false 0001474735 0001474735 2024-07-31 2024-07-31
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 
 
Date of Report (Date of earliest event reported): July 31, 2024
 
Generac Holdings Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
  
001-34627
  
20-5654756
(State or other jurisdiction
  
(Commission
  
(IRS Employer
of incorporation)
  
File Number)
  
Identification No.)
 
S45 W29290 Hwy 59
    
Waukesha, Wisconsin
  
53189
(Address of principal executive offices)
  
(Zip Code)
 
(262) 544-4811
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value
GNRC
New York Stock Exchange
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 
 
 
 
Item 2.02                Results of Operations and Financial Condition
 
On July 31, 2024, Generac Holdings Inc. (the “Company,” “we,” “us” or “our”) issued a press release (the “Press Release”) announcing its financial results for the second quarter ended June 30, 2024. A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
The information contained in Item 2.02 of this Current Report on Form 8-K (including the exhibits) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in Item 2.02 of this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
 
Discussion of Non-GAAP Financial Measures
 
In the Press Release, we present certain financial information, specifically Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Core Sales, which are not in accordance with generally accepted accounting principles (“U.S. GAAP”). We present Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Core Sales in the Press Release because these metrics assist us in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Our management uses Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Core Sales:
 
 
●
for planning purposes, including the preparation of our annual operating budget and developing and refining our internal projections for future periods;
 
 
●
to evaluate the effectiveness of our business strategies and as a supplemental tool in evaluating our performance against our budget for each period;
 
 
●
in communications with our board of directors and investors concerning our financial performance;
 
 
●
to evaluate prior acquisitions in relation to the existing business; and
 
 
●
to evaluate comparative net sales performance in prior and future periods.
 
We also use Adjusted EBITDA as a benchmark for the determination of the bonus component of compensation for our senior executives under our management incentive plans.
 
We believe that the disclosure of Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Core Sales offers additional financial metrics which, when coupled with U.S. GAAP results and the reconciliation to U.S. GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business for securities analysts, investors and other interested parties in the evaluation of our company. We believe Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Core Sales are useful to investors for the following reasons:
 
 
●
Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Core Sales, and similar non-GAAP measures are widely used by investors to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, tax jurisdictions, capital structures and the methods by which assets were acquired; and
 
 
●
by comparing our Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Core Sales in different historical periods, our investors can evaluate our operating performance excluding the impact of certain items.
 
2
 
 
Item 5.02                Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensation Arrangements of Certain Officers.
 
At the annual meeting of the Company’s stockholders, held on June 13, 2024, the Company’s stockholders approved an amendment and restatement to the Generac Holdings, Inc. 2019 Equity Incentive Plan (the “2019 Plan”).  The amendment to the 2019 Plan increases the total number of shares of common stock available for issuance under the 2019 Plan by 3,900,000 shares, extends its term to 2034, and makes certain other design changes.  The Plan and the amendment and restatement thereto are described in detail in the Company’s proxy statement filed with the Securities and Exchange Commission on Schedule 14A on April 29, 2024 in connection with the Company’s annual meeting of stockholders held on June 13, 2024.
 
Item 9.01                Financial Statements and Exhibits
 
(d) Exhibits
 
Exhibit No.
  
Description
     
99.1
  
     
104
  
Cover Page Interactive Data File (embedded within the inline XBRL document)
 
3
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
GENERAC HOLDINGS INC.
   
   
 
gnrc20240730_8kimg001.jpg
 
Name: 
Raj Kanuru
Date: July 31, 2024
Title:
EVP, General Counsel & Secretary
 
 
4

Exhibit 99.1

 

Generac Reports Second Quarter 2024 Results

 

Significant margin expansion drives strong earnings growth; 2024 outlook increased as a result of recent power outages

 

WAUKESHA, WISCONSIN (July 31, 2024) – Generac Holdings Inc. (NYSE: GNRC) (“Generac” or the “Company”), a leading global designer and manufacturer of energy technology solutions and other power products, today reported financial results for its second quarter ended June 30, 2024 and provided an update on its outlook for the full-year 2024.

