Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from Debt [USD, Thousands]

Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

63b48410e0538d03260424af9ceff9dea1187f5dec2bdefc7f953e524cb9b41a

3388735c3cd4129d67165819cc6da4074341f5165ec9278a58d3b48e429807f6

Penetration of the addressable market of homes in the United States for home standby generators (percentage)

49fcc04566b5fcba57155cb46a7309fc86eccfb1e14a00abda2c41ad69fcc4e0

14a0af31ed4b598f06939f0f2fdea4c50c7417b81a0273c5fa00ab84fd5578f2

| Metric (USD Millions) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Residential Products  | **574.8**  **[0001437749-23-003413_ex_475272.htm:10]**  | **418.9**  **[0001437749-23-013331_gnrc20230331_10q.htm:31]**  | **498.6**  **[0001437749-23-022513_gnrc20230630_10q.htm:13]**  | **565.1**  **[0001437749-23-030646_gnrc20230930_10q.htm:13]**  | **580**  **[GNRC_3373246_7]**  | **428.95**  **[0001437749-24-015075_gnrc20240331_10q.htm:12]**  | **538.4**  **[0001437749-24-024883_gnrc20240630_10q.htm:36]**  | **722.8**  **[0001437749-24-033337_gnrc20240930_10q.htm:14]**  |
| Commercial & Industrial Products | **361.5**  **[0001437749-23-003413_ex_475272.htm:10]**  | **363.0**  **[0001437749-23-013331_gnrc20230331_10q.htm:31]**  | **384.4**  **[0001437749-23-022513_gnrc20230630_10q.htm:13]**  | **384.5**  **[0001437749-23-030646_gnrc20230930_10q.htm:13]**  | **363**  **[GNRC_3373246_7]**  | **353.97**  **[0001437749-24-015075_gnrc20240331_10q.htm:12]**  | **344.2**  **[0001437749-24-024883_gnrc20240630_10q.htm:36]**  | **328.0**  **[0001437749-24-033337_gnrc20240930_10q.htm:14]**  |
| Other Products and Services | **113.0**  **[0001437749-23-003413_ex_475272.htm:10]**  | **106.1**  **[0001437749-23-013331_gnrc20230331_10q.htm:31]**  | **117.5**  **[0001437749-23-022513_gnrc20230630_10q.htm:13]**  | **121.0**  **[0001437749-23-030646_gnrc20230930_10q.htm:13]**  | **120**  **[GNRC_3373246_7]**  | **106.35**  **[0001437749-24-015075_gnrc20240331_10q.htm:12]**  | **115.6**  **[0001437749-24-024883_gnrc20240630_10q.htm:36]**  | **122.8**  **[0001437749-24-033337_gnrc20240930_10q.htm:14]**  |
| Total Net Sales       | **1,049.2**  **[0001437749-23-003413_ex_475272.htm:10]**  | **887.9**  **[0001437749-23-013331_gnrc20230331_10q.htm:31]**  | **1,000.4**  **[0001437749-23-022513_gnrc20230630_10q.htm:13]**  | **1,070.7**  **[0001437749-23-030646_gnrc20230930_10q.htm:13]**  | **1,063.67**  **[0001437749-24-003977_ex_625113.htm:10]**  | **889.27**  **[0001437749-24-015075_gnrc20240331_10q.htm:12]**  | **998.2**  **[0001437749-24-024883_gnrc20240630_10q.htm:36]**  | **1,173.6**  **[0001437749-24-033337_gnrc20240930_10q.htm:14]**  |

478c370b6ab47ae1d92c2326ae4fc4f51caa9309cddfdcee4b73ddfbd7e3807b

Generac Holdings Inc. is a leading global designer and manufacturer of energy technology solutions, providing power generation equipment, energy storage systems, energy management devices, and other power products **[0001437749-24-005040_gnrc20231231_10k.htm:4]** **[0001437749-24-005040_gnrc20231231_10k.htm:85]**. The company serves residential, light commercial, and industrial markets through a broad network of independent dealers, distributors, retailers, e-commerce partners, wholesalers, and equipment rental companies **[0001437749-24-005040_gnrc20231231_10k.htm:85]**. Generac's product offerings are categorized into three main segments: Residential products, Commercial & Industrial (C&I) products, and Other products and services **[0001437749-24-005040_gnrc20231231_10k.htm:9]** **[0001437749-24-005040_gnrc20231231_10k.htm:11]**.

1. **Residential Products** - Offers automatic home standby generators, portable generators, and residential energy storage systems, catering to the needs of homeowners.
2. **Commercial & Industrial (C&I) Products** - Provides generators and energy storage systems designed for commercial and industrial applications.
3. **Other Products and Services** - Includes aftermarket service parts, product accessories, and grid services, supporting the maintenance and enhancement of power solutions.

e97011abef3307f2e4569ff837924b125d72cd98630d05bdc76165cf86e05574

| Metric (Unit: USD, Scale: Thousands) | Q4 2022       | Q1 2023       | Q2 2023       | Q3 2023       | Q4 2023       | Q1 2024       | Q2 2024       | Q3 2024       |
|--------------------------------------|---------------|---------------|---------------|---------------|---------------|---------------|---------------|---------------|
| Domestic Segment                     | 864,600  **[0001437749-23-003413_ex_475272.htm:10]**  | 704,400  **[0001437749-23-013331_gnrc20230331_10q.htm:13]**  | 804,500  **[0001437749-23-022513_gnrc20230630_10q.htm:13]**  | 886,400  **[0001437749-23-030646_gnrc20230930_10q.htm:13]**  | 881,033  **[0001437749-24-003977_ex_625113.htm:10]**  | 712,337  **[0001437749-24-015075_gnrc20240331_10q.htm:13]**  | 817,600  **[0001437749-24-024883_gnrc20240630_10q.htm:36]**  | 1,011,347  **[0001437749-24-033337_gnrc20240930_10q.htm:16]**  |
| International Segment                | 184,600  **[0001437749-23-003413_ex_475272.htm:10]**  | 183,500  **[0001437749-23-013331_gnrc20230331_10q.htm:13]**  | 195,900  **[0001437749-23-022513_gnrc20230630_10q.htm:13]**  | 184,300  **[0001437749-23-030646_gnrc20230930_10q.htm:13]**  | 182,637  **[0001437749-24-003977_ex_625113.htm:10]**  | 176,936  **[0001437749-24-015075_gnrc20240331_10q.htm:13]**  | 180,600  **[0001437749-24-024883_gnrc20240630_10q.htm:36]**  | 162,216  **[0001437749-24-033337_gnrc20240930_10q.htm:16]**  |
| Total Net Sales                      | 1,049,200  **[0001437749-23-003413_ex_475272.htm:10]**  | 887,900  **[0001437749-23-013331_gnrc20230331_10q.htm:13]**  | 1,000,400  **[0001437749-23-022513_gnrc20230630_10q.htm:13]**  | 1,070,700  **[0001437749-23-030646_gnrc20230930_10q.htm:13]**  | N/A           | 889,273  **[0001437749-24-015075_gnrc20240331_10q.htm:13]**  | 998,200  **[0001437749-24-024883_gnrc20240630_10q.htm:36]**  | 1,173,563  **[0001437749-24-033337_gnrc20240930_10q.htm:16]**  |

