Generac Overview and Growth - Generac's purpose is to lead the evolution to more resilient, efficient, and sustainable energy solutions[2, 51] - The company has shown a track record of growth with a 15% revenue CAGR from its 2010 IPO through 2024F[33] - In 2024, Generac estimates net sales of $2.1 billion from residential products, $1.4 billion from C&I products, and $0.5 billion from other products[18] Financial Performance and Outlook - The company's 2024F guidance includes consolidated revenue increasing between 4% to 8%, with residential products increasing at a mid-teens rate and C&I products decreasing at a mid-to-high single-digit rate[107] - Generac anticipates adjusted EBITDA margins between 17% and 18% in 2024F[102] - The company expects free cash flow to be well above 100% conversion of adjusted net income in 2024F[104] Market Opportunities and Strategies - The US HSB (Home Standby) penetration rate is at 6.25% as of 2023, with every 1% of US penetration representing ~$3.5 billion end market opportunity[62, 63] - The company is building a home energy ecosystem to prioritize energy resilience and independence, deliver savings by optimizing for energy efficiency, and balance comfort and conservation[57] - Generac is developing optimized solutions for C&I energy evolution, including multi-asset connected microgrids[90, 96]

Financial Performance - LTM Net Sales reached $4.1 billion[14] - LTM Adjusted EBITDA was $736 million[14] - The company anticipates free cash flow of approximately $500 million in 2024[121] - Q3 2024 Net Sales were $1,173.6 million, a 9.6% increase year-over-year[147] - Q3 2024 Adjusted EBITDA was $231.9 million, a 22.9% increase year-over-year[147] Revenue Mix - Residential product net sales accounted for 55% of the total, amounting to $2.3 billion[14, 19] - Commercial & Industrial product net sales represented 34% of the total, amounting to $1.4 billion[14, 19] - Other product net sales made up 11% of the total, amounting to $0.5 billion[14, 19] - Domestic net sales accounted for 83% of the total, while international net sales accounted for 17%[14] Market Opportunity - The U S home standby generator penetration rate is approximately 6 25%[63] - The company estimates that every 1% increase in penetration represents a $3 5 billion opportunity[63] - US Average Electricity Prices have increased +33% since 2020[72]

Financial Performance & Guidance - Generac's revenue CAGR was 15% from the 2010 IPO through 2024F[21] - The company anticipates consolidated net sales to increase between 3% and 7% in 2024[90] - Residential product sales are expected to increase at a mid-teens rate, while C&I products are projected to decrease approximately 10% in 2024[90] - Adjusted EBITDA margins are projected to be between 16.5% and 17.5% for 2024[86] - The company expects approximately 100% conversion of adjusted net income to free cash flow in 2024[88] - In Q4 2023, Net Sales were $1063.7 million, representing a 1.4% year-over-year increase, and full year 2023 Net Sales reached $4022.7 million, a decrease of 11.9%[108] Market Opportunity & Strategy - Generac projects an approximately 5X expansion of its Served Addressable Market (SAM) from $14 billion in 2018 to $66 billion in 2026[40] - The company's strategy evolution unlocks a massive and growing SAM[40] - The Global Residential SAM is projected to increase from $22.4 billion in 2022 to $36.6 billion in 2026[46] - The Global C&I SAM is projected to increase from $16 billion in 2022 to $29.8 billion in 2026[73]

Core Insights - Generac Holdings Inc. has announced the promotion of Jim Barnes to Executive Vice President – Global Supply Chain, following the planned retirement of Roger Pascavis on June 27, 2025 [1][2] - Roger Pascavis has had a 30-year career with Generac, playing a crucial role in shaping the company's global sourcing strategy and supplier relationships [2][3] - Jim Barnes joined Generac in 2022 and brings over 20 years of experience in electronics and global supply chain strategy, and will also lead Strategic Global Sourcing and Controls & Automation efforts [3][4] Company Overview - Generac Holdings, Inc. is a total energy solutions company founded in 1959, specializing in energy technology solutions, power generation equipment, energy storage systems, and energy management devices [5] - The company aims to empower users to manage energy on their own terms and has been a pioneer in the backup generator market [5]