 

Second Quarter 2024 Highlights

 

●

Net sales were $998 million during the second quarter of 2024 as compared to $1.00 billion in the prior-year second quarter. Core sales, which excludes both the impact of acquisitions and foreign currency, was approximately flat from the prior year period.

 

 

-

Residential product sales increased approximately 8% to $538 million as compared to $499 million last year.

 

 

-

Commercial & Industrial (“C&I”) product sales decreased approximately 10% to $344 million as compared to $384 million in the prior year.

 

●

Net income attributable to the Company during the second quarter was $59 million, or $0.97 per share, as compared to $45 million, or $0.70 per share, for the same period of 2023.

 

●

Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was $82 million, or $1.35 per share, as compared to $68 million, or $1.08 per share, in the second quarter of 2023.

 

●

Adjusted EBITDA before deducting for noncontrolling interests, as defined in the accompanying reconciliation schedules, was $165 million, or 16.5% of net sales, as compared to $137 million, or 13.6% of net sales, in the prior year.

 

●

Cash flow from operations was $78 million during the second quarter, as compared to $83 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was $50 million as compared to $54 million in the second quarter of 2023.

 

●

The Company repurchased 355,640 shares of its common stock during the second quarter for approximately $51 million. There is approximately $449 million remaining under the current repurchase program as of June 30, 2024.

 

●

Subsequent to quarter end:

 

 

o

On July 3rd, the Company amended and replaced its existing $530 million term loan B credit facility with a new term loan B credit facility which has an aggregate outstanding principal amount of $500 million and a maturity date of July 3, 2031.

 

 

o

On July 12th, the Company finalized the previously awarded grant from the U.S. Department of Energy, which provides for up to $200 million in residential clean energy related project funding over a five-year term as part of the $1 billion Puerto Rico Energy Resilience Fund.

 

 

o

On July 30th, the Company agreed to increase its minority interest with an additional $35 million investment and further expand its commercial relationship with Wallbox, a global leader in smart electric vehicle charging and energy management solutions.

 

●

The Company is updating its overall net sales growth guidance for the full-year 2024 to be 4 to 8% compared to the prior year on an as-reported basis, an increase from the previous guidance range of 3 to 7%. Adjusted EBITDA margin, before deducting for non-controlling interests, is now expected to be 17.0 to 18.0% as compared to the previous expectation of 16.5 to 17.5%.

 

"Our second quarter results outperformed our prior outlook for adjusted EBITDA and adjusted EPS as input costs and operating expenses came in better than expected,” said Aaron Jagdfeld, President and Chief Executive Officer. “In line with our expectations, home standby generator shipments increased at a strong rate compared to a softer prior year period which included the impact of elevated field inventory levels, while shipments of C&I products declined versus prior year primarily due to expected weakness in our telecom and rental markets.”

 

Jagdfeld continued, “Early in the third quarter, Hurricane Beryl highlighted the rising threat of severe and volatile weather as millions of Texans experienced power outages in the aftermath of the storm. This major power outage event is expected to drive incremental demand for home standby and portable generators in the current year, while also driving higher levels of awareness for backup power longer-term as home and business owners seek protection from future power outages. With only approximately 6% penetration of the addressable market of homes in the U.S., we believe there are significant opportunities to further penetrate the residential standby generator market as the clear leader in this category.”

 

Additional Second Quarter 2024 Consolidated Highlights

 

Gross profit margin was 37.6% as compared to 32.8% in the prior-year second quarter. The increase in gross margin was primarily driven by favorable sales mix and the realization of lower input costs.

 

Operating expenses increased $29.9 million, or 12.3%, as compared to the second quarter of 2023. The growth in operating expenses was primarily driven by increased employee costs to support future growth and higher marketing spend to drive incremental awareness for our products.

 

Provision for income taxes for the current year quarter was $19.6 million, or an effective tax rate of 25.0%, as compared to $15.9 million, or a 25.9% effective tax rate, for the prior year. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior year period which did not repeat in the current year.

