Generac Holdings Inc. (GNRC) Q1 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Q1 2013 Generac Holdings Inc. Earnings Conference Call. My name is Gary and I’ll be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a Q&A session towards the end of the conference. (Operator Instructions) As a reminder, this call is being recorded for audio replay purposes. And I would like to turn the call over to York Ragen, Chief Financial Officer. Over to you.

Thanks, Gary. Good morning everyone and welcome to our first quarter 2013 earnings call. I’d like to thank everyone for joining us this morning. With me today is Aaron Jagdfeld, our President and Chief Executive Officer. We will begin our call today by commenting on forward-looking statements. Certain statements made during this presentation as well as other information provided from time to time by Generac or its employees may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements. Please see our earnings release or our SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we’ll make reference to certain non-GAAP measures during today’s call. Additional information regarding these measures including a reconciliation to comparable U.S. GAAP measures is available in our earnings release and SEC filings. I’ll now turn the call over to Aaron.

Thank you, York. Good morning everyone and thank you for joining us today. We are very pleased to report our first quarter 2013 results this morning, which we believe continue to demonstrate the accelerated adoption of standby generators into the residential and commercial markets. The awareness for the need for backup power has steadily increased over the last several years as power outages have occurred more frequently and for longer period of time. With our sales marketing and distribution efforts in our superior operational execution we have quickly build Generac into a very powerful brand in the emerging market for residential and commercial standby generators. Our first quarter net sales increased 36% over the prior year to a record $400 million with strong organic growth of 29% which remain broad based across all major regions in the United States. This strong organic growth is even more impressive when considering as follows the first, the prior year first quarter in which net sales more than doubled over the first quarter of 2011. We converted these record shipment levels during the first quarter of 2013 into record levels of adjusted EBITDA and adjusted earnings per share. Growth in shipments of home standby generators were again very strong during the quarter as the market for these products has further developed with more home owners becoming aware of the importance of having a backup power system. With penetration rates at less than 3% of single family unattached homes in the U.S. we believe there remains a substantial opportunity to continue to grow the market for these products. As the leader in the home standby generator category over the last decade with approximately 70% of market share our efforts remain focused on driving growth for this emerging product category. When combining the elevated awareness for major power outage events in recent years along with our AMP targeted marketing process power play in-home selling solution and efforts to expand distribution we believe we can continue to drive demand for home standby generators going forward. In addition to increased home standby sales during the first quarter of 2013 we also experienced a substantial year-over-year increase in portable generator shipments to the combination of inventory replenishment and overall expanded placement for these products at our retail customers. In a relatively short period of time since we entering this product category we have leveraged our technical knowledge, manufacturing capabilities and our distribution relationships to build a leading share in the portable generator market. In doing so we have further positioned the Generac brand is representing quality innovative products to provide the reliability and durability that our customers demand. Building on our success in portable generators we set out to reenter the engine driven power washer market last year. Through our technical expertise in air-cooled engines and detailed customer research we have developed a full line of washers, which includes the industry’s only variable speed power washer that we can OneWash. We recently launched this innovative new product for the spring selling season and have received positive initial feedback from both retailers and consumers. With the successful first quarter rollout of OneWash and increased placement of our consumer and prosumer units at our retail channel partners we believe we are making good progress in taking share in the power washer product category. In addition to executing on the significant increase and demand for residential products the first full quarter the Ottomotores has also contributed to our year-over-year sales growth. Our progress to-date with the integration of both the Mexico and Brazil operations has been favorable as we work toward realizing the potential revenue and cost synergies. Although we are still early in the integration process the Generac and Ottomotores sales and marketing teams remain excited about the potential to sell our residential and light commercial standby generators and mobile power equipment in the Latin American market. Much of the cost savings we are projecting will come primarily as a result of increased purchasing scale with certain components and commodities as well as from improved utilization and efficiencies in the Ottomotores operations. We remain on track to begin realizing savings of approximately $2 million a year on an annualized basis towards the second half of 2013 with the potential for additional cost reductions during the second full year of ownership. Demand for our Generac brand commercial and industrial stationery generators continues to see positive momentum during the increased awareness of the need for backup power on the part of businesses. In particular we experience strong shipments of light commercial generators used in smaller footprint retail applications as the market interest in cleaner burning more cost effective natural gas fueled backup generators continues to increase as a result of the exceptional value proposition of these products. Additionally we saw revenue growth from our telecom national account customers as wireless providers look to further safeguard their networks from power outages. Our strong results have generated over $210 million of free cash flow over the 12 months ending March 31st 2013. Our attractive margins, capital efficient business model and favorable tax attributes are the drivers of our significant cash flows which we believe sets us apart from any of our peers. This strong cash flow generation has allowed us to pursue several shareholder value enhancing activities. In recent years we’ve invested heavily in the infrastructure of our business to support and drive organic growth which has been the primary factor in doubling the size of Generac. In addition to investing in our organic growth over the past two years we’ve also paid down approximately $200 million of debt closed on acquisitions totaling a $130 million and paid a $6 per share special dividend. We believe all of these investments have helped to drive significant value for our shareholders with our market capitalization increasing by over $1.3 billion over this time period. As we continue to focus on driving shareholder value we are pleased this morning to announce for a second consecutive year that Generac would be paying a special cash dividend to its shareholders of up to $5 per share. As part of this proposed special cash dividend, we plan to refinance our existing credit facility and incur subject to market and other conditions approximately $335 million of additional debt. The new $1.15 billion credit facility is expected to be priced approximately 200 basis points or more below our current credit facility and will be slightly accretive to our earnings per share on run rate basis. We are confident that this new capital structure will provide us with the flexibility to further invest in organic growth initiative as well as pursue acquisitions that fit our Powering Ahead strategy. Given our performance and significant cash generation coupled with a very robust credit market today we believe this transaction represents yet another attractive return of capital to Generac shareholders. I would now like to turn the call back over to York to discuss first quarter results in more detail. York?

