Good day and thank you for standing by. Welcome to the Third Quarter 2021 Generac Holdings Incorporated Earnings 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. Be advised that today's conference is being recorded. With that, I would now like to hand the conference over to your speaker today, Michael Harris, Vice President, Corporate Development and Investor Relations. Thank you and please go ahead.

Good morning and welcome to our third quarter 2021 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 and our SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we will make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our earnings release or SEC filings. I will now turn the call over to Aaron.

Thanks, Mike. Good morning, everyone and thank you for joining us today. We experienced another quarter of exceptional demand as interest in our home standby generators, clean energy systems, and commercial and industrial products remained incredibly strong. Production levels were also the highest we have ever experienced in a quarter with shipments of home standby generators increasing at a substantial rate over the prior year, as we continue to ramp output at our new facility in Trenton, South Carolina. This led to record revenue growth of 34%, in spite of significant operational obstacles faced across the supply chain environment that deteriorated further during the third quarter. Even with the higher output levels, demand remained very strong and broad-based, leading to higher backlog levels, particularly for home standby generators, providing us with good visibility and a significant revenue growth for 2022. Additionally, we recently announced several strategic acquisitions that will accelerate our Powering a Smarter World strategy and provide additional avenues for growth as we continue our evolution into an energy technology solutions company. Year-over-year, overall net sales increased 34% to $943 million, an all-time record, and also increased sequentially relative to the second quarter, which was the previous all-time record. The growth in the quarter was driven by strength in both residential and commercial and industrial products as compared to the prior year. Residential product growth was led by a 50% increase in shipments of home standby generators, as production levels continued to increase significantly relative to prior year levels, as well as tremendous year-over-year growth in shipments of PWRcell energy storage systems, which also grew double-digits on a sequential basis. Shipments of commercial and industrial products were also up dramatically in the quarter, with revenue of these products now growing materially above 2019 levels due to strength across a number of end markets and geographies. Adjusted EBITDA margins of 22.2% were lower as compared to the prior year, as they were unfavorably impacted by higher logistics and commodity costs. In response to the escalating costs we are experiencing, we've undertaken a number of additional pricing actions and cost reduction initiatives to mitigate the longer-term impact to margins. Now, discussing our third quarter results in more detail, the megatrends driving consumer interest in backup power continued in the third quarter. Most notably, the Home as a Sanctuary trend, combined with more extreme weather, which again resulted in elevated power outage activity. Overall, baseline outage activity for the trailing four quarters grew on a year-over-year basis in the quarter, despite a very strong prior year comparison, and remains well above the long-term baseline average. In fact, since we began tracking the impact of outage activity more than a decade ago, four of the top ten power outage severity quarters have occurred since the second half of last year. The convergence of the heightened power outage activity, broader electrification trends, and people spending more time at home has driven unprecedented demand for home standby generators. As a result, home consultations or sales leads increased again at a strong double-digit rate in the third quarter over the robust prior-year comparison and broad-based growth continues to be experienced as almost all U.S. regions grew on a year-over-year basis in the third quarter. It's also relevant to note that home consultations in the third quarter increased over three times the comparable 2019 levels. On a year-to-date basis they are more than four times 2019 levels. Activations of home standby generators, which are a proxy for installations, also grew at a double-digit rate compared to the prior year. We continue to experience a strong expansion of our distribution footprint as we ended the third quarter with approximately 8,100 residential dealers, an increase of 1,100 dealers over the last 12 months. California and Texas alone continue to account for nearly one-third of the year-over-year increase. Early in the third quarter, we achieved a significant milestone by starting production of home standby generators at our new facility in Trenton, South Carolina. We continue to make encouraging progress increasing production levels for home standby generators across our operating footprint, with daily build rates much higher compared to prior-year levels. Despite the higher output, demand for home standby generators continues to outpace our ability to produce them, which has caused lead times to further grow to approximately 30 weeks. These significant lead times provide excellent visibility as we head into 2022 with our home standby backlog projected to be well over $1 billion entering the next year. As we consider the longer-term capacity requirements for home standby production, we have made a number of strategic decisions to further expand our footprint. Yesterday, we announced plans to expand warehousing and distribution capacity at our Trenton facility by adding 200,000 square feet, which will increase the current size of the building by nearly 50%. In addition, we recently made commitments to purchase additional long lead-time automated manufacturing equipment that would be available to come online in 2023, further increasing our capacity for several key components to provide for needed surge production as the category continues to grow. In addition to these capacity expansion actions, last week we introduced the industry's largest air-cooled home standby generator, our new 26-kilowatt unit. Building upon the success of the launch of our 24-kilowatt unit last year, the new 26-kilowatt unit will allow homeowners to access the kind of power only previously available in larger size liquid-cooled generators at a significantly lower cost. As the trend to decarbonize accelerates, the electrification of everything in the home, including heating, cooking, cleaning, and ultimately transportation, will lead to much greater residential electricity consumption. The new 26-kilowatt home standby unit will be capable of providing the kind of resiliency needed with these larger electrical loads and will provide an ability to future-proof a home as these electrification trends intensify in the years ahead. With a strong outage environment and megatrends like Home as a Sanctuary underpinning tremendous demand for home standby generators, those same factors, along with the increasing penetration of solar installations, are also driving rapid growth for our clean energy product offering. As previously mentioned, shipments of our PWRcell energy storage systems grew significantly as compared to the prior year. It also grew at a double-digit