GENERAC HOLDINGS INC.

Generac Holdings Inc. is a leading global designer, manufacturer, and provider of a wide range of energy technology solutions, serving the residential, commercial, data center, telecom, rental, and industrial markets. The Company operates in the power generation equipment, energy storage systems, energy management devices and solutions, and other power products and services industry. Key structural forces shaping competition include lower power quality driving demand for backup power, higher power prices driving the need for energy management solutions, artificial intelligence adoption creating a large market opportunity for backup power, growing demand for cleaner burning fuels such as natural gas, required investment in global infrastructure, and the home as a sanctuary driving demand for resiliency solutions. The Company sits within this landscape as a leading provider with one of the widest ranges of products in the power generation marketplace, including residential, commercial, and industrial standby generators, as well as portable and mobile generators.

Primary competitors named in the filing include Rehlko (formerly known as Kohler Power), Briggs & Stratton, Honda, Champion, Techtronics International, Harbor Freight, Husqvarna, Ariens, Tesla, Enphase, Solar Edge, Google, Resideo, The Toro Company, EcoFlow, and Emerson for residential products; and Caterpillar, Cummins, Rehlko (formerly known as Kohler Power), IGSA, MTU (Rolls Royce), AKSA, MultiQuip, Wacker, Doosan, Atlas Copco, Himoinsa, Woodward, Planelec, and Co-map for C&I products. The Company's stated competitive advantages include its core focus on power generation and storage, broad product offering, diverse omni-channel distribution model, strong factory support, and its position as a leader in natural gas power generation. The Company believes it has one of the leading positions in the North American market for power equipment with an expanding presence internationally. No single customer provided more than 4% of net sales in 2025.

The Company generates revenue through the sale of power generation equipment, energy storage systems, energy management devices and solutions, and other power products and services. The mix includes both transactional product sales and recurring income from aftermarket service parts, extended warranty revenue, grid services and other software-related subscription revenue, remote monitoring subscription revenue, and other project management service offerings. Primary customer segments include residential, commercial, data center, telecom, rental, and industrial markets. The Company distributes products through an omni-channel network including independent residential dealers and contractors, industrial distributors and dealers, national and regional retailers, e-commerce partners, electrical/HVAC/solar wholesalers, solar installers, catalogs, equipment rental companies, and other equipment distributors, as well as direct sales to certain end users. The Company is building out ecosystems of energy technology products, solutions, and services for homes and businesses, integrating product portfolios into common platforms and user interfaces.

Residential products include automatic standby generators ranging from 7.5kW to 150kW, portable and inverter generators ranging from 800W to 18kW, energy storage systems marketed under the PWRcell brand name ranging from 9kWh up to 72kWh of storage capacity, the PWRmicro microinverter, ecobee smart home energy management devices, and outdoor power equipment under the DR brand name. Residential products comprised 53.9% of total net sales in 2025, 56.6% in 2024, and 51.3% in 2023. The Company launched the latest generation lineup of air-cooled home standby generators in 2025, representing the most comprehensive platform update for the category in more than a decade. In 2025, the Company also launched the PWRcell 2 Series, the next generation of its energy storage system, and the PWRmicro, its first Generac branded microinverter. Every home standby generator is equipped with Mobile Link remote monitoring capability.

Commercial & Industrial products include a full line of generators with power outputs ranging from 10kW up to 3,250kW, including natural gas, diesel, and Bi-Fuel fueled generators, light-commercial standby generators from 22kW to 150kW, Modular Power Systems technology, industrial transfer switches, C&I mobile products such as light towers and mobile generators, C&I Battery Energy Storage Systems, and mobile energy storage systems. In 2025, the Company introduced a new line of large mega-watt diesel generator products to address the data center market opportunity. C&I products comprised 34.6% of total net sales in 2025, 32.3% in 2024, and 37.2% in 2023. Other products and services primarily consist of aftermarket service parts, installation and maintenance services, extended warranty revenue, grid services and other software-related subscription revenue, remote monitoring subscription revenue, and other project management service offerings. Other products and services comprised 11.5% of total net sales in 2025, 11.1% in 2024, and 11.5% in 2023.

