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Initiation of Research Coverage: Generac Holdings Inc.

CHICAGO, March 30, 2010 - William Blair & Company initiated research coverage of Generac Holdings Inc. (GNRC $14.75), a leading provider of residential, commercial, and industrial generators, with an Outperform rating and Core Growth company profile.

Analyst Corey Tobin estimated the company would generate adjusted earnings per share of $1.88 in 2010 and $2.02 in 2011.

“We believe underlying demand for Generac’s product, particularly in the residential segment, should remain supported by favorable macro trends for some time,” Tobin said. “We estimate Generac is addressing a $4 billion annual opportunity in North America; we expect the company to benefit from an aging electricity grid in the United States as well as demographic trends shifting toward an older population (key buyers of Generac’s residential products). Its sales drivers include marketplace adoption of residential standby systems (only 2% penetration today); market share gains in the portable, commercial, and industrial markets; and eventually international expansion. Generac sits in a favorable competitive position, particularly in the market for residential standby systems, where it has 70% share and the largest distribution channel.”

Tobin continued, “We believe the company’s asset-light business model helps it generate attractive adjusted EBITDA margins (in the mid-20% range) relative to other industrial companies. While we recognize that Generac’s top-line growth is slightly lower than the peer group mean, we believe the company’s significantly higher EBITDA margins and business model that supports very high returns on net invested capital deployed in manufacturing activities help offset the top-line discount. In addition, we believe our assumptions regarding severe weather-related ‘awareness events’ will prove conservative over the intermediate to long term, leading to upside to our long-term projected growth rates.”

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