PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Generac's unaudited condensed consolidated financial statements, detailing increased assets, equity, net income, and EPS [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Summarizes Generac's financial position, showing assets, liabilities, and equity at specific dates | Metric (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $223,531 | $281,277 | | Accounts receivable, net | $648,736 | $612,107 | | Inventories | $1,254,133 | $1,031,647 | | Total current assets | $2,245,689 | $2,032,170 | | Total assets | $5,388,801 | $5,109,331 | | Total current liabilities | $1,121,280 | $1,033,152 | | Total liabilities | $2,813,610 | $2,611,888 | | Total stockholders' equity | $2,575,191 | $2,497,443 | - Total assets increased by **$279.5 million (5.5%)** from December 31, 2024, to June 30, 2025, primarily driven by increases in inventories and property and equipment, net[11](index=11&type=chunk) - Total stockholders' equity increased by **$77.7 million (3.1%)** from December 31, 2024, to June 30, 2025, mainly due to retained earnings growth and accumulated other comprehensive income[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Presents Generac's financial performance, including net sales, gross profit, and net income for specified periods | Metric (U.S. Dollars in Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,061,169 | $998,197 | $2,003,290 | $1,887,470 | | Gross profit | $416,749 | $375,561 | $788,735 | $691,940 | | Income from operations | $111,789 | $103,235 | $195,427 | $170,104 | | Net income attributable to Generac Holdings Inc. | $74,016 | $59,115 | $117,856 | $85,347 | | Basic EPS | $1.27 | $0.99 | $2.01 | $1.38 | | Diluted EPS | $1.25 | $0.97 | $1.98 | $1.36 | - Net sales increased by **6.3% for Q2 2025** and **6.1% for YTD 2025** compared to the prior year periods[14](index=14&type=chunk) - Net income attributable to Generac Holdings Inc. grew by **25.2% for Q2 2025** and **38.1% for YTD 2025**, with diluted EPS increasing from **$0.97 to $1.25 (QoQ)** and **$1.36 to $1.98 (YoY)**[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Details changes in Generac's equity, including common stock, retained earnings, and comprehensive income | Metric (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Common Stock (Amount) | $740 | $738 | | Additional Paid-In Capital | $1,161,153 | $1,133,756 | | Treasury Stock (Amount) | $(1,354,218) | $(1,196,997) | | Retained Earnings | $2,961,859 | $2,844,296 | | Accumulated Other Comprehensive Income (Loss) | $3,105 | $(85,399) | | Total Stockholders' Equity | $2,575,191 | $2,497,443 | - Retained earnings increased by **$117.5 million** from December 31, 2024, to June 30, 2025, reflecting net income generation[16](index=16&type=chunk)[17](index=17&type=chunk) - Accumulated other comprehensive income (loss) shifted from a loss of **$(85.4) million** at December 31, 2024, to a gain of **$3.1 million** at June 30, 2025, primarily due to favorable foreign currency translation adjustments[16](index=16&type=chunk)[17](index=17&type=chunk)[55](index=55&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Outlines Generac's cash inflows and outflows from operating, investing, and financing activities | Metric (U.S. Dollars in Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $130,341 | $189,562 | | Net cash used in investing activities | $(93,308) | $(74,024) | | Net cash used in financing activities | $(101,318) | $(96,509) | | Net (decrease) increase in cash and cash equivalents | $(57,746) | $17,323 | | Cash and cash equivalents at end of period | $223,531 | $218,317 | - Net cash provided by operating activities decreased by **31.2% to $130.3 million** for the six months ended June 30, 2025, primarily due to an increase in working capital, particularly inventory replenishment[20](index=20&type=chunk)[176](index=176&type=chunk) - Net cash used in investing activities increased by **26.1% to $93.3 million**, mainly driven by higher capital expenditures for property and equipment[20](index=20&type=chunk)[177](index=177&type=chunk) - Net cash used in financing activities increased by **5.0% to $101.3 million**, primarily due to increased stock repurchases and debt repayments, partially offset by proceeds from borrowings[20](index=20&type=chunk)[179](index=179&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Description of Business and Basis of Presentation](index=11&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - Generac Holdings Inc. is a leading global designer and manufacturer of energy technology solutions, including power generation equipment, energy storage systems, and energy management devices for residential, light commercial, and industrial markets[22](index=22&type=chunk) - The company completed several acquisitions in 2024, including Wolverine Power Systems (generator distributor), Ageto, LLC (microgrid control solutions), SunGrid Solutions Inc.'s C&I BESS product offering, and Huntington Power Equipment, Inc. (generator distributor)[26](index=26&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025, making **100% bonus depreciation** and domestic research cost expensing permanent, while accelerating the phase-out of solar market incentives. The company is evaluating its impact[27](index=27&type=chunk) - New accounting pronouncements include ASU 2024-03 (Expense Disaggregation Disclosures, effective FY2026), ASU 2023-09 (Improvements to Income Tax Disclosures, effective FY2024), and ASU 2023-07 (Improving Reportable Segment Disclosures, effective FY2024 for annual, FY2025 for interim)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 2. Acquisitions](index=12&type=section&id=Note%202.%20Acquisitions) - In fiscal 2024, Generac acquired Wolverine Power Systems (November), Ageto, LLC (August), SunGrid Solutions Inc.'s C&I BESS product offering (June), and Huntington Power Equipment, Inc. (April)[33](index=33&type=chunk)[34](index=34&type=chunk) - The combined preliminary purchase price for these acquisitions was **$46.3 million**, net of cash acquired. Purchase accounting for C&I BESS and Huntington was finalized in Q2 2025, with no material adjustments[35](index=35&type=chunk) - The results of these acquisitions are included in the condensed consolidated financial statements from their respective acquisition dates, but their effects are not material to the Company's results of operations or financial position[36](index=36&type=chunk) [Note 3. Derivative Instruments and Hedging Activities](index=14&type=section&id=Note%203.%20Derivative%20Instruments%20and%20Hedging%20Activities) - Generac uses interest rate swap agreements as cash flow hedges, with effective portions of gains/losses reported in accumulated other comprehensive income (loss)[40](index=40&type=chunk) | Metric (U.S. Dollars in Thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | After-tax unrealized (losses) gains on interest rate swaps | $(3,090) | $(7,403) | $(1,730) | $252 | - The company holds stock warrants in Wallbox N.V., which are adjusted to market value quarterly, with losses recognized in other expense, net. The loss attributable to stock warrants was **$1.2 million (Q2 2025)** and **$4.6 million (YTD 2025)**[42](index=42&type=chunk)[43](index=43&type=chunk) | Derivative (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------- | :------------ | :---------------- | | Interest rate swaps | $18,528 | $28,367 | | Stock warrants | $3,347 | $7,919 | [Note 4. Fair Value Measurements](index=15&type=section&id=Note%204.%20Fair%20Value%20Measurements) - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[46](index=46&type=chunk) - Interest rate swaps and commodity/foreign currency derivative contracts are classified as Level 2, while Wallbox stock warrants and contingent consideration are classified as Level 3[48](index=48&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) | Financial Instrument (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------- | :------------ | :---------------- | | Tranche A Term Loan Facility (Fair Value) | $686,813 | N/A | | Term Loan B Facility (Fair Value) | $495,009 | N/A | | Wallbox Shares (Fair Value) | $12,191 | $19,075 | | Contingent Consideration (Fair Value) | $34,937 | $34,114 | - The fair value of Wallbox Shares, classified as Level 1, decreased from **$19.1 million to $12.2 million**, resulting in a loss of **$6.9 million** for the six months ended June 30, 2025[50](index=50&type=chunk) [Note 5. Accumulated Other Comprehensive Income (Loss)](index=17&type=section&id=Note%205.