rate sequentially. Despite numerous supply chain challenges also impacting clean energy products, we continue to experience growth well above the broader U.S. residential solar market, driven by ongoing increases in storage attachment rates and continued market share gains. In addition to strong revenue growth, key performance indicators for clean energy products continued to show favorable trends. Home consultations expanded as compared to the prior year and accelerated throughout the quarter. System activations, which are a proxy for installations and commissioning, more than doubled in the third quarter as compared to the prior year, and also increased sequentially. In addition, we further built out our installer network as we ended the third quarter with approximately 2,300 trained and certified dealers with nearly a thousand of those dealers registered on our PowerPlay CE sales platform. Despite the industry-wide supply chain and logistics challenges, we expect clean energy revenues to approximately double for full-year 2021 on a year-over-year basis. In addition, we continue to drive profitable growth within the product category as we scale volumes and optimize the supply chain. Building on the early success we've experienced with our clean energy product offering, we formally announced several exciting new clean energy related products during the third quarter that we believe will further grow our competitive advantage in this exciting new market. We introduced the industry's first purpose-built dedicated battery charging generator during the quarter, the Power Generator, which is a one-of-a-kind product enabling a homeowner to create a solar plus storage system that is completely grid independent. We also introduced our new PWRmanager load control system that maximizes battery performance and offers homeowners the ability to control specific electric loads from a mobile device via our existing PWRview energy monitoring platform. And building off the early integration success with the recent Chilicon acquisition, we introduced the PWRmicro, a Generac-branded microinverter that allows us to fully participate in the residential solar-only market, a meaningful expansion beyond the solar-plus-storage space we previously addressed. In another example of our focus on continued innovation, we announced the acquisition of Apricity, an advanced engineering and product design company focused on developing energy technology solutions. The team at Apricity brings expertise in designing and prototyping energy-related products to increase reliability, add functionality, and improve performance. The company has also developed a unique smart water heater controller that is used as a grid edge device by utilities in demand response and other energy conservation programs. Bringing this talented group on board will accelerate our efforts in expanding our clean energy offerings and increase our speed-to-market for key clean energy and grid services products and solutions. To further build upon Generac's evolution into an energy technology solutions company, yesterday we announced an agreement to acquire ecobee, which accelerates our capability to provide a home energy ecosystem with a dual value proposition for both homeowners and grid operators. Ecobee is a pioneer in the smart thermostat market and offers a full line of intelligent thermostats and home monitoring products that deliver significant energy savings, security, and peace of mind and enable the monitoring and control of a significant portion of the home's electrical load. Residential HVAC systems represent the single largest energy-consuming device in the home today, and Ecobee has created an intelligent system using smart thermostats and sensors to effectively balance comfort and conservation. With over 5 million connected devices in more than 2 million homes, Ecobee customers in North America have saved more than 20 terawatt hours of energy, which is the equivalent of saving enough energy to take all the homes in Los Angeles off the grid for an entire year. Importantly, Ecobee adds to Generac's growing suite of residential power generation, energy storage, and energy management solutions that we believe will play a pivotal role in helping to solve the challenges of the growing supply and demand imbalances of today's electrical grid. Smart thermostat controls represent one of the largest opportunities within the grid services addressable market involving the connection of grid edge devices to a grid services platform like our Concerto software platform, thereby enabling participation in grid services programs. Adding Ecobee's devices to our product portfolio considerably expands our served market opportunity and increases our capabilities to provide end-to-end solutions for turnkey virtual power plant projects. Adding Ecobee's innovative team of over 500 employees gives us the ability to further advance the development of an intelligent and intuitive user interface platform that would integrate and synchronize our generation and storage equipment, and our existing grid edge devices, providing seamless access and control for homeowners through a smartphone, tablet, or PC. We believe this approach will create one of the broadest home energy ecosystems available on the market today and allow for easy connection to our Concerto platform, empowering homeowners to make smarter energy production, storage, and consumption decisions, while providing grid operators more efficient access to the home in aggregate or at the device level for grid support programs. I'd also like to provide a brief update on Generac Grid Services, a new group within Generac that was formed in the third quarter that builds upon our October 2020 acquisition of Enbala Power Networks. Generac Grid Services was established to directly engage and serve utilities, energy retailers, and grid operators to provide an array of solutions and enable entirely new value streams that leverage a range of products from our portfolio. We took another major step toward unlocking significant value in the grid services space in the third quarter with the formal announcement of Smart Grid Ready capabilities across our home standby generators, our commercial and industrial natural gas generators, and our PWRcell energy storage systems. In addition to the peace of mind that they're receiving from Generac products, customers now have the opportunity to also obtain additional return on investment by leveraging their products to support grid reliability, resiliency, and sustainability. Within the expanding grid services marketplace, we believe Generac Grid Services is a unique and differentiated market leader due to our comprehensive set of hardware plus software plus services offerings, including through our Smart Grid Ready capabilities for legacy products, our recent acquisition of Apricity smart water heater controllers, and our pending acquisition of ecobee and its home energy management solutions. Our increasing integration of hardware with grid software and services is leading to a number of contract wins, along with a significant increase in proposal requests and an overall expanding sales pipeline. These include several examples of the new revenue streams within our grid services model as we layer on higher-value turnkey virtual power-plant programs, utilizing Generac hardware and performance contracts on top of the Concerto software-as-a-service platform. We are in the very early innings of the evolution of the power grid, but as