1.   Description of Business and Basis of Presentation

Founded in 1959, Generac Holdings Inc. (the Company) is a leading global designer and manufacturer 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. 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.

Over the years, the Company has executed a number of acquisitions that support its strategic plan (refer to Item 1 in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for a discussion of the Company's “Powering a Smarter World” strategic plan). A summary of acquisitions affecting the reporting periods presented include:

The condensed consolidated balance sheet as of June 30, 2026, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2026 and 2025, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2026 and 2025, and the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operation, and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America (GAAP). All intercompany amounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. 

Tariff Refund

On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and allowing for the recovery of IEEPA tariff amounts previously paid. The Company elected to account for the refund of tariffs under a loss recovery model pursuant to Accounting Standards Codification (ASC) 410-30. Under the loss recovery model, an asset for recovery may be recognized only when receipt is considered probable, as defined under ASC 450-20.

During the three and six months ended June 30, 2026, the Company received tariff refunds totaling approximately $61,400.  Additionally, the Company recorded a tariff refund receivable within prepaid expenses and other current assets in the condensed consolidated balance sheets of approximately $27,700 for which the Company has deemed receipt probable to occur.  Approximately $71,100 of the tariff recovery was recorded as a reduction of cost of goods sold in the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2026, and the remainder was recorded in inventories in the condensed consolidated balance sheets.

New Accounting Pronouncements 

Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standard updates (ASUs) to the FASB Accounting Standards Codification. 

In September 2025, the FASB issued ASU 2025-06 Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40). The update is intended to better align internal use software guidance with modern development methods, which have evolved to commonly include incremental and iterative development approaches. The ASU requires an entity to start capitalizing software costs when management has authorized and committed to funding a software project and when it is probable the project will be completed and used to perform the intended function. The ASU amendments also supersede previous guidance on website development costs. The update is effective for fiscal years beginning after December 15, 2027 and may be adopted prospectively, retrospectively or with a modified transition approach. Early adoption is permitted. The Company is currently assessing the impact and timing of adopting the updated standard. 

In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new guidance is intended to provide investors with more detailed disclosures around specific types of expenses. The new disclosures require additional quantitative and qualitative information for certain expenses contained within the consolidated statements of comprehensive income to be presented in the notes to the financial statements. The update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently assessing the impact and timing of adopting the updated standard. 

There have been no other recent accounting pronouncements, changes in accounting pronouncements, or recently adopted accounting guidance during the six months ended June 30, 2026, that are of significance or potential significance to the Company's consolidated financial statements or disclosures.