Good day, and thank you for standing by. Welcome to the second quarter 2024 Generac Holdings, Inc. conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone, and you will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kris Rosemann. Please go ahead. Good morning, and welcome to our second quarter 2024 earnings call. I'd like to thank everyone for joining us this morning. 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, Kris. Good morning, everyone, and thank you for joining us today. Our second quarter results were ahead of previous expectations for Adjusted EBITDA and Adjusted EPS, driven by lower input costs and operating expenses relative to our prior forecast. We are raising our 2024 full-year outlook this morning as a result of the recent increase in power outage activity, including the impact of Hurricane Beryl. Year-over-year, overall net sales in the second quarter were nearly flat compared to the prior year at $998 million. Residential product sales increased 8% from the prior year due to strong growth in home standby generator shipments. Global C&I product sales decreased 10% from a strong prior year second quarter, as softness in the telecom and rental markets was partially offset by an increase in shipments to our industrial distributor customers. Additionally, gross and Adjusted EBITDA margins expanded significantly from the second quarter of 2023 as a result of favorable sales mix and the realization of lower input costs. Home standby shipments were in line with our prior expectations during the quarter, increasing at a mid-teens rate from the softer prior year period that included a meaningful headwind from excess field inventory levels. Power outage activity during the second quarter was above the long-term baseline average, primarily due to strong storms in May that impacted multiple markets in Texas. Early in the third quarter, Hurricane Beryl made landfall in the Houston area, driving year-to-date power outage activity well above the long-term baseline average and increasing demand for home standby and portable generators. After a slow start to the year, home consultations in the second quarter increased modestly over the prior year and grew at a strong rate on a sequential basis. More importantly, home consultation activity increased significantly during the month of July due to Hurricane Beryl. Additionally, close rates have improved during the first half of 2024 as we continue to execute initiatives to improve sales lead conversion, including data, data-driven lead optimization practices, sales tool enhancements, and improved lead nurturing practices. Although we expect close rates to improve over time, they have historically moderated immediately following a major outage event in the affected region. We remain focused on making further investments to bring new and broader demographic categories into the home standby generator market and increase engagement with our end customers, particularly in regions that have not experienced material outage activity in recent periods. We ended the second quarter with our residential dealer count at approximately 8,900, an increase of 200 dealers from the end of 2023. We also continued to strengthen our relationships with non-dealer contractors as we further grew our Aligned Contractor program, an effort that helps us expand our installation bandwidth while allowing contractors to purchase product through their preferred channel. We view our dealer and aligned contractor networks as an important competitive advantage for our business, and we continue to invest heavily in these relationships with a focus on further developing tools and resources to optimize the selling, service, and installation capabilities of our distribution partners. Activations or installations of home standby generators were down modestly during the first half of 2024, reflecting the lower power outage environment from late 2023 through the first quarter of 2024. However, activations have returned to strong year-over-year growth in the month of July, and we expect continued growth in installations as we move through the seasonally stronger second half and impacted by the recent increase in outage activity. As the clear leader in residential backup power, we are uniquely positioned to respond to major outage events such as Hurricane Beryl. Our ability to leverage our strong financial position to invest in inventory for storm response, combined with our logistics capabilities, allow us to rapidly deploy product into outage-impacted areas. Our industry-leading distribution network and our scalable call centers provide 24/7 consumer support and service in our customers' time of need. We are also increasing our advertising spend in the aftermath of the storm to leverage our expertise in marketing to drive awareness for our products and generate sales leads for our distribution partners, not only in the impacted region, but also more broadly across the nation. Simultaneously, we are ramping up our efforts to increase sales and installation bandwidth by adding more dealers and aligned contractors to our distribution network. Finally, we are increasing our production rates for home standby generators to respond to increases in demand for these products, as we have built our supply chain and operating footprint capacities to allow for the rapid expansion of output to respond quickly to market changes. As a result, we are raising our overall 2024 outlook due to anticipated higher demand for home standby and portable generators following the recent increase in power outage activity. The effect of Hurricane Beryl is also expected to drive higher levels of awareness for backup power longer term, as home and business owners seek protection from future power outages. With only approximately 6% penetration of the addressable market of homes in the U.S., we believe there are significant opportunities to further grow the residential standby generator market. Now, moving to our residential energy technology products and solutions, the overall market for residential solar and storage continues to be negatively impacted from structural changes to California's net metering program, as well as higher borrowing costs, which will continue to weigh on 2024's results for these products. Although market conditions are challenging in the near term, we recently announced the execution of the previously awarded grant from the U.S. Department of Energy to provide energy storage systems to Puerto Rico, with funding from the Puerto Rico Energy Resiliency Fund. The grant provides for up to $200 million in project funding over a five-year term, which is an increase from the $100 million initially awarded when we announced our participation in the program in the fourth quarter of last year. The first shipments of energy storage systems for this program are expected to begin later this year, with the bulk of program installations occurring in 2025 and 2026. ecobee continues to execute well, gaining market share and driving robust margin improvement over the prior year. ecobee's connected homes count is now approaching four million, and services attach rates continue to increase, with strong growth in both energy services and home monitoring services. Importantly, we are leveraging ecobee's expertise in developing hardware and software experiences that are intelligent and intuitive, as their development teams are leading our efforts around building the common platform that will serve as the heart of the Generac residential energy ecosystem. As disclosed in our press release this morning, we also agreed to make an incremental $35 million minority investment in Wallbox, allowing for the expansion of our commercial agreement globally to include both residential and commercial EV charging solutions across our distribution networks. Additionally, we have aligned on a software development approach that will deepen the integration of Wallbox EV chargers with our dealer and customer platforms. We believe that the ability to manage EV charging as part of our residential