GENERAC HOLDINGS INC.

Previous wording

Founded in 1959, Generac is a leading global designer, manufacturer, and provider of a wide range of energy technology solutions. Generac provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products and services serving the residential, light commercial, data & telecom, and industrial markets. The Company continues to expand its energy technology offerings for homes and businesses in its mission to Power a Smarter World and lead the evolution to more resilient, efficient, and sustainable energy solutions.

Current wording

Founded in 1959, Generac is a leading global designer, manufacturer, and provider of a wide range of energy technology solutions. Generac provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products and services serving the residential, commercial, data center, telecom, rental, and industrial markets. The Company’s broad portfolio of energy technology offerings for homes and businesses enables its mission to Power a Smarter World and lead the evolution to more resilient, efficient, and innovative energy solutions.

Previous wording

We have a long history of providing power generation products across a variety of applications, and we maintain one of the leading positions in the North American market for power equipment with an expanding presence internationally. We believe we have 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 used in a variety of applications. The Company is evolving its product portfolio by building out ecosystems of energy technology products, solutions, and services for homes and businesses, enabling end users to better manage their energy costs and needs. As part of this evolution, we have made significant investments into developing markets such as residential and commercial & industrial (C&I) energy storage, solar power inverters, energy monitoring & management devices, and electric vehicle (EV) charging. Central to these ecosystems are the Company’s advanced connectivity devices, controls capabilities, and software platforms that facilitate the integration of our products into grid services programs. In addition, we have been leveraging our leading position in the growing market for natural gas fueled generators, which we believe represents a cleaner fuel compared to diesel, to expand into applications beyond standby power, allowing us to participate in multi-purpose microgrid projects for C&I customers. As the traditional centralized utility model evolves over time, we believe that a more decarbonized, digitized, and decentralized grid infrastructure will develop, and our energy technology solutions are uniquely and strategically positioned to participate in this next-generation grid.

Current wording

We have a long history of providing power generation products across a variety of applications, and we maintain one of the leading positions in the North American market for power equipment with an expanding presence internationally. We believe we have 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 used in a variety of applications. The recent introduction of our large-megawatt diesel generator line-up has substantially increased our served addressable market, allowing us to participate in the supply-constrained data center market which is expected to grow significantly over the coming years due to the mass adoption of artificial intelligence. Over the last few years, we have also been focused on building out ecosystems of energy technology products, solutions, and services for homes and businesses, allowing us to fully integrate our product portfolios together into common platforms and user interfaces and enabling end users to better manage their energy resilience and costs. We have also been leveraging our leading position in the growing market for natural gas fueled generators, which we believe represents a cleaner fuel compared to diesel, to develop solutions for applications beyond standby power, allowing us to participate in multipurpose microgrid projects for C&I customers. As the traditional centralized utility model evolves over time, we believe that a more decarbonized, digitized, and decentralized grid infrastructure will develop, and our energy technology solutions are uniquely and strategically positioned to participate in this next-generation grid.

Previous wording

Given our competitive strengths in our traditional power generation markets, we believe we are well-positioned to execute on the growing opportunity for backup power for homes and businesses, where increased penetration is being driven by multiple mega-trends that are resulting in poorer power quality for end users. In addition, our focus on more resilient, efficient and sustainable energy solutions has increased our served addressable market, and as a result, we believe we can continue to be a leader as energy costs rise and end markets evolve over time.

Current wording

Given our competitive strengths in our traditional power generation markets, we believe we are well-positioned to execute on the growing opportunity for backup power for homes and businesses, where increased penetration is being driven by multiple mega-trends that are resulting in poorer power quality for end users. In addition, our focus on more resilient, efficient and innovative energy solutions has increased our served addressable market, and as a result, we believe we can provide products that can help offset rising energy costs as the traditional utility grid suffers from significant supply/demand imbalances over time.

Previous wording

In 2021, we unveiled our “Powering A Smarter World” strategic plan, which serves as the framework for the significant investments we have made and will continue to make to capitalize on the long-term growth prospects of Generac. Our enterprise strategy is based on the combination of several key mega-trends that we believe will drive a number of significant strategic growth themes for our business.

Current wording

Our “Powering a Smarter World” strategic plan serves as the framework for the significant investments that we have made, and will continue to make, to capitalize on the long-term growth prospects of Generac. Our enterprise strategy is derived from certain key mega-trends that we believe will drive various strategic growth themes for our business. Those mega-trends and growth themes are as follows:

Previous wording

Power quality issues continue to increase. Power disruptions are an important driver of consumer awareness for backup power and have historically influenced demand for generators both in the United States and internationally. Increased frequency and duration of major power outage events, that have a broader impact beyond a localized level, increases product awareness and may drive consumers to accelerate their purchase of a standby or portable generator during the immediate and subsequent period, which we believe may last for six to twelve months following a major outage event. Energy storage systems offer similar resiliency advantages to consumers and can benefit from these same awareness drivers, at least for short duration power outages. The optional standby market for C&I power generation is also driven by power quality issues and the related need for backup power. The impact of climate change has received increased global focus in recent years, and an aging and underinvested electrical grid infrastructure remains highly vulnerable to the expectation of more severe and volatile weather. Additionally, rapid growth in renewable power sources such as solar and wind is resulting in increased intermittency of supply as more traditional thermal generation assets are retired, further impairing the reliable supply of electricity. At the same time, power demand is expected to meaningfully accelerate as a result of the rapid adoption of artificial intelligence and related data center energy requirements, the re-industrialization of North America, and the electrification of a wide range of consumer and commercial products, including transportation, HVAC systems, and other major appliances. These developments are causing growing supply/demand imbalances for grid operators across North America, which has led to high-profile examples of rolling blackouts and calls for utility customers to reduce consumption to maintain grid integrity. In fact, the North American Electric Reliability Corporation has labeled significant portions of the United States and Canada as being at high or elevated risk of resource adequacy shortfalls in the 2025-2029 period due in part to these supply/demand dynamics. We believe utility supply shortfalls and related warnings may continue in the future, resulting in continued deterioration of power quality in North America. Finally, certain utilities are adopting preventative power shutoff policies to reduce the risk of wildfires caused by their electrical distribution equipment, predominately in the western half of the country. Taken together, we expect these factors to continue driving increased awareness of the need for backup power and demand for Generac’s products within multiple categories.

