party with control of their, you know, basically their battery, right? In terms of what does that mean for the warranty of that battery in terms of the charge cycles, the discharge cycles, charge rates, discharge rates. That is a fairly open question at this point. I do think it'll get resolved over time. To that end, we're putting quite a bit of an effort towards EV charging beyond just the Level 2 charger. We've got some organic efforts internally here with design teams that are looking at the space to understand how do we wanna approach it beyond the Level 2.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

I think that the first thing, the first order of business for us is getting our own, Level 2 charging structure and infrastructure put together, and then integrating that deeply into home energy management, so that what we can do there is to help the homeowner manage the charging of that vehicle. That has benefit for not only the homeowner in terms of the cost of what it may take to charge that vehicle, but also in terms of the local utility or grid operator, because they are the ones who are gonna struggle the most. As people add EV charging capability to their homes, there's a pretty difficult upgrade cycle coming on the hard infrastructure, the lines, the poles, the transformers that serve those local neighborhoods where EV charging is being implemented.

[Aaron Jagdfeld, Chairman, President, and CEO at Generac]

Those are very heavy draw loads. I mean, that's a pretty significant energy draw at the home. In fact, in some cases can double the home's electrical use just by adding an EV charger. I think there's a lot to come on that. We're gonna unpack that a little bit more when we get to the IR day in September. Great question and an area of great interest for us going forward.

[Operator]

Thank you. That will end the Q&A session. I would now like to turn the conference back to Mike Harris for closing remarks.

[Mike Harris, SVP of Corporate Development and Investor Relations at Generac]

I wanna thank everyone for joining us this morning. We look forward to discussing our second quarter 2023 earnings results with you in early August. Thank you again and goodbye.

[Operator]

This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.

Participants

Executives

• Aaron Jagdfeld, Chairman, President, and CEO
• Mike Harris, SVP of Corporate Development and Investor Relations
• York Ragan, CFO

Analysts

• Chandni Chellappa, Equity Research Analyst at Clean & Sustainable Energy
• Christopher Glynn, Senior Analyst at Oppenheimer
• Donovan Schafer, Managing Director and Senior Analyst at Northland Capital Markets
• George Gianarikas, Managing Director and Senior Analyst – Sustainability Research at Canaccord Genuity
• Jeff Hammond, Managing Director and Senior Equity Research Analyst at KeyBanc Capital Markets Inc.
• Jerry Revich, Managing Director and Senior Equity Research Analyst at Goldman Sachs
• Jordan Levy, Equity Research Analyst at Truist Securities
• Joseph Osha, Managing Director and Senior Research Analyst at Guggenheim Securities
• Kashy Harrison, Senior Research Analyst at Piper Sandler
• Mark Strouse, Executive Director and Senior Equity Analyst at J.P. Morgan
• Michael Halloran, Associate Director of Research and Senior Research Analyst at Baird
• Praneeth Satish, Senior Equity Analyst at Wells Fargo
• Tommy Moll, Managing Director and Senior Equity Research Analyst at Stephens Inc.
• Analyst at William Blair