Who is Guardian? #1 Selling Brand of Automatic Standby Generators By - Best value/price - Easiest installation ti - Broadest selection - Focus on quality and innovation - Largest network of dealer support - Generators are our only Business! 1
Definition of a Standby Generator System monitors incoming utility voltage When utility power is interrupted, the generator is signaled to start The automatic transfer switch then safely closes off the utility line and simultaneously opens the line from the generator Within 20 seconds the home standby system begins supplying ppy electricity to the home or building s electrical panel. The system continues to monitor utility line conditions. When utility voltage returns at a steady state the systems re-transfers the electrical load back to the utility line and sends a signal to the generator to shut down. The generator is then returned to standby mode, ready for the next power outage. Installation Basics Generator (1) is placed (air- cooled on gravel, liquidcooled and all Florida generators on concrete slab) Transfer switch (4) is placed next to load panel (3) Conduit is run from switch to outdoor connection box where generator whip is connected Gas supply is run to flex fuel line (5) of generator Final electrical connections are made which move priority circuits over to transfer switch load panel or a larger amperage transfer switch is used to provide whole house protection 2
Air-cooled vs. Liquid-cooled Air-Cooled (8 to 20 kw) Air-cooled engine similar to mower Typical application: Selected home circuits Liquid-Cooled (25 to 150 kw) Liquid-cooled engine similar to car Typical application: Whole house or light commercial application (bank, restaurant, convenience store, etc.) NG Consumption 17 kw 183 cu.ft./hr @ full load 25 kw 375 cu.ft./hr @ full load 45 kw 720 cu.ft./hr @ full load MARKET & FACTORS 3
Exponential Market Growth History and Forecast $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 "Baseline Market" "With Weather Event Upside" Source: US-CPSC, SBI-Synovate, Generac Management Market Potential The Home Standby Market has now eclipsed the portable market. Home Standby Market $600 Million 7 years to achieve Triple digit growth annual Average margin = 20-30% Portable Market $600 Million 43 years to achieve 4-7% growth annual Average margin = 8-12% 4
Increasing Population, New Homes & Small Businesses 300 Million people in the US Aging Baby Boomers (81M) - security, comfort, convenience, high disposable income 78 Million single family homes <1% own home standby generators 10% own a portable generator 1.6 Million new homes last year Greater power requirements In-home technology advancements 6M+ small business owners 62% have no back-up power Single Family Home Market Share of Home Standby Installations Increasing Homeowner Awareness and Demand MEDIA ATTENTION PRICE MOTHER NATURE BIG BOX DISTRIBUTION ADVERTISING INTERNET INVESTMENT PROTECTION MEGA TRENDS KEEPING UP w/ THE JONES 5
Increasing Number of Weather Related Events Number of tropical storms and hurricanes Number of hurricanes Category 3 or higher Broad Need for Standby Power Causes of Major Disturbances 2002-2005 Number of People Affected by Major Disturbances (in millions) 16.2 18.3 18.6 Source: North American Electric Reliability Council Includes disturbances caused by fire, earthquakes, unit tripping, vandalism and breaker failure. 2003 2004 2005 6
Increasing Number of Weather Related Events 1M in Seattle Ice Storm 1/07 1.5M in Pacific NW - Windstorm 12/06 1.5M Illinois thru Missouri - Ice Storm 11/06.5 M in Buffalo, NY - Snowstorm 10/06 1M in Los Angeles & San Francisco - Heat Wave 9/06 1M in St. Louis due to Heat Wave 8/06 6M in Florida due to Hurricane Wilma 10/05 10M in New Orleans due to Hurricane Katrina 8/05 14M Floridians without Power after 04 Hurricanes 50M Northeasterners without power 03 Blackouts Taxing the Grid Population density Age of infrastructure Mother Nature US has the consumption of a superpower, but has the grid of a third world nation - Bill Richardson, Bill Richardson, Former U.S. Energy Secretary 7
Peak Demand vs. Capacity Trend % of Avg. Peak Demand 22 Thousands of MW 800 18 14 Represents Potential Blackouts 600 400 10 1996 1997 1998 1999 2000 2001 2003 2004 2005 200 Source: North American Electric Reliability Council Reserve Margin Peak Demand Key Factors Contributing to Standby Generator Growth 8
Becoming More Affordable Residential Average Price History and Forecast Inflation Adjusted 1997 2000 2003 2006 2009 2012 2015 $ per kw of Average Air-Cooled Home Standby Typical Home Standby Customer Age Baby Boomers 20-39 6.0% 40-59 50.0% 60+ 44.0% Home Size (Sq. Ft.) Under 2,000 31.0% 2,000-2,999 37.0% 3,000-3,999 19.0% Over 4,000 13.0% Household Income Under $60,000 23.0% $60-$100,000 33.0% $100-$200,000 27.0% Over $200,000 17.0% Home Value Under $200,000 29.0% $200-$300,000 24.0% $300-$400,000 16.0% Over $400,000 31.0% 9
