Item 1. Business

Overview

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

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

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

Company History

Generac Power Systems, Inc. was founded in 1959 to commercialize a line of affordable portable generators that offered superior performance and features. Its success through the years has been built upon engineering expertise, manufacturing excellence and innovative approaches to the market. This has driven our growth into becoming a leading provider of power equipment for a variety of applications within residential, commercial, and industrial markets.

In the 1980’s, we expanded beyond portable generators into the industrial power generation market with the introduction of our first stationary generators that provided up to 200kW of power output. We introduced our first residential standby generator in 1989 and expanded our industrial product offering and global distribution system in the 1990’s, forming a series of alliances that rapidly increased our sales. Our growth accelerated in the 2000’s as we expanded our purpose-built line of residential and commercial automatic standby generators and implemented our multi-layered, omni-channel distribution philosophy. Throughout the 2000’s, a number of high-profile power outage events also helped to increase the awareness and need for backup power and home standby generators. In 2006, our founder sold the company to affiliates of CCMP Capital Advisors, LLC, together with certain other investors and members of our management. In connection with that transaction, Generac Holdings Inc. was formed as a Delaware holding company. Generac Power Systems, Inc. is a wholly owned subsidiary of Generac Holdings Inc. For ease of reference in explaining the general activities of its related entities in this report, Generac Holdings Inc. includes here the operating activities of its wholly owned subsidiaries. In February 2010, we completed our initial public offering (IPO) of the Company’s common stock. Since then, we have scaled our sales & marketing capabilities and systems, while also building the Generac brand into one of the leading names in backup power around the nation.

Soon after going public, we implemented our “Powering Ahead” enterprise strategy. This strategic plan accelerated the Company’s transition from primarily a North America focused, emergency backup generator company into a more diversified industrial technology company with the addition of new and adjacent product categories and an expanded global presence, primarily through a series of acquisitions. It is during this time in the 2010’s that we formed and built out our International segment, which provided additional capability to expand and increase market share by introducing our broad product offering into local markets around the world.

In 2018, we transitioned to a new enterprise strategy called “Powering Our Future”, which drove further share gains in new and existing markets, capitalized on our leadership in natural gas gensets, established our connectivity strategy, and provided the foundation for the Company’s evolution into an energy technology solutions company, including our initial acquisitions within the residential clean energy space. This ultimately led to the introduction of our “Powering A Smarter World” enterprise strategy in 2021. Our current strategic plan continues the evolution of Generac’s business model that pairs traditional and renewable power generation, conversion, and storage technologies with new monitoring, management and grid services capabilities to provide solutions for the dynamic challenges presented by today’s energy landscape.

Significant Investments in Energy Technology Solutions

We have been providing power generation and resiliency solutions for homes and businesses for decades. Leveraging that expertise in power generation, Generac has made significant investments in recent years to expand its capabilities into energy technology solutions, beginning with the March 2019 acquisition of Neurio Technology Inc., a leading energy data company focused on monitoring technology and sophisticated analytics to optimize energy use within a home or business. This was followed by the April 2019 acquisition of Pika Energy Inc. (Pika Energy), a designer and manufacturer of battery storage technologies that capture and store solar or other power sources for homeowners and businesses. In October 2020, the Company acquired Enbala Power Networks Inc., one of the leading providers of distributed energy optimization and control software that helps support the operational stability of the world’s power grids. In July 2021, Generac added to its residential clean energy portfolio with the acquisition of Chilicon Power LLC (Chilicon), a designer and provider of grid-interactive rooftop power inversion devices and monitoring solutions for the solar market. Although we do not believe battery storage applications will displace traditional engine driven backup generators used for power resiliency in the short or medium term, our strategy and continued investment in such energy technology solutions will help ensure Generac maintains its leadership as an energy solutions provider as battery technology evolves over time. With these acquisitions, Generac has established a presence in the rapidly developing residential clean energy market, focused on solar and battery storage solutions, as well as grid services platforms and grid-connected solutions. With these investments, we are able to provide another source of power resiliency that complements our traditional backup power business.

In December 2021, Generac acquired ecobee Inc. (ecobee), a leader in sustainable home technology solutions. In addition to smart home thermostatic controls and other smart home devices, ecobee offers its customers the ability to participate in energy services programs, which allow homeowners to reduce energy consumption and utility bills via intelligent HVAC controls. The acquisition represents a major step forward in the Company’s efforts to provide an integrated residential energy ecosystem that includes a sophisticated user interface platform to allow homeowners to take charge of their energy generation, storage, consumption, and management. By leveraging ecobee’s product and software development expertise to create the central hub of our residential energy ecosystem, we believe ecobee’s solutions will prove to be a differentiator for Generac when combined with our growing suite of energy technology solutions.

In December 2023, Generac made a minority investment in Wallbox N.V. (Wallbox) (NYSE: WBX), a global leader in smart EV charging and energy management solutions. Along with the investment, Generac and Wallbox are working together on commercial arrangements to provide Wallbox’s full suite of EV charging solutions to Generac’s customers and distribution partners. To further strengthen this relationship, we made an additional minority investment in Wallbox in August 2024.

Following these acquisitions and investments, we have made considerable organic investments in improving the quality, reliability, and manufacturability of the solutions provided. For example, in 2023, we opened a dedicated engineering center of excellence in Reno, Nevada that currently houses the development and testing of batteries, switches, power electronics, and other clean energy solutions. We have also made considerable progress in building out leadership teams and integrating the technical capabilities from our recent acquisitions, which will help drive our energy technology strategic initiatives forward. The integration of these technologies expands upon our well-established value proposition of providing homeowners with resiliency by also optimizing for cost, convenience, and comfort.

As we look to the future, we expect to make continued investment in the development of these residential energy technologies, as we work to further broaden our product offering and distribution network. While the policy back drop for the clean energy market may evolve over time, we believe customer interest and demand, as well as government programs and support for such energy technology products, will continue as grid capacity is strained and energy costs rise. With this opportunity in front of us, we plan to build out our residential energy technology capabilities and our suite of products and solutions as we expect to play an important role in the transition to a more sustainable and reliable electric grid.

