Good morning, and welcome to our third 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 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 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 third quarter results were ahead of our previous expectations as elevated power outage activity drove a return to robust growth in overall net sales and strong execution helped to deliver significant margin expansion. The recent increase in outage activity pushed year-to-date power outage hours through September to the highest level since we began tracking this data in 2010. As a result of the third quarter outperformance and the higher-than-expected outage activity, specifically the impact of Hurricane Helene and Hurricanes Milton, we are raising our 2024 outlook. Year-over-year, overall net sales in the quarter increased approximately 10% to $1.2 billion. Residential product sales increased 28% from the prior year due to accelerating demand for home standby and portable generators in the quarter. Global C&I product sales decreased 15% from a strong prior year as CapEx spending for U.S.-based rental, telecom and beyond standby products remained lower in the quarter and as market conditions further weakened in Europe. These softer end market conditions were partially offset by continued growth in shipments to our domestic industrial distributors as we continue to reduce our lead times. Additionally, favorable sales mix, lower input and logistics costs and improved production efficiencies drove significant expansion in gross and adjusted EBITDA margins in the quarter, with gross margins reaching their highest level since the third quarter of 2010. This margin expansion, together with our return to overall net sales growth demonstrates the earnings power here at Generac as we continue to execute our strategic vision. Home standby shipments in the quarter increased at a high 20% rate from the prior year as a result of the elevated outage activity. Outage hours during the third quarter were at their highest quarterly level since the fourth quarter of 2012 and drove home consultations to an all-time quarterly record, continuing to be strong in October due to the combined impacts of Hurricane Helene and Milton. Consistent with historical trends following periods of elevated outage activity, close rates have moved lower relative to the first half of 2024. This expected compression in close rates is anticipated to be temporary as our dealer network absorbs the rapid increase in home consultations and as we expect a return to the longer-term trend of improving close rates over time. We continue to invest heavily in lead optimization, sales enhancements, and improved lead nurturing practices to help improve the longer-term trajectory of close rates. We ended the third quarter with our residential dealer count at approximately 9,100, an increase of 400 dealers from the prior year with notable growth in Texas. We expect our dealer count to grow further in regions recently impacted by severe weather, which not only helps drive overall category awareness but this expansion in distribution plays a critical role in supporting a new and higher baseline level of demand for home standby generators going forward. Our aligned contractor program also grew during the quarter and is quickly becoming an important new element of our distribution network, particularly with the additional installation bandwidth they provide. Aligned contractors, which now number over 2,000, purchase products through our wholesale channel partners and have access to several important sales and service tools. The scale of our installation network, including dealers and non-dealer contractors, is an important advantage for Generac, particularly following accelerations in demand, as we have seen in recent months. Activations or installations of home standby generators returned to year-over-year growth in the third quarter, driven by strength in the South Central region and, to a lesser extent, the Northeast and Southeast regions. Activations have continued to increase early in the fourth quarter, supporting our expectations for ongoing growth throughout year-end despite a strong prior year comparison. With unmatched scale in this industry, we are uniquely positioned to meet the rapid increase in homeowner demand for residential backup power. In addition to our scale and logistics capabilities, our industry-leading distribution network and scalable call centers provide 24/7 consumer support and service to homeowners in their time of need. We also have unique marketing capabilities with the resources and capacity to drive additional awareness of our products and generate sales leads for our distribution partners. Additionally, we are further ramping our home standby production rates and have increased hiring in our Whitewater, Wisconsin, and Trenton, South Carolina plants to meet the elevated demand levels we're seeing after Helene and Milton. Given our prior investment in additional home standby manufacturing capacity, we have been able to accelerate production at a much quicker pace. In fact, as a result of these investments and the tremendous effort of our teams, we expect to ship approximately $200 million of incremental home standby and portable generators in 2024 related to the impact of the major hurricanes in the second half of the year. The combination of Hurricanes Helene and Milton is also expected to result in higher levels of awareness for backup power longer term as homeowners and businesses look for solutions as protection against power outages. With a nationwide home standby penetration rate at only approximately 6% and the combined penetration rate of the states recently impacted by severe hurricane activity being slightly below that level, we believe there is significant runway for future growth in the category as the mega trend around lower power quality continues to play out. Demand for portable generators also surged in the quarter as a result of the dramatic increase in power outage activity over the last four months, with third quarter shipments increasing at a very strong year-over-year rate. These products not only provide an essential solution for homeowners in emergencies, but they often serve as an introduction for most first-time buyers to the backup power market, helping to drive Generac brand awareness. In addition to the recent storm-driven benefit, we are leveraging our product breadth and our ability to react to sharp demand increases to further expand our relationships with the major retailers that serve as our primary distribution channel partners for portable generators. Now moving to our Residential Energy Technology Products & Solutions. Our energy storage system sales benefited from initial shipments associated with the previously awarded Department of Energy Grant in Puerto Rico. This program is accelerating as we enter 2025 and provides favorable top-line momentum, particularly with the upcoming commercial launch of our next-generation power cell energy storage system that we introduced in September. PWRcell 2 includes important upgrades over our previous generation of storage products, making it the market leader