Good day, thank you for standing by, welcome to the 4th quarter full year 2022 Generac Holdings Inc. earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Harris, Senior VP Corporate Development and Investor Relations. Please go ahead. Good morning. Welcome to our 4th quarter and full year 2022 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 Ragen, Chief Financial Officer. We will begin our call today by commenting on forward-looking statements. Certain statements made during this presentation, as well as other information provided from time to time by Generac or its employees, may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements. Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we will make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our earnings release and SEC filings. I will now turn the call over to Aaron. Thanks, Mike. Good morning, everyone, thank you for joining us today. Our 4th quarter results reflect continued strong momentum in our commercial and industrial product categories during the quarter. Softer residential product sales resulted in consolidated net sales at the low end of our previous guidance range. Specifically, higher home standby field inventory levels continued to impact orders and shipments in the 4th quarter, and clean energy product shipments were lower as we worked to further improve the reliability of these products and expand our distribution capabilities. Year-over-year, overall net sales decreased 2% to $1.05 billion, and core sales declined 7% during the quarter. Residential product sales decreased 19% from the prior year due to the previously mentioned home standby and clean energy product headwinds. C&I product sales increased 27% on a year-over-year basis with robust core sales growth across all channels domestically and all regions internationally. Adjusted EBITDA margins declined during the quarter as the unfavorable effect of sales mix, reduced operating leverage, and the increase in recurring operating expenses from recent acquisitions were partially offset by favorable price cost dynamics. For the full year of 2022, Generac achieved another year of record top-line growth, with total net sales increasing 22% over 2021, which marked our third consecutive year of double-digit growth. While residential product shipments faced headwinds in the second half of 2022, the category still experienced strong year-over-year growth of approximately 19%. Sales of our C&I products have never been stronger as global shipments grew 26% over the prior year, resulting in $1.26 billion in annual sales. We exited 2022 with record backlog for these products, setting our expectations for another strong year in 2023. In addition to record net sales, our international segment achieved all-time highs in adjusted EBITDA and adjusted EBITDA margins for the year as we continue to benefit from increasing global demand for backup power and mobile products. Our strong liquidity position allowed us to opportunistically repurchase more than 2.7 million shares during the year. Before discussing 4th quarter results in more detail, I want to provide an update on the progress we made over the course of the year to advance our evolution into an energy technology solutions company and discuss the continued development of the powerful mega trends that are driving our business. Despite the softer second half of 2022 for our residential products, we continue to make important progress in building out our portfolio of energy technology-related solutions during the year. Importantly, we began assembling a significantly deeper and more experienced leadership team focused on improving and advancing our clean energy product and distribution capabilities while further integrating the multiple energy technology investments we've made in recent years. We also continue to develop and invest in numerous new technologies and capabilities, including taking a minority equity interest investment in WATT Fuel Cell, acquiring Blue Pillar, and launching our Single Pane of Glass initiative. Blue Pillar's capabilities provide us with the foundation for connecting our growing portfolio of C&I-focused energy technology solutions, while our Single Pane of Glass initiative is focused on developing the end-user interface or central hub of our smart home energy ecosystem and heavily leverages ecobee's platform development expertise. We also brought multiple new solutions to market during the year as we began shipping our second-generation load control device called PWRmanager, launched a line of Portable Power Stations, and announced new EV charging solutions for utilities and EV owners. Our Grid Services team also announced several additional project wins during 2022 and had a strong year across several key operating metrics. The mega trends that drive the long-term growth trajectory of our business became even more evident in 2022. Extreme weather and multiple high-profile outage events further highlighted the poor reliability of the U.S. power grid, while war and geopolitical instability in Europe forced consumers and businesses to evaluate the importance of energy security. The home as a sanctuary and aging-in-place trends that are helping drive demand for residential backup power solutions remain very compelling. A structural shift in consumer preferences and work habits in the U.S. in recent years has further increased sensitivity to power outages, with the% of individuals working from home tripling and home health referral volumes doubling since 2019. As the effects of climate change become increasingly evident, the policy backdrop for our energy technology solutions has never been more favorable. Most notably with the passage of the Inflation Reduction Act in 2022, providing additional conviction for us to maintain a long-term focus with our investments in energy technology. Increased federal infrastructure spending and the ongoing upgrade of global telecom networks help support our future growth expectations for our C&I products as well. The massive changes taking place with our nation's power grid are yet another mega trend that continues to strengthen as growing demand for electricity is met with less reliable supply. According to the North American Electric Reliability Corporation, or NERC, approximately 25% of Americans are at high risk of resource adequacy shortfalls during normal seasonal peak conditions in the 2023 to 2027 period due to the growing supply demand imbalances across our power grid. With the electrification of everything trends accelerating and the growing penetration of EVs, coupled with an increasingly higher mix of supply from intermittent renewable power generation sources, we believe this mega trend will drive a significant focus on the need for power resiliency for years to come. NERC's high-risk categorization comes before considering the notable increase in severe and volatile weather we've witnessed in recent years, which we believe only further magnifies the need for reliable, decentralized energy technology solutions. Discussing our 4th quarter results in more detail. Residential product sales declined at a double-digit rate as compared to the prior year, primarily driven by lower home standby shipments in the quarter resulting from higher field inventory levels. End market conditions continued to be strong during the quarter. Baseline power outage activity in the U.S. was above the long-term average, with Winter Storm Elliott and other larger localized outages providing yet another stark reminder of the fragility of our electrical infrastructure. The extreme temperatures over the holiday season created a surge in demand for power for residential heating and coincided with supply disruptions as the nation's largest grid operator saw nearly a quarter of its power plants fall offline, resulting in rolling blackouts. This event took place in an especially inconvenient and sensitive time for many households, further supporting the continued increase in consumer awareness of the growing need for backup power solutions. Home consultations or sales leads in the quarter remained strong, matching the record high for a 4th quarter period in the prior year. Additionally, home consultations for full year 2022 were more than three times 2019 levels. This strength has continued early in 2023, with home consultations growing again on a year-over-year basis and reaching record levels for the month of January following the holiday season outage activity. We remain focused on expanding our distribution network as we experience sequential growth in our residential dealer base and ended the quarter with more than 8,700 dealer partners, a net increase of approximately 200 dealers from the 3rd quarter. Activations, which are a proxy for installations, grew at a robust rate in the 4th quarter compared to the prior year, and also grew sequentially as a result of increased install bandwidth. In addition to this encouraging growth in activations and dealer count, we also experienced sequential improvement in close rates and dealer project lead times, although these two metrics are not yet back to normalized levels. The number of home standby generators and field inventory declined sequentially during the 4th quarter and are down more than 20% from peak levels, benefiting from reduced production rates and record activation levels in the quarter. Days of field inventory, which considers recent trends in activation rates, also declined sequentially during the 4th quarter. However, relative to historic seasonal patterns, days of field inventory are still well above normalized levels as of the end of 2022. We expect that field inventory levels will remain elevated through the first half of 2023, which will continue to weigh on orders and shipments of home standby generators during the 1st and 2nd quarters. Improving the installation bandwidth for home standby generators is a key initiative for the company in 2023. We are focused on adding more dealers, providing support for dealer recruiting, training to improve installation efficiency, and developing additional technical innovations to make it easier for contractors to install our products. Recent dealer count growth has been very encouraging as we added over 500 dealers in the second half of 2022. We also rolled out our Dealer Talent Network to help channel partners recruit qualified labor and are actively engaging with trade groups such as the Independent Electrical Contractors to further drive awareness for