Generac’s efforts in expanding its energy technology solutions extend to C&I and international markets as well. In June 2021, the Company acquired Deep Sea Electronics Limited (Deep Sea), a UK-based designer and manufacturer of advanced controls for a range of power generation and other applications used around the world. In September 2021, Generac acquired Off Grid Energy Ltd., a designer and manufacturer of industrial-grade mobile energy storage systems serving predominantly rental markets. The Company advanced its C&I connectivity strategy with the October 2022 acquisition of Blue Pillar, an industrial internet of things (IoT) platform developer that designs, deploys, and manages industrial IoT solutions. Blue Pillar provides a foundation to connect, monitor, and manage our C&I products to further enable their use in grid services programs. In February 2023, Generac acquired REFU Storage Systems GmbH (REFU), a German-based developer and supplier of battery storage and inverter hardware products, advanced software, and platform services for the commercial and industrial markets. REFU’s energy storage systems will complement and enhance our current global product offerings and are expected to further accelerate our development of new technologies in the energy technology space. Additionally, in 2024, we strengthened our presence in the emerging North American markets for C&I behind-the-meter energy storage and multi-asset microgrids with the acquisitions of SunGrid’s C&I battery energy storage system (BESS) product offering and Ageto, a leading provider of microgrid controllers that seamlessly integrate, optimize and manage distributed energy resources (DERs). These acquisitions and related organic initiatives collectively help lay the groundwork to further advance our energy technology strategies across C&I markets around the world.

For a complete summary of recent acquisitions, please see Note 1, “Description of Business,” to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

Products and Solutions

We design, manufacture, and distribute a broad range of energy technology products and solutions. We design and manufacture stationary, portable, and mobile power generators with single-engine outputs ranging between 800W and 3,250kW. We have developed a line of energy storage systems for use in residential solar-plus-storage applications. We also have a line of stationary and mobile energy storage systems that serve global C&I markets. We have a selection of energy monitoring and management devices that we expect to serve as the central hub or controls platform for our residential and C&I energy ecosystems. We participate in the market for grid services by providing DERs and the software to optimize and control those assets to support the grid. We design and manufacture other power products including light towers and a broad line of outdoor power equipment that we refer to as “chore products”, which includes a variety of property maintenance equipment powered by both engines and batteries. We classify our products and services into three categories based on similar ranges of power output geared for varying end customer uses: Residential products, C&I products, and Other products and services. The following summary outlines these categories, including their key attributes and customer applications.

Residential Products

Our residential automatic standby generators range in output from 7.5kW to 150kW, which predominantly operate on natural gas and liquid propane, and are permanently installed with an automatic transfer switch, which we also manufacture. Air-cooled engine residential standby generators range in outputs from 7.5kW to 26kW and serve as an emergency backup for small to medium-sized homes. Liquid-cooled engine generators serve as emergency backup for larger homes and small businesses and range in output from 22kW to 150kW.

As the product category leader, we believe we have the broadest line of home standby generators in the marketplace. Every home standby generator that we offer is equipped with Mobile Link™. This remote monitoring capability is a standard feature that allows our customers to check the status of their generator remotely from their smart phone or tablet and also provides the capability to similarly receive maintenance and service alerts. This remote monitoring information can also be accessed by our dealers to help them monitor their installed base of products and proactively support their customers. The data that is provided by this remote monitoring functionality also allows us to better understand our products in the field, while optimizing both product quality and customer satisfaction. We also offer propane tank monitoring solutions, a technology that we acquired in 2021 via Tank Utility Inc. (Tank Utility), an IoT propane tank monitoring solutions company. This additional monitoring capability drives further incremental value to our dealers and peace of mind to owners of our home standby generators that use propane as a fuel source.

Leveraging the technologies acquired in the 2019 acquisition of Pika Energy and the subsequent organic investments we have made in clean energy, we have developed a line of residential battery storage systems marketed under the Generac brand and using the PWRcell™ brand name. This system captures and stores electricity from solar panels or other power sources and helps reduce home energy costs while also protecting homes from shorter duration power outages. PWRcell systems can range in size from 9kWh up to 36kWh of storage capacity. In 2025, we expect to launch the PWRcell 2 Series, the next generation of our PWRcell energy storage system, which includes significant improvements in performance and compatibility as compared to the first generation.

In 2021, we acquired ecobee, a leader in sustainable smart home solutions such as smart thermostats and a suite of home monitoring products, all designed with a focus on energy conservation, convenience, peace of mind and comfort. ecobee’s smart home energy management devices and complementary sensors intelligently optimize heating and cooling systems, often the largest energy consuming system within a home, to deliver significant energy savings for homeowners. In 2023, ecobee launched a line of smart doorbell cameras, which integrates with ecobee’s products and helps to drive increased consumer engagement with their platform. The capabilities acquired via ecobee, paired with our existing Mobile Link remote monitoring system, provide the foundation for Generac’s residential connectivity infrastructure, which will be integral in the continued development of our smart home energy ecosystem.

Importantly, we are leveraging ecobee’s technologies and software development expertise to develop a user interface at the center of our home energy ecosystem that will allow homeowners to monitor and control Generac’s entire suite of products using a “single pane of glass”. In 2023, we took our first steps towards this goal by successfully integrating our home standby generators and propane tank monitors with the ecobee platform. Our next-generation clean energy products and solutions, including PWRcell 2 and Wallbox’s EV charging solutions, will be fully integrated with the ecobee platform. We believe the integration of our products and solutions in a single cohesive ecosystem will drive additional peace of mind, energy efficiency, and ultimately lower utility bills for homeowners.

This functionality will also help enable connection to grid services distributed energy resource management software (DERMS), including our in-house solution called Concerto. All of our residential energy technology products and home standby generators come with grid-connection capabilities, enabling consumers to connect and enroll their DERs in available grid services programs. These utility-sponsored programs, when and where offered, can provide value to homeowners in the form of lower utility costs, while also helping provide grid operators incremental capacity to address supply/demand imbalances on the grid.