consumer awareness grows and demand from utilities and grid operators materializes, we remain incredibly excited about the potential long-term growth trajectory of Generac Grid Services. The excitement around our expanding energy technology solution capabilities extends into the commercial and industrial product range as well, where offerings such as energy-as-a-service, microgrid solutions, and mobile energy storage systems are helping drive the long-term growth trajectory and an increasing mix of energy technology revenues. Our core commercial and industrial business experienced strong momentum in the third quarter as a number of end markets and geographies continue to recover strongly off the COVID-weakened prior-year quarter. Specifically, commercial and industrial product sales grew 47% as compared to the prior year, and 31% on a core basis. We also have a considerable backlog that is growing for commercial and industrial products that provides good visibility for meaningful growth heading into 2022. In addition to strong quoting and order activity in our North American distributor channel, shipments to telecom national account customers increased dramatically again during the quarter as compared to the prior year, as capital spending by several of our larger telecom customers continued at elevated levels and have led to further increases in project shipments during the current year. The catalyst for the additional spending on backup power in this important vertical continues to be driven by an elevated power outage environment over the last several years, the power security mandate in California requiring a minimum of 72 hours of backup power at all tower locations, and the build-out of wireless carriers' 5G networks. The long-term demand outlook for telecom backup power remains very compelling driven by the increasingly critical nature of wireless communications. We also experienced very strong growth within our national rental account customers as shipments of mobile products continue to recover at a significant rate from the COVID-driven lows of 2020. We still expect shipments of mobile products to improve dramatically for full-year 2021 versus the prior year, as national rental account customers invest heavily in fleet equipment, with utilization and rental rates continuing to improve. We remain optimistic about the long-term demand outlook for mobile products, given the important megatrend around the critical need for infrastructure improvements, which could benefit from the potential economic stimulus plans being pursued through the federal infrastructure spending bill. Additionally, we continue to build great momentum with our commercial and industrial beyond-standby initiatives. We are experiencing ongoing strength in project quoting for our natural gas generators using applications beyond traditional emergency standby power generation, such as their use in energy-as-a-service, microgrid solutions, and other distributed generation applications. During the third quarter, we announced a five-year agreement with Enchanted Rock to build and supply the advanced natural gas generators and control systems that are used in ultra-low emission, dual-purpose microgrids that Enchanted Rock designs and operates. These solutions provide commercial, industrial, and governmental customers with affordable and reliable backup power, and supply electric grid operators with critical grid stability services that accelerate the adoption of wind and solar without sacrificing overall grid reliability. The microgrid solutions are based on Generac's rich-burn gaseous engine technology and our newly acquired Deep Sea Electronics control systems, which provide quick start, utility-grade backup power in a much cleaner format when compared to traditional diesel generator solutions. We remain very optimistic regarding customer and grid operator interest in beyond-standby applications of our commercial and industrial natural gas generators. This interest is being driven by the need for enhanced grid stability and resiliency that these large blocks of power can offer, as well as the tangible and meaningful return on investment opportunity for asset owners. Our international business continues to see strong momentum as well, with net sales growth of 61% on a year-over-year basis during the third quarter, and 32% core net sales growth when excluding the benefit of the Deep Sea and Off Grid Energy acquisitions and the impact of favorable foreign currency. The core sales growth was driven by strength across all major regions that continued to experience a sharp increase in demand off the prior-year COVID lows, and have also recovered well above 2019 levels. Larger project floating and order activity continue to recover at a strong pace in key international markets, which drove growth in our international backlog during the third quarter, with the order strength continuing thus far in the fourth quarter. In addition, the segment's third quarter EBITDA margin expanded to 14.1% from 7.9% in the year-ago period due to the higher margin profile impact from the Deep Sea and Off Grid Energy acquisitions and improved operating leverage in the base business on higher sales volumes. With regards to Off Grid Energy, this acquisition closed on September 1 and brings a diverse range of energy storage solutions that provide cleaner and more flexible energy for industrial and mobile applications. Off Grid provides us an entry point into the rapidly growing market for industrial-grade energy storage systems and accelerates our hybrid generator and commercial and industrial energy storage product roadmap. Off Grid continues to see robust demand for its products in its core European markets and we are working to bring solutions for the rest of our geographic footprint given our strong global relationships with rental equipment customers. Our integration efforts are off to a strong start with some legacy customers across Europe having already placed orders for Off Grid products highlighting early momentum in the sales synergies that we expect to realize. In closing today, we have tremendous momentum in our business as we close off the current year and head into 2022 with incredible home standby demand, an expanding energy technology solutions portfolio, a growing grid services sales pipeline, and strong global demand for our commercial and industrial products. This provides support for yet another year of significant revenue growth with recent pricing and cost initiatives driving an improving margin profile. Day-to-day execution and navigation of the supply chain challenges clearly remains a near-term priority for our teams, but we're also keeping a clear focus on our new long-term Powering a Smarter World strategy with our ultimate purpose to lead the evolution to a more resilient, efficient, and sustainable energy solutions. Through the combination of aggressive organic investment and a series of strategic acquisitions over the past three years, Generac is uniquely positioned with our products, our services, our distribution, our brand, and importantly, our expertise to deliver the solutions necessary to facilitate the transition to the next-generation electrical grid. Importantly we retain significant financial flexibility to further invest and expand our capabilities and continue to advance our evolution into an energy technology solutions company. I'd now like to turn the call over to York to provide further details on third quarter results and our updated outlook. York?