9af009fb623f6e743f64e53966a3b19a5a49de8cf9b6de0fa31a334ac3f3c334

1. Given the ongoing softness in the telecom and rental markets leading to a 10% decline in C&I product sales, what steps are you taking to mitigate this weakness, and how confident are you in the recovery of these markets in the near term?
2. Despite recent growth driven by power outages like Hurricane Beryl, how sustainable is the increased demand for home standby generators, and what strategies are in place to drive growth in regions not experiencing significant outage activity?
3. With only approximately 6% penetration in the U.S. residential standby generator market, what are the key barriers to increasing market adoption, and how do you plan to overcome them to accelerate growth?
4. Considering the ongoing challenges in the clean energy market due to higher borrowing costs and changes to California's net metering program, how will these headwinds impact your Residential Energy Technology Products & Solutions, and what is your strategy to navigate them?
5. You've made significant investments in energy storage systems, EV charging solutions through your agreement with Wallbox, and microgrid technologies; how do you plan to achieve profitable growth in these highly competitive and evolving markets, and what returns do you expect from these investments?

5bbdc89902476e9dfca533062556651811e4da8d00d849fc71e5354a6afdb0dc

- **Kohler** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Briggs & Stratton** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Cummins** - Competitor in both residential and C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Honda** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Champion** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Techtronics International** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Husqvarna** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Ariens** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **LG Chem** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Tesla** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Enphase** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Solar Edge** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Google** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Resideo** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Emerson** - Competitor in residential products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Caterpillar** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **IGSA** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **AKSA** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **MultiQuip** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Wacker** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Doosan** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Atlas Copco** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Himoinsa** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **FG Wilson** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Woodward** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Planelec** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Co-map** - Competitor in C&I products  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Autogrid** - Competitor in grid services optimization software  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .
- **Energy Hub** - Competitor in grid services optimization software  **[0001437749-24-005040_gnrc20231231_10k.htm:22]** .

5fdcebdbd620bdc3880d507a77d726dba3305f138f7acb7d4049e637e6b9c8b0

Domestic

International

- External Net Sales

- Intersegment Sales

Total Revenue

4c9227a62c7ac5994a386ab173750adae4ec586bfa05f60f67736bf96baf8a2b

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Net Sales**: Increase by **3% to 7%**  **[GNRC_3373246_9]** .
  2. **Residential Product Sales**: Grow in the **mid-teens range**  **[GNRC_3373246_9]** .
  3. **C&I Product Sales**: Decline by approximately **10%**  **[GNRC_3373246_9]** .
  4. **Gross Margins**: Increase by approximately **300 basis points**  **[GNRC_3373246_9]** .
  5. **Operating Expenses**: Approximately **23%** of sales  **[GNRC_3373246_9]** .
  6. **Adjusted EBITDA Margins**: Approximately **16.5% to 17.5%**  **[GNRC_3373246_9]** .
  7. **Interest Expense**: Approximately **$85 million to $90 million**  **[GNRC_3373246_10]** .
  8. **Capital Expenditures**: Approximately **3%** of net sales  **[GNRC_3373246_10]** .
  9. **Depreciation Expense**: Approximately **$70 million to $73 million**  **[GNRC_3373246_10]** .
  10. **GAAP Intangible Amortization Expenses**: Approximately **$95 million to $100 million**  **[GNRC_3373246_10]** .
  11. **Stock Compensation Expense**: Between **$55 million to $60 million**  **[GNRC_3373246_10]** .
  12. **Free Cash Flow Conversion**: Approximately **100%** of adjusted net income  **[GNRC_3373246_10]** .
  13. **GAAP Effective Tax Rate**: Between **25% to 26%**  **[GNRC_3373246_10]** .
  14. **Weighted Average Diluted Share Count**: Approximately **61 million shares**  **[GNRC_3373246_10]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Net Sales**: Growth of **3% to 7%**  **[GNRC_3381808_6]** .
  2. **Gross Margins**: Improve by **300 to 350 basis points**  **[GNRC_3381808_7]** .
  3. **Adjusted EBITDA Margins**: Approximately **16.5% to 17.5%**  **[GNRC_3381808_7]** .
  4. **GAAP Effective Tax Rate**: Approximately **25% to 26%**  **[GNRC_3381808_7]** .
  5. **Interest Expense**: Approximately **$90 million to $93 million**  **[GNRC_3381808_7]** .
  6. **Capital Expenditures**: Approximately **3%** of net sales  **[GNRC_3381808_7]** .
  7. **Free Cash Flow**: Conversion approximately **100%**  **[GNRC_3381808_8]** .
  8. **Residential Product Sales**: Low double-digit growth  **[GNRC_3381808_6]** .
  9. **C&I Product Sales**: Higher than previously anticipated  **[GNRC_3381808_3]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue Growth**: **4% to 8%**  **[GNRC_3395296_7]** .
  2. **Home Standby Generator Sales**: High teens growth  **[GNRC_3395296_7]** .
  3. **Portable Generator Sales**: Above prior forecast  **[GNRC_3395296_7]** .
  4. **Residential Product Sales**: Mid-teens growth  **[GNRC_3395296_7]** .
  5. **Gross Margins**: Improve by **350 to 400 basis points**  **[GNRC_3395296_7]** .
  6. **Adjusted EBITDA Margins**: **17% to 18%**  **[GNRC_3395296_8]** .
  7. **GAAP Effective Tax Rate**: **25% to 26%**  **[GNRC_3395296_8]** .
  8. **Gross Interest Expense**: **$92 million to $94 million**  **[GNRC_3395296_8]** .
  9. **Stock Compensation Expense**: **$52 million to $54 million**  **[GNRC_3395296_8]** .
  10. **Free Cash Flow Conversion**: Well above **100%**  **[GNRC_3395296_8]** .
  11. **Weighted Average Diluted Share Count**: **60.5 million to 61 million shares**  **[GNRC_3395296_8]** .
  12. **Capital Expenditures**: Approximately **3% of sales**  **[GNRC_3395296_8]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: N/A
- **Guidance**: The documents do not contain information about the Q3 2024 earnings call for GNRC, so specific guidance metrics are unavailable.