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) | Component (U.S. Dollars in Thousands) | Beginning Balance – Jan 1, 2025 | Other Comprehensive Income (Loss) | Ending Balance – June 30, 2025 | | :------------------------------------ | :------------------------------ | :-------------------------------- | :----------------------------- | | Foreign Currency Translation Adjustments | $(106,166) | $95,907 | $(10,259) | | Unrealized Gain (Loss) on Cash Flow Hedges | $20,767 | $(7,403) | $13,364 | | Total | $(85,399) | $88,504 | $3,105 | - Accumulated Other Comprehensive Income (Loss) shifted from a loss of **$85.4 million** at January 1, 2025, to a gain of **$3.1 million** at June 30, 2025, primarily due to a favorable impact from the weakening of the U.S. dollar against foreign currencies, particularly the Euro and British Pound[55](index=55&type=chunk) - Unrealized losses on interest rate swaps, net of tax, were **$(7.4) million** for the six months ended June 30, 2025, compared to a gain of **$252 thousand** for the same period in 2024[55](index=55&type=chunk)[57](index=57&type=chunk) [Note 6. Segment Reporting](index=18&type=section&id=Note%206.%20Segment%20Reporting) - Generac operates with two reportable segments: Domestic (U.S. and Canada) and International (outside U.S. and Canada), both designing and manufacturing energy technology solutions[58](index=58&type=chunk) | Metric (U.S. Dollars in Thousands) | Domestic (Q2 2025) | International (Q2 2025) | Total (Q2 2025) | Domestic (Q2 2024) | International (Q2 2024) | Total (Q2 2024) | | :--------------------------------- | :----------------- | :---------------------- | :-------------- | :----------------- | :---------------------- | :-------------- | | External Net Sales | $878,231 | $182,938 | $1,061,169 | $817,558 | $180,639 | $998,197 | | Adjusted EBITDA | $158,117 | $29,512 | $187,629 | $139,674 | $25,015 | $164,689 | | Assets (June 30, 2025) | $3,970,400 | $1,418,401 | $5,388,801 | N/A | N/A | N/A | | Capital Expenditures (Q2 2025) | $47,743 | $9,973 | $57,716 | $24,101 | $3,851 | $27,952 | - Domestic segment external net sales increased by **7.4% in Q2 2025**, driven by residential energy technology solutions, portable generators, and C&I products, while International segment external net sales increased by **1.3%**[144](index=144&type=chunk) - Domestic Adjusted EBITDA margin improved to **17.9% (Q2 2025)** from **16.9% (Q2 2024)**, and International Adjusted EBITDA margin improved to **15.0% (Q2 2025)** from **13.6% (Q2 2024)**, both driven by favorable pricing and lower input costs[152](index=152&type=chunk)[153](index=153&type=chunk) - Capital expenditures for the Domestic segment increased significantly from **$24.1 million in Q2 2024 to $47.7 million in Q2 2025**, and for the International segment from **$3.9 million to $10.0 million**[71](index=71&type=chunk) [Note 7. Balance Sheet Details](index=24&type=section&id=Note%207.%20Balance%20Sheet%20Details) | Inventory Component (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------------- | :------------ | :---------------- | | Raw material | $675,553 | $611,735 | | Work-in-process | $10,877 | $6,814 | | Finished goods | $567,703 | $413,098 | | Total Inventories | $1,254,133 | $1,031,647 | - Total inventories increased by **$222.5 million (21.6%)** from December 31, 2024, to June 30, 2025, primarily driven by increases in raw materials and finished goods[74](index=74&type=chunk) | Property and Equipment Component (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------------------- | :------------ | :---------------- | | Buildings and improvements | $466,930 | $358,055 | | Machinery and equipment | $317,296 | $296,409 | | Construction in progress | $71,708 | $110,651 | | Total Property and equipment, net | $766,745 | $690,023 | - Net property and equipment increased by **$76.7 million (11.1%)** from December 31, 2024, to June 30, 2025, with significant increases in buildings and improvements, and machinery and equipment[74](index=74&type=chunk) [Note 8. Product Warranty Obligations](index=25&type=section&id=Note%208.%20Product%20Warranty%20Obligations) | Standard Product Warranty (U.S. Dollars in Thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :---------------------------------------------------- | :------------------------------- | :----------------------------- | | Balance at beginning of period | $110,717 | $110,987 | | Payments | $(18,868) | $(39,755) | | Provision for warranty issued | $25,826 | $43,944 | | Changes in estimates for pre-existing warranties | $2,269 | $4,768 | | Balance at end of period | $119,944 | $119,944 | - The standard product warranty liability increased to **$119.9 million** at June 30, 2025, from **$111.0 million** at December 31, 2024, reflecting higher provisions for new warranties issued[76](index=76&type=chunk) | Extended Warranty Deferred Revenue (U.S. Dollars in Thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------------------------------------- | :------------------------------- | :----------------------------- | | Balance at beginning of period | $194,403 | $186,922 | | Deferred revenue contracts issued | $16,915 | $32,733 | | Amortization of deferred revenue contracts | $(8,668) | $(17,005) | | Balance at end of period | $202,650 | $202,650 | - Deferred revenue related to extended warranties increased to **$202.7 million** at June 30, 2025, from **$186.9 million** at December 31, 2024, indicating continued sales of extended warranty coverage[76](index=76&type=chunk) [Note 9. Contract Balances](index=25&type=section&id=Note%209.%20Contract%20Balances) | Contract Balance (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------- | :------------ | :---------------- | | Customer deposits | $23,779 | $26,858 | - Customer deposits, representing prepayments for goods, decreased slightly from **$26.9 million** at December 31, 2024, to **$23.8 million** at June 30, 2025[77](index=77&type=chunk) - During the six months ended June 30, 2025, Generac recognized **$17.4 million** in revenue from amounts included in the December 31, 2024, customer deposit balance[78](index=78&type=chunk) [Note 10. Credit Agreements](index=27&type=section&id=Note%2010.%20Credit%20Agreements) | Borrowing Type (U.S. Dollars in Thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Short-term borrowings | $54,264 | $55,848 | | Tranche A Term Loan Facility | $693,750 | $712,500 | | Term Loan B Facility | $496,250 | $498,750 | | Revolving Facility | $90,000 | $- | | Total long-term borrowings and finance lease obligations | $1,292,813 | $1,210,776 | - The company extinguished its original **$530 million Term Loan B Facility** in July 2024, replacing it with a new **$500 million Term Loan B Facility** maturing July 3, 2031, bearing interest at SOFR + 1.75% (**6.07% as of June 30, 2025**)[81](index=81&type=chunk) - As of June 30, 2025, the company was in compliance with all financial covenants, with a net secured leverage ratio of **1.37 to 1.00** and a total leverage ratio of **1.44 to 1.00**[82](index=82&type=chunk)[85](index=85&type=chunk) - On July 1, 2025, the Tranche A Term Loan Facility and Revolving Facility were amended, extending maturities to July 1, 2030, revising the Tranche A principal to **$700 million**, and reducing Revolving Facility capacity to **$1 billion**[89](index=89&type=chunk) [Note 11. Stock Repurchase Program](index=29&type=section&id=Note%2011.%20Stock%20Repurchase%20Program) - A new **$500 million** stock repurchase program was approved on February 12, 2024, replacing the prior program and allowing repurchases over 24 months[90](index=90&type=chunk) | Period | Shares Repurchased | Value (U.S. Dollars in Thousands) | | :---------------------- | :----------------- | :-------------------------------- | | Q2 2025 | 392,521 | $50,463 | | YTD June 30, 2025 | 1,109,206 | $147,917 | | Q2 2024 | 355,640 | $50,609 | - As of June 30, 2025, **$199.3 million** remained available for repurchase under the current program[170](index=170&type=chunk) [Note 12. Earnings Per Share](index=29&type=section&id=Note%2012.%20Earnings%20Per%20Share) | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $1.27 | $0.99 | $2.01 | $1.38 | | Diluted EPS | $1.25 | $0.97 | $1.98 | $1.36 | | Weighted average common shares outstanding - diluted | 59,017,823 | 60,641,740 | 59,385,907 | 60,559,904 | - Diluted EPS increased by **28.9% for Q2 2025** and **45.6% for YTD 2025**, reflecting higher net income and a lower weighted average number of diluted shares outstanding[93](index=93&type=chunk) [Note 13. Income Taxes](index=30&type=section&id=Note%2013.