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Represents favorable impact from the weakening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2025, particularly the Euro and British Pound. Represents non-cash losses from changes in the fair value of the Company's investment in Wallbox warrants and equity securities. Represents unrealized losses of $(5,732) on the interest rate swaps, net of tax recognized of $1,419, for the three months ended March 31, 2025. Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions. Represents favorable impact from the weakening of the U.S. dollar against foreign currencies during the three months ended March 31, 2025, particularly the Euro and British Pound. Represents the following significant litigation, regulatory, and other matters that are not indicative of our ongoing operations: • A provision for judgments, settlements, and legal expenses related to certain patent lawsuits - $1,696 and $3,188 for the three and six months ended June 30, 2025, respectively, and $363 and $2,533 for the three and six months ended June 30, 2024, respectively. • Legal expenses related to certain class action lawsuits - $2,540 and $3,883 for the three and six months ended June 30, 2025, respectively. • Legal expenses related to certain government inquiries and other significant matters - $675 and $1,591 for the three and six months ended June 30, 2025, respectively. • Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $0 and $365 for the three and six months ended June 30, 2024. Includes gains (losses) on dispositions of assets other than in the ordinary course of business, gains (losses) on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. Excludes approximately 779,000 and 428,000 stock options and restricted stock awards for the three months and six months ended June 30, 2025, respectively, and 471,000 and 440,000 stock options and restricted stock awards for the three months and six months ended June 30, 2024, respectively, because they would be anti-dilutive. Represents unrealized losses of $9,838 on the interest rate swaps, net of tax effect of $2,435, for the six months ended June 30, 2025. Represents transaction costs incurred directly in connection with any investment, as defined in the Company's credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to the Company's senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under the Company's Amended Credit Agreement. Represents unrealized gains of $2,644 on the interest rate swaps, net of tax recognized of $(662), for the three months ended March 31, 2024. Represents the following significant litigation, regulatory, and other matters that are not indicative of our ongoing operations: • A provision for judgments, settlements, and legal expenses related to certain patent lawsuits - $3,188 and $1,696 for the year-to-date and three months ended June 30, 2025, respectively and $2,533 and $363 for the year-to-date and three months ended June 30 2024, respectively. • Legal expenses related to certain class action lawsuits - $3,883 and $2,540 for the year-to-date and three months ended June 30, 2025, respectively. • Legal expenses related to certain government inquiries and other significant matters - $1,591 and $675 for the year-to-date and three months ended June 30, 2025, respectively. • Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $365 year-to-date June 30, 2024. Represents unfavorable impact from the strengthening of the U.S. dollar against foreign currencies during the three months ended March 31, 2024. The pre-tax loss in the second quarter of 2025 relates primarily to the sale of our immaterial Tank Utility fleet business. Represents unrealized gains of $336 on the interest rate swaps, net of tax effect of $(84), for the six months ended June 30, 2024. 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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2025

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File Number 001-34627

GENERAC HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	20-5654756
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

S45 W29290 Hwy 59, Waukesha, WI	53189
(Address of principal executive offices)	(Zip Code)

(262) 544-4811

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	GNRC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 1, 2025, there were 58,675,951 shares of registrant's common stock outstanding.

Table of Contents

GENERAC HOLDINGS INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of June 30, 2025, and December 31, 2024	1

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30 , 2025 and 2024	2

	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30 , 2025 and 2024	3

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2025 and 2024	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	32

	Signatures	33

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Generac Holdings Inc.

Condensed Consolidated Balance Sheets

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

(Unaudited)

	*June 30,*			*December 31,*
	*2025*			*2024*
Assets
Current assets:
Cash and cash equivalents	$	223,531		$	281,277
Accounts receivable, less allowance for credit losses of $36,228 and $35,465 at June 30, 2025 and December 31, 2024, respectively		648,736			612,107
Inventories		1,254,133			1,031,647
Prepaid expenses and other current assets		119,289			107,139
Total current assets		2,245,689			2,032,170

Property and equipment, net		766,745			690,023

Customer lists, net		146,051			152,737
Patents and technology, net		361,619			379,095
Other intangible assets, net		15,074			20,026
Tradenames, net		203,756			206,664
Goodwill		1,468,791			1,436,261
Deferred income taxes		42,200			24,132
Operating lease and other assets		138,876			168,223
Total assets	$	5,388,801		$	5,109,331

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	54,264		$	55,848
Accounts payable		596,268			458,693
Accrued wages and employee benefits		54,958			81,485
Accrued product warranty		48,871			56,127
Other accrued liabilities		291,331			313,401
Current portion of long-term borrowings and finance lease obligations		75,588			67,598
Total current liabilities		1,121,280			1,033,152

Long-term borrowings and finance lease obligations		1,292,813			1,210,776
Deferred income taxes		34,719			33,185
Deferred revenue		200,459			193,260
Operating lease and other long-term liabilities		164,339			141,515
Total liabilities		2,813,610			2,611,888

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 74,023,750 and 73,785,631 shares issued at June 30, 2025 and December 31, 2024, respectively		740			738
Additional paid-in capital		1,161,153			1,133,756
Treasury stock, at cost, 15,351,876 and 14,173,697 shares at June 30, 2025 and December 31, 2024, respectively		(1,354,218	)		(1,196,997	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		2,961,859			2,844,296
Accumulated other comprehensive income (loss)		3,105			(85,399	)
Stockholders’ equity attributable to Generac Holdings Inc.		2,570,523			2,494,278
Noncontrolling interests		4,668			3,165
Total stockholders' equity		2,575,191			2,497,443
Total liabilities and stockholders’ equity	$	5,388,801		$	5,109,331

See notes to condensed consolidated financial statements.

Table of Contents

Generac Holdings Inc.

Condensed Consolidated Statements of Comprehensive Income

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

(Unaudited)

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2025*			*2024*			*2025*			*2024*

Net sales	$	1,061,169		$	998,197		$	2,003,290		$	1,887,470
Costs of goods sold		644,420			622,636			1,214,555			1,195,530
Gross profit		416,749			375,561			788,735			691,940

Operating expenses:
Selling and service		139,495			128,153			265,560			236,739
Research and development		60,354			53,996			122,402			103,406
General and administrative		79,430			65,386			154,176			132,150
Amortization of intangibles		25,681			24,791			51,170			49,541
Total operating expenses		304,960			272,326			593,308			521,836
Income from operations		111,789			103,235			195,427			170,104

Other (expense) income:
Interest expense		(18,242	)		(23,318	)		(35,352	)		(46,923	)
Investment income		1,747			1,841			3,972			3,529
Change in fair value of investments		(1,524	)		(2,117	)		(11,471	)		(8,136	)
Other, net		(3,918	)		(950	)		(4,210	)		(1,372	)
Total other expense, net		(21,937	)		(24,544	)		(47,061	)		(52,902	)

Income before provision for income taxes		89,852			78,691			148,366			117,202
Provision for income taxes		15,422			19,638			29,658			31,671
Net income		74,430			59,053			118,708			85,531
Net income (loss) attributable to noncontrolling interests		414			(62	)		852			184
Net income attributable to Generac Holdings Inc.	$	74,016		$	59,115		$	117,856		$	85,347

Net income attributable to Generac Holdings Inc. per common share - basic:	$	1.27		$	0.99		$	2.01		$	1.38
Weighted average common shares outstanding - basic:		58,496,998			59,880,336			58,771,818			59,854,131

Net income attributable to Generac Holdings Inc. per common share - diluted:	$	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

Comprehensive income attributable to Generac Holdings Inc.	$	137,561		$	34,397		$	206,360		$	56,961

See notes to condensed consolidated financial statements.

Table of Contents

Generac Holdings Inc.

Condensed Consolidated Statements of Stockholders' Equity

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

(Unaudited)

	*Generac Holdings Inc.*
														*Excess Purchase Price*						*Accumulated*
						*Additional*								*Over*						*Other*			*Total*
	*Common Stock*					*Paid-In*		*Treasury Stock*						*Predecessor*			*Retained*			*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*			*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Earnings*			*Income (Loss)*			*Equity*			*Interest*		*Total*
Balance at April 1, 2025		74,035,516		$	740	$	1,145,990		(14,953,986	)	$	(1,303,086	)	$	(202,116	)	$	2,888,136		$	(60,440	)	$	2,469,224		$	3,801	$	2,473,025
Unrealized loss on interest rate swaps, net of tax of $1,016																					(3,090	)		(3,090	)				(3,090	)
Foreign currency translation adjustment																					66,635			66,635			453		67,088
Common stock issued under equity incentive plans, net of forfeitures and shares withheld for employee taxes and strike price		(11,766	)		–		411																	411					411
Net share settlement of restricted stock awards									(5,369	)		(669	)											(669	)				(669	)
Stock repurchases									(392,521	)		(50,463	)											(50,463	)				(50,463	)
Share-based compensation							14,752																	14,752					14,752
Cash dividends paid to noncontrolling interest of subsidiary																		(293	)					(293	)				(293	)
Net income																		74,016						74,016			414		74,430

Balance at June 30, 2025		74,023,750		$	740	$	1,161,153		(15,351,876	)	$	(1,354,218	)	$	(202,116	)	$	2,961,859		$	3,105		$	2,570,523		$	4,668	$	2,575,191