and C&I energy technology ecosystems will become increasingly important, as growing electric vehicle penetration and the resulting increased demand for electricity have a rising impact on home and business owners, as well as grid operators around the world. As we continue to build out our energy technology solutions, we believe that the combination of our internal initiatives, strategic investments, and core competencies will allow us to effectively compete in these large and growing markets. As we bring increasingly competitive solutions to market over the coming quarters, starting with our next generation energy storage system later this year, we will accelerate our efforts in expanding and engaging our distribution network. This will allow us to gain market share by further leveraging our expertise in providing superior channel and customer support, as well as our proficiency in delivering qualified sales leads to distribution partners and our brand strength. We believe our unique and comprehensive approach to residential energy management will provide further differentiation as we develop the smart energy home of the future. Switching now to our C&I product category. As previously expected, global C&I product sales declined 10% from the prior year, driven by a decrease in shipments to both domestic telecom and rental customers. This decline was partially offset by continued growth with our North American industrial distributors, as shipments to this channel again grew at a robust rate in the second quarter and quoting activity remained resilient. We continue to expand our market share, primarily due to our ongoing focus on operational execution, leading to reduced product lead times and further optimization of our domestic distributor channel. This includes additional investment in certain territories where we believe we have a potential to improve our share regionally through M&A or further development of our independent distribution partners. As expected, shipments to national telecom and rental equipment customers declined in the quarter from the strong prior year period, and we continue to believe these end markets will remain soft for the balance of the year. However, we see long-term growth opportunities in both markets, despite the near-term cyclical weakness. We believe the critical need for future infrastructure projects provides substantial runway for growth in the rental channel. In the market for backup power for telecom applications, our long-term growth expectations are supported by the secular trend of growing global tower and network hub counts, and the increasingly critical nature of wireless communications and services that require significantly greater power reliability. As previously announced in late June, we acquired the C&I battery energy storage system product offering from SunGrid Solutions, located in Cambridge, Canada. This small but strategic acquisition brings us engineering and manufacturing expertise to better serve the growing market for behind-the-meter energy storage solutions for commercial and industrial applications, including where it is deployed as a critical component in multi-asset microgrids. We have an expanding pipeline of commercial projects in which we expect to provide stationary battery storage alongside our traditional generator product offerings. Additionally, we're seeing a number of projects in which EV charging equipment is also included. We believe our commercial agreement with Wallbox is important to helping expand our opportunity to win these and other similar projects. As we leverage our leading position in natural gas generators and our newly acquired capabilities in energy storage with the SunGrid acquisition, we believe we are uniquely positioned to deliver comprehensive solutions for the developing microgrid market, which is focused on providing C&I customers with important energy resiliency, as well as lower overall energy costs. Internationally, total sales were lower year- over- year, primarily related to declines in intercompany shipments from our Mexican operations to the telecom market in the U.S., as well as lower shipments in Europe, most notably for portable generators. Increases in shipments to other key regions, such as Latin America and India, partially offset this softness. As previously discussed, our expanded agreement with Wallbox also includes incremental collaboration in international end markets. This is another example of our longer-term international growth strategy as we bring a broad portfolio of solutions to more markets around the world, building on the strong track record of growth and margin expansion in our international segment over the past several years. In closing this morning, our second quarter margin outperformance and increased 2024 outlook highlight the fundamental momentum occurring within our business. Significant year-over-year margin expansion and robust free cash flow generation in the first half of 2024 have supported our continued investments in accelerating our Powering a Smarter World enterprise strategy, while also enhancing shareholder value through continued share repurchases. Once again, Hurricane Beryl highlighted the vulnerability of the electrical grid and the need for resiliency. Beryl became the earliest Category 5 hurricane to form in the Atlantic on record, providing further evidence that the changing weather patterns continue to threaten the continuity of power that we are increasingly dependent on. Additionally, the rapid adoption of intermittent generation sources and growing demand from electrification trends, as well as the adoption of artificial intelligence, are providing additional stresses on our nation's aging power grid. These secular trends will continue to manifest in lower power quality and higher power prices for all ratepayers in the decades to come. By expanding on Generac's core resiliency value proposition and helping optimize for efficiency, consumption, cost, and comfort, we remain confident that our products and solutions are uniquely capable of helping home and business owners solve the challenges around resiliency and rising utility costs. I'll now turn the call over to York to provide additional details on our second quarter results and our increased outlook for 2024. York? Thanks, Aaron. Looking at second quarter 2024 results in more detail, net sales were $998 million during the second quarter of 2024, as compared to $1 billion in the prior year's second quarter. The combination of contributions from acquisitions and the favorable impact from foreign currency had a slight positive impact on revenue during the quarter. Briefly looking at consolidated net sales for the second quarter by product class, residential product sales increased 8% to $538 million, as compared to $499 million in the prior year. Growth in residential product sales was primarily driven by a mid-teens increase in shipments of home standby generators and strong growth for portable generators domestically. This was partially offset by a decrease in portable generator shipments in Europe, given a strong prior year comparison, ongoing softness in the domestic clean energy market and lower core product sales. Commercial and industrial product sales for the second quarter of 2024 decreased 10% to $344 million, as compared to $384 million in the prior year quarter. Foreign currency and acquisitions contributed approximately 1% growth in the quarter. The core sales decline was primarily due to the expected weakness in sales to our domestic telecom and national equipment re-rental customers. This was partially offset by a robust increase in C&I product shipments through our domestic industrial distributor channel and growth in certain other key international markets. Net sales for other products and services decreased slightly to $116 million, as compared to $117 million in the prior year quarter. Gross profit margin was 37.6%, compared to 32.8% in the prior year's second quarter, primarily due to favorable sales mix, given stronger home standby shipments