Hello, and welcome to Generac Holdings' third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. We ask that you limit yourself to one question only. I would now like to turn the call over to Kris Rosemann, Senior Director, Corporate Finance and Investor Relations. You may begin.

Good morning and welcome to our third quarter 2026 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 that differ materially from those in these forward-looking statements. Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we will make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our earnings release and SEC filing. I'll now turn the call over to Aaron.

Thanks, Kris. Good morning, everyone, and thank you for joining us today. Our third quarter results reflect continued momentum in our commercial and industrial segment, with revenue from products sold into the data center market leading to a 28% increase in CNI segment net sales on a year-over-year basis. Additionally, in the quarter, our residential segment returned to strong growth, with net sales increasing 9% from the prior year, driven by the lower power quality megatrends that continue to support sustained demand for backup power solutions. Overall net sales increased 16% during the quarter to an all-time high record for Generac, and robust margin expansion helped deliver a 33% increase in adjusted EBITDA compared with the third quarter of 2025, exceeding our prior expectations and resulting in the increase in our adjusted EBITDA margin guidance for full year 2026. The third quarter also marked a tremendous step forward in solidifying our position as a leading supplier to the data center market as we entered a long-term supply agreement with Amazon for data center backup power generators. Initial deliveries in this agreement are expected to be a combined $2.4 billion in 2027 and 2028, driving the increase in our backlog for products sold to the data center market to approximately $4.5 billion, nearly tripling from just 90 days ago. The agreement with Amazon provides for up to approximately 1.7 million common warrant shares, with future vesting of the warrants linked to a total of $8 billion in backup generator purchases over the seven-year term of the deal. This warrant structure provides for incremental strategic alignment, as well as creating a material incentive for Amazon to continue leveraging Generac as a supplier well beyond the initial deliveries expected in 2027 and 2028. We believe this long-term strategic collaboration validates our status as a top-tier supplier of CNI backup power generators and provides continued confidence in the durability of demand for our products in the data center market. In addition to the significant demand from our hyperscale customers, our updated backlog also reflects continued momentum with both new and existing non-hyperscale customers, which continues to expand geographically as well, with new orders across multiple continents. We believe this growing customer base across an expanded geographical footprint helps to create an increasingly diversified business as the global data center investment cycle matures. Additionally, our previously announced capacity expansion plans remain on track and will allow us to serve this accelerating demand with our new large megawatt generator production facility in Sussex, Wisconsin as initial production began at the end of the third quarter and build rates are expected to ramp significantly in the fourth quarter. This ramp is expected to support strong sequential revenue growth in the fourth quarter of 2026, resulting in full-year 2026 data center revenue of nearly $500 million, an increase from the approximately $450 million previously expected. As we look toward a year of dramatic growth ahead for data center-related revenue in 2027, we continue to invest in our large megawatt production facilities and are working towards tripling our global production capacity. We expect to achieve significantly higher levels of output from our existing facilities through added production lines and an increase in manufacturing staffing levels. The relatively small incremental investment needed to ramp capacity further highlights the capital-light nature of our business and the incredibly strong ROI that we expect to realize from these investments. We also continue to invest in deeper vertical integration across our CNI product portfolio, highlighted by the outfitting of our new packaging facility in Belvedere, Illinois. which is expected to come online in early 2027. We view this additional packaging capacity as a key strategic advantage to protect our highly competitive lead times as end market demand surges while also expanding our share of value added content and improving overall profit margins for large megawatt generators. We believe that the vertical integration of highly customized packaging solutions is an important and unique factor in our ability to continue to win in the data center market. Internationally, we are also investing in additional manufacturing capacity for large megawatt generators as data center demand continues to grow rapidly around the world. This includes expansions in Europe, Asia, and Latin America to help serve demand we have secured from these customers in those regions. In addition to manufacturing capacity, we are also increasing our service and support footprint in these local markets where these new projects will be sited. As a result of our recent wins, current backlog, capacity expansion efforts, and our track record of strong execution, we believe we have excellent visibility to dramatic growth in the data center market in the years ahead. Specifically for 2027, we now expect revenue from products sold to the data center market to well exceed $2 billion. Now looking at our overall CNI segment results for the quarter, net sales growth remained robust, led by more than $100 million of revenue from products sold to the data center market. This significant sales increase versus the prior year period supported strong adjusted EBITDA margin expansion in the quarter, a trend that we expect to continue into 2027 as CNI segment growth dramatically accelerates further. Mobile product sales to national and independent rental equipment customers also grew again during the third quarter as compared to the prior year. Recall that in January we announced the acquisition of Almond, a mobile products company based in Nebraska, that we've now fully integrated into our existing mobile equipment offering. The resulting combined scale we now have in mobile products has allowed us to increase our market share with our rental customers. Specifically, the Allman business has outperformed our prior expectations for both sales and profitability. And, as we continue to see healthy rental fleet demand driven by a significant pipeline of large construction projects, we anticipate continued strong growth in 2027 for our mobile products. Shipments to our domestic industrial distributor channel grew sequentially in the quarter, but declined versus the third quarter of 2025 as the prior year included a tougher comparison related to our drawdown of backlog. In addition, lead times for products shipped to these customers grew longer in the quarter, driven primarily by the execution of the final phase of our project to relocate manufacturing of these products to our new facility in Beaverdam, Wisconsin. We expect lead times to return to more normal levels in the first quarter of 2027 as production ramps at Beaverdam. Order rates from our domestic industrial distributors remained robust, with the third quarter marking another record from industrial distributor customers and positioning this channel for continued growth in 2027. We also continue to see healthy quoting activity for our large megawatt generators in the non-data center applications through this channel, providing an incremental and diversified