2b3156080bcf76d11cef2f74eecbe33946ae6b4419fd283399016153a5f4baa7

Residential Products

Commercial & Industrial

Other Products

Residential Power Products

Commercial & Industrial Power Products

Other

Domestic Segment

International Segment

Total Net Sales

ddfbfafdec9a50060e585c11568e24a4e6a71b5fa0b37f84b53c0c5dc6c3c709

| Name            | Position                                      | Start Date       | Short Bio                                                                                                                                                                                                 |
|-----------------|-----------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Aaron P. Jagdfeld| President, CEO, and Chairman                 | September 2008   | Aaron P. Jagdfeld has been the CEO of Generac since September 2008, a director since November 2006, and Chairman since February 2016. He joined Generac in 1994, became CFO in 2002, and President in 2007  **[0001437749-24-005040_gnrc20231231_10k.htm:24]** **[0001104659-24-053993_tm2333314-d4_def14a.htm:8]** **[0001437749-23-004153_gnrc20221231_10k.htm:24]** .                          |
| York A. Ragen   | Chief Financial Officer                       | September 2008   | York A. Ragen has been the CFO of Generac since September 2008. He joined Generac in 2005 and previously held finance roles at APW Ltd. and Arthur Andersen  **[0001437749-24-005040_gnrc20231231_10k.htm:24]** **[0001437749-23-004153_gnrc20221231_10k.htm:24]** .                                                                             |
| Erik Wilde      | Executive Vice President, Industrial, Americas| July 2016        | Erik Wilde has been the EVP, Industrial, Americas at Generac since July 2016. He previously worked at Komatsu America Corp. in various leadership roles  **[0001437749-24-005040_gnrc20231231_10k.htm:24]** **[0001437749-23-004153_gnrc20221231_10k.htm:24]** .                                                                                  |
| Patrick Forsythe| Chief Technical Officer                       | January 2021     | Patrick Forsythe has been the CTO at Generac since January 2021. He was EVP of Global Engineering at Generac starting in July 2015 and held engineering roles at Hayward Industries and Ingersoll Rand Company  **[0001437749-24-005040_gnrc20231231_10k.htm:25]** **[0001437749-23-004153_gnrc20221231_10k.htm:24]** .                          |
| Raj Kanuru      | Executive Vice President, General Counsel and Secretary | 2013 | Raj Kanuru has been the EVP, General Counsel, and Secretary at Generac since 2013. He previously worked at Caterpillar Inc. and Progress Rail Services Inc.  **[0001437749-24-005040_gnrc20231231_10k.htm:25]** **[0001437749-23-004153_gnrc20221231_10k.htm:24]** .                                                                             |
| Norman Taffe    | President, Energy Technology                  | August 2022      | Norman Taffe has been the President, Energy Technology at Generac since August 2022. He previously held executive roles at SunPower Corporation and Cypress Semiconductor  **[0001437749-24-005040_gnrc20231231_10k.htm:25]** **[0001437749-23-004153_gnrc20221231_10k.htm:25]** .                                                               |
| Kyle Raabe      | President, Consumer Power                     | November 2019    | Kyle Raabe has been the President, Consumer Power at Generac since November 2019. He previously worked at The Master Lock Corporation and held various roles at Generac Power Systems  **[0001437749-24-005040_gnrc20231231_10k.htm:25]** **[0001437749-23-004153_gnrc20221231_10k.htm:25]** .                                                   |

35d2ae4abf987c9192017931bac475e5cf757a916c678e4e53ce11410e9cd925

**Quarterly guidance for Q4 2024:**
- **Gross margins**: ~40%  **[GNRC_3405083_7]**  (no prior guidance)  
- **Adjusted EBITDA Margins**: ~20%  **[GNRC_3405083_7]**  (no prior guidance)  
- **GAAP Effective Tax Rate**: 24%-24.5%  **[GNRC_3405083_7]**  (no prior guidance)

**Annual guidance for FY 2024:**
- **Revenue Growth**: 5%-9%  **[GNRC_3405083_6]**  (raised from 4%-8%  **[GNRC_3395296_7]** )  
- **Residential Product Sales Growth**: High teens year-over-year  **[GNRC_3405083_7]**  (raised from mid-teens  **[GNRC_3395296_7]** )  
- **C&I Product Sales**: Down high single digits year-over-year  **[GNRC_3405083_7]**  (no prior guidance)  
- **Other Sales Category**: Nearly flat year-over-year  **[GNRC_3405083_7]**  (no prior guidance)  
- **Gross Margins**: Improve by ~450 basis points  **[GNRC_3405083_7]**  (raised from 350-400 basis points  **[GNRC_3395296_7]** )  
- **Adjusted EBITDA Margins**: 17.5%-18.5%  **[GNRC_3405083_7]**  (raised from 17%-18%  **[GNRC_3395296_8]** )  
- **GAAP Effective Tax Rate**: 24%-25%  **[GNRC_3405083_7]**  (lowered from 25%-26%  **[GNRC_3395296_8]** )  
- **Gross Interest Expense**: $91M-$93M  **[GNRC_3405083_7]**  (lowered from $92M-$94M  **[GNRC_3395296_8]** )  
- **Stock Compensation Expense**: $50M-$52M  **[GNRC_3405083_7]**  (lowered from $52M-$54M  **[GNRC_3395296_8]** )  
- **Weighted Average Diluted Share Count**: ~60.5M  **[GNRC_3405083_7]**  (lowered from 60.5M-61M  **[GNRC_3395296_8]** )  
- **Capital Expenditures**: ~3% of sales  **[GNRC_3405083_7]**  (no change from ~3%  **[GNRC_3395296_8]** )  
- **Free Cash Flow Conversion**: Well above 100%, ~$500M  **[GNRC_3405083_7]**  (no change from prior guidance  **[GNRC_3395296_8]** )  
- **Residential Products Contribution to Net Sales Growth**: +$100M  **[GNRC_3405083_6]**  (no prior guidance)