	*Generac Holdings Inc.*
													*Excess Purchase Price*						*Accumulated*
					*Additional*								*Over*						*Other*			*Total*
	*Common Stock*				*Paid-In*		*Treasury Stock*						*Predecessor*			*Retained*			*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Earnings*			*Income (Loss)*			*Equity*			*Interest*		*Total*
Balance at January 1, 2025		73,785,631	$	738	$	1,133,756		(14,173,697	)	$	(1,196,997	)	$	(202,116	)	$	2,844,296		$	(85,399	)	$	2,494,278		$	3,165	$	2,497,443
Unrealized loss on interest rate swaps, net of tax of $2,435																				(7,403	)		(7,403	)				(7,403	)
Foreign currency translation adjustment																				95,907			95,907			651		96,558
Common stock issued under equity incentive plans, net of forfeitures and shares withheld for employee taxes and strike price		238,119		2		1,037																	1,039					1,039
Net share settlement of restricted stock awards								(68,973	)		(9,304	)											(9,304	)				(9,304	)
Stock repurchases								(1,109,206	)		(147,917	)											(147,917	)				(147,917	)
Share-based compensation						26,360																	26,360					26,360
Cash dividends paid to noncontrolling interest of subsidiary																	(293	)					(293	)				(293	)
Net income																	117,856						117,856			852		118,708

Balance at June 30, 2025		74,023,750	$	740	$	1,161,153		(15,351,876	)	$	(1,354,218	)	$	(202,116	)	$	2,961,859		$	3,105		$	2,570,523		$	4,668	$	2,575,191

	*Generac Holdings Inc.*
													*Excess Purchase Price*					*Accumulated*
					*Additional*								*Over*					*Other*			*Total*
	*Common Stock*				*Paid-In*		*Treasury Stock*						*Predecessor*			*Retained*		*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Earnings*		*Income (Loss)*			*Equity*			*Interest*			*Total*
Balance at April 1, 2024		73,492,146	$	735	$	1,081,985		(13,087,185	)	$	(1,037,227	)	$	(202,116	)	$	2,542,859	$	(18,832	)	$	2,367,404		$	2,908		$	2,370,312
Unrealized loss on interest rate swaps, net of tax benefit of $578																			(1,730	)		(1,730	)					(1,730	)
Foreign currency translation adjustment																			(22,967	)		(22,967	)		(40	)		(23,007	)
Common stock issued under equity incentive plans, net of forfeitures and shares withheld for employee taxes and strike price		116,432		1		6,374																6,375						6,375
Net share settlement of restricted stock awards								(3,972	)		(590	)										(590	)					(590	)
Stock repurchases								(355,640	)		(50,609	)										(50,609	)					(50,609	)
Share-based compensation						12,715																12,715						12,715
Net income (loss)																	59,115					59,115			(62	)		59,053
Balance at June 30, 2024		73,608,578	$	736	$	1,101,074		(13,446,797	)	$	(1,088,426	)	$	(202,116	)	$	2,601,974	$	(43,529	)	$	2,369,713		$	2,806		$	2,372,519

	*Generac Holdings Inc.*
													*Excess Purchase Price*						*Accumulated*
					*Additional*								*Over*						*Other*			*Total*
	*Common Stock*				*Paid-In*		*Treasury Stock*						*Predecessor*			*Retained*			*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Earnings*			*Income (Loss)*			*Equity*			*Interest*			*Total*
Balance at January 1, 2024		73,195,055	$	733	$	1,070,386		(13,057,298	)	$	(1,032,921	)	$	(202,116	)	$	2,519,313		$	(15,143	)	$	2,340,252		$	2,818		$	2,343,070
Unrealized gain on interest rate swaps, net of tax of $(84)																				252			252						252
Foreign currency translation adjustment																				(28,638	)		(28,638	)		(127	)		(28,765	)
Common stock issued under equity incentive plans, net of forfeitures and shares withheld for employee taxes and strike price		413,523		3		5,533		8,417			–												5,536						5,536
Net share settlement of restricted stock awards								(42,276	)		(4,896	)											(4,896	)					(4,896	)
Stock repurchases								(355,640	)		(50,609	)											(50,609	)					(50,609	)
Share-based compensation						25,155																	25,155						25,155
Redemption value adjustment																	(2,686	)					(2,686	)					(2,686	)
Net income																	85,347						85,347			115			85,462

Balance at June 30, 2024		73,608,578	$	736	$	1,101,074		(13,446,797	)	$	(1,088,426	)	$	(202,116	)	$	2,601,974		$	(43,529	)	$	2,369,713		$	2,806		$	2,372,519

See notes to condensed consolidated financial statements.

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Generac Holdings Inc.

Condensed Consolidated Statements of Cash Flows

(U.S. Dollars in Thousands)

(Unaudited)

	*Six Months Ended June 30,*
	*2025*			*2024*
Operating activities
Net income	$	118,708		$	85,531
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and finance lease amortization		43,292			35,241
Amortization of intangible assets		51,170			49,541
Amortization of deferred financing costs and original issue discount		1,278			1,948
Change in fair value of investments		11,471			8,136
Deferred income taxes		(18,668	)		(18,140	)
Share-based compensation expense		26,360			25,155
Loss (gain) on disposal of assets		602			(28	)
Loss attributable to the disposition of a business		3,905			-
Other noncash charges		1,513			1,680
Excess tax expense (benefits) from equity awards		90			(602	)
Net changes in operating assets and liabilities:
Accounts receivable		(485	)		(74,467	)
Inventories		(199,279	)		12,245
Other assets		7,990			12,881
Accounts payable		129,489			73,994
Accrued wages and employee benefits		(28,297	)		5,679
Other accrued liabilities		(18,798	)		(29,232	)
Net cash provided by operating activities		130,341			189,562

Investing activities
Proceeds from sale of property and equipment		-			85
Contribution to tax equity investment		-			(1,629	)
Purchase of long-term investments		(2,656	)		(1,896	)
Proceeds from sale of long-term investments		-			2,000
Expenditures for property and equipment		(88,653	)		(54,772	)
Acquisition of business, net of cash acquired		-			(17,812	)
Other investing activities		(1,999	)		-
Net cash used in investing activities		(93,308	)		(74,024	)

Financing activities
Proceeds from short-term borrowings		21,860			20,728
Proceeds from long-term borrowings		92,585			2,881
Repayments of short-term borrowings		(30,171	)		(39,011	)
Repayments of long-term borrowings and finance lease obligations		(29,032	)		(14,657	)
Stock repurchases		(147,917	)		(50,609	)
Payment of deferred acquisition consideration		-			(7,361	)
Cash dividends paid to noncontrolling interest of subsidiary		(293	)		-
Purchase of additional ownership interest		-			(9,117	)
Taxes paid related to equity awards		(9,393	)		(9,983	)
Proceeds from the exercise of stock options		1,043			10,620
Net cash used in financing activities		(101,318	)		(96,509	)

Effect of foreign exchange rate changes on cash and cash equivalents		6,539			(1,706	)

Net (decrease) increase in cash and cash equivalents		(57,746	)		17,323
Cash and cash equivalents at beginning of period		281,277			200,994
Cash and cash equivalents at end of period	$	223,531		$	218,317

See notes to condensed consolidated financial statements.

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Generac Holdings Inc.
Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

1. Description of Business and Basis of Presentation

Founded in 1959, Generac Holdings Inc. (the Company) is a leading global designer and manufacturer of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products and services serving the residential, light commercial, and industrial markets. Generac’s power products and solutions are available globally through a broad network of independent dealers, distributors, retailers, e-commerce partners, wholesalers, and equipment rental companies, as well as sold direct to certain end user customers.

Over the years, the Company has executed a number of acquisitions that support its strategic plan (refer to Item 1 in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of the Company's “Powering a Smarter World” strategic plan). A summary of acquisitions affecting the reporting periods presented include:

	●	In November 2024, the Company acquired Wolverine Power Systems (Wolverine), headquartered in Zeeland, Michigan. Wolverine is an industrial and residential generator distributor as well as a provider of maintenance and repair services.
	●	In August 2024, the Company acquired the assets and liabilities of Ageto, LLC (Ageto). Ageto designs and integrates microgrid control solutions and is headquartered in Fort Collins, Colorado.
	●	In June 2024, the Company closed on the acquisition of the Commercial & Industrial Battery Energy Storage System (C&I BESS) product offering from SunGrid Solutions Inc. located in Cambridge, Canada.
	●	In April 2024, the Company acquired Huntington Power Equipment, Inc. (Huntington), headquartered in Shelton, Connecticut. Huntington is an industrial and residential generator distributor as well as a provider of maintenance and repair services.

The condensed consolidated balance sheet as of June 30, 2025, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2025 and 2024, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2025 and 2024, and the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operation, and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

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

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

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New Accounting Pronouncements and Regulations

On July 4, 2025, President Trump signed into law the "One Big Beautiful Bill Act" (OBBBA). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing. In addition, the OBBBA accelerates the phase-out of incentives for the solar market and includes certain supply chain requirements to qualify for these incentives. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company is in the process of evaluating the impact of the OBBBA to our business and the consolidated financial statements.

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

In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new guidance is intended to provide investors more detailed disclosures around specific types of expenses. The new disclosures require additional quantitative and qualitative information for certain expenses contained within the Consolidated Statements of Comprehensive Income to be presented in the notes to the financial statements. The update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently assessing the impact and timing of adopting the updated standard.

In December 2023, the FASB issued ASU 2023-09 Improvements to Income Tax Disclosures. The ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, the Company must consistently categorize and provide greater disaggregation of information in the rate reconciliation. It must also further disaggregate income taxes paid. The update is effective for fiscal years beginning after December 15, 2024, and interim periods for fiscal years beginning after December 15, 2025. Entities may apply the amendments prospectively or may elect retrospective application. The Company is evaluating the impact of the new required disclosures but does not expect the adoption of ASU 2023-09 to have a material impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07 Segment Reporting - Improving Reportable Segment Disclosures (Topic 280). The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update was effective for fiscal year 2024 and is effective for interim periods in fiscal 2025. The required annual disclosures are reflected in Note 7, "Segment Reporting," to the 2024 Annual Report on Form 10-K and the required quarterly disclosures are reflected in Note 6, "Segment Reporting," of this Quarterly Report on Form 10-Q.

There have been no other recent accounting pronouncements, changes in accounting pronouncements, or recently adopted accounting guidance during the six months ended June 30, 2025, that are of significance or potential significance to the Company's consolidated financial statements or disclosures.

