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  "documentTitle": "Generac Holdings, Inc. (GNRC)",
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  "authorName": "Ben Axler",
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  "presentationDate": "2022-06-22 00:00:00",
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      "text": "Generac's core products are heavily marketed towards the residential and consumer market as an “insurance” policy from grid and power outages.",
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      "text": "Generac's core customer appears to be aging, and it is even tweaking its penetration assumptions in its core business. Generac recently changed its claim twice that the market opportunity for its core product has expanded from $2.0, to $2.5, and now to $3 billion for each 1% penetration, but is narrowing its buyer demographic by now focusing on buyers aged 60 or older vs. 50 or older.",
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      "text": "Generac's core products are heavily marketed towards the residential and consumer market as an “insurance” policy from grid and power outages. We find evidence that since its IPO, its penetration has failed to grow at the rate of other discretionary home products. Recently, Generac modified a key slide to show that the penetration rate was actually less than expected. It even introduced, but has since retracted, a slide classifying HSBs as “Legacy Growth Drivers”.",
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      "text": "Complicating matters, we find evidence that in its portable generator business Generac recently stopped making market share claims of “High 20%”. Based on our research, we find an onslaught of new competitors, and that Generac slashed prices by nearly 20%. We estimate this to be a $100 million headwind to cash flow.",
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      "text": "Consumer Reports, a well-regarded independent consumer review and advocacy group, has reviewed Generac's products. Generac's core competency has always been HSBs. However, a recent study shows that brands such as Champion, Briggs & Stratton, Cummins and Winco receive overall higher scores. In the category of inverters, where engines tend to be more complex and expensive, Generac did not even make the list.",
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      "text": "Generac has conducted two recent product recalls, one related to finger amputations, and another related to the risk of carbon monoxide poisoning. There have been a raft of lawsuits, and Generac even made subtle changes to its “Forward Looking Statements” noting “significant legal proceedings, claims, lawsuits or government investigations.” A recent investigation into the generator industry, including Generac, by the non-profit Texas Tribune And ProPublica says that the industry has historically resisted measures to make the products safer.",
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      "text": "Due to the stay-at-home effect from COVID-19 and the Texas power outage of 2021, we believe Generac experienced a black swan demand event for its products, causing a surge in sales and profits. Generac, along with competitors such as Kohler and Briggs & Stratton, each announced plans to increase capacity by 2x - 4x in early 2021 in response. However, with supply chain complications, Generac's ability to bring on new capacity has fallen behind schedule. Now with the economy slowing, we expect Generac to be stuck with excess capacity.",
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      "text": "Core Business Challenges At Generac",
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