GENERAC HOLDINGS INC. (GNRC) · Material Event (8-K) SEC Filing

EX-99.1 2 ex_994826.htm EXHIBIT 99.1 ex_994826.htm Exhibit 99.1 Generac Reports Second Quarter 2026 Results Further C&I segment acceleration drives robust sales increase and operating leverage during the quarter; Rapidly increasing data center backlog provides visibility to significant 2027 growth WAUKESHA, WISCONSIN (July 29, 2026) Generac Holdings Inc. (NYSE: GNRC) ( Generac or the Company ), a leading global designer and manufacturer of energy technology solutions and other power products, today reported financial results for its second quarter ended June 30, 2026, and provided an update on its outlook for the full year 2026. Second Quarter 2026 Highlights Net sales increased 11% to $1.17 billion during the second quarter of 2026 as compared to $1.06 billion in the prior year second quarter. Acquisitions, divestitures and foreign currency had a net favorable impact of 2% to sales growth during the quarter. - Commercial & Industrial ( C&I ) segment external net sales increased approximately 29% to $556 million as compared to $431 million in the prior year. - Residential segment external net sales decreased approximately 2% to $617 million as compared to $631 million in the prior year. Net income attributable to the Company during the second quarter was $143 million, or $2.40 per share, as compared to $74 million, or $1.25 per share, for the same period of 2025. Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was $174 million, or $2.91 per share, as compared to $97 million, or $1.65 per share, in the second quarter of 2025. Adjusted EBITDA before deducting for noncontrolling interests, as defined in the accompanying reconciliation schedules, was $291 million, or 24.8% of net sales, as compared to $188 million, or 17.7% of net sales, in the prior year. Net income, adjusted net income, and adjusted EBITDA all include a pre-tax impact of approximately $71 million related to tariff refunds that were recorded during the current year quarter. Cash flow from operations was $121 million as compared to $72 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was $63 million as compared to $14 million in the second quarter of 2025. As previously disclosed during the quarter, the Company signed a global supply agreement with a leading hyperscale data center operator to supply backup power generators for the company's data center infrastructure. In addition, product specific terms related to this agreement were recently finalized, which committed nearly $700 million of volume for 2027. On June 24th, the Company secured a global supply agreement with a second hyperscale customer and is currently negotiating final product specific terms for 2027 and 2028 volumes. During the quarter, the Company completed the previously disclosed acquisition of Enercon, headquartered in East Peoria, Illinois, and acquired an additional facility in Belvidere, Illinois, significantly expanding capacity for large megawatt generator packaging. The Company is maintaining its full-year 2026 net sales growth guidance of mid-to-high teens percent range as compared to the prior year. Adjusted EBITDA margin, before deducting for non-controlling interests, is now expected to be approximately 20.0 to 21.0%, reflecting an approximate 1.5% impact from tariff refunds for the full year 2026. This is an increase from the previous guidance range of 18.5 to 19.5%. 1 Second quarter results reflect continued momentum in our C&I segment driven by strong data center market revenue as we continue to ramp production for large megawatt backup generators, said Aaron Jagdfeld, President and Chief Executive Officer. We continued to solidify our position as a leading provider to the data center market by securing a global supply agreement with a second hyperscale customer during the quarter. In addition, we increased our backlog for both hyperscale and non-hyperscale customers as we have received approximately $1 billion in additional orders from both new and existing customers since our prior update. In total, our backlog for products serving the data center market has now increased to approximately $1.6 billion as of today, which does not include any committed volumes from the second hyperscale customer. To address this accelerating demand, we are investing aggressively in incremental production and packaging capacity for large megawatt generators and are planning