NEW YORK, Dec. 28, 2022 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, reminds investors that a class action lawsuit has been filed against Generac Holdings, Inc. (“Generac” or the “Company”) (NYSE: GNRC) in the United States District Court of Eastern Wisconsin on behalf of all persons and entities who purchased or otherwise acquired Generac securities between April 29, 2021, and November 1, 2022, both dates inclusive (the “Class Period”). Investors have until January 30, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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This action arises from repeated misrepresentations by Generac and its senior executives that concealed from investors a defective component at the core of Generac’s solar power products. That component—the “SnapRS”—was intended to perform an essential safety function by rapidly shutting down solar devices in certain dangerous situations. Rather than protecting consumers, the SnapRS would overheat, melt and, in some cases, start fires.
Defendants knew that the versions of the SnapRS installed in thousands of homes were defective and dangerous. Numerous consumers filed complaints with regulators, and Generac’s business partners that sold, installed, and serviced Generac’s solar products informed the Company of the SnapRS defect.
Instead of warning investors and consumers, Defendants continued to tout the success and reliability of Generac’s solar energy products while quietly making minor modifications to the SnapRS, including issuing a firmware update. After these modifications failed to fix the SnapRS, Defendants continued to mislead investors.
Generac relied on “channel partners” to sell, service, and install its solar battery storage systems, including Power Home Solar, LLC d/b/a Pink Energy (“Pink Energy”), Baker Electric Home Energy, Posigen, and Valley Solar. During the Class Period, Pink Energy was the largest of these partners, with operations in 15 states. Among other deceptions, Generac misled investors about its dependence on Pink Energy, falsely assuring investors that no single customer or partner drove more than 6% of its sales and that Generac had a broad and diverse network of distribution partners.
Generac also misled investors about its financial condition by failing to account for its liability for warranty claims arising from the defective SnapRS. By misrepresenting its warranty liability, Generac also overstated its earnings throughout the Class Period, and falsely assured investors that the Company’s financial statements were prepared in accordance with Generally Accepted Accounting Principles (“GAAP”).
Investors began to learn the truth about Generac’s defective SnapRS on August 1, 2022, when Pink Energy filed a lawsuit against Generac, revealing that the Company’s “defective” SnapRS components caused millions of dollars of damage, giving rise to liability that threatened Pink Energy’s solvency (the “Pink Energy Complaint”). The disclosures in the Pink Energy Complaint caused the price of Generac shares to decline by $3.31 per share. The liability created by defective SnapRS components ultimately forced Pink Energy to declare bankruptcy on October 7, 2022.
In the wake of Pink Energy’s bankruptcy, on October 19, 2022, Generac revealed that it had taken “pre-tax charges totaling approximately $55 million, including approximately $37 million of clean energy product warranty-related matter and approximately $18 million of bad debt expense related to a clean energy product customer that has filed for bankruptcy.” The $37 million charge related to warranty expenses appears to reflect Generac’s belated acknowledgment of its increased liability to redress defective SnapRS units. The $18 million charge related to “bad debt expense” reflects receivables owed by Pink Energy, and possibly other partners or customers burdened with defective SnapRS products, that would not be paid. The October 19 disclosures caused the price of Generac shares to decline by $37.44 per share, or 25%.
On November 2, 2022, Generac released its earnings results for the third quarter of 2022, and lowered sales guidance on its solar energy business for the remainder of the year by approximately 40%. On a conference call with investors and analysts held that same day, Generac’s CEO, Defendant Jagdfeld, attributed the lowered guidance to “the loss of a major customer during the quarter, along with the specific warranty-related issue”—i.e., the defective SnapRS component and the Pink Energy bankruptcy that resulted directly from that defect. Analysts expressed shock upon learning how dependent Generac’s clean energy business was on Pink Energy, with several analysts noting that investors had not been told of the significant concentration of that business with a single partner. As a result of these disclosures, the price of Generac shares declined by $8.99 per share, or 8%.
Through this action, Plaintiffs seek an award of damages to compensate Generac stockholders for Defendants’ misrepresentations as set forth herein.
If you purchased or otherwise acquired Generac shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Melissa Fortunato, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