source of demand for these products. Shipments to our telecom channels slowed during the quarter, primarily due to certain customers working to reduce their backlog of site deployments. Although demand for backup power for telecom customers can be variable from quarter to quarter, we continue to view the telecom channel as an attractive long-term opportunity supported by ongoing network hardening investments and growing interest in data center adjacent applications from our telecom operators. International CNINet sales, excluding shipments to data center customers, increased during the third quarter when compared to the prior year as a result of broad-based regional growth. The European region, our largest international market, experienced solid sales growth from the prior year, while sales to emerging markets such as Latin American and the Middle East returned to strong growth in the quarter. This diversified geographic growth is encouraging considering the current geopolitical environment, and we continue to evaluate opportunities to expand our presence in other regions to serve more local markets around the world. Additionally, global shipments of our control solutions increased at a robust rate during the quarter, providing further evidence of the stronger conditions in the global power generation market. Looking ahead, we expect overall CNI segment net sales to increase in the low 30% range for the full year 2026. And as we look to full year 2027, we have visibility to a dramatic increase in revenue from products sold to the global data center market. When combined with our expectations for continued growth in our rental, Industrial Distributor Channels, and International Markets, we now believe we have a path to double our commercial and industrial reporting segment in 2027. Now looking at our residential segment results in more detail. As expected, residential segment net sales returned to strong growth during the quarter, increasing 9% from the prior year. Home standby and portable generator sales both grew at a much faster rate than the overall segment, partially offset by an expected decline in shipments of energy storage systems. Segment adjusted EBITDA margins expanded by more than 350 basis points from the prior year due to favorable price cost impacts, strong operating leverage, and the continued recalibration of our energy technology related operating expense investments. Home standby generator shipments increased at a mid-teens rate during the quarter as compared to the prior year period, as the power outage environment returned to more normalized levels after several quarters of well below average outage activity. While Atlantic hurricane activity remained historically quiet during the period, everyday severe weather across the country supported baseline outage activity with particular strength in the late summer months in the Midwest and the Northeast. In-home consultations also increased sharply as compared to the prior year as a result of the higher power outage activity and our well-established demand creation efforts. Most regions across North America saw higher IHC activity with significant strength in the Midwest and Northeast as homeowners experiencing power outages continue to seek out resiliency solutions. We believe that grid reliability challenges continue to grow, driven by the risks associated with increasingly severe and volatile weather patterns, an aging infrastructure, and a dramatic increase in the demand for power, with all of these factors supporting our belief in the continued demand for the home standby generator category well into the future. Home Standby Activations or Installations returned to growth in the month of September for the first time since the second quarter of 2025. For the quarter, activations were nearly flat year over year as declines in state that saw prior year activations benefit from the afterglow of an active 2024 hurricane season were offset by strong growth in the Midwest and Northeast regions during the quarter. This return to growth in activations is further supported by the continued expansion of our residential dealer count, which grew again during the quarter to nearly 9900 dealers. Portable generator shipments were also very strong in the quarter as the product category benefited from the more active outage environment and our team continued to win new retail shelf space for these products. As a pioneer in the portable generator category, we believe we have once again regained our position as the number one market share participant in the U.S. The portable generator business remains an important part of our retail channel strategy and allows more budget conscious consumers to experience Generac branded product options to protect their home and their family. Importantly, our customer demographic data shows that more than 50% of the purchasers of home standby generators either previously or currently owned a portable generator, making the trade-up experience from a portable to a standby product an important one for our residential business. In addition to strong performance in the home standby and portable generator categories, Our Ecobee team continued to perform well during the third quarter. Sales of Ecobee solutions increased again from the prior year, and their connected home count now sits at approximately 5.5 million homes. Ecobee's services attach rate and recurring revenue continue to increase faster than their overall growth. And disciplined operating expense management helped to deliver another quarter of growing profitability for Ecobee solutions. Furthermore, we continue to expand the Ecobee user interface and experience to our larger customer base across our residential products as we recently rolled out a unified software platform to further drive adoption of the home energy ecosystem by our customers. As expected, sales of our residential energy storage systems were lower in the quarter as compared to a strong third quarter of 2025 that included the benefit of our DOE program in Puerto Rico, which was completed at the end of 2025. Higher interest rates and a more challenging policy environment continue to weigh on overall demand for solar and storage products. And as a result, we continue to recalibrate our investments in this market. Overall, we remain on track with our projection for residential segment net sales growth for the full year 2026 to be in the high single-digit range, led by mid-teens growth in the home standby category. Driven by our record net sales volume for the total company, we delivered consolidated gross margin of nearly 40%, and even Don Margin of nearly 20% as well as generating over $130 million of free cash flow for the quarter. These metrics all represent a significant increase as compared to the prior year as we continue to see favorable price-cost dynamics, leverage our fixed operating expenses as we rapidly grow, further recalibrate our energy technology op expense lower and tightly manage the working capital requirements for our business. In closing this morning, our third quarter performance, including tremendous momentum in the rapidly growing data center market, highlighted by our agreement with Amazon, alongside a return to strong growth for residential segment sales, demonstrates the strength and earnings potential of our more diversified business. Furthermore, our strong earnings and free cash flow enable us to continue to make opportunistic investments, allowing us to lean into the unprecedented data center market growth opportunity. As a result of this unique combination, Together with the mega trends around AI infrastructure, lower power quality, and higher power prices, we believe we are extremely well positioned for success as we look into the future. With that, I'll now turn the call over to York to walk through our third quarter financial results and our updated outlook in more detail.

