Generac Holdings (GNRC) 10-K risk factor changes: FY2018 vs FY2017

_Decreases in the availability and quality, or increases in the cost, of raw [removed: materials and] [added: materials,] key components [added: and labor] we use could materially reduce our earnings._

The prices of those raw materials and components are susceptible to significant fluctuations due to trends in supply and demand, [added: commodity prices, currencies,] transportation costs, government regulations and tariffs, price controls, economic conditions and other unforeseen circumstances beyond our control.

If we are unable to obtain adequate, cost efficient or timely deliveries of required raw materials and components, [added: or sufficient labor resources,] we may be unable to manufacture sufficient quantities of products on a timely basis.

Our products are subject to extensive statutory and regulatory requirements governing, among other things, [removed: emissions and] [added: emissions,] noise, [added: and product content,] including standards imposed by the EPA, CARB and other regulatory agencies around the world.

| | ● | fires, floods, [removed: tornados,] [added: tornadoes,] earthquakes, or other catastrophes; and |

| | ● | logistical challenges, including extended container port [removed: congestion;] [added: congestion, and higher logistics costs;] |

A wide variety of factors could cause such delays including, but not limited to, lack of capacity, economic downturns, availability of credit, [added: logistical challenges,] weather events or natural disasters.

At December 31, [removed: 2017,] [added: 2018,] goodwill and other indefinite-lived intangibles totaled [removed: $849.8] [added: $891.8] million.

Over the past [removed: two] [added: three] years, we have implemented a new ERP system for a majority of our business as part of our ongoing efforts to improve and strengthen our operational and financial processes and our reporting systems.

While we attempt to mitigate these risks through [added: board oversight,] controls, due diligence, [removed: training,] [added: employee training and communication, third party intrusion testing, system hardening, email and web filters, regular patching,] surveillance and other measures, we remain vulnerable to information security threats.

_We hav__e_ _indebtedness which could adversely affect our cash flow and our ability to [removed: remain in compliance with debt covenants and] make payments on our indebtedness._

As of December 31, [removed: 2017,] [added: 2018] we had total indebtedness of [removed: $928.7] [added: $924.0] million.

_Policy changes affecting international trade could adversely impact the demand for our products and our competitive position._

Changes in government policies on foreign trade and investment can affect the demand for our products, impact the competitive position of our products or prevent us from being able to sell products in certain countries.

Our business benefits from free trade agreements, and efforts to withdraw from, or substantially modify such agreements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, exchange controls or new barriers to entry, could have a material adverse effect on our results of operations, financial condition or cash flows.

Additionally, the United Kingdom’s status on EU membership, and discussions regarding its exit from the EU, has caused and may continue to cause significant volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty.

Although it is unknown what the terms of the United Kingdom’s future relationship with the EU will be, it is possible that there will be greater restrictions on imports and exports between the United Kingdom and EU and increased regulatory complexities.

Any of these factors could adversely impact customer demand, our relationships with customers and suppliers and our results of operations.

The risk of such attacks may increase as we integrate newly acquired companies.

| --- | --- | --- |

_Recently enacted U.S. tax legislation, as well as future U.S. tax legislation, may adversely affect our business, results of operations, financial condition and cash flow._

On December 22, 2017, the President signed into law Public Law No. 115-97, a comprehensive tax reform bill commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) that makes significant changes to U.S. federal income tax laws.

We have performed a preliminary assessment of the impact of the Tax Act.

However, as the Tax Act is complex and far-reaching, there could be future effects of the Tax Act that we have not identified and that could have an adverse effect on our business, results of operations, financial condition and cash flow.

Our indebtedness, combined with our other financial obligations and contractual commitments could have other important consequences.

For example, it could:

| | ● | make it more difficult for us to satisfy our obligations with respect to our indebtedness, which could result in an event of default under the agreements governing our indebtedness; |

| | ● | make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |

| | ● | require us to dedicate a portion of our cash flow from operations to interest payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions and other general corporate purposes; |

| | ● | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and |

| | ● | limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other purposes. |

Any of the above-listed factors could adversely affect our business, financial condition, results of operations and cash flows.

We are a leading global designer and manufacturer of a wide range of power generation equipment and other [removed: engine powered] [added: power] products serving the residential, light commercial and industrial markets.

Other [removed: engine powered] [added: power] products that we design and manufacture include light towers which provide temporary lighting for various end markets; commercial and industrial mobile heaters and pumps used in the oil & gas, construction and other industrial markets; and a broad product line of outdoor power equipment for residential and commercial use.

Our performance is affected by the demand for reliable power generation products, mobile product solutions and other [removed: engine powered] [added: power] products by our customer base.

We estimate that penetration rates for home standby generators are only approximately [removed: 4.0%] [added: 4.5%] of U.S. single-family detached, owner-occupied households with a home value of over $100,000, as defined by the U.S. Census Bureau's [removed: 2015] [added: 2017] American Housing Survey for the United States.

_Effect of large scale_ _and baseline_ _power disruptions._ Power disruptions are an important driver of customer awareness [added: for back-up power] and have historically influenced demand for generators, both in the United States and internationally.

For example, the major outage events that occurred during the second half of 2017 drove strong demand for portable and home standby generators, and the increased awareness of these products contributed to strong revenue growth in [removed: 2017.][added: both 2017 and 2018.]

The capital investment cycle may differ for the various commercial and industrial end markets that we serve including light commercial, retail, [added: office,] telecommunications, industrial, data centers, healthcare, construction, oil & gas and municipal infrastructure, among others.

We believe the passage of the Tax Act in [removed: late] 2017 [removed: could] [added: will continue to] have a favorable impact on future demand within many of the end markets that we serve, as the improved cash flow, liquidity and business sentiment may lead to further investments in equipment, facilities and infrastructure in the United States.

_Effect of commodity, currency and component price fluctuations._ Industry-wide price fluctuations of key commodities, such as steel, copper and aluminum, along with other components we use in our products, [added: as well as changes in labor costs required to produce our products,] can have a material impact on our results of operations.

These [added: international] acquisitions, along with our existing [removed: international presence, exposes] [added: global supply chain, expose] us to fluctuations in foreign currency exchange rates [added: and regulatory tariffs] that can have a material impact on our results of operations.

We have historically attempted to mitigate the impact of [removed: rising commodity, currency and component prices] [added: any inflationary pressures] through improved product design and sourcing, manufacturing efficiencies, price increases and select hedging transactions.

_Seasonality._ Although there is demand for our products throughout the year, in each of the past five years approximately 20% to [removed: 27%] [added: 24%] of our net sales occurred in the first quarter, 22% to 25% in the second quarter, 24% to [removed: 27%] [added: 28%] in the third quarter and [removed: 25%] [added: 27%] to 29% in the fourth quarter, with different seasonality depending on the occurrence, timing and severity of major power outage activity in each year.

_Factors influencing interest_ _expense_ _and cash interest expense__._ Interest expense can be impacted by a variety of factors, including market fluctuations in LIBOR, interest rate election periods, interest rate swap agreements, [removed: and] repayments or borrowings of [removed: indebtedness.][added: indebtedness, and amendments to our credit agreements.]

[removed: Cash] [added: Additionally,] interest expense decreased [removed: during] [added: in] 2017 [removed: compared to 2016, primarily] due to the [removed: $25] [added: $25.0] million [removed: voluntary prepayment of] Term Loan [removed: debt] [added: prepayment] in November 2016, [removed: the] [added: Term Loan repricings in] May and December [removed: 2017 Term Loan refinancings, the repayment of $100 million of ABL Facility borrowings,] [added: 2017,] and decreased borrowings at other [removed: subsidiaries; partially offset by an increase in the LIBOR rate.][added: subsidiaries.]

Refer to Note 13, “Income [removed: Taxes,”] [added: Taxes”] to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further information on the [removed: Tax Act and its impact.][added: Company’s income taxes.]

[removed: Further,] [added: As of December 31, 2018,] we had approximately [removed: $470] [added: $347] million of tax-deductible goodwill and intangible asset amortization remaining [removed: as of December 31, 2017 related to] [added: from] our acquisition by CCMP Capital Advisors, LLC in 2006 that we expect to generate aggregate cash tax savings of approximately [removed: $122] [added: $90] million through 2021, assuming continued profitability [added: of our U.S. business] and a [removed: 26%] combined federal and state tax [removed: rate.][added: rate of 26%.]

The recognition of the tax benefit associated with these assets for tax purposes is expected to be $122 million annually through 2020 and $102 million in 2021, which generates annual cash tax savings of $32 million through 2020 and $26 million in [removed: 2021, assuming profitability and a 26% combined federal and state tax rate.][added: 2021.]

Based on current business plans, we believe that our cash tax obligations through [removed: 2026] [added: 2021] will be significantly reduced by these tax [removed: attributes.][added: attributes, after which our cash tax obligation will increase.]

[removed: _Acquisitions._] [added: _Acquisitions__._] Over the years, we have executed a number of acquisitions that supported our strategic plan.

[removed: Substantially all of our net] [added: This includes] sales [removed: are generated through the sale] of our power generation equipment and other [removed: engine powered] [added: power] products to the residential, light commercial and industrial [removed: markets.][added: markets, as well as service parts to our dealer network.]

We are not dependent on any one channel or customer for our net sales, with no single customer representing more than 6% of our sales, and our top ten customers representing less than 22% of our [removed: total] [added: net] sales for the year ended December 31, [removed: 2017.][added: 2018.]

Component parts and raw materials comprised approximately 77% of costs of goods sold for the year ended December 31, [removed: 2017.][added: 2018.]

Our operating expenses consist of costs incurred to support our sales, marketing, distribution, service parts, engineering, information systems, human resources, [added: accounting,] finance, risk management, legal and tax functions, among others.

_Selling and service._ Our selling and service expenses consist primarily of personnel expense, marketing expense, [added: standard] warranty expense and other sales expenses.

[removed: Warranty] [added: Standard warranty] expense, which is recorded at the time of sale, is estimated based on historical trends.

We operate engineering facilities [added: with extensive capabilities] at many locations globally and employ over [removed: 350] [added: 400] personnel with focus on new product development, existing product improvement and cost containment.

Other (expense) income includes the interest expense on our outstanding borrowings, amortization of debt financing costs and original issue discount, and [removed: expenses] [added: cash flows] related to interest rate swap agreements.

Other (expense) income also includes other financial items such as losses on extinguishment of debt, gains (losses) on [removed: change] [added: changes] in contractual interest rate, [added: and] interest income earned on our cash and cash [removed: equivalents, and costs related to acquisitions.][added: equivalents.]

_Year ended Decemb__er 31, [removed: 2017_] [added: 201__8_] _compared_ _to year ended December 3__1, [removed: 2016_][added: 201__7_]

| | | Year Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | |

_Net sales__._ The increase in Domestic sales for the year ended December 31, 2017 was primarily due to strong growth in shipments of home standby and portable generators driven by increased power outage activity, along with strong growth for mobile products due to recovery in the general rental and oil & gas [removed: markets,] [added: markets] given the continued replacement cycle by our rental customers.

_Gross profit._ Gross profit margin for the year ended December 31, [removed: 2017] [added: 2018] was [removed: 34.8%] [added: 35.8%] compared to [removed: 35.6%] [added: 34.8%] for the year ended December 31, [removed: 2016.][added: 2017.]

[removed: The prior] [added: _Gross profit._ Gross profit margin for the] year [added: ended December 31, 2017 was 34.8% compared to 35.4% for the year ended December 31, 2016, which] included $2.7 million of business optimization and restructuring costs classified within cost of goods sold to address the significant and extended downturn for capital spending within the oil & gas industry, as well as $4.2 million of expense relating to the purchase accounting adjustment for the step-up in value of inventories relating to the Pramac acquisition.

The [removed: current] year [added: ended December 31, 2017] included $2.0 million of business optimization and non-recurring plant consolidation costs.

Excluding the impact of these charges, pro-forma gross margins were 34.9% and [removed: 36.1%] [added: 35.9%] in 2017 and 2016, respectively.