the home standby generator category among contractors. Initiatives to help dealers streamline the installation process are also progressing well, including the launch of a universal permitting package that allows dealers to pull the necessary project documentation for their specific location. We have further expanded our field training efforts and the sharing of installation best practices for dealers and non-dealer contractors. The combination of these actions is expected to result in meaningful improvement in activation rates as the year progresses. Consistent with the comments provided in our 3rd quarter earnings call in early November, we expect home standby sales to decline for the full year of 2023 due to significant weakness in first half shipments resulting from elevated levels of field inventory, with the 1st quarter expected to mark the trough for shipments during the current channel destocking process. We continue to anticipate more normalized field inventory levels in the second half of the year based on our current view of home consultations, activations, and our production rates, along with the assumption of power outage activity in line with the long-term baseline average. As we ramp home standby shipments sequentially into the second half of the year, we expect home standby sales to return to solid year-over-year growth in the 3rd and 4th quarters, even when assuming no major outage events. Favorable end market demand metrics, significant growth in our dealer counts, low nationwide penetration in the mid-single digits, and strengthening mega trends reinforce our confidence in the long-term growth trajectory for the home standby category and also support our near-term expectations for a return to growth once the home standby market reaches more normalized field inventory levels. I'd now like to provide some commentary on our residential energy technology products and solutions as sales were in line with the low end of our prior expectations during the 4th quarter, with continued softness in residential energy storage shipments offset by strong top-line performances from ecobee and Generac Grid Services. Shipments of our PWRcell energy storage systems were again negatively impacted by the loss of a large customer that ceased operations in the 3rd quarter and the overhang of the Snap RS quality-related concerns. We are committed to supporting the dealers that are participating in our Snap RS warranty coverage upgrade program, as well as ensuring that end customer systems are performing as intended. Channel partner response to these efforts has been favorable thus far, and we are working to build a larger and stronger network of installers and distributors, which remains a top priority for the company in 2023 as we position our residential clean energy product offering for long-term success. We are investing heavily on further improving the quality and reliability of our clean energy products and view the residential storage market as a key strategic opportunity for Generac. We're making good progress towards our next generation energy storage system, and we'll begin alpha testing of these products in the 2nd quarter of this year, with an anticipated launch to the market in 2024. I'd now like to provide a quick update on ecobee, which forms the core of our connected devices strategy within our residential energy ecosystem. ecobee sales continued to grow at a strong rate in the 4th quarter, despite aggressive promotional activity from competitors, which underscores the strong competitive positioning of ecobee's feature-rich solutions. In addition to their core smart thermostat product continuing to gain traction in the professional contractor channel, a number of larger utilities have been seeking out grid service partnerships with with ecobee, further validating our differentiated offering. We also recently announced the integration of home standby monitoring capabilities into the ecobee platform, which allows homeowners to monitor their home standby generator and propane tank fuel levels and receive alerts directly on the ecobee platform. This marks an important first step forward in our Single Pane of Glass initiative in developing the central user interface for our suite of residential products that will heavily leverage the ecobee platform and the development team. I also want to provide some commentary on our Grid Services team and their efforts as they closed out a strong year in 2022, with continued growth across key performance metrics, including connected megawatts, assets under management, number of customers, and gigawatt-hours of capacity delivered. The growing Grid Services sales pipeline is being driven by both new and existing customers, as well as a wide range of connectability hardware, including the Blue Pillar acquisition, which will now provide our C&I products with connectivity capabilities to allow previously stranded C&I assets to be made available to Grid Services programs. In addition, Grid Services programs can also provide incremental economic support to the residential solar plus storage market as higher financing costs impact traditional consumer loan-driven demand. Not only can these programs improve the economics for homeowners that own storage systems, but we are also seeing increased opportunities to deploy Grid Services programs utilizing utility and third-party owned systems. We believe our unique portfolio of hardware and software solutions remains a key competitive advantage within the Grid Services space. The long-term market opportunities for residential energy storage, power conversion, energy monitoring and management services, and Grid Services remains highly attractive and core to our strategic vision, and we will continue to target these markets and adjacent opportunities. To that end, we recently announced the launch of our new EV charger, which marks Generac's initial offering into this large and rapidly growing market. This product will be available later in 2023 through Generac's omni-channel distribution network, including our residential dealer network, leading home improvement and hardware retailers and electrical wholesalers. We're excited to incorporate this product into our smart home energy ecosystem while continuing to pursue future EV charging innovations and capabilities. EV charging will become an increasingly important part of the energy ecosystem of the home, and as a leader in residential power, this product is a natural extension of Generac's portfolio of energy technology solutions. Given these significant market opportunities, we continue to invest heavily in the people and processes involved in the development of these products and solutions, and this remains a key strategic area of focus for the company. We are encouraged by the progress of our new residential energy technology leadership team in integrating and improving the solutions we've acquired and developed in recent years. The investment level necessary to build a home energy technology foundation for growth will contribute to higher operating expenses as a percentage of sales for the company in 2023. We anticipate strong returns on these investments well into the future as we position Generac as a leader in the deployment and integration of hardware and software solutions for home energy ecosystems. As a result of these initiatives and investments, we expect the combination of residential energy technology products and services to deliver gross sales between $300 million and $350 million for the full year of 2023. We anticipate that these results will sequentially improve throughout the year, driven by strong growth from ecobee and Grid Services, alongside our expectations for continued improvement from our clean energy product and distribution efforts in the coming quarters. Switching gears, I now want to provide some commentary on a part of the business that has continued to outperform our expectations as our C&I products experienced an outstanding quarter globally as sales grew by 27% as compared to the prior year, benefiting from very strong demand and higher production levels resulting from capacity expansion initiatives. Growth in shipments for domestic C&I products in the 4th quarter was highlighted by strength across all channels, including national rental equipment, telecom, industrial distributors, and other strategic customers. We experienced continued strength in demand during the quarter as the backlog for our C&I products grew again sequentially and ended the year at record levels, giving us excellent visibility into continued growth for the category in 2023. Shipments of C&I stationary generators through our North American distributor channel grew significantly again in the 4th quarter, and order trends indicate growth will continue in 2023 as backlog in the channel also increased again on a sequential basis. Quoting activity and close rates remain elevated compared to the prior year levels, highlighting our sustained market share gains as well as the durability of overall demand trends for these products. Shipments to national telecom customers also increased at a robust rate during the 4th 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. Investment in telecom infrastructure remains one of the key mega trends that we expect to drive growth for our C&I products in the coming years. As global tower and network hub counts further expand and the increasingly critical nature of wireless communications requires backup power for resiliency. As the leading provider of backup power to the North American telecom market, we expect to benefit from this secular trend. We also experienced another quarter of tremendous growth with our international and independent rental equipment customers as they refresh and expand their fleets. We believe the demand environment for mobile products will remain robust in the quarters ahead, as evidenced by order growth outpacing shipment growth in the quarter and the mega trend around the critical need for infrastructure improvements continues to play out. Additionally, we're helping these customers advance their sustainability goals with solid demand for our newly introduced mobile energy storage systems and as we delivered the first containerized hydrogen fuel cell unit to a national rental customer through our recently announced distribution agreement with EODev. Strong customer interest for natural gas generators used in applications beyond traditional emergency standby projects also continued in the quarter as shipments of these products grew at an exceptional rate. Order rates also remained strong with our quarter end backlog for these products up substantially both year-over-year and sequentially. 