in storage capacity per cabinet, while also delivering improved continuous and peak power output. The AC-coupled PWRcell 2 also brings additional flexibility, including an improved retrofit installation experience and seamless generator integration with both home standby and portable generators, as well as a differentiated user interface through our ecobee platform. The introduction of the PWRcell 2 Series marks a key milestone for the company, as we believe we are building a unique energy management ecosystem for the market, centered around the ecobee Smart Home Energy Hub and focused on both resiliency and energy savings. Additionally, as we accelerate our efforts in expanding and engaging our channel partners for these products over the coming quarters, we expect to further leverage our expertise in building and developing distribution, lead generation via direct-to-consumer marketing, and our brand strength. In addition to growth in our clean energy storage solutions, our team at ecobee continues to execute very well, driving growth and significant gross margin expansion from the prior year, while also adding new products and partnerships. We believe ecobee's market share continues to grow as a result of these initiatives, building on the current installed base of more than 4 million connected homes. We see the intelligent HVAC control that ecobee provides within our energy management ecosystem as a meaningful differentiator, and we are working towards similar capabilities for EV charging management through our partnership with Wallbox. Switching gears now to our C&I product category. As previously mentioned, global C&I product sales declined 15% from the prior year. Shipments to our North American industrial distributor channel again grew at a robust rate in the third quarter, and quoting activity has remained resilient. Although our operational execution has allowed us to reduce lead times, customer project timelines have extended more recently, and we will be monitoring these trends closely as we head into 2025. As expected, shipments to national telecom and rental equipment customers declined in the quarter from the prior year period. While we expect that our sales to the telecom market have bottomed, we believe demand from our rental equipment customers will likely remain softer in the coming quarters. Despite the cyclical weakness we've experienced in 2024, we continue to view both the telecom and rental categories as long-term growth opportunities, given the mission-critical wireless networks and infrastructure-related projects that our products support. Shipments of our natural gas generators for use in beyond standby applications also declined during the quarter from a very strong prior year comparable period. End market activity remains subdued, but we are optimistic regarding the longer-term prospects for these applications and adjacent projects due to the supportive mega trends of lower power quality and higher power prices. We continue to develop a growing pipeline for our C&I battery energy storage systems or BES, as well as our multi-asset microgrid offerings, which often include traditional generator products as part of these solutions. In early August, we acquired Agito, a leading provider of microgrid controllers. This small but strategically important deal follows our recent acquisition of Sun Grid's C&I best product offering and brings us important technical capabilities that enable end users to coordinate, optimize, and monitor multiple energy assets from a single interface. Agito also brings commercial synergies, given its strong reputation in the C&I microgrid space. By leveraging these capabilities, Generac was selected for negotiations by the Department of Energy to receive a grant of $50 million to deploy microgrid solutions across approximately 100 California water utility sites. The total investment from the DOE grant and water utilities, inclusive of all hardware components, installation costs, and community benefits associated with the project, is expected to be approximately $100 million. These microgrids will also form virtual power plants capable of delivering critical grid support during times of stress. We believe this award provides important validation of our strategic vision for energy technology within the C&I product category and has the potential to serve as a successful proof point for similar applications across the country. Internationally, total sales decreased year-over-year primarily due to lower intercompany shipments from our Mexican operations to the telecom market in the U.S., as well as a decline in portable generator and C&I product sales in Europe. Our international results continue to be impacted by varying market conditions around the globe as softness in Europe in the third quarter was partially offset by growth in other key regions, most notably Latin America. Adjusted EBITDA margins have been impacted by this decline in shipment volumes, but as we execute on our global growth initiatives, we expect to drive continued improved profitability over time in this important segment of our business. In closing this morning, our third quarter outperformance and increased 2024 outlook highlight our strong execution alongside the mega trends that support our long-term growth expectations. Significant margin expansion and robust free cash flow generation thus far in 2024 have helped to enable our disciplined and balanced capital allocation strategy. I also want to take a moment to thank the teams here at Generac that have been executing our rapid response to the significant increase in power outage activity over the last several months. Our operations, supply chain, and customer support teams have been working tirelessly in response to Hurricanes Beryl, Helene, and Milton. I'm incredibly proud of our team's efforts, particularly those of our field service storm response teams that travel directly into the areas impacted by these events to provide vital boots-on-the-ground support to customers and distribution partners. As power outages have steadily trended higher over the last 30 years, the need for continuous and reliable sources of power is growing due to the increasingly electrified and connected nature of our homes, businesses, and our transportation. These electrification trends together with the adoption of artificial intelligence and the reindustrialization of North America are driving expectations for power demand or load growth far beyond what has been seen in the last two decades. At the same time, renewable intermittent generation sources are being prioritized. We expect that these secular trends will drive grid-related supply-demand imbalances, ultimately resulting in lower power quality and higher power prices for all ratepayers. By building on our well-established resiliency value proposition with solutions that optimize for efficiency, consumption, cost, and comfort, we are confident that Generac is uniquely positioned to help home and business owners overcome the challenges of the evolving electrical grid. I'll now turn the call over to York to provide further details on the third quarter results and our increased outlook for 2024.