and the realization of lower input costs, including lower freight and steel costs, as well as improved production efficiencies. Second quarter gross margins exceeded our expectations, as we were able to deliver the implied gross margin ramp in the second half of the year, sooner than expected, given improving input costs. Operating expenses increased $30 million or 12% as compared to the second quarter of 2023. This increase was primarily due to ongoing investment in resources to drive future growth across the business, including salaries, benefits, stock compensation, and bonus, and higher marketing and promotional spend to create incremental awareness for our products. As a result of these factors, Adjusted EBITDA, before deducting for non-controlling interests, as defined in our earnings release, was $165 million, or 16.5% of net sales in the second quarter, as compared to $137 million, or 13.6% of net sales in the prior year. Adjusted EBITDA margins came in ahead of our expectations during the quarter as a result of the gross margin outperformance, as well as lower operating expenses compared to prior forecast. I will now briefly discuss financial results for our two reporting segments. Domestic segment total sales, including inter-segment sales, increased 1% to $827 million in the quarter, as compared to $815 million in the prior quarter, as strong growth in the residential product category was mostly offset by expected weakness in C&I product shipments. Adjusted EBITDA for the segment was $140 million, representing a 16.9% margin, as compared to $103 million in the prior year, or 12.7% of total sales. This margin improvement was primarily driven by favorable sales mix and the realization of lower input costs, partially offset by higher operating expense investments to support future growth initiatives. International segment total sales, including inter-segment sales, decreased 18% to $185 million in the quarter, as compared to $224 million in the prior year quarter. The approximate 18% core total sales decline for the segment was primarily driven by a decrease in intercompany shipments from our Mexican operations to the domestic telecom market, as well as lower shipments to, in most European markets, most notably for portable generators. This softness was partially offset by increased sales in other key regions, such as Latin America and India. Adjusted EBITDA for the segment before deducting for non-controlling interest was $25 million, or 13.6% of total sales, as compared to $33 million, or 14.9% of total sales in the prior year. This margin decline was primarily due to reduced operating leverage on lower shipments during the quarter. Now switching back to our financial performance for the second quarter of 2024 on a consolidated basis. As disclosed in our earnings release, GAAP net income for the company in the quarter was $59 million, as compared to $45 million for the second quarter of 2023. GAAP income taxes during the current year's second quarter were $20 million, or an effective tax rate of 25%, as compared to $16 million, or an effective tax rate of 25.9% for the prior year. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior year period, which did not repeat in the current year. Diluted net income per share for the company on a GAAP basis was $0.97 in the second quarter of 2024, compared to $0.70 in the prior year. Adjusted net income for the company, as defined in our earnings release, was $82 million in the current year quarter, or $1.35 per share. This compares to adjusted net income of $68 million in the prior year, $1.08 per share. Cash flow from operations in the current year's second quarter was $78 million, as compared to $83 million in the prior year's second quarter, and free cash flow, as defined in our earnings release, was $50 million, as compared to $54 million in the same quarter last year. This change in free cash flow was primarily driven by higher cash income tax payments in the current year quarter, partially offset by higher operating earnings. Additionally, during the second quarter, we repurchased 355,640 shares of our common stock for approximately $51 million. There is approximately $449 million remaining under our current repurchase authorization as of June 30th. In early July, we amended and replaced our existing $530 million term loan B credit facility, which was set to mature in December 2026, with a new credit facility that has an aggregate principal amount of $500 million, after we made a $30 million cash prepayment in connection with the term loan amendment. This new credit facility has a maturity date of July 3rd, 2031. The new credit facility maintains the existing low rate of SOFR plus 175 basis points, while also eliminating a 10 basis point credit spread adjustment that was included in the previous term loan B credit facility. Quarterly principal payments equal to $1.25 million will begin in October 2024, with a lump sum due at maturity in July 2031. Total debt outstanding at the end of the quarter was $1.56 billion, resulting in a gross debt leverage ratio at the end of the second quarter of 2.25 times on an as-reported basis, a continued reduction from 2.5 times at the end of 2023. As we expect to generate strong free cash flow in the second half of 2024, we will continue to execute a disciplined and balanced capital allocation strategy. With that, I will now provide further comments on our updated outlook for 2024. As disclosed in our press release this morning, we are increasing our overall outlook for full year 2024. Given the elevated demand for backup power in the state of Texas due to the recent power outages, including Hurricane Beryl, that made landfall in early July, we now expect overall 2024 net sales growth to be approximately 4%-8% as compared to the prior year. This is an increase from the previously expected range of 3%-7%. Again, as a result of the recent outage activity in Texas, we are increasing our expectations for 2024 home standby generator sales growth to be in the high teens range, and portable generator sales are also now expected to be well above our prior forecast. Partially offsetting these strong trends in Texas, we are seeing continued softness in residential clean energy and core markets, resulting in only a modest reduction in our outlook for those products. As a result, overall residential product sales for the full year are now expected to grow at a mid-teens rate as compared to our prior forecast for low double-digit growth. Our full year 2024 sales growth outlook for the remaining product categories is unchanged from our prior forecast. From a pacing perspective, we anticipate year-over-year net sales growth will accelerate as we move through the second half of the year, with third quarter net sales growth in the high single digit range and fourth quarter net sales growth in the low to mid-teens range. This guidance assumes power outage activity that is in line with the longer-term baseline average for the remainder of the year and does not assume the benefit of an additional major power outage event for the rest of the year. Our gross margin expectations for the full year 2024 have also increased relative to our previous guidance, given the second quarter outperformance and higher sales mix from home standby generator sales in the second half of the year. We now expect gross margins to improve by approximately 350-400 basis points over the full year 2023. This is an increase from the 300-350 basis point improvement previously expected. Gross margins are projected to grow sequentially through the remainder of the year, due to continued favorable mix, price, and cost, with fourth quarter gross margin improving over third quarter gross margins by approximately 50 basis points. As a result of this increased outlook for gross margins, Adjusted EBITDA margins, before deducting for non-controlling interests, are now expected to be approximately 17%-18% for the full year 2024. Additionally, we also expect Adjusted EBITDA margins to grow sequentially through the remainder of the