7e74eedc1e732be23676e36dd0493bd539c614b5d4d435a1d58479d3fa0cad7b

| Program Details          | Program 1                  | Program 2                  |
|--------------------------|----------------------------|----------------------------|
| Approval Date            | July 2022  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**            | February 12, 2024  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**    |
| End Date/Duration        | 24 months  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**            | 24 months  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**            |
| Total additional amount  | $500 million  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**         | $500 million  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**         |
| Remaining authorization  | $26.3 million  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**        | $347,256,871  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:56]**      |
| Details                  | Replaced by Program 2  **[0001437749-24-033337_gnrc20240930_10q.htm:21]**   | Active, market conditions  **[0001437749-24-033337_gnrc20240930_10q.htm:21]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:56]**  |

6a21412d2378916a7dc72f388d2ad988e23de829a1f7b4dfbc3a41b31cd55d32

80d8ad732234b0a6d14c069a9a4d68599cb89a456f8149b6c7e8b8c130ea372c

| Name               | Start Date   | End Date   | Reason for Change                                                                 |
|--------------------|--------------|------------|----------------------------------------------------------------------------------|
| Deloitte & Touche LLP | April 20, 2016  **[0001437749-16-029871_gnrc20160422_8k.htm:1]**  | Present | Current auditor.                                                             |
| Ernst & Young LLP     | N/A        | April 20, 2016  **[0001437749-16-029871_gnrc20160422_8k.htm:1]**  | The Audit Committee recommended and approved the dismissal. No disagreements or reportable events.  **[0001437749-16-029871_gnrc20160422_8k.htm:1]**  |

baee15894cf989e16b51a5302c84d3d7fcf2bf8c57bc072807c0c6898a5b699a

258bdb9b2e2ba25d88ba5b16c1c184f05bccef60f2454366beeac9850cc6af5f

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $1,173.56 million (+10% YoY)  **[0001437749-24-033337_gnrc20240930_10q.htm:3]**   
- Residential Products: $722.8 million (**+28% YoY**)  **[0001437749-24-033337_gnrc20240930_10q.htm:14]** **[0001437749-23-030646_gnrc20230930_10q.htm:13]**   
- Commercial & Industrial: $328.0 million (**-15% YoY**)  **[0001437749-24-033337_gnrc20240930_10q.htm:14]** **[0001437749-23-030646_gnrc20230930_10q.htm:36]**   
- Domestic Segment: $1,011.35 million (+14% YoY)  **[0001437749-24-033337_gnrc20240930_10q.htm:37]** **[0001437749-23-030646_gnrc20230930_10q.htm:14]**   
- International Segment: $162.22 million (**-12% YoY**)  **[0001437749-24-033337_gnrc20240930_10q.htm:37]** **[0001437749-23-030646_gnrc20230930_10q.htm:14]**   
- Operating Income: $168.62 million (+61% YoY)  **[0001437749-24-033337_gnrc20240930_10q.htm:3]** **[0001437749-23-030646_gnrc20230930_10q.htm:3]**   
- Net Income: $113.74 million (**+95% YoY**)  **[0001437749-24-033337_gnrc20240930_10q.htm:3]** **[0001437749-23-030646_gnrc20230930_10q.htm:3]**   
- Diluted EPS: $1.89 (**+95% YoY**)  **[0001437749-24-033337_gnrc20240930_10q.htm:3]** **[0001437749-23-030646_gnrc20230930_10q.htm:3]**   
- R&D Expense: $56.94 million (+31% YoY)  **[0001437749-24-033337_gnrc20240930_10q.htm:3]** **[0001437749-23-030646_gnrc20230930_10q.htm:3]**   

edf5ed15c7ce22b86d08923664546718b9d961382680391d59a6de5f0736122d

d60a493190d06d57ef3abf4aabc2c549e3a27eb146dd521f5c093f58c2447d2d

| Year | Amount Due | Debt Type                  | Interest Rate | % of Total Debt                                                                 |
|----------|----------------|--------------------------------|-------------------|------------------------------------------------------------------------------------|
| 2024     | $11.875        | Tranche A Term Loan Facility  | 6.93%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 0.8% = (11.875 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                  |
| 2024     | $150.000       | Revolving Facility            | 6.93%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 10.2% = (150.000 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                |
| 2024     | $65.540        | Short-term Borrowings         | N/A               | 4.5% = (65.540 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:2]**                                 |
| 2025     | $51.875        | Tranche A Term Loan Facility  | 6.93%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 3.5% = (51.875 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                  |
| 2026     | $70.625        | Tranche A Term Loan Facility  | 6.93%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 4.8% = (70.625 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                  |
| 2027     | $755.000       | Tranche A Term Loan Facility  | 6.93%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 51.4% = (755.000 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                |
| 2027     | $150.000       | Revolving Facility            | 6.93%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 10.2% = (150.000 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                |
| 2028     | $5.000         | Tranche B Term Loan Facility  | 6.95%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 0.3% = (5.000 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                   |
| 2029     | $5.000         | Tranche B Term Loan Facility  | 6.95%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 0.3% = (5.000 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                   |
| 2030     | $5.000         | Tranche B Term Loan Facility  | 6.95%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 0.3% = (5.000 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                   |
| 2031     | $467.500       | Tranche B Term Loan Facility  | 6.95%  **[0001437749-24-033337_gnrc20240930_10q.htm:43]** **[0001437749-24-033337_gnrc20240930_10q.htm:42]** **[0001437749-24-033337_gnrc20240930_10q.htm:20]**  | 31.8% = (467.500 / 1,468.666) * 100 **[0001437749-24-033337_gnrc20240930_10q.htm:19]** **[0001437749-24-033337_gnrc20240930_10q.htm:43]**                                |

f481e5a70149678cbc8ac6fbff2a6d1c6e0a57e9c04cbcf107678efb986729c0

1. **Margin Outlook**  
   **Q:** What's causing the 200 basis point margin decline beyond normal seasonality?  
   **A:** Generac expects operating expenses as a percentage of sales to **increase in 2024** due to investments across all business units—including consumer power, industrial, and energy technologies—to drive future growth. These costs are incurred **before revenue is realized**, impacting margins in the near term. **Investments are necessary** to improve odds of success as the market changes.  **[GNRC_3373246_15]** 