The pro-forma decrease in gross margins was primarily due to unfavorable sales mix attributable to higher organic sales within the International segment and of mobile products relative to [removed: prior year,] [added: 2016,] which carry lower gross margins relative to the consolidated average.

[added: _Operating expenses._] The [removed: prior year] [added: 2016 operating expenses] included $4.4 million of business optimization and restructuring costs classified within operating expenses to address the downturn for capital spending within the oil & gas industry.

Excluding the impact of these charges, operating expenses increased [removed: $26.0] [added: $28.9] million, or [removed: 8.5%,] [added: 9.5%,] as compared to [removed: the prior year.][added: 2016.]

The increase was primarily due to the addition of recurring operating expenses associated with the Pramac and Motortech acquisitions, and an increase in personnel costs including higher incentive compensation accrued during [removed: the current year;] [added: 2017,] partially offset by a decline in amortization of intangibles.

_Other expense._ The decrease in other expense was primarily due to a [removed: prior year] [added: 2016] $3.0 million non-cash loss on change in contractual interest rate not repeating [added: in 2017] and a [removed: prior year] [added: 2016] $0.6 million loss on extinguishment of debt resulting from a $25.0 million voluntary prepayment of Term Loan debt.

Interest expense decreased during 2018 compared to 2017, primarily due to lower interest rate spreads resulting from Term Loan and ABL Facility amendments, new interest rate swaps beginning in 2018, and the repayments of Term Loan and ABL Facility borrowings.

These factors are partially offset by an increase in the market LIBOR rate.

During 2018, the U.S. Treasury Department (Treasury) issued several new regulations and other guidance which we have incorporated into our final tax calculations.

At December 31, 2018, we consider the tax expense recorded for Tax Reform to be complete.

It is possible additional regulations or guidance could be issued by Treasury or by a state which may create an additional tax expense or benefit.

We will update our future tax provisions based on new regulations or guidance accordingly.

This non-cash benefit resulted primarily from the Federal rate reduction from 35% to 21%.

Our net sales primarily consist of product sales to our customers.

Net sales also include shipping and handling charges billed to customers, with the related freight costs included in cost of goods sold.

Additionally, we offer other services, including extended warranties, remote monitoring, installation and maintenance services.

However, these services accounted for less than two percent of our net sales for the year ended December 31, 2018.

We are also impacted by foreign currency fluctuations.

| (U.S. Dollars in thousands) | | 2018 | | | | 2017 | | | | $ Change | | | | % Change | | |

| Net sales | | $ | 2,023,464 | | | $ | 1,679,373 | | | | 344,091 | | | | 20.5 | % |

| Cost of goods sold | | | 1,298,424 | | | | 1,094,587 | | | | 203,837 | | | | 18.6 | % |

| Gross profit | | | 725,040 | | | | 584,786 | | | | 140,254 | | | | 24.0 | % |

| Selling and service | | | 191,887 | | | | 174,841 | | | | 17,046 | | | | 9.7 | % |

| Research and development | | | 50,019 | | | | 42,869 | | | | 7,150 | | | | 16.7 | % |

| General and administrative | | | 103,841 | | | | 87,581 | | | | 16,260 | | | | 18.6 | % |

| Amortization of intangible assets | | | 22,112 | | | | 28,861 | | | | (6,749 | ) | | | \-23.4 | % |

| Total operating expenses | | | 367,859 | | | | 334,152 | | | | 33,707 | | | | 10.1 | % |

| Income from operations | | | 357,181 | | | | 250,634 | | | | 106,547 | | | | 42.5 | % |

| Total other expense, net | | | (46,105 | ) | | | (46,935 | ) | | | 830 | | | | \-1.8 | % |

| Income before provision for income taxes | | | 311,076 | | | | 203,699 | | | | 107,377 | | | | 52.7 | % |

| Provision for income taxes | | | 69,856 | | | | 44,142 | | | | 25,714 | | | | 58.3 | % |

| Net income | | | 241,220 | | | | 159,557 | | | | 81,663 | | | | 51.2 | % |

| Net income attributable to Generac Holdings Inc. | | $ | 238,257 | | | $ | 157,808 | | | | 80,449 | | | | 51.0 | % |

| | | Net Sales | | | | | | | | | | | | | | |

| (U.S. Dollars in thousands) | | 2018 | | | | 2017 | | | | $ Change | | | | % Change | | |

| Domestic | | $ | 1,580,325 | | | $ | 1,303,506 | | | | 276,819 | | | | 21.2 | % |

| International | | | 443,139 | | | | 375,867 | | | | 67,272 | | | | 17.9 | % |

| Total net sales | | $ | 2,023,464 | | | $ | 1,679,373 | | | | 344,091 | | | | 20.5 | % |

| | | Adjusted EBITDA | | | | | | | | | | | | | | |

| | | 2018 | | | | 2017 | | | | $ Change | | | | % Change | | |

| Domestic | | $ | 388,685 | | | $ | 290,290 | | | | 98,395 | | | | 33.9 | % |

| International | | | 35,867 | | | | 27,010 | | | | 8,857 | | | | 32.8 | % |

| Total Adjusted EBITDA | | $ | 424,552 | | | $ | 317,300 | | | | 107,252 | | | | 33.8 | % |

| (U.S. Dollars in thousands) | | 2018 | | | | 2017 | | | | $ Change | | | | % Change | | |

| Residential products | | $ | 1,042,739 | | | $ | 870,491 | | | | 172,248 | | | | 19.8 | % |

| Commercial & industrial products | | | 820,270 | | | | 684,352 | | | | 135,918 | | | | 19.9 | % |

Recent Developments

On February 13, 2018, we signed a purchase agreement to acquire Selmec Equipos Industriales, S.A. de C.V. (Selmec), which is headquartered in Mexico City, Mexico.

Selmec, which has approximately 300 employees, is a designer and manufacturer of industrial generators ranging from 10 kW to 2,750 kW.

Selmec offers a market-leading service platform and specialized engineering capabilities, together with robust integration, project management and remote monitoring services.

The Tax Act requires complex computations to be performed that were not previously required in U.S. tax law, significant judgments to be made in interpretation of the provisions of the Tax Act and significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced.

The U.S. Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered that is different from our interpretation.

While the Company continues to assess the full impact of the Tax Act, the preliminary analysis suggests a meaningful benefit from the legislation.

Specifically for 2018, the combined federal and state effective tax rate is expected to decline to between 25 to 26%, resulting in lower cash income taxes.

As we complete our analysis of the Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made.

The aggregate cash tax savings reflects a decrease of $61 million due to a reduction in the assumed tax rate from 39% to 26% as a result of the Tax Act.

As a result of the asset acquisition of the Magnum business in the fourth quarter of 2011, we had approximately $34 million of incremental tax deductible goodwill and intangible assets remaining as of December 31, 2017.

We expect these assets to generate aggregate cash tax savings of $9.0 million through 2026 assuming continued profitability and a 26% combined federal and state tax rate.

The aggregate cash tax savings reflects a decrease of $4.5 million due to a reduction in the assumed tax rate from 39% to 26% as a result of the Tax Act.

The amortization of these assets for tax purposes is expected to be $3.8 million annually through 2025 and $2.8 million in 2026, which generates an additional annual cash tax savings of $1.0 million through 2025 and $0.7 million in 2026, assuming profitability and a 26% combined federal and state tax rate.

We also sell service parts to our dealer network.

Net sales, which include shipping and handling charges billed to customers, are generally recognized upon shipment of products to our customers.

Related freight costs are included in cost of sales.

| (U.S. Dollars in thousands) | | 2017 | | | | 2016 | | | | $ Change | | | | % Change | | |

| Net sales | | $ | 1,672,445 | | | $ | 1,444,453 | | | | 227,992 | | | | 15.8 | % |

| Cost of goods sold | | | 1,090,328 | | | | 930,347 | | | | 159,981 | | | | 17.2 | % |

| Gross profit | | | 582,117 | | | | 514,106 | | | | 68,011 | | | | 13.2 | % |

| Selling and service | | | 171,755 | | | | 164,607 | | | | 7,148 | | | | 4.3 | % |

| Research and development | | | 42,925 | | | | 37,229 | | | | 5,696 | | | | 15.3 | % |

| General and administrative | | | 87,512 | | | | 74,700 | | | | 12,812 | | | | 17.2 | % |

| Total operating expenses | | | 331,053 | | | | 309,489 | | | | 21,564 | | | | 7.0 | % |

| Income from operations | | | 251,064 | | | | 204,617 | | | | 46,447 | | | | 22.7 | % |

| Total other expense, net | | | (46,376 | ) | | | (48,235 | ) | | | 1,859 | | | | \-3.9 | % |

| Income before provision for income taxes | | | 204,688 | | | | 156,382 | | | | 48,306 | | | | 30.9 | % |

| Provision for income taxes | | | 43,553 | | | | 57,570 | | | | (14,017 | ) | | | \-24.3 | % |

| Net income | | | 161,135 | | | | 98,812 | | | | 62,323 | | | | 63.1 | % |

| Net income attributable to Generac Holdings Inc. | | $ | 159,386 | | | $ | 98,788 | | | | 60,598 | | | | 61.3 | % |

| | | Net Sales | | | | | | | | | | | | | | |

| Domestic | | $ | 1,296,578 | | | $ | 1,173,559 | | | | 123,019 | | | | 10.5 | % |

| Total net sales | | $ | 1,672,445 | | | $ | 1,444,453 | | | | 227,992 | | | | 15.8 | % |

| | | Adjusted EBITDA | | | | | | | | | | | | | | |

| | | 2017 | | | | 2016 | | | | $ Change | | | | % Change | | |

| Domestic | | $ | 290,720 | | | $ | 261,428 | | | | 29,292 | | | | 11.2 | % |

| Total Adjusted EBITDA | | $ | 317,730 | | | $ | 278,387 | | | | 39,343 | | | | 14.1 | % |

| Residential products | | $ | 870,410 | | | $ | 772,436 | | | | 97,974 | | | | 12.7 | % |

| Commercial & industrial products | | | 685,052 | | | | 557,532 | | | | 127,520 | | | | 22.9 | % |

The following is a summary of the [removed: twenty-eight] [added: forty] foreign currency contracts outstanding as of December 31, [removed: 2017 (in] [added: 2018 (notional amount in] thousands):

| [removed: Currency Denomination] [added: Currency Denomination] | | Trade [removed: Dates] [added: Dates] | | Effective [removed: Dates] [added: Dates] | | [removed: Notional Amount] [added: Notional Amount] | | [added: |] Expiration [removed: Date] [added: Date] |

We are a purchaser of commodities and [removed: of] components manufactured from commodities including steel, aluminum, copper and others.

As of December 31, [removed: 2017,] [added: 2018,] we had the following commodity forward [removed: contract] [added: contracts] outstanding [removed: (in] [added: (notional amount in] thousands):

| Hedged [removed: Item] [added: Item] | | Contract [removed: Date] [added: Date] | | Effective [removed: Date] [added: Date] | | Notional [removed: Amount] [added: Amount] | | | | Fixed [removed: Price (per LB)] [added: Price] | | | Expiration [removed: Date] [added: Date] |

As of December 31, [removed: 2017,] [added: 2018,] all of the outstanding debt under our Term Loan [added: and ABL Facility] was subject to floating interest rate risk.