We continue to develop new Generac-branded energy technology products that we expect to bring to market as we build out a broader energy management ecosystem, giving our distributors access to a more diverse line-up of products that can serve a variety of applications. For example, our investment in Wallbox has allowed us to participate in the rapidly developing home EV charging market by offering co-branded EV charging technologies through our expansive distribution network.

We also provide a broad product line of portable and inverter generators that range in size from 800W to 18kW, as well as multiple portable battery solutions that provide clean, emission-free power at the push of a button. These products can help serve as an emergency home backup source of electricity on a limited basis, and they can also be used for construction and recreational purposes. Our portable generators are targeted at homeowners, with price points ranging between the consumer value end of the market through the premium homeowner market; at professional contractors, starting at the value end through the premium contractor segment; and at the recreational market with our inverter generator products, which are quieter than traditional portable generators. In addition, we offer manual transfer switches to supplement our portable generator product offering.

We provide a broad product line of outdoor power equipment referred to as “chore products”, which are used in property maintenance applications for larger-acreage residences, commercial properties, municipalities, and farms. These products include trimmers, field and brush mowers, log splitters, stump grinders, chipper shredders, lawn and leaf vacuums, pressure washers and water pumps. We also offer commercial-grade, battery-powered turf care products through our “Mean Green” brand name, which was acquired in 2020. Chore products are largely sold in North America through direct-to-consumer online catalogs, retail hardware stores, and outdoor power equipment dealers, primarily under the DR® brand name.

Residential products comprised 56.6%, 51.3% and 63.8%, respectively, of total net sales in 2024, 2023 and 2022.

Commercial & Industrial P****roducts

We offer a full line of C&I generators that are sold around the world. We are a leader in cleaner-burning natural gas fueled generators and also have a full offering of C&I generators that are fueled by diesel and Bi-FuelTM. We believe we have one of the broadest product offerings in the industry with power outputs ranging from 10kW up to 3,250kW. Through our Deep Sea subsidiary, we have expanded our capabilities in the design and manufacture of advanced controls for a range of C&I power generation applications. Our natural gas C&I stationary generators have grid-connection capabilities, enabling our customers to generate an incremental return on investment by connecting and enrolling their generator as a DERs in grid services applications where available.

Our light-commercial standby generators and related transfer switches include a full range of affordable systems from 22kW to 150kW, providing three-phase power sufficient for most small and mid-sized businesses such as grocery stores, convenience stores, restaurants, gas stations, pharmacies, retail banks, small health care facilities and other small-footprint retail applications. Our light-commercial generators predominantly run on natural gas and liquid propane.

We design and manufacture a broad product line of modularized and configured stationary generators and related transfer switches for various industrial standby, continuous-duty, and prime rated applications. Our single-engine industrial generators range in output from 10kW up to 3,250kW, include stationary and containerized packages, and can include our Modular Power Systems (MPS) technology that extends our product range up to much larger multi-megawatt systems through an integrated paralleling configuration. Over the past several years, we have introduced larger and higher-powered gaseous-fueled generators, with the highest output of 1,000kW for a single-engine set. Our industrial standby generators are primarily used as emergency backup for larger applications (such as healthcare, telecom, datacom, commercial office, retail, municipal and manufacturing, to name a few). In recent years, we have seen interest in utilizing our gaseous-fueled generators in "beyond standby" applications including distributed generation and microgrid projects and have developed purpose-built products for these applications that have grid-connected capability. This grid-connected functionality and the significant expansion of our in-house advanced controls capabilities further enhances the opportunity for our generators to be used in these applications.

Our MPS technology combines the power of several smaller generators to produce the output of a larger generator, providing our customers with redundancy and scalability in a cost-effective manner. For larger industrial applications, our MPS products offer customers an efficient, affordable way to scale their standby power needs, while offering superior reliability given their built-in redundancy which allows individual units to be taken off-line for routine maintenance while retaining coverage for critical circuits.

We also offer a full line of industrial transfer switches to meet varying needs from light commercial applications all the way up to the most demanding mission-critical installations. In recent years, we have significantly increased and upgraded our industrial transfer switch product offering, which we believe will help to enhance our attachment rate and related market share for these products. Generac’s innovative feature set and flexible platforms offer a variety of switching configurations to meet almost any project needs.

We design and manufacture a broad product line of C&I mobile products such as light towers and mobile generators, which provide temporary lighting and power for various end markets around the world (such as road and commercial construction, energy, mining, military, and special events). We also offer commercial mobile pumps, heaters, and dust-suppression equipment for a wide variety of applications. Our mobile products are typically sold globally to national and regional rental companies who then rent the equipment to the end user.

We have continued to expand our portfolio of energy technology solutions for C&I applications as well. In 2021, we acquired Off Grid Energy, a European based manufacturer of mobile energy storage systems predominantly used in the rental markets. In 2023, we acquired REFU, a European based provider of stationary C&I BESS solutions and related inverter products, which expanded our product offering to enter certain C&I BESS markets around the world. In 2024, we strengthened our position in the North American C&I BESS market with the acquisitions of SunGrid’s C&I BESS product offering and Ageto, a leading provider of microgrid controllers that seamlessly integrate, optimize and manage DERs. We believe these collective product offerings will enable us to capture market share in the rapidly developing markets for C&I BESS and multi-asset microgrids in North America.

Our C&I BESS solutions are primarily targeted at “behind-the-meter” applications for on-site energy storage. We expect to leverage our leading position as a provider of traditional stationary generators to gain share in the global C&I BESS market. This expertise is particularly beneficial for multi-asset microgrid solutions that combine generators with energy storage assets, providing the many benefits of behind-the-meter storage with longer duration outage protection. These microgrids can include other energy assets such as commercial EV charging capabilities, which we are now able to offer via our partnership with Wallbox.

We also continue to develop other energy technology products, including mobile battery-powered light towers and hybrid mobile solutions that pair a battery with a diesel engine to reduce emissions and noise pollution. In addition, we continue to provide various gaseous-engine control systems and accessories, which are used in our natural gas generators, as well as sold to other gas-engine manufacturers and aftermarket customers.