Current wording

The impact of climate change has received increased global focus in recent years, and an aging and under-invested electrical grid infrastructure remains highly vulnerable to potentially more severe and volatile weather. Additionally, growth in renewable power sources (such as solar and wind) is resulting in increased intermittency of supply as traditional thermal generation assets are retired, further impairing the reliable supply of electricity. At the same time, power demand is expected to meaningfully accelerate due to (i) the rapid adoption of artificial intelligence and related data center energy requirements, (ii) the re-industrialization of North America, and (iii) the electrification of a wide range of consumer and commercial products, including transportation, HVAC systems, and other major appliances. These developments are causing a growing supply/demand imbalance for grid operators across the world, which has led to high-profile examples of rolling blackouts and calls for utility customers to reduce consumption to maintain grid integrity. In fact, the North American Electric Reliability Corporation has labeled significant portions of the United States and Canada as being at high or elevated risk of resource adequacy shortfalls in the 2025-2029 period due in part to these supply/demand dynamics. We believe utility supply shortfalls and related warnings may continue in the future, resulting in further power quality issues for the world’s electrical grid. Finally, certain utilities are adopting preventative power shutoff policies to reduce the risk of wildfires caused by their electrical distribution equipment, predominately in the western part of the United States. Taken together, we expect these factors to continue driving increased awareness of the need for backup power for homes and businesses which will continue to create demand for Generac’s products across the portfolio.

Previous wording

Home standby penetration opportunity is significant. Many potential customers are still not aware of the costs and benefits of automatic backup power solutions. With only approximately 6.5% penetration of the addressable market of homes in the United States (which we define as single-family detached, owner-occupied households with a home value of over $175,000, as defined by the U.S. Census Bureau's 2023 American Housing Survey for the United States), we believe there are significant opportunities to further penetrate the residential standby generator market both domestically and internationally. In addition to the mega-trends supporting growth of the category, we believe by expanding and developing our distribution network, continuing to invest in our product lines and technologies, and targeting our marketing efforts, we can continue to build awareness and increase penetration for our home standby generators.

Current wording

Home standby penetration opportunity is significant. Many potential customers are still not aware of the costs and benefits of automatic backup power solutions. With only approximately 6.75% penetration of the addressable market of homes in the United States (which we define as single-family detached, owner-occupied households with a home value of over $175,000, as defined by the U.S. Census Bureau's 2023 American Housing Survey for the United States), we believe there are significant opportunities to further penetrate the residential standby generator market both domestically and internationally. In addition to the mega-trends supporting growth of the category, we believe by expanding and developing our distribution network, continuing to invest in new product lines and technologies, and optimizing our marketing efforts, we can continue to build awareness and increase penetration for our home standby generators.

Previous wording

Substantial investment in new data centers and accelerating adoption of artificial intelligence. As a result of the development of artificial intelligence and the expected benefits of this technology, there is significant capital expenditure investment going into the build out of data center infrastructure, which should enable the accelerated adoption of artificial intelligence capabilities. Backup power solutions are a necessary part of the substantial investment in data centers. Given the significant power requirements of increasingly large data center campuses, and the mission critical nature of these applications that require complete resiliency coverage, demand for large backup power generators is expected to continue to grow at a dramatic rate for the foreseeable future. This ongoing rapid demand growth for large generators has resulted in market supply constraints. As a result of our recently introduced high output diesel generator offering, this large and growing data centers market represents a significant incremental opportunity for our global C&I product category. As we continue to ramp our capabilities for large megawatt generators, we believe that we are well positioned to take share in this market over time given our historical focus on backup power generation which allows us to provide customized sales, engineering, and aftermarket support while also providing data center customers with a robust service network to ensure uptime for these critical applications. Additionally, we believe this significant growth in data center power consumption will drive demand for backup power and intelligent energy management solutions for the broader electrical grid and other grid participants as these large power loads contribute to the growing power supply/demand imbalance.