Thanks, Aaron. Looking at third quarter 2021 results in more detail, net sales increased 34% to $942.7 million during the third quarter of 2021, an all-time record, as compared to $701.4 million in the prior-year third quarter. The combination of contributions from Mean Green, Enbala, Deep Sea, Chilicon and Off Grid acquisitions, and the favorable impact from foreign currency had an approximate 4% impact on revenue growth during the quarter. Briefly looking at consolidated net sales for the third quarter by product class, residential product sales grew to $608.8 million as compared to $458.9 million in the prior year, representing a 33% increase despite a strong prior-year comparable. As Aaron already discussed in detail, home standby generator sales continued to experience robust year-over-year growth, advancing by 50% during the third quarter as we made further progress increasing production levels for these products, despite challenging supply chain headwinds. Shipments of PWRcell energy storage systems grew at a significant rate as compared to the prior year as storage attachment rates and market share gains continued to drive growth of Generac's clean energy solutions. This growth was partially offset by a decline in shipments of portable generators, which faced a strong prior year comparison from a record level of shipments due to hurricanes in the prior year. Commercial and industrial product net sales for the third quarter of 2021 increased 47% to $258.3 million as compared to $176.2 million in the prior-year quarter. There was an approximate 15% benefit to net sales during the quarter from the impact of the Deep Sea and Off Grid acquisitions along with the favorable foreign currency. The very strong core revenue growth was in part aided by the soft prior-year comparison due to the COVID-19 pandemic. However, commercial and industrial revenue also grew approximately 7% on a core basis as compared to 2019 levels. The strength in core sales was driven by growth across a number of end markets and geographies as demand is recovering at a strong rate, both domestically and internationally in the following areas. Domestically, the growth was driven by a substantial increase in shipments to telecom national account customers due to much higher capital spending levels from these customers as they continue to harden their wireless networks and prepare for 5G rollouts. Also contributing to the increase was strong growth from mobile products to our rental channel customers, as they are investing heavily in their fleets due to higher utilization and rental rates. We also experienced higher shipments of natural gas generators used in beyond-standby applications. Internationally, the increase in commercial and industrial products was broad-based from a geographic standpoint, most notably in Europe and Latin America, as these markets continue to experience a sharp increase in demand off the prior-year COVID lows and have recovered well above 2019 levels. Net sales for the other products and services category, primarily made up of aftermarket service parts, product accessories, extended warranty revenue, remote monitoring and grid services subscription revenue, and other service offerings, increased 14% to $75.6 million as compared to $66.3 million in the third quarter of 2020. There was an approximate 4% benefit in net sales during the quarter from the impact of acquisitions and favorable foreign currency. Heightened power outage activity over the past several quarters continued to drive strong growth in aftermarket service parts. A larger and growing install base of our products and higher levels of extended warranty revenue also contributed to the increase versus prior year. Gross profit margin was 35.6%, compared to 39.4% in the prior year third quarter, as higher input costs had a significant unfavorable impact during the quarter. Specifically, rising commodity prices, labor rates, and logistics costs along with the Trenton plant start-up all pressured margins in the current year quarter. The early impact of pricing actions partially offset these margin pressures with the full impact expected to be realized throughout 2022, as these price increases work through our backlog. Operating expenses increased $41.9 million or 34.8% as compared to the third quarter of 2020, but declined 13 basis points as a percentage of revenue, excluding intangible amortization due to the substantially higher sales volumes in the current year quarter. The increase in operating expense dollars was primarily driven by additional variable expenses from a significant increase in sales volume, higher employee cost and marketing spend, and the impact of acquisitions. Specifically, recurring operating expense from the Mean Green, Enbala, Deep Sea, Chilicon, Apricity, and Off Grid acquisitions, related hiring, amortization expense, and incremental transaction costs during the current year quarter. As a result, adjusted EBITDA before deducting for non-controlling interest, as defined in our earnings release, was $209.2 million or 22.2% of net sales, as compared to $178.8 million or 25.5% of net sales in the prior year. This EBITDA margin decrease was largely driven by the aforementioned decline in gross margin. I will now briefly discuss financial results for our two reportable segments. Domestic segment sales increased 30% to $791 million, as compared to $607 million in the prior year quarter, with the impact of acquisitions contributing approximately 1% of the revenue growth for the quarter. Adjusted EBITDA for the segment was $187.7 million, representing a 23.7% margin, as compared to $171.4 million in the prior year for 28.2% of net sales. International segment sales increased 61% to $152 million as compared to $94 million in the prior-year quarter. Core sales, which excludes the favorable impact of acquisitions and currency, increased approximately 32% compared to the prior year. Adjusted EBITDA for the segment, before deducting for non-controlling interest, was $21.5 million, or 14.1% of net sales, as compared to $7.4 million or 7.9% of net sales in the prior year. The strong growth in international EBITDA margins was primarily due to the favorable impact of the Deep Sea and Off Grid Energy acquisitions and incremental operating leverage on the higher sales volumes. Now switching back to our financial performance for the third quarter of 2021 on a consolidated basis as disclosed in our earnings release, GAAP net income attributable to the company in the quarter was $131.6 million as compared to $115 million for the third quarter of 2020. GAAP income taxes during the current year quarter were $32.6 million or an effective tax rate of 19.7% as compared to $32.1 million or an effective tax rate of 21.8% for the prior year. The decline in effective tax rate was primarily due to a discrete tax item resulting from a higher stock compensation deduction during the current year. Diluted net income per share for the company on a GAAP basis was $1.93 for the third quarter of 2021 compared to $1.82 for the prior year. Adjusted net income for the company, as defined in our earnings release, was $151.1 million in the current year quarter, or $2.35 per share. This compares to adjusted net income of $132.9 million in the prior year, or $2.08 per share. Cash income taxes for the third quarter of 2021 were $31.3 million as compared to $23.6 million in the prior-year quarter. The current year now reflects an expected cash income tax rate of approximately 20% to 20.5% for the full year 2021, compared to our previous expectation of approximately 21% to 21.5%. The decrease was primarily driven by a higher-than-expected level of stock compensation deduction. This expected full-year cash tax rate compares to the prior-year rate of 16% that was anticipated after the third quarter of the prior year. The increase in the current year cash tax rate versus prior year is primarily due to a significant increase in domestic pre-tax income, which is taxed at a higher statutory rate. Cash flow from operations was $74 million as compared to $155 million in the prior-year third quarter. Free cash flow, as defined in our earnings release, was $42 million as compared to $148 million in the same quarter last year. The decline of free cash flow was primarily due to a higher working capital investment in the current year quarter and higher capital expenditures, partially offset by an increase in operating earnings versus prior year. The higher working capital investment was driven by elevated inventory at the end of the current year quarter, resulting from extended logistics in-transit timing, continued supply chain constraints, ramping production rates, and the startup of our new Trenton, South Carolina facility. Updating our liquidity position as of September 30, 2021, we had $873 million of liquidity, comprised of $424 million of cash on hand and $449 million of availability on our ABL revolving credit facility. Also, total debt outstanding at the end of the third quarter was $910 million, net of unamortized original issue discount and deferred financing costs. Our gross debt leverage ratio at the end of the third quarter was only 1.1 times on an as-reported basis. Further enhancing this attractive capital structure is our strong cash flow profile, with free cash flow over the last 12 months of $455 million. I would now like to provide some additional details on our outlook for full-year 2021. As mentioned in our press release earlier this morning, we are maintaining our full-year 2021 net sales growth guidance range of approximately 47% to 50% compared with prior year, which includes approximately 5% of favorable impact from acquisitions and foreign currency. The expected benefit from acquisitions is moderately higher than previously anticipated due to the impact of the Off Grid Energy, Tank Utility and ecobee acquisitions not included in our previous guidance. Updating our margin outlook for the full year 2021. As we've discussed, we continue to experience significant supply chain challenges, logistics delays, and rising commodity prices which are resulting in higher input costs relative to our previous guidance. As a result of these factors, we now expect gross margin for full-year 2021 to decline approximately 150 basis points as compared to the prior year, which compares to the previous expectation of approximately flat versus the prior year. Due to the reduced gross margin outlook, adjusted EBITDA margins, before deducting for non-controlling interest, are now expected to be approximately 23.5%, which compares to the previous guidance of 24.5% to 25%. As a result, we expect to maintain EBITDA margins compared to the prior year, despite the significant margin headwinds and acquisitions executed during the current year. Providing some quick comments regarding our initial thoughts looking into 2022, the company's consolidated backlog has increased considerably since reporting our second quarter results, most notably for home standby generators, but also across a broad range of other residential and commercial and industrial product categories. For example, as Aaron mentioned, our home standby backlog alone is projected to be well over $1 billion entering the new year. The substantial overall backlog expected at the end of this year provides support for another year of projected significant revenue growth in 2022 with an improving margin profile as we begin to realize the full impact of various pricing actions and cost reduction initiatives. Throughout 2021, we have implemented multiple rounds of price increases across all product categories with differing realization legs depending on lead times. We expect increasing realization of all 2021 pricing actions throughout the first half of 2022 with the full benefit realized by the second half of 2022. We also are pursuing certain cost reduction initiatives to combat the significant increase in input costs, including important projects focused on profitability enhancement and continuous improvement activities. We will now provide additional guidance details to assist with modeling adjusted earnings per share and free cash flow for 2021. As mentioned previously, our cash income tax rate is now expected to be between 20% to 20.5%, which compares to prior guidance of 21% to 21.5%. GAAP intangible amortization expense for 2021 is now forecasted to be approximately $45 to $47 million, as compared to the previous guidance of approximately $49 million, with the decrease primarily due to updated purchase accounting adjustments related to recent acquisitions. Stock compensation expense is now expected to be approximately $26 million to $27 million, as compared to previous guidance of $24 million primarily due to the impact of additional acquisitions since our second quarter update. Our GAAP effective tax rate is now expected to be between 22% to 22.5% for the full year, compared to the previous guidance range of 22.5% to 23.5%. The decline is primarily due to a higher level of stock compensation deduction during the current year. Our fourth-quarter weighted average diluted share count is now expected to be approximately 64.5 million shares, assuming a December 1 closing of the ecobee transaction. This concludes our prepared remarks at this time. We'd like to open up the call for questions.