During the year ended December 31, 2025, the Company repurchased 1,109,206 ¹ shares of its common stock for $147.9 million ². On July 1, 2025, the Company amended its Term Loan A Facility and Revolving Credit Facility, extending the maturity of both to July 1, 2030, revising the Term Loan A Facility outstanding principal balance to $700,000 ³, reducing the Revolving Credit Facility borrowing capacity to $1,000,000 ⁴, and redefining the Term Benchmark to replace the Adjusted Term SOFR Rate with the Term SOFR Rate, resulting in an interest rate spread reduction of 0.10% ⁵. The Company capitalized $5.3 million ⁶ of debt issuance costs related to this refinancing transaction, wrote-off certain unamortized deferred financing costs of $0.4 million ⁷, and expensed $0.8 million ⁸ of third-party fees as a loss on refinancing of debt. On February 9, 2026, the Board approved a new stock repurchase program that allows for the repurchase of up to $500 million ⁹ of the Company's common stock over a twenty-four-month period. The Company entered into a joint venture with E.A. Juffali & Brothers on August 7, 2025, based in Bahrain, with ownership interests divided at 51% ¹⁰ and 49% ¹¹ respectively. The Company acquired Wolverine Power Systems in November 2024, Ageto in August 2024, the C&I BESS product offering from SunGrid Solutions Inc. in June 2024, and Huntington Power Equipment in April 2024. The Company acquired REFUstor in February 2023.

Total net sales for the year ended December 31, 2025 were $4,209,147 ¹² compared to $4,295,834 ¹³ in 2024, a decrease of 2.0% ¹⁴. Net income attributable to Generac Holdings Inc. was $159,554 ¹⁵ in 2025 compared to $316,315 ¹⁶ in 2024, a decrease of 49.6% ¹⁷. Diluted earnings per share were $2.69 ¹⁸ in 2025 compared to $5.39 ¹⁹ in 2024. Gross profit margin was 38.3% ²⁰ in 2025 compared to 38.8% ²¹ in 2024. Income from operations was $289,191 ²² in 2025 compared to $536,742 ²³ in 2024, a decrease of 46.1% ²⁴. Adjusted EBITDA attributable to Generac Holdings Inc. was $712,894 ²⁵ in 2025 compared to $787,926 ²⁶ in 2024. Net cash provided by operating activities was $437,978 ²⁷ in 2025 compared to $741,301 ²⁸ in 2024.

A major growth vector is the data center end market, enabled by the introduction of the Company's large mega-watt diesel generator product line, representing a massive incremental market opportunity. The Company expects this significant market opportunity to continue growing for the foreseeable future due to secular trends supporting data center capital investments and the critically under-supplied market for large megawatt backup power generators. The Company expects to increase its manufacturing, test cell, and packaging capacity even further to win market share and serve data center customers globally. Another growth vector is the home standby generator market, where the Company believes there are significant opportunities to further penetrate the residential standby generator market both domestically and internationally, with only approximately 6.75% ²⁹ penetration of the addressable market of homes in the United States. The Company believes it can continue to build awareness and increase penetration for its home standby generators by expanding and developing its distribution network, continuing to invest in new product lines and technologies, and optimizing its marketing efforts.

Another growth vector is the solar, storage, and energy management markets. The Company believes the electric utility landscape will undergo significant changes due to accelerating demand growth, grid instability, power quality issues, environmental concerns, permitting challenges, and continuing performance and cost improvements in renewable energy and energy storage technologies. The Company expects that a confluence of factors will continue to drive power prices meaningfully higher in the future, making on-site power generation from renewable sources and cleaner-burning natural gas generators more prevalent. The Company plans to leverage its strong competencies in the residential standby generator market to increase its market position in the residential solar, storage, and energy management markets. The Company also continues to explore and expand its capabilities within new gaseous generator market opportunities, including continuous-duty, prime rated, distributed generation, demand response, microgrids, and overall use as a Distributed Energy Resource. Expanding the natural gas product offering into larger power nodes is another way the Company is increasing the addressable market for natural gas generators.The Company expects to increase its manufacturing, test cell, and packaging capacity to win market share and serve data center customers globally. The Company has a staff of approximately 1,200 ³⁰ engineers working on numerous projects around the world. As of December 31, 2025, the Company employed 9,400 ³¹ employees, including part-time and temporary employees, of which approximately 4,200 ³² were directly or indirectly involved in manufacturing. The Company has made significant investments in developing a common connectivity and data platform to advance its energy management ecosystems for both residential and C&I markets.