2. Acquisitions

Fiscal 2024 Acquisitions

On November 1, 2024, the Company acquired Wolverine, headquartered in Zeeland, Michigan. Wolverine is an industrial and residential generator distributor as well as a provider of maintenance and repair services.

On August 1, 2024, the Company acquired the assets and liabilities of Ageto. Ageto designs and integrates microgrid control solutions and is headquartered in Fort Collins, Colorado.

On June 26, 2024, the Company closed on the acquisition of the C&I BESS product offering from SunGrid Solutions Inc. located in Cambridge, Canada.

On April 1, 2024, the Company acquired Huntington, headquartered in Shelton, Connecticut. Huntington is an industrial and residential generator distributor as well as a provider of maintenance and repair services.

The combined preliminary purchase price for these acquisitions was $46,265, net of cash acquired and inclusive of holdbacks and estimated contingent consideration. The Company recorded its preliminary purchase price allocations based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting for C&I BESS and Huntington was finalized during the second quarter of 2025. Neither acquisition resulted in material adjustments to the Company's preliminary estimates. Purchase accounting for Ageto will be finalized prior to September 30, 2025, and purchase accounting for Wolverine will be finalized prior to December 31, 2025. There have not been any material changes to the preliminary purchase price allocation for Wolverine or Ageto, as of June 30, 2025.

The accompanying condensed consolidated financial statements include the results of Wolverine, Ageto, C&I BESS, and Huntington from their dates of acquisition through June 30, 2025. Pro forma and other financial information are not presented as the effects of these acquisitions are not material to the Company's results of operations or financial position.

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3. Derivative Instruments and Hedging Activities

The Company records all derivatives in accordance with ASC 815, Derivatives and Hedging, which requires derivative instruments to be reported in the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies, and interest rates. The Company does not hold or issue derivative financial instruments for trading purposes.

The Company periodically utilizes commodity derivatives and foreign currency forward purchase and sales contracts in the normal course of business. Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in the Company’s condensed consolidated statements of comprehensive income. The commodity and foreign currency forward contract gains and losses are not material to the Company’s condensed consolidated financial statements for the periods presented.

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

Interest Rate Swaps

In March 2020, the Company entered into three interest rate swap agreements, which were still outstanding as of June 30, 2025. The Company formally documented all relationships between interest rate hedging instruments and the related hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. These interest rate swap agreements qualify as cash flow hedges and therefore, the effective portions of their gains or losses are reported as a component of accumulated other comprehensive income (loss) in the condensed consolidated balance sheets.

The amount of after-tax unrealized (losses) gains recognized in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2025 was $(3,090) and $(7,403), respectively and for the three and six months ended June 30, 2024 was $(1,730) and $252, respectively. The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

Stock Warrants

During the fourth quarter of 2023, the Company entered into a $30,000 agreement with Wallbox N.V. (Wallbox) to purchase 5% of its Class A common stock (Wallbox Shares) and acquire stock warrants, the latter of which provide the rights to an incremental approximate 5% ownership in the Class A common stock outstanding of Wallbox upon exercise at a fixed price with anti-dilution protections for a period of time. During the third quarter of 2024 and the first and second quarters of 2025, the Company received additional warrants in connection with additional rounds of funding performed by Wallbox through the Company's anti-dilution protection rights. In accordance with GAAP, the Company is required to adjust the carrying value of these warrants to market value on a quarterly basis. Gains and losses attributable to the stock warrants are recognized in other expense, net in the condensed consolidated statements of comprehensive income.

The loss attributable to the stock warrants was $1,215 and $4,571 for the three and six months ended June 30, 2025, respectively, and $1,035 and $6,268 for the three and six months ended June 30, 2024, respectively.

Fair Value

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

	June 30, 2025		December 31, 2024
Interest rate swaps	$	18,528	$	28,367
Stock warrants		3,347		7,919

The fair values of the interest rate swaps and stock warrants are included in operating lease and other assets in the condensed consolidated balance sheet as of June 30, 2025, and December 31, 2024. Excluding the impact of credit risk, the fair value of the interest rate swaps as of June 30, 2025, and December 31, 2024, is an asset of $19,037 and $29,254, respectively, which represents the amount the Company would receive to exit all of the agreements on those dates.

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4. Fair Value Measurements

ASC 820-10, Fair Value Measurement, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term borrowings, and revolving facility (Revolving Facility) borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based on their short-term nature. The fair value of the Tranche A Term Loan Facility borrowing, which has a net carrying value of $692,346, was approximately $686,813 (Level 2) as of June 30, 2025. The fair value of the Term Loan B Facility borrowing, which has a net carrying value of $493,585, was approximately $495,009 (Level 2) as of June 30, 2025. These Term Loan fair values were calculated based on independent valuations which contain inputs and significant value drivers that are observable.

For the fair value of the derivatives measured on a recurring basis, refer to the fair value table in Note 3, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements of this Quarterly Report on Form 10-Q. The fair value of the Company's interest rate swaps and commodity and foreign currency derivative contracts are classified as Level 2. The valuation techniques used to measure the fair value of these derivative contracts, all of which have counterparties with high credit ratings, were based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of the derivative contracts discussed above considers the Company’s credit risk in accordance with ASC 820-10.

The fair value of the Wallbox stock warrants is classified as Level 3. The fair value of these warrants is measured using a Black Scholes option pricing model, with significant inputs derived from or corroborated by observable market data as well as internal estimates, specifically the time period until exercise. The warrants received in the third quarter of 2024 (and incremental awards received since the third quarter of 2024) and fourth quarter of 2023 expire at the earlier of when the price per share equals or exceeds $6.00 or in 2028 and 2029, respectively. The time period until exercise assumption has a significant impact on the fair value of the warrants.

Equity Securities

Equity securities primarily consist of Wallbox Shares. During the third quarter of 2024, the Company invested an incremental $35,000 in additional Wallbox Shares, increasing its ownership interest to 38,096,057 Wallbox Shares. The Wallbox Shares are classified as Level 1 in the fair value hierarchy and are recognized at fair value using the closing price of Wallbox common stock quoted on the New York Stock Exchange (NYSE) on the last trading day of the quarter. The Wallbox Shares are included in operating lease and other assets in the condensed consolidated balance sheets. The fair value of the Wallbox Shares was $12,191 and $19,075 as of June 30, 2025, and December 31, 2024, respectively. Gains and losses attributable to the Wallbox Shares are recognized in other expense, net in the condensed consolidated statements of comprehensive income. The loss recognized on the Wallbox Shares was $293 and $6,884 for the three and six months ended June 30, 2025, respectively, and $1,082 and $1,868 for the thr

ee and six months ended June 30, 2024, respectively.

Contingent Consideration

Certain of the Company's business combinations involve potential payment of future consideration that is contingent upon the achievement of certain milestones. As part of purchase accounting, a liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within general and administrative expenses in the Company's condensed consolidated statements of comprehensive income. The fair value measurement of contingent consideration is typically categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs that are not observable in the market.

The combined fair value of contingent consideration for the Chilicon, Ageto, and Pramac acquisitions as of June 30, 2025, and December 31, 2024, was $34,937 and $34,114, respectively. The contingent consideration period for Chilicon extends through December 31, 2028, while the contingent consideration period for Pramac extends through December 31, 2025. The contingent consideration for Ageto can be earned in equal increments with one third of the contingent consideration capable of being earned each year as of August 1, 2025, August 1, 2026, and August 1, 2027. The current portion of contingent consideration totals $6,552 and is reported in other accrued liabilities and the non-current portion totals $28,385 and is reported in operating lease and other long-term liabilities in the condensed consolidated balance sheets.

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

Beginning balance, January 1, 2025	$	34,114
Present value interest accretion		823
Ending balance, June 30, 2025	$	34,937

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5. Accumulated Other Comprehensive Income (Loss)

The following table presents a disclosure of changes in Accumulated Other Comprehensive Income (Loss) during the three and six months ended June 30, 2025 and 2024, net of tax:

	*Foreign Currency Translation Adjustments*				*Unrealized Gain (Loss) on Cash Flow Hedges*				*Total*
Beginning Balance – April 1, 2025	$	(76,894	)		$	16,454			$	(60,440	)
Other comprehensive income (loss)		66,635		(1)		(3,090	)	(2)		63,545
Ending Balance – June 30, 2025	$	(10,259	)		$	13,364			$	3,105

	*Foreign Currency Translation Adjustments*				*Unrealized Gain (Loss) on Cash Flow Hedges*				*Total*
Beginning Balance – April 1, 2024	$	(49,253	)		$	30,421			$	(18,832	)
Other comprehensive income (loss)		(22,967	)	(3)		(1,730	)	(4)		(24,697	)
Ending Balance – June 30, 2024	$	(72,220	)		$	28,691			$	(43,529	)

	*Foreign Currency Translation Adjustments*				*Unrealized Gain (Loss) on Cash Flow Hedges*				*Total*
Beginning Balance – January 1, 2025	$	(106,166	)		$	20,767			$	(85,399	)
Other comprehensive income (loss)		95,907		(1)		(7,403	)	(5)		88,504
Ending Balance – June 30, 2025	$	(10,259	)		$	13,364			$	3,105

	*Foreign Currency Translation Adjustments*				*Unrealized Gain (Loss) on Cash Flow Hedges*			*Total*
Beginning Balance – January 1, 2024	$	(43,582	)		$	28,439		$	(15,143	)
Other comprehensive income (loss)		(28,638	)	(3)		252	(6)		(28,386	)
Ending Balance – June 30, 2024	$	(72,220	)		$	28,691		$	(43,529	)

	(1)	Represents favorable impact from the weakening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2025, particularly the Euro and British Pound.
	(2)	Represents unrealized losses of $4,106 on the interest rate swaps, net of tax effect of $1,016, for the three months ended June 30, 2025.
	(3)	Represents unfavorable impact from the strengthening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2024, particularly the Euro and Mexican Peso.
	(4)	Represents unrealized losses of $2,308 on the interest rate swaps, net of tax effect of $578, for the three months ended June 30, 2024.
	(5)	Represents unrealized losses of $9,838 on the interest rate swaps, net of tax effect of $2,435, for the six months ended June 30, 2025.
	(6)	Represents unrealized gains of $336 on the interest rate swaps, net of tax effect of $(84), for the six months ended June 30, 2024.