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 innovative solutions. Internationally, robust momentum continued as shipments increased 22% year-over-year during the 4th quarter, with 28% core total sales growth when excluding the unfavorable impact of foreign currency. Core total sales growth was driven by strength across all regions, most notably in Europe and Latin America, with inter-segment sales again growing substantially in the quarter as our Generac Mexico facility continued to ramp production of telecom products for the North American market. International segment EBITDA margins also increased during the quarter, primarily due to improved operating leverage on the higher sales volumes. The European region has seen remarkably strong demand, most notably for C&I products and portable generators due to a heightened focus on energy independence and security. Power security concerns amid the war in Ukraine have remained, and we are providing backup generators to the region through our European sales branches. Although geopolitical and macroeconomic conditions in the region remain volatile, driving less certain long-term demand trends, end market awareness of the need for resiliency has undoubtedly increased across the continent. The subsequent effect of the war on Europe's energy complex has highlighted the need for reliable on-site power resources for homes and businesses around the globe. We also recently announced the acquisition of REFU Storage Systems, a German developer and supplier of battery storage hardware products, advanced software and platform services for the commercial and industrial market. This acquisition represents our initial entrance into the large and rapidly growing C&I stationary energy storage market for behind-the-meter applications, which we view as a natural extension of our long history in the C&I backup power generation market. Given the continued momentum in the international segment, along with strong demand fundamentals and existing backlog across domestic C&I channels, we expect net sales growth for our global C&I products to be in the mid to high single digit range for 2023. In closing this morning, we are encouraged by the initial progress in our action plans to address the near-term challenges that have impacted our results over the past two quarters. We believe we have a line of sight to normalization of home standby field inventories as we rightsize our production and continue to expand our installation bandwidth. We have significantly strengthened our residential energy technology leadership team over the last six months, they are driving an increased focus on quality and innovation while we further build out our product and distribution capabilities in this strategically important part of our business. Global interest in our C&I products and services has never been stronger and is well-positioned to continue growing in 2023. We remain confident in the long-term strategic growth themes within our business, including the still significant penetration opportunity for home standby generators and the rapidly developing market for energy storage. The previously discussed mega trends that support these growth themes have never been more evident. Our refined focus on execution through our portfolio of backup power and energy technology solutions has uniquely positioned us to create value in the transition to the next generation grid. I'm extremely confident in our team's ability to continue developing innovative products and services as we execute on our mission to lead the evolution to more resilient, efficient and sustainable energy solutions. I'll now turn the call over to York to provide further details on the 4th quarter as well as full year 2022 results and our outlook for 2023. York? Thanks, Aaron. Looking at 4th quarter 2022 results in more detail. Net sales decreased 2% to $1.05 billion during the 4th quarter of 2022, as compared to $1.07 billion in the prior year 4th quarter. The combination of contributions from acquisitions and the unfavorable impact from foreign currency had an approximate 5% favorable impact on revenue growth during the quarter. Net sales for the full year 2022 increased 22% to approximately $4.56 billion, an all-time record for the company. Briefly looking at consolidated net sales for the 4th quarter by product class. Residential product sales declined 19% to $575 million, as compared to $706 million in the prior year. A partial quarter of contribution from the ecobee acquisition and the slight unfavorable impact of foreign currency contributed approximately 4% of revenue growth for the quarter on a net basis. Lower shipments of home standby generators and weakness in PWRcell energy storage systems drove the decline in residential product core sales growth. Commercial and industrial product sales for the 4th quarter of 2022 increased 27% to $361 million, as compared to $284 million in the prior year quarter. Contributions from the Electronic Environments and Blue Pillar acquisitions were fully offset by the unfavorable impact of foreign currency during the quarter. The very strong core sales growth was broad-based across all regions internationally and all channels domestically, with particular strength in national rental equipment, telecom, industrial distributors, and other direct customers for beyond standby applications. Net sales for other products and services increased 46% to $113 million as compared to $77 million in the 4th quarter of 2021. Contributions from the Electronic Environments and ecobee acquisitions contributed approximately 34% of this growth given their additional service capabilities. Core sales growth for the category was 13% due to strong growth in our services offerings in certain parts of our business, both domestically and internationally, along with continued growth in aftermarket service parts and extended warranty revenue recognition. Gross profit margin was 32.7% compared to 34.0% in the prior year 4th quarter, as unfavorable sales mix had a meaningful negative impact during the quarter. This was partially offset by the realization of previously implemented pricing actions. Operating expenses increased $49 million or 26% as compared to the 4th quarter of 2021. This increase was primarily driven by higher recurring operating expenses from recent acquisitions and unfavorable adjustment for acquisition contingent consideration, certain legal and regulatory reserves, higher intangible amortization expense, and increased employee and marketing costs. These increases were partially offset by lower acquisition-related transaction costs in the current year quarter. Adjusted EBITDA before deducting for non-controlling interest, as defined in our earnings release, was $174 million or 16.6% of net sales in the 4th quarter as compared to $220 million or 20.7% of net sales in the prior year. For the full year of 2022, Adjusted EBITDA before deducting for non-controlling interest was $825 million or an 18.1% margin as compared to $861 million or 23.1% margin in the prior year. I will now briefly discuss financial results for our two reporting segments. Domestic segment total sales, including inter-segment sales, decreased 3% to $881 million in the quarter as compared to $909 million in the prior year, with the impact of acquisitions contributing approximately 7% revenue growth for the quarter. Adjusted EBITDA for the segment was $144 million, representing a 16.4% margin, as compared to $197 million in the prior year or 21.6% of total sales. The lower domestic EBITDA margin in the quarter was primarily due to unfavorable sales mix, partially offset by the realization of previously implemented pricing actions. The impact of acquisitions and continued energy technology operating expense investments for future growth negatively affected margins during the quarter. For the full year of 2022, domestic segment total sales increased 23% over the prior year to $3.93 billion. Adjusted EBITDA margins for the segment were 18.2% compared to 24.8% in the prior year full year. International segment total sales, including inter-segment sales, increased 22% to $219 million in the quarter as compared to $180 million in the prior year quarter. Core sales, which excludes the impact of acquisitions and currency, increased approximately 28% compared to the prior year. Adjusted EBITDA for the segment before deducting for non-controlling interest was $29.5 million or 13.5% of net sales as compared to $23.7 million or 13.1% of net sales in the prior year. This margin performance was driven primarily by improved operating leverage on the higher volumes. For the full year of 2022, international segment total sales increased 32% over the prior year to $791 million. Adjusted EBITDA margins for the segment before deducting for non-controlling interests were 13.8% of total sales during 2022, a significant 280 basis point increase compared to the 11% margin in the prior year. Switching back to our financial performance for the 4th quarter of 2022 on a consolidated basis. As disclosed in our earnings release, GAAP net income for the company in the quarter was $71 million as compared to $143 million in the 4th quarter of 2021. The current year net income includes pre-tax charges totaling approximately $21 million related to an unfavorable adjustment for acquisition contingent consideration and certain legal and regulatory reserves. In addition, interest expense increased approximately $10 million compared to the prior year due to higher borrowings and higher interest rates. GAAP income taxes during the current year 4th quarter were $13.6 million or an effective tax rate of 15.5% as compared to $20.6 million or an effective tax rate of 12.4% for the prior year. The increase in effective tax rate was due to certain favorable discrete items that were reflected in the prior year, which did not repeat in the current year quarter. Diluted net income per share for the company on a GAAP basis was $0.83 in the 4th quarter of 2022 compared to $2.04 in the prior year. Adjusted net income for the company, as defined in our earnings release, was $113 million in the current year quarter or $1.78 per share. This compares to adjusted net income of $160 million in the prior year or $2.51 per share. Cash flow from operations