NYSE:GNRC
GENERAC HOLDINGS INC.
A vertically integrated global manufacturer of portable and standby generators powering homes and businesses against grid failures.
Key Metrics
Investment Thesis
Bull Case
Generac is a prime beneficiary of growing energy insecurity and extreme weather events that drive demand for backup power solutions. The company's vertical integration provides a structural cost advantage over competitors who rely on outsourced components, potentially protecting margins during supply chain disruptions. Strong free cash flow generation allows the firm to return capital to shareholders via buybacks while funding necessary R&D in battery storage and hybrid systems.
Bear Case
The sharp decline in net income from 2024 to 2025 raises concerns about profitability sustainability amidst high operating expenses exceeding $1.3B. A heavy debt load with $1.19B in long-term debt combined with significant interest expenses could constrain financial flexibility if revenue growth stalls or interest rates remain elevated. The company's reliance on cyclical commodity prices for key inputs like copper exposes earnings to unpredictable cost inflation that may outpace pricing power.
About GENERAC HOLDINGS INC.
Generac Holdings Inc. is a global leader in power solutions, providing portable generators, standby generators, and backup power systems to residential, commercial, and industrial customers worldwide. The company manufactures its own engines and alternators, allowing it to control costs and supply diverse markets including the United States, Europe, and Asia. Generac serves critical infrastructure, data centers, hospitals, and homes seeking energy resilience against grid outages.
Analysis
Management Discussion
While revenue remained relatively stable at $4.21B in 2025 compared to recent years, net income dropped sharply to $161.4M from $317.0M in 2024, indicating potential margin compression or one-time costs impacting profitability. Operating cash flow of $438.0M remains robust, supporting capital expenditures of $169.8M and significant share repurchases of $147.9M, though the large negative change in inventory ($163.1M) suggests cautious stockpiling or shifting demand dynamics.
Industry Overview
The global standby and portable generator market is expanding as grid reliability concerns and climate change increase the need for backup power during outages. Industry trends favor manufacturers who can offer integrated solutions combining traditional generators with emerging battery storage technologies. Competition is fierce, but successful players are those with localized manufacturing capabilities and strong dealer relationships to ensure rapid deployment.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $4.56B | $4.02B | $4.30B | $4.21B |
| Cost of Revenue | $3.04B | $2.66B | $2.63B | $2.60B |
| Gross Profit | $1.52B | $1.37B | $1.67B | $1.61B |
| Operating Expenses | $955.7M | $979.2M | $1.13B | $1.32B |
| Operating Income | $566.3M | $386.2M | $536.7M | $289.2M |
| R&D | $159.8M | $173.4M | $219.6M | $243.5M |
| G&A | $194.9M | $252.9M | $285.1M | $422.2M |
| Marketing | $496.3M | $448.2M | $526.4M | $555.4M |
| Stock-Based Comp | $29.5M | $35.5M | $49.2M | $49.9M |
| D&A | $156.1M | $166.6M | $171.8M | $194.8M |
| Depreciation | $52.8M | $62.4M | $74.0M | $93.3M |
| Amortization | $103.3M | $104.2M | $97.7M | $101.5M |
| Other OpEx | $104.8M | $104.7M | $97.7M | $101.5M |
| Non-Operating Income | $-57.9M | $-95.9M | $-127.3M | $-90.1M |
| Interest Expense | $54.8M | $97.6M | $89.7M | $70.7M |
| Pre-Tax Income | $508.5M | $290.3M | $409.4M | $199.1M |
| Income Tax | $99.6M | $73.2M | $92.5M | $37.7M |
| Continuing Ops | $408.9M | $217.1M | $317.0M | $161.4M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $408.9M | $217.1M | $317.0M | $161.4M |
| Minority Interest | $9.4M | $2.5M | $663.0K | $1.8M |