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6. Segment Reporting

The Company has two reportable segments for financial reporting purposes – domestic and international. The domestic segment includes the legacy Generac business and all historical acquisitions based in the U.S. and Canada, all of which have revenues substantially derived from the U.S. and Canada. The international segment includes all historical acquisitions not based in the U.S and Canada, all of which have revenues substantially derived from outside the U.S and Canada. Both reportable segments design and manufacture a wide range of energy technology solutions and other power products. The Company has multiple operating segments, which it aggregates into the two reportable segments, based on materially similar economic characteristics, products, production processes, classes of customers, distribution methods, organizational structure, and regional considerations. Intersegment sales are at an appropriate transfer price.

The Company's product offerings consist primarily of power generation equipment, energy storage systems, energy management devices & solutions, and other power products geared for varying end customer uses. While Residential products and Commercial & Industrial (C&I) products include similar products, they differ based on power output and end customer. The composition of net sales between residential, C&I, and other products & services by reportable segment is as follows:

	*Net Sales by Reportable Segment*
	*Three Months Ended June 30, 2025*
Product Classes	*Domestic*		*International*		*Total*
Residential products	$	553,314	$	20,875	$	574,189
Commercial & industrial products		216,335		145,868		362,203
Other		108,582		16,195		124,777
Total net sales	$	878,231	$	182,938	$	1,061,169

	*Net Sales by Reportable Segment*
	*Three Months Ended June 30, 2024*
Product Classes	*Domestic*		*International*		*Total*
Residential products	$	515,166	$	23,233	$	538,399
Commercial & industrial products		200,315		143,854		344,169
Other		102,077		13,552		115,629
Total net sales	$	817,558	$	180,639	$	998,197

	*Net Sales by Reportable Segment*
	*Six Months Ended June 30, 2025*
Product Classes	*Domestic*		*International*		*Total*
Residential products	$	1,026,604	$	41,736	$	1,068,340
Commercial & industrial products		422,481		277,095		699,576
Other		203,788		31,586		235,374
Total net sales	$	1,652,873	$	350,417	$	2,003,290

	*Net Sales by Reportable Segment*
	*Six Months Ended June 30, 2024*
Product Classes	*Domestic*		*International*		*Total*
Residential products	$	927,319	$	40,030	$	967,349
Commercial & industrial products		406,808		291,331		698,139
Other		195,768		26,214		221,982
Total net sales	$	1,529,895	$	357,575	$	1,887,470

Residential products consist primarily of automatic home standby generators ranging in output from 7.5kW to 150kW, portable generators, residential energy storage systems, energy management devices & solutions, and other outdoor power equipment. These products are predominantly sold through independent residential dealers, national and regional retailers, e-commerce merchants, electrical/HVAC/solar wholesalers, solar installers, and outdoor power equipment dealers. The residential products revenue consists of the sale of the product to the Company's distribution partners, who in turn sell the product to the end consumer, sometimes including installation and maintenance services. In some cases, residential products are sold directly to the end consumer. Substantially all of the residential products' revenues are recorded at a point in time when control is transferred to the customer.

C&I products consist of larger output stationary generators used in C&I applications, with power outputs up to 3,250kW. Also included in C&I products are mobile generators, light towers, C&I battery energy storage systems, mobile heaters, mobile pumps, and related controls for power generation equipment. These products are sold globally through industrial distributors and dealers, Engineering, Procurement, and Construction (EPC) companies, equipment rental companies, and equipment distributors. The C&I products revenue consists of the sale of the product to the Company's distribution partners, who in turn sell or rent the product to the end customer, sometimes including installation and maintenance services. In some cases, C&I products are sold directly to the end customer. Substantially all of the C&I products' revenues are recorded at a point in time when control is transferred to the customer.

Other consists primarily of aftermarket service parts and product accessories sold to the Company's distribution partners, the amortization of extended warranty deferred revenue, remote monitoring and grid services subscription revenue, as well as certain design, build, installation, and maintenance service revenue. The aftermarket service parts and product accessories are generally transferred to the customer at a point in time when control is transferred to the customer, while the extended warranty and subscription revenue are recognized over the life of the contract. Other service revenue is recognized when the service is performed, sometimes after certain milestones are met.

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The Company views Adjusted EBITDA as a key measure of the Company's performance. The computation of Adjusted EBITDA is based primarily on the definition that is contained in the Company’s credit agreements. The Company presents Adjusted EBITDA not only due to its importance for purposes of the Company's credit agreements, but also because it assists the Company in comparing performance across reporting periods on a consistent basis as it excludes items the Company's management does not believe are indicative of the Company's core operating performance. The Company's Chief Operating Decision Maker (CODM) is Aaron Jagdfeld, President and Chief Executive Officer (CEO). He uses Adjusted EBITDA, along with the Company's management:

	●	for planning purposes, including the preparation of the Company's annual operating budget and developing and refining internal projections for future periods;
	●	to allocate resources to enhance the financial performance of the Company's business;
	●	as a target for the determination of the bonus component of compensation for the Company's senior executives under the Company's management incentive plan, as described further in the Company's Proxy Statement;
	●	to evaluate the effectiveness of the Company's business strategies and as a tool in evaluating the Company's performance against the Company's budget for each period; and
	●	in communications with the Company's Board of Directors and investors concerning the Company's financial performance.

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

	*Three Months Ended June 30, 2025*									*Three Months Ended June 30, 2024*
	*Domestic*			*International*			*Total*			*Domestic*			*International*			*Total*
External net sales	$	878,231		$	182,938		$	1,061,169		$	817,558		$	180,639		$	998,197
Intersegment sales		6,231			14,266			20,497			9,581			3,869			13,450
Total sales		884,462			197,204			1,081,666			827,139			184,508			1,011,647
Elimination of intersegment sales								(20,497	)								(13,450	)
Costs of goods sold		520,195			144,722			664,917			498,894			137,192			636,086
Elimination of intersegment cost of goods sold								(20,497	)								(13,450	)
Operating expenses		266,446			38,514			304,960			236,242			36,084			272,326
Other segment items (1)		(60,296	)		(15,544	)		(75,840	)		(47,671	)		(13,783	)		(61,454	)
Adjusted EBITDA by reportable segment	$	158,117		$	29,512		$	187,629		$	139,674		$	25,015		$	164,689
Interest expense								(18,242	)								(23,318	)
Depreciation and amortization								(48,321	)								(42,880	)
Non-cash write-down and other adjustments (2)								(2,155	)								(1,885	)
Non-cash share-based compensation expense (3)								(14,752	)								(12,715	)
Transaction costs and credit facility fees (4)								(1,004	)								(1,267	)
Business optimization and other charges (5)								(3,442	)								(1,140	)
Provision for legal, regulatory, and other costs (6)								(4,911	)								(363	)
Change in fair value of investments (7)								(1,524	)								(2,117	)
Other (8)								(3,426	)								(313	)
Income before provision for income taxes							$	89,852								$	78,691

	*Six Months Ended June 30, 2025*									*Six Months Ended June 30, 2024*
	*Domestic*			*International*			*Total*			*Domestic*			*International*			*Total*
External net sales	$	1,652,873		$	350,417		$	2,003,290		$	1,529,895		$	357,575		$	1,887,470
Intersegment sales		13,924			32,329			46,253			17,718			13,642			31,360
Total sales		1,666,797			382,746			2,049,543			1,547,613			371,217			1,918,830
Elimination of intersegment sales								(46,253	)								(31,360	)
Costs of goods sold		981,167			279,641			1,260,808			954,217			272,673			1,226,890
Elimination of intersegment cost of goods sold								(46,253	)								(31,360	)
Operating expenses		521,155			72,153			593,308			451,890			69,946			521,836
Other segment items (1)		(116,154	)		(25,594	)		(141,748	)		(97,343	)		(24,475	)		(121,818	)
Adjusted EBITDA by reportable segment	$	280,629		$	56,546		$	337,175		$	238,849		$	53,073		$	291,922
Interest expense								(35,352	)								(46,923	)
Depreciation and amortization								(94,462	)								(84,782	)
Non-cash write-down and other adjustments (2)								(2,142	)								(2,395	)
Non-cash share-based compensation expense (3)								(26,360	)								(25,155	)
Transaction costs and credit facility fees (4)								(1,764	)								(2,692	)
Business optimization and other charges (5)								(5,017	)								(1,626	)
Provision for legal, regulatory, and other costs (6)								(8,662	)								(2,898	)
Change in fair value of investments (7)								(11,471	)								(8,136	)
Other (8)								(3,579	)								(113	)
Income before provision for income taxes							$	148,366								$	117,202

(1)

Other segment items primarily represent depreciation and amortization and the following items defined below: Non-cash write-down and other adjustments; Non-cash shared-based compensation expense; Transaction costs and credit facility fees; Business optimization and other charges; and Provision for legal, regulatory, and other costs.

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(2)

Includes gains (losses) on dispositions of assets other than in the ordinary course of business, gains (losses) on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments.

(3)

Represents share-based compensation expense to account for stock options, restricted stock, and other stock awards over their respective vesting periods.