Thank you. At this time, we would like to take any questions you might have for us today. Please note that analysts are allowed one question and one follow-up question only. Thank you. Please stand by while we compile the Q&A roster. This will only take a few moments. We have our first question, from the line of Tommy Moll from Stephens. Your line is open, please go ahead.

Good morning and thanks for taking my questions.

Hey, Tommy.

Aaron, I wanted to start on ecobee, specifically on the go-to-market there. How do they go to market or how have they gone to market historically? How is that changing when you take it into your portfolio? And when you think about the edge that Generac will bring as the owner of this business going forward, where there's some fairly stiff competition, how would you frame that for us?

Yeah, thanks for the question on that, Tommy. Ecobee is going to be—I think we'll look back a couple of years from now and that's going to be a really critical turning point for us as we continue on this journey and the evolution of becoming an energy technology company. Specifically on your question on distribution, what we really like about them is that they refer to their go-to-market or their distribution strategy as omnichannel, which is exactly how we would refer to our own. They sell through retailers and big-box retailers, they sell online through those platforms, they sell through dealers. They have over 40,000 HVAC contractors that represent them in the marketplace, so really a pretty wide net in terms of just the way they go to market. They sell to HVAC distributors, so it's really truly omnichannel. We like that; it fits well. We think there's going to be a lot of interesting synergies there. Our electrical channel can certainly install a thermostat, and conversely their trades can install some of our other products as well. So, we think there's a really good fit there. The thermostat market, if you just look at thermostats, is fairly large. This is truly beyond that though. This is about the intelligent thermostat platform and the smart thermostat platform. There are only a handful of true competitors to what ecobee does. Ecobee created this category. Stuart Lombard, the person who runs that business, began the company in 2007, and by 2009 they'd introduced the market's first true smart thermostat. Others have joined since. When we think about our differentiation going forward, it's the combination of the smart thermostat as just one of the elements of a home energy ecosystem. This is more than just the thermostat. It's about the integration of all of those things. What we really like about ecobee is it gives us a platform and it gives us a team of over 500 people in Toronto that are steeped in user interfaces and user experience, which is what we need to bring all of these assets together to combine them in a single pane of glass for view and control by the consumer and for easy attachment to grid programs through our Concerto platform. We think that this is the middle layer that is much more than just a thermostat; it's the middle layer we need going forward to bring all of this to bear as the grid continues to change and as the home energy ecosystem continues to develop. I'm really excited about this. It is a cool product. If you've ever looked at the product itself and the quality of it, the premium look and fit and finish, and the platform, if you've ever used the ecobee platform, it's definitely going to be a great platform to put all of our devices into.

