Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter and Full Year 2019 Generac Holdings Incorporated Earnings Conference Call. [Operator Instructions] We are joined today by Aaron Jagdfeld, Chief Executive Officer; and York Ragen, Chief Financial Officer. I would now like to hand the conference over to your speaker today, Mr. Mike Harris, Vice President of Corporate Development and Investor Relations. Thank you. Please go ahead, sir.

Good morning, and welcome to our fourth quarter and full year 2019 earnings call. I'd like to thank everyone for joining us this morning. With me today is Aaron Jagdfeld, President and Chief Executive Officer; and York Ragen, Chief Financial Officer. We will begin our call today by commenting on forward-looking statements. Certain statements made during this presentation, as well as other information provided from time to time by Generac or its employees, may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements. Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we will make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including a reconciliation to comparable US GAAP measures is available in our earnings release and SEC filings. I will now turn the call over to Aaron.

Thanks Mike, and welcome back. Good morning, everyone and thank you for joining us today. The fourth quarter was a strong finish to 2019 and capped a tremendous year for Generac. We achieved a record quarterly revenue - a record for revenue and all-time records for adjusted EBITDA, adjusted EPS and free cash flow. Revenue during the quarter exceeded our expectations headlined by strong home standby demand from robust growth in California, driven by the growing threat an occurrence of public safety power shut-offs, along with the overall continuation of a favorable outage environment. The revenue outperformance during the quarter was also due to strength in shipments of domestic commercial and industrial stationary generators sold through our North American distributor channel, along with higher than expected sales of domestic mobile products. These areas of strength were partially offset by lower than expected results from the continued slowdown in international markets. On a year-over-year basis, net sales increased 5% during the fourth quarter as compared to the very strong prior-year comparison where overall revenue growth was 14% and core sales growth was approximately 12%. Core sales growth for the - current year fourth quarter, which excludes both the impact of acquisitions and foreign currency was approximately 4%. Gross margin expanded 130 basis points compared to prior-year and was better than our expectations. Adjusted EBITDA margin remained strong at 22% and also came in better than forecasted. We monetized the significant amount of working capital during the quarter and generated robust free cash flow of $160 million. Before discussing fourth quarter results in more detail, I want to provide some full year financial highlights, as well as share some key accomplishments that we achieved during the year. 2019 was another record year for Generac across the board for revenue, adjusted EBITDA, adjusted…

Thanks Aaron. Looking at our fourth quarter of 2019 results in more detail, net sales for the quarter increased by 4.9% to $590.9 million as compared to $563.4 million in the fourth quarter of 2018. Excluding the $9.1 million of contribution from the Captiva, Neurio and Pika acquisitions, and the almost $3 million negative impact from foreign currency, the core growth rate during the quarter was approximately 4%. Net sales for the full year 2019, increased 8.9% to $2.20 billion, an all-time record for the Company. Looking at our consolidated net sales for the fourth quarter by product class, residential product sales during the fourth quarter increased 9.7% to $322.5 million as compared to $293.9 million in the prior year with core growth being approximately 7% when excluding the contributions from clean energy products acquired through Neurio and Pika. As Aaron mentioned, home standby generator sales continue to experience very strong year-over-year growth primarily due to increased baseline power outage activity in the US and Canada, including the utility power shut-off event that took place in California during the quarter. As we continue our focus to drive the overall penetration of the homestand by product category, we have ramped up our efforts, particularly within California to increase awareness and distribution for these products within the state. Partially offsetting the home standby strength during the fourth quarter was a decline in shipments of portable generators compared to prior-year as a result of higher retail inventories entering the fourth quarter from the threat of Hurricane Dorian. Also recall, the prior year fourth quarter included the impact of Hurricane Michael, which resulted in additional portable generator shipments into the impacted region. Looking at our commercial and industrial products. Net sales for the fourth quarter of 2019 declined 2.7% to $217.1 million as compared…