Thanks, Aaron. Looking at third quarter 2024 results in more detail. Net sales were $1.17 billion during the third quarter of 2024, as compared to $1.07 billion in the prior year third quarter. The combination of contributions from recent acquisitions and the unfavorable impact from foreign currency had a slight net positive impact on revenue during the quarter. Briefly looking at consolidated net sales for the third quarter by product class. Residential product sales increased 28% to $723 million as compared to $565 million in the prior year. This robust growth was driven by significant power outage activity during the quarter due to Hurricanes Beryl and Helene, resulting in a high 20% increase in shipments of home standby generators and very strong growth for portable generators domestically. In addition, sales of residential energy technology solutions were higher during the quarter as we experienced growth in both our clean energy and ecobee product offerings. Commercial and industrial product sales for the third quarter of 2024 decreased 15% to $328 million compared to $385 million in the prior year quarter, including a slight positive impact from the combination of contributions from acquisitions and unfavorable foreign currency. The core sales decline was due to the expected weakness in domestic shipments for telecom, national equipment rental, and beyond standby applications, as well as softer market conditions in Europe. This was partially offset by a robust increase in C&I product shipments through our domestic industrial distributor channel and growth in certain other international markets. Net sales for other products and services increased slightly to $123 million as compared to $121 million in the prior year quarter as strength in domestic service parts, accessories, and deferred warranty revenue was partially offset by lower industrial project services revenue. Gross profit margin was 40.2% compared to 35.1% in the prior year third quarter, primarily due to favorable sales mix, given stronger home standby shipments, lower input and logistics costs, and improved production efficiencies within our home standby manufacturing facilities. Third quarter gross margins were the highest we've seen in any quarter since 2010 and also exceeded our prior expectations. Operating expenses increased $33 million or 12% as compared to the third quarter of 2023. The overall growth in operating expenses was primarily due to ongoing investment in resources to drive future growth, additional marketing spend to create incremental awareness for our products, and higher variable expenses and incentive compensation given higher shipment volumes and profitability. These increases were partially offset by a $22 million provision for certain legal matters that was recorded in the prior year, which did not recur in the current year period. As a result of these factors, adjusted EBITDA before deducting for non-controlling interest, as defined in our earnings release, was $232 million or 19.8% of net sales in the third quarter compared to $189 million or 17.6% of net sales in the prior year. Adjusted EBITDA margins came in ahead of our prior expectations during the quarter as a result of the gross margin outperformance. The significant increase in adjusted EBITDA showcases the earnings power of Generac as we return to strong overall net sales growth with a robust margin profile. I will now briefly discuss financial results for our two reporting segments. Domestic segment total sales, including intersegment sales, increased 14% to $1.02 billion in the quarter compared to $894 million in the prior year quarter, including a slight benefit from acquisitions. Adjusted EBITDA for the segment was $212 million, representing a 20.7% margin compared to $160 million in the prior year or 17.9% of total sales. International segment total sales, which includes intersegment sales, decreased 20% to $167 million in the quarter compared to $208 million in the prior year quarter, including a slight unfavorable impact from foreign currency. Adjusted EBITDA for the segment before deducting for non-controlling interest was $20 million or 12.2% of total sales compared to $28 million or 13.6% of total sales in the prior year. Now switching back to our financial performance for the third quarter of '24 on a consolidated basis. As disclosed in our earnings release, GAAP net income for the company in the quarter was $114 million as compared to $60 million for the third quarter of 2023. The current year third quarter GAAP net income includes a $5.2 million gain on the change in fair value of our investment in Wallbox equity securities and warrants, which was partially offset by a $4.9 million loss on extinguishment of debt related to our previously announced Term Loan B refinancing. GAAP income taxes during the current year third quarter were $33 million or an effective tax rate of 22.7% compared to $19 million or an effective tax rate of 24.3% 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 recur in the current year. Diluted net income per share for the company on a GAAP basis was $1.89 in the third quarter of '24 compared to $0.97 in the prior year. Adjusted net income for the company, as defined in our earnings release, was $136 million in the current year quarter or $2.25 per share. This compares to adjusted net income of $102 million in the prior year or $1.64 per share. Cash flow from operations in the current year third quarter