Current wording

Substantial capital investments in new data centers and accelerating adoption of artificial intelligence. As a result of the development of artificial intelligence and the expected benefits of this technology, there is significant capital investment being made to build out data center infrastructure, which is expected to further accelerate adoption of artificial intelligence capabilities. Backup power solutions are a necessary part of this substantial investment in data centers. Given the significant power requirements and the mission-critical nature of these data centers, demand for large backup power generators is expected to grow at a dramatic rate for the foreseeable future. Due to all of these factors, the market for large-megawatt backup generators has become significantly supply-constrained. This presents a very large incremental opportunity for our recently introduced large-megawatt diesel generator offering. As we continue to ramp our capacity and capabilities for large megawatt generators, we believe that we are well positioned to take share in this market over time given (i) our long-standing historical focus on backup power generation, (ii) our global presence in markets around the world, (iii) our ability to provide customized product solutions via our extensive sales, engineering, and project management resources, and (iv) our robust aftermarket support through a combination of direct service teams and our global service network provided by our industrial distributor partners. Given the scale and mission-critical nature of these applications, this level of support is necessary to capture market share and serve these customers. Additionally, we believe these large data center power loads will contribute to the growing supply/demand imbalance across the broader electrical grid, resulting in continued power quality issues and increased demand for backup power solutions for all homes and businesses. Finally, we believe the significant growth in data center power consumption will cause higher power prices, driving growth in the market for solar, storage, and intelligent energy management solutions.

Previous wording

Increasingly critical nature and growing power consumption of digital infrastructure. As the number of “connected” devices continues to rapidly increase and wireless networks are considered critical infrastructure in the United States, network reliability and up-time are necessary for our increasingly connected society. This will require highly resilient cell tower sites across the network, and therefore necessitates the need for backup power sources on site at these cell towers. Generac is the leading supplier of backup power to the telecommunications market in the United States. As more mission-critical data is transmitted over wireless networks, we believe the penetration rate of backup generators on cell towers must increase considerably to maintain a higher level of reliability across the network. We have relationships with key Tier 1 carriers and tower companies globally, in addition to having the distribution partners to provide local service support to the global market. We believe these factors coupled with Generac’s ability to customize solutions to each customer’s needs help us to maintain our strength within the global telecommunications market.

Current wording

Increasingly critical nature and growing power consumption of digital infrastructure. As the number of “connected” devices continues to rapidly increase and wireless networks are considered critical infrastructure in the United States, network reliability and up-time are necessary for our increasingly connected society. This will require highly resilient cell tower sites across the network, and therefore, necessitates the need for backup power sources on site at these cell towers. Generac is the leading supplier of backup power to the telecommunications market in the United States. As more mission-critical data is transmitted over wireless networks, we believe the penetration rate of backup generators on cell towers must increase considerably to maintain a higher level of reliability across the network. We have relationships with key Tier 1 carriers and tower companies globally, in addition to having distribution partners to provide local service support to the global market. We believe these factors coupled with Generac’s ability to customize solutions to each customer’s needs help us to maintain our strength within the global telecommunications market.

Previous wording

Natural gas generators, a continuing growth opportunity. We believe natural gas will continue to be an important and cleaner transition fuel of the future, compared to diesel, as the world continues to shift towards lower emission power generation sources. Demand for natural gas generators continues to represent an increasing portion of the overall C&I market, as the benefits of natural gas power generation are very compelling relative to traditional diesel fueled generators. We also continue to explore and expand our capabilities within new gaseous generator market opportunities, including continuous-duty, prime rated, distributed generation, demand response, microgrids, and overall use as DERs in areas where grid stability is needed. Many of these applications are made possible by our natural gas generators having the capability to participate in available grid services programs, helping to offset the purchase price of the equipment over the product’s lifespan. Expanding our natural gas product offering into larger power nodes is also a part of this growth theme in taking advantage of the continuing shift from diesel to natural gas generators. As a leader in natural gas power generation, we believe we are well positioned to capitalize on this strategic growth theme.

Current wording

Natural gas generators, a continuing growth opportunity. We believe natural gas will continue to be an important and cleaner transition fuel of the future, compared to diesel, as the world continues to shift towards lower emission power generation sources. Demand for natural gas generators continues to represent an increasing portion of many C&I end markets, as the benefits of natural gas power generation are very compelling relative to traditional diesel fueled generators for certain end users. We also continue to explore and expand our 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 (DER) in areas where grid stability is needed. Many of these applications are made possible by our natural gas generators having the capability to participate in available grid services programs, helping to offset the purchase price of the equipment over the product’s lifespan. Expanding our natural gas product offering into larger power nodes is another way that we are increasing the addressable market for natural gas generators. As a leader in natural gas power generation, we believe we are well positioned to capitalize on this strategic growth theme.

Previous wording

Solar, storage, and energy management marketopportunities. We believe the electric utility landscape will undergo significant changes in the decade ahead due to accelerating demand growth, grid instability and power quality issues, environmental concerns, and the continuing performance and cost improvements in renewable energy and energy storage technologies. Importantly, we expect that a confluence of factors will continue to drive meaningful increases in power prices for end users in the future. As a result, on-site power generation from renewable sources and cleaner-burning natural gas generators are projected to become more prevalent as will the need to monitor, manage, and store this power – potentially developing into a significant market opportunity as utility customers seek alternative solutions to combat rising power prices. In addition, battery storage provides customers another source of power resiliency for shorter duration outages. These markets have historically been supported by subsidies and investment tax credits for consumers and businesses to help advance the adoption of clean energy technologies. Further, production tax credits are being offered to businesses that meet certain domestic manufacturing requirements in the production of renewable energy products. On July 4, 2025, the United States signed into law the OBBBA. The OBBBA accelerates the phase-out of tax incentives for the solar market and includes certain supply chain requirements to qualify for these incentives. While the change in the availability and duration of tax incentives will negatively impact the solar and storage markets in the near term, we believe the overall mega-trends that are driving the solar, storage, and energy management markets currently provide sufficient incentive for long-term, value-creating investments for market participants in this space. Given the significant long-term market opportunity, we expect to further improve our capabilities in energy technology product development, sourcing, distribution, and marketing. In addition, we plan to leverage our significant competencies in the residential standby generator market to increase our market position in the residential solar, storage, and energy management markets as we continue to build out our residential ecosystem of products and solutions.

