GENERAC HOLDINGS INC.

Generac Holdings Inc.

Notes to Condensed Consolidated Financial Statements

*(**U.S.*Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

1. Description of Business andBasis of Presentation

Founded in1959, Generac Holdings Inc. (the Company) is a leading global designer and manufacturer of a wide range of energy technology solutions. The Company 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. Generac’s power products and solutions are available globally through a broad network of independent dealers, distributors, retailers, e-commerce partners, wholesalers, and equipment rental companies, as well as sold direct to certain end user customers.

Over the years, the Company has executed a number of acquisitions that support its strategic plan (refer to Item1 in the Company's Annual Report on Form10-K for the year ended* December 31, 2025,*for a discussion of the Company's “Powering a Smarter World” strategic plan). A summary of acquisitions affecting the reporting periods presented include:

The condensed consolidated balance sheet as of* June**30,* 2026, the condensed consolidated statements of comprehensive income for thethree andsix months ended* June 30, 2026and2025*, the condensed consolidated statements of stockholders’ equity for thethree andsix months ended* June 30, 2026and2025*, and the condensed consolidated statements of cash flows for thesix months ended* June 30, 2026and2025* have been prepared by the Company and havenot been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operation, and cash flows have been made. The results of operations for any interim period arenot necessarily indicative of the results to be expected for the full year.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America (GAAP). All intercompany amounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form10-K for the year ended* December 31, 2025*.

Tariff Refund

On* February 20, 2026,the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and allowing for the recovery of IEEPA tariff amounts previously paid. The Company elected to account for the refund of tariffs under a loss recovery model pursuant to Accounting Standards Codification (ASC)410-30. Under the loss recovery model, an asset for recovery maybe recognized only when receipt is considered probable, as defined under ASC450*-20.

During thethree andsix months ended* June 30, 2026,the Company received tariff refunds totaling approximately $61,400. Additionally, the Company recorded a tariff refund receivable within prepaid expenses and other current assets in the condensed consolidated balance sheets of approximately $27,700 for which the Company has deemed receipt probable to occur. Approximately $71,100 of the tariff recovery was recorded as a reduction of cost of goods sold in the condensed consolidated statements of comprehensive income for thethree* andsix months ended* June 30, 2026,*and the remainder was recorded in inventories in the condensed consolidated balance sheets.

New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standard updates (ASUs) to the FASB Accounting Standards Codification.

In* September 2025,the FASB issuedASU2025-06 Intangibles*–* Goodwill and Other*–* Internal-Use Software (Subtopic350-40). The update is intended to better align internal use software guidance with modern development methods, which have evolved to commonly include incremental and iterative development approaches. The ASU requires an entity to start capitalizing software costs when management has authorized and committed to funding a software project and when it is probable the project will be completed and used to perform the intended function. The ASU amendments also supersede previous guidance on website development costs. The update is effective for fiscal years beginning after December 15, 2027and may*be adopted prospectively, retrospectively or with a modified transition approach. Early adoption is permitted. The Company is currently assessing the impact and timing of adopting the updated standard.

In* November 2024,the FASB issued ASU2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses*. The new guidance is intended to provide investors with more detailed disclosures around specific types of expenses. The new disclosures require additional quantitative and qualitative information for certain expenses contained within the consolidated statements of comprehensive income to be presented in the notes to the financial statements. The update is effective for fiscal years beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027,*with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently assessing the impact and timing of adopting the updated standard.

There have beenno other recent accounting pronouncements, changes in accounting pronouncements, or recently adopted accounting guidance during thesix months ended* June 30, 2026,*that are of significance or potential significance to the Company's consolidated financial statements or disclosures.

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2**. Acquisitions and Dispositions**

Fiscal2026 Acquisitions**

In* January 2026,*the Company acquired Allmand, headquartered in Holdrege, Nebraska. Allmand is a leading manufacturer of mobile power equipment for commercial, industrial, and rental markets.

In* April 2026,*the Company acquired Enercon, headquartered in East Peoria, Illinois. Enercon designs and manufactures custom power equipment and industrial enclosures for high-reliability applications for commercial and industrial markets.

In* May 2026,*the Company acquired substantially all of the assets and liabilities of the Wolter Power Systems business, headquartered in Brookfield, Wisconsin. Wolter is an industrial and residential generator distributor as well as a provider of maintenance and repair services.

In* June 2026,the Company signed an agreement to purchase the assets and assume the liabilities of New Way Power Proprietary Limited (New Way), a supplier of back-up power solutions, located in Johannesburg, South Africa. The acquisition is expected to close in thefourth* quarter of2026.

The combined preliminary purchase price for the closed acquisitions is $348,482, net of cash acquired and inclusive of holdbacks and estimated contingent consideration, of which $44,785 was funded through the issuance of treasury stock and the remainder in cash. The Company recorded its preliminary purchase price allocation based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting for Allmand will be finalized prior to* March 31, 2027,while purchase accounting for Enercon and Wolter will be finalized prior to June 30, 2027.There wereno* material changes to the preliminary purchase price allocation for Allmand as of* June 30, 2026.*All of these acquisitions are included within the Commercial & Industrial segment.