was $212 million compared to $140 million in the prior year third quarter. Free cash flow, as defined in our earnings release, was $184 million compared to $117 million in the same quarter last year. The improvement in free cash flow was primarily driven by higher operating earnings and a greater reduction in primary working capital in the current year quarter, partially offset by an increase in capital expenditures relative to the prior year. Additionally, during the third quarter, we repurchased nearly 691,000 shares of our common stock for approximately $102 million. Over the last two calendar years, we've repurchased approximately 3.2 million shares at an average cost of $125 per share. There's approximately $347 million remaining under the current repurchase authorization as of September 30. As previously announced, we also deployed capital during the third quarter with an additional $35 million investment in Wallbox and the small but strategic acquisition of Agito. In addition, we made a $30 million prepayment on our Term Loan B credit facility in connection with the refinancing that closed on July 3. Total debt outstanding at the end of the quarter was $1.5 billion, resulting in a gross debt leverage ratio at the end of the third quarter of 2.1 times on an as-reported basis, a continued reduction from 2.5 times at the end of 2023. 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 the full year 2024. Given the higher than previously expected power outage activity in the Southeast region of the U.S., specifically the impact of Hurricanes Helene and Milton. We now expect overall 2024 net sales growth to be approximately 5% to 9% compared to the prior year. This is an increase from the previously expected range of 4% to 8%. Breaking this down by product class, relative to our prior expectations, residential products are expected to increase by approximately $100 million, primarily due to incremental home standby and portable generator sales resulting from the higher power outage activity. As a result, our overall residential product sales growth is now expected to be in the high teens range on a year-over-year basis compared to our prior expectations of mid-teens increase. However, softer-than-expected market conditions within certain domestic and European end markets for our C&I and other product categories are projected to partially offset the increased residential product sales outlook. We now expect the combination of C&I and other product sales to be approximately $50 million below our prior forecast, resulting in C&I product sales now projected to be down high single digits compared to the prior year for the full year 2024. The other sales category is anticipated to be nearly flat on a year-over-year basis for the full year 2024. Our gross margin expectations for the full year '24 have also increased relative to our previous guidance due to the third quarter outperformance and higher sales mix of home standby generator is now expected in the fourth quarter. We now project gross margins to improve by approximately 450 basis points over the full year 2023, resulting in implied fourth-quarter gross margins that are similar to third-quarter gross margins in the 40% range. As a result of the increased outlook for gross margins, adjusted EBITDA margins before deducting for non-controlling interests are now expected to be approximately 17.5% to 18.5% for the full year 2024 compared to the previous guidance range of 17% to 18%. This implies fourth quarter adjusted EBITDA margins of approximately 20%. As is our normal practice, we're also providing updated 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 lower than our prior outlook, now expected to be approximately 24% to 25% compared to our previous guidance range of 25% to 26%. This is expected to result in a GAAP effective tax rate of approximately 24% to 24.5% in the fourth quarter. Importantly, to arrive at appropriate estimates for adjusted net income and adjusted earnings per share, add back items should be reflected net of tax using the 24% to 25% expected effective tax rate. As a result of lower interest rate expectations, our gross interest expense is now expected to be approximately $91 million to $93 million compared to prior guidance of $92 million to $94 million. This guidance assumes no additional Term Loan or revolver principal prepayments during the year. Stock compensation is now expected to be between $50 million to $52 million for the year compared to prior guidance of $52 million to $54 million. As a result of our share repurchases that were completed in the third quarter of 2024, our full-year weighted average diluted share count is now expected to decrease to approximately 60.5 million shares compared to prior guidance of 60.5 million to 61 million shares. Our guidance for capital expenditures as a percent of sales remains consistent at approximately 3% of sales. Depreciation expense and GAAP intangible amortization expense also remained consistent with last quarter's guidance. We continue to expect free cash flow conversion for the full year to be well above 100% as we anticipate a further reduction in working capital in the fourth quarter. This would result in free cash flow of approximately $500 million for the full year 2024, giving us significant optionality to drive further shareholder value in the future. This concludes our prepared remarks. At this time, we'd like to open up the call for questions.