Current wording

Solar and storage markets have historically been supported by subsidies and investment tax credits for consumers and businesses to help advance the adoption of clean energy technologies. Further, production tax credits are being offered to businesses that meet certain domestic manufacturing requirements in the production of renewable energy products. On July 4, 2025, the United States signed into law the One Big Beautiful Bill Act (OBBBA). The OBBBA accelerates the phase-out of tax incentives for the solar market and includes certain domestic supply chain requirements to qualify for these incentives. While this phase-out of tax incentives will negatively impact the solar and storage markets in the near term, we believe the overall mega-trends that drive the solar, storage, and energy management markets will continue and provide sufficient incentive for long-term, value-creating investments for market participants in this space. Given the significant long-term market opportunity, we believe it is important to build out our capabilities in energy technology and continue to develop our residential ecosystem of products and solutions. In addition, we plan to leverage our strong competencies in the residential standby generator market to increase our market position in the residential solar, storage, and energy management markets.

Previous wording

Impact of residential investment cycle. The market for a number of our residential products is affected by the residential investment cycle and overall consumer confidence and sentiment. When homeowners are confident of their household income, the value of their home and overall net worth, they are more likely to invest in their home. These trends can have an impact on demand for residential generators, energy storage systems, and energy management devices. Trends in interest rates and the new housing market, highlighted by residential housing starts, can also impact demand for these products. Demand for outdoor power equipment is also impacted by several of these factors, as well as weather patterns. The existence, or lack thereof, of renewable energy mandates, investment tax credits, and other subsidies can also have an impact on the demand for solar and energy storage systems.

Current wording

Impact of residential investment cycle. The market for our residential products is affected by the residential investment cycle and overall consumer confidence and sentiment. When homeowners are confident of their household income, the value of their home and overall net worth, they are more likely to invest in their home. These trends can have an impact on demand for residential generators, solar and energy storage systems, and energy management devices. Trends in interest rates and the new housing market, highlighted by residential housing starts, can also impact demand for these products. Demand for outdoor power equipment is also impacted by several of these factors, as well as weather patterns. The existence of renewable energy mandates, investment tax credits, and other subsidies can also have an impact on the demand for solar and energy storage systems. The “One Big Beautiful Bill Act” (OBBBA) that was enacted in the United States in July 2025 accelerated the phase out of certain investment tax credits, resulting in a negative impact to the solar & storage market thereafter.

Previous wording

Impact of business capital investment and other economic cycles. The global market for our C&I products is affected by different capital investment cycles, which can vary widely across the different regions and markets that we serve. These cycles include non-residential building construction, durable goods and infrastructure spending, as well as investments in the build out of data centers, as businesses or organizations either add new locations or make investments to upgrade existing locations or equipment. These trends and market conditions can have a material impact on demand for our C&I products. The capital investment cycle may differ for the various C&I end markets that we serve, including light commercial, retail, office, telecommunications, rental, industrial, data centers, healthcare, construction, oil & gas, and municipal infrastructure, among others. The market for these products is also affected by general economic conditions, fluctuations in interest rates, and geopolitical matters in the various countries where we serve, as well as credit availability in those regions.

Current wording

Impact of business capital investment and other economic cycles. The global market for our C&I products is affected by different capital investment cycles, which can vary widely across the different regions and markets that we serve. These cycles include non-residential building construction, durable goods and infrastructure spending, as well as investments in the exploration and production of oil & gas, as businesses or organizations either add new locations or make investments to upgrade existing locations or equipment. These trends and market conditions can have a material impact on demand for our products. The capital investment cycle may differ for the various C&I end markets that we serve, including data centers, light commercial, retail, office, telecommunications, rental, industrial, healthcare, construction, oil & gas and municipal infrastructure, among others. The market for these products is also affected by general economic conditions around the world, fluctuations in interest rates & foreign currencies, trade policies, and geopolitical matters and conflicts in the various countries where we serve, as well as credit availability in those regions.

Previous wording

Effect of commodity, currency, component price fluctuations, and resource availability. Industry-wide price fluctuations of key commodities, such as steel, copper and aluminum, along with other components we use in our products, as well as changes in labor costs required to produce our products, can have a material impact on our results of operations. Acquisitions over the years have increased our use of advanced electronic components and battery cells, as well as further expanded our commercial and operational presence outside of the United States. Our international acquisitions, along with our existing global supply chain, expose us to fluctuations in foreign currency exchange rates and regulatory tariffs that can also have a material impact on our results of operations.

Current wording

Effect of commodity, currency, component price fluctuations, and resource availability. Industry-wide price fluctuations of key commodities, such as steel, copper and aluminum, along with other components we use in our products, as well as changes in labor costs required to produce our products, can have a material impact on our results of operations. Acquisitions in recent years have increased our use of advanced electronic components and battery cells that can fluctuate in terms of pricing and availability. Our international operations, along with our existing global supply chain, expose us to fluctuations in foreign currency exchange rates and regulatory tariffs that can also have a material impact on our results of operations.