The accompanying condensed consolidated financial statements include the results of Allmand, Enercon, and Wolter from their dates of acquisition through* June 30, 2026.Pro forma and other financial information arenot* presented as the effects of these acquisitions arenot material to the Company's results of operations or financial position.

Summary Purchase Price Allocations

The fair values assigned to certain assets acquired and liabilities assumed for all acquisitions completed during2026 to date are shown below.No material acquisitions were completed in2025.

Fiscal2026 and2025* Dispositions***

On* June**1,* 2026, the Company completedone immaterial business disposition within the Commercial & Industrial segment andone immaterial business disposition within the Residential segment, resulting in a combined loss of $13,392.

On* January 2, 2026,the Company completedtwo* immaterial business dispositions within the Commercial & Industrial segment, resulting in a combined loss of $4,782.

On* May 31,*2025, the Company completed an immaterial business disposition within the Residential segment (prior to the segment reorganization, the Domestic segment), resulting in a loss of $3,905. Refer to Note7, "Segment Reporting," for further information regarding the segment reorganization.

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3. Redeemable Noncontrolling Interest

The Company entered into a joint venture with E.A. Juffali & Brothers (Juffali) on* August 7, 2025,based in Bahrain, aiming to expand its footprint in the Middle East region. The joint venture, operating under the name Generac Juffali Generators WLL, will function as a distinct legal entity with ownership interests divided between the Company and Juffali at 51% and 49%, respectively. As the Company holds a controlling financial interest in the joint venture's operating entity, it will consolidate the entity. During thethird* quarter of2025, Juffali funded 49% of the total capital contributed to the new legal entity. The issuance date fair value of the 49% noncontrolling interest was $979 and was recorded in the condensed consolidated balance sheets as a redeemable noncontrolling interest. This classification is based on Juffali’s right to require redemption of its interest in Generac Juffali Generators under specific triggering circumstances outlined in the joint venture agreement. The redeemable noncontrolling interest is initially recognized at its issuance date fair value and is adjusted each reporting period to reflect the noncontrolling interests’ share of comprehensive income. If the redeemable noncontrolling interest becomes currently redeemable or is probable of becoming currently redeemable, it is then adjusted to the greater of the redemption value or the carrying value, with any redemption value adjustments being recorded directly to retained earnings in the consolidated balance sheets.

The following table presents the changes in the redeemable noncontrolling interest for Generac Jufalli Generators:

4. Derivative Instruments** and Hedging Activities**

The Company records all derivatives in accordance with ASC815, Derivatives and Hedging, which requires derivative instruments to be reported in the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies, and interest rates. The Company doesnot hold or issue derivative financial instruments for trading purposes.

The Company periodically utilizes commodity derivatives and foreign currency forward purchase and sales contracts in the normal course of business. Because these contracts donot qualify for hedge accounting, the related gains and losses are recorded in the Company’s condensed consolidated statements of comprehensive income. The commodity and foreign currency forward contract gains and losses arenot material to the Company’s condensed consolidated financial statements for the periods presented.

Additionally, the Company maintains interest rate swap agreements and owns stock warrants described in more detail below.

Interest Rate Swaps

In* March 2020,the Company entered into three interest rate swap agreements, which were still outstanding as of June 30, 2026*. In* July 2025,in conjunction with the amendments to the Company’s credit agreements discussed further in Note12,* “Credit Agreements”, the Company modified its interest rate swaps to match the underlying debt and reconfirmed hedge effectiveness. The Company formally documented all relationships between interest rate hedging instruments and the related hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. These interest rate swap agreements qualify as cash flow hedges and therefore, the effective portions of their gains or losses are reported as a component of accumulated other comprehensive income (loss) in the condensed consolidated balance sheets.

The amount of after-tax unrealized losses recognized in accumulated other comprehensive income (loss) for thethree andsix months ended* June 30, 2026were$2,193 and $3,708, respectively, and for thethree* andsix months ended* June 30, 2025*were$3,090 and $7,403, respectively. The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

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Stock Warrants

During thefourth quarter of2023, the Company entered into a $30,000 agreement with Wallbox N.V. (Wallbox) to purchase 5% of its Class A common stock and acquire stock warrants, the latter of which provide the right to acquire incremental Class A common stock outstanding of Wallbox upon exercise at a fixed price with anti-dilution protections for a period of time. During thethird quarter of2024 and the first, second, andfourth quarters of2025, the Company received additional warrants under the anti-dilution protection rights in connection with additional rounds of funding performed by Wallbox. In accordance with U.S. GAAP, the Company is required to adjust the carrying value of these warrants to market value on a quarterly basis. Gains and losses attributable to the stock warrants are recognized in other expense, net in the condensed consolidated statements of comprehensive income.

The gain (loss) attributable to the stock warrants was $2,962 and $1,327 for thethree andsix months ended* June 30, 2026,respectively, and $(1,215) and $(4,571) for thethree* andsix months ended* June 30, 2025,*respectively.

Fair Value*** ***

The following table presents the fair value of all the Company’s interest rate swaps and stock warrants.