was $101 million as compared to $62 million in the prior year 4th quarter. Free cash flow, as defined in our earnings release, was $80 million as compared to $42 million in the same quarter last year. The improvement in free cash flow was primarily due to lower working capital investment in the current year quarter as we reduced our material receipts and production rates for home standby generators. This was partially offset by lower operating earnings. As of December 31, 2022, we had approximately $1.29 billion of liquidity, comprised of approximately $133 million of cash on hand and $1.16 billion of availability on our revolving credit facility. Total debt outstanding at the end of the quarter was $1.43 billion, resulting in a gross debt leverage ratio at the end of the 4th quarter of 1.8 times on an as-reported basis. During the 4th quarter, we repurchased 2.2 million shares of our common stock for $222 million or an average price of approximately $102 per share. There's approximately $278 million remaining on our current share repurchase authorization as of the end of 2022. I will now provide further comments on our new outlook for 2023. As disclosed in our press release this morning, we're initiating 2023 net sales guidance that is consistent with the high-level comments provided in our 3rd quarter earnings call on November 2. As Aaron previously discussed, shipments of residential products are expected to face significant headwinds in the first half of the year due to elevated field inventory levels for home standby generators and the continued build-out of our clean energy product and distribution capabilities. We expect the residential product category to return to year-over-year sales growth in the second half, resulting in a full year decline in the high teens range compared to prior year. We anticipate continued growth for C&I product sales across several channels domestically and internationally, resulting in expected C&I net sales growth in the mid to high single digit range for the full year, with higher growth rates anticipated in the first half of the year. As a result of these factors, we expect overall net sales for the full year to decrease between -6% to -10% as compared to the prior year, which includes approximately 1% of net favorable impact from acquisitions in foreign currency. Importantly, this guidance assumes a level of power outage activity during the year in line with the longer-term baseline average. As a result, and consistent with our historical approach, this outlook does not assume the benefit of a major power outage event during the year, such as a Category 3 or higher landed hurricane or major winter storm. As a result of this top-line outlook, we expect sales to be more weighted to the back half of the year for 2023, similar to pre-COVID periods which did not include substantial residential backlog, with overall net sales in the first half being approximately 44% weighted and sales in the second half being approximately 56% weighted. Specifically, with a return to normal seasonality and the destocking of home standby field inventory, we expect 1st quarter total sales to decline by approximately -25% to -26% from the prior year, with growth in C&I product sales more than offset by residential product headwinds. Looking at our gross margin expectations for the full year 2023 compared to 2022, we expect favorable price cost impacts driven by previously implemented pricing actions that have not yet fully annualized, certain cost reduction initiatives, and lower input costs to more than offset the negative impact of unfavorable sales mix resulting from lower home standby generator shipments. As a result, we expect gross margins for the full year to increase by approximately 150 basis points as compared to 2022. From a seasonality perspective, we expect 1st quarter gross margins to be the lowest during the year, due primarily to the outsized impact of unfavorable sales mix and lower overhead absorption on the lower home standby volumes. Specifically for the 1st quarter, we expect gross margins to be approximately 200 basis points below the 1st quarter of 2022. Sequential quarterly improvements in gross margins are expected as the year progresses due to improved sales mix from 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. As a result, gross margins are expected to progressively improve, with 4th quarter margins to be approximately 500 basis points higher than 4th quarter of 2022. In addition, we continue to focus heavily on supporting innovation, executing on strategic initiatives, and driving future revenue growth in new and existing markets. As a result of these continued investments, we expect operating expenses, excluding intangible amortization expense, as a percentage of net sales, to be nearly 20% for the full year of 2023, with operating leverage improving throughout the year. As a result of our gross margin and operating expense expectations, adjusted EBITDA margins before deducting for non-controlling interests are expected to be approximately 17%-18% for the full year compared to the 18.1% reported for the full year 2022. From a seasonality perspective, we expect adjusted EBITDA margins to improve significantly as we move throughout the year, primarily driven by the sequentially improving gross margins as previously discussed in detail, and to a lesser extent, improved leverage of operating expenses on the expected higher sales volumes in the second half of 2023. Specifically regarding the 1st quarter, adjusted EBITDA margins are expected to be the lowest for the year at approximately 10% and then improve sequentially throughout the year, returning to more normalized levels in the low 20% range in the 4th quarter. As a result, second half adjusted EBITDA margins are expected to be approximately 800 basis points higher than the first half margins. As is normal practice, we are also providing additional 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 between 24%-25% as compared to the 19.6% full year GAAP tax rate for 2022. This increase is driven primarily by expectations for lower share-based compensation deductions, increased mix of income in higher tax jurisdictions, and higher tax on foreign income in 2023 compared to 2022. Additionally, to arrive at appropriate estimates for adjusted net income and adjusted EPS, the related reconciling items should be forecasted net of tax using this GAAP tax rate as well. We expect interest expense to be approximately $90 million, assuming no additional term loan principal prepayments during the year and assuming elevated SOFR rates throughout 2023. Our capital expenditures are projected to be approximately 2.5%-3% of our forecasted net sales for the year, in line with historical levels. Depreciation expense is forecast to be approximately $56 million-$58 million in 2023, given our assumed CapEx guidance. GAAP intangible amortization expense in 2023 is expected to be approximately $100 million during the year. Stock compensation expense is expected to be between $40 million-$43 million for the year. 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. Specifically relating to the 1st quarter, we expect free cash flow to be negative, assuming a continued use of cash for working capital, with a sharp recovery in the 2nd quarter. For the full year, we expect free cash flow conversion to be strong at well over 100%, as recent trends of significant working capital builds are reversed. Our full-year weighted average diluted share count is 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. This concludes our prepared remarks. At this time, we'd like to open the call for questions. Thank you. Due to the high volume of questions, we will be taking one question at this time. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by. We'll compile the Q&A roster. Again, we ask that you limit yourself to one question. One moment for our first question. Our first question comes from Tommy Moll from Stephens. Your line is now open. Good morning, thanks for taking the question. Morning, Tommy. Morning. Aaron, I appreciated your comments and insight on the field inventory levels for home standby. I think what I heard you say was in terms of days on hand, it was down sequentially but well above normal. My related follow-on question is there any way you can frame quantitatively or qualitatively what normal looks like? To what extent do you need to continue to build out the dealer network in order to achieve that level in the back half of this year? Thank you. Yeah. Thanks, Tommy. It's obviously, you know, the field inventory destocking process that we're going through, you know, there's a lot of metrics there that we have at our fingertips, you know, in terms of how much inventory is in the field. We know activation rates. You can look at them, you know, as we do on a seasonal basis. The comments, as you indicated, you were spot on. You know, we said that from a days of field inventory standpoint, they improved sequentially from the 4th quarter, but still high. I think if you go back to our comments on the last call in November, we said we were about double. We thought field inventory levels were about double where they needed to be from a normal kind of quote, unquote, normal level. We're better than that today. You know, the raw numbers are we're about 20% off the peak in terms of just raw units in field inventory, home standby units, which is great. As that, you know, days of field inventory also coming down sequentially, the combination of those two things, you know, reducing production rates, you know, the activation rate was up nicely in the 4th quarter. We, you know, continue to see installation building out. All of those metrics are favorable and point to the destocking event that's going on. As our prepared remarks indicated, still high relative to where they need to be normally. It's not quite double. It's less than that. Maybe, I don't know, 1.6, 1.7 times still, you know, the, the level in terms of just the raw numbers as we look at them, but coming down nicely. In terms of the second part of the question, you know, it's kind of a multipart, multi-pronged approach, if you will. The biggest of which, as we've indicated, and I think you're latched onto as well, is that we just, you know, have to increase the raw dealer count. To that end, we added over 500 dealers on a net basis in the second half of the year, which is the strongest second half of a year we've ever had in terms of new