Previous wording

As disclosed in Part I, Item 1A: Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, our business is subject to risks related to, among other factors, tariffs and other changes in U.S. trade policy and international trade relations. Starting in the first quarter of 2025, the United States government enacted additional tariffs on goods imported into the U.S. from numerous countries (such as China, Vietnam, and India) and certain countries announced tariffs on U.S. goods. Some of these tariffs have been subsequently modified or delayed, and the U.S. government has also stated it is willing to negotiate with respect to the tariffs it has enacted.

Current wording

Tariffs and international trade relations. Given our global supply chain and international operations, our business is impacted by tariffs and other changes in U.S. trade policy and international trade relations. For example, 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. Some of these tariffs have been subsequently modified or delayed, and the U.S. government has also stated it is willing to negotiate with respect to the tariffs it has enacted.

Previous wording

We have implemented price increases across many of our product offerings and are currently executing a number of supply chain initiatives to attempt to mitigate the impact of these tariffs on our profitability. Despite our efforts, these tariff actions may negatively impact demand due to higher prices and also result in lower margins for some of our products. As U.S. trade policy continues to evolve, Generac will continue to analyze the impact of future tariffs and actions that can be taken to mitigate and/or minimize their effects.

Current wording

We have implemented price increases across many of our product offerings and are executing a number of supply chain initiatives to attempt to mitigate the impact of these tariffs on our profitability. Despite our efforts, these tariff actions and resulting price increases have created inflationary pressures for consumers, negatively impacting demand and margins for certain of our products. As U.S. trade policy continues to evolve, we will continue to evaluate the impact of future tariffs and take actions to mitigate and/or minimize their effects.

Previous wording

Seasonality. Although there is demand for our products throughout the year, in each of the past five years, approximately 19% to 25% of our net sales occurred in the first quarter, 22% to 28% in the second quarter, 24% to 28% in the third quarter, and 23% to 31% in the fourth quarter, with different seasonality depending primarily on the occurrence, timing and severity of major power outage activity in each year. Major outage activity is unpredictable by nature and, as a result, our sales levels and profitability may fluctuate from period to period. The seasonality experienced during a major power outage, and for the subsequent quarters following the event, will vary relative to other periods where no major outage events occurred.

Current wording

*Seasonality.*Although there is demand for our products throughout the year, in each of the past five years, approximately 20% to 25% of our net sales occurred in the first quarter, 23% to 28% in the second quarter, 24% to 27% in the third quarter, and 23% to 29% in the fourth quarter, with different seasonality depending primarily on the occurrence, timing and severity of power outage activity in each year. Major outage activity is unpredictable by nature and, as a result, our sales levels and profitability may fluctuate from period to period. The seasonality experienced during a major power outage, and for the subsequent quarters following the event, will vary relative to other periods where no major outage events occurred. The second half of 2025 represented a very low level of baseline power outage activity, impacting demand for our residential products and resulting in quarterly net sales being more evenly distributed compared to our historical averages.

Previous wording

On July 4, 2025, the United States signed the “One Big Beautiful Bill Act” (OBBBA) into law. This legislation makes permanent several key provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation and the immediate expensing of domestic research and development costs. Under ASC 740, “Income Taxes,” the effects of changes in tax laws are reflected in the Company’s financial statements in the quarter in which the legislation was passed. We expect to realize cash tax savings during 2025 as a result of provisions related to bonus depreciation and domestic research and development expensing. These changes did not have a material impact on our effective income tax rate for the third quarter or the estimated annual effective tax rate for 2025 as the changes relate to temporary differences in basis.

Current wording

On July 4, 2025, the United States signed the “One Big Beautiful Bill Act” (OBBBA) into law. This legislation makes permanent several key provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation and the immediate expensing of domestic research and development costs. Under ASC 740, “Income Taxes,” the effects of changes in tax laws are reflected in the Company’s financial statements in the quarter in which the legislation was passed. We continue to expect cash tax savings from the bonus depreciation and domestic research and development expensing. These changes did not have a material impact on our effective income tax rate for the first quarter or the estimated annual effective tax rate for 2026 as the changes relate to temporary differences in basis.

Previous wording

Three*** months endedSeptember 30, 2025,** comparedto the three months ended ***September 30, 2024

Current wording

Three*** months endedMarch 31, 2026,** comparedto the three months ended ***March 31, 2025

Previous wording

In addition, total contribution from non-annualized acquisitions for the third quarter of 2025 was $10.7 million for the domestic segment.

Current wording

In addition, net contribution from non-annualized acquisitions & divestitures for the first quarter of 2026 was $18.0 million, primarily in the Commercial & Industrial segment.

Previous wording

Gross profit. * * Gross profit margin was 38.3% as compared to 40.2% in the prior-year third quarter. The decrease in gross margin was primarily due to unfavorable sales mix together with the impact of higher tariffs and lower manufacturing absorption, partially offset by increased price realization.

Current wording

Gross profit. * * Gross profit margin was 38.7% as compared to 39.5% in the prior-year first quarter. The decrease in gross margin was primarily driven by unfavorable sales mix. In addition, higher input costs, including the impact of tariffs and commodities, were more than offset by increased price realization.

Previous wording

Other Expense. The increase in other expense, net was driven primarily by a $5.7 million loss on the change in fair value of our investment in warrants and equity securities of Wallbox N.V. and a $1.2 million loss on the modification of our Original Tranche A Term Loan Facility and Original Revolving Facility. This was partially offset by a decrease in interest expense compared to the prior year.