Thanks Aaron. As Aaron previously mentioned net sales for the first quarter 2013 were $399.6 million a 35.7% increase as compared to $294.6 million in the first quarter of 2012. Looking at net sales by product class residential product sales increased 45.8% to $255.2 million in the first quarter of 2013 relative to a strong prior year net sales comparison of $175.1 million which saw a year-over-year sales growth of 153% over the first quarter of 2011. The growth from the current year was broad based primarily driven by a significant increase in demand for standby and portable generators. With regard to home standby generators the combination of strong incoming orders and increased production rates which drove shorter lead times during the quarter considered the record shipment levels of home standby generators. Awareness for home standby generators remains high as a result of the afterglow for major power outages over the last couple of years. As demand has significantly increased over the last several quarters we’ve been able to quickly expand our capacity and supply chain enabling us to execute and satisfy our customers. Portable generator shipments during the first quarter 2013 were up significantly in comparison to the prior year quarter. Our broad relationships at retail provide us with expanded placement for portable generators over the last several years. As a result we have seen strength and shipment for these products due to strong inventory replenishment and sell through at retail after major power outages in recent quarter. We believe our solid execution and working capital investments have allowed us to capture a leading share of the portable generator market further enhancing our leading position in the market for residential backup power in the U.S. Also contributing to the revenue growth for residential products during the first quarter of 2013 was increased revenue from our power washer product line including an encouraging start to sales of our new One-Wash product which began loading on retail shelves during the quarter. We also continue to see attractive revenue growth from our Honeywell licensed residential product that are targeted toward penetrating the HVAC distribution channel. Looking at our commercial and industrial products net sales increased 21% to $127.1 million in the first quarter of 2013 from $105 million in the first quarter of 2012. The increase in net sales was primarily driven by the Ottomotores acquisition. This is the first full quarter of including Ottomotores in our financial results and we are excited about the international expansion opportunities as the Ottomotores businesses will provide us throughout Latin America. Also contributing to the year-over-year growth for strong shipments to telecom national customers as well as increased sales of light commercial natural gas generators is in smaller retail applications. As more businesses are affected by power outages we are seeing increased penetration in the commercial market for backup power as companies look to protect their reputation, inventories and revenue streams. These increases were slightly offset by a difficult prior year comparison during the quarter for certain of our mobile product sold through national rental accounts. Our other product sales category improved to $17.2 million in the first quarter of 2013 an increase of 19.2% from prior year first quarter sales of $14.5 million. As a reminder this product category is mostly comprised of aftermarket service parts as well as loose engine sold directly to OEMs for using engine power products across a wide range of applications. Gross margin as a percent of sales for the first quarter of 2013 was 38.4% compared to 37.7% in the prior year first quarter. The 70 basis point improvement was primarily the result of increased cost reduction efforts, improved pricing and a moderation in commodity cost. These margin improvements were partially offset by the mix impact from the addition of Ottomotores sales. Operating expenses for the first quarter of 2013 increased $5.4 million or 10.5% as compared to the prior year first quarter. This increase was primarily driven by operating expenses associated with the Ottomotores business as well as increased sales, engineering and administrative infrastructure to support the strategic growth initiatives and higher base line sale level of the company. Partially offsetting these increases was a $6 million decline in the amortization of intangibles. Excluding the impact of non-cash intangible amortization expense operating expenses as a percentage of net sales during the first quarter 2013 was 12.7% representing a 60 basis point decline as compared to 13.3% in the prior quarter. Adjusted EBITDA increased 43.5% to $108.8 million a 27.2% of net sales in the first quarter of 2013 as compared to $75.8 million a 25.7% of net sales in the same period last year. Our attractive EBITDA margins improved by 150 basis points in the current year quarter primarily as a result of our material cost reductions and leveraging our SG&A infrastructure on the higher organic shipment volumes. Adjusted EBITDA over the last 12 months as of March 31, 2013 was $322.8 million or 25.2% of net sales during that period. GAAP net income for the first quarter 2013 was $50.7 million as compared to $30.1 million for the first quarter of 2012. Adjusted net income as defined in our earnings release increased 26.9% to $83.9 million in the current year quarter versus $66.1 million in the prior year first quarter. This increase was attributable to improve the operating earnings during the quarter resulting from the 35.7% increase in net sales partially offset by the higher interest expense due to the refinancing of the company’s credit facilities in May of 2012 as well as higher cash income taxes. Diluted net income per share on a GAAP basis was $0.73 in the first quarter of 2013 compared to $0.44 per share in the first quarter of 2012. Adjusted diluted net income per share as reconciled in our earnings release was $1.21 for the current year quarter compared to $0.96 per share in the prior year quarter a 26% year-over-year increase. The current year adjusted EPS figure include the $0.20 per share headwind from the combination of higher interest expense and to a lesser extent higher cash income taxes. With regards to cash income taxes the first quarter 2013 includes the impact of a cash income tax expense of $4.5 million as compared to only 55,000 in the prior year quarter which translates into a $0.06 per share impact to adjusted EPS. As we commented during our previous conference call our cash income taxes for 2013 are expected to increase going forward due to a combination of our NOL carry forward becoming fully utilized during 2013 and higher overall profitability levels. Cash income taxes for 2013 were previously estimated to be approximately $9 million to $10 million. Based on our increasing guidance for the full year 2013 cash income tax expenses now projected to be $14 million to $15 million for the year which translates into a cash income tax rate of 6% to 7%. Importantly our favorable tax yield through annual intangible asset amortization in our tax return remains intact through 2021 resulting in approximately $49 million of cash tax savings per year for the next nine years. As a result our cash income tax rate is expected to be significantly lower than our current projected 37% to 39% GAAP income tax rate for the foreseeable future. As we drive higher profitability over time and the incremental pre-tax profit over this tax yield would be taxed as projected 37% to 39% tax rate going forward. Free cash flow defined as our net cash provided by operating activities less capital expenditures was $33.9 million in the first quarter of 2013 as compared to $36.4 million in the same period last year. Strong operating earnings were partially offset by increased working capital investments driven by higher levels of accounts receivable from record levels of shipments during the quarter as well as the replenishment of inventory levels to support higher production rates and seasonal bill requirements. Free cash flow over the past 12 months was $210.7 million representative of our very strong free cash flow conversion. As we announced today the company is pursuing a recapitalization to fund a special cash dividend to shareholders. Historically we have demonstrated the ability to pay down debt through our strong free cash flow generation with a recent example being the prepayment of $110 million of debt thus far in 2013 which includes the $30 million payment of the debt made this week. Going back to March 31, 2013 we have total debt outstanding of $813.2 million net of unamortized original issue discount. Total consolidated cash and cash equivalence at the end of the quarter was $54.3 million resulting in consolidated net debt of $758.9 million and a consolidated net debt to LTM adjusted EBITDA leverage ratio of 2.4 times as of March 31, 2013. This compares to a 3.5 times ratio at June 30, 2012, which reflected the $6 per share special dividend recapitalization in the second quarter of last year. For the special dividend that we are contemplating this year, we intend to incur subjective to market and other conditions approximately $335 million of additional debt as compared to March 31, 2013 (to fund) in large part a special cash dividend of up to $5 per share on our outstanding common stock. As part of this transaction, we expect to amend and restate our existing credit facility and upside to an aggregate amount of approximately $1.15 billion at an interest rate that is approximately 200 basis points or more or lower than our current credit facility. Again this should be slightly accretive to adjusted earnings per share compared to the current run rate. The proceeds from the amended debt financing will be used to pay the special cash dividend and to refinancing our existing credit facilities. We expect our current $150 million unfunded revolver will remain in place and be extended for another year. The declaration of the special cash dividend is conditioned upon obtaining new debt financing under acceptable terms. We currently expect our Board of Directors will declare an authorized payment of a special cash dividend before the end of the second quarter of 2013. Again given our strong free cash flow profile and availability on our undrawn $150 million revolving credit facility, we are very comfortable that we can still pursue our growth initiatives, while continuing to de-lever over time. Following the dividend recapitalization, we will continue to prioritize our cash flows towards making investments to drive the organic growth of the company, paying down debt to our targeted two to three times gross debt leverage ratio and executing on discipline, strategic acquisitions that we have in our pipeline. With that, I would now like to turn the call back over to Aaron to provide additional comments on our outlook for 2013.