2. **HSB and Residential Growth**  
   **Q:** Explain the underlying activation growth supporting mid-teens 2024 guidance?  
   **A:** Generac anticipates **mid-teens year-over-year growth** in home standby (HSB) generators for 2024. This is supported by the easing of field inventory destocking by **Q2** and maintaining activation rates at a new, higher baseline. While they are not assuming major outages, the market is expected to hold steady without declining.  **[GNRC_3373246_11]** 

3. **Energy Technology Growth**  
   **Q:** How will new product launches impact Energy Tech revenue and margins?  
   **A:** New energy storage products are slated to hit the market **later this year**, with only a **modest top-line impact** in 2024. Generac is focusing on development, distribution, and integrating products into a seamless ecosystem. **Margin dilution** from Energy Tech investments will persist in 2024 but is expected to **abate in 2025**, aiming for breakeven by **2026**.  **[GNRC_3373246_12]** **[GNRC_3373246_16]** **[GNRC_3373246_17]** 

4. **C&I Business Outlook**  
   **Q:** What's the outlook for C&I business recovery and impact of interest rates?  
   **A:** The Commercial & Industrial (C&I) segment is experiencing softness, particularly in telecom and rental accounts, due to reduced customer CapEx and higher interest rates delaying projects. Historically, such downturns last **4–6 quarters**. Generac anticipates recovery as interest rates normalize, with potential benefits from infrastructure investments and sustained growth in other areas offsetting some weaknesses.  **[GNRC_3373246_18]** **[GNRC_3373246_19]** **[GNRC_3373246_20]** 

5. **Channel Inventory and Destocking**  
   **Q:** Update on home standby channel inventories and $300 million destocking tailwind?  
   **A:** Excess field inventory in home standby is expected to be **largely gone by end of Q1 2024**. Generac **undershipped the market by $300 million** in 2023 due to destocking, but not all of that will be regained in 2024. A portion will contribute as a **tailwind to growth** as destocking effects abate.  **[GNRC_3373246_13]** 

6. **Gross Margin Guidance**  
   **Q:** What's driving the gross margin guidance increase to 37% in 2024?  
   **A:** The anticipated improvement to a **37% gross margin** is driven about half by favorable **mix**—with residential and home standby growing faster—and half by **cost reductions**. Cost improvements include easing supply chain pressures, lower logistics costs, better overhead absorption from increased production, reduced warehousing costs, and efficiency gains from profitability enhancement programs. Pricing adjustments are **modest**.  **[GNRC_3373246_17]** 

7. **Close Rates Trends**  
   **Q:** How are close rates and in-home consultations trending?  
   **A:** **In-home consultations (IHCs)** saw modest improvement in **close rates** during Q4. Despite a soft quarter for power outages, IHCs were **up for the year**, and January showed a strong start due to weather events and increased consumer awareness. Close rates are expected to improve **modestly over 2024**.  **[GNRC_3373246_14]** 

8. **Dealer Count Progress**  
   **Q:** What's the status of increasing the dealer count towards the 10,000 goal?  
   **A:** The dealer network remained flat at **8,700** in 2023 after significant growth in prior years. Challenges include churn from dealers added recently and a softer power outage environment. Generac is confident in reaching the **10,000 dealer** target by expanding into HVAC contractors and leveraging Ecobee's network of **14,000** contractors.  **[GNRC_3373246_21]** 

9. **Impact of Interest Rates on HSB Sales**  
   **Q:** How do interest rates affect HSB sales?  
   **A:** The home standby category is **not highly sensitive** to interest rates since purchases are often **not financed**. While higher rates may impact the broader economy, the core customer demographic continues to prioritize home protection over financing costs.  **[GNRC_3373246_23]** 

10. **Product Strategy on Generators and Storage**  
    **Q:** Update on DC generators and storage strategy, including AC coupling?  
    **A:** Generac is shifting focus from DC generators to **AC generators** for coupling with storage due to better cost structures and scale. They plan to improve **AC coupling capabilities** with new storage products launching later this year and will continue offering DC-coupled solutions where efficient. Full integration with **microinverter products** is expected by **2025**.  **[GNRC_3373246_20]** 

82d5fdf204c6c756ac47660c40e8f0cf8bfe1f64818604159ec5310ca2b9a1ee

1. **Home Standby Growth and Guidance Increase**  
   **Q:** What's driving the increased outlook for home standby?  
   **A:** The outlook for home standby growth has increased from **mid-teens to high teens**, primarily due to the impact of **Hurricane Beryl**, which led to significant infrastructure damage and increased demand in July ( **[GNRC_3395296_9]** ,  **[GNRC_3395296_10]** ). The **destocking** issue from Q1 has been resolved and is no longer a problem for the rest of the year ( **[GNRC_3395296_9]** ). Activations were modestly down in the first half due to low outage activity last year but have picked up in **July** and are expected to grow through the balance of the year ( **[GNRC_3395296_9]** ).

2. **Texas Market Opportunity**  
   **Q:** How much growth potential remains in Texas?  
   **A:** Texas is still **underpenetrated**, with penetration rates increasing from **sub-3% in 2021 to sub-5% today**, meaning **95% of homes in Texas don't have the product** ( **[GNRC_3395296_10]** ,  **[GNRC_3395296_15]** ). With recent storms like Hurricane Beryl and earlier outages, there is significant room for growth in this large housing market, and we expect penetration to increase in the years ahead ( **[GNRC_3395296_10]** ,  **[GNRC_3395296_15]** ).

3. **Gross Margin Expectations**  
   **Q:** Will input cost tailwinds continue into the second half?  
   **A:** We expect a **couple percent improvement** in gross margins from the first half to the second half, mainly due to a higher mix of home standby products, which accounts for over **50%** of the gross margin increase ( **[GNRC_3395296_12]** ,  **[GNRC_3395296_14]** ). We also anticipate some further price cost improvements, though they will be a smaller piece of the overall improvement ( **[GNRC_3395296_12]** ,  **[GNRC_3395296_14]** ).