C&I products comprised 32.3%, 37.2% and 27.6%, respectively, of total net sales in 2024, 2023 and 2022.

Other P****roducts and Services

Our “Other products and services” category primarily consists of aftermarket service parts and product accessories sold to our customers, installation and maintenance services, extended warranty revenue, grid services and other software-related subscription revenue, remote monitoring subscription revenue, and other project management service offerings provided by our owned industrial distributors.

Included in this “Other products and services” category are certain revenues that are generated by ecobee, Blue Pillar, Ageto, and our Concerto and Mobile Link software platforms, as follows:

ecobee recognizes service revenue in certain circumstances when a homeowner enrolls their smart thermostat in a grid services program offered by their utility. ecobee can provide utilities direct connection to a homeowner’s smart thermostat, thereby allowing control of a significant portion of the home’s electrical load. In exchange for this capability, utilities pay ecobee for that connection.

The 2022 acquisition of Blue Pillar expanded our C&I connectivity capabilities and provided a standard protocol for all of our C&I products to be connected. In addition to connectivity device sales, Blue Pillar recognizes software subscription and support revenue resulting from the monitoring and management capabilities its platform provides to customers.

The 2024 acquisition of Ageto further enhanced our advanced control capabilities, particularly in the C&I BESS and multi-asset microgrid markets. In addition to its controls hardware, Ageto’s solutions include software-as-a-service contracts for site level system integration and control of end customer energy assets that make up a microgrid.

Our Concerto energy-balancing software platform provides a highly flexible approach for controlling and dispatching DERs from flexible loads, backup generators, energy storage systems, and other renewable energy sources. Concerto gives utilities and grid operators the flexibility to operate virtual power plants in real-time to better manage the escalating complexities of the future electrical grid.

Finally, our Mobile Link platform provides remote monitoring services for our residential home standby customers and “Fleet” services for our residential home standby dealers, whereby we collect subscription revenue for these services on a recurring basis.

"Other products and services" comprised 11.1%, 11.5% and 8.6%, respectively, of total net sales in 2024, 2023 and 2022.

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

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

Key Mega-Trends:

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

Strategic Growth Themes:

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

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

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

Emerging applications and business models utilizing our solutions open new market opportunities. We expect the evolution of the traditional electrical utility model toward decarbonized, digitized, and decentralized solutions will create new market opportunities for our products. We believe that we can participate in this future electrical grid in a bigger way by utilizing our products and solutions as DERs by grid operators. This will require intelligent software platforms that are able to optimize an increasingly complex supply and demand equation at both the individual site and grid level, such as our Concerto DERMS software. Our residential and C&I connectivity, controls, and energy management capabilities will also enable new recurring revenue opportunities as grid services programs continue to build out over time. Additionally, we believe that growing interest in our C&I generator and BESS solutions that can be deployed in multi-asset microgrid and “beyond standby” applications will continue to emerge and create incremental market opportunities in the future. The significant advancements made in recent years in the connectivity of our products are core to these newer capabilities, which have played a key role in the evolution of Generac into an energy technology solutions company.

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

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

Additionally, the rapid increase in data centers is driving increased demand for backup power solutions, given the critical nature of this infrastructure. AI requirements, hyperscalers, and the expansion of edge computing and “connected devices” are expected to quadruple US data center energy consumption from 2023 to 2030, according to certain market forecasts. We believe this significant growth in power consumption will drive demand for backup power and intelligent energy management solutions for individual data center locations, the broader electrical grid, and other grid participants.

Other Business Drivers

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

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

Enterprise Strategy

The mega-trends and strategic growth themes that we have identified support our enterprise strategy, “Powering A Smarter World,” and our purpose statement, “To lead the evolution to more resilient, efficient, and sustainable energy solutions.” As we continue to execute our strategic plan into the future, we are focused on three key objectives: (i) improve energy resilience and independence, (ii) optimize energy efficiency and consumption, and (iii) protect and build critical infrastructure. These objectives are further explained as follows:

Improve energy resilience and independence. Increase power reliability through onsite generation and storage solutions that provide resiliency for homes, businesses and communities.

Homes, businesses, and communities are experiencing a deterioration in the reliable supply of electricity due to a number of factors including: climate change impacts driving more severe and volatile weather leading to increased power outages; a capacity constrained legacy power infrastructure that’s still predominantly a one-way system; power infrastructure being impaired by underinvestment making it more susceptible to power outages; regulatory and legislative actions focused on carbon intensity, coupled with incentives for adoption of more intermittent renewable power sources; and a dramatic increase in power demand that could outpace supply growth due to electrification trends, accelerating power demands of data centers and artificial intelligence, and the re-industrialization of North America. We have one of the broadest product offerings that we believe can directly address these challenges for homes and businesses. Our residential and C&I product offering begins with emergency standby generators that can be supplemented with portable and mobile power generators. We have also built out an offering of battery energy storage systems for behind-the-meter residential and C&I applications. These onsite generation and storage solutions provide peace of mind and protection against rising power quality issues by delivering energy resilience and independence for end users and their communities. Many of these onsite solutions are capable of being connected to the grid and can help support overall grid reliability, resiliency and sustainability when enrolled in utility grid services programs.

Optimize energy efficiency and consumption. Enable sustainable and more efficient power generation and consumption through monitoring, management and lower-carbon solutions.

Multiple entrenched trends are expected to drive accelerated demand growth for electricity in the coming years. These power demand trends will require utilities and energy retailers to meaningfully increase the supply and reliability of electricity, while at the same time working to achieve carbon-reduction goals, which is expected to further contribute to supply/demand imbalances for power. Additionally, the combination of accelerating demand growth with significant investments in maintaining, upgrading, and decarbonizing the power grid is likely to cause meaningful increases in the price of electricity, ultimately driving home and business owners to adopt solutions to offset the impact of rising costs. As part of our expanding ecosystems of energy technology solutions, we continue to build out our residential energy management capabilities, which improve energy efficiency and optimize consumption for end users. This includes ecobee smart home energy management devices, propane tank monitoring solutions, Wallbox EV charging equipment, and other load management devices. Our battery storage solutions for both residential and C&I applications allow end users to store power that is often generated on-site to optimize the timing of consumption. With this capability, home and business owners can discharge power from their battery at times when utility rates are at their highest, thereby saving money on their utility bills. Battery storage systems, along with smart thermostats and other DERs, can also participate in grid services programs, helping to enhance the efficiency of the broader electrical grid.