Thank you, York. As a result of continued strong demand for our products, we are raising our sales guidance for full year 2013. Full year 2013 net sales are now expected to increase in the low to mid teens range over the prior year as compared to the approximately 10% sales increase previously expected. Specifically for the second quarter of 2013, net sales are forecasted to increase between 30% and 35% in comparison to the second quarter of 2012. This top line guidance continues to assume no material changes in the current macroeconomic environment and no major power outage events for the remainder of 2013. We expect the demand for home standby generators will continue to benefit from increased awareness as a result of the major power outage event that have occurred in recent years resulting in a new and higher baseline level of demand for these products. In addition, we believe the ongoing improvement in the environment for residential investment and execution on our initiatives will further drive home standby penetration rates. As our guidance for the remainder of the year does not include any assumptions from major power outages, we expect to see a year-over-year decline in shipments of portable generators although not to the magnitude previously expected. For comparative purposes, when excluding the impact of event driven portable generator sales in 2012, we are projecting total residential product shipments for 2013 increased in the high single-digit range over the prior year as a result of continued demand for home standby generators and increased placement of power washers. We continue to expect net sales for commercial and industrial products to increase at a low 30% year-over-year growth rate for 2013 through a combination of the Ottomotores acquisition as well as high single-digit organic growth for both stationary and mobile power equipment. Our outlook for C&I products continues to assume a modestly improved non-residential construction market in 2013 over the prior year. Summarizing our sales growth assumptions for full year 2013, total company organic year-over-year growth excluding the impact of engine driven portables from 2012 is not expected to be between 8% and 10%, which represents an increase from our previous guidance of 6% to 8%. Assuming no major outages for the remainder of 2013, this organic growth is now expected to be partially offset by an approximate 3% headwind from a decline in portable generator sales. The acquisition of Ottomotores is still expected to contribute between 7% to 9% growth for total expected year-over-year net sales increase in the low to mid teens range. In addition as discussed during our last call, based on our historical experience a major outage event could provide an incremental net sales of between $20 million and $50 million representing the potential for 2% to 4% additional growth to our forecast depending on several factors. Consolidated gross margins for 2013 are now expected to be flat as compared to the prior year, which represents an improvement from our previous outlook of a decline in gross margins of between 80 to 100 basis points. This significantly improved forecast for gross margins is primarily due to the greater impact of cost reductions and further moderation in commodity costs along with a slight improvement in product mix. Given this outlook, we expect full year margins of approximately 37% for the third year in a row, as we continue to diversify and globalize our business. Operating expenses as a percentage of net sales excluding amortization of intangibles are still expected to be slightly up compared to 2012 as we continue to invest in our infrastructure to support our various strategic growth initiatives and an overall higher level of baseline sales. As a result, of the higher sales outlook and the revised margin guidance we now expect adjusted EBITDA for the full-year 2013 to increase in the low-teens percentage range over the prior year which is higher than the mid single-digit percentage range previously expected. We expect cash flow conversion to remain strong during 2013 and to be consistent with the cumulative average during the past four years of free cash flow representing between 90% to 95% of our adjusted net income. In closing this morning we believe our first quarter results clearly provide another tangible example of the significant earning power of our business model. The powerful macro drivers for Generac including the under investment of the electrical grid and aging in more electrically dependent population and more severe and unpredictable whether it should drive further awareness of the need for backup power. In addition to these macro drivers we continue to work on a number of exciting strategic initiatives that we believe will further grow the baseline business for Generac over the long-term. Through innovation and solid execution in 2013, we expect to drive the adoption of backup power generation for homes and businesses. At the same time we are building Generac into a larger more balanced company with improved global focus by continuing to diversity our product offerings our distribution channels and the geographies we serve. Add to this potential for further recovery in residential investment and non residential construction and we believe Generac is well positioned over the long term to continue driving organic revenue growth superior margins and strong free cash flow. This concludes our prepared remarks. At this time we’d like to open up the call for questions. Operator?

Thank you. Ladies and gentlemen, your Q&A session will now begin. (Operator Instructions). Our first question comes from the line of Christopher Glynn of Oppenheimer. Over to you Christopher. Christopher Glynn – Oppenheimer: Thanks. Good morning. So just curious if you look at the 2Q guidance we look at that as indicative of the new baseline or does that factor and still a partial lingering of afterglow from the events?

Yeah, this is York. I mean I think there is probably some afterglow I think we’ve – when you talk about lead-times and as we ramped up production here into – in the first quarter we came into the year with lead-times elevated as a result of strong demand from Sandy it was about probably 8 to 10 weeks when we came into the year we ramped up production very quickly very efficiently, by the end of the quarter coming into second quarter probably lead-times are probably more three or four weeks and then now probably today they’re probably more in line with normal lead-times around two weeks I think as a result of that there’s probably some lead-time contraction in Q2, having said that then there is the baseline levels from a seasonality perspective that underlay that one. Christopher Glynn – Oppenheimer: Okay. And then in terms of a overall penetration the product category that you’ve been talking about 2.5% or so. Could you comment on the relative penetration for homes 100,000 or 200,000 versus maybe higher value tranches.