4. **Clean Energy Segment and Ecobee Margins**  
   **Q:** Is the timing for profitability improvement in clean energy changing?  
   **A:** The timing for new product introductions remains unchanged, with our next-generation storage device targeted for the end of this year and microinverter products in the first half of next year ( **[GNRC_3395296_11]** ). While the solar plus storage market has been muted this year, we've secured a **Department of Energy grant increased to $200 million**, which will bolster installations in 2025 and 2026 ( **[GNRC_3395296_11]** ). **Ecobee's margins are improving** due to a focus on cost reductions and supply chain efficiencies, leading to a significant impact on gross margin ( **[GNRC_3395296_11]** ).

5. **Telecom and C&I Market Outlook**  
   **Q:** What's the outlook for telecom and C&I markets?  
   **A:** We believe we're at the **bottom** of the telecom cycle, with current run rates expected to improve in the back half, especially in Q4 ( **[GNRC_3395296_15]** ). Although we don't have solid forecasts from telecom partners for 2025, we're hopeful for better performance next year. Our industrial distribution channel has performed well, with strategic acquisitions improving market share and offsetting some of the telecom weakness ( **[GNRC_3395296_15]** ).

6. **Impact of Storms on Other Markets**  
   **Q:** Do storms like Beryl boost demand in other regions?  
   **A:** Yes, widespread outages often lead to increased interest in other markets due to media coverage. For example, a storm in Texas can positively impact IHCs in Florida as people become more aware of potential outages ( **[GNRC_3395296_16]** ). However, media coverage of Hurricane Beryl was less than expected nationally, which may have muted this effect somewhat ( **[GNRC_3395296_16]** ).

7. **Revenue Guidance and Key Swing Factors**  
   **Q:** What's driving the 4% to 8% revenue growth range?  
   **A:** The increased guidance is mainly due to the impact of **Hurricane Beryl** on demand in Texas, leading to higher activations and IHCs ( **[GNRC_3395296_13]** ,  **[GNRC_3395296_20]** ). We are not seeing significant softening in consumer demand beyond what was previously anticipated, and close rates are holding steady nationally ( **[GNRC_3395296_20]** ).

8. **India Market Growth**  
   **Q:** How is the business performing in India?  
   **A:** India is a **growing market** for us, where we're focusing on **natural gas generators** in a market traditionally dominated by diesel solutions ( **[GNRC_3395296_18]** ). The Indian market is converting to natural gas, and we see opportunities as infrastructure builds out. Although it's still a small part of our business, it's experiencing nice growth rates ( **[GNRC_3395296_18]** ).

9. **Duration of Sales Tailwind After Storms**  
   **Q:** How long does increased demand last after major storms?  
   **A:** Typically, the sales tailwind from major storms lasts **2 to 4 quarters**, but larger events can extend this effect ( **[GNRC_3395296_19]** ). For example, the **Texas freeze in 2021** had an echo that only recently quieted down. It's too early to tell if Hurricane Beryl will have a prolonged impact, but at a minimum, we expect it to boost demand through this year and into the first half of next year ( **[GNRC_3395296_19]** ).

10. **Nurturing Leads and Close Rates**  
    **Q:** Can nurturing leads improve sales uptake?  
    **A:** Yes, there's an opportunity to nurture **warm leads** from increased IHCs, especially following storm activity like Hurricane Beryl ( **[GNRC_3395296_12]** ). While close rates may temporarily decrease due to a surge in leads, our improved nurturing capabilities allow us to convert these leads over time, supporting future sales growth ( **[GNRC_3395296_12]** ).

13f2bbcb36a71fad278ec9cf3c651576e5d91d3a8b2fab62f6e318405900494c

1. **Residential Outlook and Destocking**  
   **Q:** Is destocking finished, and what's the outlook for residential activations?  
   **A:** Management indicated that destocking is largely over, as they exited the quarter with activations and shipments in line.  **[GNRC_3381808_12]**  While activations were modestly down in the **mid-single-digit range** year-over-year due to a weaker outage environment, they remain confident about the seasonal ramp into the second half.  **[GNRC_3381808_17]**  The residential category is still significantly up from 2019 levels, and they expect the business to pick up in Q2 without the prior quarter's undershipping.  **[GNRC_3381808_17]** 

2. **Gross Margin Improvements**  
   **Q:** What drove the better-than-expected gross margins this quarter?  
   **A:** The company saw gross margins improve by over **1%** above expectations due to input costs improving sooner than anticipated.  **[GNRC_3381808_14]**  Lower steel costs, reduced freight expenses, and better plant efficiencies contributed to this improvement.  **[GNRC_3381808_19]**  This early realization derisks the assumption of further gross margin improvement in the second half.  **[GNRC_3381808_14]** 

3. **C&I Business Strength**  
   **Q:** How sustainable is the strength in the C&I business amid rental and telecom weakness?  
   **A:** The industrial distribution channel has shown resilience and is offsetting weakness in rental and telecom markets.  **[GNRC_3381808_11]**  This channel represents close to **70-75%** of domestic C&I sales  **[GNRC_3381808_16]**  and continues to grow as the company invests heavily and gains market share.  **[GNRC_3381808_11]**  Management believes the demand for backup power in businesses remains strong due to ongoing concerns about power quality and reliability.  **[GNRC_3381808_11]** 

4. **Competitive Landscape and Market Share**  
   **Q:** Has the competitive landscape changed with your biggest competitor going private?  
   **A:** Management doesn't believe the competitor's acquisition will significantly impact the competitive landscape.  **[GNRC_3381808_15]**  They noted that their home standby products have a **higher margin** than any other offerings, and they have likely **improved their market share** over the last several quarters.  **[GNRC_3381808_15]** 

5. **Energy Technology Investments**  
   **Q:** What's the outlook for energy technology and progress on new products?  
   **A:** While the near-term market for solar plus storage and EV charging is weaker due to higher interest rates and policy changes  **[GNRC_3381808_13]** , Generac remains on track to launch new products later this year.  **[GNRC_3381808_13]**  They are optimistic that market conditions will improve by 2025 and are heavily investing in R&D across all products, especially energy tech.  **[GNRC_3381808_20]**  The company is developing next-generation storage devices and rooftop solar products, aiming to offer a unified platform integrating various energy solutions.  **[GNRC_3381808_20]** 