 

Cash flow from operations was $77.7 million during the second quarter, as compared to $83.1 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was $49.7 million as compared to $53.9 million in the second quarter of 2023. Higher operating earnings in the current year quarter were more than offset by an increase in income tax payments as compared to the prior year.

 

1
 

 

Business Segment Results

 

Domestic Segment

 

Domestic segment total sales (including inter-segment sales) increased 1% to $827.1 million as compared to $815.3 million in the prior year, including a slight benefit from acquisitions. Higher home standby and portable generator shipments and growth in C&I product sales to industrial distributors were offset by lower C&I product shipments to telecom and national rental equipment customers.

 

Adjusted EBITDA for the segment was $139.7 million, or 16.9% of domestic segment total sales, as compared to $103.2 million, or 12.7% of total sales, in the prior year. This margin improvement was primarily driven by favorable sales mix and the realization of lower input costs, partially offset by higher operating expense investments to support future growth initiatives.

 

International Segment

 

International segment total sales (including inter-segment sales) decreased 18% to $184.5 million as compared to $223.7 million in the prior year quarter, including a slight benefit from foreign currency. The core total sales decline for the segment was primarily driven by lower inter-segment sales related to softness in the telecom market and weaker shipments in Europe, most notably for portable generators.

 

Adjusted EBITDA for the segment, before deducting for noncontrolling interests, was $25.0 million, or 13.6% of international segment total sales, as compared to $33.3 million, or 14.9% of total sales, in the prior year. This margin decline was primarily due to reduced operating leverage on lower shipments during the quarter.

 

2024 Outlook

 

As a result of recent power outage activity, which includes the impact of major outage event Hurricane Beryl, the Company is updating its full-year 2024 net sales guidance to 4 to 8% growth as compared to the prior year, an increase from the previous expectation of 3 to 7%.

 

Additionally, the Company now expects net income margin, before deducting for non-controlling interests, to be approximately 6.5 to 7.5% for the full-year 2024 as compared to the prior expectation of 6.0 to 7.0%. The corresponding adjusted EBITDA margin is now expected to be approximately 17.0 to 18.0% as compared to the previous guidance range of 16.5 to 17.5%.

 

The Company continues to expect strong operating and free cash flow generation for the full year, with free cash flow conversion from adjusted net income well above 100%.

 

Conference Call and Webcast

 

Generac management will hold a conference call at 10:00 a.m. EST on Wednesday, July 31, 2024 to discuss second quarter 2024 operating results. The conference call can be accessed at the following link: https://register.vevent.com/register/BIda289d036c8c4968881c6413359be673. Individuals who wish to listen via telephone will be given dial-in information.

 

The conference call will also be webcast simultaneously on Generac's website (http://www.generac.com), accessed under the Investor Relations link. The webcast link will be made available on the Company’s website prior to the start of the call within the Events section of the Investor Relations website.

Following the live webcast, a replay will be available on the Company’s website for 12 months.

 

About Generac

 

Generac is a leading energy technology company that provides backup and prime power products and energy storage systems for home and commercial & industrial applications, energy monitoring & management devices and services, and other engine & battery powered tools and equipment. Founded in 1959, Generac introduced the first affordable backup generator and later created 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.

 

2
 

 

Forward-looking Information

 

Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements give Generac's current expectations and projections relating to the Company's financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "forecast," "project," "plan," "intend," "believe," "confident," "may," "should," "can have," "likely," "future," "optimistic" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

 

Any such forward-looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Although Generac believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Generac's actual financial results and cause them to differ materially from those anticipated in any forward-looking statements, including:

 

● fluctuations in cost, availability, and quality of raw materials, key components and labor required to manufacture our products;
● our dependence on a small number of contract manufacturers and component suppliers, including single-source suppliers;

●

our ability to protect our intellectual property rights or successfully defend against third party infringement claims;

●

increase in product and other liability claims, warranty costs, recalls, or other claims;