Yeah, I mean it’s a great question Chris. The penetration rates we’ve always been amazed when you look at penetration rates and we look at kind of a – we spread the sales if you will for homes standby generators across a wide range of demographics each group’s home values. What we see is the very even distribution so first of all just to clarify the penetration rate we say now is little less than 3% and that just to remind everybody the addressable market as we define it is single family unattached housing stock in the U.S. greater than a $100,000 in value so we really – well some of these products probably end up on homes less than a $100,000 in value the majority of them are greater than that. And when you look at specifically to answer your question tranches like the 100 to 200K range what we find is actually a pretty even distribution certainly further up the home price gets as a percentage of that homes value the investment in homes standby generator become smaller. So obviously it becomes an easier project to undertake from a financial standpoint for homes of greater value not just the general statement but that being said what we see is in particular in areas of the country we have older housing stock which is in the Northeast, some areas in the Midwest where you have demographically speaking we have older customers who have been in this homes for a long time. The home value themselves are not that great in fact when you look at it there is actually a pretty even spread homes under $300,000 represent a little less than half of the total installed base and that’s probably a little bit of a dated figure about a year or two old but and about a half of it is over $300,000 so just to give you some perspective in terms of how that breaks out. Christopher Glynn – Oppenheimer: Great. Thanks and congratulations.

Thanks.

Thank you Chris.

Thank you. Next question comes from the line of Jeff Hammond of KeyBanc Capital Markets. Over to you Jeff. Jeff Hammond – KeyBanc Capital Markets: Hey, good morning guys. Can you quantify what Ottomotores was in the quarter?

It – we haven’t broken out specifically but it was the vast majority of the year-over-year growth that 21% year-over-year growth for C&I the vast majority of that was Ottomotores, we did see a positive organic growth on the Generac side but Ottomotores has made up the vast majority of that 21%. Jeff Hammond – KeyBanc Capital Markets: Okay. Just in general what do you’re seeing in the commercial around attitudes on commercial generators on the East Coast just given the level of storms and just kind of change in attitude from your kind of key customers and cellphone backup power, gas stations etcetera. And are you seeing kind of any movement on rags being put in place there.

Yeah Jeff, its Aaron. We’ve seen obviously an elevated interest in commercial gensets we call that out as one bright spot in Q1 and frankly we’ve been calling that out as a bright spot over the last several years here in terms of the value proposition that in particular the smaller footprint retailers get from having a small backup system in particular we’ve seen a tendency towards small natural gas systems because the front-end cost is lower on those machines. As it relates to regulations in a particular certain verticals in businesses we obviously telecommunications we’ve been a longstanding supplier to that industry, we continue to see a lot of interest in that vertical in particular. We’ve now seen stepped up interest is the matter of fact not only from the telecommunications providers themselves but the co-locators also so these are some of the companies that co-locate space for towers where the wireless company itself does not want to either own the real estate or physically can on the real estate or for whatever reason doesn’t the co-locators and there is a few of them out there have gotten interest in this category in the last few years because they’re offering backup power on those sites. Basically is another amenity if you will for the carriers to entice them to choose one co-locator versus another one of their peers and so we’re seeing more interest there around regulation the FCC had shown some pretty strong interest early on in tackling these issue of critical communications that don’t occur when you have power outages we have this notion that we want to send everybody a text message when a Tornado is coming or send everybody text messages to get out of the way of the path of severe weather that’s a great idea and everybody carries their mobile phone, the problem is that the tower site is darks as a result of that – as a result of the outage from that weather you don’t get the message though. So if lenders those kind of first alert systems really been renders and useless so that’s an issue. The other issue is just critical communications 911 calls lot of people are cutting the landline to their homes and they’re using cellphones now exclusively and that creates a problem obviously at the local self site doesn’t have power. So the SEC started to tackle this issue I think there is been obviously there is a new Chair person coming in for the FCC so we’ll see the outgoing Chair person had some interest in it we’ll see up the new Chair person wants to take that up as a area. We’ve actually seen actually more interest at the local and state level than we have at the federal level around gas stations the whole fuel infrastructure discussion as gotten some legs here in terms of certain townships and certain local entities actually mandating at least some level of readiness for critical fuel depots or critical fuel stations, some of them are readiness to connect the generator which is good but the logistics get pretty tough in the middle of the storm to find a generator to hook up to that installation. So we still think the right answer is a permanently install backup generator for critical installations, critical communications, critical infrastructure, we think that’s a right answer, we do think that over time regulations will move in that direction we just don’t know which at what speed. Jeff Hammond – KeyBanc Capital Markets: Okay. And then just overall on margins what’s driving the better margins just simply better flow through on volumes or are you getting any kind of better mix shift?

Actually Jeff, its York. Actually I think the bigger, you are talking Q1 specifically year-over-year gross margins 70 basis point improvement. The mix actually wasn’t a huge component of that because if you remember last year at this time, we were in similar pattern, as we just come off a significant outages and we’re shipping a lot of home standby generators in Q1 of 2012 we did that in Q1 of 2013 as well. I think when you look at the cost reduction efforts that we’ve been working on where just it’s part of our culture and just we are relentless on value engineering, our strategic global sourcing group is woks tirelessly discover the globe to find the best quality lowest price components. And then, when you think about Magnum, the things that we’re working with the Magnum Group to go after cost reductions in a way in the Generac way. All those things are what’s happening behind the scenes to dive the improvement in margins that we are talking about. When you talk about, I mentioned in the and actually in the release, I mentioned pricing when you are the step of volumes you don’t any promotional discounting you don’t need to do and those are the big drivers. I think commodity moderation is playing a role – a bit of a role here. But I think when you put that all together you are getting to 70 basis point improvement and that’s and that’s even in spite of the Ottomotores business for the first quarter layering on which has traditional industrial and international type margins that are layering on top of that so all good things on the margin front. Jeff Hammond – KeyBanc Capital Markets: Great. Thanks, guys.

Thank you. Next question comes from the line of Ross Gilardi. Over to you, Ross. Ross Gilardi – Bank of America/Merrill Lynch: Good morning.

Good morning, Ross. Ross Gilardi – Bank of America/Merrill Lynch: I’m just wondering, what’s happening with installation costs around the country? I know, you are seeing as more electricians are getting trained and learn about your products and start more businesses just dedicated to installing generators are you seeing installation costs start to go down to reduce the overall total cost for the customer?