We continue to build out our system level controls by leveraging our deep software development capabilities brought on by various acquisitions. These controls enable the monitoring and management that is necessary to optimize energy efficiency and consumption. For our residential products, we are developing a common platform and user interface to bring all of our residential products into a single ecosystem. Using ecobee as the central hub and MobileLink as our connectivity platform, we are able to link all of our installed residential products together for a seamless consumer experience to monitor, manage, and control their energy generation, storage, and consumption. For our C&I products, we are developing a similar ecosystem of controls that are building off Deep Sea’s industrial controls, Blue Pillar’s IoT network solutions, and Ageto’s multi-asset microgrid control technology, helping businesses to better optimize their energy efficiency and consumption. These enhanced control capabilities provide the foundation for the continued build out of a common system-level platform for our C&I customers to monitor, manage, and control all of their DERs, including non-Generac assets as well.

Protect and build critical infrastructure. Offering innovative solutions that enable and protect next-generation power, telecommunications, transportation, water, and other critical infrastructure.

The critical power infrastructure around the world is becoming more sensitive to growing electricity supply/demand imbalances. Generac’s suite of products can be connected and synchronized within DERMS platforms, such as our Concerto offering, providing utilities and grid operators the flexibility to access and control these DERs in real-time to better manage the escalating complexities of their electrical grids. When utilized in these applications, our residential and C&I products essentially provide power capacity to utilities and grid operators in the form of a virtual power plant. We believe the next generation of critical power infrastructure will be more decarbonized, digitized and decentralized, and we view the aggregation and management of DERs as an important aspect in supplementing the next generation grid.

As society becomes more “connected” and more mission-critical data travels over wireless networks, reliability and uptime of this telecommunications equipment will be essential to maintain our way of life. As a leader in providing backup power generators for wireless cell towers around the world, we believe we can play an important role in helping to protect and build this critical infrastructure. In addition, we believe that data centers will be considered critical infrastructure as more data will be accessed from the “cloud” and artificial intelligence becomes more ubiquitous in our everyday lives. As a result, backup power solutions will be important elements of this next-generation infrastructure in order to make them more resilient.

Our broad offering of C&I mobile products (including mobile light towers, mobile power generators, mobile energy storage systems and hybrid generators) play a key role in the completion of infrastructure construction projects, such as roads, highways, bridges, and airports. Finally, our products are also commonly used to provide standby power to other critical infrastructure such as water and wastewater systems and other municipal infrastructure, as well as healthcare facilities that are vital for a safe and healthy society.

See “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Drivers and Operational Factors” of this Annual Report on Form 10-K for additional drivers that influence demand for our products and other factors affecting the markets that we serve.

Distribution Channels and Customers

We distribute our products through a variety of distribution channels to increase awareness of our product categories and brands, and to ensure our products reach a broad, global customer base. This omni-channel distribution network includes independent residential dealers and contractors, industrial distributors and dealers, national and regional retailers, e-commerce partners, electrical/HVAC/solar wholesalers, solar installers, catalogs, equipment rental companies, and other equipment distributors. We also sell direct to certain national and regional account customers, as well as to individual consumers or businesses who are the end users of our products.

We believe our global distribution network is a competitive advantage that has strengthened over the years as we continue to add, expand and develop the various distribution channels through which we sell our products. We offer a broad set of tools, programs, factory support, and sales leads to help our distribution partners be successful. Our network is well balanced with no single customer providing more than 5% of our net sales in 2024.

We have the industry's largest network of factory direct independent generator dealers in North America. Our residential dealer network is made up of electrical and HVAC contractors across the US and Canada. These dealers sell, install and service our residential and light commercial generators to end users. Over the years, we have made significant investments to grow this dealer network, and we will continue to make those investments in the future given the importance of this channel. We continue to focus on a variety of initiatives to more effectively market and sell our home standby products and better align our dealer network with Generac. We will continue our efforts to improve customer lead quality, nurture those leads, and develop our dealers, all with a goal of increasing close rates and lowering our cost per lead over time. Over the years, we have made significant investments in our proprietary in-home selling system for residential dealers that we call “Power Play”. We are continuously making enhancements to this platform, again with the objective of improving the customer experience and overall close rates. Additionally, our remote monitoring platform allows our residential generator dealers to monitor their installed base of customers through a feature that we call “Fleet”, enabling them to offer a more proactive experience to service a customer’s generator. By offering the best product line, pricing, marketing, tools, programs, and customer support, we believe we have built the strongest dealer network in the home standby generator industry.

In recent years, we have been establishing a base of solar contractors that sell, install and service our PWRcell energy storage systems. Leveraging our decades of expertise in partnering with our residential generator dealers, we believe we can expand our solar installer network and increase mindshare for Generac’s products, helping us to win in the clean energy market in the future. In addition, we have been developing distribution relationships with national solar providers to offer our equipment in their portfolio of products and services. As we continue to launch new clean energy products in the future, we expect to accelerate our efforts to expand distribution in this market.

Our industrial products distribution network consists of industrial power generation distributors that cover particular regions around the world. Over the past several years, we have been strengthening our industrial dealer network globally through acquisitions and organic means, to increase our C&I product sales and related market share. Since 2020, we have acquired a number of our industrial distributors to give us direct coverage of those regions in the United States and accelerate our efforts in those markets. Industrial distributors and dealers provide C&I end users with ongoing sales, installation, service and product support. Our industrial distributors and dealers help maintain the local relationships with commercial electrical contractors, specifying engineers, and national account regional buying offices. We also sell to certain EPC companies and other companies that specialize in managing more complex power generation projects, including microgrids and “beyond standby” applications.

