They maybe use a little — consume a little more fuel, but not materially. So, that kind of direction we’re headed strategically there is kind of moving away from the DC generator product to the AC generators, but it’s a really small part of our product line. The broader question, and you’re asking kind of an AC coupling, we have AC coupling capabilities today with the Pika system. We can take the battery as a stand-alone with the Pika inverter, we can AC couple it to competitors’ inverters. That’s not the most efficient architecture, so as we introduce new products later this year, the next-generation storage products, we’re going to improve the capability for AC coupling and make that a more, I’ll call it, a better experience, a more sophisticated experience, a lower cost experience going forward.
And then of course, that sets us up nicely as we go forward with the microinverter products into 2025. And we’re going to continue to offer the Pika products. I mean there are — if you’re doing a clean sheet implementation, we still believe that DC coupling is the most efficient — round trip efficient way to do that. And so we think there’s a place in the architecture for that system, at least for now. But as we roll micro-inverters out and as we continue to build out our strategy and have success, I think the market will tell us directionally where we need to go. I think you, in particular, pointed out trying to support both architectures going forward is a heavy load to do, and we would probably tend to agree with you on that. But again, we’ve got a long way to go before we’re kind of proficient in the AC coupled solutions with the micro inverter solutions.
There’s some very capable products in market today, and it’s taken us a long time to get to market because we are going to have a product that we’re proud to put our name on, and that will stand the test of time from a reliability standpoint for our customers. And we’re working through that. It’s part of the big investment that we’ve been talking about, this 350 to 400 basis point drag. It’s a piece of that on EBITDA margins, but we’re committed to it. We think that there’s a huge opportunity for us to be successful in that going forward.
Operator: Our next question comes from Jordan Levy with Truist Securities. Your line is open.
Unidentified Analyst: [indiscernible] on for Jordan. Thanks for taking my question. As it relates to the dealer count, I think you closed the year with 8,700 and we have talked about the desire to bring that number closer to 10,000 over the coming years. So, can you maybe talk to the work you’re doing there and some of the sticking points that makes it more challenging to bring that number up? Thank you.
Aaron Jagdfeld: Yes, absolutely. Great question. And we’ve had some eye-popping increases over the last couple of years in dealer counts. 2023 was a more muted year, right? We kind of flatlined in 2023. Part of that is, I think, the large increase that we saw a little over 2,000 dealers being added in the years leading up to 23%, you’ve got, I think, as you would imagine, you’ve got a process there that we — our dealer count, by the way, is on a net basis, right? So — and we basically — we don’t count a dealer for the purposes of that account if they haven’t bought anything from us in a 12-month period. So we’re maybe a little bit hard on ourselves in the way we think about dealer counts and the way we talk about it. If you were to actually look at the total number of dealers in our network, it’s more than 8,700.
But the 10,000 is a target on a net basis and we are still targeting that. The headwinds to that this year, in particular, where I think just the kind of rollover of some of the ads that we had, we still had a lot of really nice gross adds to the dealer count. So we’re bringing new dealers in — but we — as we call them, we call them dark doors. When a dealer hasn’t bought from us in 12 months, we put them in that dark door category, and that is an offset to any gross adds that we have. So it’s kind of churn, if you will. There’s a churn that happens there. We had more churn in 2023, churn of a lot of those dealers that were added over the last couple of years. That also happens when you have kind of softer power outage environments, which certainly, as we talked about Q4 being a softer environment, that’s a headwind to adding dealers, it’s tough to get people interested in the category if the demand isn’t there necessarily, right?
So we saw in-home consultations drop-off in Q4. So those things present headwinds. I think longer-term, as we’ve looked at this, we built this from basically zero, 20 years ago to 8,700 today to get to that 10,000, we’re deploying an army of people that are going out there and engaging with primarily electrical contractors, but we’ve started to open the aperture on that to also include HVAC contractors. One interesting trend that I think many people have probably noted is you’re seeing kind of a consolidation of kind of home services businesses. So electrical contractors getting into the HVAC business or vice versa or into plumbing or into home automation. Kind of this broadening of the suite of services that a contracting business will offer.