As of December 31, [removed: 2017,] [added: 2018,] we had the following interest rate swap contracts outstanding [removed: (in] [added: (notional amount in] thousands):

| Hedged [removed: Item] [added: Item] | | Contract [removed: Date] [added: Date] | | Effective [removed: Date] [added: Date] | | [removed: Notional Amount] | [added: Notional Amount] | | | [removed: Fixed] [added: | Fixed] LIBOR [removed: Rate] [added: Rate] | | | Expiration [removed: Date] [added: Date] |

| Interest Rate | | June 19, 2017 | | July 2, 2018 | | | [added: |] 125,000 | | | | 1.6543% | | July 1, 2019 |

| Interest Rate | | June 19, 2017 | | July 1, 2019 | | | [added: |] 125,000 | | | | 1.9053% | | July 1, 2020 |

| Interest Rate | | June 19, 2017 | | July 1, 2020 | | | [added: |] 125,000 | | | | 2.1328% | | July 1, 2021 |

| Interest Rate | | June 19, 2017 | | July 1, 2021 | | | [added: |] 125,000 | | | | 2.3453% | | July 1, 2022 |

| Interest Rate | | June 19, 2017 | | July 1, 2022 | | | [added: |] 125,000 | | | | 2.4828% | | May 31, 2023 |

| Interest Rate | | June 30, 2017 | | July 1, 2018 | | | [added: |] 125,000 | | | | 1.7090% | | July 1, 2019 |

| Interest Rate | | June 30, 2017 | | July 1, 2019 | | | [added: |] 125,000 | | | | 1.9750% | | July 1, 2020 |

| Interest Rate | | June 30, 2017 | | July 1, 2020 | | | [added: |] 125,000 | | | | 2.2170% | | July 1, 2021 |

| Interest Rate | | June 30, 2017 | | July 1, 2021 | | | [added: |] 125,000 | | | | 2.4360% | | July 1, 2022 |

| Interest Rate | | June 30, 2017 | | July 1, 2022 | | | [added: |] 125,000 | | | | 2.5910% | | May 31, 2023 |

| Interest Rate | | August 9, 2017 | | July 1, 2018 | | | [added: |] 125,000 | | | | 1.6298% | | July 1, 2019 |

| Interest Rate | | August 9, 2017 | | July 1, 2019 | | | [added: |] 125,000 | | | | 1.8598% | | July 1, 2020 |

| Interest Rate | | August 9, 2017 | | July 1, 2020 | | | [added: |] 125,000 | | | | 2.0848% | | July 1, 2021 |

| Interest Rate | | August 9, 2017 | | July 1, 2021 | | | [added: |] 125,000 | | | | 2.3010% | | July 1, 2022 |

| Interest Rate | | August 9, 2017 | | July 1, 2022 | | | [added: |] 125,000 | | | | 2.4848% | | May 31, 2023 |

| Interest Rate | | August 30, 2017 | | July 1, 2018 | | | [added: |] 125,000 | | | | 1.5503% | | July 1, 2019 |

| Interest Rate | | August 30, 2017 | | July 1, 2019 | | | [added: |] 125,000 | | | | 1.7553% | | July 1, 2020 |

| Interest Rate | | August 30, 2017 | | July 1, 2020 | | | [added: |] 125,000 | | | | 1.9803% | | July 1, 2021 |

| Interest Rate | | August 30, 2017 | | July 1, 2021 | | | [added: |] 125,000 | | | | 2.2228% | | July 1, 2022 |

| Interest Rate | | August 30, 2017 | | July 1, 2022 | | | [added: |] 125,000 | | | | 2.4153% | | May 31, 2023 |

At December 31, [removed: 2017,] [added: 2018,] the fair value of these interest rate swaps was an asset of [removed: $4.4] [added: $8.4] million.

Even after giving effect to these swaps, we are exposed to risks due to changes in interest rates with respect to the portion of our Term Loan [added: and ABL Facility] that is not covered by the swaps.

A hypothetical change in the LIBOR interest rate of 100 basis points would have changed annual cash interest expense by approximately [removed: $6.3] [added: $3.8] million (or, without the swaps in place, [removed: $9.3] [added: $8.8] million) in [removed: 2017.][added: 2018.]

For additional information on the Company’s foreign currency and commodity forward contracts, and interest rate swaps, including amounts charged to the statement of comprehensive income during [added: 2018,] 2017, [added: and 2016,] refer to Note 4, “Derivative Instruments and Hedging Activities,” and Note 5, “Accumulated Other Comprehensive Loss,” to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| GBP | | 11/12/18 - 12/17/18 | | 11/12/18 - 12/17/18 | | | 4,066 | | 1/16/19 - 6/19/19 |

| USD | | 11/12/18 - 12/14/18 | | 11/12/18 - 12/14/18 | | | 10,165 | | 1/16/19 - 3/6/19 |

| AUD | | 11/12/18 - 11/19/18 | | 11/12/18 - 11/19/18 | | | 1,900 | | 1/16/19 - 1/23/19 |

| Copper | | February 12, 2018 | | February 1, 2018 | | $ | 3,776 | | | | $3.114 per LB | | December 31, 2018 |

| Copper | | March 8, 2018 | | March 9, 2018 | | $ | 3,427 | | | | $3.109 per LB | | December 31, 2018 |

| Copper | | March 20, 2018 | | March 21, 2018 | | $ | 3,418 | | | | $3.101 per LB | | December 31, 2018 |

| Copper | | March 20, 2018 | | March 21, 2018 | | $ | 1,697 | | | | $3.079 per LB | | December 31, 2018 |

| Copper | | March 26, 2018 | | April 1, 2018 | | $ | 3,003 | | | | $3.027 per LB | | December 31, 2018 |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| GBP | | 9/26/17 - 12/20/17 | | 9/26/17 - 12/20/17 | | 14,756 | | 1/10/18 - 3/17/18 |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Copper | | October 19, 2016 | | October 20, 2016 | | $ | 3,502 | | | $ | 2.118 | | December 31, 2017 |

| Interest Rate | | October 23, 2013 | | July 1, 2014 | | $ | 100,000 | | | | 1.7420% | | July 2, 2018 |

| Interest Rate | | October 23, 2013 | | July 1, 2014 | | | 100,000 | | | | 1.7370% | | July 2, 2018 |

| Interest Rate | | May 19, 2014 | | July 1, 2014 | | | 100,000 | | | | 1.6195% | | July 2, 2018 |

Founded in 1959, Generac Holdings Inc. (the Company or Generac) is a leading global designer and manufacturer of a wide range of power generation equipment and other [removed: engine powered] [added: power] products serving the residential, light commercial and industrial markets.

A summary of [removed: the] recent acquisitions can be found in Note 1, “Description of Business,” to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

[removed: These products] [added: Our residential automatic standby generators range in output from 6kW to 60kW,] operate on natural gas, liquid propane or [removed: diesel] [added: diesel,] and are permanently installed with an automatic transfer switch, which we also manufacture.

We also provide a [removed: cellular-based] remote monitoring system for home standby generators called _Mobile_ _Link_™, which allows our customers to check the status of their generator conveniently from a desktop PC, tablet computer or smartphone, and also provides the capability to receive maintenance and service alerts.

These products are largely sold in North America through [added: on-line] catalogs, [removed: on-line,] retail hardware stores and outdoor power equipment dealers primarily under the DR® brand name.

Residential products comprised [removed: 52.0%, 53.5%] [added: 51.5%, 51.8%] and [removed: 51.2%,] [added: 53.1%,] respectively, of total net sales in [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015.][added: 2016.]

[removed: _Commercial] [added: _Commercial] & [removed: Industrial_ _P__roducts_][added: Industrial_ _P__roducts_]

For larger industrial applications, our MPS products offer customers an efficient, affordable way to scale their standby power needs, and also [removed: offers] [added: offer] superior reliability given [removed: its] [added: their] built-in redundancy which allows individual units to be taken off-line for routine maintenance while retaining coverage for critical circuits.

We [removed: also] manufacture commercial mobile pumps which utilize wet and dry-priming pump systems for a wide variety of wastewater applications.

[removed: The acquisition of Motortech in January 2017 added] [added: We also manufacture various] gaseous-engine control systems and [removed: accessories] [added: accessories,] which are sold [removed: primarily] to [removed: European] gas-engine manufacturers and [removed: to] aftermarket customers.

C&I products comprised [removed: 41.0%, 38.6%] [added: 40.6%, 40.8%] and [removed: 41.6%] [added: 38.6%] respectively, of total net sales in [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015.][added: 2016.]

[removed: _Other_ _P__roducts_][added: _Other_ _P__roducts_]

Other products comprised [removed: 7.0%, 7.9%] [added: 7.9%, 7.4%] and [removed: 7.2%,] [added: 8.3%,] respectively, of total net sales in [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015.][added: 2016.]

This distribution network includes independent residential dealers, industrial distributors and dealers, national and regional retailers, e-commerce [removed: merchants,] [added: partners,] electrical and HVAC wholesalers (including certain private label arrangements), catalogs, equipment rental companies and equipment distributors.

Our network is well balanced with no customer providing more than 6% of our sales in [removed: 2017.][added: 2018.]

Our overall dealer network located [removed: in] [added: around] the [removed: United States, Canada and Latin America,] [added: world] is the industry's largest network of factory direct independent generator contractors in North America.

Our industrial network consists of a combination of primary distributors as well as a support network of dealers serving the [removed: United States and Canada.][added: global market.]

The industrial distributors and dealers provide industrial and commercial end users with ongoing [removed: sales] [added: sales, installation] and product support.

Our wholesaler network distributes our residential and light-commercial generators, and consists of selling branches of both national and local distribution houses for electrical and HVAC [removed: products.][added: products on a wholesale basis.]

The distribution for our [added: C&I] mobile products includes international, national, regional and specialty equipment rental companies, equipment distributors and construction companies, which primarily serve non-residential building construction, road construction, energy markets and special events.

In addition, international acquisitions over the [removed: past several] years have provided access to numerous independent distributors in over 150 countries.

Additionally, our residential products are [added: also] sold direct to individual consumers, who are the end users of the product.

We have been executing on our [removed: “Powering Ahead”] strategic plan, which serves as the framework for the significant investments we have made to capitalize on the long-term growth prospects of Generac.

As we continue to move [removed: the Powering Ahead] [added: our strategic] plan into the future, we are focused on a number of initiatives that are driven by the [removed: same] [added: following] four key [removed: objectives:][added: objectives, which are now called “Powering Our Future”:]

_Growing the residential standby generator [removed: market._] [added: market_.] As the leader in the home standby generator market, it is incumbent upon us to continue to drive growth and increase the penetration rate of these products in households across the [removed: United States and Canada.][added: world.]

With only approximately [removed: 4.0%] [added: 4.5%] 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 $100,000, as defined by the U.S. Census Bureau's [removed: 2015] [added: 2017] American Housing Survey for the United States), we believe there are opportunities to further penetrate the residential standby generator [removed: market.][added: market both domestically and internationally.]

[removed: These businesses] [added: The recent acquisitions that now comprise our International segment] have significantly increased our global presence by adding product, manufacturing and distribution capabilities that serve local markets around the world, and have resulted in us becoming a leading global player in the markets for backup power and mobile power equipment.

As we look forward, we intend to leverage our increased international footprint attained from these acquisitions to serve the over $13 billion annual market for power generation equipment outside the U.S. and [removed: Canada.][added: Canada through each of the key objectives discussed above.]

We [removed: maintain inventory warehouses] [added: store finished goods at third-party logistics providers] in the United States that accommodate material storage and rapid response requirements of our customers.

Our primary focus on power generation equipment and other [removed: engine powered] [added: power] products drives technological innovation, specialized engineering and manufacturing competencies.

Research and development (R&D) is a core competency and includes a staff of over [removed: 350] [added: 400] engineers working on numerous [removed: projects.][added: projects at various facilities worldwide.]

We have over [removed: 30] [added: 35] years of experience using natural gas engines and have developed specific expertise with fuel systems and emissions technology.

We believe that our expertise in [removed: engine powered] [added: power] equipment gives us the capability to develop new products that will allow continued diversification in our end markets.

Our Strategic Global Sourcing [removed: (SGS)] function continuously evaluates the quality and cost structure of our [removed: products] [added: purchased components] and assesses the capabilities of our supply chain.

We also believe our broad product offering, diverse [added: omni-channel] distribution model and strong factory support provide additional advantages as well.