Our first question comes from Tommy Moll of Stephens Inc. Please go ahead with your question, Tommy.

Good morning. And thank you for taking my question. I want to start on home standby. So you guided the residential revenue of high teens year-over-year now. Within that, is it safe to assume that home standby would be a little bit above and what are you assuming for activations embedded in that full-year guidance? Thank you.

Yes, Tommy. Home standby is expected to be slightly above the 15% range. Regarding activations, we saw growth return in the third quarter and anticipate that it will accelerate, as mentioned in our prepared remarks this morning, throughout the fourth quarter due to the market adjusting to the increased demand from recent events. While we haven't provided specific guidance on activations for the entire year, we expect them to increase. I would also like to remind you that we had a very strong fourth quarter last year, which creates a tough comparison for activations. However, we are confident based on the current indicators. Early in the fourth quarter, activations are aligning with our expectations.

Thanks, Aaron. As a follow-up, we haven't talked too much today about the margin impact from the energy technology investments. But I know that the intention there is for that to fade over time. And while you're not going to guide us for 2025 today, anything you can do to help frame how that margin drag could fade next year based on what you're seeing would be helpful. Thank you.

This year, we expect to see a drag in the range of 350 to 400 basis points, which has remained consistent. This level represents a significant investment for us. During the renewable energy show in Anaheim, we made progress with our PWRcell 2, which received positive feedback. We believe building out our ecosystem centered around the ecobee Energy Hub was very well received. This approach allows for control of significant energy loads in the home, specifically HVAC systems, alongside energy storage, which we see as a key differentiator. We're also looking at similar strategies for other major energy loads, such as EV charging, which we consider crucial for the future. We anticipate that our approach is unique in the market. As we outlined at our Investor Day last year, we project being closer to breakeven by the end of 2026, which we still believe is attainable. While we cannot precisely determine next year's impact on EBITDA, we expect it to decrease from the current 350 to 400 basis point drag as we approach breakeven. However, even at breakeven, we expect it to continue affecting EBITDA margins in 2026 until we move beyond that point. We are making progress and are pleased with the response to our products, and now we need to focus on successfully commercializing these new offerings. This will be different from our experiences with first-generation products, which were more challenging to market. Our commercial teams, especially in energy technology, are eager to promote the new products as we enter 2025.

Thank you. Our next question comes from the line of George Gianarikas of Canaccord Genuity. Your question please, George.

Hi. Good morning, everyone. And thanks for taking my question. I'd love if you can kind of dig in a little bit as to what's happening in your European business and when you expect those trends to potentially rebound? Thank you.

Yes, thank you, George. Europe has been experiencing some challenges. Earlier this year, we observed trends mainly related to portable generators. We faced tough comparisons from the previous year due to the Ukraine-Russia war, which heightened energy security concerns and increased portable generator sales in 2023. As we approached 2024, those concerns lessened after a mild winter, leading to struggles in that area. This issue has now broadened to impact the overall commercial and industrial product line in Europe as well. However, not all news is negative for our international segment. We are noticing surprising strength in Latin America, particularly with a new team managing operations there, who have done a commendable job in addressing the market and enhancing our position. In contrast, Europe, especially Germany, has been quite challenging. Germany is a significant market for us, and recent headlines reflect this struggle, including notable issues in the automotive sector, with Volkswagen announcing its first plant closures in Germany in 84 years. It seems likely that Europe will face difficulties for a while until we possibly see an economic shift, which we hope occurs around 2025. I anticipate a recovery in the domestic commercial and industrial sector before we see improvements in Europe. We do see some positive signs in the telecom sector in the U.S., although rental activity remains low. We fell slightly short of our rental guidance in the third quarter, as the season hasn't been strong. Rental companies are adopting a cautious approach, possibly influenced by the current election environment and concerns over capital expenditures. Therefore, I expect Europe to continue facing challenges throughout next year, albeit with some areas of growth in Latin America and other parts of the world.

Our next question comes from the line of Mike Halloran of Baird. Please go ahead, Mike.

Good morning, everyone. I wanted to see if you could provide some historical context around the activity you're experiencing today. What kind of growth are you seeing in comparison to the past? I'm looking at this from two angles: first, your penetration and awareness in these regions is significantly higher now than it was previously—perhaps not as much in terms of penetration, but certainly in awareness. How is this reflected in the activity levels? Secondly, how is this awareness influencing regions that aren't directly affected? So I'm interested in tracking the performance of both the impacted and non-impacted regions and whether there is any spillover effect, along with some historical insights.