Capital expenditures were $169.9 million ³³ in the year ended December 31, 2025, $136.7 million ³⁴ in 2024, and $129.1 million ³⁵ in 2023. On February 9, 2026, the Board approved a new stock repurchase program that allows for the repurchase of up to $500 million ³⁶ of the Company's common stock over a twenty-four-month period. The Company does not have plans to pay dividends on its common stock in the foreseeable future. Research and development expenses were $243,470 ³⁷ in 2025, $219,600 ³⁸ in 2024, and $173,443 ³⁹ in 2023.

A structural headwind is the phase-out of tax incentives for the solar market. On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (OBBBA), which accelerates the phase-out of tax incentives for the solar market and includes certain domestic supply chain requirements to qualify for these incentives. The Company states this will negatively impact the solar and storage markets in the near term. Additionally, the Company received a grant from the U.S. Department of Energy to facilitate the installation of residential solar and battery storage systems for disadvantaged Puerto Rican residents that the DOE has elected to stop funding going forward in 2026. Another headwind is the impact of tariffs and changes in U.S. trade policy. Starting in the first quarter of 2025, the United States government enacted additional tariffs on goods imported into the U.S. from numerous countries, and certain countries announced tariffs on U.S. goods. The Company states these tariff actions and resulting price increases have created inflationary pressures for consumers, negatively impacting demand and margins for certain of its products.

A key constraint is the unpredictable nature of power outage activity, which significantly affects demand for the majority of the Company's products. The filing notes that the second half of 2025 represented a very low level of baseline power outage activity, impacting demand for residential products. The Company also faces risks related to the availability and cost of raw materials, key components, and labor, as well as dependence on a small number of contract manufacturers and component suppliers, including single-source suppliers. The Company's ability to realize the anticipated benefits of its acquisitions, divestitures, restructurings, or realignments is also a noted constraint.

Demand for the majority of the Company's products is significantly affected by unpredictable power outage activity, which can lead to substantial variations in financial results. The filing notes that sustained periods without major power disruptions can lead to reduced consumer awareness and reduced sales growth rates. The Company faces risks from fluctuations in the cost, availability, and quality of raw materials, key components, and labor, with principal raw materials including steel, copper, and aluminum. The Company depends on a small number of outside manufacturers and component suppliers, including single-source suppliers, for certain products and components, and any disruption could impair the ability to deliver products. The Company is subject to product liability, warranty claims, and recalls, and has recorded a provision of $104.5 million ⁴⁰ for a settlement agreement related to a portable generator product liability case. Changes in U.S. trade policy, including the imposition of new or increased tariffs, have created inflationary pressures for consumers, negatively impacting demand and margins for certain products. The Company has a substantial amount of goodwill and other indefinite-lived intangibles totaling $1,594.4 million ⁴¹ as of December 31, 2025, and future impairment could materially adversely affect net income.

Management's message emphasizes the Company's 'Powering a Smarter World' strategic plan, which serves as the framework for significant investments to capitalize on long-term growth prospects. The three key strategic priorities emphasized are: improve energy resilience and independence, optimize energy efficiency and consumption, and innovate to protect and build critical infrastructure. Management highlights the significant data center market opportunity enabled by the introduction of large mega-watt diesel generators, the opportunity to further penetrate the home standby generator market given only approximately 6.75% ⁴² penetration, and the long-term opportunity in solar, storage, and energy management markets despite near-term headwinds from the phase-out of tax incentives. Management also notes the Company's focus on building out ecosystems of energy technology products and leveraging its leading position in natural gas fueled generators.