As of December 31, [removed: 2017,] [added: 2018,] we had [removed: 4,556] [added: 5,664] employees [removed: (4,017] [added: (5,046] full time and [removed: 539] [added: 618] part-time and temporary employees).

Of those, [removed: 2,393] [added: 3,154] employees were directly involved in manufacturing at our manufacturing facilities.

The current agreement, which expires October 17, 2021, covers our [removed: Waukesha and] Eagle, Wisconsin [removed: facilities.][added: facility.]

[removed: Other] [added: Similarly, other] countries have varying degrees of regulation [added: for our products,] depending upon product application and fuel types.

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the [removed: “Investors”] [added: “Investor Relations”] portion of the Company’s web site, www.generac.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission (SEC).

The acquisition of Selmec in June 2018 increased our industrial generator market share within the Latin American markets, as well as added specialized engineering capabilities.

Our “Other Products” category primarily consists of aftermarket service parts and product accessories sold to our dealers, and the amortization of extended warranty deferred revenue.

The acquisition of Selmec added a service platform, including robust integration, project management and remote monitoring services.

They typically sell to electrical contractors who are not in our dealer network.

Business Strategy

_Gaining market share_.

We continue to put a strong focus on improving our share of the power equipment markets in which we participate around the world by emphasizing our innovation and continually expanding our product lines and services.

We design and build a wide range of products from portable, stationary and mobile generators, power washers, light towers, mobile heaters, pumps, brush mowers and trimmers, and other engine powered equipment.

Being number one or number two in all of these categories globally is our goal.

We have many advantages over our competitors with strengths in our engineering and operations capabilities as well as a global distribution network that we believe can be leveraged further for continued market share gains in the markets we serve around the world.

_Connect with customers, partners and product._ We will work to diversify our business model from solely “equipment centric” to a systems and services provider through connectivity solutions and subscription based applications deployed enterprise wide.

The first step is increasing connection with our products to unlock opportunities and revenue streams.

We will develop tools and programs that add value to dealers and end-users that will result in recurring revenue from subscriptions and parts.

We will leverage data obtained from connected devices by developing predictive analytics that result in continuously improving product quality, sales processes and tools, energy optimization, aftermarket penetration, customer experience and alignment with dealers.

Finally, we will build or acquire energy management capabilities to monetize an ecosystem of devices that relate to energy use, storage, generation, control and optimization.

While expansion globally is no longer one of the four key objectives in the Powering Our Future strategic plan, it becomes a core piece to the success of each of the objectives.

With our continuous focus on research and development, we expect to develop new intellectual property on an ongoing basis.

The Company’s website is www.generac.com.

Reportable Segments

The Company has two reportable segments for financial reporting purposes – Domestic and International.

The Domestic segment includes the legacy Generac business and the impact of acquisitions that are based in the United States, all of which have revenues that are substantially derived from the U.S. and Canada.

The International segment includes the Ottomotores, Tower Light, Pramac and Motortech acquisitions, all of which have revenues that are substantially derived from outside the U.S. and Canada.

Both reportable segments design and manufacture a wide range of power generation equipment and other engine powered products, which are discussed in further detail below in the context of our product classes.

Refer to Note 6, “Segment Reporting,” to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further information.

Our residential automatic standby generators range in output from 6kW to 60kW, with manufacturer's suggested retail prices (MSRPs) from approximately $1,949 to $16,199.

Our “Other Products” category includes aftermarket service parts to our dealers, product accessories and proprietary engines to third-party original equipment manufacturers (OEMs).

We expanded our dealer network in recent years on a global basis with the acquisition of Pramac in March 2016, particularly in Europe, the Middle East and Asia/Pacific regions.

Business Strategy

_Gaining commercial and industrial market share._ Our growth strategy for commercial and industrial power generation products is focused on incremental market share gains.

Key to this objective are efforts to leverage our expanding platform of diesel and natural gas offerings by better optimizing our industrial distribution partners’ capabilities to market, sell and support these products.

Specifically, we continue to pursue certain initiatives to expand our distributors’ interactions with engineering firms and electrical contractors responsible for specifying and selecting our products within C&I power generation applications.

We are also committed to a number of sales process initiatives and go-to-market strategies to increase market visibility and improve the overall specification rates for our products which should increase quoting activity and close rates for our industrial distributors.

_Expanding_ _global presence_. We have increased our revenues shipped outside the U.S. and Canada in recent years, with sales outside this region accounting for approximately 22% of our revenues during 2017, as compared to approximately 20% and 10% in 2016 and 2015, respectively.

This increase is largely the result of acquisitions made that comprise our International segment – Ottomotores, Tower Light, Pramac and Motortech.

We also intend to improve the profit margins of our International segment by executing on several revenue and cost synergies, and driving organic growth in existing markets with additional investment and focus, including the expanding opportunity for global gaseous-fueled products.

We will continue to evaluate other opportunities to expand into additional regions of the world through both organic initiatives and potential acquisitions.

We believe the investments we have made to date, due in part to our Powering Ahead strategy, have helped to capitalize on the macro, secular growth drivers for our business and are an important part of our efforts to diversify and globalize our business.

Our total R&D expense was $42.9 million, $37.2 million and $32.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

R&D is conducted at various facilities worldwide, including a recent expansion of our advanced engineering labs at our corporate headquarters and the addition of a Chinese technology center in Suzhou, China.

The SEC maintains a web site, www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically with the SEC by the Company.

From time to time, we are involved in legal proceedings primarily involving product liability, [removed: patent and] employment matters and general commercial disputes arising in the ordinary course of our business.

As of December 31, [removed: 2017,] [added: 2018,] we believe that there is no litigation pending that would have a material effect on our results of operations or financial condition.

10-K 1 [removed: gnrc20171231_10k.htm] [added: gnrc20181231_10k.htm] FORM 10-K

UNITED [removed: STATES SECURITIES] [added: STATES SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. 20549

| For the fiscal year ended December 31, [removed: 2017] [added: 2018] Or | |

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] 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 [removed: and post] such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [added: a] smaller reporting [removed: company,] [added: company] or an emerging growth company.

See [added: the] definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and [removed: “ emerging] [added: “emerging] growth company” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer ☑ | [removed: | |] Accelerated filer ☐ | [removed: | | |]

| Non-accelerated filer ☐ [removed: (Do not check if a smaller reporting company)] | [removed: | |] Smaller reporting company ☐ | [removed: | | |]

| Emerging growth company ☐ | | [removed: | | | | |]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the [added: Exchange] Act).

The aggregate market value of the voting common equity held by non-affiliates of the registrant on June [removed: 30, 2017,] [added: 29, 2018,] the last business day of the registrant’s most recently completed second fiscal quarter, was approximately [removed: $2,189,264,580] [added: $3,115,194,826] based upon the closing price reported for such date on the New York Stock Exchange.

As of February [removed: 16, 2018, 62,325,716] [added: 19, 2019, 62,129,621] shares of registrant's common stock were outstanding.

Portions of the registrant’s Annual Report to Stockholders for the year ended December 31, [removed: 2017] [added: 2018] furnished to the Securities and Exchange Commission are incorporated by reference into Part II of this Form 10-K.

Portions of the registrant’s Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders (the [removed: “2018] [added: “2019] Proxy Statement”), which will be filed by the registrant on or prior to 120 days following the end of the registrant’s fiscal year ended December 31, [removed: 2017,] [added: 2018,] are incorporated by reference into Part III of this Form 10-K.

[removed: 2017] [added: 2018] FORM 10-K ANNUAL REPORT

| Item 1. | [removed: [Business](#item1)] [added: [Business](#business)] | 1 |

| Item 1A. | [Risk [removed: Factors](#item1a)] [added: Factors](#risk)] | 8 |

| Item 1B. | [Unresolved Staff [removed: Comments](#item1b)] [added: Comments](#unresolved)] | 15 |

| Item 2. | [removed: [Properties](#item2)] [added: [Properties](#properties)] | 16 |

| Item 3. | [Legal [removed: Proceedings](#item3)] [added: Proceedings](#legal)] | 16 |

| Item 4. | [Mine Safety [removed: Disclosures](#item4)] [added: Disclosures](#mine)] | 16 |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#item5)] [added: Securities](#market)] | 16 |

| Item 6. | [Selected Financial [removed: Data](#item6)] [added: Data](#selected)] | 18 |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#item7)] [added: Operations](#mgmtdisc)] | 23 |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#item7a)] [added: Risk](#quant)] | 35 |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#item8)] [added: Data](#finstate)] | 37 |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#item9)] [added: Disclosure](#changes)] | [removed: 69] [added: 70] |

| Item 9A. | [Controls and [removed: Procedures](#item9a)] [added: Procedures](#controls)] | [removed: 69] [added: 70] |

| Item 9B. | [Other [removed: Information](#item9b)] [added: Information](#other)] | [removed: 70] [added: 71] |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#item10)] [added: Governance](#directors)] | [removed: 70] [added: 71] |

| Item 11. | [Executive [removed: Compensation](#item11)] [added: Compensation](#execcomp)] | [removed: 70] [added: 71] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#item12)] [added: Matters](#security)] | [removed: 70] [added: 71] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#item13)] [added: Independence](#certain)] | [removed: 70] [added: 72] |

| Item 14. | [Principal Accountant Fees and [removed: Services](#item14)] [added: Services](#principal)] | [removed: 70] [added: 72] |

| Item 15. | [Exhibits and Financial Statement [removed: Schedules](#item15)] [added: Schedules](#exhibits)] | [removed: 70] [added: 72] |

| | ● | availability, cost and quality of raw materials and key components [removed: used] [added: and labor needed] in producing our products; |

| | ● | the impact on our results of possible fluctuations in interest rates, foreign currency exchange rates, [removed: commodities and] [added: commodities,] product [removed: mix;] [added: mix and regulatory tariffs;] |

| | ● | increase in product and other liability claims or recalls; [removed: and] |

| | ● | changes in environmental, health and [removed: safety] [added: safety, or product compliance] laws and [removed: regulations.] [added: regulations affecting our products or operations.] |

| --- | --- |

| | | |

| | | |

| | | |

| | | |

| Item 16. | [Form 10-K Summary](#formsummary) | 74 |

| | ● | failures or security breaches of our networks or information technology systems; and |

| --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- |

We [removed: own, operate] [added: own] or lease manufacturing, distribution and office facilities globally totaling over [removed: four] [added: five] million square feet.

The following table provides information about our principal facilities exceeding [removed: 10,000] [added: 20,000] square feet:

| Waukesha, WI | | Owned | | Corporate headquarters, [removed: manufacturing, R&D, service parts distribution] [added: R&D] | | Domestic |

| Winooski, VT | | Leased | | [removed: Distribution] [added: Distribution, storage] | | Domestic |

| Mexico City, Mexico | | Leased | | [removed: Office and] [added: Office, manufacturing,] warehouse | | International |

| [removed: Fellbach, Germany] [added: Sydney, Australia] | | Leased | | Sales, office, warehouse | | International |

| [removed: Crewe, England] [added: Stoke-on-Trent, United Kingdom] | | Leased | | Sales, office, warehouse | | International |

| Celle, Germany | | Owned | | Manufacturing, office, [removed: sales,] [added: warehouse,] R&D | | International |

As of December 31, [removed: 2017,] [added: 2018,] substantially all of our domestically-owned and a portion of our internationally-owned properties are subject to collateral provisions under our senior secured credit facilities.

| Janesville, WI | | Leased | | Distribution | | Domestic |

| South Burlington, VT | | Leased | | Office | | Domestic |

| Charlotte, VT | | Leased | | Distribution, storage | | Domestic |

| Guadalajara, Mexico | | Owned | | Sales, office | | International |

| Changzhou, China | | Leased | | Manufacturing, office, warehouse, R&D | | International |

In addition to the countries represented above, the Company has other operations or sales offices in the United Arab Emirates, India, Singapore and the Dominican Republic, as well as several other countries throughout Europe.