Company Overview - Generac Holdings (GNRC) shares have increased by approximately 10.3% over the past month, outperforming the S&P 500 index [1] - The most recent earnings report is crucial for understanding the catalysts affecting the stock's performance [1] Earnings Estimates - Estimates for Generac Holdings have trended downward, with the consensus estimate decreasing by 19.39% over the past month [2] - The stock currently holds a Zacks Rank of 4 (Sell), indicating expectations of below-average returns in the coming months [4] VGM Scores - Generac Holdings has a strong Growth Score of A, but a lower Momentum Score of B, and a Value Score of C, placing it in the middle 20% for value investment strategy [3] - The overall aggregate VGM Score for the stock is A, which is significant for investors not focused on a single strategy [3] Industry Comparison - Generac Holdings is part of the Zacks Manufacturing - General Industrial industry, where Graco Inc. (GGG) has seen a 3.7% increase in the past month [5] - Graco reported revenues of $528.28 million for the last quarter, reflecting a year-over-year growth of 7.3% [5] - Graco's expected earnings for the current quarter are $0.78 per share, with a slight year-over-year increase of 1.3% [6]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Generac Holdings Inc.'s unaudited condensed consolidated financial statements for Q1 2025 and 2024, including balance sheets, comprehensive income, cash flows, and detailed notes on accounting policies, acquisitions, and debt [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were **$5.06 billion**, a slight decrease from **$5.11 billion** at year-end 2024, with total liabilities also decreasing slightly to **$2.59 billion** from **$2.61 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $187,464 | $281,277 | | Inventories | $1,095,082 | $1,031,647 | | Total current assets | $1,988,539 | $2,032,170 | | Total assets | $5,060,454 | $5,109,331 | | **Liabilities & Equity** | | | | Total current liabilities | $1,007,588 | $1,033,152 | | Long-term borrowings and finance lease obligations | $1,195,861 | $1,210,776 | | Total liabilities | $2,587,429 | $2,611,888 | | Total stockholders' equity | $2,473,025 | $2,497,443 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For the three months ended March 31, 2025, net sales increased to **$942.1 million** from **$889.3 million** in the prior-year period, with net income attributable to the company significantly rising to **$43.8 million**, or **$0.73** per diluted share Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $942,121 | $889,273 | | Gross profit | $371,986 | $316,379 | | Income from operations | $83,638 | $66,869 | | Net income attributable to Generac | $43,840 | $26,232 | | Diluted EPS | $0.73 | $0.39 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$58.2 million** for Q1 2025, a decrease from **$111.9 million** in Q1 2024, primarily due to an increase in working capital, resulting in a net decrease in cash and cash equivalents of **$93.8 million** Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $58,152 | $111,898 | | Net cash used in investing activities | $(33,539) | $(26,637) | | Net cash used in financing activities | $(119,719) | $(36,331) | | Net (decrease) increase in cash | $(93,813) | $48,361 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the financial statements, covering accounting policies, acquisitions, derivative use, fair value measurements, segment performance, debt, and legal proceedings - The company executed several acquisitions in 2024, including Wolverine Power Systems, Ageto, LLC, the C&I BESS product offering from SunGrid Solutions, and Huntington Power Equipment, with a combined preliminary purchase price of **$46.3 million**[25](index=25&type=chunk)[34](index=34&type=chunk) - The company is exposed to market risks from commodity prices, foreign currencies, and interest rates, and uses derivative instruments like interest rate swaps and foreign currency contracts to manage these risks, not for trading purposes[37](index=37&type=chunk)[38](index=38&type=chunk) - The company has two reportable segments: Domestic and International, with the Domestic segment generating **$774.6 million** in net sales and the International segment generating **$167.5 million** for Q1 2025[57](index=57&type=chunk)[58](index=58&type=chunk) - As of March 31, 2025, the company was in compliance with all financial covenants for its credit facilities, with a total leverage ratio of **1.40 to 1.00** and an interest coverage ratio of **11.25 to 1.00**[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, highlighting a **5.9%** net sales increase and improved gross margin, driven by mega-trends, and details operational results, liquidity, cash flow, and non-GAAP reconciliations [Overview and Strategic Drivers](index=31&type=section&id=Overview%20and%20Strategic%20Drivers) Generac positions itself as a leading energy technology solutions provider, capitalizing on mega-trends like deteriorating power quality, rising energy prices, and AI-driven demand to expand its markets for backup power and energy management - Key mega-trends driving demand include lower power quality, higher power prices, accelerating AI adoption, growing demand for cleaner fuels (natural gas), and the 'Home as a Sanctuary' concept[114](index=114&type=chunk) - The company sees significant opportunity in the low penetration of home standby generators, with only about **6.5%** of the addressable U.S. market