The fair values of the interest rate swaps and stock warrants are included in prepaid expenses and other current assets in the condensed consolidated balance sheets as of* June 30, 2026,and December 31, 2025.Excluding the impact of credit risk, the fair value of the interest rate swaps as of June 30, 2026,and December 31, 2025,*is an asset of $6,540 and $11,604, respectively, which represents the amount the Company would receive to exit all of the agreements on those dates.

5. Fair Value** Measurements**

ASC820-10, Fair Value Measurement, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes athree-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level1) observable inputs such as quoted prices in active markets; (Level2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level3) unobservable inputs in which there is little orno market data, which require the reporting entity to develop its own assumptions.

The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, contract assets, accounts payable, accrued liabilities, contract liabilities, short-term borrowings, and revolving facility (Revolving Facility) borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based on their short-term nature. The fair value of the New Tranche A Term Loan Facility borrowing, which has a net carrying value of $697,122,** was $693,000 (Level2) as of June30,* 2026. The fair value of the Term Loan B Facility borrowing, which has a net carrying value of $488,986, was $493,092 (Level2) as of* June*30,* 2026. These Term Loan fair values were calculated based on independent valuations which contain inputs and significant value drivers that are observable.

For the fair value of the derivatives measured on a recurring basis, refer to the fair value table in Note4, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements of this Quarterly Report on Form10-Q. The fair value of the Company's interest rate swaps and commodity and foreign currency derivative contracts are classified as Level2. The valuation techniques used to measure the fair value of these derivative contracts, all of which have counterparties with high credit ratings, were based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of the derivative contracts discussed above considers the Company’s credit risk in accordance with ASC820-10.

The fair value of the Wallbox stock warrants is classified as Level3. The fair value of these warrants is measured using a Black Scholes option pricing model, with significant inputs derived from or corroborated by observable market data as well as internal estimates, specifically the time period until exercise. The warrants received in2025, 2024, and2023 expire at the earlier of when the price per share equals or exceeds $120.00 or in2028, 2028, and2029, respectively. The time period until exercise assumption has a significant impact on the fair value of the warrants.

Equity Securities

Equity securities primarily consist of Wallbox Class A common stock (Wallbox Shares). During thethird quarter of2024, the Company invested an incremental $35,000 in additional Wallbox Shares. The Wallbox Shares are classified as Level1 in the fair value hierarchy and are recognized at fair value using the closing price of Wallbox common stock quoted on the New York Stock Exchange (NYSE) on the last trading day of the quarter. The Wallbox Shares are included in operating lease and other assets in the condensed consolidated balance sheets. The fair value of the Wallbox Shares was $7,276 and $4,457 as of* June**30,* 2026, and* December 31, 2025,respectively. Gains and losses attributable to the Wallbox Shares are recognized in other expense, net in the condensed consolidated statements of comprehensive income. Thegain (loss)recognized on the Wallbox Shares was $2,552 and $2,819 for thethree* andsix months ended* June 30, 2026,respectively, and $(293) and $(6,884) for thethree* andsix months ended* June 30, 2025,*respectively.

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Contingent Consideration

Certain of the Company's business combinations involve potential payment of future consideration that is contingent upon the achievement of certain milestones. As part of purchase accounting, a liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within general and administrative expenses in the Company's condensed consolidated statements of comprehensive income. The fair value measurement of contingent consideration is typically categorized as a Level3 liability, as the measurement amount is based primarily on significant inputs that arenot observable in the market.

The combined fair value of contingent consideration for the Chilicon Power LLC (Chilicon), Ageto, and Enercon acquisitions as of* June 30, 2026and for the Chilicon, Ageto, and PR Industrial S.r.l. (Pramac) acquisitions as of December 31, 2025,was $121,866 and $32,872, respectively. The contingent consideration period for Pramac ended as of December 31, 2025.The contingent consideration for Chilicon extends through December 31, 2029,and is paid annually based on incremental earnings and upon achievement of certain milestones. The contingent consideration for Ageto can be earned in equal increments withone* third of the contingent consideration earned as of* August 1, 2025,and the remainingtwo* increments capable of being earned on* August 1, 2026and August 1, 2027.The contingent consideration for Enercon extends through April 1, 2027,*and is earned based on the achievement of specified target EBITDA levels during the earnout period, with 35% payable in restricted shares and the remainder in cash. The current portion of contingent consideration totals $105,858 and is reported in other accrued liabilities, and the non-current portion totals $16,008 and is reported in operating lease and other long-term liabilities in the condensed consolidated balance sheets.

The following table provides a reconciliation of the activity for contingent consideration:

(1) Represents $91,551 of contingent deferred consideration for the Enercon acquisition.

(2) Represents payment of $3,917 in shares for the Chilicon acquisition. The payment of common stock is accounted for as a non-cash item in the condensed consolidated statements of cash flows.