6. **Input Cost Sensitivity**  
   **Q:** How are input costs affecting your margins, particularly steel and copper prices?  
   **A:** Steel, their largest input, has seen costs come down, aiding margin improvement as they turn through higher-cost inventory.  **[GNRC_3381808_19]**  Freight costs have also decreased, and plant efficiencies have improved.  **[GNRC_3381808_19]**  While copper prices have increased, their impact is less significant compared to steel.  **[GNRC_3381808_19]** 

7. **Industrial Distribution Channel Growth**  
   **Q:** Can you elaborate on the growth and significance of the industrial distributor channel?  
   **A:** The industrial distributor channel accounts for close to **70-75%** of domestic C&I sales.  **[GNRC_3381808_16]**  The company has invested heavily in this channel over the past decade, enhancing its capacity to serve various markets, including critical infrastructure.  **[GNRC_3381808_16]**  The products are highly customized with long sales cycles, and there is no concern about channel buildup as shipments are tied to specific projects.  **[GNRC_3381808_16]** 

8. **Data Center Market Strategy**  
   **Q:** How is Generac approaching the surge in data center power demand?  
   **A:** Generac's products typically serve below the power range required for large data centers and doesn't plan to develop engines for that market.  **[GNRC_3381808_10]**  However, they serve edge data centers and see opportunities in natural gas backup solutions due to permitting challenges with diesel.  **[GNRC_3381808_10]**  They anticipate that increased data center power demand will strain the grid, potentially leading to more widespread power quality issues, which could increase demand for their products.  **[GNRC_3381808_10]** 

9. **Non-Home Standby Residential Challenges**  
   **Q:** What's causing weakness in the non-home standby residential market?  
   **A:** The company faces challenges in portable generators due to a weaker outage environment and reduced demand after prior surges.  **[GNRC_3381808_18]**  International portable generator sales declined significantly as power security concerns in Europe abated.  **[GNRC_3381808_18]**  Additionally, their core products have suffered from high inventory levels and soft demand following the pandemic.  **[GNRC_3381808_18]** 

10. **R&D Expenses and Focus**  
    **Q:** What's driving the increase in R&D expenses, and where are funds being allocated?  
    **A:** R&D expenses increased as the company continues to invest in strategic initiatives, especially in energy technology.  **[GNRC_3381808_20]**  They are developing next-generation residential storage devices and rooftop solar products, aiming to offer unique integration across energy solutions.  **[GNRC_3381808_20]**  They have expanded tech centers across multiple locations to build talent and compete effectively in the market.  **[GNRC_3381808_20]**  The OpEx guidance remains consistent despite these investments.  **[GNRC_3381808_20]** 

84232f39511442a4a10ff448814e7bbe234199a7f61ab3bb996b0f462992035c

- **GNRC expects significant gross margin improvement in 2024, reaching levels not seen since 2020, driven by a favorable sales mix from higher home standby generator sales and cost reductions.**  **[GNRC_3373246_17]**
- **The company's investment in energy technology, including the launch of next-generation energy storage devices and the growth of Ecobee products, positions GNRC for strong future growth, with the energy technology segment expected to grow approximately 25% in 2024.**  **[GNRC_3373246_12]**
- **GNRC has strong long-term conviction in its commercial and industrial (C&I) business, which has achieved a CAGR close to 30% over the last three years, and is investing in additional capacity by building a new plant in Wisconsin to support future growth.**  **[GNRC_3373246_18]**

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- *Bear Case for Generac Holdings Inc. ($GNRC):**
- **Slowdown in Key U.S. Commercial & Industrial Verticals:** Generac is experiencing reduced demand in significant U.S. C&I market segments, notably in **telecom and national rental accounts**, which have cooled off due to broader slowdowns in C&I markets and higher interest rates affecting new construction. CapEx spending by large telcos has been reined in, leading to near-term softness in these verticals.  **[GNRC_3363286_11]**
- **Close Rates for Home Standby Generators Remain Below Pre-Pandemic Levels:** Despite efforts to improve, **close rates have not recovered to historical highs**, partly due to expanding into younger demographics that require more education and have longer sales cycles. This could delay return to previous sales levels for home standby generators.  **[GNRC_3363286_8]**

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- **Declining Commercial & Industrial (C&I) sales**: Generac expects global C&I product sales to decline by approximately **10%** in 2024 due to cyclical pressures in telecom, rental, and beyond standby customers.  **[GNRC_3373246_18]** **[GNRC_3373246_22]**
- **Continued margin dilution from energy technology investments**: The company's investments in residential energy technology are expected to dilute EBITDA margins by approximately **350 to 400 basis points** in 2024, similar to 2023, with profitability improvements not expected until 2025 or 2026.  **[GNRC_3373246_16]** **[GNRC_3373246_9]**
- **Near-term margin pressure**: Adjusted EBITDA margins are expected to be lowest in the first quarter of 2024, in the mid-**12%** range, before improving later in the year, indicating lower profitability in the near term.  **[GNRC_3373246_9]**

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- **Higher interest rates are making projects more difficult to close**, leading to delays in the home standby and beyond standby segments as projects wait for a more constructive rate environment.  **[GNRC_3395296_17]**
- **Close rates may temporarily weaken due to an influx of leads from large-scale events** like Hurricane Beryl, which can impact sales conversions despite increased interest.  **[GNRC_3395296_12]**
- **Dependence on small and less mature markets like India** could limit growth, as India's infrastructure is still developing and the business there remains small.  **[GNRC_3395296_18]**

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- **Generac's gross margins have improved ahead of expectations**, realizing input cost improvements sooner than anticipated, which **derisks margin improvement assumptions** for the second half of the year.  **[GNRC_3381808_14]**
- **The industrial distributor channel, accounting for close to 70% of domestic C&I sales, is experiencing significant growth**, offsetting weaknesses in rental and telecom markets and strengthening Generac's market position.  **[GNRC_3381808_16]**
- **Generac is heavily investing in R&D for next-generation energy technologies**, including residential storage devices launching later this year and new inverter products in early 2025, aiming to **integrate multiple products on a single platform** to enhance customer experience and drive future growth.  **[GNRC_3381808_20]**