Sales History Geographical Sales History Usage Usage is concentrated in areas with high hurricane frequency and poor power grids. High Density Sales History Low Density Sales History THE GUARDIAN DIFFERENCE 10
The Guardian Difference: Category Dominance Distribution & Brands Quality & Innovation Depth & Breadth of Line Value Priced Leader Dealer Network The Guardian Difference: Category Dominance Guardian is the #1 Selling Home Standby Generator Guardian has 70% Market Share - Larger than all of the competition combined Proven track record Onan 6% Briggs 4% Other 10% 2006 Market Share by Brand: $600M total Kohler 10% GUARDIAN 70% 11
The Guardian Difference: Sales Channels / Brands Retail E-Commerce DEALER Electrical Wholesaler Private Label The Guardian Difference: Quality/Value Price Ranking Increasing Value For Price Guardian positioned in the upper right-hand quadrant Generac/Guardian Coleman Briggs & Stratton Honda Caterpillar Kohler Cummins Perceived Quality Source: L.E.K. Interviews, Analysis Study 2006 12
The Guardian Difference: Quality Exceeding Standards 50 years of electromagnetic engineering experience Vertically integrated and self-sufficient Non-reliant on outsourcing of major components First residential line to be Each unit is tested as it comes off the production line Japanese Industrial Standardization The Guardian Difference: Continuous Innovation Continuous research and development leads to innovations that set industry standards 13
The Guardian Difference: Engine Technology The original OHVI with automotive style design changes 3x the life of competition at 3000 hours 2 years or 200 hours between oil changes. 200 hours is 8.3 days without an oil change The Guardian Difference: Depth of Line Residential Standby Generators Light-Commercial Standby Generators Telecommunications Output: 7kW - 45kW End Users: Homeowners Industrial Standby Generators Output: 20kW - 150kW End Users: Gas Stations, Restaurants and Other Retail Businesses Portable Generators Output: 20kW - 3MW End Users: Cell Towers and Switching Centers Recreational Vehicle Generators Output: 20kW - 6MW End Users: Factories, Hospitals, Data Centers and Municipal Buildings Output: 12.5kW - 17.5kW End Users: Homeowners and Contractors Output: 3.5kW - 7.5kW End User: Motor Homes, Travel Trailer Manufacturers and After Market Sales 14
The Guardian Difference: Breadth of Line Comprehensive range 8kW -150kW Air cooled and liquid cooled option Variety of transfer switch configurations High speed or low speed rpm options Steel or Aluminum enclosure options The Guardian Difference: Value Priced Leader Most affordable backup power - vertically integrated manufacturer - design/build engines and alternators Kohler B&S Guardian Kohler Guardian 12,000W 15,000W 20,000W000W 30,000W000W 45,000W $3899 $5199 $5149 $13,499 $10999 Lowest cost per kw in the industry (45-80%) Lowest installation cost in the industry - pre-wired conduits/transfer switch on air-cooled 15
The Guardian Difference: Dealer Network - 4100+ Sales and Servicing Dealers Nationwide - Supported with 800 Dealer locator number The Guardian Difference: Manufacturing Facilities Total Sq. Ft. = 1 Million More than the competition s facilities combined Whitewater Vertically integrated engine & generator production. Doubled plant size after blackout of 2003. (295,000 sq. ft.) Capacity increased 700%. Waukesha Eagle Corporate headquarters & water-cooled Water-cooled genset production generator & transfer switches (265,000 sq. ft.) & metal fabrication (240,000 sq. ft.) Maquoketa 500-2000kW generator production (145,000 sq. ft.) 16
The Guardian Difference: Distribution Center 200,000 sq. ft. State of the art facility We continue to invest THE PRODUCT 17
Air-Cooled Product Enclosure Streamlined, stylish design Lockable, single-point hood release Overhang on roof Articulated, self-holding hinges Superior corrosion resistance Galvaneal base coating Hand tooled & stamped Textured powder coat paint All weld points moved to the inside Removable front panel for service access User Friendly Controls EXTERNAL PANEL (10 20 kw) Recessed with hinged, lockable door External circuit breaker disconnect GFCI outlet for outdoor power needs Angled receptacle LED status display in door Green: Ready for operation Red: Shutdown or fault status Yellow: Requires attention (17 & 20 kw only) 18
New Digital Controller 2-line, backlit LCD display Bi-lingual ltext t(english h&s Spanish) Engine hours Generator ready status Event logging Run logging (50 events) Alarm logging (50 events) Optional wireless remote monitor Maintenance reminders and alerts Alarm displays (automatic shutdown) Status checks Diagnostics (test menu) User settings Best In Class Power Quality New High Efficiency Alternator True Power Technology < 5% total harmonic distortion Confident operation of sensitive electronic equipment and appliances Digital i isochronous governor for smooth and consistent 60 Hz output (10-20 kw) 8 kw has mechanical governor (60 Hz + 5%) 19