dealer adds, at 8,700. We ended the year actually over 8,700 dealers, you know, progressing very nicely there in terms of broadening our reach. Also focused on training. I think one of the things we mentioned, you know, with the pandemic over the last several years, we had very aggressive training, you know, face-to-face training programs pre-pandemic. We had to scale those back during the pandemic. We just weren't able to do that. We're back to training now face-to-face with dealers, with contractors, and that is super helpful in terms of the engagement level with those partners. Another area is helping them find labor. One of the big things that we heard in the second half of last year was the, you know, the labor constraints that our dealers have and our contractor partners have, in, you know, in being able to expand their installation capacity is just headcount, just people. We created something we call the Dealer Talent Network, and we've rolled that out here early in 2023. We're getting good traction there in helping dealers find and hire and onboard the talent they need to increase their installation capacity. All of those things together. Longer term, we have some technical solutions we're working on. Obviously, trying to take labor out of, you know, the actual installation process is a big part of this as well. All of those efforts, we think that certainly on the shorter-term efforts like adding distribution, training, and helping dealers find qualified headcount, we're making really good progress on those short-term initiatives. Longer-term, on the innovation side, we see and have a number of really good kind of ideas around how we can continue to take labor out of the home standby installation process. I think we're making good progress. We see the metrics reflecting that in a lower, you know, in a lower field inventory level, but we're still gonna see that, you know, kind of exist here through the first half. We own that. We know that's gonna result in pressure on the first half of the year. You know, because of the margin profile of those products in particular, as you heard York's remarks around the outlook, you know, it's gonna be kind of a tale of two halves. Seasonally, top line's gonna be relatively similar at 44% being the first half, 56% being the back half. I think profitability, because of the heavy mix shift, you're gonna see that play out in, you know, that 800 basis point move from Q1 to Q4 in EBITDA margins that we're. In gross margin. In gross margin, excuse me, that we're anticipating over the course of the year. Great question and obviously a central focus not only for us, but others as well. Thank you. Our one moment for our next question. Our next question comes from Michael Halloran from Baird. Your line is now open. Hey, good morning, everyone. Thanks. Take the question. Just follow up on that, Aaron. Maybe you can just talk about what your assumptions are for the underlying demand dynamics as you work through the back half of the year. In other words, sounds like you think that the current strength that you're seeing on the in-home consultations and some of those megatrends you mentioned, sounds like you think that carries through the year into the back half of the year. Just some thoughts on what's underpinning that back half strength from an underlying demand perspective, kind of ignoring that inventory normalization side that you've talked about. Yeah, no, thanks, Mike. I think there's you know, optically, I think when you look at first half, second half, right, like, I think it looks like, wow, that's a really big hill to climb. Again, seasonally, interestingly enough, you get kind of normal seasonality. You go back to 2019 levels and actually pre-2019, just looking back, we're really not that far off of how the top line would pace seasonally. We've got this, what I'll call kind of artificially low. We're referring to it as an air pocket with Home Standby because of the destocking event. To answer your question, what gives us confidence that the year will play out, at least the underpinned, you know. What's underpinning the demand, you know, metrics that we're seeing and how we're building out our view on the full year? There's a couple things. One is you look at the 4th quarter, IHC levels. That was a record 4th quarter for us. It matched the 4th quarter of the prior year. That was a record. They're both records in terms of IHC flow. We're seeing really strong sales lead volume. That has continued here in 2023. As we said, January was an all-time record for us for a January. Best January we've ever had with IHCs. We're really encouraged by the continued focus by homeowners. Look, I think that what is maybe, you know, there's a lot of noise in the story right now with the destocking and everything else that some of the clean energy challenges that we've had, we're talking about, but what shouldn't be lost on people is the fact that power outages are happening, and people are concerned about resiliency. Grid operators are very concerned about their ability to supply power on a, on a normal basis. Like, forget weather for a second, but just with, you know, kind of the way that the grid is changing as we electrify everything on the demand side and on the source side, on the power generation side, the addition of all these renewable sources, these mandates to increase renewable sources, and those are intermittent sources, that's driving supply and demand challenges for grid operators and utilities like they've never seen before. So their ability to solve for those challenges is a huge focal point. You can just see what's happening, right? I mean, look at the holiday outages that we saw in the Carolinas and in areas along the East Coast, where there were rolling blackouts because of the demand from electric heating, residential heating, and the cold weather taking power plants and supply offline. In Austin, we had the ice storm here recently as well, another 400,000 homes that were without power there. Power outages and the concern around power outages front and center for homeowners. We're seeing that come through in our sales lead volume. We're also seeing as part of our metrics here and what we're, you know, what the assumptions that we're making to answer your question, we're assuming a higher close rate. Why are we assuming that? Because we're seeing that. And we're coming off of kind of the lows. We're about 20% higher on close rates today than we were a year ago, which is really encouraging. Now, they're not back to pre-pandemic levels yet. But they're improving. That's the opportunity. That's the opportunity. We're seeing improving close rates. We see higher sales, lead volume. We've got the distribution ads. This is another really important part of the story. I mean, we added, you know, 500 new dealers on a net basis in the second half of the year. This is how we've always talked about this business kind of being a step function grower, and we have these periods of elevated growth, and then things kind of level off, and you kind of come down off the peaks, and you level off into what we refer to and have referred to historically as a new and higher baseline level of demand. That's really what we're targeting in the second half of the year, is the, you know, that normalization, if you will, of that baseline demand, right? The presentation of that, and then the, you know, the field inventories, that destocking process being completed here by the first half of the year. You put all that together and package it up, and then obviously you surround all that with continued strength in our C&I business, which has been great. We probably don't talk enough about that. A fantastic property that we've built over, you know, the last 15 years here, that's been a great way to help us diversify this business, and has given us exposure to some awesome mega trends around telecom and some of the infrastructure rebuild, type of efforts that are going on, not only domestically here but globally. We put all that together, and that's what really gives us confidence in, you know, kind of this first half, second half story. I know there's a lot of discussion on, you know, hard landing, soft landing, recession, whatever it may be. I think to Aaron's point then, as long as there's power outages, we've historically tended to decouple from that economic environment as long as there's power outages. That's, you know, put it back to full circle to how Aaron started the answer to that question. Thank you. One moment for our next question. Our next question comes from Jeff Hammond from KeyBanc Market. Your line is now open. Hey, good morning, guys. Morning, Jeff. Jeff. Hey, so, just wanna go through the one, just, you know, the bridge on the margins first half to second half and how you get there. I guess on a full year basis, it seems like EBITDA margins are, you know, kind of flattish to slightly down and, you know, just given the revenue decline and the mix change, you know, given home standbys under more pressure, just some of the moving pieces on how to kind of hold those margins flat. Yeah, no, Jeff, this is York. Speaking to EBITDA margins, so we mentioned- Yep. Q1 would be in that 10% range, you know, the double hit of the destock coupled with a tough comp from the prior year. Looking at 10% EBITDA for Q1, talked about Q4, you know, building out through the year to Q4 being in that low 20% range. You're right, that's an abnormally larger, you know, EBITDA range progressing through the year. I think given some of the things that Aaron talked about, that's the rationale for it. When you look at a lot of the pieces, I mean, half of that growth, just alone, half of that growth as home standby recovers in the back half, you'll get a better mix in Q4 than you did in Q1 of home standby. You'll get a tremendous amount of operating leverage then on the higher volumes. I would say just half of the margin recovery is just better mix and operating leverage on the higher home standby volumes. The other half is really a story on cost. You know, we're currently realizing, you know, on a lag basis, we're still realizing higher input costs, you know, higher commodity costs, higher logistics costs, because there's lags to get through our supply chain and lags to get through our inventory levels in terms of realizing our input costs. When you model it out, we expect as we get through Q4 relative to Q1, we'll have lower commodities, we'll have lower electronic surcharges that