af7d665c1a492e7e51dda6ad8558038f2dbda69efb741a18ae31045f5cc4eee5

- **Significant growth potential in the residential standby generator market**, particularly in Texas due to increased power outage activity from events like Hurricane Beryl. With only approximately **6% penetration of the addressable market of homes in the U.S.** and **less than 5% in Texas**, there is substantial room for market expansion. The recent increase in **in-home consultations (IHCs)** and sales leads supports this growth outlook.  **[GNRC_3395296_1]** ,  **[GNRC_3395296_2]** ,  **[GNRC_3395296_10]**
- **Strategic investments and acquisitions in energy technology solutions** such as the acquisition of SunGrid Solutions and a minority investment in Wallbox position Generac well to capitalize on the growing markets of microgrids and EV charging solutions. This enhances their ability to provide comprehensive solutions, leveraging their expertise in natural gas generators and energy storage systems, for both residential and commercial customers.  **[GNRC_3395296_4]** ,  **[GNRC_3395296_3]** ,  **[GNRC_3395296_17]**
- **International expansion opportunities**, particularly in India, present significant growth potential. Generac is capitalizing on the market's shift from diesel to natural gas generators, leveraging their focus on natural gas gensets. The Indian market is poised to benefit from geopolitical shifts and infrastructure development, positioning Generac for long-term growth in this region.  **[GNRC_3395296_18]**

a798bd8fb55316691ac79098cd3f7f9c20f78b439419f3f26dc920a4134f9d5e

1. **Energy Tech Margin Impact**  
   **Q:** How will margin drag from energy tech investments change next year?  
   **A:** The margin drag from energy technology investments is currently **350 to 400 basis points**.  **[GNRC_3405083_9]**  While we can't pinpoint next year's impact, we expect this drag to abate as we progress towards breakeven by the end of **2026**.  **[GNRC_3405083_9]** 

2. **European Business Outlook**  
   **Q:** What's happening in your European business and rebound expectations?  
   **A:** European sales, especially in Germany, are struggling due to decreased demand after energy security concerns abated.  **[GNRC_3405083_10]**  We anticipate Europe to be tough throughout **2025**, possibly recovering after domestic C&I does.  **[GNRC_3405083_10]**  However, we're seeing surprising strength in Latin America.  **[GNRC_3405083_10]** 

3. **Home Standby Guidance**  
   **Q:** Is home standby revenue above the residential guidance?  
   **A:** Yes, home standby is slightly above the **15% range** we've guided for residential revenue.  **[GNRC_3405083_8]**  Activations returned to growth in Q3 and are expected to accelerate in Q4.  **[GNRC_3405083_8]** 

4. **Weather Events Impact**  
   **Q:** How do recent weather events affect demand and production?  
   **A:** Recent events could add **$200 million** in upside this year, with some spillover into **2025**.  **[GNRC_3405083_11]**  We've ramped production capacity, doubling it with our Trenton, South Carolina facility, to meet increased demand.  **[GNRC_3405083_11]** 

5. **New Product Timing**  
   **Q:** What's the timing for PowerCell 2 and inverter introductions?  
   **A:** The launch of PowerCell 2 has shifted **4 to 6 weeks** into February, targeting early to mid-Q1.  **[GNRC_3405083_12]**  The new inverter (micro) is scheduled for early second half of next year.  **[GNRC_3405083_12]** 

6. **C&I Business Trends**  
   **Q:** Has the C&I business stabilized or is more softness expected?  
   **A:** Telecom shows signs of improvement, and we believe C&I has possibly bottomed out.  **[GNRC_3405083_15]**  Rental markets remain weak and may stay muted through **2025**.  **[GNRC_3405083_15]** 

7. **Margin Progression Factors**  
   **Q:** What's driving margin improvement: mix or efficiencies?  
   **A:** Year-over-year gross margin improved by **5%**, with **40-50%** due to mix and **50-60%** from price-cost benefits.  **[GNRC_3405083_16]**  Sequentially, price-cost benefits have mostly run through the P&L.  **[GNRC_3405083_16]** 

8. **Demand Trends**  
   **Q:** Are in-home consultations translating into higher demand?  
   **A:** October is set to be a record month for in-home consultations, indicating strong demand.  **[GNRC_3405083_14]**  We're seeing increased interest even outside the directly impacted states.  **[GNRC_3405083_11]** 

9. **Financing Options Effect**  
   **Q:** Can expanding financing boost home standby sales?  
   **A:** Yes, financing helps overcome price barriers, and we're ramping up financing initiatives through our dealer channel in **2025**.  **[GNRC_3405083_18]** 

10. **Clean Energy Differentiation**  
    **Q:** What's unique about your new clean energy products?  
    **A:** PowerCell 2 offers the largest capacity battery in the market and improved power output.  **[GNRC_3405083_12]**  Our ecosystem, centered around the Ecobee Energy Hub, optimizes energy use during outages, effectively creating a personal microgrid.  **[GNRC_3405083_12]** 

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- Generac's **field inventory levels are returning to normal**, allowing the company to **focus on improving production efficiency** and **ship in line with end market demand**, which is expected to enhance **gross margins** and **EBITDA margins**.  **[GNRC_3363286_7]**
- The company is experiencing **strong sales leads**, with the **third quarter being the second best ever** for sales leads, indicating **robust end market demand**, particularly in **underpenetrated markets** like California, which has a **penetration rate of only 2%** compared to the national average of **5.75%**, suggesting **significant growth potential**.  **[GNRC_3363286_8]**
- **Ecobee products are posting record quarters**, and new product offerings expected next year are anticipated to **set Generac apart from the competition**, indicating strong potential for growth in the **Residential Energy Technology** segment.

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- **Generac is experiencing significant weakness in its non-home standby residential products, including portable generators, which have seen a sharp decline in sales both domestically due to a softer outage environment and internationally due to easing power security concerns in Europe.** Additionally, the company's core residential products have suffered over the last 1.5 years in a "brutal market," and distributors are hesitant to invest in new inventory due to high existing stock levels.  **[GNRC_3381808_18]**
- **Despite increased shipments of home standby generators, activations are down year-over-year due to a weaker outage environment, indicating softer demand for these products.** The company acknowledges that activations have been slower, which could impact future sales if power outage trends remain below historical levels.  **[GNRC_3381808_9]**
- **Generac is facing increased operating expenses, particularly in research and development, as it invests heavily in its energy technology products and strategic initiatives.** While these investments may benefit the company long-term, in the near term, they are offsetting gross margin improvements and could pressure profitability if revenues do not grow sufficiently to cover the higher expenses.  **[GNRC_3381808_20]**

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Generac Holdings Inc (GNRC)

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