	(4)	Represents transaction costs incurred directly in connection with any investment, as defined in the Company's credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to the Company's senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under the Company's Amended Credit Agreement.
	(5)	Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions.
	(6)	Represents the following significant litigation, regulatory, and other matters that are not indicative of our ongoing operations: • A provision for judgments, settlements, and legal expenses related to certain patent lawsuits - $1,696 and $3,188 for the three and six months ended June 30, 2025, respectively, and $363 and $2,533 for the three and six months ended June 30, 2024, respectively. • Legal expenses related to certain class action lawsuits - $2,540 and $3,883 for the three and six months ended June 30, 2025, respectively. • Legal expenses related to certain government inquiries and other significant matters - $675 and $1,591 for the three and six months ended June 30, 2025, respectively. • Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $0 and $365 for the three and six months ended June 30, 2024.
	(7)	Represents non-cash losses primarily from changes in the fair value of the Company's investment in Wallbox warrants and equity securities.
	(8)	The pre-tax loss in the second quarter of 2025 relates primarily to the sale of our immaterial Tank Utility fleet business.

The following tables summarize additional financial information by reportable segment:

	*Assets by Reportable Segment*
	*June 30, 2025*		*December 31, 2024*
Domestic	$	3,970,400	$	3,873,904
International		1,418,401		1,235,427
Total	$	5,388,801	$	5,109,331

	*Depreciation and Amortization by Reportable Segment*
	*Three Months Ended June 30,*
	*2025*		*2024*
Domestic	$	39,371	$	33,655
International		8,950		9,225
Total	$	48,321	$	42,880

	*Depreciation and Amortization by Reportable Segment*
	*Six Months Ended June 30,*
	*2025*		*2024*
Domestic	$	77,192	$	66,257
International		17,270		18,525
Total	$	94,462	$	84,782

	*Capital Expenditures by Reportable Segment*
	*Three Months Ended June 30,*
	*2025*		*2024*
Domestic	$	47,743	$	24,101
International		9,973		3,851
Total	$	57,716	$	27,952

	*Capital Expenditures by Reportable Segment*
	*Six Months Ended June 30,*
	*2025*		*2024*
Domestic	$	76,041	$	48,267
International		12,612		6,505
Total	$	88,653	$	54,772

The Company’s sales in the U.S. represented approximately 80% and 78% of total sales for the three months ended June 30, 2025 and 2024, respectively, and 79% and 77% for the six months ended June 30, 2025 and 2024, respectively. Approximately 74% and 76% of the Company's identifiable long-lived assets were located in the U.S. as of June 30, 2025 and December 31, 2024, respectively.

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7. Balance Sheet Details

Inventories consist of the following:

	*June 30,*		*December 31,*
	*2025*		*2024*
Raw material	$	675,553	$	611,735
Work-in-process		10,877		6,814
Finished goods		567,703		413,098
Total	$	1,254,133	$	1,031,647

Property and equipment consists of the following:

	*June 30,*			*December 31,*
	*2025*			*2024*
Land and improvements	$	31,780		$	30,220
Buildings and improvements		466,930			358,055
Machinery and equipment		317,296			296,409
Dies and tools		58,741			48,681
Vehicles		18,608			13,887
Office & information technology equipment and internal use software		228,588			213,003
Leasehold improvements		10,596			9,776
Construction in progress		71,708			110,651
Gross property and equipment		1,204,247			1,080,682
Accumulated depreciation		(437,502	)		(390,659	)
Total	$	766,745		$	690,023

Total property and equipment includes finance leases of $83,726 and $61,214 on June 30, 2025, and December 31, 2024, respectively, primarily consisting of buildings and improvements. Amortization of finance lease right of use assets is recorded within depreciation expense in the condensed consolidated statements of comprehensive income. The initial measurement of new finance lease right of use assets is accounted for as a non-cash item in the condensed consolidated statements of cash flows.

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8. Product Warranty Obligations

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

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2025*			*2024*			*2025*			*2024*
Balance at beginning of period	$	110,717		$	111,126		$	110,987		$	116,408
Payments		(18,868	)		(20,733	)		(39,755	)		(42,080	)
Provision for warranty issued		25,826			16,745			43,944			32,049
Changes in estimates for pre-existing warranties		2,269			(859	)		4,768			(98	)
Balance at end of period	$	119,944		$	106,279		$	119,944		$	106,279

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

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2025*			*2024*			*2025*			*2024*
Balance at beginning of period	$	194,403		$	163,793		$	186,922		$	155,870
Deferred revenue contracts issued		16,915			15,089			32,733			29,873
Amortization of deferred revenue contracts		(8,668	)		(7,180	)		(17,005	)		(14,041	)
Balance at end of period	$	202,650		$	171,702		$	202,650		$	171,702

The timing of recognition of the Company’s deferred revenue balance related to extended warranties as of June 30, 2025 is as follows:

Remainder of 2025	$	17,994
2026		37,534
2027		37,653
2028		31,563
2029		25,209
After 2029		52,697
Total	$	202,650

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

	*June 30,*		*December 31,*
	*2025*		*2024*
Product warranty liability
Current portion - Accrued product warranty	$	48,871	$	56,127
Long-term portion - other long-term liabilities		71,073		54,860
Total	$	119,944	$	110,987

Deferred revenue related to extended warranties
Current portion - Other accrued liabilities	$	36,478	$	34,069
Long-term portion - Deferred Revenue		166,172		152,853
Total	$	202,650	$	186,922

9. Contract Balances

While the Company’s standard payment terms for its customers are less than one year, the specific payment terms and conditions in its customer contracts vary. In certain cases, the Company’s customers pay for their goods in advance. These prepayments are recognized as customer deposits (contract liabilities) and recorded in other accrued liabilities in the condensed consolidated balance sheets. The balance of customer deposits was $23,779 and $26,858 on June 30, 2025, and December 31, 2024, respectively. During the six months ended June 30, 2025, the Company recognized revenue of $17,392 related to amounts included in the December 31, 2024 customer deposit balance. The Company typically recognizes revenue within one year of the receipt of the customer deposit.

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10. Credit Agreements

Short-term borrowings included in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, consisted of borrowings by the Company’s foreign subsidiaries on local lines of credit totaling $54,264 and $55,848, respectively. As of June 30, 2025 and December 31, 2024, the weighted-average interest rates on the short-term borrowings were 5.29% and 5.44%, respectively.

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

	*June 30,*			*December 31,*
	*2025*			*2024*
Tranche A Term Loan Facility	$	693,750		$	712,500
Term Loan B Facility		496,250			498,750
Original issue discount and deferred financing costs		(6,925	)		(8,203	)
Revolving Facility		90,000			-
Finance lease obligations		89,064			66,355
Other		6,262			8,972
Total		1,368,401			1,278,374
Less: current portion of debt		67,424			60,753
Less: current portion of finance lease obligation		8,164			6,845
Total long-term borrowings and finance lease obligations	$	1,292,813		$	1,210,776

Prior to the Tranche A Term Loan Facility and Revolving Facility amendments discussed below, as of June 30, 2025, the Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility is repayable in quarterly installments which commenced September 2023, with a balloon payment due June 29, 2027. The Term Loan B Facility matures on July 3, 2031, and is repayable in quarterly installments which commenced September 2024, with a balloon payment due July 2031. Maturities of the Company's Tranche A Term Loan Facility, Term Loan B Facility and Revolving Facility outstanding on June 30, 2025, before considering original issue discount and deferred financing costs, are as follows:

	*Tranche A Term Loan Facility*		*Term Loan B Facility*		*Revolving Facility*		*Total*
2025	$	28,125	$	2,500	$	-	$	30,625
2026		65,625		5,000		-		70,625
2027		600,000		5,000		90,000		695,000
2028		-		5,000		-		5,000
2029		-		5,000		-		5,000
2030		-		5,000		-		5,000
2031		-		468,750		-		468,750
Total	$	693,750	$	496,250	$	90,000	$	1,280,000

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

In July 2024, the Company extinguished the $530,000 balance then outstanding under the Original Term Loan B Facility and replaced it with a new $500,000 Tranche B Term Loan Facility maturing on July 3, 2031 (New Term Loan B Facility). The New Term Loan B Facility continues to include a $300,000 uncommitted incremental term loan on that facility. In accordance with ASC 470-50, the Company capitalized $2,991 of debt issuance costs related to this transaction. Additionally, the Company wrote-off the unamortized deferred financing costs related to the Original Term Loan B of $4,236 and expensed $625 of fees paid to creditors as a loss on extinguishment of debt. The New Term Loan B Facility bears interest at the SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%, resulting in a 6.07% combined rate as of June 30, 2025.

The New Term Loan B Facility does not require an Excess Cash Flow payment if the Company’s net secured leverage ratio is maintained below 3.75 to 1.00. As of June 30, 2025, the Company’s net secured leverage ratio was 1.37 to 1.00, and the Company was in compliance with all covenants under the Facility. There are no financial maintenance covenants on the Term Loan B Facility.

In June 2022, the Company amended and restated its existing credit agreements (Amended Credit Agreement) that resulted in a new term loan facility in an aggregate principal amount of $750,000 (Tranche A Term Loan Facility), established a new $1,250,000 revolving facility (Revolving Facility), and replaced all LIBOR provisions with SOFR provisions. The Tranche A Term Loan Facility and the Revolving Facility bear interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, based on the Company's total leverage ratio and subject to a SOFR floor of 0.0%. As of June 30, 2025, the interest rate for the Tranche A Term Loan Facility and the Revolving Facility is 5.92%.

The Tranche A Term Loan Facility and the Revolving Facility contain certain financial covenants that require the Company to maintain a total leverage ratio below 3.75 to 1.00, as well as an interest coverage ratio above 3.00 to 1.00. As of June 30, 2025, the Company’s total leverage ratio was 1.44 to 1.00, and the Company's interest coverage ratio was 12.34 to 1.00. The Company was also in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2025.

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

As of June 30, 2025, there was $90,000 outstanding under the Revolving Facility, leaving $1,159,250 of unused capacity, net of outstanding letters of credit.

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See Item 7A of the Annual Report on Form 10-K for the year ended December 31, 2024, for further information on interest rate swaps that are currently outstanding and partially offset the above interest expense on outstanding borrowings.