Yeah Ross that’s an area of focus for us over the years. We have always said that, we can work – we can work tirelessly here at Generac to take cost out of the product. We can take a $100 of cost out of the product and that’s a lot of work to take $100 of cost out of a product. And yet if our installation partners, just turnaround put 100 bucks back in installation or overcharge for installation, we’re not getting the kind of traction we need for the TCO, the total cost of ownership of the product. So, we’ve been focused on this issue. What we haven’t had is enough data to do something about it and that – that sounds like a bit of a (inaudible) but it’s true. I mean, if pricing go over the map, installations are, we wish there was kind of a one size fits all approach to installations. But if you are installing a product in a 100 year farm house versus new construction those installation the spreads on those, the cost of those different installations is pretty wide. But what we’ve done is, if you recall, we launched now this new selling system that we got we call it power play, the tablet based selling solution, which allows our distributions, our dealers, which we got now over 5000 dealers here as of the end of Q1 and it allows those dealers to quickly produce a proposal and it’s a turnkey proposal for homeowners. Well in doing so, it includes the installation cost and a fairly detailed breakdown of the installation cost between materials and labor and all of the aspects of permits and things that go into that. We have a very rich stream of data suddenly coming at us relatively to installation costs. It’s our goal this year to collect that data to mind that data and to start to create different programs around that. I can’t say that just from a step back, just a big macro standpoint to answer your question yes, we’re seeing some higher competition on installations as more people have been trained how to do it as more dealers come online and as interested increase in the category and dealers have to get a bit sharper with their pencil on a total cost proposal basis. But yet I think that there are still some fairly decent breakthroughs to be had in installation costs, which we’ve not yet realized in the market. I think our ability to collect that data mine it and to find insight in it to help us either design product modifications to take cost out of the installation, which we’ve done a little bit over the years here or to improve training or frankly to exert some amount of additional control or pressure over what the installed costs are being charged on the marketplace. I think that’s the more exciting thing. It’s a little bit more, longer term-view but I do think that’s going to be, that’s going to be something that we’re looking forward to kind of 2014 and beyond. Ross Gilardi – Bank of America/Merrill Lynch: Okay. Thanks a lot. And then, what are seeing in the rental channel right now. You said that I think part of Magnum I’m not sure it was part of Magnum or all of Magnum was actually down due to tough comps. Do you think that the rental companies being more cautious on fleet, is there any competitive issue there at all or are you any less excited about Magnum going forward anywhere three to six months ago?

Yeah. We remain really excited about that business. What we find it’s interesting that’s a business that we’re learning over the last really kind of year and a half of our ownership here. The national account part of that business is a pretty heavy weight on that business in terms of the amount of sales. And very similar to our national account business and our C&I, our C&I segment that is, it can be a bit lumpy from quarter-to-quarter. There is a degree of variability. And so, we think that this is just kind of that, that kind of nature of from one quarter to the next, seeing a bit of variability there in the national account purchases. We really like the long-term prospects for this business. When you look at what it targets in terms of the infrastructure build out in the U.S. road construction, commercial construction, oil and gas, which did pull back a bit. I think, you could admit maybe there is a bit softness there on the oil and gas side but I think that also it’s a fairly temporary phenomenon. Natural gas production, oil production in this country domestic energy production is going to be important center for us over the next couple of decades here in this country. And so, we think that the, we’re in a really good spot with this business. We like the opportunities for this business internationally. They don’t have much in the way of international sales. So, we think there is some opportunities there as well going forward. So, we think that there is no share loss sin these numbers. It’s really just I think some variability quarter-to-quarter. Ross Gilardi – Bank of America/Merrill Lynch: Okay. Thank you. And then just lastly, could you just talk a little bit more about your initial read on Ottomotores and Brazilian markets receptivity to the products and does it whet your appetite to want to diversify further globally with acquisitions?

Yeah. The Ottomotores acquisition has really been for us, it’s been a great experience as a company that’s been frankly very focused domestically here in the U.S. and Canada for the last 50 plus years getting ourselves down on the ground in another country and other countries in this case all of Latin America including Brazil, Mexico. And really starting to understand – create an understanding for those other markets, how those markets transact distribution not only philosophies, but tendencies how customers order all the things that come with learning a new business. We are pretty quick studies here. So, we pick this up, we think pretty quickly. There is frankly that business has a lot of opportunity and Brazil in particular that’s a very, obviously it’s a very kind of protectionist economy the way that it’s structured with having a physical presence in the country we think that there is some opportunity there. The Ottomotores it’s still relatively new down there. They have only been there for a couple of years. The previous owner had started up that branch, that business Ottomotores Brazil several years ago and they are still pretty small so we like what we see there in terms of potential demand around world – the World Cup infrastructure build out around the Summer Olympics in Rio that build out. We think the next several years here are pretty exciting. As far as whetting our appetite for further acquisitions as we’ve indicated part of our Powering Ahead strategy is to be a more global company. We believe that there is a substantial opportunity for Generac to be much bigger on the global scene in terms of a player in the markets that we serve the products in particular around Nat gas, which again is a pretty nascent market globally. It’s growing in North America but it’s still pretty small in other parts of the world but I think natural gas is going to be an area of intense focus, natural gas production, natural gas utilization now in gensets but base load power creation is going to be and transportation potentially is going to be a very solid focus worldwide here for the next several decades. And so, I think, we’re going to be really focused on finding additional opportunities to grow globally and that could be organically in certain areas. It could be through acquisition. I guess, we’ll evaluate one of those opportunities as they come along but we’re pretty excited about the potential for Generac and becoming a much more global player. Ross Gilardi – Bank of America/Merrill Lynch: Outstanding. Thank you.

Thanks, Ross.

Thanks, Ross.

Next question comes from the line of Charley Brady of BMO Capital Markets. Over to you Charley. Charley Brady – BMO Capital Markets: Thanks. Good morning guys.

Good morning Charley.

Hi, Charley. Charley Brady – BMO Capital Markets: Perhaps if I misjudged, did you guys give what how much portables and how much standbys were opt in the quarter?

No, we…

We don’t break that out traditionally.

We have not traditionally broken that out but I think what we did say is that both contributed to growth and we saw a very nice growth on both sides of – both of those product lines. Charley Brady – BMO Capital Markets: And then on the OneWash product how many stores is that in right now and what’s the rollout look like for that product?