%20Income%20Taxes) | Period | Effective Income Tax Rate | | :---------------------- | :------------------------ | | Six Months Ended June 30, 2025 | 20.0% | | Six Months Ended June 30, 2024 | 27.0% | - The decrease in the effective tax rate for the six months ended June 30, 2025, was primarily due to a discrete tax benefit related to a business disposition[94](index=94&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA), signed July 4, 2025, makes **100% bonus depreciation** and domestic research cost expensing permanent, but accelerates the phase-out of solar market incentives. The company is evaluating its impact on deferred tax balances[143](index=143&type=chunk) - The company is implementing OECD Pillar Two rules but does not expect a material impact on its effective tax rate for the remainder of 2025[141](index=141&type=chunk)[142](index=142&type=chunk) [Note 14. Commitments and Contingencies](index=31&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) - Generac has a floor plan financing arrangement for dealers, with **$167.2 million** outstanding as of June 30, 2025[95](index=95&type=chunk) - The company is involved in several legal proceedings, including class action lawsuits related to clean energy products (Haak, Oakland County, Walling), shareholder derivative actions, patent infringement lawsuits (Ollnova, Champion), and government inquiries (DOJ, EPA, CARB, CPSC) regarding emissions and product recalls[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - While it is unlikely that current legal proceedings will have a material adverse effect on financial condition, actual losses could exceed reserves due to the inherent difficulty in estimating outcomes[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on Generac's financial performance, strategic direction, and factors influencing results [Forward-Looking Statements](index=34&type=section&id=Forward-Looking%20Statements) Highlights inherent uncertainties and risks associated with future financial projections and business outcomes - The report contains forward-looking statements based on current expectations and projections, subject to risks and uncertainties that could cause actual results to differ materially[112](index=112&type=chunk)[113](index=113&type=chunk) - Key factors that could affect financial results include fluctuations in raw material costs, dependence on suppliers, changes in trade policies, intellectual property protection, consumer spending, governmental policies (tax incentives), product liability claims, legal proceedings, and the ability to manage growth and competition[114](index=114&type=chunk) [Recent Developments](index=36&type=section&id=Recent%20Developments) Discusses recent governmental tariffs and the 'One Big Beautiful Bill Act' impacting Generac's operations - The U.S. government enacted additional tariffs on goods from various countries (China, Vietnam, Mexico) in Q1 2025, which may negatively impact demand and margins despite price increases and supply chain initiatives[117](index=117&type=chunk)[118](index=118&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA), signed July 4, 2025, makes **100% bonus depreciation** and domestic research cost expensing permanent but accelerates the phase-out of solar market incentives. The company is evaluating its business and financial statement impact[119](index=119&type=chunk) [Overview](index=36&type=section&id=Overview) Describes Generac's business as a global energy technology solutions provider and its strategic expansion - Generac is a leading global provider of energy technology solutions, including power generation, energy storage, and energy management, serving residential, light commercial, and industrial markets[120](index=120&type=chunk) - The company is expanding its product portfolio into energy technology ecosystems for homes and businesses, focusing on residential and C&I energy storage, solar inverters, energy monitoring, and EV charging, integrated with advanced connectivity and software platforms[121](index=121&type=chunk) - Generac aims to lead the evolution to more resilient, efficient, and sustainable energy solutions, capitalizing on growing demand for backup power due to deteriorating power quality and expanding into multi-purpose microgrid projects with natural gas fueled generators[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Mega-Trends, Strategic Growth Themes, and Additional Business Drivers](index=36&type=section&id=Mega-Trends,%20Strategic%20Growth%20Themes,%20and%20Additional%20Business%20Drivers) Identifies key market trends and strategic initiatives driving Generac's growth and business development - Key mega-trends driving Generac's 'Powering A Smarter World' strategy include lower power quality, higher power prices, accelerating AI adoption, growing demand for cleaner fuels, required investment in global infrastructure, and the 'Home as a Sanctuary' trend[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Strategic growth themes include capitalizing on increasing power quality issues, significant home standby penetration opportunities (currently **~6.5% in the U.S.**), expanding into solar, storage, and energy management markets, and leveraging natural gas generators as a cleaner transition fuel[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - The company sees substantial investment in new data centers and accelerating AI adoption as a significant incremental opportunity for large backup power generators, where Generac aims to take market share with its high output diesel offerings and robust service network[131](index=131&type=chunk) - Other business drivers include the residential investment cycle (consumer confidence, interest rates, housing starts), business capital investment cycles (non-residential construction, data centers), and global economic conditions[133](index=133&type=chunk)[134](index=134&type=chunk) [Factors Affecting Results of Operations](index=40&type=section&id=Factors%20Affecting%20Results%20of%20Operations) Discusses external and internal factors influencing Generac's financial performance, such as costs, seasonality, and tax rates - Results are affected by commodity, currency, and component price fluctuations, which Generac mitigates through product design, sourcing, manufacturing efficiencies, price increases, and hedging[135](index=135&type=chunk)[136](index=136&type=chunk) - Seasonality impacts sales, with Q2 historically accounting for **22-28% of net sales**, but this can vary significantly based on the unpredictable occurrence and severity of major power outage activity[137](index=137&type=chunk) - Interest expense decreased year-over-year due to lower borrowings and interest rates, while the effective tax rate decreased primarily due to a discrete tax benefit from a business disposition[139](index=139&type=chunk)[140](index=140&type=chunk) [Results of Operations - Three months ended June 30, 2025, compared to the three months ended June 30, 2024](index=42&type=section&id=Results%20of%20Operations%20-%20Three%20months%20ended%20June%2030,%202025,%20compared%20to%20the%20three%20months%20ended%20June%2030,%202024) Compares Generac's financial performance for Q2 2025 against Q2 2024, highlighting key changes in sales and profitability | Metric (U.S. Dollars in Thousands) | Q2 2025 | Q2 2024 | $ Change | % Change | | :--------------------------------- | :----------- | :----------- | :--------- | :------- | | Net sales | $1,061,169 | $998,197 | $62,972 | 6.3% | | Gross profit | $416,749 | $375,561 | $41,188 | 11.0% | | Income from operations | $111,789 | $103,235 | $8,554 | 8.3% | | Net income attributable to Generac Holdings Inc. | $74,016 | $59,115 | $14,901 | 25.2% | | Diluted EPS | $1.25 | $0.97 | $0.28 | 28.9% | | Adjusted EBITDA | $187,629 | $164,689 | $22,940 | 13.9% | - Domestic segment total sales increased by **7% (6% core growth)** driven by residential energy technology solutions, portable generators, and C&I products, partially offset by softness in national rental accounts[145](index=145&type=chunk) - International segment total sales increased by **7% (6% core growth)** with a **1% favorable foreign currency impact**, driven by higher inter-segment sales and C&I product strength in Europe[146](index=146&type=chunk) - Gross profit margin improved to **39.3% from 37.6%**, primarily due to favorable pricing and lower input costs, partially offset by unfavorable sales mix[147](index=147&type=chunk) - Operating expenses increased by **12.0%** due to higher variable costs from increased shipment volumes, employee costs for future growth, and expenses from recent acquisitions[148](index=148&type=chunk) - The effective tax rate decreased to **17.2% from 25.0%** due to a favorable discrete tax benefit from the sale of the Tank Utility fleet business[150](index=150&type=chunk) [Results of Operations - Six months ended June 30, 2025, compared to the six months ended June 30, 2024](index=44&type=section&id=Results%20of%20Operations%20-%20Six%20months%20ended%20June%2030,%202025,%20compared%20to%20the%20six%20months%20ended%20June%2030,%202024) Compares Generac's financial performance for YTD June 30, 2025, against the prior year, detailing sales and profitability trends | Metric (U.S. Dollars in Thousands) | YTD June 30, 2025 | YTD June 30, 2024 | $ Change | % Change | | :--------------------------------- | :---------------- | :---------------- | :--------- | :------- | | Net sales | $2,003,290 | $1,887,470 | $115,820 | 6.1% | | Gross profit | $788,735 | $691,940 | $96,795 | 14.0% | | Income from operations | $195,427 | $170,104 | $25,323 | 14.9% | | Net income attributable to Generac Holdings Inc. | $117,856 | $85,347 | $32,509 | 38.1% | | Diluted EPS | $1.98 | $1.36 | $0.62 | 45.6% | | Adjusted EBITDA | $337,175 | $291,922 | $45,253 | 15.5% | - Domestic segment total sales increased by **8% (7% core growth)** driven by home standby generators, portable generators, energy technology solutions, and C&I products, partially offset by lower C&I sales to national rental accounts[156](index=156&type=chunk) - International segment total sales increased by **3.1% (5.1% core growth, offset by 2% unfavorable foreign currency)** due to higher inter-segment sales and stronger product sales in Europe[157](index=157&type=chunk) - Gross profit margin improved to **39.4% from 36.7%**, primarily due to favorable price realization and lower input costs[158](index=158&type=chunk) - Operating expenses increased by **13.7%** due to higher variable costs from increased shipment volumes, employee costs, marketing spend, and expenses from recent acquisitions[159](index=159&type=chunk) - The effective tax rate decreased to **20.0% from 27.0%** due to a discrete tax benefit from the Tank Utility fleet business sale and the absence of unfavorable discrete tax items from the prior year[161](index=161&type=chunk) [Liquidity and Financial Condition](index=48&type=section&id=Liquidity%20and%20Financial%20Condition) Assesses Generac's current financial resources, debt structure, and ability to meet short-term and long-term obligations - As of June 30, 2025, Generac had total liquidity of **$1,382.8 million**, comprising **$223.5 million** in cash and cash equivalents and **$1,159.3 million** in Revolving Facility availability[173](index=173&type=chunk) | Debt Outstanding (U.S. Dollars in Millions) | June 30, 2025 | | :------------------------------------------ | :------------ | | Term Loan B Facility | $496.3 | | Tranche A Term Loan Facility | $693.8 | | Revolving Facility | $90.0 | - The company was in compliance with all credit agreement covenants as of June 30, 2025, with a net secured leverage ratio of **1.37 to 1.00** and an interest coverage ratio of **12.34 to 1.00**[168](index=168&type=chunk) - The stock repurchase program had **$199.3 million** remaining authorization as of June 30, 2025, with **$147.9 million** in repurchases during the six months ended June 30, 2025[170](index=170&type=chunk)[171](index=171&type=chunk) - Dealer floor plan financing outstanding was **$167.2 million** as of June 30, 2025, accounting for approximately **13% of net sales** for the six months ended June 30, 2025[174](index=174&type=chunk) [Long-term Liquidity](index=50&type=section&id=Long-term%20Liquidity) Evaluates Generac's long-term capital resources and capacity for sustained operations and growth investments - Generac believes its cash, cash flow from operations, and revolving credit facility provide sufficient capital for ongoing operations, debt repayments, stock buybacks, and future growth investments[175](index=175&type=chunk) [Cash Flow](index=50&type=section&id=Cash%20Flow) Analyzes Generac's cash generation and usage across operating, investing, and financing activities | Cash Flow Category (U.S. Dollars in Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $130,341 | $189,562 | | Net cash used in investing activities | $(93,308) | $(74,024) | | Net cash used in financing activities | $(101,318) | $(96,509) | - Operating cash flow decreased by **$59.2 million**, primarily due to increased working capital from residential product inventory replenishment, partially offset by higher operating earnings[176](index=176&type=chunk) - Investing cash flow increased by **$19.3 million** in usage, mainly due to higher expenditures for property and equipment (**$88.7 million in 2025 vs. $54.8 million in 2024**)[177](index=177&type=chunk)[178](index=178&type=chunk) - Financing cash flow usage increased by **$4.8 million**, driven by **$147.9 million** in share repurchases and **$59.2 million** in debt repayments, partially offset by **$114.5 million** in new borrowings[179](index=179&type=chunk)[180](index=180&type=chunk) [Contractual Obligations](index=50&type=section&id=Contractual%20Obligations) Summarizes Generac's significant contractual commitments and their potential financial impact - There have been no material changes to contractual obligations since the December 31, 2024, Annual Report on Form 10-K, except for changes in outstanding borrowings and interest rates as detailed in Note 10[181](index=181&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Outlines key accounting judgments and assumptions that significantly impact Generac's financial reporting - Generac's critical accounting estimates include goodwill and other indefinite-lived intangible asset impairment assessment, and income taxes[182](index=182&type=chunk) - No material changes in critical accounting policies have occurred since the February 19, 2025, filing of the Annual Report on Form 10-K[183](index=183&type=chunk) [Non-GAAP Measures](index=52&type=section&id=Non-GAAP%20Measures) [Adjusted EBITDA](index=52&type=section&id=Adjusted%20EBITDA) Defines and reconciles Adjusted EBITDA, a non-GAAP measure used for performance evaluation and covenant compliance - Adjusted EBITDA is a key performance measure used by management for planning, resource allocation, compensation, and evaluating business strategies, as well as for credit agreement compliance[184](index=184&type=chunk)[185](index=185&type=chunk) - Adjusted EBITDA excludes interest expense, depreciation, amortization, income tax expense, certain non-cash gains/losses, share-based compensation, transaction costs, business optimization expenses, legal/regulatory charges, and mark-to-market adjustments on minority investments[184](index=184&type=chunk) | Metric (U.S. Dollars in Thousands) | Q2 2025 | Q2 2024 | YTD June 30, 2025 | YTD June 30, 2024 | | :--------------------------------- | :----------- | :----------- | :---------------- | :---------------- | | Net income | $74,430 | $59,053 | $118,708 | $85,531 | | Interest expense | $18,242 | $23,318 | $35,352 | $46,923 | | Depreciation and amortization | $48,321 | $42,880 | $94,462 | $84,782 | | Provision for income taxes | $15,422 | $19,638 | $29,658 | $31,671 | | Adjusted EBITDA | $187,629 | $164,689 | $337,175 | $291,922 | - Adjusted EBITDA increased by **13.9% for Q2 2025** and **15.5% for YTD 2025**, reflecting improved operating performance[190](index=190&type=chunk) [Adjusted Net Income](index=56&type=section&id=Adjusted%20Net%20Income) Defines and reconciles Adjusted Net Income, a non-GAAP measure providing insight into ongoing operational results - Adjusted Net Income is a non-GAAP measure used to provide a more complete understanding of ongoing results by excluding amortization of intangibles, deferred financing costs, transaction costs, business optimization expenses, legal/regulatory charges, and mark-to-market gains/losses on investments[197](index=197&type=chunk)[199](index=199&type=chunk) | Metric (U.S. Dollars in Thousands) | Q2 2025 | Q2 2024 | YTD June 30, 2025 | YTD June 30, 2024 | | :--------------------------------- | :----------- | :----------- | :---------------- | :---------------- | | Net income attributable to Generac Holdings Inc. | $74,016 | $59,115 | $117,856 | $85,347 | | Amortization of intangible assets | $25,681 | $24,791 | $51,170 | $49,541 | | Tax effect of add backs | $(17,138) | $(7,520) | $(27,507) | $(16,445) | | Adjusted net income attributable to Generac Holdings Inc. | $97,328 | $81,690 | $172,694 | $134,641 | | Adjusted net income per common share - diluted | $1.65 | $1.35 | $2.91 | $2.22 | - Adjusted Net Income attributable to Generac Holdings Inc. increased by **19.1% for Q2 2025** and **28.3% for YTD 2025**, with diluted Adjusted EPS increasing from **$1.35 to $1.65 (QoQ)** and **$2.22 to $2.91 (YoY)**[200](index=200&type=chunk) PART II. OTHER INFORMATION [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Addresses Generac's exposure to market risks, including commodity prices, foreign currencies, and interest rates - The company is exposed to market risks from changes in commodity prices, foreign currencies, and interest rates[37](index=37&type=chunk) - No material changes in market risk have occurred since the December 31, 2024, Annual Report on Form 10-K, with further details provided in Note 3 regarding derivative instruments and hedging activities[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of Generac's disclosure controls and procedures and reports no material changes in internal control [Disclosure Controls and Procedures](index=57&type=section&id=Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[206](index=206&type=chunk) [Changes in Internal Control Over Financial Reporting](index=57&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There have been no changes in internal control over financial reporting during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[207](index=207&type=chunk) [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) Refers to detailed disclosures on Generac's ongoing legal matters and potential liabilities - Information regarding the company's legal proceedings is provided in Note 14, 'Commitments and Contingencies,' to the condensed consolidated financial statements[209](index=209&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) Identifies specific risks related to the data center market's growth and Generac's ability to capitalize on it - The growth of the data center market, driven by AI adoption, is difficult to project and may not be sustainable, posing risks to Generac's growth, revenue, and profitability objectives[210](index=210&type=chunk) - Achieving success in this market requires significant capital investment and management resources, and failure to effectively manage growth could impact business plans and competitive responses[210](index=210&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details Generac's stock repurchase activities and the remaining authorization under its programs | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs | Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs | | :---------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | 04/01/2025 – 04/30/2025 | - | $- | - | $249,803,018 | | 05/01/2025 – 05/31/2025 | 177,531 | $134.23 | 177,531 | $225,973,103 | | 06/01/2025 – 06/30/2025 | 220,359 | $123.85 | 214,990 | $199,340,001 | | Total | 397,890 | $128.48 | 392,521 | N/A | - During Q2 2025, Generac repurchased **392,521 shares** of common stock for approximately **$50.5 million** under its stock repurchase programs[211](index=211&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms no defaults occurred on Generac's senior debt obligations during the reporting period - There were no defaults upon senior securities[212](index=212&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that Generac has no mine safety disclosures to report - There are no mine safety disclosures[213](index=213&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) Confirms no changes in Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[214](index=214&type=chunk) [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) Lists all supplementary documents and certifications filed with the Form 10-Q - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), condensed consolidated financial statements in iXBRL format (101), and the cover page in inline XBRL (104)[215](index=215&type=chunk) [Signatures](index=60&type=section&id=Signatures) Contains the official certifications and signatures for the filed financial report - The report is duly signed by York A. Ragen, Chief Financial Officer, on behalf of Generac Holdings Inc., dated August 5, 2025[218](index=218&type=chunk)[220](index=220&type=chunk)

Group 1 - Zacks Premium offers various tools for investors, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens to enhance investment confidence [1][2] - The Zacks Style Scores are complementary indicators that rate stocks based on value, growth, and momentum methodologies, helping investors identify stocks likely to outperform the market in the next 30 days [2][3] Group 2 - Stocks are rated with an alphabetic system from A to F based on their value, growth, and momentum qualities, with A being the highest score indicating a better chance of outperforming [3] - The Value Score focuses on identifying undervalued stocks using ratios like P/E, PEG, and Price/Sales to find attractive investment opportunities [3] - The Growth Score assesses a company's future prospects by analyzing projected and historical earnings, sales, and cash flow to identify sustainable growth stocks [4] - The Momentum Score helps investors capitalize on price trends by analyzing short-term price changes and earnings estimate revisions [5] - The VGM Score combines the three Style Scores to identify stocks with the best value, growth, and momentum characteristics, serving as a strong indicator alongside the Zacks Rank [6] Group 3 - The Zacks Rank is a proprietary model that uses earnings estimate revisions to help investors build successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.75% since 1988, significantly outperforming the S&P 500 [7][9] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B, ensuring a higher probability of success [9][10] Group 4 - Generac Holdings Inc, a leading manufacturer of power generation systems and energy management solutions, is currently rated 3 (Hold) on the Zacks Rank with a VGM Score of B [11] - Generac is considered a potential growth investment, with a Growth Style Score of B and a forecasted year-over-year earnings growth of 4.8% for the current fiscal year, supported by upward revisions in earnings estimates [12]

Core Insights - Generac Holdings reported Q2 earnings that exceeded market estimates, leading to a positive market reaction and an increase in stock price [1] Financial Performance - The company beat earnings estimates significantly, which impressed the market [1] Market Reaction - The size of the earnings beat resulted in a notable increase in the company's stock price [1]

Core Insights - Generac delivered a strong quarterly performance, exceeding analyst expectations and raising its full-year guidance, which has positively impacted its stock price [1][2][4] Financial Performance - In Q2, Generac's revenue increased by 6.2%, with residential growth at 7% and commercial and industrial growth at 5% [2] - Adjusted EBITDA margins improved from 16.5% to 17.7%, while adjusted non-GAAP earnings per share rose by 22.2% to $1.65, surpassing expectations [2] - The company has tightened its full-year revenue outlook to a range of 2% to 5%, up from the previous 0% to 7% range, and adjusted EBITDA margins are now projected to be between 18% and 19% [3] Market Context - There is growing consumer concern regarding electricity scarcity, which may be driving investments in on-premises generators [4] - The rise of artificial intelligence data centers is contributing to potential strains on the electricity grid, further influencing demand for Generac's products [4] Valuation and Investment Perspective - Following the recent stock surge, Generac trades at approximately 24 times this year's earnings estimates and 21 times next year's estimates, which is reasonable for a high-quality market leader [6] - Generac is considered a growth at a reasonable price (GARP) stock, with potential for increased sales during electricity outages caused by disasters [7]

Core Insights - Generac Holdings Inc. (GNRC) reported second-quarter 2025 adjusted earnings per share (EPS) of $1.65, exceeding the Zacks Consensus Estimate of $1.33, and up from $1.35 in the prior-year quarter [1][8] - Net sales reached $1.061 billion, a 6% increase from $998 million in the prior-year quarter, also surpassing the consensus estimate of $1.024 billion, driven by growth in both Residential and Commercial & Industrial (C&I) product sales [1][8] Financial Performance - GNRC's adjusted EPS for Q2 was $1.65, with revenues of $1.061 billion, both beating consensus estimates [1][8] - Domestic revenues rose 7% year over year to $884.5 million, supported by acquisitions and higher demand for residential energy technology solutions [9] - International revenues increased 7% year over year to $197.2 million, with a favorable impact from foreign currency fluctuations [10] - Gross profit was $416.8 million, up from $375.6 million in the prior-year quarter, with gross profit margins improving to 39.3% from 37.6% [12] - Operating income increased by 8.3% year over year to $111.8 million, and adjusted EBITDA rose to $188 million from $165 million a year ago [13] Guidance and Expectations - GNRC revised its 2025 revenue growth expectations to 2-5%, narrowing from the previous guidance of 0-7% [3][8] - The company anticipates net income margin to be in the range of 7.5-8.5%, up from the earlier guidance of 6.5-8.5% [3] - Free cash flow conversion from adjusted net income is now expected to be 90% to 100%, compared to the previous range of 70% to 90% [3] Strategic Initiatives - GNRC sees long-term opportunities in the data-center vertical, driven by increased investment in data centers and the growth of artificial intelligence [4] - The company is building a robust backlog for its new high-output diesel generator product, following strong initial reception [4] Stock Performance - GNRC's stock rose by 7.7% in pre-market trading, with a 1.4% increase over the past six months, outperforming the Manufacturing-General Industrial industry's growth of 1% [5]