On July 1, 2025, the Company amended its existing Tranche A Term Loan Facility and $1,250,000 Revolving Facility, extending the maturity of both to July 1, 2030, revising the Tranche A Term Loan Facility outstanding principal balance to $700,000, reducing the Revolving Facility borrowing capacity to $1,000,000, and removing the Credit Adjustment Spread (as defined in the Amended Credit Agreement) from each. The revised Tranche A Term Loan Facility is now repayable in increasing quarterly installments over time, equal to 0.625% to 2.50% of the original principal amount, beginning on October 1, 2026. The revised Tranche A Term Loan Facility and Revolving Facility will continue to bear interest at either a base rate plus an applicable margin between 0.25% and 0.75% or SOFR rate plus an applicable margin between 1.25% and 1.75%, both based on the Company’s total leverage ratio and subject to a SOFR floor of 0.0%.

11. Stock Repurchase Program

In July 2022, the Company's Board of Directors approved a stock repurchase program, which commenced on August 5, 2022, and allowed for the repurchase of up to $500,000 of the Company's common stock over a 24-month period. Additionally, on February 12, 2024, the Company’s Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500,000 of the Company’s common stock over the following 24 months. The new program replaced the prior share repurchase program, which had $26,297 remaining available for repurchase when the new program was approved. Pursuant to the approved program, the Company may repurchase its common stock from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchases may be executed using a combination of Rule 10b5-1 trading plans, open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of the Company's credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice.

During the three and six months ended June 30, 2025, the Company repurchased 392,521 and 1,109,206 shares of common stock for $50,463 and $147,917, respectively. During the three and six months ended June 30, 2024, the Company repurchased 355,640 shares of common stock for $50,609. The Company has periodically reissued shares out of Treasury stock, including for acquisition contingent consideration payments.

12. Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to the common shareholders of the Company by the weighted average number of common shares outstanding during the period, exclusive of restricted shares. Except where the result would be anti-dilutive, diluted earnings per share is calculated by assuming the vesting of unvested restricted stock and the exercise of outstanding stock options, as well as the satisfaction of certain contingent acquisition consideration conditions as of the end of the period. Refer to Note 4, “Redeemable Noncontrolling Interest,” of the Annual Report on Form 10-K for the year ended December 31, 2024, for further information regarding the accounting for redeemable noncontrolling interests within earnings per share.

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

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2025*		*2024*		*2025*		*2024*
Numerator
Net income attributable to Generac Holdings Inc.	$	74,016	$	59,115	$	117,856	$	85,347
Redemption value adjustment		-		-		-		(2,686	)
Net income attributable to common shareholders	$	74,016	$	59,115	$	117,856	$	82,661

Denominator
Weighted average shares, basic		58,496,998		59,880,336		58,771,818		59,854,131
Dilutive effect of stock compensation awards (1)		520,825		761,404		614,089		705,773
Diluted shares		59,017,823		60,641,740		59,385,907		60,559,904

Net income attributable to common shareholders per share
Basic	$	1.27	$	0.99	$	2.01	$	1.38
Diluted	$	1.25	$	0.97	$	1.98	$	1.36

(1) Excludes approximately 779,000 and 428,000 stock options and restricted stock awards for the three and six months ended June 30, 2025, respectively, and 471,000 and 440,000 stock options and restricted stock awards for the three and six months ended June 30, 2024, respectively, because they would be anti-dilutive.

13. Income Taxes

The effective income tax rates for the six months ended June 30, 2025 and 2024 were 20.0% and 27.0%, respectively. The decrease in the effective tax rate was primarily due to a discrete tax benefit in the current year related to a business disposition.

14. Commitments and Contingencies

The Company has an arrangement with a finance company to provide floor plan financing for certain dealers. The Company receives payment from the finance company after shipment of product to the dealer. The Company participates in the cost of dealer financing up to certain limits and has agreed to repurchase products repossessed by the finance company, but does not indemnify the finance company for any credit losses they incur. The amount financed by dealers which remained outstanding under this arrangement as of June 30, 2025, and December 31, 2024, was $167,176 and $165,432, respectively.

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On August 1, 2022, Power Home Solar, LLC d/b/a Pink Energy (PHS) filed a lawsuit in the Western District of Virginia against Generac Power Systems, Inc., a wholly-owned subsidiary of the Company (Generac Power). The complaint alleges breaches of warranty, product liability, and other various causes of action against Generac Power relating to the sale and performance of certain clean energy equipment and seeks to recover damages, including consequential damages, that PHS allegedly incurred. The Company disputes the allegations in the complaint, including that PHS can seek consequential damages or amounts greater than the $25,000 liability cap set forth in the agreement between the parties. Generac Power moved to dismiss the complaint and compel arbitration consistent with the parties’ agreement. PHS later filed a Chapter 7 bankruptcy petition in the Western District of North Carolina that identified Generac Power as one of its outstanding creditors. The parties agreed to toll PHS’s deadline to respond to the motion to dismiss and all other pretrial deadlines to allow the bankruptcy trustee to evaluate the complaint. The Trustee has not yet taken further action in this lawsuit. Generac Power intends to vigorously defend against the claims in the complaint, in whichever forum they may proceed.

On October 28, 2022, Daniel Haak filed a putative consumer class action lawsuit against Generac Power in the Middle District of Florida. The complaint alleges breaches of warranty, tort-based, and unjust enrichment claims against Generac Power relating to the sale and performance of certain clean energy products, and seeks to recover damages, including consequential damages, that the plaintiff and putative class allegedly incurred. Additional putative class actions were filed by consumers raising similar claims and allegations in other district court cases. These putative class actions have been consolidated into a Multidistrict Litigation, In re: Generac Solar Power Systems Marketing, Sales Practices and Products Liability Litigation currently pending in the Eastern District of Wisconsin, Case No. 23-md-3078. Generac Power and the Company filed their answer to the consolidated master complaint after the court denied the motion to dismiss on May 24, 2024. Generac Power and the Company intend to vigorously defend against the consolidated master complaint.

On December 1, 2022, Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System filed a putative securities class action lawsuit against the Company and certain of its officers in the Eastern District of Wisconsin. The court subsequently consolidated a later filed action and appointed a lead plaintiff. The lead plaintiff filed a consolidated complaint alleging violation of federal securities law related to disclosures of certain matters (the Oakland County Lawsuit). On February 7, 2025, the court granted the Company’s motion to dismiss and found that plaintiffs failed to adequately plead a securities fraud claim. Plaintiffs filed an amended complaint on March 10, 2025 and the Company has filed a motion to dismiss.

On February 3, 2023, a purported Company shareholder filed a shareholder derivative action against certain of the Company’s officers and directors in the United States District Court for the Eastern District of Wisconsin. The complaint seeks unspecified damages on behalf of the Company and certain other relief, such as certain reforms to corporate governance practices. The complaint (in which the Company is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of the Company’s public statements and legal compliance, and that the Company was damaged as a result of the breaches of fiduciary duties, and the defendants were unjustly enriched. The complaint also alleges, among other things, violations of Sections 14(a), 10(b) and 20(a) of the Securities Exchange Act of 1934, abuse of control, gross mismanagement, and waste of corporate assets. The Company has received several additional derivative actions filed in both state and federal courts raising similar claims and allegations, including issues raised in the Oakland County Lawsuit. The Company disputes the allegations in the shareholder derivative actions and intends to vigorously defend against the claims in the complaints.

On October 28, 2022, Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Michigan and, as a result, the Company became aware of an enforcement investigation by the U.S. DOJ. The subpoena requests similar documents and information provided by the Company to the U.S. EPA and the CARB in response to civil document requests related to the Company’s compliance with emissions regulations for approximately 1,850 (not in thousands) portable generators produced by the Company in 2019 and 2020 and sold in 2020. On October 2, 2024, the Company received additional information from the EPA that could increase the number of portable generators under review by the EPA by approximately 4,850 (not in thousands) if certain emissions certifications for 2020 are voided. The Company is cooperating with the DOJ, EPA and CARB regarding these topics and other ancillary requests for information.

On November 30, 2022, the CPSC notified the Company of its intention to recommend the imposition of a civil penalty for failing to timely submit a report to the CPSC in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021. On May 3, 2023, the parties entered into a mutual settlement agreement. The agreement does not constitute an admission by Generac or a determination by the CPSC that Generac violated the CPSA. The terms of the settlement agreement require the Company to (i) abide by certain customary agency requirements regarding the ongoing commitment to the Company’s internal CPSA compliance practices and program, and (ii) pay a civil fine of $15,800. On July 21, 2023, Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Wisconsin and, as a result, the Company became aware of a continuing inquiry by the DOJ related to its statutory obligations under the CPSA in connection with this matter. Additionally, on October 23, 2023, the CPSC notified the Company that it is further investigating whether the Company complied with the reporting requirements to the CPSC in relation to certain portable generators that were subject to a voluntary recall previously announced on September 14, 2023. The Company is cooperating fully with both the CPSC and DOJ investigations and, at this time, is unable to predict the eventual scope, duration or final outcome of such investigations.

On March 8, 2022, Ollnova Technologies Limited, a non-practicing entity, filed a patent infringement lawsuit against ecobee Technologies, ULC. (ecobee) in the United States District Court for the Eastern District of Texas (Case No. 22-cv-00072-JRG). Ollnova claimed that ecobee infringes on four of its patents. Following an October 5, 2023, jury verdict finding one of Ollnova’s patents invalid and that ecobee infringed at least one of the claims of the asserted patents, on March 1, 2024, the trial court entered judgment against ecobee for $11,500, as well as an award of prejudgment and post-judgment interest. In 2023, the Company recorded a reserve of $12,669 related to this matter. In the first quarter of 2024, the Company recorded an additional reserve of $1,826 for estimated prejudgment and post-judgement interest. ecobee has appealed the trial court’s judgment to the Court of Appeals for the Federal Circuit and that appeal is currently pending.