Shares of our common stock are traded on the New York Stock Exchange (NYSE) under the symbol “GNRC.” [removed: The following table sets forth the high and low sales prices reported on the NYSE for our common stock by fiscal quarter during 2017 and 2016, respectively.]

The following table summarizes the stock repurchase activity for the three months ended December 31, [removed: 2017,] [added: 2018,] which [removed: also] consisted of the withholding of shares upon the vesting of restricted stock awards to pay related withholding taxes on behalf of the recipient:

| | | [removed: | |] Total Number of Shares Purchased | | | | Average Price Paid per Share | | | | Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs | | | | Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs | | |

For equity compensation plan information, [removed: please] refer to Note 15, “Share Plans,” to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

The line graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the Standard & Poor’s S&P 500 Index, the S&P 500 Industrials Index and the Russell 2000 Index for the five-year period ended December 31, [removed: 2017.][added: 2018.]

The graph and table assume that $100 was invested on December 31, [removed: 2012] [added: 2013] in each of our common stock, the S&P 500 Index, the S&P 500 Industrials Index and the Russell 2000 Index, and that all dividends were reinvested.

[removed: ][added: ]

| Company / Market / Peer Group | | [removed: 12/31/2012 | | | |] 12/31/2013 | | | | 12/31/2014 | | | | 12/31/2015 | | | | 12/31/2016 | | | | 12/31/2017 | | | [added: | 12/31/2018 | | |]

As of February [removed: 16, 2018,] [added: 19, 2019,] there were [removed: approximately 204] [added: 194] registered holders of record of Generac’s common stock.

Our ability to pay dividends on our common stock is currently [removed: restricted] [added: limited] by the terms of our senior secured credit facilities and may be further restricted by any future indebtedness we incur.

[removed: Our business is conducted through our subsidiaries, including our principal operating subsidiary, Generac Power Systems, Inc.] Dividends from, and cash generated by our subsidiaries will be our principal sources of cash to repay indebtedness, fund operations, repurchase shares of common stock and pay dividends.

Accordingly, our ability to pay dividends to our stockholders is dependent on the earnings and distributions of funds from our [removed: subsidiaries, including Generac Power Systems, Inc.][added: subsidiaries.]

For information on securities authorized for issuance under our equity compensation plans, [removed: see] [added: refer to] “Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” which is incorporated herein by reference.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | |

| 10/01/18 - 10/31/18 | | | \- | | | | \- | | | | \- | | | $ | 144,453,228 | |

| 11/01/18 - 11/30/18 | | | 1,213 | | | $ | 55.05 | | | | \- | | | $ | 250,000,000 | |

| 12/01/18 - 12/31/18 | | | 170 | | | | 52.79 | | | | \- | | | $ | 250,000,000 | |

| Total | | | 1,383 | | | $ | 54.77 | | | | | | | | | |

For information on the Company’s stock repurchase plans, refer to Note 11, “Stock Repurchase Program,” to the consolidated financial statements.

| Generac Holdings Inc. | | $ | 100.00 | | | $ | 82.56 | | | $ | 52.56 | | | $ | 71.93 | | | $ | 87.43 | | | $ | 87.75 | |

| S&P 500 Index - Total Returns | | | 100.00 | | | | 113.69 | | | | 115.26 | | | | 129.05 | | | | 157.22 | | | | 150.33 | |

| S&P 500 Industrials Index | | | 100.00 | | | | 109.83 | | | | 107.04 | | | | 127.23 | | | | 153.99 | | | | 133.53 | |

| Russell 2000 Index | | | 100.00 | | | | 104.89 | | | | 100.26 | | | | 121.63 | | | | 139.44 | | | | 124.09 | |

Price Range of Common Stock

| 2017 | | High | | | | Low | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Fourth Quarter | | $ | 52.09 | | | $ | 48.21 | |

| Third Quarter | | $ | 46.15 | | | $ | 35.91 | |

| Second Quarter | | $ | 37.29 | | | $ | 34.52 | |

| First Quarter | | $ | 42.64 | | | $ | 36.79 | |

| 2016 | | High | | | | Low | | |

| Fourth Quarter | | $ | 43.49 | | | $ | 35.74 | |

| Third Quarter | | $ | 38.00 | | | $ | 33.13 | |

| Second Quarter | | $ | 39.25 | | | $ | 33.86 | |

| First Quarter | | $ | 38.51 | | | $ | 27.26 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | |

| 10/01/17 | \- | 10/31/17 | | | 79 | | | $ | 51.77 | | | | \- | | | $ | 170,108,876 | |

| 11/01/17 | \- | 11/30/17 | | | 641 | | | | 49.21 | | | | \- | | | | 170,108,876 | |

| 12/01/17 | \- | 12/31/17 | | | \- | | | | \- | | | | \- | | | | 170,108,876 | |

| Total | | | | | 720 | | | $ | 49.49 | | | | | | | | | |

| Generac Holdings Inc. | | $ | 100.00 | | | $ | 187.73 | | | $ | 154.98 | | | $ | 98.67 | | | $ | 135.03 | | | $ | 164.13 | |

| S&P 500 Index - Total Returns | | | 100.00 | | | | 132.39 | | | | 150.51 | | | | 152.59 | | | | 170.84 | | | | 208.14 | |

| S&P 500 Industrials Index | | | 100.00 | | | | 140.68 | | | | 154.50 | | | | 150.59 | | | | 178.99 | | | | 216.64 | |

| Russell 2000 Index | | | 100.00 | | | | 138.82 | | | | 145.62 | | | | 139.19 | | | | 168.85 | | | | 193.58 | |

The selected historical consolidated financial data for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] are derived from our audited consolidated financial statements included elsewhere in this annual report.

The selected historical consolidated financial data for the years ended December 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] is derived from our audited historical consolidated financial statements not included in this annual report.

| (U.S. Dollars in thousands, except per share [removed: data)] [added: data)] | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Statement of Operations [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Selling and service | | | [removed: 171,755] [added: 191,887] | | | | [removed: 164,607] [added: 174,841] | | | | [removed: 130,242] [added: 164,860] | | | | [removed: 120,408] [added: 130,242] | | | | [removed: 107,515] [added: 120,408] | |

| Research and development | | | [removed: 42,925] [added: 50,019] | | | | [removed: 37,229] [added: 42,869] | | | | [removed: 32,922] [added: 37,163] | | | | [removed: 31,494] [added: 32,922] | | | | [removed: 29,271] [added: 31,494] | |

| General and administrative | | | [removed: 87,512] [added: 103,841] | | | | [removed: 74,700] [added: 87,581] | | | | [removed: 52,947] [added: 74,693] | | | | [removed: 54,795] [added: 52,947] | | | | [removed: 55,490] [added: 54,795] | |

| Amortization of intangibles (1) | | | [removed: 28,861] [added: 22,112] | | | | [removed: 32,953] [added: 28,861] | | | | [removed: 23,591] [added: 32,953] | | | | [removed: 21,024] [added: 23,591] | | | | [removed: 25,819] [added: 21,024] | |

| Tradename and goodwill impairment (2) | | | \- | | | | \- | | | | [removed: 40,687] [added: \-] | | | | [removed: \-] [added: 40,687] | | | | \- | |

| Gain on remeasurement of contingent consideration (3) | | | \- | | | | \- | | | | \- | | | | [removed: (4,877] [added: \-] | [removed: )] | | | [removed: \-] [added: (4,877] | [added: )] |

| Total operating expenses | | | [removed: 331,053] [added: 367,859] | | | | [removed: 309,489] [added: 334,152] | | | | [removed: 280,389] [added: 309,669] | | | | [removed: 222,844] [added: 280,389] | | | | [removed: 218,095] [added: 222,844] | |

| Interest expense | | | [removed: (42,667] [added: (40,956] | ) | | | [removed: (44,568] [added: (42,667] | ) | | | [removed: (42,843] [added: (44,568] | ) | | | [removed: (47,215] [added: (42,843] | ) | | | [removed: (54,435] [added: (47,215] | ) |

| Investment income | | | [removed: 298] [added: 1,893] | | | | [removed: 44] [added: 298] | | | | [removed: 123] [added: 44] | | | | [removed: 130] [added: 123] | | | | [removed: 91] [added: 130] | |

| Loss on extinguishment of debt (4) | | | [removed: \-] [added: (1,332] | [added: )] | | | [removed: (574] [added: \-] | [removed: )] | | | [removed: (4,795] [added: (574] | ) | | | [removed: (2,084] [added: (4,795] | ) | | | [removed: (15,336] [added: (2,084] | ) |

| Gain (loss) on change in contractual interest rate (5) | | | \- | | | | [removed: (2,957] [added: \-] | [removed: )] | | | [removed: (2,381] [added: (2,957] | ) | | | [removed: 16,014] [added: (2,381] | [added: )] | | | [removed: \-] [added: 16,014] | |

| Total other expense, net | | | [removed: (46,376] [added: (46,105] | ) | | | [removed: (48,235] [added: (46,935] | ) | | | [removed: (56,578] [added: (49,055] | ) | | | [removed: (35,013] [added: (56,578] | ) | | | [removed: (72,749] [added: (35,013] | ) |

| Income before provision for income taxes | | | [removed: 204,688] [added: 311,076] | | | | [removed: 156,382] [added: 203,699] | | | | [removed: 122,983] [added: 153,697] | | | | [removed: 258,362] [added: 122,983] | | | | [removed: 278,716] [added: 258,362] | |

| Provision for income taxes (6) | | | [removed: 43,553] [added: 69,856] | | | | [removed: 57,570] [added: 44,142] | | | | [removed: 45,236] [added: 56,519] | | | | [removed: 83,749] [added: 45,236] | | | | [removed: 104,177] [added: 83,749] | |

| Net income attributable to noncontrolling interests | | | [removed: 1,749] [added: 2,963] | | | | [removed: 24] [added: 1,749] | | | | [removed: \-] [added: 24] | | | | \- | | | | \- | |

| Net income attributable to Generac Holdings Inc. | | $ | [removed: 159,386] [added: 238,257] | | | $ | [removed: 98,788] [added: 157,808] | | | $ | [removed: 77,747] [added: 97,154] | | | $ | [removed: 174,613] [added: 77,747] | | | $ | [removed: 174,539] [added: 174,613] | |

| Net income attributable to common shareholders per common share - diluted: | | $ | [removed: 2.56] [added: 3.54] | | | $ | [removed: 1.50] [added: 2.53] | | | $ | [removed: 1.12] [added: 1.47] | | | $ | [removed: 2.49] [added: 1.12] | | | $ | [removed: 2.51] [added: 2.49] | |

| Statement of Cash Flows [removed: data:] [added: data:] | | | | | | | | | | | | | | | | | | | | |

| Depreciation | | $ | [removed: 23,127] [added: 25,296] | | | $ | [removed: 21,465] [added: 23,127] | | | $ | [removed: 16,742] [added: 21,465] | | | $ | [removed: 13,706] [added: 16,742] | | | $ | [removed: 10,955] [added: 13,706] | |

| Amortization of intangible assets | | | [removed: 28,861] [added: 22,112] | | | | [removed: 32,953] [added: 28,861] | | | | [removed: 23,591] [added: 32,953] | | | | [removed: 21,024] [added: 23,591] | | | | [removed: 25,819] [added: 21,024] | |

| Expenditures for property and equipment | | | [removed: (33,261] [added: (47,601] | ) | | | [removed: (30,467] [added: (33,261] | ) | | | [removed: (30,651] [added: (30,467] | ) | | | [removed: (34,689] [added: (30,651] | ) | | | [removed: (30,770] [added: (34,689] | ) |

| Other Financial [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Adjusted EBITDA attributable to Generac Holdings Inc. (7) | | $ | [removed: 311,655] [added: 416,793] | | | $ | [removed: 274,603] [added: 311,225] | | | $ | [removed: 270,816] [added: 272,738] | | | $ | [removed: 337,283] [added: 270,816] | | | $ | [removed: 402,613] [added: 337,283] | |