year, driven by the above-mentioned gross margin improvement and additional operating leverage on higher shipments as we move throughout the second half of the year. This will result in fourth quarter Adjusted EBITDA margins improving over third quarter Adjusted EBITDA margins by approximately 200 basis points, resulting in fourth quarter Adjusted EBITDA margins of approximately 20%. As is our normal practice, we will also provide additional guidance details to assist with modeling adjusted earnings per share and free cash flow for the full year 2024. For the full year, our GAAP effective tax rate is still expected to be approximately 25%-26%. This is expected to result in a GAAP effective tax rate of approximately 25% for each of the remaining two quarters of the year. Importantly, to arrive at appropriate estimates for adjusted net income and adjusted earnings per share, add-back items should be reflective net of tax using the 25% expected effective tax rate. Gross interest expense is now expected to be approximately $92 million-$94 million, as compared to the prior guidance of $90 million-$93 million. This guidance assumes no additional term loan or revolver principal prepayments during the year. Stock compensation expense is now expected to be between $52 million-$54 million for the year, as compared to prior guidance of $55 million-$60 million. We're also increasing our free cash flow conversion guidance for the full year to be well above 100%, as we anticipate an incremental, incremental benefit from working capital reduction in the second half of the year. This compares to our prior guidance of approximately 100%. Our full-year weighted average diluted share count is now expected to decrease to approximately 60.5 million-61 million shares, as compared to prior guidance of 61 million shares. This updated guidance reflects the share repurchases that were completed in the second quarter of this year. Our guidance for capital expenditures as a percentage of sales remains consistent at approximately 3% of sales. Depreciation expense and GAAP intangible amortization expense also remain consistent with last quarter's guidance. Finally, this 2024 outlook does not reflect potential additional acquisitions or share repurchases that could drive incremental shareholder value. This concludes our prepared remarks. At this time, we'd like to open up the call for questions. Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. First question comes from Tommy Moll with Stephens Inc. Go ahead, your line is open. Good morning, and thank you for taking my questions. Morning, Tommy. Aaron, I wanted to start on home standby. Sounds like the outlook for the year went from mid-teens, excuse me, to high teens. It's, it's a two-part question. First part is, can you characterize how much of that growth is just lapping over the destock versus incremental underlying demand? And then second part on the demand, can you characterize activations versus shipments in Q2 and maybe even through July after the storm? Thanks. Yeah. So maybe, Tommy, I'll take the second part of that question first. And like, yeah, on the first part of the question, obviously, we have been talking about a $300 million impact from the field inventory situation last year. And so part of, obviously, part of the increased guide here, I would say this, you know, the guidance we had originally proposed considered that, you know, the destocking. So the increase in guidance, you know, from the mid-teens to the higher number would be really the delta that's storm related. Mm-hmm. That's all incremental. So that's all incremental. I'd, I'd have to do the math to give you, like, a more precise answer than that, but that's how I would answer it, is that, you know, the original guidance did contemplate that. Mm-hmm. The destocking occurred in Q1, and, you know, that hasn't been a problem. Mm As we had expected here in Q2, and it won't be a problem in the balance of the year. As far as the activation and shipment trends from Q2, you know, as we said, activations in the first half of the year were modestly down. That really is related to the lower power outage activity that we saw last year. In the beginning, you know, we kind of started off the year a little bit slow. Here in 2024, Q1's outage hours were below the baseline average, but they've obviously picked up here in Q2, and we anticipate those activation rates to grow through the balance of the year here. And in fact, as we noted in the prepared remarks this morning, July, we're already seeing from a trend standpoint, we're seeing that pick up. So shipments were, I would say, ahead of activations if you're looking just at Q2, but that's seasonally to be expected. That's how, yeah, and it was only slightly. It's not. It wasn't a big number. But that is how the, you know, that's how the business paces in terms of preparing for the season. We want our channel partners, you know, to have that product ready to go. But again, as we've said previously, as we exited Q1, we feel like those field inventory levels are normal, right? So this is all part of the normal seasonal trend at this point. One moment for our next question. The next question comes from George Gianarikas with Canaccord Genuity. Go ahead, your line is open. Hi, good morning, everyone, and thank you for taking my questions. Hey, George. I'd just like to focus on what you've seen or what you saw in July that led to the guidance increase. Clearly, there's been an impact from the hurricane, but can you just sort of isolate the pockets of increased interest in in-home consultation and activations? Is it strictly in the areas that were impacted by the hurricane, or were there reverberations throughout Texas, where you saw increased activity and interest outside of those regions? And to the extent you could share this data, to the extent you have it, what are the high penetration rates, the highest penetration rates that you're seeing in parts of Texas, and how much further can we go in penetration, in your opinion, over the long term? Thank you. Yeah, thanks, George. So, you know, what we saw in July, obviously, was, you know, that the Hurricane Beryl impact was significant in a market in Houston that had been also impacted earlier in May by, you know, I think, you know, some people refer to it as a derecho, kind of a straight-line wind event that created outages. And, you know, I think really the impact of Beryl, even though it was a Cat 1 storm and not really that strong meteorologically, the way they're scored, the ground was very saturated, and there was high enough winds that led to just a lot of infrastructure damage, you know, physical damage, with trees and other things taking out components of the grid. And so it took a long time to repair. What we've you know, in our experience with outages, it's really, frankly, more the length of the outage. So the duration is it plays a huge role in kind of getting people to a point of high interest in finding solutions, right? And so our increased guidance is really reflective of two things. One, we sold a lot of portable generators in July. As you would expect, as one of the leaders in the industry, you know, we carry a fair amount of inventory in preparation for these types of events, and that inventory was deployed very quickly down in that market. Maybe not as much as we would normally see, strictly because that storm, you know, you would normally have time ahead of the storm to prepare. This storm kind of caught people off guard. It was supposed to hit kind of the Mexico-Texas border, and then it took a severe right-hand turn and went north, kind of at the wrong time and impacted, obviously, the Houston market instead. So not a ton of time to prepare and get more inventory positioned ahead of the storm, but in the aftermath, we certainly were able to deploy that. But then, obviously, the increase in IHCs, in-home consultations, has been dramatic in the month of July, I would say. You know, we have continued to see in our history here since we've been tracking IHCs, and