Domestic segment total sales (including inter-segment sales) increased 14% to $1,020.2 million in the three months ended September 30, 2024, as compared to $894.0 million in the prior-year third quarter. This was primarily driven by strong shipments of home standby and portable generators.

International segment total sales (including inter-segment sales) decreased 20% to $166.7 million in the three months ended September 30, 2024, as compared to $207.6 million in the prior-year third quarter. The total sales decline was primarily due to lower inter-segment sales related to softness in the telecom market and a decline in shipments of portable generators and C&I products in Europe due to weaker market conditions.

Total contribution from non-annualized acquisitions for the third quarter of 2024 was $4.5 million for the domestic segment. The company continues to integrate recent acquisitions to expand its product offerings and market reach.

Operating expenses increased $32.6 million, or 12.0%, as compared to the prior-year third quarter. The growth in operating expenses was primarily driven by increased employee costs to support future growth, additional marketing spend to drive incremental awareness for our products, and higher variable expenses and incentive compensation given higher shipment volumes and profitability.

In July 2024, the Company extinguished the $530.0 million balance then outstanding under the former Tranche B Term Loan Facility and replaced it with a new $500.0 million Tranche B Term Loan Facility maturing on July 3, 2031.

During the third quarter of 2024, the Company repurchased 690,711 shares of common stock for $102.1 million. The company is actively managing its capital allocation strategy.

The company is involved in several legal proceedings, including class action lawsuits, derivative actions, and government investigations. The outcome of these proceedings is uncertain and could have a material adverse effect on the company's financial condition, results of operations, or cash flows.

On November 30, 2022, the CPSC notified the Company of its intention to recommend the imposition of a civil penalty for failing to timely submit a report to the CPSC in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021

On October 28, 2022, Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Michigan, as a result of which the Company became aware of an enforcement investigation by the U.S. Department of Justice (“DOJ”). The subpoena requests similar documents and information provided by the Company to the U.S. Environmental Protection Agency (“EPA”) and the California Air Resource Board (“CARB”) in response to civil document requests related to the Company’s compliance with emissions regulations

The company maintains one of the leading market positions in the power equipment markets in North America and an expanding presence internationally. The company's focus on resilient, efficient, and sustainable energy solutions has dramatically increased their served addressable market.

Generac has been evolving its product portfolio by building out ecosystems of energy technology products, solutions, and services for homes and businesses. As part of this evolution, the company has made significant investments into growing markets such as residential and C&I energy storage, solar module-level power electronics (“MLPE”), energy monitoring & management devices, and electric vehicle (“EV”) charging.

As the company's traditional power generation markets continue to grow due to multiple mega-trends that are driving increased penetration of our products, the company believes it is in an excellent position to execute on this opportunity given our competitive strengths. 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 that Generac is well positioned for success over the long-term.

The company has historically attempted to mitigate the impact of any inflationary pressures through improved product design and sourcing, manufacturing efficiencies, price increases, and select hedging transactions

Our international acquisitions, along with our existing global supply chain, expose us to fluctuations in foreign currency exchange rates and regulatory tariffs that can also have a material impact on our results of operations.

Generac is the leading supplier of backup power to the telecommunications market in the United States, where approximately half of all existing tower sites have yet to be "hardened" with backup power. As more mission-critical data is transmitted over wireless networks, we believe this penetration rate must increase considerably to maintain a higher level of reliability across the network.

In recent years, the Company has been evolving its product portfolio by building out ecosystems of energy technology products, solutions, and services for homes and businesses. As part of this evolution, we have made significant investments into growing markets such as residential and C&I energy storage, solar module-level power electronics (“MLPE”), energy monitoring & management devices, and electric vehicle (“EV”) charging.

We have been leveraging our leading position in the growing market for natural gas fueled generators, which we believe represents a cleaner transition fuel compared to diesel, to expand into applications beyond standby power, allowing us to participate in Energy-as-a-Service and microgrid projects for C&I customers.

We expect to further advance our capabilities in energy technology by increasing our product development, sourcing, distribution, and marketing efforts. In addition, we should be able 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.

In July 2024, the Company extinguished the $530.0 million balance then outstanding under the former Tranche B Term Loan Facility and replaced it with a new $500.0 million Tranche B Term Loan Facility maturing on July 3, 2031.

During the third quarter of 2024, the Company repurchased 690,711 shares of common stock for $102.1 million. The company is actively managing its capital allocation strategy.

The $141.8 million net cash used in investing activities for the nine months ended September 30, 2024, primarily represents cash payments of $83.4 million related to the purchase of property and equipment, $21.8 million for the acquisitions of Huntington, C&I BESS, and Ageto, $1.6 million for a tax equity investment, and $35 million for an incremental minority investment in Wallbox.

The terms of the settlement agreement require the Company to (i) abide by certain customary agency requirements regarding the ongoing commitment to the Company's internal CPSA compliance practices and program

Natural gas as compared to diesel, and other alternative fuels, are important elements in the transition to a lower-carbon global energy supply.

Generac introduced the first affordable backup generator and later commercialized the automatic home standby generator category. The Company has continued to expand its energy technology offerings in its mission to lead the evolution to more resilient, efficient, and sustainable energy solutions around the world.

Power disruptions are an important driver of consumer awareness for back-up 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

We are seeing increasing evidence that warnings of potential resource inadequacies are driving incremental consumer awareness of the need for backup power solutions. We believe utility supply shortfalls and related warnings may continue in the future, further expanding awareness of deteriorating power quality in North America. 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.

We believe the electric utility landscape will undergo significant changes in the decade ahead due to rising utility rates, grid instability and power quality issues, environmental concerns, and the continuing performance and cost improvements in renewable energy and energy storage technologies.