Thanks York. We are initiating guidance for the full year 2020 and expect continued strong revenue growth highlighted by the rapidly expanding clean energy in California markets for our energy technology products and solutions. For the full year, net sales are expected to increase between 6% to 8% compared to the prior year on an as-reported basis and 5% to 7% on a core growth basis. Importantly, this guidance assumes a level of power outages during the year in line with the longer-term baseline average. But given the high likelihood of a significant power shut off event in California, again in 2020, we have included the benefit of one of these events in our guidance. However, consistent with our historical approach, this outlook does not assume the benefit of a major power outage event during the year, such as a category three or higher landed hurricane. Incremental to our baseline revenue guidance, should there be a major event during 2020 along with any additional power shut-offs in California, we could expect approximately 3% to 5% of additional revenue growth, resulting in an upside case as reported sales growth of - between 9% and 13%. From a seasonality perspective, we are anticipating normal historical trends for the year. Specifically, our baseline guidance assumes net sales in the first half are projected to be approximately 45% of full-year revenue with the second half expected to be approximately 55%. Year-over-year growth is forecasted to be in the low-single digits in the first quarter, as the demand softness with telecom and international is anticipated to continue in the near term, but growth is expected to accelerate during the second quarter. Our upside case scenario, should it occur is more likely to take place during the second half of the year where the probabilities increase…

Thanks again, Aaron. As is our normal practice, we are providing additional guidance details to assist with modeling adjusted earnings and free cash flow for 2020. Please note, these additional items assume our baseline guidance case for the year. For 2020, our GAAP effective tax rate is expected to increase to between 23.5% to 24% as compared to 21.1% for full year rate 2019. Based on our guidance provided for 2020, our cash income tax expense for the year is expected to be approximately $55 million to $59 million, which translates into an anticipated full year 2020 cash income tax rate of between 15.5% to 16.5%, as compared to 15% rate for the full year 2019. As a reminder, we still have a favorable tax shield as a result of a significant intangible amortization deduction in our corporate tax return that results in our cash income tax rate being notably lower than our GAAP income tax rate. The tax affected annual value of this tax shield is expected to be approximately $30 million per year and expires fully in 2021. In 2020, we expect interest expense to be approximately $37 million to $38 million, assuming no additional principal payments during the year and flat LIBOR rates throughout 2020. Our capital expenditures for 2020 reflect continued investments in expanding capacity and are forecasted to be approximately 2.5% of our forecasted net sales for the year. Depreciation expense is forecast to be approximately $33 million to $34 million in 2020 given our assumed CapEx guidance. GAAP and intangible amortization expense in 2020 is expected to be approximately $31 million to $32 million during the year. Stock compensation expense is expected to be $18 million to $19 million in 2020. For full-year 2020, operating and free cash flow generation is once again expected to be strong and follow historical seasonality, benefiting from the solid conversion of adjusted net income to free cash flow expected to be approximately 90% in 2020. Finally, our full-year diluted share count is expected to increase and be approximately 64 million shares, this compares to 62.9 million shares in 2019. This 2020 outlook does not reflect potential business acquisitions or stock buybacks. Given our strong balance sheet and free cash flow generation, we have significant resources to drive further shareholder value as we execute on our long-term strategic priorities. This concludes our prepared remarks. At this time, we'd like to open up the call for questions.

[Operator Instructions] Our first question comes from Christopher Glynn with Oppenheimer. Your line is now open.

So for the 150 megawatts for clean energy coverage, curious how you're seeing the relative value on this initial trust from your captive legacy channels in dealers versus partnerships that are peculiar just to this category for you.