remember, that really goes back to kind of around the post-Sandy era, so kind of, you know, in that 2012 to 2013 timeframe, so about a decade that we've been doing this. We continue to see with every hour of outage activity, a higher level of intensity of the number of IHCs or sales leads we get per hour, and that definitely fit the bill in this storm. And some of that, again, is related to the fact that that market was also impacted earlier in the year by, you know, by the previous event. So the combination of those things. We have, you know, we have about 800 dealers in Texas, so we think we're in pretty good shape to respond to the, to the event. We don't have 800 in Houston. We have a lot in Houston, but not 800, but 800 across the Texas market. And there is a bit of an echo effect that happens when you see an event like that hit a market like Texas. You generally see an uplift in other markets with IHCs. I would say with this event, and that generally comes because of media coverage of an event, I, I do think that, you know, for whatever reason, the media coverage of this, of Hurricane Beryl was maybe a little more muted than you might expect on a national stage. Certainly, if something would have happened on the East Coast or the West Coast, that tends to get the media's attention a little bit greater. Something happens down in Texas, maybe not as much. But nonetheless, you know, I think the increase that we've, we've seen in IHCs, we believe is, is, you know, underpins kind of the, the increase that, that we've given in terms of the, the guidance. And, you know, today, Texas is still underpenetrated in our view, so we're roughly 6% penetrated nationally on the average. In, in the state, we're less than 5% penetrated today. So, you know, we think there's room, and obviously, it's a huge housing market. And a lot of, you know, there's a lot of people went through those multiple outages here, and, you know, we do think that that pen rate's gonna increase in the years ahead. One moment for our next question. The next question comes from Mike Halloran with Baird. Go ahead. Your line is open. Hey, morning, everyone. Hey, Mike. Morning. So, question then on the clean energy side of things and the margin trajectory. Heard the comment in the prepared remarks about ecobee's margin starting to trend better. Maybe what's the driver behind that? And when you think more broadly about the current headwind associated with all the investments and then the timing of the new product launches and when you can start really getting revenue associated with that, has the timeline changed at all from your perspective as far as that profitability improvement curve might look like in those businesses? Hey, Mike York here. I'll jump in on the gross margin commentary. ecobee, the team up in at ecobee has spent, there's been a tremendous amount of focus on gross margin improvement, really just working on the cost of the bill material of the T-stat itself, and significant effort in terms of supply chain cost reductions and whatnot. So I would say, the execution of those initiatives are reading through now, and there's a pretty significant impact in terms of the improvement of the gross margin. They were good before, and now they're even better. Yeah, and I think some of that too is the fact that, you know, when we acquired ecobee at the depths of the pandemic. True. So, you know, I think the cost curves there were inflated. Surcharges. Maybe even artificially, surcharges. Electronic surcharges. Less, especially around electronic components, and that has obviously relaxed as well. So that's part of it. Not to, not to discredit or take away anything, anything from the teams in terms of their, in terms of their efforts, which have been great, but it's some of that is market forces. And then I think, Mike, you know, to answer the question on timing, you know, I would say this on timing, you know, nothing has really changed in the timing of our new product introductions, right? So we're still targeting the end of this year for our next generation storage device, first half of next year for our microinverter products. Those are all still intact. I think, and we may have mentioned this on the last call, what may have changed is, you know, just the sour mood around solar plus storage, that market, right? The market trends there have been muted, have been relatively negative this year and have kind of persisted through this year with higher rate environment and still kind of absorbing the impact of Net metering 3.0 in California. But that, I would say, for us, you know, again, it's not much of an impact this year, but I think some of that might get offset if the market remains a little bit weak. You know, we talked about this Department of Energy grant that we were awarded. You know, that grant was, we generally thought that that would impact us to the tune of about $100 million when we announced it last, late last year, and that was gonna be over, it's a five-year term. That was upsized, significantly here, through our discussions and negotiations with the DOE and the other partners on the island, and now we think that impact is $200 million, and the bulk of those installs are gonna happen in 2025 and 2026. So that's kind of an element that we didn't have necessarily in our, you know, a project win of that magnitude. We didn't have that in our original kind of pacing, so I think that helps to offset, any market, weakness that may persist into 2025. So I guess a long-winded way, as I generally do, of saying, you know, we're really not- Mm-hmm. changing the timing on this. I think it's, you know, the puts and takes there might be a little bit different than what we had originally contemplated, but I think the timing's intact. One moment for our next question. The next question comes from Jeff Hammond with KeyBanc Capital Markets. Go ahead, your line is open. Hey, good morning, guys. Hey, Jeff. Hey, two-part question. One, you know, input cost tailwinds, do you think they'll continue into the second half? And then just, I guess we're in a unique period where we've had kind of these elevated IHCs and maybe more tire kickers around grid instability, and I'm wondering with, you know, this storm activity, if maybe, and this nurturing initiative, if maybe the uptake from some of those warm leads, you know, can drive some incremental, you know, uptake versus normal? Yes. Yeah, on the input cost side, looking like first half to second half, Jeff, if there's, let's say, a couple percent improvement from first half to second half on gross margins, I'd say the vast majority of that gross margin increase will be just gonna be with the higher mix of home standby coming through in the second half. You know, well over 50% of that gross margin increase will be just that mix improvement. But we are expecting some further price-cost improvements first half, second half, to continue to read through, but it will be smaller, it'll be a smaller piece of the puzzle. Yeah, and then, Jeff, I think, you know, with the IHCs and kind of the, the, quote-unquote, "tire kickers," we have seen an increase in, you know, the... I'll call it the broadening of the top end of our funnel. You know, we, we've talked about our efforts and outreach to engage new demographics and trying to broaden the, you know, the consumer appeal for these products more broadly. And that has, you know, that has produced, I think, the effect it's had is it's, we've got a lot more people shopping the category. There's obviously the-- I would also talk about, you know, the broader mentions of potential power outages from some of the structural things that are going on with the grid. You know, we talk about the electrification trends, we talk about the decarbonization trends, we talk about power quality, you know, being impacted negatively in the future here, today and in the future, and also power prices are expected to continue to rise. And that, the media, I think mainstream media, has picked up these, these narratives, and, you know, I think that also