we've been incurring all throughout 2022, lower logistics costs, the better manufacturing overhead absorption as we ramp up productions. We always have our profitability enhancement programs that we're working on every year that are focused on cost reductions of the bill of material of our products, focused cost reductions, you know, cross-functional initiatives, things like that. On the cost side, that's the other half of the half of the puzzle. We feel confident as we work through the lags, we'll see better margins, relative as a result of better input costs. Thank you. One moment for our next question. Our next question comes from Christopher Glynn from Oppenheimer. Your line is now open. Hey. Hey, Chris. Christopher, is your line on mute? Please unmute. We lost Chris. One moment for our next question. We now have Christopher Glynn. Oh. With Oppenheimer. Hey, Chris. Hey, Chris. Okay. One moment, please. One moment for our next question. Our next question comes from Mark Strouse from JP Morgan. Your line is now open. Yes, good morning. Thanks for taking our questions. I wanted to turn to the clean power business. I apologize if I missed this. Did you say what that revenue number was? In 2022. How should we think about that range kind of heading into 2023? I'm kind of also curious, I know you've got a lot of things going on that are company specific. How are you thinking about kind of the macro environment for that business in particular? Just hearing some kind of mixed commentary from some of the other companies in the space. Yeah. Mark, this is York. That energy technology business, which includes the clean energy, PWRcell energy storage business, our ecobee connected devices business and Grid Services business, that was around $300 million for the year. I think in Aaron's prepared remarks, we expect that same energy technology business to be around $300 million-$350 million for 2023. From a macro standpoint, Mark, you know, the way we see the space, obviously it's, you know, we're in this for the long run. From a macro environment standpoint, I think there's, you know, a number of forecasts out there that are calling for residential solar to maybe be down in 2023, and there's a couple of reasons for that. Obviously, higher interest rates as part of that story. Another part of that story would be some of the changes that are ongoing, you know, kind of at the state level. You look at like California with NEM 3.0 and the impact that that can have on the, you know, the pace of solar penetration rates. I would say, you know, that's largely there's a view that that's largely offset by some of the federal stimulus that the IRA Act is providing. We remain, you know, bullish that, you know, while growth maybe isn't gonna be huge, as York said, you know, between $300 million and $350 million, which is, you know, a little bit of growth over the prior year. We are seeing, you know, at least within our network, for, you know, the clean energy side. We've got some specific company challenges, as you mentioned, that we're working through. On our connected devices businesses, specifically ecobee, seeing really nice growth in that business as well as Grid Services, like we mentioned in our prepared remarks this morning. That all kind of goes under this umbrella that we refer to as residential energy technology, put together the clean energy devices, connected devices and Grid Services. You know, not tremendous growth in 2023, but, you know, we see the opportunity for that business long term. It's just an important strategic part of what we need to build out, and we're gonna be successful there longer term. Thank you. One moment for our next question. For our next question, we have Brian Drab with William Blair. Your line is now open. Good morning. I was wondering if you could just elaborate on the EV charging opportunity. Can you say anything about what you think the revenue opportunity might be there longer term, and are you essentially leveraging the PWRcell technology to build that product? Yeah, it's a great question, Brian. You know, this is We're really excited about this. We're, you know, the first generation product, I'll call it, that we're launching this year is It's more of a standard level two charger that we'll have in the market by later this year. We really wanna get something in the hands of our distribution partners, in particular our dealer partners, who are starting to see more opportunities for EV charger implementation. The team is really focused longer term. You know, We believe there's some innovation there. As you kind of indicate, you know, the current architecture we have with our PWRcell system, this the REbus architecture, as we refer to it, that we have. We think there's a great opportunity to do more with EV charging, and really to separate ourselves from a technical standpoint longer term. That won't be the initial product, but the initial product, you know, is gonna again get us in the space. We do think there's some opportunities around the initial product to help homeowners manage the different loads in their home so that they can maybe avoid a costly upgrade of their electrical system. One of the things that many homeowners are confronting as they, you know, look at an EV charger or look at buying an EV is, you know, it's not just that they have to install the charger, which can cost, you know, $1,000-$1,500, but they also have to oftentimes upgrade their electrical system because their panel is either deficient in the amount of power that it can supply or perhaps it's not up to code. In fact, some of the installation partners are telling us that 60% of the time when they're installing a charger, they have to do some major electrical work around upgrading the panel. We think there's an opportunity with some of our power manager technology to help homeowners manage some of the heavier amperage loads and avoid some of those, you know, more expensive, panel upgrades and electrical upgrades. That's gonna be part of our value proposition around EV charging initially here. Longer term, we think there's some pretty exciting things perhaps around bidirectional charging. As that market matures, we think we can really add some value there for homeowners. In particular, when you think of the EV charger in the context of a one component in the broader home energy ecosystem, we think that that's gonna be at the very large load for the home. You know, being able to control that load, both from, you know, an efficiency standpoint as well as a cost standpoint, it's gonna be super critical to how homes manage their overall, you know, energy generation, their storage, and you know, all of their resiliency efforts as well longer term. Thank you. One moment for our next question. Our next question comes from Jerry Revich from Goldman Sachs. Your line is now open. Hi. Good morning, everyone. Morning, Jerry. Hi, Jerry. Aaron, I wonder if you could just expand on the comments regarding 20% decline in field inventory. In the 10- Q, you folks disclosed $220 million of dealer financing guarantees on inventories. Is that 20% apply to that $220 million? In other words, are you under shipping and demand by $40 million in the 4th quarter? Or is that a subset of the overall dealer inventory picture that you look at? Yeah, I think well this is York, Jerry. Yeah, that disclosure that you're speaking to on the field, the floor plan financing program is just a subset of our field inventory, that's out- Yeah. Field inventory is across all channels, right? All channels. Retailers, e-commerce partners. Not everybody, and even the dealers, not everybody. Yeah. The field, floor plan financing. Right. It's a subset. It is a subset. It is improving that number off the peaks. Again, if you just look at raw units across the entire subset, based on the information we track with all the data we have, just raw units were down 20% from peak levels from earlier this year. Earlier in mid-middle part of 2022. Thank you. One moment for our next question. Our next question comes from Joseph Osha from Guggenheim. Your line is now open. Thanks. Good morning, everyone. Just penciling through what you've said so far and looking at the comp in particular how residential energy tech is trending, it looks to me like somewhere around Q3 for this to work, you need your HSB business to see a 30% or so sequential increase Q2 to Q3 or is that a correct interpretation of the whole year guidance? Well, you will definitely see a larger than normal sequential increase from Q2 to Q3 in home standby just because you won't have the field inventory overhang. Yeah. You know, that's an artificial reduction in the first half. There's some normal seasonality that takes place. Yeah, normal seasonality. Right. That's the season for home standby generators typically picks up in third and 4th quarter, so. Sure. I'm. Yeah. You would expect to see a sizable increase in Home Standby to, you know, that, you know, that's what you're interpreting from our comments. Yep. Thank you. One moment for our next question. Our next question comes from Donovan Schafer from Northland Capital Markets. Your line is now open. Hi, guys. Thanks for taking the questions. Hi, Donovan. Hey, I'd like to take a moment and just ask something a bit kind of maybe higher level, or it's, you know, not as maybe a near-term quarter-to-quarter issue. In the last couple of years, with how much it kind of feels like the home standby market itself has changed just with how much growth there's been with the COVID demand and everything. I'm wondering if you can give us an update on kind of the competitive landscape there. You know, of course, rising tide lifts all boats, so everyone can be doing well. But for a long time, you've talked about having the 75% market share. I'm curious if your sense is still that that's kind of where you are today, about 75% market share with home standby, or if there are sort of any changes there, if that is, you know, incrementally moving higher or lower even, you know, while everything rises. If you don't have that in particular, you know, are you seeing competitors make any moves saying, "Hey, you know, this is getting to be a really big market." You know, you purchase and own your own copper winding equipment because of the scale that you have. If the whole market's growing, you know, are you aware of, like, competitors making moves like that, you know, buying their own copper winding equipment? Anything like that, kind of just, you