I don’t have the total store count Charley directly on hand but I – we got a – we’ve got an innovation MCAP as it referred to at Low’s in all stores. So and it’s the entire store count of Lows. We’ve got some other partners in the retail side so its, I mean, it’s in thousands of locations put it that way. I don’t have again don’t have the exact store count so I apologize for that but good receptivity on that product initially here both at the retail channel as well as consumer channel. I think pursuant to comments made by others in the Lawn & Garden market the spring has been I know here in the Upper Midwest up until really the last few days you wouldn’t want to be in outside doing anything and I think I saw it was smelling again in Minnesota yesterday. So there is parts of the country here where spring just has not arrived or is only recently arrived. So we’re actually pretty encouraged by the performance of OneWash and frankly our other consumer and power washers at this point in spite of a slow start to the spring season. So we’re hoping to see that accelerate even more here, I will say that lot of the OneWash today is placement its initial rollout into these stores so we’ll be monitoring very closely over the next 30 to 60 days as kind of a sell-through at retail and again we hope to see spring kind of arrive in parts of the country where it has yet to arrive. Charley Brady – BMO Capital Markets: Okay. It’s fair to say that the bulk of the rollout initial placement is completed.

A good chunk of that initial rollout has been completed here through April so not fully reflected in Q1 there is some additional that rollout was kind of bridging over really March and April and there is a little bit actually here in May as well but the bulk of it’s done. Charley Brady – BMO Capital Markets: Okay. And in terms of pricing I know you talked about mix really being or not being a big driver of it in cost containment being above I’m wondering can you quantify how much if any price to help the margins?

Price was a small piece of that although.

Yeah, I mean we did…

Now it looks sellers that was this deliver.

We didn’t raise prices in our residential markets this year, we adjusted prices only slightly in our C&I markets on certain note so I think in the totality and that frankly we wouldn’t be realizing much of that yet anyway in C&I because there is a lag in terms of the court order to shift cycle so that’s something that it was a very small contributor in the quarter. Charley Brady – BMO Capital Markets: Okay. And one more, I’ll back in the queue. Your comment on the special dividend when you said up to $5 I’m just trying to understand the up two part what’s – is that continues on the size of the financing as it sound like a size of financing was pretty fixed.

Yeah, this – yeah we’ve got – similar to what we did last year, Charley we set up to at that point $10 we were looking at and then we went out and restructure that deal even though the financing was – we had a pretty good plan on what we wanted to do the high yield markets were not as receptive we kind of hit a soft patch in high yield market frankly when we launched last year and so we downsized the dividend to $6. So this year should market conditions dictate I think the important thing to note as we said last year is we really don’t have a gun to your head have to do anything I mean is this kind of an optional transaction for us that we think is not only accretive as we said even though on slight basis to our run rate EPS but it just we think it’s a great way to return capital on the evidence of free cash flow of this company to our shareholders but again if the markets tighten up for some reason if there is something in Europe or something in who knows some other parts of the world that gets people generally in terms of the debt markets to credit markets we could downsize that if we needed to there is really no need to do the transaction other than that we think it’s just a smart financial move for us. Charley Brady – BMO Capital Markets: Great. Thanks a lot.

That market we’re strong but it should be out in the next week or two just a disclaimer. Charley Brady – BMO Capital Markets: Yeah. Fair enough.

Thanks Charley. Charley Brady – BMO Capital Markets: Thanks.

Thanks for your question. Next question comes from the line of Brian Drab of William Blair. Over to you. Brian Drab – William Blair: Good morning York. Good morning Aaron.

Good morning.

Good morning. Brian, how are you? Brian Drab – William Blair: Good, good. Obviously the entire Generac teams have been working at an amazing record pace for the last six months in large part (inaudible) need on the East Coast so congrats on what you guys have accomplished.

Thank you.

Thank you. Brian Drab – William Blair: Can you talk a little bit more about the order rates in general whether activity that you are seeing on the East Coast and what’s the trends in throughout the first quarter and if you could comment how is the activity been in April?

Sure. I think we typically don’t get too detail in those descriptions Brian but I think I can tell you just couple of high levels things. As I said I may have mentioned it in answering the previous question our dealer account is now over 5000 dealers at the end of the first quarter which is obviously a bigger number than it was I think we were at something on the order of 4800 at the end of the year. So we’ve added that’s a pretty brisk phase to continue to add distribution so you can take that as to mean there is still a high level of interest certainly at the distribution level around these products. Consumer level now that we’ve got some frankly some pretty good information coming out of us with our as I mentioned our power play application, our AMP targeted marketing process. The information flow that we’re getting is frankly it’s starting to be a tidal wave of data that we’ve had – we’ve always been a very data driven organization we’re getting even more data now at a much more granular level both geographically breakdowns of profit margins for dealers and installation cost and really that’s helping us kind of refine our marketing methods our targeted marketing approach in terms of geographically where we’re going. We see obviously in the Northeast as you indicate still a fair amount of interest in the category we just hit the six month anniversary for Sandy here beginning of the week, we think that, that interest is going to stay fairly strong throughout the next couple of quarters. As we’ve said when you get a large event like that, that afterglow as we referred to it can be anywhere from 6 to 12 months. Certainly in the Northeast there is a compounding effect with the Irene event that happened in 2011 and there is just some areas in that country that have been battered by these events and power outages have been very prevalent and have caused people to reevaluate their needs and those needs now are starting to include backup power. On top of that you got housing increasing and well new constructions not a huge part of where these products go it’s still 10% to 15% of our sales so movements up to the kinds of levels for new construction do have some kind of an impact there that’s positive. I do think my comments aside about the Northeast we’ve actually seen strength in all regions so that’s what gives us again we talk about events and we talk about the impact those events have really the impact that those events have as it gives us the opportunity to tell our story to everybody and regardless if you live in California or you live in New Jersey or you live somewhere in the Midwest or Southeast we get to tell people about the category we get to educate people, we get to invest in our infrastructure to promote the category, we get to invest in our infrastructure to market the category and I think that’s the most to me that’s the – when we talk about this new higher baseline that it couldn’t be more evidence for that and to see all of the regions performing well in this category. Brian Drab – William Blair: Okay, great. Thanks for all that detail. And just if you could talk just a little bit more about the Sandy effect when I think about the typical person who is affected by Sandy I wouldn’t be surprised if it’s something that a standby generators something that they consider throughout the winter talk to the dealer now the weather is breaking now you’re going to start to see the installation if you been at – why don’t – but it doesn’t work that way where we see actually even stronger sales or standby generators now that the weather is breaking.