Thank you, Mike. That's a great question. To give you some context, there are several factors to consider. The states most affected by Helene and Milton—about six or seven—are actually a bit below the national average penetration rate of 6% for home standby systems. While they aren't significantly lower than places like California, they still fall short. However, we have a solid dealer presence in those markets because we've previously sold there. Texas, in particular, has faced several high-priority events, and we've added many dealers in that state. Out of the 400 dealers we've brought on board over the last year, a substantial number are in Texas. We anticipate that dealer counts will likely improve in Florida and the Carolinas in the fourth quarter. To address your main inquiry, we've noted that these events can generate between $50 million and $100 million depending on when they occur within the year. Later events typically yield lower impacts from that range. Adding the effects of the three events could mean an upside of approximately $150 million to $300 million. This year, we expect to realize around $200 million from those incidents, which aligns with our expectations, although some effects may extend into 2025. We still have time to monitor developments before providing formal guidance, and we are focusing on ramping up our production. Our fourth-quarter guidance relies on what we can achieve in our factories, influenced by our supply chain situation. Historically, we've increased our capacity significantly, especially after bringing our Trenton, South Carolina facility online, which essentially doubled our home standby production capacity. Currently, lead times for these products range from four to eight weeks, depending on the specifics, and that’s likely the peak going forward. As we increase production over the quarter, we anticipate returning to more normal lead times by 2025, barring any major events in the meantime. The unusual intensity of recent weather events and changes in temperature patterns are crucial factors to consider. Overall, we’re able to ramp production more quickly. The outcomes from these events are in line with our expectations, and we’re pleased with our dealer representation and brand visibility in those affected markets. Regarding the spillover effect in areas not directly influenced by these events, we've actually seen a significant increase in home consultations outside of the impacted states this October. Demand appears to be broadly rising, which is encouraging. Across the U.S., with the exception of Canada, we've experienced easier comparisons this quarter, with strong growth noted in most regions. As we approach the end of October, we are on track to set a record for in-home consultations, which is an important indicator not only for the fourth quarter impact but also for raising awareness of our category as we move into 2025.

Our next question comes from the line of Jeff Hammond of KeyBanc Capital Markets. Your line is open, Jeff.

Hey. Good morning, guys. So maybe just back on clean energy. Can you just talk about what you think is really differentiated in the new product and just the initial feedback you're getting, any kind of early distribution partner wins? And just an update on the inverter intro timing?

Yes, it's great, Jeff. I appreciate that. The new product PWRcell 2 is essentially a complete redesign of the platform we acquired from Pika back in 2019. We've experienced ups and downs with that platform, but our teams have worked hard over the last year and a half, and we've invested significantly, as noted by the 350 to 400 basis point drag on EBITDA margins. It's a big undertaking. The key differentiating factors of this platform focus on resiliency in storage. While it can handle the time-shifting needs for solar energy storage and savings, homeowners want their battery to last during outages. The first-generation product already had the largest capacity battery on the market, and the second-generation product will maintain that status. Additionally, we've made several upgrades for better continuous and peak power output, allowing more of your home to be powered during an outage without having to prioritize which appliances to back up. Beyond that, we're expanding on the concept of an ecosystem. We believe this is fundamental to our thesis in acquiring ecobee, given the technology it offers, particularly concerning the user interface and experience. Their high-end smart thermostat provides comprehensive capabilities that we plan to utilize to manage the entire ecosystem and enhance customer experience, balancing both savings and resiliency. A prime example is during a utility outage. If you have an ecobee thermostat or Energy Hub at the center of your ecosystem along with a PWRcell 2 and possibly a generator or EV charger, the ecobee Smart Hub will manage these devices to extend battery duration. For instance, it might adjust the thermostat a few degrees warmer on a cold day or cooler on a hot day to save energy, and it can make those adjustments automatically based on your comfort settings or learned behaviors. Moreover, it can also ensure that your EV charging system doesn’t consume stored energy during an outage, preserving it for critical needs. As we grow this ecosystem with more devices, the importance of having a central hub will be even clearer. We’re effectively creating a personal microgrid for homes that can be optimized for various factors like resiliency, cost, conservation, and comfort. We demonstrated this concept at the RE+ show, and the positive reactions from customers and distribution partners underscored its value. This unique capability, combined with our brand strength and marketing abilities, positions us well moving forward. Regarding product timelines, we initially planned to ship PWRcell 2 by the end of the fourth quarter, but that has shifted to early to mid-Q1 as we finalize customer field trials. The micro is still on track for the early second half of next year.