know, this higher level update on the competitive dynamics in the home standby market. Yeah. No, it's a great question, Donovan. We don't talk too much about that. I mean, we probably, you know, it's a good checkpoint. I would tell you that we believe our share is probably north of that 75%. We've probably grown over the last few years, a little bit, probably more outsized. You're right, though, that a rising tide, you know, raises all boats there. I think our competitors are, you know, First of all, the competitive set is the same. It's been the same for almost 20 years in the category, which is interesting to me. You know, the two other competitors that play in that space, you know, it's a much smaller part of their business, right? Like, their businesses, their core businesses are other things. You know, for those competitors, the home standby generators in particular are a tertiary or even further down the pole kind of product line for them. In terms of their focus, right, just raw focus on the products, the development, you know, we still are the only product in the market that has connectivity out of the box, right? That we give every homeowner who buys a home standby today can get updates on their, you know, the status of their generator, you know, through Mobile Link, which is our app. Now they can get it through the ecobee platform, which is awesome. We just rolled that out as part of our ecosystem. You know, those types of things our competitors don't have that. That's, I think, one of the beautiful things about scale. You pointed out that the advantage of that in-- on the manufacturing side, right? Our ability to invest heavily in the machine tooling and the capabilities we need to continue to drive, you know, the kind of not only the capacity that we need, right, to grow the market, which is where we've struggled over the last few years until recently, is getting capacity to increase at the rate of the increase in the market. Also, you know, the scale extends beyond just manufacturing, right? Our ability to invest in driving sales leads. I mean, we are spending tens of millions of dollars advertising to drive sales leads. The platform, PowerPlay, which is our sales selling platform, that's a unique platform in the marketplace. Our ability to recruit distribution, right? To put the kind of focus on that, on that effort. You know, again, if you're a smaller player in this market and for somebody that, you know, if you're mid-single digit kind of market share or 10% share, it's a small part of your business too, you have to think about the context of making a business decision about investing to that level, even though it's a good market. You know, I think that's a difficult decision to make, if you're some of our competitors. We're trying to use our scale to continue to grow and to continue to do, you know, I think things that lead the industry. We've done that for two decades or more, and we're gonna continue to do that in terms of leaning in to things like connectivity, you know, things like the next generation, home standby generator. Which, you know, we haven't talked much about, but we've got some really exciting product developments there that we'll talk about as the year progresses here. That's the kind of thing that I think once we get, you know, once you unpack that, you look at what scale gets you. You know, it's just one of those things where we've got that flywheel spinning, very, very fast right now, and we continue to invest heavily in it. Thank you. One moment for our next question. Our next question comes from Maheep Mandloi from Credit Suisse. Your line is now open. Hey, morning. Thanks for taking the questions. First, I just wanna check if do you assume any price reductions for the home standby generators in the guidance? The second question on the online channels versus your dealer and distributors. Can you just talk about that dynamics, what the share is, and if you know, seeing a growth in online versus dealers, and how is that impacting the relationship with your traditional channels? Thanks. Yes. Thanks, Maheep. I think I'll deal with from a share perspective, we don't break down the channel share. You know, our dealer channel is our biggest channel. It's a really important channel. Obviously, they do, you know, obviously the lion's share of installations in the network. That's not restricted just to dealers. I mean, if you're an electrical contractor, you can do, you know, you can do installations as well, and you have access to the product through an electrical wholesale channel if you wanna buy, but maybe you don't wanna commit to the level that you need to commit to to be a dealer, right? To carry inventory, to supply service, and to do, you know, the work there to be a dealer. It's a different level. You know, our e-commerce partners are also an important channel, though, and have been for some time. It's a great way for homeowners who, you know, if they find they want to project manage this on their own, right? Hire their own electrical contractor or plumber to do the work, you know, there might be a way for them to save a few dollars that way. You know, it's a little more work, right? A dealer provides a turnkey solution for most homeowners. What we're finding is, as the category matures, dealer share has grown faster than other channel share because more people who are getting into the category really want a turnkey solution. Dealers will pull the permit, they'll do all the work that's needed to make that a seamless project for the homeowner. As far as pricing, your question on pricing, really all we've built into the guide this year, and I think we've called this out, is, you know, at the higher level of promotion, as you would expect, you know, as the category starts to normalize in terms of get to that new and higher level, baseline level, we would expect a higher level of promotion. There's been very little in the way of promotion over the last several years. When you think about price on a net basis, I would say there's some of that net price built in. There's probably less price this year, a lower price this year on a net basis than prior year simply because of increased discount. Yeah. Now that we've caught the backlog, when you're in a position of backlog, you don't promote as much. There's a normal cadence of promotion every year, when you're not in backlog, and we'll revert back to that. Thank you. One moment for our next question. Our next question comes from Kashy Harrison from Piper Sandler. Your line is now open. Good morning, thanks for taking the question. Core sales in the C&I business in Q4 was about 27%, it sounds like, I think maybe 30% for the full year. You're indicating you have a record backlog, you're seeing strength across all segments. I was wondering if you could maybe speak to the durability of demand in C&I over a multi-year time period, maybe just provide some color as to why C&I revs are only up in the mid to high single digits, just given what you saw in Q4 and in 2022. Thank you. Thanks for the question, Kashy. The, you know, the C&I business, you know, I think we said in the prepared remarks, but it continues to outperform our expectations. They had a fantastic Q4. You know, the durability of the demand, you know, that is a lead time business, right? Like, we've talked about this in the past. Our residential business, in particular the home standby business, has not traditionally been a backlog business or a lead time business, even though it got to that, you know, position through the outsized demand that was happening over the last several years. C&I has always been kind of a business, you look at book to bill, and we see, you know, record levels of backlog in that business as we exit 2022, and that's both domestically as well as internationally. You know, that gives us confidence and, frankly, really good visibility into, you know, the year here. I would say that within that, you know, within the C&I business, there's a couple of big pieces of that, though, that where maybe visibility is less so and maybe kind of leads to why we're saying mid to high single-digit growth for the year. You know, Growth cycles for telecom and for our mobile equipment, which are generally sold through the larger national rental account customers, can be a bit lumpy from, you know, from time to time. They can turn the CapEx spending on and off quite quickly. You know, we have some visibility based on forecasts. You know, you can listen to as we always do when we dialogue with our national rental account customers, we listen to their guides on CapEx spending for the upcoming year. They're all by and large kind of, you know, forecasting similar levels to last year, if not greater levels based on, based on the company. Our telecom customers are also telling us they're continuing to build out their networks, harden their networks. They're focused on building out 5G. You know, look, we've been down this road before, and we're also we're cognizant of the fact that things can happen, and they can turn the CapEx spending off quickly. I think we're, you know, we're positioning a bit to say we have less visibility, less visibility around telecom and national rental accounts versus some of our distributor business, both, you know, kind of internationally and domestically here, where, you know, we have very good backlog and very good visibility. You put all that together, and we also have some tougher comps in the second half of the year. Q4. Q4 was really, you know, really, heady. Kind of coming up against that tougher comp the second half of the year, you know, we're just that kind of manifests itself, I think, in a lower growth rate. I think you put all that together, I think, you know, high, you know, kind of mid to high single digit growth still feels kind of appropriate right now at this kind of stage of the cycle. We're watching it. Thank you. One moment for our next question. Our next question comes from Praneeth Satish from Wells Fargo. Your line is now open. Thanks. Good morning. I wanted to go back to HSB and the guidance for the large increase in the second half. I guess I'm just wondering how much improvement in installation capacity would you need to see over the course of the year to achieve that growth? Could you get there based on the current pace of installation capacity growth over the last few quarters? Or would you need to kind of see a more pronounced growth in installation capacity to support your revenue guidance