Current wording

Other Expense. The reduction in other expense, net was driven primarily by a decrease in the loss on the change in fair value of our investment in warrants and equity securities of Wallbox N.V. This was partially offset by the net impact of two immaterial business dispositions that closed in the current year quarter.

Previous wording

Provision for income taxes. Provision for income taxes for the current year quarter was $11.8 million, or an effective tax rate of 15.0%, as compared to $33.5 million, or a 22.7% effective tax rate, for the prior year. The decrease in effective tax rate was primarily driven by favorable discrete tax items in the current-year quarter related to certain return-to-provision adjustments that did not occur in the prior year.

Current wording

Provision for income taxes. Provision for income taxes for the current year quarter was $23.6 million, or an effective tax rate of 24.4%, as compared to $14.2 million, or a 24.3% effective tax rate, for the prior quarter. The slight increase in effective tax rate was primarily due to certain discrete items and their impact on higher pre-tax income relative to the prior year quarter.

Previous wording

Net income attributable to Generac Holdings Inc. * * Net income attributable to the Company during the third quarter was $66 million, as compared to $114 million for the same period of 2024. This decrease was primarily driven by the factors outlined above.

Current wording

Net income attributable to Generac Holdings Inc. * * Net income attributable to the Company during the first quarter was $73 million, or $1.24 per share, as compared to $44 million, or $0.73 per share, for the same period of 2025.

Previous wording

Adjusted EBITDA for the international segment, before deducting for noncontrolling interests, was $27.4 million, or 14.8% of international segment total sales, as compared to $20.3 million, or 12.2% of total sales, in the prior year. This margin increase was primarily driven by favorable sales mix.

Current wording

Adjusted EBITDA for the Commercial & Industrial segment, before deducting for noncontrolling interests, was $66.5 million, or 13.0% of C&I total sales, as compared to $45.3 million, or 11.4% of total sales, in the prior year. This margin increase was primarily driven by improved price/cost realization, the accretive impact of the Allmand acquisition, and operating leverage on higher shipment volumes.

Previous wording

Adjusted Net Income. Adjusted net income attributable to the Company, as defined in the accompanying non-GAAP measures reconciliation schedules, was $108 million in the current year third quarter as compared to $136 million in the prior-year. This decrease was primarily driven by lower net income in the current period as outlined above together with changes in certain add-back items.

Current wording

Adjusted Net Income. Adjusted net income attributable to the Company, as defined in the accompanying non-GAAP measures reconciliation schedules, was $106 million in the current year first quarter as compared to $75 million in the prior-year. This increase was primarily driven by higher net income in the current period as outlined above.

Previous wording

On July 1, 2025, we amended our Original Tranche A Term Loan Facility and Original Revolving Facility, extending the maturity of both to July 1, 2030, revising the Original Tranche A Term Loan Facility outstanding principal balance to $700 million, reducing the Original Revolving Facility borrowing capacity to $1 billion and redefining the Term Benchmark (as defined in the Prior Amended Credit Agreement) to replace the Adjusted Term SOFR Rate (as defined in the Prior Amended Credit Agreement) with the Term SOFR Rate (as defined in the New Credit agreement), resulting in an interest rate reduction of 0.10%. The New Tranche A Term Loan Facility is repayable in increasing quarterly installments over time, equal to 0.625% to 2.50% of the original principal amount, beginning on October 1, 2026. The New Tranche A Term Loan Facility and the New Revolving Facility bear interest at a rate based on SOFR plus an applicable margin between 1.25% and 1.75%, both based on our total leverage ratio and subject to a SOFR floor of 0.0%. As of September 30, 2025, the interest rate for the New Tranche A Term Loan Facility and the New Revolving Faci lity is 5.78%.

Current wording

On July 1, 2025, we amended our Original Tranche A Term Loan Facility and Original Revolving Facility (Prior Amended Credit Agreement), extending the maturity of both to July 1, 2030, revising the Original Tranche A Term Loan Facility outstanding principal balance to $700 million (New Tranche A Term Loan Facility), reducing the Original Revolving Facility borrowing capacity to $1 billion (New Revolving Facility) (collectively the New Credit Agreements) and redefining the Term Benchmark (as defined in the Prior Amended Credit Agreement) to replace the Adjusted Term SOFR Rate (as defined in the Prior Amended Credit Agreement) with the Term SOFR Rate (as defined in the New Credit Agreements), resulting in an interest rate reduction of 0.10%. The New Tranche A Term Loan Facility is repayable in increasing quarterly installments over time, equal to 0.625% to 2.50% of the original principal amount, beginning on October 1, 2026. The New Tranche A Term Loan Facility and the New Revolving Facility bear interest at a rate based on SOFR plus an applicable margin between 1.25% and 1.75%, both based on our total leverage ratio and subject to a SOFR floor of 0.0%. As of March 31, 2026, the interest rate for the New Tranche A Term Loan Facility and the New Revolving Faci lity is 4.92%.

Previous wording

As of September 30, 2025, there was $495 million outstanding under the Term Loan B Facility, $700 million outstanding under the New Tranche A Term Loan Facility, and $90.0 million of borrowings on the New Revolving Facility, leaving $909.3 million of unused capacity, net of outstanding letters of credit.

Current wording

As of March 31, 2026, there was $492.5 million outstanding under the Term Loan B Facility, $700 million outstanding under the New Tranche A Term Loan Facility, and no borrowings on the New Revolving Facility, leaving $999.3 million of unused capacity, net of outstanding letters of credit.