6. Accumulated Other Comprehensive** Income (Loss)**

The following table presents a disclosure of changes in Accumulated Other Comprehensive Income (Loss) during thethree andsix months ended* June 30, 2026and2025*, net of tax:

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7. Segment Reporting

On* March 25, 2026,the Company announced its plan to reorganize itstwo reportable segments, effective March 31, 2026 (*the Reorganization). The Company’s Chief Operating Decision Maker (CODM) is Aaron Jagdfeld, President and Chief Executive Officer (CEO). The Reorganization reflected a change in how the CODM evaluates the Company’s operations and performance to better align reporting with the way the business is managed. Prior to the Reorganization, the Company's reportable segments were Domestic and International. As a result of the Reorganization, the Company's new reportable segments are Residential and Commercial & Industrial (C&I). While Residential and C&I include similar products, they differ based on power output and end customer.

The Residential segment consists of the former Domestic segment, excluding the domestic C&I operations. Residential products consist primarily of automatic home standby generators ranging in output from7.5kW to150kW, portable generators, residential energy storage systems, energy management devices and solutions, and other outdoor power equipment. These products are predominantly sold through independent residential dealers, national and regional retailers, e-commerce merchants, electrical/HVAC/solar wholesalers, solar installers, and outdoor power equipment dealers. Residential segment revenue consists of product sales to the Company's distribution partners, who in turn sell the product to the end consumer, sometimes including installation and maintenance services. The Residential segment revenue also includes sales of products and services related to aftermarket service parts, the amortization of extended warranty deferred revenue, grid services revenue, and remote monitoring subscription revenue. In some cases, residential products are sold directly to the end consumer. The majority of Residential segment revenues are recorded at a point in time when control is transferred to the customer. The remaining revenue, primarily related to extended warranty and other subscription services, is recognized over the period the related services are performed.

The C&I segment consists of the operations of the former International segment with the addition of the domestic Commercial & Industrial operations. Commercial & Industrial products consist of larger output stationary generators used in C&I applications, with power outputs up to3,250kW. Also included in C&I products are mobile generators, light towers, C&I battery energy storage systems, mobile heaters, mobile pumps, and related controls for power generation equipment. These products are sold globally through industrial distributors and dealers, Engineering, Procurement, and Construction (EPC) companies, equipment rental companies, and equipment distributors. C&I segment revenue consists of product sales to the Company's distribution partners, who in turn sell or rent the product to the end customer, sometimes including installation and maintenance services. The C&I segment revenue also includes sales of products and services related to aftermarket service parts and product accessories sold to the Company's distribution partners, grid services subscription revenue, as well as certain installation and maintenance service revenue. In some cases, C&I products are sold directly to the end customer. C&I segment revenues are recorded at either a point in time when control of the product is transferred to the customer, or if the performance obligation is satisfied over time, then revenue is recognized using a method that reflects the performance under the contract. Other service revenue is recognized when the services are performed.

Segment financial information for the prior periods has been recast to conform to the current presentation.

The composition of net sales between Residential and Commercial & Industrial reportable segments is as follows:

The Company views Adjusted EBITDA as a key measure of the Company's performance. The computation of Adjusted EBITDA is based primarily on the definition that is contained in the Company’s credit agreements. The Company presents Adjusted EBITDAnot only due to its importance for purposes of the Company's credit agreements, but also because it assists the Company in comparing performance across reporting periods on a consistent basis as it excludes items the Company's management believes arenot indicative of the Company's core operating performance. The CODM uses Adjusted EBITDA, along with the Company's management:

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The table below presents sales (external and intersegment), significant segment expenses, other segment items, and Adjusted EBITDA by reportable segment, reconciled to consolidated income before provision for income taxes.

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The following tables summarize additional financial information by reportable segment:

The Company’s sales in the U.S. represented approximately 76% and 80% of total salesfor thethree months ended* June30,* 2026 and*2025,* respectively, andapproximately 77% and 79% for thesix months ended* June 30, 2026and2025,* respectively. Approximately 78% and 74% of the Company's identifiable long-lived assets were located in the U.S. as of* June**30,* 2026 and* December 31, 2025,*respectively.

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8. Balance Sheet Details

Inventories consist of the following:

Property and equipment consists of the following:

Total property and equipment includes finance leases of $81,961 and $83,963 as of* June 30, 2026,and December 31, 2025,*respectively, primarily consisting of buildings and improvements. Amortization of finance lease right of use assets is recorded within depreciation expense in the condensed consolidated statements of comprehensive income. The initial measurement of new finance lease right of use assets is accounted for as a non-cash item in the condensed consolidated statements of cash flows.

Other accrued liabilities consist of the following:

(1) The decrease primarily relates to a $206,500 payment made by the Company and its insurance carriers to satisfy a legal obligation. Refer to Zawaski, et. al. v. Generac Power Systems, Inc., et. al. in Note16 “Commitments and Contingencies,” for more information.

9. Goodwill

As described in Note7, "Segment Reporting," effective* March 31, 2026,*the Company reorganized its reportable segments into Residential and C&I. As a result, the composition of the Company's reporting units changed. The Company reassigned goodwill to the affected reporting units using a relative fair value allocation approach.