is leading to people coming into the funnel and exploring their options around resiliency and trying to manage their own power and independence and efficiency. That said, you know, when you get an event like Beryl and you get the increased outage activity we have, it's obviously an opportunity for us to engage clearly on the resiliency story with those people who may have, you know, received an IHC, and for whatever reason, didn't, we didn't get to closure on a project. You know, I think it's important to note, you know, close rates have improved throughout this year, and they're up nicely from the end of last year. But what typically happens, historically, what we see is when you get a large-scale event like Beryl, you'll see a weakening in the close rate, kind of temporarily in the affected markets because you get such an influx of leads. You get a lot of people into the funnel at once. Now, that could be somewhat offset by some of these warm leads being, you know, if we're able to nurture those to closure as a result of the event. So, you know, I think that, that'll all kind of work out, you know, in the future here as we, as we look at what the, you know, what the close rate does. But, you know, we do expect the close rate to kind of step back here temporarily, but we have a lot more leads. So, you know, and that's, again, combination of all those elements is what goes into our calculus around raising guidance today. So, you know, and, and once those leads are in our system, you know, we can nurture them later, too, even if they don't get the closure today. We have, I think, much better nurturing techniques and capabilities today than we've ever had. So the opportunity to work those leads in the future, either on the back of future outage events or, you know, certain promotions or new financing opportunities, things like that, we've been pretty bullish about, you know, the opportunities that, as our growing house file, if you will, of sales leads, the ability to mine that file to the benefit of, you know, driving more sales. One moment for our next question. The next question comes from Brian Drab with William Blair. Go ahead, your line is open. Hi, good morning. Thanks for taking my question. Hey, Brian. I'd just like to.. morning. Just like to see if I could, ask you to put a finer point on the revenue, excuse me, revenue, guidance update. So if, if we're increasing revenue growth by 1%, that's, that's about $40 million, obviously, in incremental revenue. You know, you had, storm activity that we've talked about in May and then the Hurricane Beryl, and that driven some portables. You gave us, you said we're going from mid-teens to high teens in home standby, and, and that's, you know, the, you know, $50 million, like 50, ±5, maybe, in, in that move from mid-teens to high teens. I just wonder if you could put a finer point on this so I can understand why we're not, you know, being conservative, especially given, you know, the outage hours related to this Hurricane Beryl were very close to the outage hours associated with the ice storm of 2021, which at the time, categorized as a top five all-time weather outage event. Yeah, Brian, this is York. I think your numbers are directionally close in terms of how you're quantifying the impact that we've included, at least in this- in the implied guidance. You've got that home standby growth that you just referred to. You get a little bit of portable improvement. You get a little small offsets with clean energy on some of the comments we made on that outlook. Other products, so some slight declines there that are offsetting. So when you put it all together, we've always said that the impact of a major power outage event would be in that year, would be roughly somewhere between $50 million-$100 million. Like, we've said that for a number of years. So I would say what we've included in our guidance, partly because it's early, we've included our guidance maybe towards the lower end of that $50 million-$100 million in terms of our impact from Hurricane Beryl. It's early. We'll... You know, the portable, I think Aaron's comments about how the hurricane sort of took a sharp turn sort of unexpectedly, and we weren't able to, you know, deploy portables maybe before the storm. Maybe-- So maybe the portable uptake wasn't as significant, maybe, in this storm as it would have been in maybe some other hurricanes where you can plan ahead a little bit better. That might be some of the impact that on the portable side, but I think on the home standby side, it's early. We've, you know, we've got a lot, a lot of IHCs have come in as a result of these. We'll see how the close rates play out on that, and we'll be able to update, you know, throughout at our next quarter here. Stand by for the next question. Next question comes from Jerry Revich with Goldman Sachs. Go ahead, your line is open. Yes, hi. Good morning, everyone. Good morning. I'm wondering if we just talk about the gross margin performance. You know, last quarter, we spoke about better material costs, and the first quarter looks like that continued versus plan in the second. And, I'm wondering, as we think about the implied guidance in the back half of the year, is there an opportunity for the normalizing material logistics costs to drive a tailwind relative to the guidance, given the continued strong performance each quarter so far? Yeah, Jerry, no, the, I mean, gross margins were up almost 5% year-over-year. We've been seeing that for a number of quarters here as price costs, you know, improvements have been reading through. And then now we're starting to see, as home standby field inventory becomes normalized, and we're seeing that year-over-year growth in our home standby shipments. We're we're definitely getting the mix improvement there. So in the second quarter, I would say of that, roughly 5% improvement in gross margins, I'd say, I'd say maybe 3% of that 5% was mix related. The other 2% was price cost. Again, we've been seeing that for a number of quarters. And then I, as I mentioned, I think when Jeff Hammond asked the question, as we-... As we jump from first half to second half, you know, we do expect sequential improvement in gross margins, again, some further, mostly due to the just continued mix improvements with a higher mix of home standby in the second half of the year relative to the first half. But we do expect, you know, some price cost improvements. And as a result, you would, you would continue to see year-over-year price cost improvements as a result of all that. So at least in the second half of the year. So, yeah. No, well, you know, again, gross margins are getting, you know, healthy, you know, as the mix of home standby normalizes and price cost normalizes and improves. Standby for our next question. The next question comes from Kashy Harrison with Piper Sandler. Go ahead, your line is open. Good morning, and thanks for taking the questions. So just a few for me. You know, how much does Texas contribute annually to resi demand in a normal year on the resi side? And then, you know, on the C&I side, I was just curious if you've had any updates from your telecom rental customers on how they're thinking about the duration of the downturn. And then also, I was wondering if you could just speak to the sustainability of some of the strength you're seeing in the industrial distribution business in light of some of the weaker macro that we saw in 2Q. Thank you. Got it. Thanks, Kashy. So, yeah, I mean, Texas is obviously, it's a, it's a big market. We don't break out each kind of state that way, but, you know, we have grown. If you recall back, with the, the Texas Freeze, that event in, February of 2021, we said our, you know, penetration rates were sub 3% then. Today, they're sub 5%, so in Texas, so we've had 200 basis points roughly of penetration growth in Texas in a pretty brief period of time, you know, about little, little like about 3 years worth of time. So, you know, it's been an important, part of growth here, and obviously, these events, both the