Generac Holdlings 10-K (2022-02-22)

For the fiscal year ended December 31, 2021

 

 

 

Item 1. Business

 

Overview

 

Generac is a leading energy technology solutions company that provides backup and prime power generation systems for residential and commercial & industrial (C&I) applications, solar + battery storage solutions, energy management devices and controls, advanced power grid software platforms & services, and engine- & battery-powered tools and equipment. 

 

grid : a pattern or structure made from horizontal and vertical lines crossing each other to form squares

 

The Company is committed to sustainable, cleaner energy products poised to revolutionize the 21st century electrical grid. As an energy technology solutions company that is “Powering a Smarter World”, our corporate purpose is to lead the evolution to more resilient, efficient, and sustainable energy solutions around the world.

 

committed : loyal and willing to give your time and energy to something that you believe in

 

resilient : able to be happy, successful, etc. again after something difficult or bad has happened / able to quickly return to its usual shape after being bent, stretched, or pressed

 

 

 

We have a long history of providing power generation products across a variety of applications, and we maintain one of the leading market positions in the power equipment markets in North America and an expanding presence internationally.

 

presence : the fact that someone or something is in a place / a feeling that someone is still in a place although they are not there or are dead

 

 

 

We believe we have one of the widest ranges of products in the power generation marketplace, including residential, commercial and industrial standby generators; as well as portable and mobile generators used in a variety of applications. 

 

 

 

In recent years, the Company has been evolving its business model to focus on building out a residential and C&I ecosystem of energy technology products, solutions, and services. 

 

 

 

As part of this evolution, we have made significant investments into rapidly growing new markets such as residential clean energy storage, solar microinverters, and energy monitoring & management devices, all of which are distributed energy resources (DERs) that can be aggregated into virtual power plants (VPPs) within grid services programs.

 

aggregate : something formed by adding together several amounts or things

 

 

 

In addition, a key strategic focus has been leveraging our leading position in the growing market for cleaner burning natural gas fueled generators to expand into applications beyond standby power, allowing us to participate in Energy-as-a-Service and microgrid projects for commercial and industrial applications.

 

leverage : the action or advantage of using a lever / the act of using borrowed money to buy an investment or a company / power to influence people and get the results you want

 

 

 

We have also made investments in next-generation platforms and controls for both residential and C&I applications that facilitate the connection of our products to the grid. 

 

facilitate : to make something possible or easier

 

 

 

Expanding these capabilities will enable the increasing utilization of our equipment as DERs as the nascent market for grid services expands over the next several years.

 

capabilities : the ability to do something

 

utilization : the act of using something in an effective way

 

nascent : only recently formed or started, but likely to grow larger quickly 

 

 

 

Our growing presence in grid services programs will enhance the value of our power generation and storage products that might otherwise sit idle, as they are now able to be dispatched and orchestrated as part of a distributed energy solution, thereby generating additional return-on-investment for the home or business owner while also delivering value to utilities and energy retailers by helping to balance, support and enhance the reliability of the electrical grid.

 

idle : not working or being used / without any particular purpose / lazy and not willing to work

 

dispatch : to send something, especially goods or a message, somewhere for a particular purpose

 

orchestrated : with every detail very carefully planned, sometimes secretly

 

thereby : as a result of this action

 

 

 

 As the traditional centralized utility model evolves over time, we believe that a more decarbonized, digitized, and decentralized grid infrastructure will build-out, and Generac's energy technology solutions are uniquely and strategically positioned to participate in this next-generation grid referred to as "Grid 2.0".

 

decarbonize : to stop or reduce carbon gases, especially carbon dioxide, being released into the atmosphere as the result of a process, for example the burning of fossil fuel

 

 

 

As our traditional power generation markets continue to grow due to multiple mega-trends that are driving increased penetration of our products, we believe we are in an excellent position to execute on this opportunity given our competitive strengths. 

 

penetration : a movement into or through something or someone

 

execute : to kill someone as a legal punishment / to do or perform something, especially in a planned way

 

 

 

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.  

 

addressable : (of a problem or situation) that can be addressed / (computing) (of a part of a computer system) that is identified using its own address

 

 

Company History

 

 

Generac was founded in 1959 to commercialize a line of affordable portable generators that offered superior performance and features. The Company’s success through the years has been built upon engineering expertise, manufacturing excellence and our innovative approaches to the market. This has driven our growth into becoming a leading provider of power equipment for a variety of applications within residential, commercial, and industrial markets.

 

superior : better than average or better than other people or things of the same type

 

 

 

In 1980, we expanded beyond portable generators into the industrial power generation market with the introduction of our first stationary generators that provided up to 200kW of power output.

 

stationary : not moving, or not changing

 

 

 

We introduced our first residential standby generator in 1989 and expanded our industrial product offering and global distribution system in the 1990s, forming a series of alliances that rapidly increased our sales.

 

alliance : a group of countries, political parties, or people who have agreed to work together because of shared interests or aims / an agreement to work with someone else to try to achieve the same thing

 

 

 

Our growth accelerated in the 2000’s as we expanded our purpose-built line of residential & commercial automatic standby generators and implemented our multilayered, omni-channel distribution philosophy. Throughout the 2000’s, a number of high-profile power outage events also helped to increase the awareness and need for back-up power and home standby generators.

 

accelerated : faster than usual

 

implement : to start using a plan or system

 

outage : a period when a service, such as electricity, is not available

 

 

 

In 2006, the founder of Generac sold the company to affiliates of CCMP Capital Advisors, LLC, together with certain other investors and members of our management. In February 2010, we completed our initial public offering (IPO) of our common stock.

 

affiliate : to cause a group to become part of or form a close relationship with another, usually larger, group, or organization / an organization that is connected with or controlled by another, usually larger, organization

 

 

 

Soon after going public, we implemented our “Powering Ahead” enterprise strategy. This strategic plan accelerated the Company’s transition from primarily a North America focused, emergency backup generator company into a more diversified industrial technology company with the addition of new and adjacent product categories and an expanded global presence, primarily through a series of acquisitions.

 

adjacent : very near, next to, or touching / to change, or make someone or something change, from one form or situation to another 

 

 

 

In 2018, we transitioned into a new enterprise strategy called “Powering Our Future”, which drove further share gains in new and existing markets, capitalized on Generac’s leadership in natural gas, established our connectivity strategy, and provided the initial foundation for the Company’s evolution into an energy technology solutions company, including some key initial acquisitions within the residential clean energy space.

 

transition : a change from one form or type to another, or the process by which this happens / to change, or make someone or something change, from one form or situation to another 

 

 

 

This ultimately led to the introduction of our new “Powering A Smarter World” enterprise strategy in 2021.  This current strategic plan continues the evolution of Generac’s business model that pairs traditional and emerging power generation and storage technologies with new monitoring, management and grid services capabilities to provide solutions for the dynamic challenges presented by today’s energy landscape.

 

pair : two things of the same appearance and size that are intended to be used together, or something that consists of two parts joined together 

 

 

 

(the rest omitted)