Our retail distribution channel includes thousands of locations across the globe and includes a variety of national and regional home improvement chains, electronics retailers, clubs, buying groups, hardware & farm supply stores, and outdoor power equipment dealers. These physical retail locations are supplemented by a large presence of e-commerce retailers, along with a number of catalog retailers. The retail channel primarily sells our residential standby, portable and light-commercial generators, as well as our outdoor power equipment and ecobee smart home energy management devices. The placement of our products at retail locations drives significant awareness for our brands and the home standby generator product category.

Our wholesale network distributes our residential and light-commercial generators, residential energy storage systems, and smart home energy management devices on a two-step basis. The channel consists of selling branches of both national and local distribution houses for electrical, HVAC and solar equipment on a wholesale basis, which in turn typically sell to electricians and HVAC/solar installers who are not in our dealer network. As part of our efforts to increase sales & installation bandwidth for home standby generators, we have established an Aligned Contractor Program that provides certain benefits to contractors that purchase our products through the wholesale network and agree to participate in enhanced training sessions. We believe that this program will further align Generac with these independent contractors which is important during surge periods of demand in local markets.

On a selective basis, we have established private label and licensing arrangements with third party partners to provide residential, light-commercial and industrial generators under different brand names. These partners include leading home equipment, electrical equipment and construction machinery companies, each of which provides access to incremental channels of distribution for our products. Additionally, our ecobee products are also sold through HVAC OEMs on a co-branded basis.

The distribution for our C&I mobile products includes global, 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.

We also sell direct to certain customers that are the end users of our products covering a variety of end market verticals both domestically and around the world. This includes telecommunication, retail, data centers, banking, energy, healthcare, convenience stores, grocery stores, restaurants, governments, and other commercial applications. We have developed a diverse, global sales force that calls on these opportunities directly and helps customize solutions to each customer’s needs in their local markets. Additionally, certain of our residential products are sold direct to individual consumers, who are the end users of the product. In the grid services space, we sell software and equipment direct to utilities and grid operators.

Research and Development

Our focus on a broad range of energy technology products and solutions drives technological innovation, advanced engineering & software development capabilities, and specialized manufacturing competencies. Research and development (R&D) has been a core competency for Generac since our inception, and today includes a staff of approximately 1,250 engineers working on numerous projects at various facilities around the world. These activities are focused on new product introductions, developing new technologies and product enhancements, as well as maintaining product competitiveness by reducing manufacturing costs, improving safety characteristics, and increasing reliability & performance, while ensuring compliance with regulatory standards. We have significant experience using natural gas engines and have developed specific expertise with fuel systems and emissions technology. In the residential and light commercial markets, we have developed proprietary engines, cooling packages, controls, fuel systems, and emissions systems which help drive innovation while also enhancing the margin profile of those products.

More recently, we have also built out specific expertise around battery storage systems and power conversion that we plan to leverage as we expand into clean energy markets. In addition, we have significantly increased our software development capabilities across a variety of applications, including energy management, system-level microgrid controls, remote monitoring, and distributed energy resource management systems. Combining advanced software development with our broad engineering capabilities will enable us to create common ecosystems for our residential and C&I products, helping us to accelerate our energy technology efforts.

We also have engineering and product management resources focused on evaluating and developing alternative technologies that are emerging and could become commercially viable over the long-term, such as fuel cells and hydrogen. We have a long history of driving product innovation into the markets that we serve. As we continue to develop new products and technologies that are more decarbonized, digitized, and decentralized, we believe we can maintain our leadership position as an energy technology solutions provider.

Intellectual Property

We are committed to research, development, and product innovation, and we rely on a combination of patents and trademarks to help establish and protect our proprietary rights. Our patents protect certain features and technologies we have developed for use in our products including fuel systems, air flow, electronics and controls, noise reduction, engines, energy management, energy monitoring, energy storage, and load management. We believe the existence of these patents and trademarks, along with our ongoing processes to register additional patents and trademarks, help protect our intellectual property rights and enhance our brands and competitive position. We also use proprietary manufacturing processes that require customized equipment. With our continuous focus on research and development, we expect to develop new intellectual property on an ongoing basis.

See “Item 1A. Risk Factors” of this Annual Report on Form 10-K for additional factors related to intellectual property rights that can affect our business.

Manufacturing

We operate numerous manufacturing plants, distribution facilities and inventory warehouses located throughout the world. We also store finished goods at third-party logistics providers in the United States that accommodate material storage and rapid response requirements of our customers. See “Item 2 – Properties” of this Annual Report on Form 10-K for additional details regarding the locations and activities of our principal operations.

Over the last few decades, we have developed significant manufacturing capability in the power generation industry, including engines, alternators, sheet metal fabrication, and controls. We have a heavy focus on vertical integration for certain proprietary manufacturing processes, and outsource certain components and complete products where we can leverage scale to optimize cost and quality. In recent years, we have added manufacturing capacity through investments in automation, while also expanding our manufacturing footprint through organic means as well as through acquisitions. Our ability to rapidly increase capacity has been critical to executing our growth.

For our energy technology products, our engineering and technical teams are closely aligned with our contract manufacturing partners in order to leverage their expertise and capital investments involving electrical component manufacturing.

Suppliers of Raw Materials, Components and Equipment

Our primary raw material inputs are steel, copper and aluminum, all of which are purchased from third parties and, in many cases, as part of machined or manufactured components. In certain instances, we purchase complete equipment or systems from third-party suppliers, including from contract manufacturers. Given our increasing focus on energy technology solutions, advanced electronic components and micro-processors have become a larger consideration within our supply chain. Within the clean energy market, batteries are a significant supply chain input for our energy storage systems. Over multiple decades, we have developed an extensive network of reliable suppliers in the United States and around the world. We continuously evaluate the quality and cost structure of our purchased components & equipment and assess the capabilities and capacity of our supply chain. We select our sourcing partners based on this evaluation. For certain products, we do not have internal manufacturing capabilities and rely upon a small number of contract manufacturers to build these products or supply these components, including but not limited to certain energy technology products and components.

Over time, we have diversified the geographic reach of our global supply chain partners to partially mitigate the impact of certain trade tariffs that have been assessed on imports coming into the United States. We will continue to monitor ongoing developments with new trade tariffs that may be implemented in the future, and take action to offset the impact of those tariffs.