Thanks, Aaron. Looking at third quarter 2026 results in more detail, overall consolidated net sales during the quarter increased 16% to an all-time record of $1.29 billion. as compared to $1.11 billion in the prior year third quarter. The net effect of acquisitions, divestitures and foreign currency had an approximate 1% favorable impact on revenue growth during the quarter. Commercial and industrial segment total sales increased approximately 28% to $553 million from $432 million in the prior year quarter, including an approximate 4% net favorable impact to net The core total sales growth for this segment was primarily driven by ramping revenue from products sold into the global data center market. In addition, broad-based regional growth internationally was offset by lower shipments to the domestic industrial distributor and telecom channels. Residential segment total sales increased approximately 9% to $744 million as compared to $685 million in the prior year quarter. This increase is primarily driven by strong sales growth for home standby and portable generators compared to the prior year, benefiting from more normalized outage activity in the current year quarter. This growth was partially offset by lower shipments of energy storage systems given the completion of our Department of Energy program in Puerto Rico at the end of 2025. The mid-teens percent increase in home standby generator sales was mostly driven by higher volumes, with pricing contributing a smaller portion of the growth as compared to the third quarter of 2025. Consolidated gross profit margin was 39.9% compared to 38.3% in the prior year third quarter. The increase was primarily driven by favorable price-cost impacts, including lower tariff rates compared to the prior year and a modest tariff recovery benefit reflected in the current year quarter. This margin expansion was partially offset by unfavorable sales mix given the higher sales growth in the C&I segment. Operating expenses increased $31.6 million or 10% as compared to the third quarter of 2025. The increase was primarily driven by increased operating expense investments to support future C&I growth as well as higher marketing spend to drive awareness for our products and additional incentive compensation and intangible amortization expense partially offset by lower operating expense investment in energy technology solutions. As a percent of sales excluding amortization expense, OPEX percent decreased by 1.6% compared to the prior year, highlighting the improved operating leverage on significantly higher sales. Overall, consolidated adjusted EBITDA before deducting for non-controlling interests, as defined in our earnings release, was $256 million, or 19.8% of net sales in the third quarter as compared to 193 million or 17.3% of net sales in the prior year. This significant year-over-year margin expansion was driven by the previously discussed gross margin performance as well as strong operating leverage on higher sales volumes as we maintain a disciplined and balanced approach towards investing in strategic growth opportunities. adjusted EBITDA for the commercial and industrial segment before deducting for non-controlling interest with 69.3 million or 12.5% of CNI total sales as compared to 43.8 million or 10.1% of segment total sales in the prior year. This margin increase was primarily driven by operating leverage on higher shipments and the net favorable impact of acquisitions and divestitures. Adjusted EBITDA for the residential segment was $200.8 million, or 27% of residential total sales, as compared to $160.2 million, or 23.4% in the prior year. This margin increase was primarily driven by favorable price-cost impacts, operating leverage given higher shipment volumes, and lower operating expense investment in energy technology solutions. Now switching back to our overall financial performance for our third quarter of 2026 on a consolidated basis. As disclosed in our earnings release, gap net income for the company in the quarter was $109 million as compared to $66 million for the third quarter of 2025. Total other expense net improved to $17.4 million in the current year quarter from $24.7 million in the prior year. Lower net interest expense, a reduction in our wall box investment for value adjustment and a loss on refinancing of debt in the prior year all contributed to this improvement in total other expense net. Gap income taxes during the current year third quarter were $34.2 million or a more normalized effective tax rate of 23.9% as compared to $11.8 million or an effective tax rate of 15% for the prior year. The prior year effective tax rate included certain favorable discrete tax items that did not repeat in the current year quarter. Diluted net income per share for the company on a GAAP basis was $1.83 in the current year third quarter compared to $1.12 in the prior year. Adjusted net income for the company as defined in our earnings release was $151 million in the current year quarter or $2.54 per share This compares to adjusted net income of $108 million in the prior year quarter or $1.83 per share. Cash flow from operations was $171 million during the current year third quarter as compared to $118 million in the prior year. Free cash flow as defined in our earnings release was $132 million as compared to $96 million in the third quarter of 2025. This strong increase in free cash flow during the quarter was primarily driven by higher operating earnings, partially offset by increased capital expenditures in support of our CNI capacity expansion initiatives. Total debt outstanding at the end of the quarter was approximately $1.33 billion, resulting in a gross debt leverage ratio at the end of the third quarter of 1.4 times on an as reported basis, which is within our target gross debt leverage range of one to two times adjusted EBITDA. With that, I will now provide further comments on our updated outlook for 2026. As disclosed in our earnings release this morning, we are maintaining our full year 2026 outlook for overall net sales growth. We continue to expect consolidated net sales for the full year 2026 to increase in the mid to high teens percent range as compared to the prior year, which includes an approximate 2% favorable impact from the net effect of foreign currency acquisitions and divestitures. In addition, we are maintaining our previous sales growth guidance ranges for both CNI and residential segments. CNI segment net sales growth is still expected to be in the low 30% range compared to 2025 as revenue from products sold to the data center market continues to ramp. Within the CNI segment, we now expect data center revenue to be nearly $500 million for the full year 2026 as we continue to increase our backlog for products sold into this market. For the residential segment, we continue to expect net sales to increase at a high single-digit rate as compared to the prior year. Consistent with our historical approach, this guidance assumes a level of power outage activity in line with the longer-term baseline average for the remainder of the year and does not assume the benefit of a major power outage event during the year. Residential year-over-year net sales growth is expected to accelerate in the fourth quarter due to a softer prior year comparison that included the impact of very low power outage activity and the transition to our next generation home standby product line. With regards to our gross margin guidance for 2026, we continue to expect full year gross margins to be in the 40% range, inclusive of tariff refunds in the second quarter, which benefited full year margins by approximately 150 basis points. Specifically for the fourth quarter, gross margins are expected to moderate sequentially to the 37% to 38% range due to the impact of sales mix from the significant projected sequential growth in data center sales and other inflationary pressures. Now looking at our updated adjusted EBITDA margin expectations for the full year, As a result of our third quarter outperformance, we are raising our adjusted EBITDA margin guidance range to 20.5 to 21%. This compares to our previous guidance range of 20 to 21%. This full year range includes the previously mentioned tariff refunds that were reflected in our second quarter results. Specifically for the fourth quarter, we continue to expect adjusted EBITDA margins to be in the 20% range resulting in a 300 basis point improvement relative to the fourth quarter of prior year. On a sequential basis, we expect improved operating leverage on higher shipment volumes and seasonally lower operating expenses to allow us to hold EBITDA margins consistent relative to the third quarter of 2026. As is our normal practice, we're also providing additional guidance details to assist with modeling adjusted earnings per share and free cash flow for the full year 2026. Importantly, to arrive at appropriate estimates for adjusted net income and adjusted earnings per share, add back items should be reflected net of tax using our expected effective tax rate. For full year 2026, our gap effective tax rate is still expected to be between 24.5 to 25%. This implies a gap effective tax rate of 25.5 to 26% for the fourth quarter of 2026. We expect interest expense to be at the higher end of our previous guidance range of approximately 65 to 69 million for full year 2026, given modestly higher interest rate assumptions. Our capital expenditures are projected to be approximately 4 to 4.5% of our forecasted net sales for the year as we continue to invest in expanding our large megawatt generator production and packaging capacity. Depreciation expense is now expected to be approximately $112 to $116 million for the full year 2026. Gap and tangible amortization expense in 2026 is now expected to be approximately $114 to $118 million during the year. Stock compensation expense is now expected to be at the lower end of our previous guidance range of $54 to $58 million for the year. Despite our elevated CapEx investments to drive our data center capacity expansion, Free cash flow generation remains strong and is now expected to be approximately $450 million for the full year 2026 as higher operating earnings, lower working capital use, and incremental data center customer deposits are driving free cash flow higher relative to previous expectations. Our full year weighted average diluted share count is now expected to be at the lower end of our previous guidance range of 59.5 to 60 million shares in 2026. and finally, this 2026 outlook does not reflect potential additional acquisitions, divestitures or share repurchases that could drive incremental shareholder value in the fourth quarter. This concludes our prepared remarks. At this time, we'd like to open up the call for questions.