Financial Data and Key Metrics Changes - Overall net sales increased by 6% year over year to $1,060 million for the quarter [5][23] - Adjusted EBITDA margins improved to nearly 18%, up from 16.5% in the prior year [6][26] - Gross profit margin rose to 39.3% compared to 37.6% in the prior year, driven by favorable pricing and lower input costs [25] Business Line Data and Key Metrics Changes - Residential product sales increased by 7% to $574 million, driven by growth in energy storage systems and portable generators [23] - C and I product sales rose by 5% to $362 million, supported by domestic industrial distributor and telecom shipments [24] - Home standby sales remained flat year over year, while portable generator sales saw robust growth despite lower outage activity [9][11] Market Data and Key Metrics Changes - Domestic segment sales increased by 7% to $884 million, with international segment sales also up by 7% to $197 million [26][27] - The company experienced strong growth in the telecom market, which is expected to continue due to increasing power reliability needs [17] Company Strategy and Development Direction - The company is focusing on expanding its dealer network, which increased by approximately 400 dealers year over year [10] - A significant emphasis is placed on the upcoming launch of a new generation of home standby generators, which is expected to enhance market competitiveness [11] - The company is entering the data center market, with a backlog of over $150 million, indicating strong demand for large megawatt generators [7][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating evolving market conditions while focusing on growth opportunities [22] - The company anticipates a contraction in the residential solar market but remains committed to its energy ecosystem strategy [16][61] - Future growth is expected in the C and I product segment, particularly in the data center market, which is projected to grow significantly [19][48] Other Important Information - The company repurchased approximately 393,000 shares for $50 million during the quarter, with $200 million remaining on the share repurchase authorization [30] - Total debt outstanding at the end of the quarter was $1.4 billion, resulting in a gross debt leverage ratio of 1.7 times [31] Q&A Session Summary Question: Update on data center market entry - Management indicated that initial shipments to international markets will start in Q3, with domestic shipments expected late this year, but significant revenue impact is anticipated in 2026 [42][43] Question: Changes in investment philosophy regarding solar and inverter markets - Management acknowledged a potential contraction in the solar market but emphasized the importance of solar and storage technologies in the residential energy ecosystem [53][61] Question: Trends in home standby generator demand - Management noted that installations are up year to date, with a focus on monitoring demand trends in the second half of the year, particularly in light of potential outage events [84]

Financial Data and Key Metrics Changes - Overall net sales increased by 6% year over year to $1,060,000,000 for the quarter [4][21] - Adjusted EBITDA margins improved to nearly 18%, driven by strong gross margin performance and better operating leverage [5][24] - Gross profit margin rose to 39.3% compared to 37.6% in the prior year, primarily due to favorable pricing and lower input costs [23] Business Line Data and Key Metrics Changes - Residential product sales increased by 7% year over year to $574,000,000, driven by growth in energy storage systems and portable generator sales [21][22] - C and I product sales grew by 5% year over year to $362,000,000, supported by domestic industrial distributor and telecom shipments [22] - Sales in the Other Products and Services category increased by approximately 8% to $125,000,000, primarily due to growth in aftermarket service parts and Ecobee sales [22] Market Data and Key Metrics Changes - Domestic segment total sales increased by 7% to $884,000,000, including a 1% contribution from recent acquisitions [24] - International segment total sales also rose by approximately 7% to $197,000,000, benefiting from foreign currency [24] - The telecom market is expected to deliver robust growth for the full year 2025, driven by increasing reliance on wireless communications [16] Company Strategy and Development Direction - The company is focusing on expanding its dealer network, which increased to approximately 9,300 industrial dealers, enhancing consumer awareness for home standby products [9] - A new generation of home standby generators is set to launch, featuring improved efficiency and lower costs [10] - The company is committed to optimizing pricing strategies in response to evolving tariff landscapes while executing supply chain and cost reduction initiatives [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the data center market, with a backlog of over $150,000,000 for large megawatt generators [19] - The company anticipates a challenging comparison for 2025 due to the absence of major outage events, but expects to maintain a baseline level of demand [11][32] - Management noted that the residential solar market is likely to contract, prompting a reevaluation of investment levels in solar technologies [15][62] Other Important Information - The company repurchased approximately 393,000 shares for $50,000,000 during the quarter, with $200,000,000 remaining on the share repurchase authorization [28] - Total debt outstanding at the end of the quarter was $1,400,000,000, resulting in a gross debt leverage ratio of 1.7 times [29] Q&A Session Summary Question: Update on the data center market entry - Management indicated that initial shipments to international markets will start in Q3, with domestic shipments expected late this year, but significant revenue impact is anticipated in 2026 [40][41] Question: Comments on Ecobee and solar market investment - Management acknowledged a potential contraction in the solar market but emphasized the importance of solar and storage technologies in the residential energy ecosystem [54][62] Question: Trends in home standby demand - Management noted that installations of home standby products are up year to date, with a robust dealer network supporting growth, despite lower outage activity in the first half of the year [85][86]

Core Insights - Generac Holdings reported revenue of $1.06 billion for the quarter ended June 2025, marking a year-over-year increase of 6.3% and exceeding the Zacks Consensus Estimate by 3.61% [1] - The company's EPS for the same period was $1.65, up from $1.35 a year ago, representing a surprise of 24.06% over the consensus estimate of $1.33 [1] Revenue Breakdown - Revenue from Residential products was $574.19 million, surpassing the estimated $557.36 million, reflecting a year-over-year increase of 6.7% [4] - Revenue from Other products reached $124.78 million, exceeding the estimated $120.73 million, with a year-over-year increase of 7.9% [4] - Revenue from Commercial & Industrial products was $362.2 million, above the estimated $342.91 million, showing a year-over-year increase of 5.2% [4] Stock Performance - Shares of Generac Holdings have returned +3.2% over the past month, compared to a +3.4% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Generac Holdings (GNRC) came out with quarterly earnings of $1.65 per share, beating the Zacks Consensus Estimate of $1.33 per share. This compares to earnings of $1.35 per share a year ago. These figures are adjusted for non-recurring items. There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectation ...

[Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Generac's Q2 2025 performance exceeded expectations with strong sales and profitability across segments, alongside strategic market entries [Overall Performance and Operational Highlights](index=1&type=section&id=Overall%20Performance%20and%20Operational%20Highlights) Generac exceeded Q2 2025 expectations with strong Residential and C&I sales, driven by energy storage, home energy management, and data center market entry - Generac's Q2 2025 results exceeded expectations with **strong performance** in Residential and C&I product sales, driven by energy storage systems, home energy management solutions, and portable generator market share gains. The company also successfully entered the data center market[3](index=3&type=chunk) [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) Generac reported increased net sales, net income, and Adjusted EBITDA in Q2 2025, while cash flow from operations and free cash flow decreased Q2 2025 Key Financial Metrics (YoY Comparison) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $1,061 million | $998 million | 6% | | Residential Product Sales | $574 million | $538 million | 7% | | C&I Product Sales | $362 million | $344 million | 5% | | Net Income Attributable to Company | $74 million | $59 million | 25.4% | | EPS (Diluted) | $1.25 | $0.97 | 28.9% | | Adjusted Net Income Attributable to Company | $97 million | $82 million | 18.3% | | Adjusted EPS (Diluted) | $1.65 | $1.35 | 22.2% | | Adjusted EBITDA | $188 million | $165 million | 13.9% | | Adjusted EBITDA Margin | 17.7% | 16.5% | 1.2 pp | | Cash Flow from Operations | $72 million | $78 million | -7.7% | | Free Cash Flow | $14 million | $50 million | -72.0% | - The company repurchased **392,521 shares** of its common stock for approximately **$50 million** during Q2 2025, with **$200 million** remaining under the current repurchase program[4](index=4&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Additional%20Second%20Quarter%202025%20Consolidated%20Highlights) Generac's Q2 2025 saw improved gross profit margin and effective tax rate, but increased operating expenses and decreased cash flow from operations [Profitability and Expenses](index=2&type=section&id=Profitability%20and%20Expenses) Gross profit margin improved to 39.3% in Q2 2025 due to pricing and lower costs, despite a 12.0% increase in operating expenses Q2 2025 Gross Profit Margin | Metric | Q2 2025 | Q2 2024 | Change (pp) | | :----------------- | :------ | :------ | :---------- | | Gross Profit Margin | 39.3% | 37.6% | 1.7 | - Operating expenses increased by **$32.6 million**, or **12.0%**, primarily due to higher variable costs from increased shipment volumes, increased employee costs to support future growth, and ongoing expenses from recent acquisitions[6](index=6&type=chunk) Q2 2025 Provision for Income Taxes | Metric | Q2 2025 | Q2 2024 | Change (pp) | | :----------------- | :------ | :------ | :---------- | | Effective Tax Rate | 17.2% | 25.0% | -7.8 | [Cash Flow and Debt Management](index=2&type=section&id=Cash%20Flow%20and%20Debt%20Management) Cash flow from operations and free cash flow decreased in Q2 2025 due to working capital and capital expenditures, while debt facilities were extended Q2 2025 Cash Flow Summary | Metric | Q2 2025 | Q2 2024 | Change ($M) | | :-------------------------- | :------ | :------ | :---------- | | Cash Flow from Operations | $72.2M | $77.7M | -$5.5M | | Free Cash Flow | $14.5M | $49.7M | -$35.2M | - Generac amended and extended its existing term loan A and revolving credit facility, setting a new maturity date of **July 1, 2030**. The term loan A balance is now **$700 million**, and the revolving facility borrowing capacity is reduced to **$1.0 billion**[9](index=9&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Results) Both Domestic and International segments reported strong sales growth and improved Adjusted EBITDA margins in Q2 2025 [Domestic Segment](index=2&type=section&id=Domestic%20Segment) Domestic segment sales increased 7% to $884.5 million, driven by residential energy tech and C&I products, with improved Adjusted EBITDA margin Domestic Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | | Total Sales | $884.5 million | $827.1 million | 7% | | Adjusted EBITDA | $158.1 million | $139.7 million | 13.2% | | Adjusted EBITDA Margin | 17.9% | 16.9% | 1.0 pp | - Growth was primarily driven by residential energy technology solutions, portable generators, and C&I products to industrial distributors and national telecom customers, partially offset by softness in C&I product shipments to national rental accounts[10](index=10&type=chunk) [International Segment](index=2&type=section&id=International%20Segment) International segment sales grew 7% to $197.2 million, boosted by inter-segment sales and European C&I products, with an improved Adjusted EBITDA margin International Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | | Total Sales | $197.2 million | $184.5 million | 7% | | Adjusted EBITDA | $29.5 million | $25.0 million | 18.0% | | Adjusted EBITDA Margin | 15.0% | 13.6% | 1.4 pp | - Core sales growth was primarily driven by higher inter-segment sales and strength in C&I product shipments in Europe, partially offset by softer shipments in other regions[12](index=12&type=chunk) [Full-Year 2025 Outlook](index=2&type=section&id=2025%20Outlook) Generac updated its full-year 2025 guidance, narrowing sales growth and raising profitability and free cash flow conversion targets [Sales Guidance](index=2&type=section&id=Sales%20Guidance) Generac narrowed its full-year 2025 net sales growth guidance to 2% to 5%, reflecting Q2 outperformance and revised tariff assumptions Full-Year 2025 Net Sales Growth Guidance Update | Metric | Previous Guidance | Updated Guidance | | :---------------------- | :---------------- | :--------------- | | Net Sales Growth (YoY) | 0% to 7% | 2% to 5% | [Profitability Guidance](index=3&type=section&id=Profitability%20Guidance) The company raised its full-year 2025 net income margin to 7.5%-8.5% and Adjusted EBITDA margin to 18.0%-19.0% Full-Year 2025 Profitability Guidance Update | Metric | Previous Guidance | Updated Guidance | | :--------------------------------- | :---------------- | :--------------- | | Net Income Margin | 6.5% to 8.5% | 7.5% to 8.5% | | Adjusted EBITDA Margin | 17.0% to 19.0% | 18.0% to 19.0% | [Cash Flow Guidance](index=3&type=section&id=Cash%20Flow%20Guidance) Generac increased its full-year 2025 free cash flow conversion guidance to 90%-100%, driven by the One Big Beautiful Bill Act Full-Year 2025 Free Cash Flow Conversion Guidance Update | Metric | Previous Guidance | Updated Guidance | | :------------------------------------ | :---------------- | :--------------- | | Free Cash Flow Conversion from Adj. Net Income | 70% to 90% | 90% to 100% | [Company Information](index=3&type=section&id=About%20Generac) This section provides an overview of Generac, its forward-looking statements, associated risks, and definitions of non-GAAP financial measures [About Generac](index=3&type=section&id=About%20Generac_Detail) Generac is a global leader in energy technology solutions, providing power generation, storage, and management for diverse markets - Generac is a global leader in energy technology solutions, offering power generation, energy storage, and energy management products for residential, commercial, and industrial markets, aiming for resilient, efficient, and sustainable energy[19](index=19&type=chunk) [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-looking%20Information) This section cautions that forward-looking statements are subject to risks, including raw material costs, supplier dependence, and trade policy changes - Forward-looking statements in this release are not guarantees of performance and involve risks and uncertainties that could cause actual results to differ materially[20](index=20&type=chunk)[21](index=21&type=chunk) - Key