Best In Class Power Output Specifically designed for long run times & rigorous demand of generator use No break-in period with 2-year, 200- hour service intervals Full pressure lubrication ensures instant total lubrication to vital parts High torque design responds instantly to large electrical loads Automotive style designs, including spin-on oil filter, extends oil change interval and helps to eliminate oil consumption Portable Generators 15,000 Watt & 17,500 Watt units Manual transfer switch (60a/16 circuits) Long life, durable, reliable Generac s own engine 922 cc OHVI Auto idle control Electric start Auto voltage regulation Electronic governor Great for immediate response to events! 20
GenReady Load Center GenReady is a hybrid load center panel that operates as a normal load center and also allows for seamless integration of standby generators. Remote Wireless Monitoring System Status menu Test menu History menu Service schedule Exercise menu Time & Date menu Graph menu 21
200 Amp Transfer Switch 18-circuit SE rated load center Automatic ti load shedding Sheds entire main panel if connected load exceeds generator output Automatic or manual re-connect of shed loads Reconnect after 5, 15, 30 or 60 minutes Try to re-connect one time or continuous Manual reset at any time Addresses 2008 NEC sizing for optional standby Options & Accessories Hour Meters Battery Warmer Coolant Kit Annunciators PowerMaster TM GenLink 22
MERCHANDISING & TRAINING Dedicated Technical Support 1-800 line: 888-609-9711 i & t ti service & support questions E-fax line: 888-609-9712 order status, order placement Interactive website link Technical support literature 23
Training Web-casts Scheduled web-casts from technical experts Log into Generac.webex.com Pre-authorized participation Generac Training Seminars 2 day seminars - in depth training in Milwaukee State of the art training facility by Engineering experts Certified and accredited 24
Dealer Events Sales Meetings, shows and other live demo events Merchandising Aids/POP In-store displays, counter displays, counter mats, banners and signage 25
Targeted End-user Material Post cards, door hangers, literature Pull Through Support Promotional Funds, Employee Opportunities, Advertising Monies 26
ENERGY OPPORTUNITY Existing home opportunity - 98% of Guardians sold are retrofitted - Less than 1% of the homes own HSB - 99% of customers would put HSB on their next home - Homeowner demand growing New construction ti opportunity - Easier to afford on mortgage - Most economical Installation - Differentiate from competition - Homeowner demand growing 27
Commercial Opportunity Business Lost Sales P Hour Per 6M+ small business in the U.S. 80% have experienced an outage in the last year Of those, 29% w/o power for 8hrs. & 19% w/o power for 16hrs. during a single outage 62% have no backup power system 58% say they would consider purchasing a backup system if it made economical sense Gas/Convenience Store High Volume Restaurant Typical kw Appx. Installed Generator Cost Payback Hours $445 35 $13,200 30 $705 45 $15,200 22 Drug Store $1,400 60 $18,100 13 Supermarket $43,510 150 $36,100 10 Your Opportunity Our complementary products and services are a natural up-sell and fit; Standby generators put the romance in NG Standby generators are the hook to penetrate non-ng users and electric appliance based homes You have existing long term relationships with home owners, home builders and commercial customers We have a current need to promote additional burner tips and increase the overall gas load You have the ability to bundle these products/services Standby generators provide an off-season sales opportunity & and repetitive service/maintenance contracts You can differentiate yourselves from the competition You can generate more dollars while driving more volume You can take advantage of a rapidly growing opportunity 28
To Get Involved in Generators Partner with existing local Guardian generator dealers -trade leads, resources, referrals Add local generator dealers to NG contractor networks Add generator category to existing contactor networks - become a dealer - training, merchandising, technical support - installs, service, maintenance contracts Product available through gas equipment wholesalers Summary Generators are our only business We dominate the category and drive market growth We lead in innovation, quality and value We have the largest manufacturing facilities, largest selection of product and the largest service network We are committed to training and support We want your business Thank You 29