to add further capacity as our pipeline of opportunities materializes. Additional Second Quarter 2026 Consolidated Highlights Gross profit margin was 44.5% as compared to 39.3% in the prior year second quarter. The increase was primarily driven by tariff refunds which contributed approximately 6% to gross margin during the quarter. Additionally, unfavorable sales mix and higher input costs were partially offset by favorable price realization. Operating expenses increased by $6.4 million, or 2%, as compared to the second quarter of 2025. The increase was primarily driven by increased operating expense investments to support future C&I growth and higher intangible amortization, partially offset by lower legal expenses in the current year. Provision for income taxes for the current year quarter was $46.7 million, or an effective tax rate of 24.6%, as compared to $15.4 million, or a 17.2% effective tax rate, for the prior year. The increase in the effective tax rate was primarily related to a non-recurring favorable discrete item in the prior year period that did not repeat in the current year. Cash flow from operations was $121.2 million during the second quarter, as compared to $72.2 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was $62.9 million as compared to $14.5 million in the second quarter of 2025. This strong increase in free cash flow during the quarter was primarily driven by higher operating earnings, including cash receipts from tariff refunds. Second Quarter Business Segment Results Commercial & Industrial Segment Commercial & Industrial segment total sales increased approximately 29% to $556.5 million from $430.6 million in the prior year quarter, including an approximate 6% net favorable impact to sales growth from the combination of acquisitions, divestitures, and foreign currency. The core total sales growth for the segment was primarily driven by ramping revenue from products sold into the global data center market. In addition, increased shipments to rental and telecom channel customers were more than offset by a decrease in shipments to the domestic industrial distributor channel. Adjusted EBITDA for the segment, before deducting for noncontrolling interests, was $81.5 million, or 14.6% of C&I total sales, as compared to $53.3 million, or 12.4% of total sales, in the prior year. This margin increase was primarily driven by an impact from tariff refunds of approximately 2%, as well as the favorable impact of acquisitions/divestitures and improved operating leverage, offset by an unfavorable sales mix shift and strategic operating expense investments to support future growth. Residential Segment Residential segment total sales decreased approximately 2% to $621.3 million as compared to $634.7 million in the prior year quarter. This modest sales decrease was primarily driven by lower energy storage system and portable generator shipments compared to the prior year, mostly offset by growth in home standby generator sales. Adjusted EBITDA for the segment was $215.4 million, or 34.7% of Residential segment total sales, as compared to $146.4 million, or 23.1% of Residential sales, in the prior year. This increase was primarily driven by tariff refunds which impacted margins by approximately 9%, as well as favorable sales mix and operational efficiencies resulting in lower operating expenses. 2 2026 Outlook Total net sales growth is still expected to be in the mid-to-high teens percent range as compared to the prior year, which includes an approximate 2% favorable impact from the net effect of foreign currency, acquisitions, and divestitures. C&I segment sales are now expected to grow in the low 30% range during the year as a result of continued significant momentum in the data center market, and Residential segment sales are now projected to increase in the high-single digit range from the prior year. Additionally, the Company now expects net income margin, before deducting for non-controlling interests, to be approximately 9.0 to 10.0% for the full-year 2026, as compared to the previous guidance of 8.0 to 9.0%. The corresponding adjusted EBITDA margin is now expected to be approximately 20.0 to 21.0%, as compared to the previous guidance of 18.5 to 19.5%. This increased outlook is primarily due to the tariff refund included in the second quarter, which is expected to have an approximate 1.5% impact for the full year 2026. Conference Call and Webcast