risk factors include fluctuations in cost, availability, and quality of raw materials and components; dependence on a small number of suppliers; changes and volatility in trade policies (tariffs); and changes in durable goods spending by consumers and businesses[21](index=21&type=chunk)[24](index=24&type=chunk) [Non-GAAP Financial Measures Definitions](index=5&type=section&id=Non-GAAP%20Financial%20Metrics) Generac defines Core Sales, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow as key non-GAAP financial metrics - Core Sales excludes the impact of acquisitions and foreign currency translation, facilitating easier comparison of net sales performance[25](index=25&type=chunk) - Adjusted EBITDA is defined as net income before noncontrolling interests adjusted for interest, depreciation, amortization, income tax, and various non-cash and non-recurring items[26](index=26&type=chunk) - Adjusted Net Income is net income before noncontrolling interests adjusted for amortization of intangible assets, deferred financing costs, transaction costs, business optimization expenses, and certain legal/regulatory charges[27](index=27&type=chunk) - Free Cash Flow is defined as net cash provided by operating activities, plus proceeds from beneficial interests in securitization transactions, less expenditures for property and equipment[28](index=28&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents Generac's balance sheets, comprehensive income statements, and cash flow statements for Q2 2025 and year-to-date [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $5,388.8 million as of June 30, 2025, driven by inventories and property, with corresponding increases in liabilities and equity Condensed Consolidated Balance Sheet Summary (June 30, 2025 vs Dec 31, 2024) | Metric | June 30, 2025 ($ Thousands) | Dec 31, 2024 ($ Thousands) | Change ($ Thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------------- | | Total Current Assets | 2,245,689 | 2,032,170 | 213,519 | | Total Assets | 5,388,801 | 5,109,331 | 279,470 | | Total Current Liabilities | 1,121,280 | 1,033,152 | 88,128 | | Total Liabilities | 2,813,610 | 2,611,888 | 201,722 | | Total Stockholders' Equity | 2,575,191 | 2,497,443 | 77,748 | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q2 2025 net sales rose to $1,061.2 million, with net income attributable to Generac increasing to $74.0 million, or $1.25 per diluted share Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30) | Metric | 2025 ($ Thousands) | 2024 ($ Thousands) | Change ($ Thousands) | Change (%) | | :--------------------------------------- | :----------------- | :----------------- | :------------------- | :--------- | | Net sales | 1,061,169 | 998,197 | 62,972 | 6.3% | | Gross profit | 416,749 | 375,561 | 41,188 | 11.0% | | Income from operations | 111,789 | 103,235 | 8,554 | 8.3% | | Net income attributable to Generac Holdings Inc. | 74,016 | 59,115 | 14,901 | 25.2% | | Diluted EPS | $1.25 | $0.97 | $0.28 | 28.9% | Condensed Consolidated Statements of Comprehensive Income (Six Months Ended June 30) | Metric | 2025 ($ Thousands) | 2024 ($ Thousands) | Change ($ Thousands) | Change (%) | | :--------------------------------------- | :----------------- | :----------------- | :------------------- | :--------- | | Net sales | 2,003,290 | 1,887,470 | 115,820 | 6.1% | | Gross profit | 788,735 | 691,940 | 96,795 | 14.0% | | Income from operations | 195,427 | 170,104 | 25,323 | 14.9% | | Net income attributable to Generac Holdings Inc. | 117,856 | 85,347 | 32,509 | 38.1% | | Diluted EPS | $1.98 | $1.36 | $0.62 | 45.6% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $130.3 million for the six months ended June 30, 2025, primarily due to increased inventories Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 ($ Thousands) | 2024 ($ Thousands) | Change ($ Thousands) | | :------------------------------------ | :----------------- | :----------------- | :------------------- | | Net cash provided by operating activities | 130,341 | 189,562 | (59,221) | | Net cash used in investing activities | (93,308) | (74,024) | (19,284) | | Net cash used in financing activities | (101,318) | (96,509) | (4,809) | | Net (decrease) increase in cash and cash equivalents | (57,746) | 17,323 | (75,069) | - The decrease in net cash from operating activities was significantly impacted by a **$199.3 million increase in inventories** in 2025, compared to a **$12.2 million increase** in 2024[36](index=36&type=chunk) [Supplemental Financial Information](index=9&type=section&id=Segment%20Reporting%20and%20Product%20Class%20Information) This section details segment and product class performance, along with reconciliations for non-GAAP financial measures [Segment and Product Class Performance](index=9&type=section&id=Segment%20Reporting%20and%20Product%20Class%20Information_Detail) Both Domestic and International segments reported 7% sales growth in Q2 2025, with residential products leading external net sales increases Total Sales by Reportable Segment (Three Months Ended June 30) | Segment | 2025 ($ Thousands) | 2024 ($ Thousands) | Change ($ Thousands) | Change (%) | | :---------- | :----------------- | :----------------- | :------------------- | :--------- | | Domestic | 884,462 | 827,139 | 57,323 | 6.9% | | International | 197,204 | 184,508 | 12,696 | 6.9% | External Net Sales by Product Class (Three Months Ended June 30) | Product Class | 2025 ($ Thousands) | 2024 ($ Thousands) | Change ($ Thousands) | Change (%) | | :------------------------ | :----------------- | :----------------- | :------------------- | :--------- | | Residential products | 574,189 | 538,399 | 35,790 | 6.6% | | Commercial & industrial products | 362,203 | 344,169 | 18,034 | 5.2% | | Other | 124,777 | 115,629 | 9,148 | 7.9% | Adjusted EBITDA by Reportable Segment (Three Months Ended June 30) | Segment | 2025 ($ Thousands) | 2024 ($ Thousands) | Change ($ Thousands) | Change (%) | | :---------- | :----------------- | :----------------- | :------------------- | :--------- | | Domestic | 158,117 | 139,674 | 18,443 | 13.2% | | International | 29,512 | 25,015 | 4,497 | 18.0% | | Total Adjusted EBITDA | 187,629 | 164,689 | 22,940 | 13.9% | [Non-GAAP Reconciliation Schedules](index=10&type=section&id=Reconciliation%20Schedules) Detailed reconciliations are provided for Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow, outlining specific adjustments from GAAP net income Net Income to Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Adjustment Item | 2025 ($ Thousands) | 2024 ($ Thousands) | | :------------------------------------ | :----------------- | :----------------- | | Net income attributable to Generac Holdings Inc. | 74,016 | 59,115 | | Interest expense | 18,242 | 23,318 | | Depreciation and amortization | 48,321 | 42,880 | | Provision for income taxes | 15,422 | 19,638 | | Non-cash share-based compensation expense | 14,752 | 12,715 | | Adjusted EBITDA | 187,629 | 164,689 | Net Income to Adjusted Net Income Reconciliation (Three Months Ended June 30) | Adjustment Item | 2025 ($ Thousands) | 2024 ($ Thousands) | | :------------------------------------ | :----------------- | :----------------- | | Net income attributable to Generac Holdings Inc. | 74,016 | 59,115 | | Amortization of intangible assets | 25,681 | 24,791 | | Business optimization and other charges | 3,442 | 1,140 | | Provision for legal, regulatory and other costs | 4,911 | 363 | | Tax effect of add backs | (17,138) | (7,520) | | Adjusted net income attributable to Generac Holdings Inc. | 97,328 | 81,690 | Free Cash Flow Reconciliation (Three Months Ended June 30) | Metric | 2025 ($ Thousands) | 2024 ($ Thousands) | | :------------------------------------ | :----------------- | :----------------- | | Net cash provided by operating activities | 72,189 | 77,664 | | Expenditures for property and equipment | (57,716) | (27,952) | | Free cash flow | 14,473 | 49,712 |