Chris, it's a great question. Obviously, we think that we're going to be able to tap our existing distribution channels for clean energy opportunities in the future. And in fact, we were - we had our annual conference with all of our distribution partners down in Orlando, last week. We had over 3,000 people there, representing about 1,500 dealers. And so the products were incredibly well-received. We talked about not only the product, the technology and a lot of the programs around that, but I think one of the things it's very evident to us that the typical dealer for us is a small electrical contractor, that's about 85% of the channel for us. And I think most of those contractors would tell you privately that this is pretty new stuff for them, right. They haven't dealt with a lot of the clean energy technology. Some of them have. They're perfectly comfortable with solar and even some comfortable storage. Storage has been so thinly penetrated to this point that it's really new for everybody. But what we're seeing out of 150 megawatts, to answer your question more directly is that that's coming from a lot of the new channel partners that we've picked up, so there is - there are a number of distributor companies that are involved in the clean energy space to distribute all the components necessary to build out a system, whether that be a solar array, or whether that be the storage system itself. And so we've been very successful garnering interest of new customers, which is great because obviously, we want to tap into our legacy channel too, but one of the things we want to do is also grow a new channel. So I think over time, as our traditional channels, if we can call on that get more comfortable with the technology and they do a few installs, they get a few under their belt that will accelerate. I think initially, it's going to be a little bit slower ramp, not maybe slower than our expectations. It's just we expected it to be slow. It's difficult to take a small business like a small electrical contractor and give them something that new and have them be comfortable out of the box with it. So that they'll get there like it's just like home standby really 20 years ago. Now, we don't want to take 20 years and I don't think it well, but because the market is going to move a lot faster than that. But a lot of that is coming from new channel partners, which is great.

And then I had a question on core home standby. I think you mentioned the Northeast wasn't as strong as some other areas. So I'm wondering if you've seen some states or regions kind of fundamentally move past peak and penetration, but that shifting to other regions, if you just kind of speak to that notion.

Yes. I think what - again the Northeast notwithstanding, right. I mean the Northeast was up really big after a couple of major events in 2011-2012, nor'easters in '20 - I think that was in '20 - early 2018. We had some nor'easter type storms like three or four of them in a row. So the nor'easter is interesting. And it's softened after those major events in 2011 and 2012. After growing off of a massive base and it's softened, but into a range that was materially higher than the baseline before those events. Then it picked back up again with the nor'easters in 2018. So we're kind of comping - for full year '19, we're comping those nor'easters with the Northeast, that was the only region that was down. And when we look across all the regions for our activations, which is amazing. The broad-based strength in the category continues to surprise even us, honestly. It's a function of again additional points of light in distribution that we put out there, the breadth of our product offering, the aggressiveness of our marketing - with the direct targeted marketing that we do for home standby is we spend a lot of money, we spend a lot of time and we generated a lot of leads. So as I said in the prepared remarks, 2019 was the highest year ever for our in-home consultations - a number of in-home consultations. IHC has reached record levels. So I think there's always going be some puts and takes, right. You're going to have difficult comps off of peaks and they come back around. But I think what's really impressive to us is the broad-based strength that we see generally regionally, and then obviously the West based on our prepared remarks was off the hook as they say. It was crazy good, so.

Our next question comes from Ross Gilardi with Bank of America. Your line is now open.

Aaron, I just want to ask, I mean look, your stock's obviously soaring, you got a $7 billion market cap right now. Your leverage is low. You're generating a lot of cash. What is in you're clearly very optimistic about the clean energy business? What's your appetite for a larger clean energy storage acquisition? And what do you tolerate a year or two of earnings dilution if something was out there that really bolstered your long-term position and you felt like it was the right thing to do for the Company?

Yes. I mean obviously it's something we're talking a lot about, Ross. The fact that - obviously, the stock has performed well, of course, and I think the business - the prospects for our business have never been brighter. As I said, we tapped into, I think some really big megatrends here at the Company relative to the changing utility landscape. This - we're calling it an energy revolution here internally that - and we view those comments externally with our channel partners and others that, there are going to be a lot of changes ahead. And with all those changes ahead, I think that as we look at - and obviously, we don't comment specifically on our M&A funnel, but we're looking at a lot of things in that funnel that I would say are different from what we would have looked at historically, bigger things, things that are obviously fit in with the clean energy space. There's - it's changed our gaze if you will, in terms of where we look and the size of the things that we look at. Now, we're still looking at a lot of different potential bolt-on acquisitions to that build out some of our platforms and maybe fully can round out some things that were already working on. But there are some technology players out there. I just - I think we're in a great position, right. Obviously, the strength of our balance sheet, York and the team getting done with the - they went through in it, amended and extended the - our credit agreement, again here gave us just a fantastic liability structure for a number of years through 2023, so we're - 2026, excuse me, so we're in a really, really good shape there. So we're looking at a lot of things. And again, I can't comment specifically, but I'm excited about the future and I'm excited that we're in a position where we can capitalize on that future.