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question only. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tommy Mall with Stevens. Your line is open.

Morning, and thank you for taking my questions.

Hey, Tommy.

Aaron, you mentioned a pathway to potentially double the CNI revenue line in 2027. If we just use the 4Q Revenue as our base. What can you tell us about the sequential uplift from there? It's going to be important for us to have some sense of how that progresses. Thank you.

Yeah, thanks, Tommy. So, yeah, Q4, you know, depends on kind of how you guys have modeled it. Everybody's going to probably do it a little bit different. But, you know, I think if you kind of take our guidance this morning, which we're holding the full year guidance today. There was just, I think, some timing between Q3 and Q4. I mentioned the ramp up of our final phase of our project at Beaver Dam to consolidate our non-data center products, really, in effect. It's our smaller output products. And that was a little bit of a drag on the quarter beyond our expectations. But nothing severe, nothing we won't catch. We're going to make it up. But there is a huge ramp as you go into Q4. As we talk about hitting that $500 million of data center Shipments for the full year. There's a big ramp just to hit that in Q4 as we bring Sussex online. We've run our first units down the line there at the end of third quarter, and now we're into kind of the significant ramp. But then as you get into 2027, there's going to be a significant ramp on our data center production rates. As we said, we're tripling our capacity. So kind of first half, second half, there's a pretty big lift. to go from first half to second half. So from a pacing perspective, if that's kind of the heart of your question. But that's something that I think we're pretty confident in. We've got the backlog for kind of one-third, maybe first half, two-thirds, second half, kind of thinking about that. In terms of the data center. In terms of the data center ramp, yeah, specifically. I think when you step back, you're right, we mentioned that potential path here to doubling the Our global CNI business, which I think is just super exciting because I've been saying that we could double it in the next three years, right? The next three to five, I think I even said. And here we are, you know, next year we're going to double it off of potentially 2026's number, which is mind-blowing to me in terms of just the uplift. So, you know, there's a lot that's got to go on to make that happen, but we believe we've got the supply chain. We believe from an execution standpoint we're in good shape. I would also say, though, Tommy, just to be if you kind of step back and wait the whole company. Right. I mean, if you take that doubling of the CNI business next year and you kind of look at our framework that we laid out back on Investor Day back in March for everything else, for Rezi and for the other non data center CNI. I mean, that puts us kind of at a seven billion dollar clip. for top line for net sales for next year as a company, which is a dramatic increase over where we're at today. 4.9. Yeah, 4.9. I think the total guide is a little bit higher than that. But it's a huge ramp.

Thank you. Please stand by for our next question. Our next question comes from the line of Mike Holleran with Baird. Your line is open.

Hey, morning, guys. Morning. Hey, Mike. Hey, so just following up on that, maybe just more specifically, could you run through the capacity build schedule when that should, in your mind, kind of hit that full run rate? And based on the conversations that you're having, are you seeing an incremental need for further capacity moves? And then I guess as a mild sidebar, how does the strength of the quoting you're seeing in non-data center large gen sets fit into that equation?

Yeah, thanks, Mike. And maybe I'll tackle that first. I mean, the quoting's been, you know, we've quoted a lot of products, a lot of projects. Those are long sales cycles, as we know. The bigger you get into the size of the product, the more complex the project, and obviously the larger the dollar amount, you know, in terms of financing those projects. I'm talking non-data center large megawatt projects now. There's just long sales cycles. We've definitely taken orders there, and it's growing. But in all honesty, it pales at this point in comparison to what we're seeing in the data center in terms of our, you know, that $4.5 billion of backlog. On the capacity ramp, you know, I think what's really interesting there is we've kind of said we're in a triple capacity by, you know, I think we've said by the third quarter of next year is kind of when we'd hit that tripling. And, you know, we've been kind of saying $3.75 billion. Probably use something closer to $4 billion just to round it up. And just because as we start to lay out our product lines here and we gain some experience building these sets, we're feeling incrementally more positive about what we can get out of the existing footprint. So call it $4 billion by kind of the second half of next year. And kind of ending this year, as we said, we were kind of in that billion and a quarter as a company, it might be a little higher than that in terms of what the capacity would be. But, you know, we're approaching a number if you just take the backlog, if you kind of take that backlog and kind of piece it apart, more than half of that backlog is for 2027. So, you know, there's north of that, north of half there that's going to come through in 27. So we still have room to take some additional orders. The team continues to quote. I would remind everybody, though, you know, we've got a lead time there that we're quoting kind of in the 45 to 50 week range. So You just kind of do the math on that. And whatever orders we haven't received by Q1 of next year will be pretty tough to fulfill in 2027. So our backlog from this point till about maybe the second half of the first quarter next year, that'll be kind of what we're looking to fill up for capacity. Beyond that, the other part of your question, we continue to evaluate, as we've said, what does the next leg of growth look like? Should we, you know, perhaps land another major account? And, you know, we keep talking about hyperscalers, but we're landing major accounts on non-hyperscalers as well. Co-locator accounts are very large. And so, you know, the progression there is going to be important for us to watch. And we're kind of watching kind of how it goes here, I would say, over the next, you know, kind of 90 to 120 days as we get into Q1 next year, as we ramp that production in Sussex. We bring our Belvedere packaging facility online. I mentioned that in the prepared remarks as well. All of those things are projects that are in flight. Our team is doing a great job there. Really proud of what we've done to be able to get the first units down the line in Sussex earlier than we had thought. We're fully testing, fully producing at this stage and fully ramping that facility. We've already been producing in our Oshkosh facility. That's something that is exciting as we add to that. and as we bring Belvedere online as well. And then I also mentioned internationally, we've got facility expansion plans in Europe, in Asia, in Latin America, and those are all the direct result of orders that we've taken, orders that are in our backlog today. To fulfill those orders, we're adding expansion plans. And they were plans that we've been talking about here as part of that tripling. It's nothing incremental to that at this point, but I think it's further evidence that We're going to have the footprint that's capable of approaching close to $4 billion annually in sales just for the data center market. And then we continue to evaluate what would the next level of capacity look like beyond that.

Thank you. Our next question comes from the line of George Giannakis with Canaccord Genuity. Your line is open.

Hi. Good morning, everyone, and thank you for taking my questions. Hey, George. I'm just curious as to how you view the recent executive actions targeting foreign produced components within the bulk power system from the Tubb administration and any impact that you can see and how you're evaluating your component and engine sourcing strategy as a result of that.

Thank you.