derecho in May and then the, the Hurricane Beryl event, are, are going to continue to, to drive that market, forward. You know, but again, still sub-6%, at 5%, I mean, there's a lot of houses that. Said another way, as we like to tell our teams here, you know, 95% of the homes in Texas don't have the product, so, and they are all kind of, you know, potential targets, for a generator. And it's a, you know, it's a huge market. And so, you know, we're really bullish on that. You know, in terms of the kind of the question on telecom specifically, you know, we kind of think this is the bottom here for telecom for us, you know, especially, relative to the comparisons last year. You know, the current pacing, though, the current run rate, feels like it's at the bottom. In fact, the back half contemplates a little bit of increase, especially as we get into Q4. So kind of Q2, Q3 here is kind of the bottom for the telecom cycle as we see it, and starting to maybe show some green shoots there. We're hopeful about 2025, but the reality of it is, we don't have any solid forecasts or information from our telecom partners at this point that would say that, you know, 2025 is gonna be better than 2024. They haven't shared anything with us yet. But, you know, once they get to that stage of planning for next year, you know, hopefully we'll be able to relay some of that information as we get into the 2025 guidance, next year. But, you know, it's an important market. We have an outsized share there, so that's why it's kind of impacted us negatively this year with the pullback. But that's, you know, that's... We're bullish about that long term. As I said before, you know, tower counts, hub counts, all those important elements of the infrastructure for wireless communications, and then the critical nature of those comms, and the need for, you know, reliable power infrastructure, especially, you know, again, when we have outage, large outage events like Beryl, it really does highlight the need for hardening of those networks. So, you know, that, that we expect to, to, to be important long term. And then your last question on the industrial distributors. Yeah, we've, we've done a lot. The current, you know, our team here, the leadership, there, Erik Wilde and his team, have done an awesome job really working through our distributors here in the U.S. And, you know, putting the other plans to make the right investments in, you know, whether it be sales, whether it's service, you know, whether it's our ability to support, where we're selling direct, you know, either through telecom or other, you know, other opportunities. We have to make sure we have that kind of coast-to-coast support. But also, you know, we, we've done some acquisitions there. We've acquired a couple of distributors where we were underperforming in certain markets, and we felt that we could do better, and that actually has paid off quite well. In the markets where we've done acquisitions, we've seen our share improve dramatically. You know, again, we were underneath our share nationally in those markets, so just getting to the share position would be, you know, would be an increase. But we've actually gone beyond that. So we've seen some really nice results there, alongside kind of our organic efforts with development of the distribution partners. So those are all paying off. We're gaining share, and we really like where we're going with that channel. It's helped, you know, kind of be a bellwether here as we weather the downturn in telecom and rental in 2024 here. That channel has performed quite well, and we expect it to continue to remain strong here through the next several years. One moment for our next question. Next question comes from Stephen Gengaro with Stifel. Please go ahead. Your line is open. Thanks. Good morning, everybody. Morning. Just a quick one for me. You talked earlier about sort of the impact of storms kind of reverberating kind of across other markets. And I'm just curious, A, have you seen that at all in IHCs? And maybe even B, is there historical precedent where you've actually seen a meaningful uptick in adjacent markets or not? Or am I sort of reading a little too much into this? Yeah, Stephen, it's a great question. I can tell you historically, whenever you get a widespread outage, it makes people think, right? So as an example, in Texas, you get a hurricane hitting Texas at early in the season, first Cat 5 ever on record in the Atlantic that early, and people in Florida are watching. And so Florida IHCs, there is a reverberation there that's positive, that gets people to action quicker. We advertise on a national basis, so that advertising resonates better when, in the background you have, outages taking place. So you know, we have historical reference points for that, and we certainly have seen some of that here as well. Again, the only cautionary point I would put on that is that for whatever reason, the Hurricane Beryl Texas event was maybe less covered nationally. You know, it's really quite a significant event relative to just the raw hours and the duration of the outages. And yet nationally, the media, you know, just, I don't think covered it quite as well, maybe as they might have if that had happened, perhaps somewhere on the East Coast or somewhere on the West Coast. So, and that happens, but nonetheless, that's a, you know, that's a reality of some of the, you know, the way those cycles work. So, but we are seeing definitely, especially the Gulf Coast states, when you get into hurricane season and somebody sees, you know, when people see, a storm of that magnitude, something that gets to that magnitude that quickly, this early in the season, and in particular, where we've got a very strong season still predicted. So I think that's another important element here, you know. That hasn't gone away, right? Then nothing's changed there. Yes, it's gone quiet here for a little bit, but normally it would be in July and August, you know, or July in particular, is usually a quiet month for events. But we'll see how it turns out the rest of the year. One moment for our next question. The next question comes from Jordan Levy with Truist Securities. Please go ahead. Your line is open. Appreciate you all squeezing me in here. I just wanted to get your thoughts quickly on beyond standby. I don't think I heard you bring it up unless I missed it. I know it's kind of a quiet period for that, but just, yeah, any thoughts on any traction in that segment? Yeah. Thanks, Jordan. You know, we're still bullish on that segment. It's just gone, it's gone, as you said, it's been a little bit quieter here. The higher rate environment has made some of those projects a little more difficult to pencil out. Kind of what's interesting is it kind of falls along the lines of a lot of the other, I'll call it, you know, kind of clean energy-related efforts, you know, in terms of the impact of high rates. You know, and that's something that's created a situation where the projects haven't gone away, they just haven't gotten a closure. So I think, you know, what's happening there is those projects are kind of idling in the background, waiting for a more constructive rate environment. And then we would expect that, you know, that segment that's still gonna grow. We're a leader in natural gas gen sets, which are used in those types of applications. I think one extension of that that is becoming a little clearer, we're finding that, you know, the whole beyond standby category, which we had, I think, largely defined as just using a generator for, you know, purposes other than just emergency backup, you know, using it to also supplement a grid that's under heavy stress. I think what we're finding is it's maybe we have to expand our definition of that to include some of these microgrid projects as well. Because in effect, what's happening is many of the microgrid projects have natural gas generators as an important component, but they also contain other pieces. They contain storage. So you know, the SunGrid acquisition that we