Thank you, Aaron. That's very helpful. As a follow-up, I wanted to talk about your home standby business. At the Investor Day you gave some directional insight on really favorable cost per lead trends. You're still supply constrained there, notwithstanding major efforts to alleviate that bottleneck. But if you weren't supply-constrained in this environment, Aaron, how many more sales and marketing dollars could you deploy efficiently into that customer acquisition funnel? Are we talking 25% more dollars, 50%?

I think what's interesting, Tommy, is we really haven't backed off on deploying the dollars even though we are supply constrained. This is maybe why the lead times continue to grow, which is not what we want to see for our customers. But I think we've got our arms around some really good longer-term plans here to continue to expand capacity. All the things that we have been working on will come online next year and we made some pretty big commitments in the third quarter around not only the expansion at the Trenton facility, but commitments toward additional automated manufacturing equipment to help us scale even further. Our marketing team watches the statistics very closely. If they were to see the cost per lead starting to change around where we're spending, they would throttle back the spending, and so far that hasn't been the case. A home standby generator project is already a longer project timeline for most people because there's permitting involved, contractors, the work itself, and inspections. Generally, it was two or three months previously, and I think people realize in today's environment that we are supply constrained in a lot of things, not just home standby generators—appliances, vehicles—so there's an acceptance level that they have to wait. I also think it speaks to how in tune people are with the importance of having backup power. The outages have been increasing and lasting longer. People are spending more time in their homes and they realize how vulnerable they are and what that means to the ability to work from home or for kids to learn from home. All those things require continuous power. A generator is going to be an appliance that many homes will have as the grid continues to change. We're committed to expanding capacity and have confidence in the long-term demand. As it relates to marketing dollars, we're going to continue to spend as long as it makes sense financially.

Thanks, Aaron. I appreciate the insight and I'll turn it back.

Our next question comes from the line of Ross Gilardi from Bank of America. Your line is open. Please go ahead.

Hey, good morning. Thanks, guys.

Hey, Ross.

I just had some questions on York's preliminary comments on 2022 revenue growth. It would seem that if you deliver the backlog alone, and I think a critical planning assumption at the Investor Day was to work that backlog down to essentially zero by the end of 2022, $1 billion plus backlog alone is close to 30% revenue growth next year. Am I thinking about that correctly? And from the installer and distribution perspective, are you confident that you've got enough distributors and installers on the ground right now that could get those all installed, or do they just end up sitting in limbo for a period of time?

Hey Ross, I'll take some of those questions and then York can jump in. On the backlog, directionally you're thinking about it right. We will have a bigger backlog coming into 2022 than originally thought because demand has just been stronger. It's outstripping supply. We're hitting record output levels on home standby, and we could go higher if not for constraints, many of which are logistics related, such as increased dwell time at ports and trouble finding trucks. These issues are holding us back a bit but we think they're temporary and should resolve. The real question is the theoretical capacity numbers. If supply chain constraints persist into the first half of next year, that could create headwinds to achieving the theoretical capacity. That's something we must watch. Longer-term, we have a good plan to go even higher with home standby capacity and confidence to execute. You hit on an important point: distribution and installation. We have 8,100 dealers today and we've grown that by 1,100 dealers over the last 12 months, the most in that period we've ever grown, and we need to grow more. We will need to pick up the pace of installations to keep pace with deliveries next year. Dealers aren't the only installers: electrical contractors and HVAC contractors also install home standby systems. There are over 70,000 electrical contractors and over 100,000 HVAC contractors who can do installations. We need to do a lot more training, find more dealers, and will have an outside focus on that for next year. York, any additional comments?

I would add that whether we catch down the backlog next year depends on the supply chain environment and the outage environment. Both will influence our ability to fulfill the backlog in 2022.

It's setting up to be a large year just based on the backlog alone.

Can I ask a follow-up? The original plan last quarter was to get EBITDA margin back to Q1 2021 levels in the fourth quarter, and obviously that's changed as reflected in your guidance. Do you get back there in the first half of 2022, and can you give us a sense of where the run-rate pricing contribution to revenue growth entering next year?

We implemented multiple rounds of pricing across all categories. Some pricing will realize earlier, some later depending on lead times. The September increase will show up on shipments in Q4 and some increases will not fully realize until mid-2022 given our current lead times. By the end of the first half of 2022, we expect full realization of 2021 pricing actions, and that should get gross margins closer to where they were earlier in the year. We're putting budgets together, so not giving clear numeric guidance now, but margins should improve sequentially throughout next year.

It's definitely going to improve. The way costs rose rapidly, particularly logistics and certain commodities, means realization lags have shortened because we're burning through material so much quicker. That causes costs to read through our margins more quickly today. We have a plan to get ahead of it and I feel good about where we will be next year.

Our next question comes from the line of Philip Shen from ROTH Capital. Your line is open. Please go ahead.

Hey, guys. Thanks for taking my questions. First, on capacity: you announced the expansion in Trenton yesterday. Is that part of the double-by-Q2-2022 plan? You mentioned Aaron that you've secured equipment for 2023. Have you made the decision on capacity expansion beyond the Q2 2022 double? Have you locked in supply chain agreements which are critical and made commitments there? And finally, the Jefferson facility—has that been converted to permanent and is it key for reaching that Q2 2022 double as well? Thanks.