Generac management will hold a conference call at 10:00 a.m. EDT on Wednesday, July 29, 2026 to discuss second quarter 2026 operating results. A webcast of the conference call can be accessed at the following link: https://edge.media-server.com/mmc/p/zrzjabf4 The webcast of the conference call is also available on Generac's website (http://www.generac.com), accessed under the Investor Relations link. The webcast link will be made available on the Company s website prior to the start of the call within the Events section of the Investor Relations website. Following the live webcast, a replay will be available on the Company s website for 12 months. About Generac Generac is a total energy solutions company that empowers people to use energy on their own terms. Founded in 1959, Generac is a leading global designer, manufacturer, and provider of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products and services serving the residential, commercial, data center, telecom, rental, and industrial markets. The Company s broad portfolio of energy technology offerings for homes and businesses enables its mission to Power a Smarter World and lead the evolution to more resilient, efficient, and innovative energy solutions. Forward-looking Information Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements give Generac's current expectations and projections relating to the Company's financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "forecast," "project," "plan," "intend," "believe," "confident," "may," "should," "can have," "likely," "future," "optimistic" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Any such forward-looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Although Generac believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Generac's actual financial results and cause them to differ materially from those anticipated in any forward- looking statements, including: frequency and duration of power outages impacting demand for our products; 3 fluctuations in cost, availability, and quality of raw materials, key components and labor required to manufacture our products; our dependence on a small number of contract manufacturers and component suppliers, including single-source suppliers; changes and volatility with respect to the trade policies of various countries, which may result in new or increased tariffs, trade restrictions, or other unfavorable trade actions; our ability to protect our intellectual property rights or successfully defend against third party infringement claims; changes in durable goods spending by consumers and businesses or other global macroeconomic conditions, impacting demand for our products; changes in governmental policies, particularly with respect to tax incentives, tax credits, or grant programs, which could: (i) affect the demand for certain of our products; or (ii) result in a withdrawal or reduction of grants previously awarded to the Company; increase in product and other liability claims, warranty costs, recalls, or other claims; significant legal proceedings, claims, fines, penalties, tax assessments, lawsuits or government investigations; our ability to consummate our share repurchase programs; our failure or inability to adapt to, or comply with, current or future changes in applicable laws, regulations, and product standards; our ability to develop and enhance products and gain customer acceptance including our offerings that serve the data center and energy technology markets; uncertainty regarding the growth of the data center market; increase in contract risk related to terms with certain data center customers, including cancellation rights, delivery requirements, and potential liability exposure tied to our performance obligations or other claimed damages; our ability to accurately forecast demand for our products and effectively manage inventory levels relative to such forecast; our ability to remain competitive; our dependence on our dealer and distribution network; market reaction to changes in selling prices or mix of products; loss of our key management and employees; disruptions from labor disputes or organized labor activities; our ability to attract and retain employees; disruptions in our manufacturing operations; the possibility that the expected synergies, efficiencies and cost savings of our acquisitions, divestitures, restructurings, or realignments will not be realized, or will not be