| Adjusted net income attributable to Generac Holdings Inc. (8) | | | [removed: 212,858] [added: 292,213] | | | | [removed: 198,257] [added: 211,869] | | | | [removed: 198,436] [added: 195,572] | | | | [removed: 234,165] [added: 198,436] | | | | [removed: 301,664] [added: 234,165] | |

| Balance Sheet [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Property and equipment, net | | | [removed: 230,380] [added: 278,929] | | | | [removed: 212,793] [added: 230,380] | | | | [removed: 184,213] [added: 212,793] | | | | [removed: 168,821] [added: 184,213] | | | | [removed: 146,390] [added: 168,821] | |

| Goodwill | | | [removed: 721,523] [added: 764,655] | | | | [removed: 704,640] [added: 721,523] | | | | [removed: 669,719] [added: 704,640] | | | | [removed: 635,565] [added: 669,719] | | | | [removed: 608,287] [added: 635,565] | |

| Other intangibles and other assets | | | [removed: 249,505] [added: 261,961] | | | | [removed: 260,742] [added: 249,505] | | | | [removed: 292,686] [added: 260,742] | | | | [removed: 352,396] [added: 292,686] | | | | [removed: 394,237] [added: 352,396] | |

| Long-term borrowings, less current portion | | | [removed: 906,548] [added: 876,396] | | | | [removed: 1,006,758] [added: 906,548] | | | | [removed: 1,037,132] [added: 1,006,758] | | | | [removed: 1,065,858] [added: 1,037,132] | | | | [removed: 1,155,298] [added: 1,065,858] | |

| Other long-term liabilities | | | [removed: 120,784] [added: 166,947] | | | | [removed: 78,737] [added: 124,745] | | | | [removed: 62,408] [added: 80,968] | | | | [removed: 68,240] [added: 62,408] | | | | [removed: 53,010] [added: 68,240] | |

| Redeemable noncontrolling interests | | | [removed: 43,929] [added: 61,004] | | | | [removed: 33,138] [added: 43,929] | | | | [removed: \-] [added: 33,138] | | | | \- | | | | \- | |

| Total liabilities and stockholders' equity | | $ | [removed: 2,019,964] [added: 2,426,314] | | | $ | [removed: 1,861,684] [added: 2,025,965] | | | $ | [removed: 1,778,635] [added: 1,865,969] | | | $ | [removed: 1,864,419] [added: 1,778,635] | | | $ | [removed: 1,776,224] [added: 1,864,419] | |

[removed: (6)] As a result of the Tax Act, we recognized a one-time, non-cash benefit of $28.4 million in the fourth quarter of 2017 primarily from the impact of the revaluation of the [added: Company's] net deferred tax liabilities.

The computation of adjusted EBITDA is based on the definition of EBITDA contained in the Term Loan and [removed: Amended] ABL Facility (terms defined in Note 10, “Credit Agreements,” to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K).

The adjustments included in the reconciliation table listed below are provided for under our Term Loan and [removed: Amended] ABL Facility, and also are presented to illustrate the operating performance of our business in a manner consistent with the presentation used by our management and Board of Directors.

| | ● | several of the adjustments that we use in calculating Adjusted EBITDA, such as non-cash write-downs and other charges, while not involving cash expense, do have a negative impact on the value [added: of] our assets as reflected in our consolidated balance sheet prepared in accordance with U.S. GAAP; and |

| Net sales | | $ | 2,023,464 | | | $ | 1,679,373 | | | $ | 1,447,743 | | | $ | 1,317,299 | | | $ | 1,460,919 | |

| Costs of goods sold | | | 1,298,424 | | | | 1,094,587 | | | | 935,322 | | | | 857,349 | | | | 944,700 | |

| Gross profit | | | 725,040 | | | | 584,786 | | | | 512,421 | | | | 459,950 | | | | 516,219 | |

| Income from operations | | | 357,181 | | | | 250,634 | | | | 202,752 | | | | 179,561 | | | | 293,375 | |

| Other, net | | | (5,710 | ) | | | (4,566 | ) | | | (1,000 | ) | | | (6,682 | ) | | | (1,858 | ) |

| Net income | | | 241,220 | | | | 159,557 | | | | 97,178 | | | | 77,747 | | | | 174,613 | |

| (U.S. Dollars in thousands) | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |

| Current assets | | $ | 1,120,769 | | | $ | 824,557 | | | $ | 687,794 | | | $ | 632,017 | | | $ | 707,637 | |

| Total assets | | $ | 2,426,314 | | | $ | 2,025,965 | | | $ | 1,865,969 | | | $ | 1,778,635 | | | $ | 1,864,419 | |

| Total current liabilities | | $ | 560,706 | | | $ | 396,423 | | | $ | 347,926 | | | $ | 213,224 | | | $ | 240,522 | |

| Total stockholders' equity | | | 761,261 | | | | 554,320 | | | | 397,179 | | | | 465,871 | | | | 489,799 | |

(6) On December 22, 2017, the U.S. Government enacted a comprehensive tax reform bill commonly referred to as the Tax Cuts and Jobs Act (the Tax Act, or Tax Reform).

| (U.S. Dollars in thousands) | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |

| Net income attributable to Generac Holdings Inc. | | $ | 238,257 | | | $ | 157,808 | | | $ | 97,154 | | | $ | 77,747 | | | $ | 174,613 | |

| Net income | | | 241,220 | | | | 159,557 | | | | 97,178 | | | | 77,747 | | | | 174,613 | |

| Other | | | 850 | | | | 761 | | | | 700 | | | | 465 | | | | 296 | |

| (U.S. Dollars in thousands) | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |

| Net income attributable to Generac Holdings Inc. | | $ | 238,257 | | | $ | 157,808 | | | $ | 97,154 | | | $ | 77,747 | | | $ | 174,613 | |

| Net income attributable to noncontrolling interests | | | 2,963 | | | | 1,749 | | | | 24 | | | | \- | | | | \- | |

| Net income | | | 241,220 | | | | 159,557 | | | | 97,178 | | | | 77,747 | | | | 174,613 | |

| Provision for income taxes | | | 69,856 | | | | 44,142 | | | | 56,519 | | | | 45,236 | | | | 83,749 | |

| Income before provision for income taxes | | | 311,076 | | | | 203,699 | | | | 153,697 | | | | 122,983 | | | | 258,362 | |

| Adjusted net income | | | 295,735 | | | | 215,070 | | | | 197,791 | | | | 198,436 | | | | 234,165 | |

| Net sales | | $ | 1,672,445 | | | $ | 1,444,453 | | | $ | 1,317,299 | | | $ | 1,460,919 | | | $ | 1,485,765 | |

| Costs of goods sold | | | 1,090,328 | | | | 930,347 | | | | 857,349 | | | | 944,700 | | | | 916,205 | |

| Gross profit | | | 582,117 | | | | 514,106 | | | | 459,950 | | | | 516,219 | | | | 569,560 | |

| Income from operations | | | 251,064 | | | | 204,617 | | | | 179,561 | | | | 293,375 | | | | 351,465 | |

| Costs related to acquisitions | | | (777 | ) | | | (1,082 | ) | | | (1,195 | ) | | | (396 | ) | | | (1,086 | ) |

| Other, net | | | (3,230 | ) | | | 902 | | | | (5,487 | ) | | | (1,462 | ) | | | (1,983 | ) |

| Net income | | | 161,135 | | | | 98,812 | | | | 77,747 | | | | 174,613 | | | | 174,539 | |

| (U.S. Dollars in thousands) | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |

| Current assets | | $ | 818,556 | | | $ | 683,509 | | | $ | 632,017 | | | $ | 707,637 | | | $ | 627,310 | |

| Total assets | | $ | 2,019,964 | | | $ | 1,861,684 | | | $ | 1,778,635 | | | $ | 1,864,419 | | | $ | 1,776,224 | |

| Total current liabilities | | $ | 388,872 | | | $ | 341,939 | | | $ | 213,224 | | | $ | 240,522 | | | $ | 250,845 | |

| Total stockholders' equity | | | 559,831 | | | | 401,112 | | | | 465,871 | | | | 489,799 | | | | 317,071 | |

Refer to Note 2, “Significant Accounting Policies – Goodwill and Other Indefinite-Lived Intangible Assets,” to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further information on the 2015 impairment charges.

Additionally, for the year ended December 31, 2013, includes the loss on extinguishment of debt as a result of a refinancing transaction in May 2013.

| --- | --- | --- |

| Other | | | 202 | | | | (120 | ) | | | 465 | | | | 296 | | | | 1,043 | |

| | ● | administrative agent fees and revolving credit facility commitment fees under our Term Loan and Amended ABL Facility, which we believe to be akin to, or associated with, interest expense and whose inclusion in Adjusted EBITDA is therefore similar to the inclusion of interest expense in that calculation; |

| | ● | transaction costs relating to the acquisition of a business; and |

| | ● | other financing costs incurred relating to the dividend recapitalization transaction in May 2013. |

| Adjusted net income | | | 216,059 | | | | 200,476 | | | | 198,436 | | | | 234,165 | | | | 301,034 | |

To the [removed: Shareholders] [added: Stockholders] and Board of Directors of Generac Holdings Inc.

We have audited the accompanying consolidated balance sheets of Generac Holdings Inc. and subsidiaries (the “Company”) as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the [removed: two] [added: three] years in the period ended December 31, [removed: 2017,] [added: 2018,] and the related notes, collectively referred to as the “financial statements”.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of its operations and its cash flows for each of the [removed: two] [added: three] years in the period ended December 31, [removed: 2017,] [added: 2018,] in conformity with accounting principles generally accepted in the United States of America.

We [removed: also] have [added: also] audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (PCAOB),] the [removed: Company’s] [added: Company's] internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in [removed: _Internal Control-Integrated] [added: Internal Control — Integrated] Framework [removed: (2013)_] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, [removed: 2018] [added: 2019,] expressed an unqualified opinion on the [removed: Company’s] [added: Company's] internal control over financial reporting.

Our responsibility is to express an opinion on [removed: these consolidated] [added: the Company's] financial statements based on our audits.

We conducted our [removed: audit] [added: audits] in accordance with the standards of the PCAOB.

Such procedures [removed: include] [added: included] examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Milwaukee, [removed: WI][added: Wisconsin]

To the [added: Stockholders and] Board of Directors [removed: and Stockholders] of Generac Holdings Inc.