Thanks, Phil. The Trenton expansion adding 200,000 square feet is primarily warehousing and distribution and is not part of the double-double capacity increase. It's indicative of our confidence to run at elevated rates for an extended period and it made sense to bring warehousing in-house. Regarding the long lead-time automated manufacturing equipment, the tooling for internal components has lead times of 60 to 70 weeks. We've committed to ordering that equipment now so it will be available in 2023. We don't yet know exactly where we'll place that tooling—could be Trenton, Whitewater, Jefferson, or another facility—but ordering it now ensures we won't be unable to react later. The equipment will allow us to go further than the double-double we discussed previously. On Jefferson: we converted a facility where we make portable generators and other products and added capacity for home standby. We added another production line there in the third quarter and we anticipate producing more from Jefferson as we end the year. Some components we usually manufacture internally were temporarily placed with external suppliers; those components will be delivered in the back half of Q4 and will go to Jefferson to help increase capacity. We'll likely produce home standby in Jefferson throughout 2022 and possibly into 2023 depending on backlog and demand. We have taken the necessary steps to enable capacity growth beyond the double-double, and more details will come as we finalize plans.

Great. Thank you. As it relates to ecobee, based on our industry checks we estimated the revenue run rate around $30 million to $50 million and that the company is probably running near break-even. Are we in the right ballpark here? And if so, what kind of growth could you see for ecobee in 2022? Finally, how are they managing through the chip shortage? I'm guessing they also have issues there.

Ecobee is actually larger than that; they are closer to $125 million in revenue and are supply chain constrained. They could be higher but have had some supply constraints, including chips. We are adding additional chip capacity across their product line, and Stuart and his team are navigating that well. Their growth rate is expected to be about three times and we're projecting aggressive growth in devices and services under our long-range plan. Ecobee is still in investment mode and is generating operating losses today; we expect continued investment for the next couple of years and it may be a couple of years before they break even. That doesn't worry us as this is an important strategic investment for the home energy ecosystem and platform integration work.

Our next question comes from the line of Brian Drab from William Blair. Your line is open. Please go ahead.

Hey, good morning. First, can you talk about the supply chain issues you might be facing or could face as you try to ramp additional capacity, setting up the new distribution warehouse, and any of the equipment you need? We're hearing a lot about supply chain issues with building generators, but how is the effort to get the equipment into these facilities going?

Great question, Brian. We're pacing pretty well with the existing equipment that's been on order. The newly committed equipment has longer lead times due to component shortages—these automated systems have a lot of electronics and chips. However, the equipment scheduled for Q1 and Q2 next year is still on track and we feel good about those timelines. We've built supply chain timing assumptions into our plans for when facilities and equipment will become meaningful. The true component supply chain deteriorated in the third quarter with port congestion, trucking and rail challenges, and increased dwell time. The cost to get components here has also increased materially, but it's primarily the time factor that's the most challenging. I'm hopeful this situation will improve over the next 60 days, as we are hearing some indications that it may have bottomed, though every day presents different challenges.

Thanks. As a follow-up, can you quantify what you expect the excess transportation costs to be in 2021? If those costs subside in 2022, how helpful could that be to your financial model next year?

Looking at gross margin reduction, in Q3 it reduced over 3 percentage points year-over-year, which was predominantly all price-cost headwind. Looking forward into Q4, there's another roughly 4 percentage point price-cost impact year-over-year. If logistics and commodity pressures moderate and coupled with pricing actions, that could result in a quick rebound in profitability.

Our next question comes from the line of Joseph Osha from Guggenheim Partners. Your line is open. Please go ahead.

Hi, thanks for taking the question. We haven't talked about Chilicon much today. I'm wondering how the launch is going given availability of components and prices—how is that working right now?

Great point, Joe. The TAM for microinverters is large and the team is making good progress on the planned launch in Q2 of next year. We are maintaining that commitment. We're watching component availability and scaling the contract manufacturer that Chilicon used while adding other contract manufacturing resources to broaden the supply chain. We believe we will have enough supply to get started next year. We'll finalize planning in our 2022 guidance, but initial receptivity has been strong. The internal excitement around what we can do with the product is high and Ross Minick and his team are very bullish about the long-term opportunity.

Thanks. As a follow-up on ecobee, many companies have tried integrated home energy management with mixed success. With Chilicon and storage you can potentially offer a complete package. Will you go to customers and offer a combined complete home energy solution including thermostats and storage?

Absolutely. Ecobee is more than a thermostat; it's a platform. HVAC is the largest energy load in the home today. Combine generation—PV or natural gas generator—with storage, load management, thermostatic control, and water heater control, and you can offer a complete package. Grid edge devices such as thermostats and water heater controllers are relatively small incremental costs but add significant value to homeowners and grid operators. This becomes compelling in the context of total system spend on Solar Plus storage. It also enables value to the grid via Concerto. We're taking a long-term view and see strong strategic rationale for integrating ecobee with our broader home energy ecosystem.

Our next question comes from the line of Mark Strouse from J.P. Morgan. Your line is open. Please go ahead.

Good morning. Aaron, you said at Analyst Day you expected to get backlog back to a normalized level by the end of 2022. Over the past month since you made that statement, are you more optimistic or less optimistic about that ability?

Great question. Compared to four to six weeks ago, I am less optimistic we'll catch the full backlog by the end of 2022. Demand has outstripped expectations as we ended Q3 and entered Q4. Even with quieter outage activity in October, demand remains extremely strong across our indicators—consultations, activations, and incoming orders. The Home as a Sanctuary trend, electrification, and concerns about power reliability are all driving people to solutions like home standby and storage. We may be at a tipping point where penetration accelerates. We're roughly at 6% penetration today; every one percentage point of penetration represents about $2.5 billion of market. We're over 75% share in the space, so the opportunity is significant. We must be ready across production, installation, and service to support this demand.

Thanks. As a follow-up on ecobee: what's the longer-term margin contribution from that business? What do clean energy margins generally look like today?

If you look at ecobee as it ramps, its margin profile in the out years should look similar to our clean energy business. We have discussed clean energy moving to mid-to-high teens EBITDA margins in the out years, and gross margins closer to the mid-30% range. Storage is a profitable business today, though we haven't provided an exact current margin, and over a few years we expect it to move into the mid-to-high teens EBITDA margin profile as it scales. Ecobee should align with that overall clean energy margin profile in the out years.