The dilution aspect of that, Aaron, can you comment at all, how to think about that, like would you - clearly, you guys have got very high margins in your overall business stemming from standby, how would you consider that?

Yes. Obviously, dilution we think about it, but look, that doesn't scare us. Think of all the things that we've done with the high margin profile we have, honestly, it's very difficult to find anything to buy that would not be dilutive. That's been the challenge is everything - our margins, we've got great margins and we've got a great position in the marketplace. It's difficult to find things that become accretive to margins. If they're strategic and they are incremental, and they make - frankly, they fit well with our views on the future, which I guess you could call strategy, strategic thinking then we'll do it. And if that means we have to suffer through some dilution for a period of time and we've done this, right. I mean some of the acquisitions - some of the larger acquisitions we've done over the years have had exactly that impact. Even the clean acquisitions we did last year, right. I mean we spent $100 million-plus on Pika and Neurio. And as we said in the prepared remarks, that is having a drag on EBITDA margins, you know, is that I think we said something like 50 basis points last year and this year it's going to be 125 basis points all-in, and out of the gate, Q1 it's going to be 200 basis points. So it's going to improve as the cost structure improves of those products and as we scale. But dilution doesn't scare me because I know long-term, I know what our capabilities are and we've proven this. With all the things that we've done, here we are. We're still at basic with the same margins we've been at over the course of the last five, six, seven years. So I'm okay with that.

Especially if we have a path to improve margins over time.

You have to have that. Obviously, you have to have that.

Our next question comes from Philip Shen with ROTH Capital Partners. Your line is now open.

Congrats on the NOVA deal.

Thanks. Yeah.

Yes, that's a big one. There are few solar leasing companies out there, in general, can you talk about how you ended up with NOVA, specifically in an exclusive? And can you share how the agreement is structured, possibly? Is it like a typical dealer? Are there any upfront payments from the other party? Did the geographic footprint, for example, serve as a key driver in the decision? I know they have a presence in Puerto Rico and other islands, how important was that?

Yes. Great question, Phil. We're really excited about the partnership with Sunnova. And we're thrilled that they've selected us as their partner. And the exclusivity really is related to the financing arrangement that they can offer. They've got some pretty great financing packages and pretty unique approach to that. Others have different packages as well and we have talked to - really, we're talking to the entire industry because we think we've got a great story to tell in terms of the technology - the storage technology. And really maybe even more importantly, we probably don't talk enough about this, the monitoring technology that we've got and the energy management technologies that we're working on, and we're going to put together and have been putting together in our PWRcell storage system. Sunnova was just the first one to sign up with us on this program and on this path. I mean we're talking to others. We're going to work with the - as many partners that want to work with us. And those larger partners represent about 30% of the market. And then I think our focus obviously, where we think we really can have an impact is in the independent channel. We think we can bring a lot of unique solutions, tools and a value proposition for the independent channel, that is something that they've not seen before, up until this point. We can give them a turnkey solution with power inversion, with storage, all the power electronics, the optimizers on the rooftop, and we can put all of that in one package. And it's basically under one brand and we can give that to them, and we can offer them that in a unique way. So again, we're not trying to limit ourselves in any one way. The exclusivity was really about the financing arrangement with Sunnova. Again, really excited about that. I'm not going to comment on the specifics of the financing package itself. One reason, I'm not as well versed in the details of the financing packages as others are. But obviously, Phil, we can take you offline. We can get you more comfortable with that as well going forward here. But we're really super excited about NOVA and our partnership, and looking forward to that growth as we expand our efforts here with clean energy.

And the geographic footprint impact that decision given their presence in Puerto Rico and other island, countries or territories?

I mean it is because we look at - obviously, we're looking at what everybody else looks at is where are the biggest opportunity sets for us to go after. And you look at the islands, you look at - in the Caribbean, you look at Puerto Rico and the places where NOVA has a stronger footprint. It fits really well with some of the areas that are projected to have some of the heaviest growth going forward and then our - where penetration rates and attach - more importantly, where attachment rates for storage make the most sense. And that's really - you know, it's - that is a part of this, and one of the reasons why I think both Sunnova and us want to get going on this because we both see attachment rates for storage increasing at a really decent clip here in 2020. And I think the - them having additional storage partners that can bring a unique solution like we have I think is attractive for them and for their customer base.