We have audited the internal control over financial reporting of Generac Holdings Inc. and its subsidiaries (the "Company") as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in [removed: _Internal] [added: Internal] Control — Integrated Framework [removed: (2013)_] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on [removed: the] criteria established in [removed: _Internal] [added: Internal] Control — Integrated Framework [removed: (2013)_] [added: (2013)] issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, [removed: 2017,] [added: 2018,] of the Company and our report dated February 26, [removed: 2018] [added: 2019,] expressed an unqualified opinion on those financial statements.

| _(U.S. Dollars in Thousands, Except Share and Per Share [removed: Data__)_] [added: Data)_] | | | |

| | | [removed: December 31,] [added: December 31,] | | | | | | |

| | | [added: 2018 | | | |] 2017 | | | | 2016 | | |

| Cash and cash equivalents | | $ | [removed: _138,472_] [added: 224,482] | | | $ | [removed: _67,272_] [added: 138,472] | |

| Accounts receivable, less allowance for doubtful accounts of [removed: $4,805] [added: $4,873] and [removed: $5,642] [added: $4,805] at December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively | | | [removed: _280,002_] [added: 326,133] | | | | [removed: _241,857_] [added: 279,295] | |

| Prepaid expenses and other assets | | | [removed: _19,741_] [added: 25,404] | | | | [removed: _24,649_] [added: 19,741] | |

| Property and equipment, net | | | [removed: _230,380_] [added: 278,929] | | | | [removed: _212,793_] [added: 230,380] | |

| Customer lists, net | | | [removed: _41,064_] [added: 61,194] | | | | [removed: _45,312_] [added: 41,064] | |

| Patents, net | | | [removed: _39,617_] [added: 29,970] | | | | [removed: _48,061_] [added: 39,617] | |

| Other intangible assets, net | | | [removed: _2,401_] [added: 3,043] | | | | [removed: _2,925_] [added: 2,401] | |

| Tradenames, net | | | [removed: _152,683_] [added: 152,283] | | | | [removed: _158,874_] [added: 152,683] | |

| Goodwill | | | [removed: _721,523_] [added: 764,655] | | | | [removed: _704,640_] [added: 721,523] | |

| Deferred income taxes | | | [removed: _3,238_] [added: 163] | | | | [removed: _3,337_] [added: 3,238] | |

| Other assets | | | [removed: _10,502_] [added: 15,308] | | | | [removed: _2,233_] [added: 10,502] | |

| Liabilities and stockholders’ [removed: equity] [added: equity] | | | | | | | | |

| Short-term borrowings | | $ | [removed: _20,602_] [added: 45,583] | | | $ | [removed: _31,198_] [added: 20,602] | |

| Accounts payable | | | [removed: _233,639_] [added: 328,091] | | | | [removed: _181,519_] [added: 233,639] | |

| Accrued wages and employee benefits | | | [removed: _27,992_] [added: 40,819] | | | | [removed: _21,189_] [added: 27,992] | |

| Other accrued liabilities | | | [removed: _105,067_] [added: 105,067] | | | | [removed: _93,068_] [added: 7,551] | | [added: | | 112,618 | |]

| Current portion of long-term borrowings and capital lease obligations | | | [removed: _1,572_] [added: 1,977] | | | | [removed: _14,965_] [added: 1,572] | |

| Long-term borrowings and capital lease obligations | | | [removed: _906,548_] [added: 876,396] | | | | [removed: _1,006,758_] [added: 906,548] | |

| Deferred income taxes | | | [removed: _43,789_] [added: 43,789] | | | | [removed: _17,278_] [added: (1,937] | [added: )] | [added: | | 41,852 | |]

| Other long-term liabilities | | | [removed: _76,995_] [added: 76,995] | | | | [removed: _61,459_] [added: 5,898] | | [added: | | 82,893 | |]

| Redeemable noncontrolling interest | | | [removed: _43,929_] [added: 61,004] | | | | [removed: _33,138_] [added: 43,929] | |

| Common stock, par value $0.01, 500,000,000 shares authorized, [removed: 70,820,173] [added: 71,186,418] and [removed: 70,261,481] [added: 70,820,173] shares issued at December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively | | | [removed: _708_] [added: 712] | | | | [removed: _702_] [added: 708] | |

| Additional paid-in capital | | | [removed: _459,816_] [added: 476,116] | | | | [removed: _449,049_] [added: 459,816] | |

| Treasury stock, at cost, [removed: 8,448,874] [added: 9,047,060] and [removed: 7,564,874] [added: 8,448,874] shares at December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively | | | [removed: _(294,005_] [added: (321,473] | ) | | | [removed: _(262,402_] [added: (294,005] | ) |

| Excess purchase price over predecessor basis | | | [removed: _(202,116_] [added: (202,116] | ) | | | [removed: _(202,116_] [added: (202,116] | ) |

February 26, 2019

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at the Selmec Equipos Industriales, S.A. de C.V. (“Selmec”), which was acquired on June 1, 2018 and whose financial statements constitute 11.1% and 5.3% of net and total assets, respectively, 1.5% of net sales, and 0.04% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2018.

Accordingly, our audit did not include the internal control over financial reporting at Selmec.

Milwaukee, Wisconsin

February 26, 2019

| | | 2018 | | | | 2017 | | |

| Assets | | | | | | | | |

| Inventories | | | 544,750 | | | | 387,049 | |

| Total current assets | | | 1,120,769 | | | | 824,557 | |

| Total assets | | $ | 2,426,314 | | | $ | 2,025,965 | |

| Other accrued liabilities | | | 144,236 | | | | 112,618 | |

| Total current liabilities | | | 560,706 | | | | 396,423 | |

| Deferred income taxes | | | 71,300 | | | | 41,852 | |

| Other long-term liabilities | | | 95,647 | | | | 82,893 | |

| Total liabilities | | | 1,604,049 | | | | 1,427,716 | |

| Retained earnings | | | 831,123 | | | | 610,836 | |

| Total stockholders’ equity | | | 761,261 | | | | 554,320 | |

| Total liabilities and stockholders’ equity | | $ | 2,426,314 | | | $ | 2,025,965 | |

| --- |

| Net sales | | $ | 2,023,464 | | | $ | 1,679,373 | | | $ | 1,447,743 | |

| Costs of goods sold | | | 1,298,424 | | | | 1,094,587 | | | | 935,322 | |

| Gross profit | | | 725,040 | | | | 584,786 | | | | 512,421 | |

| Selling and service | | | 191,887 | | | | 174,841 | | | | 164,860 | |

| Research and development | | | 50,019 | | | | 42,869 | | | | 37,163 | |

| General and administrative | | | 103,841 | | | | 87,581 | | | | 74,693 | |

| Total operating expenses | | | 367,859 | | | | 334,152 | | | | 309,669 | |

| Income from operations | | | 357,181 | | | | 250,634 | | | | 202,752 | |

| Other, net | | | (5,710 | ) | | | (4,566 | ) | | | (1,000 | ) |

| Income before provision for income taxes | | | 311,076 | | | | 203,699 | | | | 153,697 | |

| Provision for income taxes | | | 69,856 | | | | 44,142 | | | | 56,519 | |

| Net income | | | 241,220 | | | | 159,557 | | | | 97,178 | |

| Net income attributable to Generac Holdings Inc. | | $ | 238,257 | | | $ | 157,808 | | | $ | 97,154 | |

| Total comprehensive income | | | 238,605 | | | | 178,522 | | | | 79,490 | |

| Comprehensive income attributable to Generac Holdings Inc. | | $ | 236,958 | | | $ | 172,973 | | | $ | 80,463 | |

| --- |

| | | Common Stock | | | | | | | | Additional Paid-In | | | | Treasury Stock | | | | | | | | Excess Purchase Price Over Predecessor | | | | Retained | | | | Accumulated Other Comprehensive | | | | Total Stockholders' | | | | Noncontrolling | | | | | | |

| | | Shares | | | | Amount | | | | Capital | | | | Shares | | | | Amount | | | | Basis | | | | Earnings | | | | Income (Loss) | | | | Equity | | | | Interest | | | | Total | | |

| Impact of adoption of certain accounting standards (Note 2) | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | (2,299 | ) | | | – | | | | (2,299 | ) | | | – | | | | (2,299 | ) |

| Balance at December 31, 2015 (as adjusted) | | | 69,582,669 | | | $ | 696 | | | $ | 443,109 | | | | (3,567,575 | ) | | $ | (111,516 | ) | | $ | (202,116 | ) | | $ | 355,874 | | | $ | (22,475 | ) | | $ | 463,572 | | | $ | \- | | | $ | 463,572 | |

| Net income | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 157,808 | | | | – | | | | 157,808 | | | | 119 | | | | 157,927 | |

Report of Independent Registered Public Accounting Firm

Waukesha, Wisconsin

These financial statements are the responsibility of the Company's management.

We believe that our audits provide a reasonable basis for our opinion.

February 26, 2018

We have audited the accompanying consolidated statements of comprehensive income, stockholders’ equity and cash flows of Generac Holdings Inc. (the Company) for the year ended December 31, 2015.

Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Generac Holdings Inc. for the year ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

February 26, 2016, (except for Note 6, _Segment Reporting,_ and Note 2, _New Accounting Pronouncements,_ as to which the date is February 24, 2017)

| --- | --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Assets | | | | | | | | |

| Inventories | | | _380,341_ | | | | _349,731_ | |

| Total current assets | | | _818,556_ | | | | _683,509_ | |

| | | | | | | | | |

| Total assets | | $ | _2,019,964_ | | | $ | _1,861,684_ | |

| Total current liabilities | | | _388,872_ | | | | _341,939_ | |

| Total liabilities | | | _1,416,204_ | | | | _1,427,434_ | |

| Total stockholders’ equity | | | _559,831_ | | | | _401,112_ | |

| Total liabilities and stockholders’ equity | | $ | _2,019,964_ | | | $ | _1,861,684_ | |

| --- | --- | --- | --- | --- | --- |

| Net sales | | $ | _1,672,445_ | | | $ | _1,444,453_ | | | $ | _1,317,299_ | |

| Costs of goods sold | | | _1,090,328_ | | | | _930,347_ | | | | _857,349_ | |

| Gross profit | | | _582,117_ | | | | _514,106_ | | | | _459,950_ | |

| Tradename and goodwill impairment | | | _–_ | | | | _–_ | | | | _40,687_ | |

| Total operating expenses | | | _331,053_ | | | | _309,489_ | | | | _280,389_ | |

| Income from operations | | | _251,064_ | | | | _204,617_ | | | | _179,561_ | |

| Costs related to acquisition | | | _(777_ | ) | | | _(1,082_ | ) | | | _(1,195_ | ) |

| Other, net | | | _(3,230_ | ) | | | _902_ | | | | _(5,487_ | ) |

| Income before provision for income taxes | | | _204,688_ | | | | _156,382_ | | | | _122,983_ | |

| Total comprehensive income | | | _180,100_ | | | | _81,124_ | | | | _71,039_ | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | Excess Purchase Price | | | | | | | | Accumulated | | | | | | | | | | | | | | |

| | | | | | | | | | | Additional | | | | | | | | | | | | Over | | | | | | | | Other | | | | Total | | | | | | | | | | |

| | | Common Stock | | | | | | | | Paid-In | | | | Treasury Stock | | | | | | | | _Predecessor_ | | | | Retained | | | | Comprehensive | | | | Stockholders' | | | | Noncontrolling | | | | | | |

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an assessment of the effectiveness of internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] based on the criteria established in the 2013 _Internal Control – Integrated Framework_, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, [removed: 2017.][added: 2018.]

Deloitte & Touche LLP, the Company’s independent registered public accounting firm, issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] which is included herein.

Other than the [removed: assessment] [added: implementation] of [removed: controls for] the [removed: ERP implementation] [added: new leases standard] noted above, there have been no changes in our internal control over financial reporting that occurred during the [removed: year] [added: quarter] ended December 31, [removed: 2017] [added: 2018] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In conducting this assessment, our management excluded the Selmec Equipos Industriales, S.A. de C.V. business, which was acquired on June 1, 2018 and whose financial statements constitute 11.1% and 5.3% of net and total assets, respectively, 1.5% of net sales, and 0.04% of net income of the total consolidated financial statement amounts as of and for the year ended December 31, 2018.

In January 2019, we implemented ASU 2016-02, _Leases_.

As a result of the adoption, we implemented changes to our controls related to leases.

These included the development of new policies related to the capitalization of leases, enhanced lease terms and contract review requirements, and other ongoing monitoring activities.

These controls were designed to provide assurance at a reasonable level of the fair presentation of our consolidated financial statements and related disclosures.

In October 2017 and January 2018, two subsidiaries implemented the Company's global enterprise resource planning (ERP) systems.

In connection with those ERP system implementations, we are updating our internal controls over financial reporting for those subsidiaries as necessary, to accommodate modifications to their business processes and accounting procedures.

Additional implementations are expected to occur at our remaining locations over a multi-year period.