Our next question comes from the line of Jed Dorsheimer from Canaccord Genuity. Your line is open. Please go ahead.

Hey, thanks and congrats on ecobee. I've worked with Stuart and think he'll be a great fit. Aaron, could you unpack grid services a bit more? If there's an installed capacity of well over 20 gigawatts of generating capacity in the field, how do you get a homeowner with a 24-kilowatt generator to sign up to allow access to their generator through Concerto? Where are you in that process with utilities and how do you unlock that 20-plus gigawatts?

Great question, Jed. We're vocal about grid services because our proposal pipeline has grown significantly since acquiring Enbala. Concerto's latest release adds functionality and Smart Grid Ready capabilities across our home standby generators, C&I gas generators, and PWRcell systems, and our Power Manager load control device is also Smart Grid Ready. Adding ecobee and other grid edge devices increases the assets we can bring into programs. The process is twofold: first, we can demonstrate to a utility the amount of distributed capacity available in their territory—hundreds of megawatts in some markets—that they didn't realize was already on the ground. That data is powerful and changes the conversation. The next step is connecting those assets and enrolling customers. Some utilities move faster than others; we are in pilots with several utilities to enroll existing and new generator and storage owners into programs. We are exercising control in pilots to demonstrate value for grid reliability and resiliency. Utilities are being mandated to decarbonize and need tools to integrate more renewables while maintaining grid stability. Concerto enables that by coordinating distributed resources. As we add more devices—generators, storage, thermostats, water heater controllers—we can aggregate these resources into virtual power plants and offer new value streams. It's early innings, but the number of proposals and pilot programs gives us conviction that this is a meaningful long-term opportunity.

As a follow-up, on Europe: given current energy policy and potential resilience issues this winter, demand could accelerate in Europe. How are you thinking about positioning the business to capture potential demand there given North American constraints?

You're right that Europe presents an obvious opportunity given energy challenges. Interest in home standby increased outside the U.S. last year and we're seeing higher demand. We're supply constrained, so that limits how aggressive we can be in the near term, but deliveries to Europe are up dramatically off a small base and growing quickly. Storage is another area of opportunity; we'll introduce a new PWRcell system in 2023 better suited for some European applications. The Off Grid acquisition accelerates our presence in European industrial and mobile storage markets, and we've seen early order momentum there. Europe is a large opportunity and we are focused on it, but we also have a significant opportunity in North America that demands our attention.

Next question will be from the line of Jeff Hammond from KeyBanc Capital Markets. Your line is open. Please go ahead.

Good morning. This is David Tarantino on for Jeff. Attacking these supply chain headwinds from a different angle, could you provide color on how the extended lead times to 30 weeks balance out between supply shortages and just the underlying demand strength?

The 30-week lead times are primarily driven by demand outstripping supply. While there are supply chain constraints affecting components and ramping to theoretical capacity, even if we produced at current maximum capacity, demand likely would outstrip that given where orders and customer interest are today. Some constraints are logistics-related and may impact our ability to fully realize theoretical capacity mid-next year, but the primary driver is strong demand across the category.

Next question comes from the line of Pearce Hammond from Piper Sandler. Your line is open. Please go ahead.

Good morning and thanks for taking my question. Specifically related to acquisitions, you've made a number of acquisitions recently. Are you going to pause to digest and integrate these, and if you're looking for future acquisitions, what white space is still available within the energy technology solutions mandate?

Great question. We did six acquisitions this year; that wasn't the plan at the start of the year, but acquisition timing is often determined by sellers and market processes. We've done around 23 or 24 deals over time and we've developed integration capabilities. The acquisitions this year have been spread across residential, commercial and industrial, and clean energy businesses, and some are international. I don't think we'll stop doing acquisitions to absorb them; instead, we'll ensure we have the resources to integrate and accelerate our strategy. Acquisitions are used to accelerate strategy, not to obscure results. As for white space, in residential we continue to look at heavy amperage loads and control opportunities, potentially in EV charging or other appliances. On the commercial and industrial side, while Off Grid accelerates our C&I storage for mobile and industrial applications, there's more to round out. Ecobee advanced our home energy ecosystem significantly. We'll continue to seek strategic acquisitions that accelerate our capabilities.

Our next question comes from the line of Jerry Revich from Goldman Sachs. Your line is open. Please go ahead.

Hi, this is on for Jerry Revich. In terms of the cost headwinds in the fourth quarter, can you describe how much is expected to be transient versus permanent?

When we discuss impacts from commodities and logistics, some of it stems from temporary expediting or higher logistics costs due to supply chain constraints, and some is driven by commodity price inflation such as steel, copper, and aluminum. As logistics normalize and supply chain constraints ease, those logistics costs should moderate. The impact of higher input costs is expected to be transient as we roll in our pricing actions and cost reduction initiatives. Over a longer-term view, we expect to offset much of these pressures through pricing and productivity improvements.

Our next question comes from the line of Maheep Mandloi from Credit Suisse. Your line is open. Please go ahead.

Thanks. Quick one on working capital: as we look into the next two quarters, should we expect a similar working capital increase for Q4 and Q1 because of inventory challenges here?

There are four factors causing elevated inventory: extended transit times, supply chain constraints causing backup in inventory when certain components are missing, ramping production, and startup of Trenton. The ramping part will continue into Q1 next year, and once Trenton is fully up and running that will contribute to increased inventory. The longer in-transit times and other supply chain constraints should level off over time; we expect those to normalize over the next year. So, working capital pressures related to ramping will persist into Q1, but some elements should stabilize.

There are no further questions at this time. Michael, please continue.

We want to thank everyone for joining us this morning. We look forward to discussing our fourth quarter 2021 earnings results with you in mid-February. Thank you again and goodbye.

This concludes our conference for today. Thank you all for participating. You may now disconnect. Have a great day.