Well I think there is a couple of things, first of all obviously demand surged in near-term months right after the event right so through the fourth quarter we saw a very good demand through the first quarter kind of above our historical levels of demand certainly for that category and it continues here in going into the second quarter, obviously as it warms up in certain parts of the country installations become easier to do so there is a physically there is some constraints installing when the ground is frozen in certain areas trenching for gas pipe and electrical runs if that’s required in certain installation that’s tougher to do in the date of winter so installations have certainly picked up as we – as York mentioned couple of times we ramped up our production pretty aggressively in Q1 and into Q2 here we’ve gotten our lead-times down to at the end of the first quarter we were down to about three or four weeks and that’s down now back inside of normal lead-times here as we stand today. The interest level remains high and I think it will remain high as I said for the next couple of quarters the thing it run into is that the further you get away from a major event even though people may be good to consideration immediately after and they maybe good research they maybe talked to a dealer, dealers were busy, product was not as available. And so they probably put off maybe another event to trigger them to kept them over the point of purchase. Some people are lot more proactive and they will get back in the queue right way here. As season (warms up) they are going to – they will read something about the anniversary of Sandy or the experience of thunderstorm locally. It takes up power or they will hear a story about power being cut to some part of the country or and that will remind them that they remain vulnerable without a backup power system. So, again there is a lot of different factors that go into that. It’s an emotional thing for people. It’s a practical thing for certain others, who have businesses they run in other homes or medical devices they are running. But for people where it’s more of a discretionary purchase sometimes it takes a couple of outages to put them over the edge. Brian Drab – William Blair: Right, right. Okay. Thanks for all the detail.

Thanks.

And your next question comes from the line of Steve Tusa of JPMorgan. Over to you. Steve Tusa – JPMorgan: Sorry my questions have been answered. Thanks.

Thanks, Steve.

Okay, thank you. Next question is from the line of John Quealy of Canaccord. Over to you. John Quealy – Canaccord: Hey good morning guys. Congrats on the quarter.

Hi, John. John Quealy – Canaccord: Can we go to play – can we go to power play for a minute. I know it was rolled out in the iPad I think January at your sales conference. Can you talk about are closure rates better for the population that has this application in the field is time to close better. Just anecdotally, can you give us some feeling on how that’s rolling out in the ground level with the guys?

It’s a great question John and the one that we’ve been watching this very closely because obviously we want to, we want to see the impact it’s having right. So, our focus here in the first quarter of the rollout has really been around training and it’s around getting more people to use the product, getting them comfortable with it, getting them to load in there. There is quite a bit of setup actually for on the front end for this. We’ve actually rolled out a couple of iterations off the software just kind of in keeping with in terms of the – as w get feedback from dealers, as we get feedback from we’re continually monitoring kind of how the software is being used. We’ve actually rolled out just recently an updated version of power play that add some additional features to the software that we think are going to be helpful to continue to streamline the sales process. But getting at the heart of your question, one of the encouraging early returns here in this data has been the close rates are about double for those dealers using the software versus other dealers not using it and that is for us kind of the – that is what we hope to see as a continuing outcome of our investment in this and it’s been an investment. I mean, let’s say it’s a huge investment to do this. But we think it’s the right thing to streamline the sales process to make it more effective and we’re seeing that kind of an impact so it’s been, it’s been very, we’re very encouraged early on. John Quealy – Canaccord: And then second question on the Nat gas side on the C&I or small like commercial very clearly it feels like a buy versus build opportunity for Generac and to your comments earlier that there was so much going on downstream in gas in the last mile. When we look forward a couple of quarters, should we expect an acquisition nothing major but something on the Nat gas side maybe domestically or how should we think about this opportunity for Generac in the next couple of quarters from an M&A perspective?

Yeah John I think for us it’s probably less about M&A in that space and it would be organically. I mean, when we look across the universe of opportunities with M&A for this thing, for that just talk Nat gas for a second. I mean, we really are the – we’re the standout leader in Nat gas gensets in North America and have been for sometime. So, acquisitions if we’re going to come in the Nat gas space for us would probably be, if we could find something that the expertise that we developed in Nat gas well that could be extendable into other products or other market opportunities that might be something we would look at. But frankly as I look out just in the near term the next few quarters to answer your question, I don’t see as much on that side. I see more about our efforts to push into the commercial application. So, light, this light commercial what we refer to a small footprint, retail type applications, bank branches, restaurants, gas stations, convenient stores those types of retail applications we think just need to be brought into the loop on and the opportunity and the return on the investment, we’ve got to learn the math for them. I mean, if most businesses can payback a power outage, they can payback the cost of this product very, very quickly with a single outage. And so, when you look at that and if we can get that message out there to businesses, we think there is a potential for quite a bit of upside jus in investing in our sales efforts, investing in our marketing efforts around Nat gas going forward. John Quealy – Canaccord: Organically.

Organically. John Quealy – Canaccord: That’s great. And then lastly so on the debt side currently you are very covenant light can we assume that the new tranche here is going to be similar like covenants or can you talk about a little bit?

Correct. Yeah, we anticipate it’s going to be basically amended (inaudible) at the existing credit facility effectively the same credit facility covenant wide upsized and with lower interest rates so and some other flexibility built in as well so anticipated to be covenant wide as well. John Quealy – Canaccord: Great. Thank you guys.

Thanks John.

Thank you. And the next question comes from the line of Jerry Revich of Goldman Sachs. Over to you, Jerry. Jerry Revich – Goldman Sachs: Good morning.

Hi, Jerry. Jerry Revich – Goldman Sachs: Aaron it sound like your market share is tracking better than you expected and power washers and maybe portables I’m wondering, can you just talk about it you are getting traction in the marketplace and how you are tracking in those product lines roughly?