Our next question comes from Jeff Hammond with KeyBanc Capital. Your line is now open.

So just on the guidance, it seems like most - most to all of the organic growth is coming from the energy storage and maybe some growth in California. So just maybe talk about how you're thinking about home standby outside of California for the year, and just maybe the moving pieces in the C&I, mobile, telecom et cetera?

Yes. Hi, Jeff. This is York. Yeah. So I think you're right. Looking at the guide our core growth rate of 5% to 7%, a large percentage of that will be the clean growth and California growth. Home standby, we are projecting it to be up modestly. I think we always have this challenge every year when we guide, especially our baseline guidance when we don't assume any type of major outage events from Mother Nature. We tend to guide modestly - modest growth on the residential side. Home standby again would be up modestly. Portables without an event, we did sell a number of portables - of $30 million portables as a result of Hurricane Dorian, last year. That wouldn't repeat, so a little bit of a headwind there, but we think we can make up for that with some home standby. On the C&I side, looking at low-single-digit growth, I think that start out the year a little slower, telecom and international, and will probably continue its trends that we're seeing here in Q4, into the first quarter. But we expect that to pick up in the second half. Overall for the year, looking at C&I, may be in that low-single-digit growth range. So when you put it altogether outside of California clean, roughly flat to slightly up, and then we've got that 3% to 5% upside, should we get some major events in 2020.

And then what's - I think you said you think you're going to put in 150-megawatt hours up from a 100-megawatt. Can you just talk about what's informing that delta? Is it the Sunnova? Is it order rates to date? And just how you think your supply chain is reacting as you kind of ratchet up those expectations? Thanks.

Yes. And obviously, Jeff, you follow the Company for a long time, so you know we don't do that lightly, right? We don't just increase the guide like that until we generally have pretty decent viewpoints on that in terms of just our available kind of knowledge that we have in front of us here. And that's a combination of all the things you mentioned. I mean, obviously, we're excited about the Sunnova opportunity. We - also, as I said previously, we've signed on a couple of larger distributor partners that we haven't done press releases on but they are important meaningful distributors in the space that we're really excited to be partnered with as well. So it's a combination of those kind of partnerships that we've nailed down. We've got pretty good visibility with incoming order rate so far, some backlog. And that's what's informing kind of our views on this. And then obviously, there are some broader overall market trends. As I said, storage attachment rates being higher and headed higher. And our longer-term view and this may not be as much around the guide change from 100-megawatts to 150-megawatts, as much as it is our views longer-term. But the intensification around storage going forward is going to be - we believe is going to be meaningful. And whether that happens, you know, in the current year or it happens in some future period, storage is going to play an incredibly important role in this push towards renewable energy. And the ability to use that storage and smaller form factors at homes and businesses, the improved cost structure of that product as a result of the push towards larger format storage to support utilities and utility-scale for the push towards renewables is going to be a net positive…

Our next question comes from Stanley Elliott with Stifel. Your line is now open.

Sticking on the supply chain, is there any concerns, impact of the virus from China? And how that would impact your ability to get the products through over the course of the year?

Yes. I mean, obviously, there's probably not a company that isn't thinking about this. And we've got - we've actually got operations in China as well. We've got a facility in Southern China. We have a technical center outside of Shanghai. So we have a fair amount of employees over there as well. So it's interesting because you get a lot of mixed signals right now that some facilities have started back up, including our own. We've restarted our facility in Southern China because we're not directly in a quarantine zone. But there are other facilities that have been told that they can't start for another week or two. So it's kind of a --a mixed kind of bag in terms of capacity right now. I think the next couple of weeks are going to be really critical. I think what I can tell you, Stanley is the one thing we have assessed is there's not going be an impact to our Q1. So Q1, we feel good about being able to satisfy kind of where we're guiding here for Q1. And Q2, we're going to come into the quarter in pretty good shape because we'll be building for a season at this point. I think where we'll run into our first problems if we run into them at all, are going to be on the operational side of our business, which is we'll just - we may - this air pocket that might get created here, normally we - we're kind of in an interesting situation because we were buying ahead anyway to cover the Chinese New Year period like everybody does. And we always go a little stronger because you never know it used to be that suppliers didn't get the same level of people returning after Chinese New Year, so their output was usually a little constrained after the New Year. But I think we're in a pretty - we feel like we're of a decent spot right now for the next, call it 60 days. And - but the next couple of weeks are going to be really critical to really assessing the full impact that this might have on the rest of the year. But Q1 seems safe. But after that, it's a matter of what happens next.