Yeah, thanks, George. Yeah, this has been a topic of discussion, obviously, since the draft of that executive order was released. It's not the first time that was also done in the first administration, the first Trump administration. They also released that near the end of the administration's tenure. And, you know, it was kind of reissued here by this version of the administration. It really is targeting, you know, and if you just do a direct read of it, it's targeting 69,000 volt applications, which is absolutely utility, you know, utility grade power. So the lines, the equipment, and it's really geared around cybersecurity, right? So obviously any kind of, you know, foreign entities of concern, you know, having any of that in the grid, right, in the grid system that could potentially cause a cyber type of issue is what that executive order is aimed at. Of course, it's broadly worded. And of course, you know, it's left to interpretation. The final wording of that is going to come out. It's supposed to come out in December, but it is clearly on its face. And our policy team is highly engaged with the Department of Energy and with other stakeholders there. I would remind everybody that when we announced our agreement with Amazon, that was after the draft of the executive order was issued. We took our customers like Amazon and others who obviously had the same questions that you're asking, George, wanted to understand our position on that. Then they obviously got counsel themselves to understand the reading of that EO and what could get caught up in that. So we believe there's a small chance. But like anything, until you see the final wording, you're not sure. So if something were to happen there, as we've talked, our current engine supplier, we've been discussing domestic options with them to supply here in the US, to build in the US. They are looking at that anyway to support our growth, the tremendous growth that we're forecasting here in the next several years that can be satisfied today from their plants in Europe, and in Asia, but they think that from a logistics standpoint and just a lead time standpoint, maybe having those products produced domestically might be a better thing to do. So that's an evaluation and we would obviously accelerate those plans should we end up with a negative reading on that executive order. But again, everybody we've talked to, we believe that's a very small, front of the meter, high voltage applications, not. Backup Power. Our generators are not connected to the grid. They're connected to the facility. They're not grid connected. We don't push power back to the grid. And we're not buying any controls from foreign entities concerned. In fact, we make the controls in the UK. There are controls, deep sea controls that we manufacture. And so there's really no cybersecurity threat there. And there's certainly no kind of way to have those gen sets even attached to the grid. So we just We believe that once we clarify that with the administration, we believe that we should be fine.

Thank you. Our next question comes from the line of Jeff Hammond with KeyBank Capital Markets. The line is open.

Hey, good morning, guys. Morning, Jeff.

Morning.

Just on kind of the ramp, I want to just maybe just talk about supply chain readiness, comfort with the engine supplier for the ramp. And then just as you talk about going from, I guess, a billion to five to four billion, just what do you need to do? Is it just adding lines, adding people, adding shifts, or is there any more complexity to it? Thanks.

Yeah, thanks, Jeff. Yeah, from a supply chain standpoint, you know, we continue to dual and triple source all the major components there, obviously with the exception of the engine at this point, given the limited supply of and many more engines, high horsepower diesel engines around the world. But everywhere else, we're dual and triple sourcing all the major components. And while supply will remain tight, we believe we have a path based on our deep conversations. And I would just point out, our hyperscale customers in particular, Hyperscaler One, who we've not named, but also Amazon, have done their own deep due diligence on our supply chain to ensure that there's not only redundancy, in the supply chain so that we can provide products at the levels that they are requesting at or higher, as they've told us. Hyperscaler One has told us that they'll go higher in 2028 if we can demonstrate execution in 2027. So we feel good on supply chain, obviously tight, something we watch, but supply chain is an area where we have deep expertise. We have a lot of resource and a lot of talent across the enterprise. We've always had that. and we're now applying it here. I think it's really interesting to take that, which has almost always been focused on our residential business, if we're being honest, and move that over to our CNI business in terms of just the amount of activity to stand up that new supply chain and to ensure its capacity and redundancy. In the overall capacity increases, I think we've called this out before, but the kind of footprint, if you want to talk about the building, The four walls that we have at each of the places in Oshkosh, in Sussex, our packaging capacity in Belvedere, the acquisition at Enercon down in Peoria, Illinois, the international footprint that we have and the expansions we're talking about there. We are adding a new line in Sussex, so there is investment there, which we've talked about. That's a big part of how we get from one and a quarter to 3.75 or 4 billion, if you will, tripling of capacity. The investments we're making in the international expansions are also part of that, getting to that kind of tripling of capacity. But the CapEx to do that, as we've called out, is relatively modest, I think, in the grand scheme of things. And the ROI is incredibly strong in a short-term period, in a very short period. So adding additional shifts to those lines, adding more manpower, is really what we're going to be doing there. We may have to pick up some more space for raw material storage and for finished goods storage, things like that. Those are areas where we could see additional expansion needs. But those, again, are relatively cost-effective in terms of, as an example, to hold the finished products. Those are big open fields. You're not talking about big buildings or things like that. I wouldn't say that that's going to be a constraint. We don't see that as a constraint. and raw materials somewhat similarly. I mean, we can find space in our network today, third party logistics, things like that to accommodate that as we grow. So working through all of that, but we feel that we've got a really high visibility path to that increase over next year. And that gives us confidence again to talk about the path and the framework here to double our overall CNI net sales for 2027.

Thank you. Please stand by for our next question. Our next question comes from the line of Brian Drab with William Blair. Your line is open.

Hey, good morning.

Good morning, Brian.

I was just wondering if you could give us a little bit more on the visibility that you have to 2028 because, you know, you made the comment that two-thirds of the, you know, maybe roughly $2 billion in data center sales in 27 come in the second half. That would mean an annualized run rate of $2.7 billion in data center in that second half. How much of that capacity do you expect to fill, I guess, is what I'm wondering, in 2028? Because you're going to have $4 billion. It's like 50% more capacity than you're exiting the year with. Is that Amazon? Is it the other hyperscaler?

What gives you the confidence and urgency around adding that much capacity as you look at 28?

Yeah, thanks, Brian. I think a big part of that confidence, if you will, or our views on needing that capacity really revolve around a couple things. One, I would say the strength of our non-hyperscale order opportunities. So the quote book there that we've got, the funnel, is incredibly strong around the world and here domestically. And so as those projects move to the finish stage, to the final stages, we wanna make sure that we've got capacity to accommodate that. So that's a big part of, if you just step back and you look at kind of our backlog here, the 4.5, as we said, more than half is for 2027. So less than half would be for 2028. And that does not include anything for hyperscaler one in 28 today. So we don't have that in our math. So if you just take that number and what they've told us is if we execute it can be as big or bigger than the 700 million that we anticipate doing with them in 2027. So if you put that into the number and then you add continued momentum with our non-hyperscale customers at the same level that we're winning today, we can see a path to needing that capacity. for 2028. We think that that's an opportunity. The other kind of open question, of course, and we've talked a little bit about this, is could there be another hyperscale customer? We have, as we mentioned, I think last quarter, we started deeper negotiations with a third hyperscale partner. And those that will be like the first two that we anticipate that will be a long process, but and probably wouldn't have any impact until 2028 for sure. I think at this stage of the game, just knowing the length of those to get on those approved vendor lists, the length of those processes and the depth of those processes, we just don't anticipate that being done prior to, as I said before, kind of the clock running out on where our lead time sits for anything to happen in 2027. That would have to happen by the end of Q1. And I just don't see a path to getting a deal done with a third hyperscaler by the end of Q1. I think it's just going to be and also, you know, that those customers, because the lead times are so long in the market today, they're already planning out their 27. You know, they've kind of got everything nailed down. So when we're talking about additional opportunities for another hyperscalers, we're really talking about 28. So as that all becomes clearer, you know, I think I'm not worried about whether we're going to consume the capacity we're talking about here, this, you know, kind of 4 billion. What I'm worried about is do we need more? and that's where I think, as I said before, we'll watch very closely this play out and we'll react to that as appropriate. We're starting to plan. We're saying to our teams, what would it take if we wanted to increase again another 50% capacity? If we wanted to go from four to six billion a year, what does that look like? And what would that take? As I said before, I think within the four walls of the buildings we've got, the footprint we have today, That $4 billion represents kind of maxing out what's in that footprint today. So we think it's going to take some additional footprint. And that capacity can be added in a number of ways. It could be a greenfield site. It could be an existing site. It could be an acquisition. We're continuing to look at a pipeline of acquisitions and how that might help us expand capacity as well. So a lot of focus and a lot of discussion on capacity here as we go forward.