On June 9, 2023, Spartronics Vietnam, Inc., a contract manufacturer of Generac Power’s clean energy products, filed multiple lawsuits against Generac Power and sub-suppliers accusing Generac Power of fraud, breaching its supply agreement with Spartronics, tortiously interfering with Spartronics’ relationships with its sub-suppliers, and requesting a determination of rights under the parties’ agreements in state and federal court. Spartronics subsequently filed additional third-party complaints against Generac Power raising similar claims and allegations. After a court granted Generac Power’s motion to compel arbitration, Spartronics filed a demand for arbitration of its claims. Generac Power denies the allegations in the complaints, including that Generac Power is responsible for Spartronics' purchasing practices, and is pursuing a counterclaim in connection with the arbitration.

On November 21, 2023, Christopher Walling filed a putative securities class action lawsuit against the Company and certain of its officers in the Western District of Wisconsin and was later appointed lead plaintiff. The complaint asserts claims for alleged violation of federal securities law related to statements concerning the Company’s financial outlook and the impact of macroeconomic trends on the demand for its products. The plaintiff seeks to represent a class of individuals who purchased or otherwise acquired common stock between May 3, 2023, and August 3, 2023, and seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s stock (the Walling Lawsuit). The Company moved to dismiss the amended complaint on June 21, 2024, and intends to vigorously defend against the claims in the amended complaint.

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On December 5, 2023, seven plaintiffs filed a product liability lawsuit in the Philadelphia County Court of Common Pleas against Generac Power, other Generac affiliates, and unrelated entities for damages sustained in an accident involving a GP15000E portable generator that occurred on October 4, 2023 (Zawaski, et al. v. Generac Power Systems, Inc., et al.). Plaintiffs are pursuing claims against Generac Power for negligence, strict liability, and loss of consortium, seeking compensatory and punitive damages. Discovery and evaluation of the case are ongoing as the Company continues to defend the matter, and it is uncertain how liability, if any, might be shared among multiple parties.

On February 14, 2024, a purported Company shareholder filed a derivative action against certain of the Company’s officers and directors in the United States District Court for the Eastern District of Wisconsin. The complaint (in which the Company is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of the Company’s public statements and legal compliance, including as to the claims raised in the Walling Lawsuit. The complaint seeks unspecified damages on behalf of the Company and certain other relief, including certain corporate governance reforms. The Company disputes the allegations in the shareholder derivative action and intends to vigorously defend against the claims in the complaint.

On October 9, 2024, Champion Power Equipment, Inc. (Champion) filed a patent infringement lawsuit against Generac Power in the United States District Court for the Eastern District of Wisconsin (Case No. 24-cv-01281-LA). Champion claims that certain Generac and Powermate branded multi-fuel portable generators infringe on Champion’s portfolio of dual and multi-fuel patents. Generac Power denies infringement and has filed a counterclaim against Champion claiming that some of Champion’s portable generators infringe on Generac Power’s patents relating to carbon monoxide detection and engine shutoff technologies. Champion intends to file new patent infringement claims against Generac Power pertaining to its own carbon monoxide detection and shutoff technology in response to Generac’s claims. Generac Power denies the infringement allegations and intends to vigorously defend the matter.

On October 18, 2024, two individuals filed a putative consumer class action lawsuit against Generac Power and the Company in the Middle District of Florida (Case No. 24-cv-02412). The Amended Complaint, which includes additional plaintiffs, alleges certain defects for home standby generators manufactured or sold to consumers from 2020-2024. Plaintiffs assert breaches of warranty, tort-based, and statutory claims relating to the sale and performance of home standby generators. The Company disputes the allegations and intends to vigorously defend against the claims in the complaint, including that the case should not proceed as a class action.

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

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “forecast,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future,” “optimistic” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements contained in this quarterly report are based on assumptions that we have made in light of our industry experience and on our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. The forward-looking statements contained in this quarterly report include estimates and comments regarding:

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our business and markets that we serve, financial and operating results, and future economic performance;

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proposed new product and service offerings; and

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management's goals, expectations, and objectives, and other similar expressions concerning matters that are not historical facts.

Factors that could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements include:

	●	fluctuations in cost, availability, and quality of raw materials, key components and labor required to manufacture our products;
	●	our dependence on a small number of contract manufacturers and component suppliers, including single-source suppliers;
	●	changes and volatility with respect to the trade policies of various countries, which may result in new or increased tariffs, trade restrictions, or other unfavorable trade actions;
	●	our ability to protect our intellectual property rights or successfully defend against third party infringement claims;
	●	changes in durable goods spending by consumers and businesses or other global macroeconomic conditions, impacting demand for our products;
	●	changes in governmental policies, particularly with respect to tax incentives, tax credits, or grant programs, which could: (i) affect the demand for certain of our products; or (ii) result in a withdrawal or reduction of grants previously awarded to the Company;
	●	increase in product and other liability claims, warranty costs, recalls, or other claims;
	●	significant legal proceedings, claims, fines, penalties, tax assessments, lawsuits or government investigations;
	●	our ability to consummate our share repurchase programs;
	●	our failure or inability to adapt to, or comply with, current or future changes in applicable laws, regulations, and product standards;
	●	scrutiny regarding our sustainability practices;
	●	our ability to develop and enhance products and gain customer acceptance for our products;
	●	frequency and duration of power outages impacting demand for our products;
	●	our ability to accurately forecast demand for our products and effectively manage inventory levels relative to such forecast;
	●	our ability to remain competitive;
	●	our dependence on our dealer and distribution network;
	●	market reaction to changes in selling prices or mix of products;
	●	loss of our key management and employees;
	●	disruptions from labor disputes or organized labor activities;
	●	our ability to attract and retain employees;
	●	disruptions in our manufacturing operations;
	●	the possibility that the expected synergies, efficiencies and cost savings of our acquisitions, divestitures, restructurings, or realignments will not be realized, or will not be realized within the expected time period;
	●	risks related to sourcing components in foreign countries;
	●	compliance with environmental, health and safety laws and regulations;
	●	government regulation of our products;
	●	failures or security breaches of our networks, information technology systems, or connected products;
	●	our ability to make payments on our indebtedness;
	●	terms of our credit facilities that may restrict our operations;
	●	our potential need for additional capital to finance our growth or refinance our existing credit facilities;
	●	risks of impairment of the value of our goodwill and other indefinite-lived assets;
	●	volatility of our stock price; and
	●	potential tax liabilities.

Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary in material respects from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in our filings with the Securities and Exchange Commission, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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Recent Developments

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

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

On July 4, 2025, the United States signed into law the "One Big Beautiful Bill Act" (OBBBA). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing. In addition, the OBBBA accelerates the phase-out of tax incentives for the solar market and includes certain supply chain requirements to qualify for these incentives. We are in the process of evaluating the impact of the OBBBA to our business and the consolidated financial statements.

Overview

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

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

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

Mega-Trends, Strategic Growth Themes, and Additional Business Drivers

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

Key Mega-Trends:

●	Lower power quality continuing to drive demand for backup power solutions:
	o	More frequent severe and volatile weather impacting an aging grid, causing increased power outage activity.
	o	Increasing deployment of intermittent generation sources coupled with accelerating electricity demand trends driving supply/demand imbalances for utilities and grid operators.
●	Higher power prices driving the need for energy management solutions:
	o	Electrification trends causing power demand to exceed supply, driving up power prices.
	o	Investment required to upgrade grid infrastructure and transition to renewable power sources, pushing prices higher.
●	Artificial intelligence adoption accelerating, creating a large market opportunity for backup power:
	o	Significant power requirements for the buildout of data centers to enable AI adoption could drive further grid instability and higher power prices.
	o	Acceleration in the number of hyperscale and edge data centers that require significant backup power.
●	Growing demand for cleaner burning fuels:
	o	Natural gas and other alternative fuels are vital to the energy transition.
	o	Demand for natural gas-fueled backup generators growing as homes and businesses desire cleaner-burning fuel sources of generation.
●	Required investment in global infrastructure, driving demand for our products:
	o	Upgrading of aging and underinvested legacy infrastructure systems, such as power, telecommunications, transportation, and water.
	o	Expanding investment for increasingly critical technology infrastructure as we transition to a more "connected" society.
●	Home as a Sanctuary, driving increased demand for resiliency solutions that provide peace of mind:
	o	Increasing importance of the home with more people working from home and aging in place.
	o	Growing market for intelligent and connected homes that can provide improved energy efficiency.

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Strategic Growth Themes:

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

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

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

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

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

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

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Other Business Drivers

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

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

Factors Affecting Results of Operations

We are subject to various factors that can affect our results of operations, which we attempt to mitigate through factors we can control, including continued product development, expanded distribution, pricing, cost control, and hedging. Certain operational and other factors that affect our business include the following:

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

We have historically attempted to mitigate the impact of any inflationary pressures through improved product design and sourcing, manufacturing efficiencies, price increases, and select hedging transactions. Our results are also influenced by changes in fuel prices in the form of freight rates, which in some cases are accepted by our customers and in other cases are paid by us.

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

Acquisitions. Over the years, we have executed a number of acquisitions that support our strategic plan. A summary of the recent acquisitions can be found in Note 1, “Description of Business and Basis of Presentation,” to the condensed consolidated financial statements in Item 1 of this Quarterly Report on Form 10-Q and in Item 8 (Note 1, “Description of Business”) of the Annual Report on Form 10-K for the year ended December 31, 2024.

Factors Influencing Interest Expense

Interest expense can be impacted by a variety of factors, including market fluctuations in SOFR, interest rate election periods, interest rate swap agreements, repayments or borrowings of indebtedness, and amendments to our credit agreements. Refer to Note 10, “Credit Agreements,” to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for further information. The year-over-year decrease in interest expense in the current period was primarily driven by lower borrowings and lower interest rates during the period.