The Company concluded that the change in reporting unit composition represented a triggering event and performed an interim quantitative goodwill impairment test for the reporting units affected by the reorganization. The impairment test compared the carrying value of each affected reporting unit, including goodwill, with its estimated fair value. As a result of this test, the Company recorded $1,523 of goodwill impairment forone reporting unit within the Residential segment in thefirst quarter of2026. For the remaining affected reporting units, the Company concluded that estimated fair value exceeded carrying value andno additional impairment was recognized.

The carrying value of goodwill by reportable segment is summarized below:

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10. Product Warranty** Obligations**

The Company accounts for standard product warranty obligations as assurance warranties and records a liability at the time of sale of the related product based on historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. The following is a tabular reconciliation of the Company’s standard product warranty liability accounted for as an assurance warranty:

The Company also sells extended warranty coverage for certain products, which it accounts for as a service warranty. The sales of extended warranties are recorded as deferred revenue, and typically have a duration offive toten years. The deferred revenue related to extended warranty coverage is amortized over the duration of the extended warranty contract period, following the standard warranty period, using the straight-line method. The Company believes the straight-line method is appropriate because the performance obligation is satisfied based on the passage of time. The amortization of deferred revenue is recorded to net sales in the condensed consolidated statements of comprehensive income. The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

The timing of recognition of the Company’s deferred revenue balance related to extended warranties as of* June 30, 2026* is as follows:

Standard product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows:

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11. Contract Balances

Customer contracts* may*give rise to timing differences between revenue recognition, billings, and cash collections, resulting in the recognition of billed accounts receivable, unbilled receivables (contract assets), or deferred revenue (contract liabilities) within the condensed consolidated balance sheets.

Contract assets primarily consist of unbilled receivables associated with contracts accounted for under the cost-to-cost method of revenue recognition, where revenue recognized based on costs incurred exceeds amounts billed to customers. Contract assets are included in prepaid expenses and other current assets in the condensed consolidated balance sheets. The balance of contract assets was $78,730 and $8,867 as of* June 30, 2026,and December 31, 2025,*respectively.

Contract liabilities primarily consist of customer deposits that exceed revenue recognized. Contract liabilities are included in other accrued liabilities (for the portion expected to be recognized withintwelve months) or long-term deferred revenue (for the portionnot expected to be recognized withintwelve months) in the condensed consolidated balance sheets, until revenue is recognized. The balance of contract liabilities, excluding the extended warranty deferred revenue balance disclosed in Note10, was $117,918 and $151,257 as of* June**30,* 2026, and* December 31, 2025,respectively. During thesix* months ended* June 30, 2026,the Company recognized revenue of $90,360 related to amounts included in the December 31, 2025*contract liability balance.

As of* June*30,* 2026,* the aggregate amount of revenue that the Company expects to recognize on remaining performance obligations (excluding extended warranty) was approximately $143,000, of which approximately 80% is expected to be recognized as revenue over the nexttwo years. We have applied the practical expedient to exclude the value of remaining performance obligations for contracts with an original term ofone year or less.

12**. Credit Agreements**

Short-term borrowings included in the condensed consolidated balance sheets as of* June30,* 2026, and* December 31, 2025,consisted of borrowings by the Company’s foreign subsidiaries on local lines ofcredit totaling $48,318 and $50,618, respectively. As of June30,* 2026, the weighted-average interest rate on the short-term borrowings was 6.15%.

Long-term borrowings are included in the condensed consolidated balance sheets as follows:

As of* June 30, 2026*, there were $4,437 of unamortized deferred financing costs associated with the New Revolving Facility (as defined below) included in operating lease and other assets in the condensed consolidated balance sheets, and $5,142 of unamortized original issue discount and deferred financing costs linked to the New Tranche A Term Loan Facility and Term Loan B Facility (as defined collectively below) included in long-term borrowings and finance lease obligations in the condensed consolidated balance sheets.

The New Tranche A Term Loan Facility and New Revolving Facility mature on* July 1, 2030.The New Tranche A Term Loan Facility is repayable in quarterly installments commencing October 1, 2026,with a balloon payment due at maturity. The Term Loan B Facility matures on July 3, 2031,and is repayable in quarterly installments which commenced September 2024,with a balloon payment due at maturity. Maturities of the Company's New Tranche A Term Loan Facility, Term Loan B Facility, and New Revolving Facility outstanding on June**30,* 2026, before considering original issue discount and deferred financing costs, were as follows:

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The Company’s credit agreements originally provided for a $1,200,000 Tranche B Term Loan Facility (Original Term Loan B Facility) and included a $300,000 uncommitted incremental term loan on that facility. After several amendments, the Original Term Loan B Facility bore interest at rates based on either a base rate plus an applicable margin of 0.75% or adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%, and was scheduled to mature on* December 13, 2026.*

In* July 2024,the Company extinguished the $530,000 balance then outstanding under the Original Term Loan B Facility and replaced it with a new $500,000 Tranche B Term Loan Facility maturing on July 3, 2031 (New Term Loan B Facility and, together with the Original Term Loan B Facility, the Term Loan B Facility). The New Term Loan B Facility continues to include a $300,000 uncommitted incremental term loan on that facility. In accordance with ASC470*-50, the Company capitalized $2,991 of debt issuance costs related to this transaction. Additionally, the Company wrote-off the unamortized deferred financing costs related to the Original Term Loan B of $4,236 and expensed $625 of fees paid to creditors as a loss on refinancing of debt. The New Term Loan B Facility bears interest at the SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%, resulting in a 5.37% combined rate as of* June**30,* 2026.