Thank you. Our next question comes from the line of Manish Samaya with Cantor Fitzgerald. Your line is open.

Good morning, guys. If you can just help us understand how we should think about the CNI margin progression as hyperscale volumes ramp into 27 and I guess into 28. Thanks, Manesh.

I think in the fourth quarter here, as the data center business continues to ramp sequentially into the fourth quarter, I did mention that gross margins will moderate sequentially down to that 37-38% range. We're obviously still putting our budgets together for 2027 and our longer-range plans for 2028, but gross margins on a consolidated basis will moderate, but if you just look at the CNI segment, that's what we're evaluating to see how we can hold. Maybe the CNI segment overall, CNI segment gross margins might moderate a bit, but we'll definitely make it up. on the OpEx line and EBITDA margins will definitely improve for the C&I segment. I think we've said sort of that high teens range over the longer term into 2027.

Yeah, I think we still believe that that's possible. In fact, I think we think it's going to be possible faster as we ramp. The leverage we're going to get on the OpEx is going to be tremendous next year. I think, as York said, we're putting all that together still, but we're incrementally positive. We're already seeing some read-through here, and we're just in the early innings.

Still targeting improvements, C&I segment, EBITDA margins.

But the drop-through and the impact on the overall company, if you go back to our framework from the investor day back in March, we're still projecting that kind of low 20s EBITDA margin. for especially as you scale. I mean, the drop through is fantastic. So we're incrementally positive. I would say there that we're going to achieve those numbers quicker than we were originally planning, given the the size of the data center opportunity and how that's grown much faster than what we had projected back in March.

Thank you. Please stand by for our next question. Our next question comes from the line of Praneeth Satish with Wells Fargo. Your line is open.

Thanks. Good morning. On the non-hyperscaler side, it seems like you're seeing good traction. I think 500 million of bookings this quarter, if I heard you correctly. And I guess, I mean, all of that seems encouraging given some of the financing concerns that we're hearing about for the neoclouds. And so I guess as you look into 2027, are you seeing any change in customer conversations or project activity or the scope of your of your backlog on that non-hyperscaler side. And do you think we could see kind of the same level of bookings for that business next year or potentially grow it from here?

Yeah, it's a great question, Praneeth. You know, the funnel is huge. Outside of the hyperscale business, hyperscale customers directly, you know, we're seeing and we're starting to see repeat customer orders, right? So non-hyperscale customers, co-locators that We've already won projects with, and we're bidding now second phases, third phases, other projects. We've got a series of kind of executive top-to-top meetings coming up with a number of our larger, I would say, co-locator customers. I'll be visiting one on Friday, as a matter of fact. And we're talking about long-range plans here in terms of, I would just say their confidence, to put a finer point on it, their confidence is very high that they're going to need a lot of product for the foreseeable future. and so what they're pushing us on is in you know in light of in fact kind of our announcement with Amazon and this really did trigger a lot of these conversations kind of kicking into another gear is just a level of you know they want to have a level of understanding of what we're willing to do or what we can do for them outside of the hyperscale accounts so there's about you know maybe call it a level of concern that you know that the allocation doesn't shift 100% to hyperscale customers and away from the co-locators or non-hyperscale customers. That is not our intention. And as we said, it's a big part of why we've pegged the backlog or the capacity number at kind of close to $4 billion. We believe that we need room to have a diversified customer base there. And we're very bullish on what that order book could look like. I think if you did the order, if you did the backlog roll forward, it's actually almost $600 million of non-hyperscale and many other hyperscale orders that we received in the last 90 days, just looking at that roll forward from 1.6 billion to the 4.5, given that we shipped 100 million as well in the quarter. It's a strong order book, it's an even stronger pipeline, and it's why we're thinking about, again, just to reiterate the point, we're thinking about what does the next leg of capacity look like? We are asking for strong commitments from these non-hyperscaler accounts, It's something to help us get comfortable with additional investment that might be needed. And those are the kinds of conversations we're having in those top to top meetings.

Thank you. Our next question comes from the line of Tanner James with Jefferies. Your line is open.

Hi, thanks for taking my question. I'll try to sneak one in on residential. Thanks for the standby color, by the way. Some encouraging trends there. I just wanted to focus on the margin side now that you've seen some more normalized volumes. Assuming standard volume growth, how should we think about potential operating leverage for the segment on a go-forward basis? What portion of the step-up in year-over-year margin performance would you consider to be durable?

And how might you frame preliminary expectations for 2027? Thanks.

where the residential margins are coming out on a gross margin basis. When we've modeled it out, that's basically we think we can sustain that. Where you get further margin improvement on the EBITDA line is that operating expense line. If you look back at our investor day, we expect to continue to drive further operating leverage, operating expense leverage, and further margin improvement. Now, having said that, we said in 2028 we'd be close to 27%, and I think we delivered that in the quarter, but that's seasonal, I guess, a seasonally strong period. But for a full year, I guess, we would expect it to continue to generate strong EBITDA margins, that residential sector.