Our next question comes from the line of Brian Drab of William Blair. Your question please, Brian.

Hi. Thanks for taking my question. I'm looking at the timing of the hurricanes, Helene and Milton. There are still significant outages in several states, even in mid-October. There's a cycle time to getting these home standby generators installed and the necessary conversations with dealers. I'm trying to understand why even half of the demand related to these recent hurricanes would be fulfilled in 2024. It seems like you’ve only had a couple of weeks since these people got their power back. It feels like just the start of a wave of demand, rather than a situation where a lot of it will be satisfied in 2024.

That's a great question, Brian, and it deserves some elaboration. In 2024, our capacity to meet that demand will depend largely on our supply chain and operations. We began ramping up our efforts after Beryl in early July, which allowed us to get ahead of the demand a bit. We prioritized improving our portable generator inventories before the season and started executing on the home standby ramp earlier than expected due to that early event. This advance preparation was crucial as forecasts indicated a potentially active season. However, after that initial boost, we didn't see any significant demand until we faced Helene in late September. The key issue is how long the surge in demand will last and when we will see a pullback to a new, higher baseline level. Those details are still uncertain. Additionally, it’s early in the season and we haven’t even finished October yet; we are experiencing record outage hours this month, the highest since we began tracking in 2010. Moving forward, we want to observe how demand develops for the remainder of the year. This is also an election year, and with current interest rates higher than historically, homeowners may feel hesitant to invest in projects for their homes due to mortgage rate concerns. A slight decline in rates hasn’t significantly impacted 30-year mortgage rates yet. We will keep an eye on how these factors evolve, especially as the Southeast region understands the need for a resiliency plan, and our products are well-suited for that. It’s all about timing surrounding the peak demand: identifying when it will occur, how far it will drop afterward, and establishing the new baseline demand level.

Our next question comes from the line of Jerry Revich of Goldman Sachs. Your question please, Jerry.

Yes, hi. Good morning, Aaron. Aaron, York, I'm wondering if you could just talk about the level of in-home consultations that you're seeing based on web traffic. It looks like you're setting records in terms of interest in your products. Is that translating into home consultations? And with the revised residential standby guidance, it looks like you're not counting on a sequential pickup in the standby business 4Q versus I'm wondering, is that right? And can you talk about that because normally, seasonally, you do see higher shipment rates 4Q versus 3Q?

Yes, thanks, Jerry. Regarding the IHC, we are not finished with October yet; we have one more day, but we are on track for a record level. When you look at the third quarter, as we mentioned, that was...

How portable they're going to go down Q3 to Q4, and home standby's going to go up as we ramp production, of course, is sort of matched by the portable decline.

Yes. So home standby is going to increase and portable is, obviously, unless we have sold a lot of portable generators. Frankly, even if we have another major event here anytime soon, our inventory levels are quite low. So we're in the middle of replenishing those stock levels. So it's really a shift between higher home standby and lower portables for Q4 when you're going to try to compare the Q3 to Q4 run rate.

Our next question comes from the line of Kashy Harrison of Piper Sandler. Your line is open, Kashy.

Good morning, guys. And thank you for taking my question. I'll keep in mind to the C&I side of the business. Can you help us think through whether the implied 4Q C&I numbers have essentially stabilized or whether based on what you're seeing on cycle times in the U.S. and Europe, rental and everything else, that there could be some more risk? I'm just trying to get a sense of if the business has in aggregate bottomed by your measures, or if you think there could still be some softness as we think about the coming quarters qualitatively?

Thank you for your question, Kashy. As we mentioned during the last call, we see Q2 and Q3 as the lowest points for telecom, and we do not expect any decline from here. In fact, we're starting to see some signs of improvement, and our guidance for Q4 suggests a slight increase compared to Q3. Regarding the rental market, we observed it to be weaker than anticipated in Q3, which is usually a seasonal business for us. Typically, we experience an uptick with lighting towers around this time of year, but that has not occurred. While it hasn’t significantly deviated from our expectations, it was disappointing to see a greater decline than we expected. It feels like we are likely at the bottom right now. The critical question regarding rentals is where this market heads next year. At this time, we have not received guidance from the major rental companies we work with regarding their CapEx spending for next year, but we believe it will likely remain quite slow throughout 2025. For telecom, we are optimistic about the potential for continued improvement. In terms of our core industrial distributor channel, we are working to reduce our lead times, and operationally we are performing well. However, we are seeing book-to-bill rates below 1. As we continue to catch up on our backlog and lower our lead times, we might see some softening in that area. Quotations remain strong, but we are noticing that the timeline from quote to order is extending, leading to project delays. This is not uncommon during this phase of the cycle, particularly with persistent high rates. If uncertainties surrounding the election resolve and rates decrease as projected for next year, this might only be a temporary issue, likely related to our efforts to manage backlog and lead times. Another important consideration for us is Europe; while the outlook for Mainland Europe is not encouraging, we have been experiencing substantial growth in other markets, particularly in Latin America and some in the Middle East. We also have new products launching next year and partnerships forming in that sector. My early assessment suggests that we may have found a bottom for our European and international operations. Even if Europe continues to face challenges, it may be compensated or even surpassed by growth in other regions where we operate and see opportunities.