| Net to Common | $399.5M | $214.6M | $316.3M | $159.6M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $2.18B | $2.00B | $2.03B | $2.46B |
| Cash & Equivalents | $132.7M | $201.0M | $281.3M | $341.4M |
| Accounts Receivable | $522.5M | $537.3M | $612.1M | $602.7M |
| Inventory | $1.41B | $1.17B | $1.03B | $1.25B |
| Prepaid Expenses | $121.8M | $91.9M | $107.1M | $269.5M |
| Other Current Assets | $0 | $0 | $0 | $0 |
| Long-Term Assets | $2.99B | $3.10B | $3.08B | $3.11B |
| PP&E (Net) | $467.6M | $598.6M | $690.0M | $813.6M |
| Intangibles | $930.7M | $846.1M | $758.5M | $675.3M |
| Goodwill | $1.40B | $1.43B | $1.44B | $1.47B |
| Operating Leases | — | — | $58.0M | $51.3M |
| Other LT Assets | $187.9M | $218.6M | $134.4M | $104.0M |
| Total Assets | $5.17B | $5.09B | $5.11B | $5.57B |
| Current Liabilities | $992.0M | $880.8M | $1.03B | $1.22B |
| Accounts Payable | $446.1M | $340.7M | $458.7M | $436.6M |
| Current Debt | $10.1M | $42.1M | $60.8M | $12.7M |
| Current Leases | — | — | $29.3M | $15.7M |
| Other Current Liab | $535.9M | $497.9M | $484.4M | $750.3M |
| Long-Term Liabilities | $1.81B | $1.86B | $1.58B | $1.72B |
| Long-Term Debt | $1.37B | $1.43B | $1.21B | $1.19B |
| LT Operating Leases | — | — | $29.2M | $36.1M |
| Other LT Liab | $436.7M | $261.1M | $145.1M | $256.5M |
| Total Liabilities | $2.80B | $2.74B | $2.61B | $2.93B |
| Shareholders' Equity | $2.37B | $2.35B | $2.50B | $2.64B |
| Paid-In Capital | $1.02B | $1.07B | $1.13B | $1.19B |
| Retained Earnings | $2.32B | $2.52B | $2.84B | $3.00B |
| AOCI | $-65.1M | $-15.1M | $-85.4M | $874.0K |
| Treasury Stock | $808.5M | — | — | — |
| Total L&E | $5.17B | $5.09B | $5.11B | $5.57B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $408.9M | $217.1M | $317.0M | $161.4M |
| Non-Cash Adjustments | $-518.0M | $713.5M | $288.7M | $-25.4M |
| Working Capital Changes | $167.6M | $-408.9M | $135.6M | $302.1M |
| Cash from Operations | $58.5M | $521.7M | $741.3M | $438.0M |
| Capital Expenditures | $86.2M | $129.1M | $136.7M | $169.8M |
| Cash from Investing | $-134.2M | $-178.1M | $-208.7M | $-172.9M |
| Debt Issuances | $1.03B | $348.8M | $541.5M | $132.8M |
| Share Buybacks | $345.8M | $251.5M | $152.7M | $147.9M |
| Dividends Paid | $309.0K | $0 | $273.0K | $293.0K |
| Cash from Financing | $64.0M | $-277.1M | $-448.8M | $-212.7M |
| FX Effect | $-2.9M | $1.8M | $-3.5M | $7.8M |
| Net Change in Cash | $-14.6M | $68.3M | $80.3M | $60.1M |
| Beginning Cash | $147.3M | $132.7M | $201.0M | $281.3M |
| Ending Cash | $132.7M | $201.0M | $281.3M | $341.4M |
Frequently Asked Questions
How does GENERAC HOLDINGS INC. make money?
The company operates primarily through three segments: Residential Power Solutions (portable generators for home use), Commercial/Industrial Power Solutions (standby backup systems for critical infrastructure), and Engine & Alternator Manufacturing (vertical integration providing core components to internal production and external partners).
What are the main risks for GNRC?
Significant volatility in raw material costs, particularly copper and steel, which are essential for alternator and engine production. Rising interest rates increase financing costs for customers purchasing expensive standby generator systems, potentially dampening demand. Intense competition from international manufacturers could pressure margins if the company cannot maintain its cost advantages through vertical integration.
What is GNRC's competitive advantage?
Generac maintains a strong competitive moat through its vertically integrated manufacturing of engines and alternators, which reduces dependency on third-party suppliers and protects margins. Its extensive dealer network and brand recognition in the US market provide significant distribution reach for both portable and standby units. The company's focus on energy resilience positions it well against increasing climate-related grid instability and extreme weather events.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.