Yeah, I think the key there is what you said, York, that the gross margin, we feel good about being able to kind of hold that now that obviously there's a lot of things that go into that as you guys know from tariffs to commodities to everything else so we're rolling up our our plans for 2027 specifically but if you just go back to the framework we provided and kind of using 27 gross margin or Q3 gross margin as kind of a as a harbinger for the future I think that's probably realistic I think the EBITDA margin seasonal you know it's a seasonal business so as York said I think you know maybe Q3 is a little bit of a you know kind of just seasonally we outperform kind of the full year because of the higher sales volume that we generally experience in the back half of the year and Q3 specifically. But we're also just the last part of that as we not only leverage the operating expense, but we continue to talk about our recalibration of our OPEX for our energy technology spend. So that also is going towards improving the EBITDA margin for that segment of our business.

The only other thing I guess is reminding everyone that Q2 we had a pretty high tariff refund going through and a lot of that went through the residential segment so you don't want to run rate obviously that Q2 number. There was a very small amount that came through in Q3 that you wouldn't run rate but for the most part it's negligible.

Thank you. Our next question comes from the line of Dimple Gose with Piper Sandler. Yeah, your line is open. Good morning, Aaron and York. Thanks for taking my question. Just more broadly, are any hyperscalers or co-location customers today asking for nat gas or bi-fuel backup instead of diesel? Or said differently, what share of RFQs specify gas in your view?

Yeah, thanks, Dimple. For us, for backup power, we have had conversations about gas Generally, the projects are smaller in nature. Some of them I would refer to more as edge data centers. We have a customer, in fact, that we provide a mix of gas and diesel product for backup, again. But as you get into larger power ranges, the problems that you run into in using gas as backup is that the machines themselves are just, they're not as power dense, meaning they take up a lot of space. The conversations about gas with hyperscalers and for large projects, is almost always around prime power, so behind the meter prime power. And that's an area that, as we've talked, today we do not have a product offering for that, and so that's not inclusive in anything that we're bidding today. But we continue to look at that product category. I think there's a viewpoint that, honestly, those are places that, for a reciprocating engine genset to run on natural gas and provide prime power to a facility, No facility operator wants to do that any longer than they have to. They want to have grid connect. That would only be a bridge solution or a very short-term interim solution. Other solutions, you know, turbines and things like that, combined cycle turbines, are a much better way to do that because they're more efficient. And, you know, the power outputs are greater. You have fewer machines. Obviously, the cost is higher, but a resip engine, you know, gas machines for prime power, I would view as a very short-term bridge solution until a facility can get grid connected. No operator wants to run an energy plant using that type of technology for any length of time. That's just not at volume, at scale. It's not a technology that's best suited to that, I would say. There are certain applications where it works very well. Landfill gas, where you're trying to use other feedstocks and things. But when you're talking about pipeline gas and feeding that as prime power, using a resip engine is probably not the best way to do that.

Thank you. Our next question comes from the line of Steven Gingaro with Stiefel. Your line is open.

Thanks. Good morning, everybody. I'm just curious, you've covered a lot. When you look at the residential homestand by business and you have the new products that have rolled out, have you seen any change on the demand side? I'm just kind of curious if that's impacting demand or is it more of an efficiency gain on your part? And maybe alongside of that as we sort of think about the The installation side, do you have any feedback from the dealers as to how that process is going?

Yeah, thanks, Stephen. Yeah, the new product line, which, by the way, is packed with just a lot of technology for efficiency to not only produce the product, so efficiencies that we get, but efficiencies on the installation and service side as well. But I would say that probably one of the biggest features in the new product line is out of the box connectivity on a cellular basis. So every single machine is connectable. And we have our fleet connectivity rate is something like 99% right now, which is when we had Wi-Fi protocol as our standard protocol, we usually got about a 50% to 55% connectivity rate. So we're now seeing almost 100% of the fleet and what it's doing, which is fantastic information back for us. back for the dealer, back for the customer in terms of making sure that unit's ready to run. In terms of feedback from dealers, once they do a few of them, it's like anything. It's a new product. There's a bit of a learning curve with every new product. So once people get through that and they do a few machines, they come to appreciate, I think, the ease of installation and the efficiency gains there. And then also, again, having each machine connected so that the dealer can see it and monitor it provides them a lot of potential opportunities to make sure that a customer isn't let down when they need the product. And that just provides an overall better experience for everybody involved. And so I think over time as the product category matures, but early returns are good. There's just this learning curve that people have to get through. And we've gotten through that learning curve, I would say, in our own facilities quite well. Our facilities in Whitewater and Trenton have returned to the pre-next generation product in terms of production levels, in terms of our labor efficiency to put those machines together, all of the things that we look at, first pass test rates, all of those things. We're very pleased with the way that that's run through our facilities. We continue to see more and more of the product get installed in the field, and as customers and dealers get more comfortable with it, That's going to only get better from here.

Thank you. Our next question comes from the line of Keith Housen with North Coast Research. Your line is open.

Good morning, gentlemen. I appreciate the opportunity. In terms of the residential, just kind of following up on that, I think in the script you guys mentioned adding new retailers into the footprint there. Perhaps let's talk a little bit about the expansion of the retail footprint as well as promotional activities in the quarter and how they benefit the quarter and how to think about that going forward.

Yeah, thanks, Keith. So on the retail side, yeah, that comment was maybe more specifically made around our portable gens. Our team there is doing a great job. You know, it's a portable generator market. You know, our founder, this company, basically, you know, if you have a portable generator today or anything that's sold on the market, it traces its lineage back to Generac, to our founder back in the 1960s, the late 1950s and early 1960s. you know we're the pioneer in that market and you know we've kind of as the home standby business grew over the years you know portables were I would say probably I don't want to say they were starved of resources but it's just like anything you know it's like I call it kind of conscious neglect you know you go through a process where you're just not you're not putting resources into everything at the same level we made a decision a couple years ago to do that we brought in a new leader for that group specifically a general manager to lead that. And he and his team have done just a great job. And that's manifesting itself now in, you know, if you know the retail space, product line reviews, PLRs as we call them in the lingo, we've done a great job picking up share there on the product line reviews side. And getting that share in and then having, as we said, you know, having some a little bit more active weather patterns here in the third quarter, our portable generator business is growing nicely and doing well. And it's really kind of an important thing when you step back You want to try and be a bigger provider of products to your retailers. You don't want to just be a one-trick pony in terms of, if we were just supplying home standbys into our retailers, you want to have an array of products. As we've said previously, it's a trade-up experience for people who own or owned a portable generator. They oftentimes go on, when their circumstances change, they go on to owning a home standby. So having them have a good experience with a portable product, with our brand, we think it's just really important in getting people to ultimately convert to a home standby buyer, whether it's next year or 10 years from now. And also, I would also say, look, I think consumers are a bit under stress. You can look across the spectrum there, whether it's K-shaped or whatever shape, I don't know what letter we're on now to describe it, but There are consumers who they still have backup power needs, but maybe a home standby is just not attainable in terms of where their budget is today. Portables are a great option as a first line of defense for a homeowner to protect their family, protect their home, protect their business even. In some cases, we see that. We love our retail strategy. We've got a really strong retail team. Portable generators are a cornerstone of that, but we have a lot of retail business as well with home standby. and the home standby business just keeps trucking along. I mean, that business is, it's just fun to watch. You know, it's been tough. I think we're coming off the bottom now of a number of quarters. I don't know how many quarters we strung together there, Kris, and four quarters of, you know, kind of down below average outage environment. But we're kind of coming back now and we just see, you know, we see tremendous opportunities there. I think we're closing in on 7% penetrated by six and three quarters percent of households that have the product. and the opportunity is enormous going forward.