●

significant legal proceedings, claims, fines, penalties, tax assessments, lawsuits or government investigations;

●

our ability to consummate our share repurchase programs;

●

our failure or inability to adapt to, or comply with, current or future changes in applicable laws and regulations;

●

scrutiny regarding our ESG practices;

●

our ability to develop and enhance products and gain customer acceptance for our products;

●

frequency and duration of power outages impacting demand for our products;

●

changes in durable goods spending by consumers and businesses or other macroeconomic conditions, impacting demand for our products;

●

our ability to accurately forecast demand for our products and effectively manage inventory levels relative to such forecast;

●

our ability to remain competitive;

●

our dependence on our dealer and distribution network;

●

market reaction to changes in selling prices or mix of products;

●

loss of our key management and employees;

●

disruptions from labor disputes or organized labor activities;

●

our ability to attract and retain employees;

●

disruptions in our manufacturing operations;

●

changes in U.S. trade policy;

●

the possibility that the expected synergies, efficiencies and cost savings of our acquisitions, divestitures, restructurings, or realignments will not be realized, or will not be realized within the expected time period;

●

risks related to sourcing components in foreign countries;

●

compliance with environmental, health and safety laws and regulations;

●

government regulation of our products;

●

failures or security breaches of our networks, information technology systems, or connected products;

●

our ability to make payments on our indebtedness;

●

terms of our credit facilities that may restrict our operations;

●

our potential need for additional capital to finance our growth or refinancing our existing credit facilities; 

●

risks of impairment of the value of our goodwill and other indefinite-lived assets;

●

volatility of our stock price; and

●

potential tax liabilities.

 

Should one or more of these risks or uncertainties materialize, Generac's actual results may vary in material respects from those projected in any forward-looking statements. In the current environment, some of the above factors have materialized and may cause actual results to vary from these forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in Generac's filings with the U.S. Securities and Exchange Commission (“SEC”), particularly in the Risk Factors section of the 2023 Annual Report on Form 10-K and in its periodic reports on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

 

Any forward-looking statement made by Generac in this press release speaks only as of the date on which it is made.  Generac undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

3
 

 

Non-GAAP Financial Metrics

 

Core Sales

 

The Company references core sales to further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP. Core sales excludes the impact of acquisitions and fluctuations in foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparison of net sales performance with prior and future periods.

 

Adjusted EBITDA

 

To supplement Generac’s condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company provides the computation of Adjusted EBITDA attributable to the Company, which is defined as net income before noncontrolling interests adjusted for the following items: interest expense, depreciation expense, amortization of intangible assets, income tax expense, certain non-cash gains and losses including certain purchase accounting adjustments and contingent consideration adjustments, share-based compensation expense, certain transaction costs and credit facility fees, business optimization expenses, certain specific provisions, mark-to-market gains and losses on a minority investment, and Adjusted EBITDA attributable to noncontrolling interests, as set forth in the reconciliation table below. The computation of Adjusted EBITDA is based primarily on the definition included in our Credit Agreement.

 

Adjusted Net Income

 

To further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company provides a summary to show the computation of adjusted net income attributable to the Company. Adjusted net income attributable to the Company is defined as net income before noncontrolling interests adjusted for the following items: amortization of intangible assets, amortization of deferred financing costs and original issue discount related to the Company's debt, intangible impairment charges, certain transaction costs and other purchase accounting adjustments, business optimization expenses, certain specific provisions, mark-to-market gains and losses on a minority investment, other non-cash gains and losses, and adjusted net income attributable to non-controlling interests.

 

Free Cash Flow

 

In addition, the Company references free cash flow to further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP. Free cash flow is defined as net cash provided by operating activities, plus proceeds from beneficial interests in securitization transactions, less expenditures for property and equipment, and is intended to be a measure of operational cash flow taking into account additional capital expenditure investment into the business.