realized within the expected time period; risks related to sourcing components in foreign countries; compliance with environmental, health and safety laws and regulations; scrutiny regarding our sustainability practices; government regulation of our products; failures or security breaches of our networks, information technology systems, or connected products; risks due to instability caused by geopolitical conflicts; our ability to make payments on our indebtedness; terms of our credit facilities that may restrict our operations; our potential need for additional capital to finance our growth or refinancing our existing credit facilities; risks of impairment of the value of our goodwill and other indefinite-lived assets; volatility of our stock price; and potential tax liabilities. Should one or more of these risks or uncertainties materialize, Generac's actual results may vary in material respects from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in Generac's filings with the U.S. Securities and Exchange Commission ("SEC"), particularly in the Risk Factors section of the Annual Report on Form 10-K and in its periodic reports on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements. 4 Any forward-looking statement made by Generac in this press release speaks only as of the date on which it is made. Generac undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Non-GAAP Financial Metrics Core Sales The Company references core sales to further supplement Generac's consolidated financial statements presented in accordance with U.S. GAAP. Core sales excludes the impact of acquisitions and fluctuations in foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparison of net sales performance with prior and future periods. Adjusted EBITDA To supplement Generac s consolidated financial statements presented in accordance with U.S. GAAP, the Company provides the computation of Adjusted EBITDA attributable to the Company, which is defined as net income (loss) before noncontrolling interests adjusted for the following items: interest expense, depreciation expense, amortization of intangible assets, income tax expense (benefit), certain non-cash gains and losses including certain purchase accounting adjustments and contingent consideration adjustments, share-based compensation expense, certain transaction costs and credit facility fees, business optimization expenses, provision for certain legal and regulatory charges, certain specific provisions, mark-to-market gains and losses on a minority investment, and Adjusted EBITDA attributable to noncontrolling interests. The provision for legal and regulatory charges adjusts for matters that are significant and not part of the ordinary routine litigation or regulatory matters incidental to the Company s business, such as large suits and settlements, class action lawsuits, government inquiries and certain intellectual property litigation. The adjustments to net income (loss) in computing Adjusted EBITDA are set forth in the reconciliation table below. The computation of Adjusted EBITDA is based primarily on the definition included in our Credit Agreement. Adjusted Net Income To further supplement Generac's consolidated financial statements presented in accordance with U.S. GAAP, the Company provides a summary to show the computation of adjusted net income attributable to the Company. Adjusted net income attributable to the Company is defined as net income (loss) before noncontrolling interests adjusted for the following items: amortization of intangible assets, amortization of deferred financing costs and original issue discount related to the Company's debt, intangible impairment charges, certain transaction costs and other purchase accounting adjustments, business optimization expenses, provision for certain legal and regulatory charges, certain specific provisions, mark-to-market gains and losses on a minority investment, other non-cash gains and losses, and adjusted net income attributable to non-controlling interests. Free Cash Flow In addition, the Company references free cash flow to further supplement Generac's consolidated financial statements presented in accordance with U.S. GAAP. Free cash flow is defined as net cash provided by operating activities, less expenditures for property and equipment, and is intended to be a measure of operational cash flow taking into account additional capital expenditure investment into