currently served[116](index=116&type=chunk) - Generac is investing in solar, storage, and energy management markets, expecting them to become significant as utility customers seek alternatives to rising power prices and grid instability[117](index=117&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) For Q1 2025, net sales increased **5.9%** year-over-year to **$942.1 million**, driven by an **8.7%** rise in the Domestic segment, with gross margin expanding significantly to **39.5%** and net income attributable to the company rising **67.1%** to **$43.8 million** Q1 2025 vs Q1 2024 Financial Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $942,121 | $889,273 | $52,848 | 5.9% | | Gross profit | $371,986 | $316,379 | $55,607 | 17.6% | | Income from operations | $83,638 | $66,869 | $16,769 | 25.1% | | Net income attributable to Generac | $43,840 | $26,232 | $17,608 | 67.1% | - Domestic segment sales increased **9%** to **$782.3 million**, driven by higher sales of home standby generators and energy technology solutions[135](index=135&type=chunk) - International segment sales decreased slightly, impacted by a **5%** unfavorable effect from foreign currency[136](index=136&type=chunk) - Residential product sales grew **15.2%** to **$494.2 million**, while Commercial & Industrial product sales declined **4.7%** to **$337.4 million**[134](index=134&type=chunk) [Liquidity and Financial Condition](index=38&type=section&id=Liquidity%20and%20Financial%20Condition) As of March 31, 2025, Generac had total liquidity of **$1.44 billion**, comprising **$187.5 million** in cash and **$1.25 billion** available under its Revolving Facility, while repurchasing **$97.5 million** in stock during Q1 2025 - Total liquidity as of March 31, 2025, was **$1.44 billion**, consisting of **$187.5 million** in cash and **$1.25 billion** available credit[151](index=151&type=chunk) - In Q1 2025, the company repurchased **$97.5 million** of its common stock, with **$249.8 million** remaining authorization under the current program[148](index=148&type=chunk)[149](index=149&type=chunk) - The company was in compliance with all debt covenants, with a total leverage ratio of **1.40 to 1.00** (below the 3.75 to 1.00 limit) and an interest coverage ratio of **11.25 to 1.00** (above the 3.00 to 1.00 requirement)[147](index=147&type=chunk) [Non-GAAP Measures](index=40&type=section&id=Non-GAAP%20Measures) The company provides reconciliations for non-GAAP financial measures, Adjusted EBITDA and Adjusted Net Income, which management uses to evaluate performance, with Adjusted EBITDA at **$148.9 million** and Adjusted Net Income at **$75.4 million** for Q1 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to Generac | $43,840 | $26,232 | | Adjustments (Interest, D&A, Taxes, etc.) | $95,128 | $94,489 | | Change in fair value of investment | $9,947 | $6,019 | | **Adjusted EBITDA** | **$149,546** | **$127,233** | Adjusted Net Income (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Adjusted net income attributable to Generac | $75,366 | $52,951 | | Adjusted diluted EPS | $1.26 | $0.88 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposures since the 2024 Annual Report on Form 10-K, referring to Note 3 for details on derivative instruments and hedging activities - There have been no material changes in market risk since the 2024 Annual Report on Form 10-K[183](index=183&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[184](index=184&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2025[185](index=185&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 14 of the condensed consolidated financial statements for detailed information regarding the company's ongoing legal proceedings, including class action lawsuits, patent infringement, and government inquiries - For details on legal proceedings, the report directs readers to Note 14, 'Commitments and Contingencies,' in the financial statements[187](index=187&type=chunk) - The company is involved in several legal matters, including a putative securities class action, shareholder derivative actions, a patent infringement lawsuit, and is cooperating with inquiries from the DOJ, EPA, and CPSC[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to its risk factors since the filing of its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors have occurred since the filing of the 2024 Annual Report on Form 10-K[188](index=188&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended March 31, 2025, the company repurchased a total of **780,289** shares at an average price of **$135.96** per share, with approximately **$249.8 million** remaining available for future repurchases under the program Stock Repurchase Activity for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Remaining Authorization | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | - | - | - | $347,256,871 | | Feb 2025 | 213,522 | $141.67 | 213,522 | $317,007,965 | | Mar 2025 | 566,767 | $133.81 | 503,163 | $249,803,018 | | **Total Q1** | **780,289** | **$135.96** | **716,685** | **$249,803,018** | [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) On March 6, 2025, CEO Aaron Jagdfeld modified a pre-existing Rule 10b5-1 trading arrangement, adjusting the amount of shares to be sold, price limits, and timing of sales under the plan - CEO Aaron Jagdfeld modified a Rule 10b5-1 trading plan on March 6, 2025, changing the terms for selling up to **31,303 shares** and exercising options for **13,697 shares**[192](index=192&type=chunk)

