Generac Holdings 10-Q 2022-03-31

Filed 2022-05-09. 2 sections, 148K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

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 March 31, 2022
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)

Delaware20-5654756
(State or other jurisdiction of(IRS Employer
incorporation or organization)Identification No.)
S45 W29290 Hwy 59, Waukesha, WI53189
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueGNRCNew 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 May 4, 2022, there were 63,829,951 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 March 31, 2022 and December 31, 20211
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 20212
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 20213
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 20214
Notes to Condensed Consolidated Financial Statements5
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations15
Item 3.Quantitative and Qualitative Disclosures About Market Risk26
Item 4.Controls and Procedures26
PART II. OTHER INFORMATION
Item 1.Legal Proceedings26
Item 1A.Risk Factors26
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds27
Item 6.Exhibits27
Signatures28

PART I. FINANCIAL INFORMATION

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)
March 31,December 31,
20222021
Assets
Current assets:
Cash and cash equivalents$206,023$147,339
Accounts receivable, less allowance for credit losses609,870546,466
Inventories1,236,7721,089,705
Prepaid expenses and other assets72,73664,954
Total current assets2,125,4011,848,464
Property and equipment, net443,480440,852
Customer lists, net231,513238,722
Patents and technology, net482,947492,473
Other intangible assets, net56,24666,436
Tradenames, net237,854243,531
Goodwill1,412,1871,409,674
Deferred income taxes11,77915,740
Operating lease and other assets150,126121,888
Total assets$5,151,533$4,877,780
Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings$84,995$72,035
Accounts payable697,486674,208
Accrued wages and employee benefits50,44372,060
Other accrued liabilities415,955331,674
Current portion of long-term borrowings and finance lease obligations4,2795,930
Total current liabilities1,253,1581,155,907
Long-term borrowings and finance lease obligations1,002,685902,091
Deferred income taxes163,843205,964
Operating lease and other long-term liabilities351,724341,681
Total liabilities2,771,4102,605,643
Redeemable noncontrolling interests71,51158,050
Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 72,589,905 and 72,386,017 shares issued at March 31, 2022 and December 31, 2021, respectively727725
Additional paid-in capital959,890952,939
Treasury stock, at cost(471,833)(448,976)
Excess purchase price over predecessor basis(202,116)(202,116)
Retained earnings2,067,8681,965,957
Accumulated other comprehensive loss(46,402)(54,755)
Stockholders’ equity attributable to Generac Holdings Inc.2,308,1342,213,774
Noncontrolling interests478313
Total stockholders' equity2,308,6122,214,087
Total liabilities and stockholders’ equity$5,151,533$4,877,780
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 March 31,
20222021
Net sales$1,135,856$807,434
Costs of goods sold775,108485,620
Gross profit360,748321,814
Operating expenses:
Selling and service98,24368,424
Research and development39,74422,388
General and administrative41,97232,899
Amortization of intangibles26,0548,979
Total operating expenses206,013132,690
Income from operations154,735189,124
Other (expense) income:
Interest expense(9,554)(7,723)
Investment income77603
Other, net2463,309
Total other expense, net(9,231)(3,811)
Income before provision for income taxes145,504185,313
Provision for income taxes28,60835,368
Net income116,896149,945
Net income attributable to noncontrolling interests3,038952
Net income attributable to Generac Holdings Inc.$113,858$148,993
Net income attributable to Generac Holdings Inc. per common share - basic:$1.61$2.39
Weighted average common shares outstanding - basic:63,449,38062,478,734
Net income attributable to Generac Holdings Inc. per common share - diluted:$1.57$2.33
Weighted average common shares outstanding - diluted:64,828,81964,099,073
Comprehensive income attributable to Generac Holdings Inc.$122,365$153,816
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.
Excess Purchase PriceAccumulated
AdditionalOverOtherTotal
Common StockPaid-InTreasury StockPredecessorRetainedComprehensiveStockholders'Noncontrolling
SharesAmountCapitalSharesAmountBasisEarningsIncome (Loss)EquityInterestTotal
Balance at January 1, 202272,386,017$725$952,939(8,667,031)$(448,976)$(202,116)$1,965,957$(54,755)$2,213,774$313$2,214,087
Unrealized gain on interest rate swaps, net of tax of $6,326–––––––18,72818,728–18,

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