the business. The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with U.S. GAAP. Please see the accompanying Reconciliation Schedules and our SEC filings for additional discussion of the basis for Generac's reporting of Non-GAAP financial measures, which includes why the Company believes these measures provide useful information to investors and the additional purposes for which management uses the non-GAAP financial information. SOURCE: Generac Holdings Inc. CONTACT: Kris Rosemann Director Corporate Finance & Investor Relations (262) [email protected] 5 Generac Holdings Inc. Condensed Consolidated Balance Sheets (U.S. Dollars in Thousands, Except Share and Per Share Data) (Unaudited) June 30, December 31, 2026 2025 Assets Current assets: Cash and cash equivalents $ 264,921 $ 341,413 Accounts receivable, less allowance for credit losses of $33,767 and $34,504 as of June 30, 2026 and December 31, 2025, respectively 669,204 602,739 Inventories 1,238,871 1,248,867 Prepaid expenses and other current assets 260,381 269,459 Total current assets 2,433,377 2,462,478 Property and equipment, net 862,578 813,605 Customer lists, net 159,251 127,517 Patents and technology, net 313,682 338,308 Other intangible assets, net 7,375 10,011 Tradenames, net 221,107 199,430 Goodwill 1,651,751 1,467,094 Deferred income taxes 8,107 41,949 Operating lease and other assets 114,923 113,287 Total assets $ 5,772,151 $ 5,573,679 Liabilities and stockholders equity Current liabilities: Short-term borrowings $ 48,318 $ 50,618 Accounts payable 556,088 436,583 Accrued wages and employee benefits 62,360 69,850 Accrued product warranty 43,473 44,716 Other accrued liabilities 447,770 591,387 Current portion of long-term borrowings and finance lease obligations 32,052 22,192 Total current liabilities 1,190,061 1,215,346 Long-term borrowings and finance lease obligations 1,248,958 1,260,256 Deferred income taxes 54,270 60,913 Deferred revenue 227,820 232,921 Operating lease and other long-term liabilities 173,047 165,197 Total liabilities 2,894,156 2,934,633 Redeemable noncontrolling interest 367 742 Stockholders equity: Common stock, par value $0.01, 500,000,000 shares authorized, 74,234,629 and 74,050,753 shares issued as of June 30, 2026 and December 31, 2025, respectively 742 741 Additional paid-in capital 1,211,335 1,187,419 Treasury stock, at cost, 15,228,990, and 15,373,990 shares at June 30, 2026 and December 31, 2025, respectively (1,334,835 ) (1,358,053 ) Excess purchase price over predecessor basis (202,116 ) (202,116 ) Retained earnings 3,220,054 3,003,557 Accumulated other comprehensive (loss) income (17,557 ) 874 Stockholders equity attributable to Generac Holdings Inc. 2,877,623 2,632,422 Noncontrolling interests 5 5,882 Total stockholders equity 2,877,628 2,638,304 Total liabilities and stockholders equity $ 5,772,151 $ 5,573,679 6 Generac Holdings Inc. Condensed Consolidated Statements of Comprehensive Income (U.S. Dollars in Thousands, Except Share and Per Share Data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net sales $ 1,173,510 $ 1,061,169 $ 2,232,875 $ 2,003,290 Costs of goods sold 651,699 644,420 1,300,828 1,214,555 Gross profit 521,811 416,749 932,047 788,735 Operating expenses: Selling and service 141,627 139,495 265,251 265,560 Research and development 65,781 60,354 128,437 122,402 General and administrative 73,155 79,430 149,440 154,176 Amortization of intangibles 30,815 25,681 61,195 51,170 Total operating expenses 311,378 304,960 604,323 593,308 Income from operations 210,433 111,789 327,724 195,427 Other (expense) income: Interest expense (16,787 ) (18,242 ) (32,163 ) (35,352 ) Investment income 3,561 1,747 5,244 3,972 Change in fair value of investments 5,916 (1,524 ) 4,542 (11,471 ) Loss attributable to business dispositions (13,456 ) (3,905 ) (18,238 ) (3,905 ) Other, net 39 (13 ) (644 ) (305 ) Total other expense, net (20,727 ) (21,937 ) (41,259 ) (47,061 ) Income before provision for income taxes 189,706 89,852 286,465 148,366 Provision for income taxes 46,696 15,422 70,343 29,658 Net income 143,010 74,430 216,122 118,708 Net (loss) income attributable to noncontrolling interests (234 ) 414 (375 ) 852 Net income attributable to Generac Holdings Inc. $ 143,244 $ 74,016 $ 216,497 $ 117,856 Net income attributable to common shareholders per common share - basic: $ 2.44 $ 1.27 $ 3.69 $ 2.01 Weighted average common shares outstanding - basic: 58,822,634 58,496,998 58,615,919 58,771,818 Net income attributable to common shareholders per common share - diluted: $ 2.40 $ 1.25 $ 3.64 $ 1.98 Weighted average common shares outstanding - diluted: 59,635,447 59,017,823 59,436,379 59,385,907 7 Generac Holdings Inc. Condensed Consolidated Statements of Cash Flows (U.S. Dollars in Thousands) (Unaudited) Six Months Ended June 30, 2026 2025 Operating activities Net income $ 216,122 $ 118,708 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and finance lease amortization 53,189 43,292 Amortization of intangible assets 61,195 51,170 Amortization of deferred financing costs and original issue discount 1,081 1,278 Change in fair value of investments (4,542 ) 11,471 Deferred income tax expense (benefit) 26,447 (18,668 ) Share-based compensation expense 27,447 26,360 Loss on disposal of assets 211 602 Loss attributable to business dispositions 18,238 3,905 Other noncash charges 2,159 1,513 Excess tax benefits from equity awards (3,447 ) 90 Net changes in operating assets and liabilities: Accounts receivable (64,430 ) (485 ) Inventories 14,869 (199,279 ) Other assets (105,336 ) 7,990 Accounts payable 116,387 129,489 Accrued wages and employee benefits (8,098 ) (28,297 ) Other accrued liabilities (110,996 ) (18,798 ) Net cash provided by operating activities 240,496 130,341 Investing activities Proceeds from sale of property and equipment 10 - Purchase of long-term investments - (2,656 ) Expenditures for property and equipment (87,687 ) (88,653 ) Acquisition of business, net of cash acquired (211,820 ) - Proceeds (payments) from sale of business, net of cash disposed 23,654 (1,999 ) Net cash used in investing activities (275,843 ) (93,308 ) Financing activities Proceeds from short-term borrowings 22,736 21,860 Proceeds from long-term borrowings 82,538 92,585 Repayments of short-term borrowings (25,571 ) (30,171 ) Repayments of long-term borrowings and finance lease obligations (93,096 ) (29,032 ) Stock repurchases - (147,917 ) Payment of deferred acquisition consideration (958 ) - Cash dividends paid to noncontrolling interest of subsidiary - (293 ) Taxes paid related to equity awards (36,702 ) (9,393 ) Proceeds from the exercise of stock options 10,275 1,043 Net cash used in financing activities (40,778 ) (101,318 ) Effect of exchange rate changes on cash and cash equivalents (367 ) 6,539 Net decrease in cash and cash equivalents (76,492 ) (57,746 ) Cash and cash equivalents at beginning of period 341,413 281,277 Cash and cash equivalents at end of period $ 264,921 $ 223,531 8 Generac Holdings Inc. Segment Reporting and Product Class Information (U.S. Dollars in Thousands) (Unaudited) Total Sales by Reportable Segment Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 External Net Sales Intersegment Sales Total Sales External Net Sales Intersegment Sales Total Sales Residential $ 617,022 $ 4,241 $ 621,263 $ 630,594 $ 4,124 $ 634,718 Commercial & Industrial 556,488 2 556,490 430,575 - 430,575 Corporate and eliminations - (4,243 ) (4,243 ) - (4,124 ) (4,124 ) Total net sales $ 1,173,510 $ - $ 1,173,510 $ 1,061,169 $ - $ 1,061,169 Total Sales by Reportable Segment Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 External Net Sales Intersegment Sales Total Sales External Net Sales Intersegment Sales Total Sales Residential $ 1,166,338 $ 7,108 $ 1,173,446 $ 1,173,709 $ 9,672 $ 1,183,381 Commercial & Industrial 1,066,537 51 1,066,588 829,581 - 829,581 Corporate and eliminations - (7,159 ) (7,159 ) - (9,672 ) (9,672 ) Total net sales $ 2,232,875 $ - $ 2,232,875 $ 2,003,290 $ - $ 2,003,290 Adjusted EBITDA by Reportable Segment Adjusted EBITDA by Reportable Segment Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Residential $ 215,389 $ 146,424 $ 353,974 $ 258,013 Commercial & Industrial 81,484 53,342 148,016 98,688 Corporate and eliminations (6,149 ) (12,137 ) (17,785 ) (19,526 ) Total adjusted EBITDA (1) $ 290,724 $ 187,629 $ 484,205 $ 337,175 (1) See reconciliation of Adjusted EBITDA to Net income attributable to Generac Holdings Inc. on the following reconciliation schedule. 