The information required by Item 10 not already provided herein under “Item 1 – Business – Executive Officers”, will be included in our [removed: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

The information required by this item will be included in our [removed: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

The information required by this item, including under the heading “Securities Authorized for Issuance Under Equity Compensation Plans,” will be included in our [removed: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

The information required by this item will be included in our [removed: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

The information required by this item will be included in our [removed: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

| Consolidated balance sheets as of December 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] | [removed: 40] [added: 39] |

| Consolidated statements of comprehensive income for years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] | [removed: 41] [added: 40] |

| Consolidated statements of stockholders’ equity for years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] | [removed: 42] [added: 41] |

| Consolidated statements of cash flows for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] | [removed: 43] [added: 42] |

| Notes to consolidated financial statements | [removed: 44] [added: 43] |

[removed: See the] [added: The below] Exhibits Index [removed: following] [added: is] the [removed: signature pages for a] list of the exhibits being filed or furnished with or incorporated by reference into this Annual Report on Form 10-K.

| [removed: 10.5] [added: 10.6] | | [Restatement Agreement, dated as of May 31, 2013, to that certain Credit Agreement, dated as of February 9, 2012, as amended and restated as of May 30, 2012, among Generac Power Systems, Inc., Generac Acquisition Corp., the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Bank of America, N.A. and Goldman Sachs Bank USA, as syndication agents (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 4, 2013).](http://www.sec.gov/Archives/edgar/data/1474735/000110465913046543/a13-14243_1ex10d1.htm) |

| [removed: 10.6] [added: 10.7] | | [Guarantee and Collateral Agreement, dated as of February 9, 2012, as amended and restated as of May 30, 2012, among Generac Holdings Inc., Generac Acquisition Corp., Generac Power Systems, Inc., certain subsidiaries of Generac Power Systems, Inc. and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2012).](http://www.sec.gov/Archives/edgar/data/1474735/000110465912041005/a12-13434_1ex10d2.htm) |

| [removed: 10.7] [added: 10.8] | | [First Amendment to Guarantee and Collateral Agreement dated as of May 31, 2013, among Generac Holdings Inc., Generac Acquisition Corp., Generac Power Systems, Inc., certain subsidiaries of Generac Power Systems, Inc. and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on June 4, 2013).](http://www.sec.gov/Archives/edgar/data/1474735/000110465913046543/a13-14243_1ex10d3.htm) |

| [removed: 10.8] [added: 10.9] | | [Credit Agreement, dated as of May 30, 2012, among Generac Power Systems, Inc., its Domestic Subsidiaries listed as Borrowers on the signature pages thereto, Generac Acquisition Corp., the lenders party thereto, Bank of America, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA, as syndication agents, and Wells Fargo Bank, National Association, as Documentation Agent (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2012).](http://www.sec.gov/Archives/edgar/data/1474735/000110465912041005/a12-13434_1ex10d3.htm) |

| [removed: Exhibits Number] [added: Exhibits Number] | | Description |

| [removed: 10.9] [added: 10.10] | | [Amendment No. 1 dated as of May 31, 2013, among Generac Power Systems, Inc., its Domestic Subsidiaries listed as Borrowers on the signature pages thereto, Generac Acquisition Corp., the lenders party thereto, Bank of America, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA, as syndication agents, and Wells Fargo Bank, National Association, as Documentation Agent (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on June 4, 2013).](http://www.sec.gov/Archives/edgar/data/1474735/000110465913046543/a13-14243_1ex10d4.htm) |

| [removed: 10.10] [added: 10.11] | | [Amendment No. 2 dated as of May 29, 2015, among Generac Power Systems, Inc., its Domestic Subsidiaries listed as Borrowers on the signature pages thereto, Generac Acquisition Corp., the lenders party thereto, Bank of America, N.A. as Administrative Agent, and the other agents named therein (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 1, 2015).](http://www.sec.gov/Archives/edgar/data/1474735/000143774915011443/ex10-1.htm) |

| [removed: 10.11] [added: 10.13] | | [Guarantee and Collateral Agreement, dated as of May 30, 2012, among Generac Holdings Inc., Generac Acquisition Corp., Generac Power Systems, Inc., certain subsidiaries of Generac Power Systems, Inc. and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2012).](http://www.sec.gov/Archives/edgar/data/1474735/000110465912041005/a12-13434_1ex10d4.htm) |

| [removed: 10.12] [added: 10.14] | | [First Amendment to Guarantee and Collateral Agreement dated as of May 31, 2013, among Generac Holdings Inc., Generac Acquisition Corp., Generac Power Systems, Inc., certain subsidiaries of Generac Power Systems, Inc. and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on June 4, 2013).](http://www.sec.gov/Archives/edgar/data/1474735/000110465913046543/a13-14243_1ex10d5.htm) |

| [removed: 10.13+] [added: 10.15+] | | [2009 Executive Management Incentive Compensation Program (incorporated by reference to Exhibit 10.46 of the Registration Statement on Form S-1 filed with the SEC on December 17, 2009).](http://www.sec.gov/Archives/edgar/data/1474735/000104746909010795/a2195840zex-10_46.htm) |

| [removed: 10.14+] [added: 10.16+] | | [Generac Holdings Inc. Amended and Restated 2010 Equity Incentive Plan (incorporated by reference to Appendix A to the Definitive Proxy Statement on Schedule 14A of the Company filed with the SEC on April 27, 2012)](http://www.sec.gov/Archives/edgar/data/1474735/000104746912004891/a2208974zdef14a.htm#la47301_appendix_a) |

| [removed: 10.15+] [added: 10.17+] | | [Generac Holdings Inc. Annual Performance Bonus Plan (incorporated by reference to Exhibit 10.63 of the Registration Statement on Form S-1 filed with the SEC on January 25, 2010).](http://www.sec.gov/Archives/edgar/data/1474735/000104746910000285/a2196063zex-10_63.htm) |

| [removed: 10.16+] [added: 10.18+] | | [Amended and Restated Employment Agreement, dated November 5, [removed: 2015,] [added: 2018,] between Generac and Aaron Jagdfeld (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 6, [removed: 2015).](http://www.sec.gov/Archives/edgar/data/1474735/000143774915020022/ex10-1.htm)] [added: 2018).](http://www.sec.gov/Archives/edgar/data/1474735/000143774918019673/ex_128192.htm)] |

| [removed: 10.17+] [added: 10.26] | | [Form of [removed: Change in Control Severance] [added: Director Indemnification] Agreement (incorporated by reference to Exhibit [removed: 10.64] [added: 10.51] of the Registration Statement on Form S-1 filed with the SEC on January [removed: 25, 2010).](http://www.sec.gov/Archives/edgar/data/1474735/000104746910000285/a2196063zex-10_64.htm)] [added: 11, 2010).](http://www.sec.gov/Archives/edgar/data/1474735/000104746910000097/a2195969zex-10_51.htm)] |

| [removed: 10.18] [added: 10.19] | | [Form of Confidentiality, Non-Competition and Intellectual Property Agreement (incorporated by reference to Exhibit 10.40 of the Registration Statement on Form S-1 filed with the SEC on November 24, 2009).](http://www.sec.gov/Archives/edgar/data/1474735/000104746909010392/a2195620zex-10_40.htm) |

| [removed: 10.19+] [added: 10.27] | | [Form of [removed: Restricted Stock Award] [added: Officer Indemnification] Agreement (incorporated by reference to Exhibit [removed: 10.44] [added: 10.52] of the Registration Statement on Form S-1 filed with the SEC on January [removed: 25, 2010).](http://www.sec.gov/Archives/edgar/data/1474735/000104746910000285/a2196063zex-10_44.htm)] [added: 11, 2010).](http://www.sec.gov/Archives/edgar/data/1474735/000104746910000097/a2195969zex-10_52.htm)] |

| [removed: 10.26+] [added: 10.28+] | | [Form of Performance Share Award Agreement (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q filed with the SEC on May 8, 2014).](http://www.sec.gov/Archives/edgar/data/1474735/000147473514000015/exh10_1.htm) |

| [removed: 10.27] [added: 10.30+] | | [Summary of Employment Arrangement with Jeffrey Mueller, President / General Manager – Consumer Power, as set forth in the Offer of Employment Letter dated November 13, [removed: 2017.](https://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105259.htm)] [added: 2017 (incorporated by reference to Exhibit 10.27 of the Annual Report on Form 10-K filed with the SEC on February 26, 2018).](http://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105259.htm)] |

| 21.1* | | [List of Subsidiaries of Generac Holdings [removed: Inc.](https://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105075.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_134959.htm)] |

| 23.1* | | [Consent of Deloitte & Touche LLP, Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105076.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_134953.htm)] |

| 31.1* | | [Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105078.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_134954.htm)] |

| 31.2* | | [Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105079.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_134955.htm)] |

| 32.1 | | [Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105080.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_134956.htm)] |

| 32.2 | | [Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774918003334/ex_105081.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_134957.htm)] |

| 101* | | The following financial information from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2017,] [added: 2018,] filed with the SEC on February 26, [removed: 2018,] [added: 2019,] formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, [removed: 2017] [added: 2018] and December 31, [removed: 2016;] [added: 2017;] (ii) Consolidated Statements of Comprehensive Income for the Fiscal Years Ended December 31, [removed: 2017,] [added: 2018,] December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015;] [added: 2016;] (iii) Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended December 31, [removed: 2017,] [added: 2018,] December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015;] [added: 2016;] (iv) Consolidated Statements of Cash Flows for the Fiscal Years Ended December 31, [removed: 2017,] [added: 2018,] December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015;] [added: 2016;] (v) Notes to Consolidated Financial Statements. |

| | | [removed: + Indicates] [added: ___________________ *Filed herewith. Furnished herewith. +Indicates] management contract or compensatory plan or arrangement. |

| 10.5 | | [2018 Replacement Term Loan Amendment, dated as of June 8, 2018, among Generac Power Systems, Inc., Generac Acquisition Corp., the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents named therein (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the SEC on June 14, 2018).](http://www.sec.gov/Archives/edgar/data/1474735/000143774918011755/ex_116401.htm) |

| 10.12 | | [Second Amended and Restated Credit Agreement, dated as of June 12, 2018, among Generac Power Systems, Inc., its Subsidiaries listed as Borrowers on the signature pages thereto, Generac Acquisition Corp., the lenders party thereto, Bank of America, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, and Wells Fargo Bank, National Association, as Documentation Agent (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed with the SEC on June 14, 2018).](http://www.sec.gov/Archives/edgar/data/1474735/000143774918011755/ex_116402.htm) |

| Exhibits Number | | Description |

| 10.24+* | | [Amended Form of Nonqualified Stock Option Award Agreement pursuant to the 2010 Equity Incentive Plan.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_135458.htm) |

| 10.25+* | | [Amended Form of Restricted Stock Award Agreement pursuant to the 2010 Equity Incentive Plan.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_135459.htm) |

| 10.29+* | | [Amended Form of Performance Share Award Agreement pursuant to the 2010 Equity Incentive Plan.](https://www.sec.gov/Archives/edgar/data/1474735/000143774919003397/ex_135477.htm) |

| 10.31+ | | [Generac Holdings Inc. Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).](http://www.sec.gov/Archives/edgar/data/1474735/000143774918014736/ex_119268.htm) |

| 10.32+ | | [Generac Power Systems, Inc. Executive Change in Control Policy, effective November 5, 2018 (incorporated by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q filed with the SEC on November 6, 2018).](http://www.sec.gov/Archives/edgar/data/1474735/000143774918019673/ex_128193.htm) |

| | | |

| | | |

| | | |

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | Generac Holdings Inc. | |

| --- | --- | --- |

| | By: | /s/ Aaron Jagdfeld |

| | | Aaron Jagdfeld |

| | | _Chairman,_ _President and Chief Executive Officer_ |

Dated: February 26, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons and on behalf of the Registrant in the capacities and on the dates indicated.

| Signature | Title | | Date | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| /s/ Aaron Jagdfeld | Chairman, President and Chief Executive | | February 26, 2018 | | |

| Aaron Jagdfeld | Officer | | | | |

| /s/ York A. Ragen | Chief Financial Officer and | | February 26, 2018 | | |

| York A. Ragen | Chief Accounting Officer | | | | |

| /s/ bennett Morgan | Lead Director | | February 26, 2018 | | |

| Bennett Morgan | | | | | |

| /s/ TODD A. ADAMS | Director | | February 26, 2018 | | |

| Todd A. Adams | | | | | |

| /s/ JOHN D. BOWLIN | Director | | February 26, 2018 | | |

| John D. Bowlin | | | | | |