announced this quarter, you know, and that we talked a little bit about in the prepared remarks, you know, gets us closer to another critical component of microgrids, which is the behind-the-meter storage element of that. And then, you know, we also called out that we're seeing EV charging be part of some of these projects as well. So commercial grade EV charging. So our partnership with Wallbox, I think, helps us be a little bit more of an important supplier to the, you know, a microgrid project. And, you know, we continue to build out our competencies there in not only the assets but the ecosystem, if you will, as we call it, similar to the residential ecosystem. We think there's an ecosystem developing on the C&I side, and we think that kind of that beyond standby moniker, kind of is, is likely gonna grow to include some of the activity we're seeing around these microgrid projects. So still bullish on it, but I think in a challenging rate environment, just, I think it's softer than, than it will be longer term. One moment for our next question. The next question comes from Donovan Schafer with Northland Capital Markets. Go ahead, your line is open. Hey, guys. Thanks for taking the questions. I just wanna see if we can get any more color on, in the prepared remarks, you said, you know, on the C&I. I think, I believe it was on the C&I side, that some of the weakness there was being offset by strength in India. And, you know, that's always been a market that it's kind of interesting to talk about. So what have you been seeing more recently on the ground? A nything impacted by, you know, election politics or anything like that? And just generally, any more color on the Indian market would be great. Thank you. Yeah, thanks, Donovan. No, India's a, you know, it's a growing market for us. We, through our Pramac subsidiary in Europe, we acquired, an Indian manufacturer a number of years ago and expanded that, relationship through, our, you know, our ownership of that, in its entirety. Built a new factory there, for that market. And, you know, that, our positioning there is different than other Indian genset manufacturers in that... And again, it's a little bit like a page out of the domestic playbook here. You know, we're really focused on natural gas, and most traditional solutions for backup power in the C&I markets globally are diesel solutions. And we do offer a diesel product line, but where we're getting the most traction is actually with our gas products. So those are products that are actually, designed here in the U.S., built in India, with our engines and our fuel systems and ignition systems, and then they're deployed in the Indian market. You know, we're bullish on that because the Indian market is converting to natural gas. We see a lot of pipeline projects on the drawing board as part of the, you know, burgeoning infrastructure build-out in India. I think, you know, from, you know, if you just step back, you know, India is poised very well to be the, I think, the chief beneficiary of some of the geopolitical tensions that have been rising between the U.S. and China. India is, you know, in a very good position to see, you know, the growth in their economy come at, you know, probably at the detriment to China as a lot of manufacturers shift production away from China and move to places like India and other markets. And India, you know, for all that it is, you know, it's, there's still a lot of opportunity there. It hasn't grown as fast as China historically. A lot of that is just based on, you know, the infrastructure within the country is still, you know, not mature, has a ways to go, but there has been progress. I think the political environment in India has been more receptive to business here as of late, the last several years, which is also a positive. And again, I think, you know, we're bullish on India longer term. It's still a small business for us, I think, and you just, you know, you put it all together, but it's a growing business. It's got nice growth rates. And again, we separate ourselves there by focusing on gas, where other manufacturers are still focused on diesel. by for our next question. Next question comes from Keith Housum with North Coast Research. Keith, go ahead. Your line is open. Great, thanks. I appreciate the opportunity. Just focusing more back on Texas, just real quick. In terms of historically, when major storms have gone through, how long has that tailwind been towards sales there? Has it been just a quarter or two? Has it been, you know, lasting longer? Yeah. Thanks, Keith. It usually goes two to four quarters. Of course, the bigger the event, sometimes you'll get an echo that's even bigger than that. In fact, I would say, you know, with the Texas Freeze of 2021, that echo has only recently been quieter, and some of that was exacerbated by the pandemic and just, you know, the impact that that created for people being concerned about outages. But, you know, something like, even like a Hurricane Sandy back in 2012, definitely went beyond the two to four quarters. Remains to be seen whether this event will rise to that. I think we're kind of sizing it on the smaller end of a major event at this point, just. But again, you know, that may change, our views on that may change as time grows. I would say that at a minimum, this will take us through this year and into the first half of next year. The anniversary, usually. Especially when you hit the anniversary of the event, right? Like, that's when media picks up: "Hey, remember a year ago, it started a hurricane season. Remember, we had Hurricane Beryl, you know, in July," you know, kind of early in the season. So those things get picked up. Again, the media drives a lot of that, kind of echo effect. And then to clarify, like, these events, the way it works is that, while you'll get a surge in demand, and then that afterglow lasts for a while, for a number of quarters, then it levels off at a new and higher baseline than where it was previously. So that's why these major events and the broad awareness created by them, you tend to increase distribution, that props up, they're actively in market now, on an ongoing basis to continue to satisfy demand, and you hold up that new prop up that new and higher baseline going forward. Great, thanks. I'll leave it there. One moment for our next question. The next question comes from Chip Moore with Roth. Go ahead, your line is open. Hey, thanks for taking the question. I'm wondering if you could expand a bit, just on how you're thinking about back half of the year, swing factors for that 4%-8% revenue range. Obviously, it sounds like Beryl activations will play a large role, but just other key puts and takes, you know, what are you baking in on consumer? You know, any softening there on the low end? Thanks. No, I mean, we're not necessarily seeing that, in terms of- Not anything beyond what we already had out. In terms of... Exactly. In terms of change from our prior guidance. Right. For the most part, the guidance increase is the impact of Beryl particularly in Texas, but maybe some around the edges, broader awareness around the nation. But we're not necessarily seeing a softening of the consumer that's offsetting that. Beyond what we are- Beyond what we are- Our, our- And our prior guidance. Our guidance did contemplate some consumer soft- Yeah, we had talked about that in terms of large ticket. Like, for instance, close rates are hanging in there. Yeah. Now, maybe we'll... With the large increase in IHCs from Texas, maybe those won't all close at the same rate, so maybe you'll see a temporary moderation in close rates. But, for the most part, close rates are hanging in there around the nation. This concludes the question and answer session, and I would now like to turn it back to Kris Rosemann for closing remarks. We want to thank everyone for joining us this morning. We look forward to discussing our third quarter 2024 earnings results with you in late October. Thank you again, and goodbye. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.