Yes. That sounds fair. And a lot of moving parts, unfortunately. Switching gears onto the telecom side, with the Sprint, T-Mobile, is that - as you guys have internally gameplay, is that good for the business telecom? Or is it possibly push out some of the backup generators installs that you would expect to see given they'll be working through the M&A logistics?

Yes. I think the actual deal itself getting approved. We actually think it's a good thing, right. It just takes away the uncertainty that surrounded that. So that I would put a check in the positive column. I think on the other side of the ledger, you have the fact that as our prepared remarks indicated and we're going to start out the year a little bit slow with telecom. There's a bit of an air pocket here on - in terms of the cycles of capital spending. And we've seen this forever in this industry. There just - there is green light, red light, green light, red light. It can be lumpy. We were - last year, overall telecom demand was greater than the previous year, but it's slowed down later in 2019. And that slowness has continued here in early 2020. So without getting into the specifics of kind of which carriers are causing that, because we don't like to talk directly about individual customers, but I think that we're - the long-term prospects here are immense, and the 5G technology is game-changing. The amount of stuff that, that's going to enable from drone delivery to automated driving to the robotic surgery, all these super high-functioning technologies are going to require a consistent 5G connection. And that consistent 5G connection is going to only come from a site that has consistent power. And so the penetration rate of backup power at cell sites is going to have to improve - is going to have to increase dramatically. And so I - we just don't think there's any question about it. It's not a question of if. It's only a question of when. And so - but the when has been the challenging part, right. It's been a lumpy quarter-to-quarter. And the first half of this year, - first couple of quarters of this year, Phil, at least right now based on the visibility we have, and again, we've always said this, we don't get great visibility out of those guys, but it could change tomorrow. But at least at the visibility, we have today, we think it's going to start off, kind of like 2019 ended a little slow.

Our next question comes from Brian Drab with William Blair. Your line is now open.

In your longer-term guide at the Analyst Day, and I just want to kind of try to put a finer point slightly on the clean energy outlook. But you talked at the Analyst Day about clean energy, potentially accounting for about 2 points of growth through 2022, and it was somewhat back-end loaded in your mind at the time, I believe. But is it fair to assume at this point that number one, the 2 points through 2022 is conservative? And number two, that maybe you can get 2 points already in 2020 from clean energy?

Yes. Brian, it's York. I think you're right. We - I think - as Aaron said, I think our expectations with clean have far exceeded what we had originally thought. And I'm thinking into that September 4, Investor Day. These 150-megawatt hours that we are looking to deploy in 2020, that is - that's probably three times more than what we were thinking. And now, I don't know how that's going to transpose or extrapolate into where we think that will be three years from now. But --

But it's off faster.

…it's off a lot faster, so we expect to see some nice growth in 2020 overall for the Company related to clean. And that's a lot better than expectation, back when we talked during the Investor Day.

So it sounds like maybe it could be even more than 2 points of growth next year if it's triple…

Yes. Based on the math that - yes.

It's going to be quite a bit better than that, Brian.

Yes.

And again I think just - I think it's - you hate to say this as a CEO but it almost feels like we've caught lightning in a bottle here in terms of our timing and in terms of our - the companies that we acquired, I think were the right companies we acquired. I think it was the right time to enter the space. And everything we see is - has punctuated by just a lot of energy, no pun intended around storage and around our entry into it, specifically, our brand, the things that we can bring to that market with our distribution, our selling systems, our targeted marketing. And nobody has done that. And I think there's just a lot of optimism from the channel partners that we've engaged with already, including people like Sunnova where we've announced partnerships that we're super excited. I mean, we're playing an infomercial already on clean energy and we're making the phone ring. And we've got people that were we're talking to, we're creating sales leads at a cost per sale that materially lower than what the solar plus storage industry has historically seen from a customer acquisition cost standpoint. So we just see a lot of room to run with that and I think that's reflective of our optimism in the guidance.