Previous wording

The Term Loan B Facility bears interest at the adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%. As of September 30, 2025, the interest rate for the Term Loan B Facility is 6.03%. The Term Loan B Facility does not require an Excess Cash Flow payment (as defined in the Term Loan B Facility credit agreement) if our net secured leverage ratio is maintained below 3.75 to 1.00. As of September 30, 2025, our net secured leverage ratio was 1.35 to 1.00, and we were in compliance with all covenants of the Facility. There are no financial maintenance covenants on the Term Loan B Facility. The New Tranche A Term Loan Facility and the New Revolving Facility contain certain financial covenants that require us to maintain a total leverage ratio below 3.75 to 1.00, as well as an interest coverage ratio above 3.00 to 1.00. As of September 30, 2025, our total leverage ratio was 1.41 to 1.00, and our interest coverage ratio was** **12.54 to 1.00. We were also in compliance with all other covenants of the New Credit Agreements as of September 30, 2025.

Current wording

The Term Loan B Facility bears interest at the adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%. As of March 31, 2026, the interest rate for the Term Loan B Facility was 5.42%. The Term Loan B Facility does not require an Excess Cash Flow payment (as defined in the Term Loan B Facility credit agreement) if our net secured leverage ratio is maintained below 3.75 to 1.00. As of March 31, 2026, our net secured leverage ratiowas 1.31 to 1.00, and we were in compliance with all covenants of thefacility. There are no financial maintenance covenants on the Term Loan B Facility. The New Tranche A Term Loan Facility and the New Revolving Facility contain certain financial covenants that require us to maintain a total leverage ratio below 3.75 to 1.00, as well as an interest coverage ratio above 3.00 to 1.00. As of March 31, 2026, our total leverage ratio was 1.37 to 1.00, and our interest coverage ratio was** **12.98 to 1.00. We were also in compliance with all other covenants of the New Credit Agreements as of March 31, 2026.

Previous wording

In July 2022, our Board of Directors approved a stock repurchase program, which commenced on August 5, 2022, and allowed for the repurchase of up to $500.0 million of our common stock over a 24-month period. Additionally, on February 12, 2024, our Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500.0 million of our common stock over the next twenty-four months. The new program replaced the prior share repurchase program, which had approximately $26.3 million remaining available for repurchase when the new program was approved. Pursuant to the approved program, we may repurchase our common stock from time to time, in amounts and at prices we deem appropriate, subject to market conditions and other considerations. The repurchases may be executed using a combination of Rule 10b5-1 trading plans, open market purchases, privately negotiated agreements, or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of our credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice. As of September 30, 2025, the remaining unused buyback authorization under the current program was $199.3 million.

Current wording

On February 12, 2024, our Board of Directors approved a stock repurchase program that allowed for the repurchase of up to $500.0 million of our common stock over a twenty-four-month period. Additionally, on February 9, 2026, our Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500.0 million of our common stock over the next twenty-four months. The new program replaces the prior share repurchase program, which had approximately $199.3 million remaining available for repurchase when the new program was approved. Pursuant to the approved program, we may repurchase our common stock from time to time, in amounts and at prices we deem appropriate, subject to market conditions and other considerations. The repurchases may be executed using a combination of Rule 10b5-1 trading plans, open market purchases, privately negotiated agreements, or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of our credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice. As of March 31, 2026, the remaining unused buyback authorization under the current program was $500 million.

Previous wording

During the three and nine months ended September 30, 2025, we repur chased 0 and 1,109,206 shares of common stock for $0 and $147.9 million, respectively. During the three and nine months ended September 30, 2024, we repurchased 690,711 and 1,046,351 shares of common stock for $102.1 million and $152.7 million, respectively. We have periodically reissued shares out of Treasury stock, including for acquisition contingent consideration payments.

Current wording

There were no share repurchases under the program during the first quarter of 2026. During the first quarter of 2025, w e repur chased 716,685 shares of common stock for $97.5 million. We have periodically reissued shares out of Treasury stock, including for acquisition contingent consideration payments.

Previous wording

We have an arrangement with a finance company to provide floor plan financing for qualifying dealers. This arrangement provides liquidity for our dealers by financing dealer purchases of Generac products with credit availability from the finance company. We receive payment from the finance company after shipment of product to the dealer, and our dealers are given a longer period of time to pay the finance company. If our dealers do not pay the finance company, we may be required to repurchase the applicable inventory held by the dealer. We do not indemnify the finance company for any credit losses they may incur. Total dealer purchases financed under this arrangement accounted for appro ximately 13% and 12% of net sales for the nine months ended September 30, 2025, and 2024, respectively. The amount financed by dealers which remained outstanding under this arrang ement was $165.2 million and $165.4 million as of September 30, 2025, and December 31, 2024, respectively.

Current wording

We have an arrangement with a finance company to provide floor plan financing for qualifying dealers. This arrangement provides liquidity for our dealers by financing dealer purchases of Generac products with credit availability from the finance company. We receive payment from the finance company after shipment of product to the dealer, and our dealers are given a longer period of time to pay the finance company. If our dealers do not pay the finance company, we may be required to repurchase the applicable inventory held by the dealer. We do not indemnify the finance company for any credit losses they may incur. Total dealer purchases financed under this arrangement accounted for approximately 11% and 15% of net sales for thethree months ended March 31, 2026 and 2025, respectively. The amount financed by dealers which remained outstanding under this arrangement was $162.3 million and $149.7 million as of March 31, 2026, and December 31, 2025, respectively.