The New Term Loan B Facility doesnot require an Excess Cash Flow payment (as defined in the New Term Loan B Facility credit agreement) if the Company’s net secured leverage ratio is maintained below 3.75 to1.00. As of* June 30, 2026,the Company’s net secured leverage ratio was 1.15 to1.00*, and the Company was in compliance with all covenants under the facility. There areno financial maintenance covenants on the New Term Loan B Facility.

The Company's original Tranche A Term Loan Facility provided an aggregate principal amount of $750,000 (Original Tranche A Term Loan Facility), along with a $1,250,000 revolving facility (Original Revolving Facility), with all LIBOR provisions replaced with SOFR provisions. The Original Tranche A Term Loan Facility and the Original Revolving Facility bore interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, depending on the Company's total leverage ratio and subject to a SOFR floor of 0.0%.

On* July 1, 2025,the Company amended the 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 $700,000 (New Tranche A Term Loan Facility), reducing the Original Revolving Facility borrowing capacity to $1,000,000 (New Revolving Facility) (collectively the New Credit Agreements), and redefined 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%. Except for redefining the Term Benchmark, interest rates for the New Credit Agreements remain unchanged from the original credit agreements. As of June**30,* 2026, the interest rate for the New Tranche A Term Loan Facility and the New Revolving Facility is 4.87%. In accordance with ASC470-50, the Company capitalized $5,275 of debt issuance costs related to this transaction. Additionally, the Company wrote-off certain unamortized deferred financing costs related to the Original Revolving Facility of $443 and expensed $782 ofthird-party fees as a loss on refinancing of debt.

Both the New Tranche A Term Loan Facility and the New Revolving Facility contain certain financial covenants that require the Company to maintain a total leverage ratio below 3.75 to1.00, as well as an interest coverage ratio above 3.00 to1.00. As of* June30,* 2026, the Company’s total leverage ratio was 1.20 to*1.00,* and the Company's interest coverage ratio was 15.72 to1.00**. The Company was also in compliance with all other covenants of the New Credit Agreements as of* June**30,* 2026.

The New Term Loan B Facility, New Tranche A Term Loan Facility and New Revolving Facility are guaranteed by substantially all of the Company’s wholly-owned domestic restricted subsidiaries and are secured by associated collateral agreements which pledge afirst priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, cash, trade accounts receivable, inventory, and other current assets and proceeds thereof.

As of* June**30,* 2026, there wereno amounts outstanding under the New Revolving Facility, leaving $999,250 of unused capa city, net of outstanding letters of credit.

See Item7A of the Annual Report on Form10-K for the year ended* December 31, 2025*, for further information on interest rate swaps that are currently outstanding that partially offset the interest expense associated with the above outstanding borrowings.

Also see Item8 of the Annual Report on Form10-K for the year ended* December 31, 2025,*for further information on finance lease obligations.

13**. Stock Repurchase**** Program**

On* February 12, 2024,the Company's Board of Directors approved a stock repurchase program that allowed for the repurchase of up to $500,000 of the Company's common stock over a 24-month period. Additionally, on February 9, 2026,the Company’s Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500,000 of the Company’s common stock over the following 24 months. The new program replaces the prior share repurchase program, which had $199,340 remaining available for repurchase when the new program was approved. Pursuant to the approved program, the Company mayrepurchase its common stock from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchases maybe executed using a combination of Rule10b5*-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 the Company's credit agreements. The repurchases* maybe 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.

During thethree andsix months ended* June 30, 2026,there wereno share repurchases under the program. During thethree* andsix months ended* June 30, 2025,*the Company repurchased 392,521 and 1,109,206 shares of common stock for $50,463 and $147,917, respectively. The Company has periodically reissued shares out of Treasury stock, including for acquisition contingent consideration payments.

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14. Earnings Per** Share**

Basic earnings per share is calculated by dividing net income attributable to the common shareholders of the Company by the weighted average number of common shares outstanding during the period, exclusive of restricted shares. Except where the result would be anti-dilutive, diluted earnings per share is calculated by assuming the vesting of unvested "in the money" restricted stock and the exercise of outstanding "in the money" stock options, as well as the satisfaction of certain acquisition contingent consideration conditions as of the end of the period. Refer to Note4, “Redeemable Noncontrolling Interests,” of the Annual Report on Form10-K for the year ended* December 31, 2025*, for further information regarding the accounting for redeemable noncontrolling interests within earnings per share.

The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share:

(1) Excludes approximately 124,000 and 123,000 stock options and restricted stock awards for thethree andsix months ended* June**30,* 2026, respectively, and 779,000 and 428,000 stock options and restricted stock awards for thethree andsix months ended* June 30, 2025,*respectively, because they would be anti-dilutive.