Thank you. Our next question comes from the line of Christine Cho with Barclays. Your line is open.

Good morning. Thank you for squeezing me in. You know, we've seen air permitting and emissions requirements just being more scrutinized on prime power. I'm curious if this is trickling to diesel backup gen for data centers, particularly in certain states or markets with tighter emission standards. How easy would it be for customers to change equipment specs? And depending on the outcome of midterms, do you think this is also something that could become more stringent? And if so, what sort of changes would that entail for you with respect to supply chain? Thank you.

Yeah, thanks, Christine. Good question. I would say that a good chunk of our backlog today already includes products where the emissions regulations are more stringent than the current federal levels. So in backup power products, high horsepower diesel product ranges, those products are required by EPA to meet what's known as Tier 2 levels for diesel engines for emergency backup. You can show that those products are going to be used in that capacity. But we have customers who are requiring best available commercial technology, which would be more tier four. So that's kind of the difference being, you know, an over the road truck engine that runs all the time has a higher, more stringent level of emissions requirement at the federal level. And we also see at the state level that happening, you know, and it's happened for years in places like California. We're seeing it in certain East Coast states, certain pockets around the U.S. That's been a longstanding trend. And, you know, irrespective of administration, to be honest, you know, whether the midterms go one way or the other. That's something that continues to march forward. But there is technology that allows us, we can add technology to these pieces of equipment that allow them to meet those more stringent levels of emissions for backup. I think if you step back, and we're happy to add those pieces of equipment to these gensets, but the reality of it is they just don't run that often. And so in terms of the overall total output, Certainly with prime power, you need to have that. You're talking about needing to control NOX and particulate matter for diesel engines, and that would be a Tier 4 type of requirement, full stop. But if you're in an emergency situation, you're adding a lot of cost and complexity to the machine that you really probably don't need, but we're happy to accommodate that. And again, sometimes those are requirements at the project level because of the specific siting location of the project, being in an air quality district that requires that. or we've got a customer that has just said, look, we understand it's not required at the federal level, but we want that. We've decided that that's a position we're going to take and we do have customers that have taken that and we can satisfy that. From a supply chain standpoint, again, like the rest of our supply chain, there's some constraints there, but this is kind of, I would say, it's well-trotted technology. It's not new technology. It's around using catalysts and other technologies to to reduce the NOx and particulate matter, particulate filters, things like that that go into the machines or on top of the machines. In this case, there's not room inside the box. They actually sit on top of the box. And we're doing that today, and we're looking to add additional supply base there as well as that becomes a more frequent request from customers.

Thank you. Our next question comes from the line of Joseph Osha with Guggenheim Securities. Your line is open.

Thanks for taking my question. Let me just state at the outset that I hope the new residential products have spark plugs that are easier to change. That's my only request. It's hard to get at that one plug. Two questions for you. First, on the COLO side, is it Is it fair to assume that a lot of that business is concentrating into some of these large data center REITs that we both know about, or is your business more dispersed? And then the second question, following up on some of the others, Aaron, I hear you on gas versus diesel, but we do see Watsila, Eneo, even Canton Commons investing pretty heavily there. So I'm just wondering, are they seeing something that you're not? Thank you.

Yeah, thanks, Joe. Yeah, I think on that point, specifically on gas, you know, those companies, the competitors you mentioned, already had product lines in those spaces. And I think they're adding capacity to sell those existing products. For us, it would be a new product line, and we would have to design that. So, you know, in terms of the timeline to do that, and then, you know, again, if we believe that that bridge power requirement is shorter term in nature, you know, I just, we continue to look at it as a space. We don't want to ignore it. but right now we've got our full attention on expanding capacity for our high horsepower diesel backup solutions which we believe is a you know we believe there's there's actually a an opportunity there for for us to be a bigger player longer term as well as we've said you know outside of the data center market so we want to make sure that we're doing all the things we need to do there to put us in position to win even outside the data center market now on your you know the first part of your question on the co-locators that you know in terms of Is it concentrated? There are a couple of bigger guys in there that we're having conversations with. I would say the project that we've booked in our backlog today is pretty diversified. There's maybe one customer in there that's got a larger chunk of that, but it's not like a disproportionately large portion of that. It's a big part, but it's not disproportionately so. We have a lot of smaller co-locators spread out with a lot of projects around the globe. So we feel pretty good about the diversification there. But what is interesting is we are quoting a lot of those larger REITs, those larger REIT-based customers or REIT-backed customers for future projects. You know, that's where I think we're looking at, okay, where do we kind of, in terms of allocation, right? Like it gets back to the discussion around how much concentration do you want to have in a customer base? and that's, you know, I'm never a huge fan of that. I want to have a diversified customer base both in terms of the number of customers but also geographically where they're located. That's just, you want to have a healthy customer base. So we continue to be measured about that and, you know, we've had some pretty pointed discussions with some customers as an example. You know, if a customer comes in and they're unwilling to provide a corporate guarantee for an SPV, you know, we're kind of at a point where we're like, you know, appreciate your interest in the product, but if we can't get comfortable with who the parent company is and we can't get some level of guarantee around that for purposes of us underwriting the credit for a project, then we're not going to do it.

Or appropriate customer deposits.

Or appropriate customer deposits and payment timelines that cover, you know, de-risk a project. We're not going to do it. We have a lot of options out there in terms of customers who are interested, and we're kind of getting to that point in the cycle here in terms of being able to be, I think, more selective, which I think is a good thing. And that's leading us down a path that should be interesting as this matures, we'll be able to give more color on this. But today, it's a pretty diverse customer base beyond the hyperscalers.

Thank you. Ladies and gentlemen, at this time, I would like to turn the call back over to Kris for closing remarks.

We want to thank everyone for joining us this morning. We look forward to discussing our fourth quarter and full year 2026 earnings results in mid-February. Thank you again and goodbye.

That concludes today's conference. You may now disconnect.