Company Overview - Generac Holdings has evolved from a manufacturer of gasoline generators to a global leader in energy supply over 65 years [1] - Founded in 1959, Generac is credited with inventing the market for automatic home generators [1] Industry Insights - The company operates in the energy supply sector, which has seen significant growth and innovation [1] - Generac's leadership in the market highlights the increasing demand for reliable energy solutions, particularly in residential settings [1]

Core Insights - Generac Holdings, Inc. emphasizes the importance of preparedness for the anticipated above-average 2025 hurricane season, which could lead to significant power outages and disruptions for homeowners [1][2][3] Industry Outlook - Colorado State University's forecast predicts 17 named storms for the 2025 hurricane season, with nine expected to become hurricanes and four reaching major hurricane strength (Category 3 or higher) [2] - The 2024 hurricane season was notably intense, with activity tracking 130% above normal, and the early forecast for 2025 is projected to be about 125% above the average of the past decade [2] Company Initiatives - Generac offers a comprehensive Hurricane Preparedness Guide, developed by power outage experts, which includes recommendations, safety tips, and best practices to help homeowners prepare for severe weather [3] - The company aims to protect homeowners from the disruptions caused by power outages, highlighting the reliance on electricity for daily life [3] Company Background - Generac Holdings, Inc. is a leading global designer, manufacturer, and provider of energy technology solutions, founded in 1959, and is known for its innovative backup power solutions [5]

Core Insights - Generac Holdings Inc (GNRC) reported first-quarter 2025 adjusted earnings per share (EPS) of $1.26, exceeding the Zacks Consensus Estimate of 99 cents and up from 88 cents in the prior-year quarter [1] - Net sales reached $942 million, a 6% increase from $889 million in the prior-year quarter, also surpassing the consensus estimate of $918.7 million [2] Financial Performance - The increase in Residential product sales was a key driver, compensating for weaker Commercial & Industrial (C&I) product sales, with higher demand for home standby generators amid rising power outages [2] - Management revised its 2025 revenue expectations to a growth range of 0-7%, down from the previous guidance of 3-7%, with net income margin expectations adjusted to 6.5-8.5% from 8-9% [3][4] - Gross profit rose to $372 million from $316.4 million year-over-year, with gross profit margins improving to 39.5% from 35.6% [10] Segment Analysis - Domestic revenues increased by 9% year-over-year to $782.3 million, aided by acquisitions contributing a 2% increase, while core sales rose by 7% [5] - International revenues decreased by 0.6% year-over-year to $185.5 million, impacted by a 5% unfavorable effect from foreign currency fluctuations [6] - Residential product revenues surged by 15% year-over-year to $494 million, while C&I revenues fell by 5% to $337 million [7] Cash Flow and Liquidity - In the first quarter, GNRC generated $58 million in net cash from operating activities, with free cash flow totaling $27 million [12] - As of March 31, 2025, GNRC had $187.5 million in cash and cash equivalents, alongside nearly $1.19 billion in long-term borrowings [12] Share Buyback Program - GNRC approved a new share buyback authorization of up to $500 million over the next 24 months, replacing the remaining balance of the previous program [13]

Core Insights - Generac Holdings reported revenue of $942.12 million for Q1 2025, a year-over-year increase of 5.9% and an EPS of $1.26 compared to $0.88 a year ago, exceeding the Zacks Consensus Estimate of $918.71 million by 2.55% [1] - The company delivered an EPS surprise of 27.27%, with the consensus EPS estimate being $0.99 [1] Revenue Breakdown - Revenue from Residential products was $494.15 million, surpassing the average estimate of $483.51 million by five analysts, representing a year-over-year change of 15.2% [4] - Revenue from Other products was $110.60 million, slightly above the average estimate of $110.51 million, with a year-over-year change of 4% [4] - Revenue from Commercial & Industrial products was $337.37 million, exceeding the average estimate of $324.61 million, but showing a year-over-year decline of 4.7% [4] Stock Performance - Shares of Generac Holdings have returned -10.4% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]