for the second half? It's a great question and fundamental, obviously, to how we think about, you know, the ability to hit these targets in the second half. We do need installation bandwidth to continue to expand and grow. We grew very nicely last year, and ended the year very strong in Q4. You've got normal seasonality that happens there. You get into the winter months here, the depths of the winter months, and as we would expect, you know, activations are down, you know, versus 4th quarter because that's the kind of pacing we normally see, right? It's really hard to install product when there's, you know, a foot of snow on the ground or there's still frost in the ground in the Northeast and Midwest and other areas of the country like that. To answer your question directly, we do have built into the model that there is, you know, there has to be an increase yet in installation bandwidth. We added 500 new dealers in the back half of the year. That's gonna help a lot, and we're gonna continue to add dealers and focus on expanding distribution here throughout 2023 to pace towards that higher activation rate that we're gonna need by the time we exit 2023. I will say this, it's not the kind of increase, like looking back, you know, it's not the kind of increase we would have needed at this point last year. If we had, you know, probably been, you know, kind of I think we were more optimistic that the channel was gonna respond favorably to our increase in capacity output at the factory. We felt that they were gonna increase their installation capacity at the same, you know, commensurate with that pace. If you kind of stood back and looked at that, you know, today it's like, wow, okay, that's a really large. The question you're asking, that's a really large increase last year. This year, it's not nearly the size increase year-over-year because we've made really good progress. In Q4 we made really good progress. In Q4, we made really good progress as well on increasing activation. It's a smaller kind of hill to climb than if you compare it to the prior year. It was a much bigger hill to climb. Again, looking back on that and now kind of fully understanding the challenges that distribution had in adding the labor they needed, and doing all the things that they needed to do to respond on a commensurate basis with our capacity increases, you know, that was really the fundamental problem we ran into in kind of running well past them in terms of shipments. That I think we feel better about where we're at today as we think about that hill we have to climb, but there is still an increase needed as we exit 2023. Thank you. One moment for our next question. Our next question comes from George Gianarikas from Canaccord Genuity. Your line is now open. Hi, good morning, and thanks so much for taking my question. You bet. Mine was a little longer term in nature. I know that the company's margins have deleveraged this year, I'm wondering if there's anything structural over the long term that will hinder you from getting back to EBITDA margins in the low to mid-20s? Thank you. No, this is York. Like, just even thinking about our Q4 guide, for Q4 2023, we're guiding, you know, to get back to those low 20% range, at least for that seasonal time period. When you think about 2024 and 2025, we think we're well on our way to getting back to those levels on a full year basis. I think with some continued growth and continued leverage, in particular on the energy technology side, where we'll continue to grow that business and go from investment mode to Startup mode to growth mode and profitability mode, that will definitely help improve the overall company's profitability in 2024 and 2025. Yeah, I think just on that point, York's right. I mean, we kind of alluded to it in the prepared remarks this morning, but we're investing heavily in that part of the business, you know, and the growth rates are not there right now. They were. We ran into our challenges, obviously well documented here. We've got, you know, we've got a lot of work to do around that. I think the takeaway this morning for everybody is we're not pivoting away from it. We're gonna continue to invest in it. We've brought in new leadership and strengthening that team, which is, I think, a really critical part of, you know, kind of our turnaround efforts. I'll just call it what it is there when it comes to certain of those products, you know, in the energy tech space. We have work to do, and it's proving to be, you know, more difficult, and it's gonna prove to be more costly than we originally anticipated. We still think that it's worth the effort. This is an area where, you know, again, the macro environment favors this, based on everything we've talked about this morning, based on everything that, you know, is known out there in the marketplace. We think we have every right to play here. We think we have to execute better. To execute better, we're gonna have to spend more money, and we're gonna have to spend more time, and we're gonna have to do things the right way going forward. That's, you know, we own that, and we've addressed it. I feel really good about what we've done, the changes we've made in that business over the last six months. It is still going to be a significant drag on, you know, kind of our EBITDA margins, at least here in 2023, but that should relax as we go forward and we start to, you know, kind of recover in parts of that business. We see the continued growth in other parts of that business, like the ecobee pieces as well as Grid Services. Longer term, we're absolutely committed to it, and we're gonna, we're gonna be successful there. If people think that this has scared us off or, you know, this is gonna turn us away from it, they don't know us, they don't know me. We're definitely gonna go after this business. We have every right to play here and every right to win here, and we're going to do that. It's just gonna take more time and it's gonna be a heavier investment than we had originally calibrated around. Thank you. One moment for our next question. Our next question comes from Henry Roberts from Truist Securities. Your line is now open. Hi, this is Jordan Levy from Truist Securities. Thanks for taking my question. Hello. On the energy technology business, I just wanted to see, if we could get some more insight into how you're thinking about the recovery of PWRcell as we move through the year and regaining some of the ground that was lost there, this year in terms of your guidance, which, of $300 million-$350 million for the year for the entire segment. Yes, it's a great question, Jordan. You know, that PWRcell business is exactly what I was talking about in the previous question. You know, basically, that's gonna sequentially improve throughout the year. That's kinda how we're, you know, kind of viewing our expectations for the year. You know, we're coming off of a pretty low base, you know, just in terms of where we're at because of the loss of that major customer in the 3rd quarter last year. We've got to rebuild and build a stronger distribution network for those products and we've got to recover confidence from the market in general in those products. You know, we're having those conversations. We're making the right improvements to the product and have been making that over the back half of this year. Now we've got to get back to selling. We've got to get back to engaging with the channel and building out and finding new distribution partners to work with on that. I think what's really exciting about that, and not trying to turn it into a 2024 story, but, you know, as I mentioned in the prepared remarks, we have our next generation of our storage device that is going to alpha testing here. We'll start shipping that in Q2, and we'll hopefully expand that to beta testing by, you know, throughout the back half of this year. You know, we've I've seen some prototypes of it in our team. We've got, again, a very different technical team that's working on that product today than what was working on the original, kind of what we refer to as our R1 product, the acquired product from Pika Energy, which we've worked to improve and harden. We, you know, we're looking forward to the next generation device, and we're very excited about what that device is going to be able to do in the market. I don't wanna, you know, kind of ruin the surprise for everybody at this point, but, you know, I think, as we, as we pace throughout here throughout 2023, we'll be able to give you some more commentary around how it's going. We're gonna do a lot of extended field testing, obviously, in that product to make sure it's ready for prime time when we get to it next year. The team is very encouraged. Again, I think it fits well with my previous comments on how important we see residential energy storage being for the future. It's an incredibly important product category, especially in light of things like NEM 3.0 in California. Really to make the economics work for solar in California today, you've got to add a storage device. Frankly, homeowners want that anyway because they want the resiliency, they want the ability to improve the payback on that solar investment, and they're gonna need storage. So, we're very focused on that. We're very focused on what the supply chain changes are gonna need to be around not only the batteries, the packs, and the other components here. The Inflation Reduction Act really kind of starts to take hold and you get these production tax credit opportunities for domestic manufacturing or North American manufacturing, you know, we'll start to also really have that reflected in our supply chain for those products. There's a lot of work to be done there. I think it maybe goes hand in hand with my comments a minute ago around the investment level needed to be successful here. Even though, you know, PWRcell itself, you know, we've got recovery to do there, and I think we're still, you know, we're gonna be okay as we go out throughout this year. We're still investing heavily in next generation products and where we're going for the future. Thank you. I'm showing no further questions. I would now like to turn the call back over to Mike Harris for closing remarks. We wanna thank everyone for joining us this morning. We look forward to discussing our 1st quarter 2023 earnings results with you in early May. Thank you again. Goodbye. This concludes today's conference call. Thank you for participating. You may now disconnect.