Yeah no it’s something that on the portable generators I’ll hit that one first because that’s been a market we’ve been in. It’s been almost five years now since we reentered that market. Based on the information we see, we’re the leading share from a brand perspective, a leading share player in portable generators today, as we stand. So, we think that, that’s share is somewhere in the mid 20s. Frankly it continues to move up. We get – we continue to get placement in places, we didn’t have before season to season just looking at kind of where we are at. Certainly as our comments indicated the first quarter remain strong with portable generators. We saw quite a bit of inventory replenishment and some new shelf placements that we have got over the prior year. I think as a result of our position, our strong position from an inventory perspective last season. We think that we were very well positioned to take advantage of the demand surge that that (occur) to those products. So, we feel very good about portables and what we have done now as we translated that and as my comments indicted we translate that into this position of power washers. Now on power washers Jerry, we are still, we are still single-digit share. So, we’re not diluting anybody. We’ve got some very strong players in that market but we like our approach from an innovation standpoint. We like our approach from a value orientation standpoint the positioning of our brand as a brand that is a, that stands for something in this space in terms of being rugged, in terms of being durable all of those power washers are made in the U.S. so we’re promoting that quite heavily that is different than some of the other competitors, who are out there so we think that there is, there is a play to be had in terms of positioning ourselves as those products being manufactured here in the U.S. And so we like our position, we like long-term prospects. We think that, that kind of double-digit low to mid double-digit margin – market share is very achievable here in the next few years plus in that space. Jerry Revich – Goldman Sachs: And Aaron can you give us an update on the Honeywell branded generator strategy is that from a focus standpoint they have taken a little bit of a backseat in all the works that you are doing with main Generac distributors and I guess, what are your medium term targets for that part of the platform?

That’s I mean, Honeywell has done very well. It’s done exactly what we wanted it to do, which was to get us entrée into the HVAC space and that’s what we’ve been using our brand exclusively to do. Jerry Revich – Goldman Sachs: Home standby in particular. Aaron Jagdfeld – Goldman Sachs: Home standby in particular. We don’t focus as much whether in the portable gen space but we do have a few retailers, who help us differentiate product offerings for those retailers, and with a very good brand obviously Honeywell has been incredibly well recognized brand and that’s why we’re really happy to put it on the product. But in the home standby space, the strategy there all along has been to target the 100,000 HVAC dealers that are out there, where we’re accelerating our efforts in terms of training those dealers and in terms of getting them signed on board it’s a build out process much as same as what we’ve gone through with the electrical contracting space, the HVAC space takes a lot of work. These are folks that aren’t as familiar with the products. While they know how to deal with natural gas and propane fuels and they know how to deal with electricity. They are not as familiar with air cool engines or water cool engines. So, getting them trained properly technically, getting them to understand the process, the sales process. They are generally fairly accomplished sales people on the HVAC space and that’s the part we really like about that. So, we like what Honeywell is. We like the trajectory it’s on. We are getting into the heating, the cooling season here. So, what we’re finding with Honeywell is you have to continue to keep their attention the dealers that is. They get pretty busy starting this time of the year as the weather heats up. So, we need to keep them focused on the opportunities in power generation and we have to continue to figure out how to make sure we their mind share around the category going forward but we really like – we like the opportunities that the Honeywell as brought to us. Jerry Revich – Goldman Sachs: Okay. Thank you.

Thanks, Jerry.

Thank you. And the final question comes from the line of Stanley Elliott of Stifel. Over to you Stanley. Stanley Elliott – Stifel: Good morning, guys.

Hi, Stanley.

Hi, Stanley. Stanley Elliott – Stifel: Thanks for taking my question and congratulations. Without the momentum in the category are you seeing any more favorable responses or anybody from the home builders actually starting to take a look at this and offer this now as an option from the building side?

We have Stanley, the place where we see the best traction with that and it’s – frankly it’s been a bit of where we’re seeing traction over the last several years but it’s accelerating here recently is more with the custom builders which is great because they’re looking to differentiate their product in home from large production builders with other amenities so hot tubs and generators and other granite countertops, things like that to separate themselves in terms of their product. But and so that’s the good news, the bad news is that’s very decentralize I mean custom builders are generally building in much smaller quantities of homes there is lots of them I mean you can look just in the Milwaukee market here where we’re located and there is 15 or 20 of them here and we’re – this is a fairly small market from a new construction standpoint. So you can multiply that by the top 100 to 200 DMAs around the country and there is a lot of custom builders so reaching them all with the message around this product category is where our focus life could deliver its – that’s a little bit of a slog to try to and get that built out the way we’d like to. I still continue to think that new construction is a – if we could just get some of the big production builders to get on board with instead of looking at today what we get with these guys is one-off development that they’re doing and in area the country where the power quality has been power they’ll look at that development and they’ll say okay I want to have each of the homes in this development be generator ready maybe even some of them with the generator or at least half of the option to the home owner to put one on, that’s what we’d like to do everywhere we’d like to see homes be offered up by builders as being constructed generator ready. Frankly to make a home generator ready is only a couple hundred hours it’s really – it’s about a little bit of coordination about running the gas supply to the home and the electric supply to the home to make sure they’re conveniently located to accept the generator down the road to make sure that they’re eagerly to accept a transfer switch in the home’s basement or garage or wherever the electric system is for the home. It could greatly reduce the cost of adding a generator downstream if the homes were made generator ready so that’s been our big message, we’re not trying to necessarily sell generators to builders as much as we are trying to sell them on the concept of offering homes that are generator ready. Stanley Elliott – Stifel: And one the power washer product it sounds like the rollout is going very well, has there been discussion with other big box retailers about then adding that shelf space maybe later on at that year or certainly in time for next spring selling season.

We’re getting into right now the – we’re getting in line with the season here for next spring season so with the rollout occurs generally in December, January, February timeline in terms of our production ramp-up and then placing that in market kind of February, March, April. So that those line of these are starting to heat up Stanley so we’ll be participating in those, we think there is still lot of opportunity out there, we’ve gotten a lot of traction with our washers in some of those retailers who were not on the shelf today actually if you go online for those retailers you’ll see that our washers are some of the best selling online washers that they have. So we think that, that could translate into the potential for obviously a robust discussion around placement of our products on the shelves for the next selling season in some of those retailers I don’t anticipate that they’re going to make a change from any decisions they’ve made today for this year’s selling season there wouldn’t be time to react to that but certainly we like – we like our position today on the customers that have decided to put on the shelf and we like our prospects tomorrow for those retailers that we think are very good targets for us and frankly all of those retailers we have very good relationships with portable generators and home standby so we think that, that should translate into potential opportunity for us down the line. Stanley Elliott – Stifel: Yes, great. Thank you very much and best of luck guys.

Thanks, Stanley.

Thanks, Stanley.

Thank you. That now concludes the Q&A session. I will now hand the call back to Aaron.