Previous wording

As of September 30, 2025, we had total liquidity of $1,209.3 million which consists of $300.0 million of cash and cash equivalents and $909.3 million of availability under our New Revolving Facility.

Current wording

As of March 31, 2026, we had total liquidity of $1,264.8 million which consists of $265.5 million of cash and cash equivalents and $999.3 million of availability under our New Revolving Facility.

Previous wording

We believe our cash and cash equivalents, cash flow from operations, and availability under our New Revolving Facility and other short-term lines of credit will provide us with sufficient capital to continue to run our operations. We may use a portion of our cash flow for debt repayments and common stock buybacks, impacting the amount available for working capital, capital expenditures, acquisitions, and other general corporate purposes. As we continue to expand our business, we may require additional capital to fund other activities that could potentially drive incremental shareholder value.** **

Current wording

We believe our cash and cash equivalents, cash flow from operations, and availability under our New Revolving Facility and other short-term lines of credit will provide us with sufficient capital to continue to run our operations. We may use a portion of our cash flow for debt repayments and common stock buybacks, impacting the amount available for working capital, capital expenditures, acquisitions, and other general corporate purposes. As we continue to expand our business, we may require additional capital to fund other initiatives that could potentially drive incremental shareholder value.** **

Previous wording

The $141.8 million net cash used in investing activities for the nine months ended September 30, 2024 primarily represents cash payments of $83.4 million related to the purchase of property and equipment, $21.8 million for the acquisitions of Huntington, C&I BESS, and Ageto, $1.6 million for a tax equity investment, and $35 million for an incremental minority investment in Wallbox.

Current wording

The $153.8 million net cash used in investing activities for the three months ended March 31, 2026 primarily represents cash payments of $29.4 million related to the purchase of property and equipment, $122.8 million for the acquisition of Allmand, and $1.5 million related to other investing activities.

Previous wording

The $115.5 million net cash used in investing activities for the nine months ended September 30, 2025 primarily represents cash payments of $110.5 million related to the purchase of property and equipment, $3.0 million for the purchase of long-term investments, and $2.0 million related to other investing activities.

Current wording

The $33.5 million net cash used in investing activities for the three months ended March 31, 2025 primarily represents cash payments of $30.9 million related to the purchase of property and equipment, and $2.7 million for the purchase of long-term investments.

Previous wording

The $246.6 million net cash used in financing activities for the nine months ended September 30, 2024 primarily represents proceeds of $29.2 million from short-term borrowings, $506.5 million from long-term borrowings, and $12.3 million from the exercise of stock options. These cash proceeds were more than offset by $609.5 million of debt repayments ($48.9 million of short-term borrowings and $560.6 million of long-term borrowings and finance lease obligations), $152.7 million of share repurchases, a $9.1 million payment for the remaining ownership interest in Captiva, a $6.0 million payment and $1.4 million payment of deferred acquisition consideration related to our Chilicon and Blue Pillar acquisitions, respectively, $12.3 million for taxes paid related to equity awards, and $3.6 million of payments for debt issuance costs related to our Tranche B Term Loan Facility refinancing.

Current wording

The $41.4 million net cash used in financing activities for the three months ended March 31, 2026 primarily represents proceeds of $14.1 million from short-term borrowings, $0.2 million from long-term borrowings, and $7.2 million from the exercise of stock options. These cash proceeds were more than offset by $27.2 million of debt repayments ($21.0 million of short-term borrowings and $6.2 million of long-term borrowings and finance lease obligations), $34.6 million for taxes paid related to equity awards, and $1.1 million for payments of deferred acquisition consideration.

Previous wording

The $121.3 million net cash used in financing activities for the nine months ended September 30, 2025 primarily represents proceeds of $30.9 million from short-term borrowings, $134.7 million from long-term borrowings, $1.0 million of contributions received from the noncontrolling interest holder of a subsidiary, and $4.2 million from the exercise of stock options. These cash proceeds were more than offset by $123.0 million of debt repayments ($47.3 million of short-term borrowings and $75.7 million of long-term borrowings and finance lease obligations), $147.9 million of share repurchases, $5.3 million of debt issuance costs, $2.7 million payment of contingent acquisition consideration, and $12.9 million for taxes paid related to equity awards.

Current wording

The $119.7 million net cash used in financing activities for the three months ended March 31, 2025 primarily represents proceeds of $19.2 million from short-term borrowings, $0.9 million from long-term borrowings, and $0.6 million from the exercise of stock options. These cash proceeds were more than offset by $34.4 million of debt repayments ($20.0 million of short-term borrowings and $14.4 million of long-term borrowings and finance lease obligations), $97.5 million of share repurchases, and $8.6 million for taxes paid related to equity awards.

Previous wording

There have been no material changes in our critical accounting policies since the February 19, 2025, filing of our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Other than the changes described within Note 9, "Goodwill," to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, there have been no material changes in our critical accounting policies since the February 18, 2026, filing of our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

(a) Represents the following non-cash charges, gains, and other adjustments: gains/losses on the disposition of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. We believe that adjusting net income for these items is useful for the following reasons:

Current wording

(a)Represents the following non-cash charges, gains, and other adjustments: gains/losses on the disposition of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. We believe that adjusting net income for these items is useful for the following reasons: