AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Distribution and service capabilities exist, but their superiority and barriers to replication are unestablished. This is insufficient evidence of position, rather than proof of interchangeable offerings.
durability · — · The passages do not demonstrate persistence of a defensible advantage through competition or technological change; data-center share gains remain prospective.
customer dependency · — · Service capability and distribution access do not establish customer dependence, repeat demand or switching friction.
erosion resilience · — · Realized pricing and operational improvements coexist with price-sensitive demand, delivery impairments and intellectual-property costs. Without an established structural advantage, resilience of a moat cannot be graded.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 2/4 · Price increases partially offset costs in 2022–2023 and 2025, and exceeded higher input costs in first-quarter 2026. However, tariff-related increases also reduced demand and margins for certain products. Outcomes demonstrate mixed pricing power.
retention · — · Neither broad distribution nor aggregate operating performance establishes repeat customer demand, dealer continuity or renewals. Price-sensitive demand is adverse evidence of elasticity, but does not identify retention outcomes.
margin resilience · 2/4 · 2025 gross margin declined modestly as pricing partially offset cost, mix and inventory pressures. Early-2026 price realization and efficiencies show mitigation capability, but second-quarter improvement relied heavily on tariff refunds. Resilience is mixed, not evidence of a moat by itself.
contractual freedom · 2/4 · Predominantly sub-year product contracts and implemented price increases demonstrate some ability to revise prices. Discounts and rebates are defined in master agreements; unrestricted unilateral repricing of existing commitments is not established.
Predictability74
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 12.50
- Positive FCF years (%)
- 80.00
- FCF margin volatility (pp)
- 4.81
Financial strength51
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 43.26
- netDebtEbitGrade
- 31.42
- interestCoverageGrade
- 28.10
- currentRatioGrade
- 100.00
- Debt / FCF (x)
- 4.97
- Net debt / operating income (x)
- 3.43
- Interest coverage (x)
- 4.09
- Current ratio (x)
- 2.03
Capital allocation86
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 11.15
- 3-year average dilution (%)
- -2.49
- 3-year average SBC / revenue (%)
- 1.07
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half 2026 operating cash flow of $240.5 million exceeded $87.7 million of capital spending, with no program buybacks. Acquisitions required $211.8 million in cash plus issued shares, cash declined, and Enercon carries substantial contingent consideration. Disposition losses and undisclosed acquisition returns temper the evidence; tariff refunds also aided cash generation.
incentive alignment · 3/4 · Actual enterprise incentive payouts fell to 46% of target following missed goals. Three-year awards vested at 66.7% as cash conversion exceeded maximum while growth and margin missed thresholds. Adopted share-retention rules and disclosed ownership compliance support demonstrated alignment, although individual holdings and long-term effectiveness remain incompletely covered.
execution · 2/4 · Operating evidence indirectly supports management capability: cash generation improved and early-2026 efficiencies and pricing offset costs. Against this, 2025 working-capital and earnings targets were missed, three-year growth and margin fell below award thresholds, and substantial legal costs were incurred. Tariff refunds limit attribution of the recovery to execution.
governance · 2/4 · An independent lead director, audit committee sessions without management and an auditor finding of effective internal controls provide concrete oversight evidence. Combined chairman and CEO roles concentrate authority, while the supplied passages provide incomplete board-independence and shareholder-rights coverage.
Evidence
Generac’s power products and solutions are available globally through a broad network of independent dealers, distributors, retailers, e-commerce partners, wholesalers, and equipment rental companies, as well as sold direct to certain end user customers.
Business / global distribution network · Filed 04/08/2026
We also believe our broad product offering, diverse omni-channel distribution model, and strong factory support provide additional advantages as well.
Competition / management assertion of distribution and factory-support advantages · Filed 18/02/2026
As we continue to ramp our capacity and capabilities for large megawatt generators, we believe that we are well positioned to take share in this market over time given (i) our long-standing historical focus on backup power generation, (ii) our global presence in markets around the world, (iii) our ability to provide customized product solutions via our extensive sales, engineering, and project management resources, and (iv) our robust aftermarket support through a combination of direct service teams and our global service network provided by our industrial distributor partners.
MD&A / management assessment of large-megawatt capabilities and prospective market share · Filed 04/08/2026
Some of our competitors have established brands and are larger in size or are divisions of large, diversified companies which have substantially greater financial resources than we do.
Risk factors / competitor brands and financial resources · Filed 18/02/2026
Despite our efforts, these tariff actions and resulting price increases have created inflationary pressures for consumers, negatively impacting demand and margins for certain of our products.
MD&A / realized demand and margin effects of tariffs and price increases · Filed 04/08/2026
Delays in our suppliers' deliveries have sometimes impaired, and may continue to impair, our ability to deliver products to our customers.
Risk factors / historical supplier delivery impairments · Filed 18/02/2026
We have recently been subject to adverse rulings or have settled claims for significant amounts related to the infringement of third-party intellectual property rights, and may continue to be subject to such claims, damage awards or settlement payments.
Risk factors / realized adverse intellectual-property rulings and settlements · Filed 18/02/2026
We implemented multiple price increases to help mitigate the impact of these rising commodity costs, and the realization of these price increases in 2022 and 2023 helped to partially offset the higher commodity costs.
Commodity risk / realized pricing offsets in 2022 and 2023 · Filed 21/02/2024
Gross profit margin for the year ended December 31, 2025 was 38.3% compared to 38.8% for the year ended December 31, 2024.
MD&A / 2025 gross margin comparison · Filed 18/02/2026
The decrease in gross profit margin was primarily driven by higher inputs costs, unfavorable sales mix, and a certain inventory provision as disclosed in the reconciliation table below.
MD&A / input costs, mix and inventory provision · Filed 18/02/2026
This decline was partially offset by higher price realization.
MD&A / favorable 2025 price realization · Filed 18/02/2026
In addition, higher input costs, including the impact of tariffs and commodities, were more than offset by increased price realization.
MD&A / first-quarter 2026 price realization exceeding higher input costs · Filed 05/05/2026
The increase was primarily driven by tariff refunds which contributed approximately 6% to gross margin growth during the quarter.
MD&A / tariff refunds contributing to second-quarter gross margin improvement · Filed 04/08/2026
Additionally, unfavorable sales mix and higher input costs were partially offset by favorable price realization.
MD&A / second-quarter mix, input costs and favorable pricing · Filed 04/08/2026
Discounts and rebates offered to customers are typically defined in the master sales agreements with customers and, therefore, are recorded using the most likely amount method based on the terms of the contract.
Revenue recognition / discounts and rebates in master sales agreements · Filed 18/02/2026
As the Company’s product sale contracts and standard payment terms predominantly have a duration of less than one year, it uses the practical expedient applicable to such contracts and does not consider the time value of money.
Revenue recognition / predominantly short-duration product contracts · Filed 18/02/2026
We have implemented price increases across many of our product offerings and are executing a number of supply chain initiatives to attempt to mitigate the impact of these tariffs on our profitability.
MD&A / implemented price increases across many offerings · Filed 04/08/2026
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 businesses, net of cash acquired (211,820 ) - Proceeds (payments) from sale of businesses, 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 foreign 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 See notes to condensed consolidated financial statements.
Condensed consolidated cash flows / first-half 2026 spending, financing and cash generation · Filed 04/08/2026
On April 1, 2026, the Company issued 247,321 shares of its common stock to the former owners of Enercon, as partial consideration for the acquisition of all of the outstanding shares of Enercon.
Unregistered securities / acquisition shares actually issued · Filed 04/08/2026
Additional contingent consideration may be earned up to a maximum amount of $112,043, with 35% paid in restricted shares and the remainder in cash, upon the achievement of certain conditions.
Subsequent events / Enercon contingent consideration commitment · Filed 05/05/2026
Jagdfeld, Ragen, and Kanuru. 2025 Financial Goals Annual Performance Bonus Metrics – Consolidated Threshold Target Maximum 2025 Achievement Weighted Payout % Adjusted EBITDA (75%)* $677.0 million $846.3 million $1,015.6 million $715.5 million 46.0% PWC as % of Net Sales (25%) 32.9% 29.9% 26.9% 35.1% 0.0% Overall Payout 46.0% * Adjusted EBITDA under the AIP excludes the impact of acquisitions that occurred during the performance period and is calculated before deduction for noncontrolling interests.
Executive compensation / actual 2025 performance and incentive payout · Filed 29/04/2026
As of March 31, 2026, all NEOs have met their ownership requirements.
Executive compensation / ownership requirement compliance as of March 31, 2026 · Filed 29/04/2026
For the three-year period from 2023 to 2025, the Committee determined that the revenue CAGR and average adjusted EBITDA margin did not achieve threshold levels, while FCF Conversion exceeded the maximum level, resulting in vesting of the awards at 66.7% of Target.
Executive compensation / actual 2023–2025 performance and award vesting · Filed 29/04/2026
Board of Directors Leadership Structure Aaron Jagdfeld has served as a director of the Company since 2006 and is the Company’s Chairman of the Board, President, and Chief Executive Officer.
Corporate governance / combined chairman and CEO roles · Filed 29/04/2026
Bennett Morgan serves as the Board’s independent Lead Director.
Corporate governance / independent lead director · Filed 29/04/2026
The Audit Committee meets with our independent registered public accounting firm without management present on a regular basis.
Corporate governance / audit committee meetings without management · Filed 29/04/2026
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Independent auditor report / effective internal control at December 31, 2025 · Filed 18/02/2026
This margin increase was primarily driven by operational efficiencies resulting in lower operating expenses and favorable price realization that more than offset higher input costs.
MD&A / residential operational efficiencies and price realization · Filed 05/05/2026
2025 operating expenses also include $142.3 million of legal provisions, settlements, patent related costs, and other costs related to certain legal matters.
MD&A / actual 2025 legal provisions, settlements and patent-related costs · Filed 18/02/2026
Specifically, it simplified the retention ratios to be 50% of after-tax shares received from compensatory equity awards; however, if an executive is not in compliance after 5 years, the retention ratio is 100% of after-tax shares.
Executive compensation / adopted share-retention requirements · Filed 29/04/2026
During the three and six months ended June 30, 2026, we received tariff refunds totaling approximately $61 million.
MD&A / tariff refunds received during first-half 2026 · Filed 04/08/2026