9 Generac Holdings Inc. Reconciliation Schedules (U.S. Dollars in Thousands, Except Share and Per Share Data) (Unaudited) Net income to Adjusted EBITDA reconciliation Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income attributable to Generac Holdings Inc. $ 143,244 $ 74,016 $ 216,497 $ 117,856 Net (loss) income attributable to noncontrolling interests (234 ) 414 (375 ) 852 Net income 143,010 74,430 216,122 118,708 Interest expense 16,787 18,242 32,163 35,352 Depreciation and amortization 58,410 48,321 114,384 94,462 Provision for income taxes 46,696 15,422 70,343 29,658 Non-cash write-down and other adjustments (1) 2,515 2,155 1,072 2,142 Non-cash share-based compensation expense (2) 14,005 14,752 27,447 26,360 Transaction costs and credit facility fees (3) 1,115 1,004 3,825 1,764 Business optimization and other charges (4) 2,351 3,442 3,504 5,017 Provision for legal, regulatory, and other costs (5) (951 ) 4,911 2,255 8,662 Change in fair value of investments (6) (5,916 ) 1,524 (4,542 ) 11,471 Other (8) 12,702 3,426 17,632 3,579 Adjusted EBITDA 290,724 187,629 484,205 337,175 Adjusted EBITDA attributable to noncontrolling interests (237 ) 612 (383 ) 1,244 Adjusted EBITDA attributable to Generac Holdings Inc. $ 290,961 $ 187,017 $ 484,588 $ 335,931 10 Net income to Adjusted net income reconciliation Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income attributable to Generac Holdings Inc. $ 143,244 $ 74,016 $ 216,497 $ 117,856 Net income attributable to noncontrolling interests (234 ) 414 (375 ) 852 Net income 143,010 74,430 216,122 118,708 Amortization of intangible assets 30,815 25,681 61,195 51,170 Amortization of deferred financing costs and original issue discount 546 642 1,081 1,278 Transaction costs and other purchase accounting adjustments (7) 712 345 3,260 452 Loss attributable to business or asset dispositions (8) 13,456 3,905 18,238 4,295 Business optimization and other charges (4) 2,351 3,442 3,504 5,017 Provision for legal, regulatory and other costs (5) (951 ) 4,911 2,255 8,662 Change in fair value of investments (6) (5,916 ) 1,524 (4,542 ) 11,471 Tax effect of add backs (10,150 ) (17,138 ) (21,035 ) (27,507 ) Adjusted net income 173,873 97,742 280,078 173,546 Adjusted net income attributable to noncontrolling interests (234 ) 414 (375 ) 852 Adjusted net income attributable to Generac Holdings Inc. $ 173,639 $ 97,328 $ 279,703 $ 172,694 Adjusted net income attributable to Generac Holdings Inc. per common share - diluted: $ 2.91 $ 1.65 $ 4.71 $ 2.91 Weighted average common shares outstanding - diluted: 59,635,447 59,017,823 59,436,379 59,385,907 (1) Includes (gains)/losses on the disposition of assets other than in the ordinary course of business, (gains)/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. A full description of these and the other reconciliation adjustments contained in these schedules is included in Generac's SEC filings. (2) Represents share-based compensation expense to account for stock options, restricted stock, and other stock awards over their respective vesting periods. (3) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under our Amended Credit Agreement. (4) Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions. 11 (5) Represents the following significant litigation, regulatory, and other matters that are not indicative of our ongoing operations: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Legal expenses, judgements and settlements related to certain patent lawsuits $ (3,485 ) $ 1,696 $ (1,038 ) $ 3,188 Legal expenses, judgements and settlements related to certain class action lawsuits 1,262 2,540 2,288 3,883 Legal expenses related to certain government inquiries and other significant matters 1,272 675 2,134 1,591 Release of warranty provision recorded in 2022 to address clean energy warranty-related matters - - (1,129 ) - Total provision for legal, regulatory and other matters $ (951 ) $ 4,911 $ 2,255 $ 8,662 (6) Represents non-cash (gains) losses primarily from changes in the fair value of the Company's investment in Wallbox N.V. warrants and equity securities. (7) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, and certain purchase accounting and contingent consideration adjustments. (8) The current year loss relates primarily to four immaterial business dispositions with two closing in the first quarter and two closing in the second quarter of 2026. The prior year loss relates primarily to one immaterial business disposition that closed in the second quarter of 2025. Free Cash Flow Reconciliation Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net cash provided by operating activities $ 121,211 $ 72,189 $ 240,496 $ 130,341 Expenditures for property and equipment (58,290 ) (57,716 ) (87,687 ) (88,653 ) Free cash flow $ 62,921 $ 14,473 $ 152,809 $ 41,688 12