 

The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with U.S. GAAP.  Please see the accompanying Reconciliation Schedules and our SEC filings for additional discussion of the basis for Generac's reporting of Non-GAAP financial measures, which includes why the Company believes these measures provide useful information to investors and the additional purposes for which management uses the non-GAAP financial information.

 

SOURCE: Generac Holdings Inc.

 

CONTACT:

 

Kris Rosemann

Senior Manager – Corporate Development & Investor Relations
(262) 506-6064
InvestorRelations@generac.com

 

4
 

 

Generac Holdings Inc.

Condensed Consolidated Balance Sheets

(U.S. Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

 

   

June 30,

    

December 31,

  
   

2024

    

2023

  

Assets

                

Current assets:

                

Cash and cash equivalents

   $ 218,317     $ 200,994  

Accounts receivable, less allowance for credit losses of $34,546 and $33,925 at June 30, 2024 and December 31, 2023, respectively

     610,322       537,316  

Inventories

     1,152,133       1,167,484  

Prepaid expenses and other current assets

     74,886       91,898  

Total current assets

     2,055,658       1,997,692  
                 

Property and equipment, net

     622,947       598,577  
                 

Customer lists, net

     167,240       184,513  

Patents and technology, net

     398,452       417,441  

Other intangible assets, net

     21,963       27,127  

Tradenames, net

     211,406       216,995  

Goodwill

     1,432,933       1,432,384  

Deferred income taxes

     17,401       15,532  

Operating lease and other assets

     190,566       203,051  

Total assets

   $ 5,118,566     $ 5,093,312  
                 

Liabilities and stockholders’ equity

                

Current liabilities:

                

Short-term borrowings

   $ 66,407     $ 81,769  

Accounts payable

     406,296       340,719  

Accrued wages and employee benefits

     61,433       54,970  

Accrued product warranty

     58,743       65,298  

Other accrued liabilities

     269,250       292,120  

Current portion of long-term borrowings and finance lease obligations

     50,428       45,895  

Total current liabilities

     912,557       880,771  
                 

Long-term borrowings and finance lease obligations

     1,444,696       1,447,553  

Deferred income taxes

     70,889       90,012  

Deferred revenue

     176,020       167,008  

Operating lease and other long-term liabilities

     141,885       158,349  

Total liabilities

     2,746,047       2,743,693  
                 

Redeemable noncontrolling interest

     -       6,549  
                 

Stockholders’ equity:

                

Common stock, par value $0.01, 500,000,000 shares authorized, 73,608,578 and 73,195,055 shares issued at June 30, 2024 and December 31, 2023, respectively

     736       733  

Additional paid-in capital

     1,101,074       1,070,386  

Treasury stock, at cost, 13,446,797 and 13,057,298 shares at June 30, 2024 and December 31, 2023, respectively

     (1,088,426 )     (1,032,921 )

Excess purchase price over predecessor basis

     (202,116 )     (202,116 )

Retained earnings

     2,601,974       2,519,313  

Accumulated other comprehensive loss

     (43,529 )     (15,143 )

Stockholders’ equity attributable to Generac Holdings Inc.

     2,369,713       2,340,252  

Noncontrolling interests

     2,806       2,818  

Total stockholders’ equity

     2,372,519       2,343,070  

Total liabilities and stockholders’ equity

   $ 5,118,566     $ 5,093,312  

 

5
 

 

Generac Holdings Inc.

Condensed Consolidated Statements of Comprehensive Income

(U.S. Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

 

   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  
                                 

Net sales

   $ 998,197     $ 1,000,420     $ 1,887,470     $ 1,888,330  

Costs of goods sold

     622,636       671,999       1,195,530       1,287,410  

Gross profit

     375,561       328,421       691,940       600,920  
                                 

Operating expenses:

                                

Selling and service

     128,153       115,743       236,739       216,431  

Research and development

     53,996       43,942       103,406       85,762  

General and administrative

     65,386       56,371       132,150       116,056  

Amortization of intangibles

     24,791       26,393       49,541       52,216  

Total operating expenses

     272,326       242,449       521,836       470,465  

Income from operations

     103,235       85,972       170,104       130,455  
                                 

Other (expense) income:

                                

Interest expense

     (23,318 )     (25,160 )     (46,923 )     (48,155 )

Investment income

     1,841       941       3,529       1,629  

Change in fair value of investment

     (2,117 )     -       (8,136 )     -  

Other, net

     (950 )     (331 )     (1,372 )     (497 )

Total other expense, net

     (24,544 )     (24,550 )     (52,902 )     (47,023 )
                                 

Income before provision for income taxes

     78,691       61,422       117,202       83,432  

Provision for income taxes

     19,638       15,907       31,671       23,756  

Net income

     59,053       45,515       85,531       59,676  

Net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Net income attributable to Generac Holdings Inc.

   $ 59,115     $ 45,198     $ 85,347     $ 57,628  
                                 

Net income attributable to common shareholders per common share - basic:

   $ 0.99     $ 0.70     $ 1.38     $ 0.76  

Weighted average common shares outstanding - basic:

     59,880,336       61,721,614       59,854,131       61,645,341  
                                 

Net income attributable to common shareholders per common share - diluted:

   $ 0.97     $ 0.70     $ 1.36     $ 0.75  

Weighted average common shares outstanding - diluted:

     60,641,740       62,348,184       60,559,904       62,429,911  
                                 

Comprehensive income attributable to Generac Holdings Inc.

   $ 34,397     $ 69,060     $ 56,961     $ 104,422  

 

6
 

 

Generac Holdings Inc.

Condensed Consolidated Statements of Cash Flows

(U.S. Dollars in Thousands)

(Unaudited)

 

   

Six Months Ended June 30,

  
   

2024

    

2023

  

Operating activities

                

Net income

   $ 85,531     $ 59,676  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation

     35,241       28,982  

Amortization of intangible assets

     49,541       52,216  

Amortization of original issue discount and deferred financing costs

     1,948       1,921  

Change in fair value of investment

     8,136       -  

Deferred income taxes

     (18,140 )     (14,152 )

Share-based compensation expense

     25,155       20,379  

Gain on disposal of assets

     (28 )     (532 )

Other noncash charges

     1,680       735  

Excess tax benefits from equity awards

     (602 )     (1,040 )

Net changes in operating assets and liabilities, net of acquisitions:

                

Accounts receivable

     (74,467 )     (15,535 )

Inventories

     12,245       (15,897 )

Other assets

     12,881       16,333  

Accounts payable

     73,994       (2,449 )

Accrued wages and employee benefits

     5,679       6,694  

Other accrued liabilities

     (29,232 )     (72,743 )

Net cash provided by operating activities

     189,562       64,588  
                 

Investing activities

                

Proceeds from sale of property and equipment

     85       1,801  

Proceeds from beneficial interests in securitization transactions

     -       1,472  

Contribution to tax equity investment

     (1,629 )     (6,627 )

Net proceeds from (purchase of) long-term investments

     104       (2,000 )

Expenditures for property and equipment

     (54,772 )     (53,900 )

Acquisition of business, net of cash acquired

     (17,812 )     (16,188 )

Net cash used in investing activities

     (74,024 )     (75,442 )
                 

Financing activities

                

Proceeds from short-term borrowings

     20,728       45,989  

Proceeds from long-term borrowings

     2,881       317,975  

Repayments of short-term borrowings

     (39,011 )     (21,125 )

Repayments of long-term borrowings and finance lease obligations

     (14,657 )     (160,557 )

Stock repurchases

     (50,609 )     -  

Payment of contingent acquisition consideration

     -       (4,979 )

Payment of deferred acquisition consideration

     (7,361 )     -  

Purchase of additional ownership interest

     (9,117 )     (104,844 )

Taxes paid related to equity awards

     (9,983 )     (9,186 )

Proceeds from the exercise of stock options

     10,620       6,223  

Net cash (used in) provided by financing activities

     (96,509 )     69,496  
                 

Effect of exchange rate changes on cash and cash equivalents

     (1,706 )     1,403  
                 

Net increase in cash and cash equivalents

     17,323       60,045  

Cash and cash equivalents at beginning of period

     200,994       132,723  

Cash and cash equivalents at end of period

   $ 218,317     $ 192,768  

 

7
 

 

Generac Holdings Inc.