And then just quickly, I joined a little late given an overlapping call. But did you mention the total dealer count as you exited 2019, and what the growth was there for the year?

Yes. It was about 6,500 dealers, Brian. And that's a 500 dealer add year-over-year.

Yes.

I can only remember, maybe one other year in my career here where we had that many new dealers. So it will - that has, as you guys know when we expand the dealer base that much, that'll have a meaningful impact in the future. I mean there is no doubt that that is something that factors into the future - potential growth for home standby.

And our final question comes from Jerry Revich with Goldman Sachs. Your line is now open.

On the battery storage increased target, really nice to see folks getting that much traction. Can you just talk about your anticipated mix of channel? And are you anticipating any significant further announcements of distribution arrangements with Tier 1 installers to get to the 150-megawatt number you mentioned earlier on the call?

Yes. I think, Jerry, we've been assessing kind of the distribution - the path to market here with the distribution. And as I've said before, the market the way it's - it kind of breaks out about 30% of the solar market non-speaking and again storage is pretty nascent still in comparison. But 30% of call it clean-energy type of distribution has done through larger companies like Sunnova, like the one that we partnered with. And the other - the remaining 70% is really done through independent dealers, so smaller contractors either specifically involved in clean energy or in some cases may be electrical contractors like we would have as dealers. We've got some dealers who are involved in that and will be part of that independent channel. I think, you know, longer-term, I think that we would look at our sales spread, just kind of mirroring that maybe overweighting the independent channel a little bit, given our the value prop that we bring to the independents in terms of the fact that we're going to have a selling system. And again, it's very similar to - with the selling system we have in our legacy products with home standby. It's called PowerPlay. We call it PowerPlay CE. And PowerPlay CE really starts at the sizing of the rooftop solar array. So we've made an investment in a Company there to help us with that. And they kind of plug-in on the front end of PowerPlay CE, and help the independent contractor take that through to a final proposal, and obviously, focused on adding storage along the way, in that proposal. And then you're being able to offer some financing and other things. But basically, as I said previously, kind of a one-stop-shop. A lot of the independent channels, the…

And in terms of the cost per lead that you alluded to earlier, can you just talk about how it compares and the storage business compared to the legacy standby business, just to give us a bit more context on how that's tracking? And if you can comment on close rates as well, that would be helpful.

Yes. So our legacy, - I'll start with our legacy costs, they're down to all-time lows in 2019. Again we had all-time highs at the number of IHCs we drove, the number of appointments - the times we made the phone ring, we turn those into appointments, the highest close rate we ever had also in 2019. So when you convert that to a cost-per-sale, we're at, really low levels or historically low levels compared to when we rolled the program out in 2014. On the flip side of that, obviously, it's brand new with what we're doing with clean energy. So we've really dialed in over the last six years - five or six years, the legacy product in terms of the media that we buy, the times that we buy, where we kind of air it, the demographics, DMAs that we focus on. And we're working through that with clean energy. We just got on the air in mid-January, quite 30 days yet. But what we're impressed by is the fact that we're making the phone rings. And probably even more impressive interestingly enough is kind of a side comment. There's a lot of people calling just because it's our brand. We're getting people calling asking for home standby, in some cases. So I think the power of the brand has been really interesting to us. I mean we - Generac, we always - we never thought of Generac as a household brand. We just - but what we've done over the last decade to build that brand into something that means something in the eyes of a customer, certainly in terms of backup power. And what we're trying to do in the future to put that brand in the context of something that's in that energy ecosystem…

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I would now like to turn the call back over to Mike Harris, for any closing remarks.

We want to thank, everyone for joining us this morning. We look forward to discussing our first quarter earnings results with you in late April. Thank you again and goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.