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for additional information regarding the impact of other macroeconomic factors.

See “Item 1A. Risk Factors” of this Annual Report on Form 10-K for additional factors that can influence our supply of raw materials, components and equipment.

Competition

In our traditional power generation markets, we face competition from a variety of large diversified industrial companies, as well as smaller generator manufacturers or packagers around the world. The competitive landscape varies between our Residential and C&I power generation products. We face a different set of competitors for our mobile equipment and engine powered tools as well. In recent years, we have expanded who we compete against as we enter certain energy technology markets, such as solar inverters, battery storage systems, smart thermostats, and grid services.

In the generator market, many of the traditional participants compete in only certain portions of the market, targeting specific applications within their larger diversified product mix. In addition, for certain competitors, power generation is typically a smaller piece of their business, and therefore, is less prioritized from a strategic standpoint. Generac’s primary focus is on power generation and storage equipment with a key emphasis on standby, portable and mobile generators with broad capabilities across the residential, light-commercial and industrial markets. We believe that our core focus on power generation and storage drives product innovation and provides us with competitive advantages to win in the marketplace. We also believe our broad product offering, diverse omni-channel distribution model, and strong factory support provide additional advantages as well.

Residential products – Competitors include Rehlko (formerly known as Kohler Power), Briggs & Stratton, Honda, Champion, Techtronics International, Harbor Freight, Husqvarna, Ariens, Tesla, Enphase, Solar Edge, Google, Resideo, The Toro Company, Goal Zero, and Emerson along with a number of other domestic and foreign competitors; certain of which also have broad operations in other manufacturing businesses.

C&I products – Competitors include Caterpillar, Cummins, Rehlko (formerly known as Kohler Power), IGSA, AKSA, MultiQuip, Wacker, Doosan, Atlas Copco, Himoinsa, FG Wilson, Woodward, Planelec, and Co-map, as well as other domestic and foreign competitors that package engines and alternators into power generation equipment in local markets around the world; certain of which focus on the market for diesel generators as they are also diesel engine manufacturers.

Other products – Relative to service parts and extended warranty revenue, all of the above-named companies are primary competitors. Relative to grid services optimization software, Autogrid/Schneider and Energy Hub, along with other grid service solution providers, are primary competitors.

In a continuously evolving market, we believe our scale and broad capabilities position us well to remain competitive. Overall, we compete primarily based on brand reputation, quality, reliability, pricing, innovative features, breadth of product & solution offering, product availability and factory support.

Government Incentives and Regulation, including Environmental Matters

Generac’s growing presence in energy technology solutions has increased our exposure to renewable energy mandates, investment tax credits, and other demand-creation subsidies from certain existing and potential government incentives, such as incentives included in the U.S. Inflation Reduction Act that was passed in 2022. These incentives cover a wide range of clean energy products and solutions, including solar inverters, battery storage systems, grid services, and grid-edge devices. The availability, size, and outlook for such incentives can impact the markets for these products and solutions. These legislative and regulatory actions and other methods of government funding can be subject to changes in the political environment at a given point in time. While the policy back drop for the clean energy market may evolve over time, we believe customer interest and demand, as well as government programs and support for such energy technology products, will continue as grid capacity is strained and energy costs rise.

As a manufacturing company, our operations are subject to a variety of federal, state, local and foreign laws & regulations covering environmental, health and safety matters. Applicable laws & regulations include those governing, among other things, emissions to air, discharges to water, noise, and employee & consumer safety, as well as the generation, handling, storage, transportation, treatment, and disposal of hazardous waste and other materials. In addition, our products are subject to various laws & regulations relating to fuel requirements, labeling, and marketing.

Our products sold in the United States are regulated by the U.S. Environmental Protection Agency (EPA), California Air Resources Board (CARB) and various other state and local air quality management districts. All of our engines and engine-driven products sold in the U.S. are regulated, and these governing bodies continue to pass regulations that require us to meet more stringent emission standards. In addition, certain of our products are subject to safety standards as established by various other standards and rulemaking bodies, including the U.S. Consumer Product Safety Commission (CPSC), among others. Similarly, other countries have varying degrees of regulation for our products, depending upon product application and fuel types.

See “Item 1A. Risk Factors” to this Annual Report on Form 10-K for additional legal and regulatory factors that can affect the products we sell and the results of our operations.

Sustainability Practices

We published a report on our sustainability practices in April 2024. This report details certain measures that align with our “Powering a Smarter World” enterprise strategy and our purpose statement: 'To lead the evolution to more resilient, efficient, and sustainable energy solutions.' The information provided within the sustainability report is not part of this report and is therefore not incorporated herein by reference. A copy of the sustainability report is available on our Investor Relations webpage at Generac.com. We plan to publish an updated report on our sustainability practices in April 2025 that coincides with the filing of our annual Proxy Statement.

Human Capital

"Our People" is one of the foundational elements to our “Powering a Smarter World” enterprise strategy and is a corporate value as well. We foster a culture of engagement to strengthen our company while supporting individual achievement, inclusivity, and good corporate citizenship globally. We believe our success is directly linked to our employees’ professional growth and personal well-being, combined with strong families and communities.

Some examples of key human capital programs and initiatives that we are focused on include:

Health, wellness and safety – Employee health and safety is the Company’s top priority. Generac’s total rewards program is based on the four pillars of balance, security, well-being and community. These programs are designed to meet the varied and evolving needs of our diverse workforce. We maintain an employee wellness program, incentivize healthy-living activities, and develop and administer company-wide policies to help ensure the safety of each employee and compliance with government agency and other standards.

Talent development & employee engagement – Our success is directly tied to our employees and what we can accomplish together. We prioritize creating opportunities to help employees build careers and support their growth as part of a meaningful and valuable employee experience. We hold internal career development events as well as partner with third party educational resources to offer on the job learning, collaborative work experiences and formal learning programs to support the progression and advancement of our workforce. Further, we maintain an ongoing global employee engagement initiative with targeted action plans by region, function, and business group. Action plans and their progress are measured by global employee engagement surveys. A global human capital management system was implemented enabling Generac management to make better talent decisions, proactively manage careers, scale globally and maintain compliance. We are an equal opportunity employer whose hiring and promotion practices comply with all the applicable laws and we do not condone employment discrimination in any form.