Factors Influencing Provision for Income Taxes and Cash Income Taxes Paid

The decrease in effective tax rate was primarily due to a discrete tax benefit in the current year related to the sale of our immaterial Tank Utility fleet business.

In 2021, the Organization for Economic Cooperation and Development (OECD) released Pillar Two Global Anti-Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. The OECD continues to release guidance and countries are implementing legislation to adopt the rules, some of which became effective on January 1, 2024. The United States has not yet enacted legislation implementing Pillar Two. We are continuing to implement the Pillar Two rules and evaluate their potential impact on future periods. There was no impact to our financial results for the three or six months ended June 30, 2025, and we do not expect the rules to have a material impact on our effective tax rate for the remainder of the year. We will update our future tax provisions based on new regulations or guidance accordingly.

On July 4, 2025, the United States signed into law the "One Big Beautiful Bill Act" (OBBBA). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing. In addition, the OBBBA accelerates the phase-out of tax incentives for the solar market and includes certain supply chain requirements to qualify for these incentives. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. We are in the process of evaluating the impact of the OBBBA to our business and the consolidated financial statements.

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Results of Operations

Three months ended June 30, 2025, compared to the three months ended June 30, 2024

The following table sets forth our consolidated statements of operations information for the periods indicated:

	Three Months Ended June 30,
(U.S. Dollars in thousands)	2025			2024			$ Change			% Change

Net sales	$	1,061,169		$	998,197		$	62,972			6.3	%
Costs of goods sold		644,420			622,636			21,784			3.5	%
Gross profit		416,749			375,561			41,188			11.0	%
Operating expenses:
Selling and service		139,495			128,153			11,342			8.9	%
Research and development		60,354			53,996			6,358			11.8	%
General and administrative		79,430			65,386			14,044			21.5	%
Amortization of intangible assets		25,681			24,791			890			3.6	%
Total operating expenses		304,960			272,326			32,634			12.0	%
Income from operations		111,789			103,235			8,554			8.3	%
Total other expense, net		(21,937	)		(24,544	)		2,607			10.6	%
Income before provision for income taxes		89,852			78,691			11,161			14.2	%
Provision for income taxes		15,422			19,638			(4,216	)		-21.5	%
Net income		74,430			59,053			15,377			26.0	%
Net income attributable to noncontrolling interests		414			(62	)		476			-767.7	%
Net income attributable to Generac Holdings Inc.	$	74,016		$	59,115		$	14,901			25.2	%

The following tables set forth our reportable segment information for the periods indicated:

	Net Sales
	Three Months Ended June 30,
(U.S. Dollars in thousands)	2025		2024		$ Change		% Change
Domestic	$	878,231	$	817,558	$	60,673		7.4	%
International		182,938		180,639		2,299		1.3	%
Total net sales	$	1,061,169	$	998,197	$	62,972		6.3	%

	Total Sales by Reportable Segment
	Three Months Ended June 30, 2025								Three Months Ended June 30, 2024
	External Net Sales		Intersegment Sales			Total Sales			External Net Sales		Intersegment Sales			Total Sales
Domestic	$	878,231	$	6,231		$	884,462		$	817,558	$	9,581		$	827,139
International		182,938		14,266			197,204			180,639		3,869			184,508
Intercompany elimination		-		(20,497	)		(20,497	)		-		(13,450	)		(13,450	)
Total net sales	$	1,061,169	$	-		$	1,061,169		$	998,197	$	-		$	998,197

	Adjusted EBITDA
	Three Months Ended June 30,
	2025		2024		$ Change		% 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	%

The following table sets forth our product class information for the periods indicated:

	Net Sales by Product Class
	Three Months Ended June 30,
(U.S. Dollars in thousands)	2025		2024		$ Change		% 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	%
Total net sales	$	1,061,169	$	998,197	$	62,972		6.3	%

Net sales. Domestic segment total sales (including inter-segment sales) increased approximately 7% to $884.5 million as compared to $827.1 million in the prior year, including an approximate 1% benefit from acquisitions. The 6% core total sales increase was primarily driven by increase in volumes of residential energy technology solutions, portable generators, and C&I products to industrial distributors and national telecom customers. This growth was partially offset by continued softness in product shipments to national rental accounts. Home standby generator sales were approximately flat on a year-over-year basis.

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International segment total sales (including inter-segment sales) increased approximately 7% to $197.2 million from $184.5 million in the prior year quarter, including an approximate 1% favorable impact from foreign currency. The 6% core total sales growth for the segment 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.

In addition, total contribution from non-annualized acquisitions for the second quarter of 2025 was $6.2 million for the domestic segment.

Gross profit. Gross profit margin was 39.3% as compared to 37.6% in the prior-year second quarter. The increase in gross margin was primarily driven by favorable pricing and lower input costs, partially offset by unfavorable sales mix.

Operating Expenses. Operating expenses increased $32.6 million, or 12.0%, as compared to the second quarter of 2024. The growth in operating expenses was primarily driven by higher variable costs due to higher shipment volumes, increased employee costs to support future growth across the business, and ongoing operating expenses related to recent acquisitions.

Other Expense. The decrease in other expense, net was driven primarily by a decrease in interest expense due to lower borrowings and lower interest rates compared to the prior-year second quarter. This was partially offset by a pre-tax loss attributable to the sale of our immaterial Tank Utility fleet business.

Provision for income taxes. Provision for income taxes for the current year quarter was $15.4 million, or an effective tax rate of 17.2%, as compared to $19.6 million, or a 25.0% effective tax rate, for the prior year. The decrease in effective tax rate was primarily due to a favorable discrete tax benefit in the second quarter related to the sale of our immaterial Tank Utility fleet business.

Net income attributable to Generac Holdings Inc. Net income attributable to Generac Holdings Inc. in the second quarter of 2025 was $74.0 million compared to $59.1 million in the prior-year second quarter. This increase was primarily driven by the factors outlined above.

Adjusted EBITDA. Adjusted EBITDA for the domestic segment in the second quarter of 2025 was $158.1 million, or 17.9% of domestic segment total sales, as compared to $139.7 million, or 16.9% of total sales, in the prior-year second quarter. This margin increase was primarily driven by favorable price realization and lower input costs, partially offset by unfavorable sales mix and increased operating expense investments to support future growth.

Adjusted EBITDA for the international segment in the second quarter of 2025, before deducting for non-controlling interests, was $29.5 million, or 15.0% of international segment total sales, as compared to $25.0 million, or 13.6% of total sales, in the prior-year second quarter. This margin increase was primarily driven by favorable price and cost impacts, partially offset by unfavorable sales mix.

Adjusted Net Income. Adjusted Net Income in the second quarter of 2025 was $97.3 million compared to $81.7 million in the prior-year second quarter. This increase was primarily driven by higher net income in the current period as outlined above together with changes in certain add-back items.

See “Non-GAAP Measures” for a discussion of how we calculate Adjusted EBITDA and Adjusted Net Income and the limitations on their usefulness.

Results of Operations

Six months ended June 30, 2025, compared to the six months ended June 30, 2024

The following table sets forth our consolidated statements of operations information for the periods indicated:

	Six Months Ended June 30,
(U.S. Dollars in thousands)	2025			2024			$ Change			% Change

Net sales	$	2,003,290		$	1,887,470		$	115,820			6.1	%
Costs of goods sold		1,214,555			1,195,530			19,025			1.6	%
Gross profit		788,735			691,940			96,795			14.0	%
Operating expenses:
Selling and service		265,560			236,739			28,821			12.2	%
Research and development		122,402			103,406			18,996			18.4	%
General and administrative		154,176			132,150			22,026			16.7	%
Amortization of intangible assets		51,170			49,541			1,629			3.3	%
Total operating expenses		593,308			521,836			71,472			13.7	%
Income from operations		195,427			170,104			25,323			14.9	%
Total other expense, net		(47,061	)		(52,902	)		5,841			11.0	%
Income before provision for income taxes		148,366			117,202			31,164			26.6	%
Provision for income taxes		29,658			31,671			(2,013	)		-6.4	%
Net income		118,708			85,531			33,177			38.8	%
Net income attributable to noncontrolling interests		852			184			668			363.0	%
Net income attributable to Generac Holdings Inc.	$	117,856		$	85,347		$	32,509			38.1	%

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The following tables set forth our reportable segment information for the periods indicated:

	Net Sales
	Six Months Ended June 30,
(U.S. Dollars in thousands)	2025		2024		$ Change			% Change
Domestic	$	1,652,873	$	1,529,895	$	122,978			8.0	%
International		350,417		357,575		(7,158	)		-2.0	%
Total net sales	$	2,003,290	$	1,887,470	$	115,820			6.1	%

	Total Sales by Reportable Segment
	Six Months Ended June 30, 2025								Six Months Ended June 30, 2024
	External Net Sales		Intersegment Sales			Total Sales			External Net Sales		Intersegment Sales			Total Sales
Domestic	$	1,652,873	$	13,924		$	1,666,797		$	1,529,895	$	17,718		$	1,547,613
International		350,417		32,329			382,746			357,575		13,642			371,217
Intercompany elimination		-		(46,253	)		(46,253	)		-		(31,360	)		(31,360	)
Total net sales	$	2,003,290	$	-		$	2,003,290		$	1,887,470	$	-		$	1,887,470

	Adjusted EBITDA
	Six Months Ended June 30,
	2025		2024		$ Change		% Change
Domestic	$	280,629	$	238,849	$	41,780		17.5	%
International		56,546		53,073		3,473		6.5	%
Total Adjusted EBITDA	$	337,175	$	291,922	$	45,253		15.5	%

The following table sets forth our product class information for the periods indicated:

	Net Sales by Product Class
	Six Months Ended June 30,
(U.S. Dollars in thousands)	2025		2024		$ Change		% Change
Residential products	$	1,068,340	$	967,349	$	100,991		10.4	%
Commercial & industrial products		699,576		698,139		1,437		0.2	%
Other		235,374

GENERAC HOLDINGS INC. 10-Q