Our next question comes from the line of Stephen Gengaro of Stifel. Your question please, Stephen.

Thanks. Good morning, everybody. So a quick one for me. When we think about the margin progression that you've seen and relative maybe to the prior guidance, but even just relative throughout the year. Can you talk about or give us some sense for how much is mix and how much is sort of cost out and efficiency gains that you've been able to achieve?

Yes, Stephen, this is York. So gross margins improved roughly 5% year-over-year. We've been seeing that for quite some time now over a number of quarters. This particular quarter, I'd say about 40% to 50% of that 5% was mix related. So obviously, as home standby generators increase in mix, we're going to get a nice bump in margins. So that means around 50% to 60% was price cost. So we're still on a year-over-year basis, still seeing the benefits of lower input costs coming through the P&L as we turn through that higher cost of inventory or as we sell through that in the past, and now that's not running through the P&L. And then logistics costs, we continue to do a good job in terms of bringing material to the plants and getting them out to our customers. So we continue to run our factories more efficiently as, in particular, the home standby volume picks up. So price cost has been favorable for a number of quarters, continues to be in Q3, like I said, around 50% to 60% of that year-over-year increase was price cost. What's interesting is if you look from, say, like now look ahead from Q3 to Q4 now sequentially now, not talking year-over-year but sequentially. I'd probably say a lot of that price cost is now running through our P&L here in Q3. I mean we logged what, 40% gross margins in Q3. That's the best we've seen since 2010. So we're feeling good in terms of where we're at from our gross margin profile, and we believe that will continue into Q4. And so I'd say, sequentially, the price/cost scenario has played out, but year-over-year, we'll still see benefits.

Our next question comes from the line of Keith Housum of Northcoast Research. Your question please, Keith.

Great thanks. Appreciate it. Good morning, guys. In terms of like the power outages and the driving of demand, all focuses have been on HSB. But can you touch on, is there any opportunity for growth within C&I or the beyond standby batteries in terms of those guys benefiting from when you have these massive storms come through?

Thank you, Keith, for bringing that up. I should have mentioned it earlier when discussing C&I. When outages occur, they certainly raise awareness among small business owners and large network operators alike. If they haven't invested in a backup plan, they quickly see how it can impact their operations, revenue, and potentially lead to inventory spoilage. Historically, we've noticed that there is often a delayed reaction in business decisions, which involve capital expenditure budgets and approval processes that take time to set in motion. Typically, we'd expect to see increased demand following these outage events within a four-quarter cycle, both in affected and indirectly impacted areas. For instance, a national telecom operator might decide to allocate more funds for network hardening, like purchasing generators or storage devices. We've seen this pattern arise before, and it could counter any potential long-term weakness in the core industrial C&I markets we're experiencing now. These are usually temporary issues. When active outage events occur, they prompt businesses to rethink their planning related to disaster preparedness, continuity of operations, and regulatory compliance, which all come to the forefront.

Our next question comes from the line of Jordan Levy of Truist Securities. Your question please, Jordan.

Morning all. And thanks for all the detail. We've talked before about the percentage of the HSB category that finance or I think your program with Synchrony. I think you said it's around 20% of dealer network sales or so. I'm just curious how you think about the potential to ever expand that financing optionality on HSB as more customers start to think through power quality and outage activity sort of issues?

Yes, this is York, Jordan. Having financing definitely helps, as price is often a barrier to increasing close rates. Financing can help overcome that challenge when closing a deal. I can confirm that in 2025, we will be enhancing our financing initiatives across the dealer channel, which will be a significant focus throughout the year, just like it has been in 2024. We agree that this will be crucial for driving higher close rates.

We want to thank everyone for joining us this morning. We look forward to discussing our fourth quarter and full year 2024 earnings results with you in mid-February. Thank you again, and goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.