Segment Reporting and Product Class Information

(U.S. Dollars in Thousands)

(Unaudited)

 

   

Total Sales by Reportable Segment

  
   

Three Months Ended June 30, 2024

    

Three Months Ended June 30, 2023

  
   

External Net

Sales

    

Intersegment

Sales

    

Total Sales

    

External Net

Sales

    

Intersegment

Sales

    

Total Sales

  

Domestic

   $ 817,558     $ 9,581     $ 827,139     $ 804,539     $ 10,713     $ 815,252  

International

     180,639       3,869       184,508       195,881       27,842       223,723  

Intercompany elimination

     -       (13,450 )     (13,450 )     -       (38,555 )     (38,555 )

Total net sales

   $ 998,197     $ -     $ 998,197     $ 1,000,420     $ -     $ 1,000,420  

 

 

   

Total Sales by Reportable Segment

  
   

Six Months Ended June 30, 2024

    

Six Months Ended June 30, 2023

  
   

External Net

Sales

    

Intersegment

Sales

    

Total Sales

    

External Net

Sales

    

Intersegment

Sales

    

Total Sales

  

Domestic

   $ 1,529,895     $ 17,718     $ 1,547,613     $ 1,508,927     $ 26,320     $ 1,535,247  

International

     357,575       13,642       371,217       379,403       60,784       440,187  

Intercompany elimination

     -       (31,360 )     (31,360 )     -       (87,104 )     (87,104 )

Total net sales

   $ 1,887,470     $ -     $ 1,887,470     $ 1,888,330     $ -     $ 1,888,330  

 

 

   

External Net Sales by Product Class

  
   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  

Residential products

   $ 538,399     $ 498,587     $ 967,349     $ 917,450  

Commercial & industrial products

     344,169       384,353       698,139       747,343  

Other

     115,629       117,480       221,982       223,537  

Total net sales

   $ 998,197     $ 1,000,420     $ 1,887,470     $ 1,888,330  

 

   

Adjusted EBITDA by Reportable Segment

  
   

Three Months Ended June 30, 2024

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  

Domestic

   $ 139,674     $ 103,202     $ 238,849     $ 170,863  

International

     25,015       33,343       53,073       65,757  

Total adjusted EBITDA (1)

   $ 164,689     $ 136,545     $ 291,922     $ 236,620  

 

(1) See reconciliation of Adjusted EBITDA to Net income attributable to Generac Holdings Inc. on the following reconciliation schedule. 

 

8
 

 

Generac Holdings Inc.

Reconciliation Schedules

(U.S. Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

 

Net income to Adjusted EBITDA reconciliation

                                
   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  
                                 

Net income attributable to Generac Holdings Inc.

   $ 59,115     $ 45,198     $ 85,347     $ 57,628  

Net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Net income

     59,053       45,515       85,531       59,676  

Interest expense

     23,318       25,160       46,923       48,155  

Depreciation and amortization

     42,880       41,247       84,782       81,198  

Provision for income taxes

     19,638       15,907       31,671       23,756  

Non-cash write-down and other adjustments (1)

     1,885       (4,152 )     2,395       (7,312 )

Non-cash share-based compensation expense (2)

     12,715       10,045       25,155       20,379  

Transaction costs and credit facility fees (3)

     1,267       1,149       2,692       2,240  

Business optimization and other charges (4)

     1,140       1,760       1,626       2,860  

Provision for legal, regulatory, and clean energy product charges (5)

     363       -       2,898       5,800  

Change in fair value of investment (6)

     2,117       -       8,136       -  

Other

     313       (86 )     113       (132 )

Adjusted EBITDA

     164,689       136,545       291,922       236,620  

Adjusted EBITDA attributable to noncontrolling interests

     (37 )     520       440       3,653  

Adjusted EBITDA attributable to Generac Holdings Inc.