As of December 31, 2024, we had 9,239 employees, including part-time and temporary employees working in our operations, manufacturing and supply chain functions. Of those, approximately 3,850 employees, including temporary workers, were directly or indirectly involved in manufacturing.

Domestically, we have had an “open shop” bargaining agreement for the past 50 years that covers our Eagle, Wisconsin facility. That facility is subject to a collective bargaining agreement that expires October 17, 2026, and is subject to Wisconsin’s Right to Work law. Through an acquisition in April 2024, three additional smaller facilities, which are located in Bloomfield and Shelton, Connecticut and Bohemia, New York, are subject to a collective bargaining agreement for its technicians. That collective bargaining agreement expires October 31, 2027, and is subject to a Union Security provision. Additionally, our plants in Mexico, Italy, Germany, and Spain are operated under various local or national union groups or works councils. Our other facilities are not unionized.

Available Information

Our principal executive offices are located at S45 W29290 Highway 59, Waukesha, Wisconsin, 53189 and its telephone number is (262) 544-4811. The Company’s website is www.generac.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports (if applicable) are available free of charge through the “Investor Relations” portion of our web site, as soon as reasonably practicable after they are filed with the Securities and Exchange Commission (SEC). The information provided on these websites is not part of this report and is therefore not incorporated herein by reference.

Information About Our Executive O****fficers

The following table sets forth information regarding our executive officers:

Name		Age		Position
Aaron P. Jagdfeld		53		President, Chief Executive Officer and Chairman
York A. Ragen		53		Chief Financial Officer
Erik Wilde		50		President, Domestic C&I
Raj Kanuru		54		Executive Vice President, General Counsel and Secretary
Norman Taffe		58		President, Energy Technology
Kyle Raabe		50		President, Consumer Power

Aaron P. Jagdfeld has served as our Chief Executive Officer since September 2008, as a director since November 2006 and was named Chairman in February 2016. Prior to becoming Chief Executive Officer, Mr. Jagdfeld worked for Generac for 15 years. He began his career in the finance department in 1994 and became our Chief Financial Officer in 2002. In 2007, he was appointed President and was responsible for sales, marketing, engineering and product development. Prior to joining Generac, Mr. Jagdfeld worked in the audit practice of the Milwaukee, Wisconsin office of Deloitte and Touche. Mr. Jagdfeld holds a Bachelor of Business Administration in Accounting from the University of Wisconsin-Whitewater.

York A. Ragen has served as our Chief Financial Officer since September 2008. Prior to becoming Chief Financial Officer, Mr. Ragen held Director of Finance and Vice President of Finance positions at Generac. Prior to joining Generac in 2005, Mr. Ragen was Vice President, Corporate Controller at APW Ltd., a spin-off from Applied Power Inc., now known as Enerpac Tool Group. Mr. Ragen began his career at Arthur Andersen in the Milwaukee, Wisconsin office audit practice. Mr. Ragen holds a Bachelor of Business Administration in Accounting from the University of Wisconsin-Whitewater.

Erik Wilde began serving as our President, Domestic C&I in July 2016. Mr. Wilde was Vice President and General Manager of the Mining Division for Komatsu America Corp., a manufacturer of construction, mining, and compact construction equipment, from 2013 until he joined Generac. Prior to that role, he held leadership positions as Vice President of the ICT Business Division and Product Marketing at Komatsu America Corp. beginning in 2005. Mr. Wilde holds a Bachelor of Business Administration in Management from Boise State University and an M.B.A. from the Keller Graduate School of Management.

Raj Kanuru is our Executive Vice President, General Counsel & Secretary and is the Company’s principal legal and compliance officer, roles that he has held since joining Generac in 2013. Prior to joining Generac, Mr. Kanuru served as in-house counsel at Caterpillar Inc. for almost 14 years within various leadership roles, including in Caterpillar’s Securities, Regulatory and Tax group, in Caterpillar Financial, and in Caterpillar’s Energy & Transportation group. From 2009 to 2013, Mr. Kanuru served as Vice President, General Counsel and Secretary of Progress Rail Services Inc., and its subsidiaries (a Caterpillar company). He began his legal career as a senior associate in the tax consulting practice of Arthur Andersen LLP. Mr. Kanuru holds a Bachelor of Science in Finance degree from Birmingham-Southern College and received his Juris Doctor degree from the University of Alabama.

Norman Taffe began serving as President, Energy Technology in August 2022. Prior to joining Generac, Mr. Taffe was Executive Vice President North America Residential of SunPower Corporation from 2018 to 2021. Prior to this, Mr. Taffe was Executive Vice President - Products and Vice President of Power Plant Products and Solutions from 2013 to 2018. Mr. Taffe also worked in various engineering and marketing management capacities at Cypress Semiconductor from 1989 to 2012, including Executive Vice President – Consumer & Computation Devices from 2005 to 2012. Mr. Taffe holds a Bachelor of Science in Electrical Engineering from the University of Michigan and an Executive MBA from Harvard Business School.

Kyle Raabe has served as our President, Consumer Power since November 2019. Prior to rejoining Generac, Mr. Raabe was Senior Vice President of North American Sales, Demand Planning and Sales Operations from 2018 through 2019 and Vice President of Sales for the Commercial Security and Safety groups from 2015 through 2018 at The Master Lock Corporation, a manufacturer of locks, combination padlocks and other security products. Prior to working at The Master Lock Corporation, Mr. Raabe led multiple groups at Generac Power Systems from 2007 through 2015 as Director of Wholesale and Dealer Distribution, Vice President Wholesale Distribution Sales and Vice President, Industrial Distribution Sales. Before joining Generac, Mr. Raabe served at Veolia North America, Environmental Services leading Midwest Regional Service Operations. Mr. Raabe holds a BA, Biological Science from Lawrence University.