15**. Income Taxes**

The effective income tax rates for thesix months ended* June**30,* 2026 and2025 were 24.6% and 20.0%, respectively. The increase in effective tax rate was primarily related to a non-recurring favorable discrete item in the prior year period related to a business disposition that didnot repeat in the current year period.

16**. Commitments and**** Contingencies**

The Company has an arrangement with a finance company to provide floor plan financing for certain dealers. The Company receives payment from the finance company after shipment of product to the dealer. The Company participates in the cost of dealer financing up to certain limits and has agreed to repurchase Generac products repossessed by the finance company, but doesnot indemnify the finance company for any credit losses they incur. The amount financed by dealers which remained outstanding under this arrangement as of* June 30, 2026,and December 31, 2025,*was$179,174 and $149,737, respectively.

On* August 1, 2022,Power Home Solar, LLC d/b/a Pink Energy (PHS) filed a lawsuit in the Western District of Virginia against Generac Power Systems, Inc., a wholly owned subsidiary of the Company (Generac Power). The complaint alleges breaches of warranty, product liability, and other causes of action against Generac Power relating to the sale and performance of certain clean energy equipment and seeks to recover damages, including consequential damages, that PHS allegedly incurred. The Company disputes the allegations in the complaint, including that PHS can seek consequential damages or amounts greater than the $25,000 liability cap set forth in the agreement between the parties. Generac Power moved to dismiss the complaint and compel arbitration consistent with the parties’ agreement. PHS later filed a Chapter7* bankruptcy petition in the Western District of North Carolina that identified Generac Power asone of its outstanding creditors. The parties agreed to toll PHS’s deadline to respond to the motion to dismiss and all other pretrial deadlines to allow the bankruptcy trustee to evaluate the complaint. The Trustee decided to pursue PHS’s claims against Generac in arbitration. Generac Power intends to vigorously defend against the claims and contends that PHS cannot recover certain damages on behalf of its customers upon final approval of the settlement in the Multidistrict Litigation described below to the extent the claims relate to the performance of a certain solar system component. The arbitration hearing is expected to occur in* June 2027.*

On* October 28, 2022,Daniel Haak filed a putative consumer class action lawsuit against Generac Power in the Middle District of Florida. The complaint alleges breaches of warranty, tort-based, and unjust enrichment claims against Generac Power relating to the sale and performance of certain clean energy products, and seeks to recover damages, including consequential damages, that the plaintiff and putative class allegedly incurred. Additional putative class actions were filed by consumers raising similar claims and allegations in other district court cases. These putative class actions have been consolidated into a Multidistrict Litigation, In re: Generac Solar Power Systems Marketing, Sales Practices and Products Liability Litigation currently pending in the Eastern District of Wisconsin, CaseNo.* 23-md-3078. Generac Power and plaintiffs participated in a mediation through which the parties agreed to certain monetary and non-monetary terms to resolve the matter on a classwide basis. The parties have obtained preliminary approval for the classwide settlement and will be seeking final approval. In thethird quarter of2025, Generac Power recorded a reserve for the contemplated $15,000 settlement fund. Generac Power doesnot concede liability or any charges of wrongdoing in connection with the proposed settlement.

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On* December 1, 2022,Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System filed a putative securities class action lawsuit against the Company and certain of its officers in the Eastern District of Wisconsin. The court subsequently consolidated a later filed action and appointed a lead plaintiff. The lead plaintiff filed a consolidated complaint alleging violation of federal securities law related to disclosures of certain matters (the Oakland County Lawsuit). On February 7, 2025,the court granted the Company’s motion to dismiss and found that plaintiffs failed to adequately plead a securities fraud claim. Plaintiffs filed an amended complaint on March 10, 2025.On April 30, 2026,*the court granted the Company’s motion to dismiss the amended complaint with prejudice, again finding that plaintiffs failed to adequately plead a securities fraud claim, and directed the entry of final judgment in favor of the Company. Plaintiffs have appealed the judgment of dismissal, and the Company intends to vigorously defend the judgment.

On* February 3, 2023,a purported Company shareholder filed a shareholder derivative action against certain of the Company’s officers and directors in the United States District Court for the Eastern District of Wisconsin. The complaint seeks unspecified damages on behalf of the Company and certain other relief, such as certain reforms to corporate governance practices. The complaint (in which the Company is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of the Company’s public statements and legal compliance, and that the Company was damaged as a result of the breaches of fiduciary duties, and the defendants were unjustly enriched. The complaint also alleges, among other things, violations of Sections14*(a),10(b) and20(a) of the Securities Exchange Act of1934, abuse of control, gross mismanagement, and waste of corporate assets. The Company has received several additional derivative actions filed in both state and federal courts raising similar claims and allegations, including issues raised in the Oakland County Lawsuit. The Company disputes the allegations in the shareholder derivative actions and intends to vigorously defend against the claims in the complaints.