   $ 164,726     $ 136,025     $ 291,482     $ 232,967  

 

(1) Includes gains/losses on the disposition of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. A full description of these and the other reconciliation adjustments contained in these schedules is included in Generac's SEC filings. 
 

(2) Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
 

(3) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under our Amended Credit Agreement.
 

(4) Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions.

 

(5) Represents the following significant and unusual charges not indicative of our ongoing operations:

 

•

A provision for judgments and legal expenses related to certain patent and securities lawsuits - $0.4 million and $2.1 million in the second and first quarter of 2024, respectively.
 

•

Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $0.4 million in the first quarter of 2024.
 

•

A provision for a matter with the Consumer Product Safety Commission ("CPSC") concerning the imposition of civil fines for allegedly failing to timely submit a report under the Consumer Product Safety Act ("CPSA") in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021 - $5.8 million in the first quarter of 2023.

 

(6) Represents non-cash losses from changes in the fair value of the Company's investment in warrants and equity securities in Wallbox N.V.

 

9
 

 

Net income to Adjusted net income reconciliation

                                
   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  
                                 

Net income attributable to Generac Holdings Inc.

   $ 59,115     $ 45,198     $ 85,347     $ 57,628  

Net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Net income

     59,053       45,515       85,531       59,676  

Amortization of intangible assets

     24,791       26,393       49,541       52,216  

Amortization of deferred finance costs and original issue discount

     975       967       1,948       1,921  

Transaction costs and other purchase accounting adjustments (7)

     681       669       1,525       1,387  

Loss/(gain) attributable to business or asset dispositions (8)

     28       -       65       (119 )

Business optimization and other charges (4)

     1,140       1,760       1,626       2,860  

Provision for legal, regulatory, and clean energy product charges (5)

     363       -       2,898       5,800  

Change in fair value of investment (6)

     2,117       -       8,136       -  

Tax effect of add backs

     (7,520 )     (7,460 )     (16,445 )     (14,590 )

Adjusted net income

     81,628       67,844       134,825       109,151  

Adjusted net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Adjusted net income attributable to Generac Holdings Inc.

   $ 81,690     $ 67,527     $ 134,641     $ 107,103  
                                 

Adjusted net income attributable to Generac Holdings Inc. per common share - diluted:

   $ 1.35     $ 1.08     $ 2.22     $ 1.72  

Weighted average common shares outstanding - diluted:

     60,641,740       62,348,184       60,559,904       62,429,911  

 

(7) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, and certain purchase accounting and contingent consideration adjustments.
 

(8) Represents gains and losses attributable to the disposition of a business or assets occurring in other than ordinary course, as defined in our credit agreement.  

 

 

Free Cash Flow Reconciliation

                                
   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  
                                 

Net cash provided by operating activities

     77,664       83,147       189,562       64,588  

Proceeds from beneficial interests in securitization transactions

     -       677       -       1,472  

Expenditures for property and equipment

     (27,952 )     (29,923 )     (54,772 )     (53,900 )

Free cash flow

   $ 49,712     $ 53,901     $ 134,790     $ 12,160  

 

10
v3.24.2
Document And Entity Information
Jul. 31, 2024
Document Information [Line Items]  
Entity, Registrant Name Generac Holdings Inc.
Document, Type 8-K
Document, Period End Date Jul. 31, 2024
Entity, Incorporation, State or Country Code DE
Entity, File Number 001-34627
Entity, Tax Identification Number 20-5654756
Entity, Address, Address Line One S45 W29290 Hwy 59
Entity, Address, City or Town Waukesha
Entity, Address, State or Province WI
Entity, Address, Postal Zip Code 53189
City Area Code 262
Local Phone Number 544-4811
Title of 12(b) Security Common Stock
Trading Symbol GNRC
Security Exchange Name NYSE
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001474735
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