Generac Holdings 10-Q 2021-09-30

Filed 2021-11-04. 2 sections, 177K characters. Original on sec.gov · Markdown · JSON

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2021

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File Number 001-34627

GENERAC HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	20-5654756
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

S45 W29290 Hwy 59, Waukesha, WI	53189
(Address of principal executive offices)	(Zip Code)

(262) 544-4811

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 1, 2021, there were 63,089,973 shares of registrant’s common stock outstanding.

GENERAC HOLDINGS INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	1

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020	2

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020	3

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 6.	Exhibits	30

	Signatures	31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Generac Holdings Inc.
Condensed Consolidated Balance Sheets
(U.S. Dollars in Thousands, Except Share and Per Share Data)
(Unaudited)

	*September 30,*			*December 31,*
	*2021*			*2020*
Assets
Current assets:
Cash and cash equivalents	$	423,726		$	655,128
Accounts receivable, less allowance for credit losses		510,670			374,906
Inventories		934,948			603,317
Prepaid expenses and other assets		54,228			36,382
Total current assets		1,923,572			1,669,733

Property and equipment, net		412,706			343,936

Customer lists, net		154,152			49,205
Patents and technology, net		141,952			86,727
Other intangible assets, net		14,703			9,932
Tradenames, net		172,398			146,159
Goodwill		1,174,315			855,228
Deferred income taxes		3,813			1,497
Operating lease and other assets		102,819			73,006
Total assets	$	4,100,430		$	3,235,423

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	61,470		$	39,282
Accounts payable		611,181			330,247
Accrued wages and employee benefits		69,882			63,036
Other accrued liabilities		270,536			204,812
Current portion of long-term borrowings and finance lease obligations		4,945			4,147
Total current liabilities		1,018,014			641,524

Long-term borrowings and finance lease obligations		843,426			841,764
Deferred income taxes		175,665			115,769
Operating lease and other long-term liabilities		236,344			179,955
Total liabilities		2,273,449			1,779,012

Redeemable noncontrolling interests		44,704			66,207

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 72,335,705 and 72,024,329 shares issued at September 30, 2021 and December 31, 2020, respectively		724			721
Additional paid-in capital		563,162			525,541
Treasury stock, at cost		(358,634	)		(332,164	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		1,834,477			1,432,565
Accumulated other comprehensive loss		(55,541	)		(34,254	)
Stockholders’ equity attributable to Generac Holdings Inc.		1,782,072			1,390,293
Noncontrolling interests		205			(89	)
Total stockholders' equity		1,782,277			1,390,204
Total liabilities and stockholders’ equity	$	4,100,430		$	3,235,423

See notes to condensed consolidated financial statements.

Generac Holdings Inc.
Condensed Consolidated Statements of Comprehensive Income
(U.S. Dollars in Thousands, Except Share and Per Share Data)
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	*2021*			*2020*			*2021*			*2020*

Net sales	$	942,698		$	701,355		$	2,670,113		$	1,724,118
Costs of goods sold		606,704			425,206			1,672,570			1,066,666
Gross profit		335,994			276,149			997,543			657,452

Operating expenses:
Selling and service		82,242			60,901			229,443			178,566
Research and development		27,165			20,658			74,897			58,762
General and administrative		40,802			31,061			115,311			88,732
Amortization of intangibles		12,206			7,892			32,237			23,340
Total operating expenses		162,415			120,512			451,888			349,400
Income from operations		173,579			155,637			545,655			308,052

Other (expense) income:
Interest expense		(7,980	)		(8,096	)		(23,424	)		(25,081	)
Investment income		165			301			1,012			1,921
Loss on extinguishment of debt		–			–			(831	)		–
Other, net		(400	)		(557	)		2,536			(2,687	)
Total other expense, net		(8,215	)		(8,352	)		(20,707	)		(25,847	)

Income before provision for income taxes		165,364			147,285			524,948			282,205
Provision for income taxes		32,611			32,050			114,341			59,967
Net income		132,753			115,235			410,607			222,238
Net income (loss) attributable to noncontrolling interests		1,183			265			3,008			(3,337	)
Net income attributable to Generac Holdings Inc.	$	131,570		$	114,970		$	407,599		$	225,575

Net income attributable to Generac Holdings Inc. per common share - basic:	$	1.98		$	1.86		$	6.42		$	3.59
Weighted average common shares outstanding - basic:		62,690,437			62,353,473			62,583,957			62,244,872

Net income attributable to Generac Holdings Inc. per common share - diluted:	$	1.93		$	1.82		$	6.27		$	3.51
Weighted average common shares outstanding - diluted:		64,208,116			63,761,380			64,146,281			63,546,132

Comprehensive income attributable to Generac Holdings Inc.	$	113,727		$	123,887		$	386,789		$	187,548

See notes to condensed consolidated financial statements.

Generac Holdings Inc.
Condensed Consolidated Statements of Stockholders' Equity
(U.S. Dollars in Thousands, Except Share Data)
(Unaudited)

		Generac Holdings Inc.
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