It’s giving us a nice opportunity to get introduced to new kind of cohorts in the contracting business. And then on top of that, I would tell you that bringing Ecobee into the fold, they have upwards of 14,000 HVAC contracting relationships just with the 3.5 million homes that they put devices into and that is kind of a really important kind of feeding ground for us in terms of a bench, if you want to think of it that way, where we can add and bring new dealers in to sell to. So working all of those pads, I’m very confident we’re going to get to 10,000 as the category continues to expand in the years ahead. So we haven’t kind of put a pin on the date that’s going to happen, but it’s definitely going to happen as the category continues to grow.
Operator: One moment for our next question. Our next question comes from Chip Moore with ROTH MKM. Your line is open.
Chip Moore: Hi. Thanks for taking the question. I wanted to go back to visibility for C&I with some of that cyclical deterioration you’ve seen since the Investor Day. Aaron, is there maybe a potential for infrastructure investments to kick in here at some point and start to help drive growth there? And then any implications for those three-year growth targets you’ve laid out? Thanks.
Aaron Jagdfeld: Yes, it’s a great question. I think in terms of infrastructure, obviously, anything that moves the needle there will certainly help shorten the cycle, kind of off cycle for the rental equipment for sure. The telecom cycle, I think, is going to play out. Some of that is it’s kind of the installation bandwidth that those network kind of operators have to build out, like the speed at which they can build out their networks. There is some — we ran into some headwinds there with some specific customers just being able to kind of keep pace with installations according to their schedules that they had originally set for themselves. We were giving them product according to the schedules. You could probably say, okay, maybe there’s some field inventory there as a result.
We’re not really calling it that way because it’s not really a business we talk about inventory being carried for, but that’s somewhat the issue there with maybe one or two of those customers, but I think that cycle — I don’t know if there’s much we can do or that we would see to point to kind of that cycle accelerating. I think it’s just going to have to play out the way that it plays out. But I think, again, the C&I cycles we’ve seen this movie before. So it doesn’t really worry us. The visibility question is a good one. We — unfortunately, because these are big customers that kind of in our world, they wheel big pencils, right? They’ve got — that’s probably a dated term now, but they can write big, big people. They can write big POs or they can stop writing big POs and we get forecasts from them and we listen to the same things that others listen to in terms of their CapEx guidance because that obviously is the best proxy that we can use and we have as much dialogue with them as we can about what are their build-out plans for networks and what are their build-out plans for fleet when it comes to the rental customers.
And we know, we have some visibility in the pipeline for beyond standby projects as we’re quoting them. But unfortunately, visibility, it’s probably the weakest area of visibility for us in terms of our C&I business. When you look at the strength we called out in C&I which is offsetting some of this weakness and won’t offset all of it, obviously, because we’re saying C&I is going to be down for the year 10%. But offsetting that, our — we call it our IDC, our independent distribution network is we continue to see growth there. In fact, in some of the distribution partners, we actually have acquired a number of them over the last several years. And that’s given us really clear insight and really good visibility actually into some local markets.
And that is much more of a quotation business. And so we have, I think, much better visibility in that part of the business on C&I, but not as much, unfortunately, in some of these national account customers that can be I think, a lot more volatile in their order patterns.
York Ragen: And there are some pockets around the globe that we’re seeing growth as well the offset some of that softness. But I think the last part of your question was, how do we feel about C&I in the LRP that we — the long-range plan that we rolled out during Investor Day. And I think — in talking to the team that runs that business, it’s — I think because they these select certain customers that we’re referring to in telecom rental beyond standby maybe they turned things off a little bit harder than we were expecting when we were walking through the Investor Day materials, but we think they think we think that they can turn them back on just as fast. So…