On* October 28, 2022,Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Michigan and, as a result, the Company became aware of an enforcement investigation by the U.S. DOJ. The subpoena requests similar documents and information provided by the Company to the U.S. EPA and the CARB in response to civil document requests related to the Company’s compliance with emissions regulations for approximately1,850* (not in thousands) portable generators produced by the Company in2019 and2020 and sold in2020. On* October 3, 2025,the Company received notice from the EPA that it would seek to void certain emissions certifications for2020,* affecting approximately4,850 (not in thousands) additional portable generators as the Company previously disclosed in Note18, “Commitments and Contingencies,” to its2024 Annual Report on Form10-K. The Company is cooperating with the DOJ, EPA and CARB regarding these topics, making various voluntary self-disclosures to the EPA since2024, and responding to other ancillary requests for information, including a request for additional information the Company received from the EPA on* May 12, 2026.*

On* March 8, 2022,Ollnova Technologies Limited, a non-practicing entity, filed a patent infringement lawsuit against ecobee Technologies, ULC. (ecobee) in the United States District Court for the Eastern District of Texas (CaseNo.* 22-cv-00072-JRG). Ollnova claimed that ecobee infringes onfour of its patents. At afirst trial in* October 5, 2023,the jury invalidatedone* of Ollnova’s patents and found ecobee infringed at leastone of the claims of the asserted patents. On* March 1, 2024,the trial court entered judgment against ecobee for $11,500, plus prejudgment and post-judgment interest. In2023,* the Company recorded a reserve of $12,669 related to this matter. In thefirst quarter of2024, the Company recorded an additional reserve of $1,826 for estimated prejudgment and post-judgement interest and continued to accrue for post-judgment interest thereafter. ecobee appealed the trial court’s judgment and on* June 4, 2026,the Court of Appeals for the Federal Circuit vacated the judgment and ordered a new trial, which the trial court scheduled for July 10, 2026.Subsequently, the parties resolved their dispute pursuant to a confidential settlement agreement without an admission of liability, infringement, or any wrongdoing. In thesecond* quarter of2026, the Company reduced the reserve established for the original verdict and interest to the amount of the settlement.

On* December 5, 2023,seven plaintiffs filed a product liability lawsuit in the Philadelphia County Court of Common Pleas against Generac Power, other Generac affiliates, and unrelated entities for damages sustained in an accident involving aGP15000E portable generator that occurred on October 4, 2023 (Zawaski, et al. v. Generac Power Systems, Inc., et al.). Plaintiffs pursued claims against Generac Power for negligence, strict liability, and loss of consortium, seeking compensatory and punitive damages. On January 26, 2026,the Company, together with other co-defendants, agreed to enter a settlement in principle to resolve all asserted claims, while denying any wrongdoing, to eliminate the uncertainty, burden, and expense of protracted litigation. The Company agreed to pay $104,500 in addition to the Company’s excess insurance for the applicable policy year. As of March 31, 2026and December 31, 2025,the Company has reflected a reserve for $206,500 within other accrued liabilities and an insurance receivable for $102,000 in prepaid expenses and other assets in the condensed consolidated balance sheets. The Company and its insurance carriers satisfied the payment obligation on April 1, 2026.*

On* October 9, 2024,Champion Power Equipment, Inc. (Champion) filed a patent infringement lawsuit against Generac Power in the United States District Court for the Eastern District of Wisconsin (CaseNo.* 24-cv-01281-LA). Champion claims that certain Generac and Powermate branded multi-fuel portable generators infringe on Champion’s portfolio of dual and multi-fuel patents. Generac Power denies infringement and has filed a counterclaim against Champion claiming that some of Champion’s portable generators infringe on Generac Power’s patents relating to carbon monoxide detection and engine shutoff technologies. Champion in turn filed new patent infringement claims relating to its own carbon monoxide detection and shutoff technology. Generac Power denies the infringement allegations and intends to vigorously defend the matter.

On* October 18, 2024,*two individuals filed a putative consumer class action lawsuit against Generac Power and the Company in the Middle District of Florida (CaseNo. 24-cv-02412). Plaintiffs amended their original complaint to include additional plaintiffs and theories of liability. Plaintiffs alleged certain defects exist in home standby generators manufactured or sold to consumers from2020-2024. Plaintiffs asserted breaches of warranty, tort-based, and statutory claims relating to the sale and performance of home standby generators. The court dismissed (1) all claims against the Company and (2) all non-Florida residents’ claims against Generac Power for lack of personal jurisdiction, and limited the Florida plaintiffs’ claims against Generac Power to claims for breach of express warranty. The Company disputes the allegations and intends to vigorously defend against the remaining claims in the Amended Complaint, including that the case shouldnot proceed as a class action.

It is presently unlikely that any legal, regulatory or other proceedings pending against or involving the Company will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. However, in many of these matters, it is inherently difficult to determine whether a loss is probable or to estimate the size or range of the possible loss given the variety and potential outcomes of actual and potential claims, the uncertainty of future rulings, the behavior or incentives of adverse parties, and other factors outside the control of the Company. Accordingly, the Company’s loss reserves* may*change from time to time, and actual losses could exceed the amounts reserved by an amount that could be material to the Company’s consolidated financial position, results of operations or cash flows in any particular reporting period.

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