Generac Holdings 10-Q 2022-06-30

Filed 2022-08-08. 2 sections, 192K 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 June 30, 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)

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 August 3, 2022, there were 63,830,918 shares of registrant’s common stock outstanding.

GENERAC HOLDINGS INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	1

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	2

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021	3

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

	Signatures	32

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)

	*June 30,*			*December 31,*
	*2022*			*2021*
Assets
Current assets:
Cash and cash equivalents	$	467,140		$	147,339
Accounts receivable, less allowance for credit losses		692,291			546,466
Inventories		1,240,524			1,089,705
Prepaid expenses and other assets		91,356			64,954
Total current assets		2,491,311			1,848,464

Property and equipment, net		446,007			440,852

Customer lists, net		217,152			238,722
Patents and technology, net		469,384			492,473
Other intangible assets, net		51,727			66,436
Tradenames, net		233,023			243,531
Goodwill		1,388,051			1,409,674
Deferred income taxes		14,091			15,740
Operating lease and other assets		162,205			121,888
Total assets	$	5,472,951		$	4,877,780

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	77,514		$	72,035
Accounts payable		614,009			674,208
Accrued wages and employee benefits		61,249			72,060
Other accrued liabilities		415,730			331,674
Current portion of long-term borrowings and finance lease obligations		3,674			5,930
Total current liabilities		1,172,176			1,155,907

Long-term borrowings and finance lease obligations		1,286,499			902,091
Deferred income taxes		151,643			205,964
Operating lease and other long-term liabilities		360,041			341,681
Total liabilities		2,970,359			2,605,643

Redeemable noncontrolling interests		82,830			58,050

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 72,588,588 and 72,386,017 shares issued at June 30, 2022 and December 31, 2021, respectively		727			725
Additional paid-in capital		967,819			952,939
Treasury stock, at cost		(475,294	)		(448,976	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		2,210,582			1,965,957
Accumulated other comprehensive loss		(82,839	)		(54,755	)
Stockholders’ equity attributable to Generac Holdings Inc.		2,418,879			2,213,774
Noncontrolling interests		883			313
Total stockholders' equity		2,419,762			2,214,087
Total liabilities and stockholders’ equity	$	5,472,951		$	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 June 30,						Six Months Ended June 30,
	*2022*			*2021*			*2022*			*2021*

Net sales	$	1,291,391		$	919,981		$	2,427,247		$	1,727,415
Costs of goods sold		834,406			580,246			1,609,514			1,065,866
Gross profit		456,985			339,735			817,733			661,549

Operating expenses:
Selling and service		120,066			78,777			218,309			147,201
Research and development		41,599			25,344			81,343			47,732
General and administrative		52,600			41,610			94,572			74,509
Amortization of intangibles		25,876			11,052			51,930			20,031
Total operating expenses		240,141			156,783			446,154			289,473
Income from operations		216,844			182,952			371,579			372,076

Other (expense) income:
Interest expense		(10,235	)		(7,721	)		(19,789	)		(15,444	)
Investment income		92			244			169			847
Loss on extinguishment of debt		(3,743	)		(831	)		(3,743	)		(831	)
Other, net		505			(373	)		751			2,936
Total other expense, net		(13,381	)		(8,681	)		(22,612	)		(12,492	)

Income before provision for income taxes		203,463			174,271			348,967			359,584
Provision for income taxes		45,826			46,362			74,434			81,730
Net income		157,637			127,909			274,533			277,854
Net income attributable to noncontrolling interests		1,278			873			4,316			1,825
Net income attributable to Generac Holdings Inc.	$	156,359		$	127,036		$	270,217		$	276,029

Net income attributable to Generac Holdings Inc. per common share - basic:	$	2.24		$	2.06		$	3.85		$	4.44
Weighted average common shares outstanding - basic:		63,662,510			62,605,166			63,607,711			62,533,725

Net income attributable to Generac Holdings Inc. per common share - diluted:	$	2.21		$	2.01		$	3.78		$	4.34
Weighted average common shares outstanding - diluted:		64,713,748			64,088,709			64,799,002			64,097,378

Comprehensive income attributable to Generac Holdings Inc.	$	120,864		$	119,246		$	243,229		$	273,062

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.
																						**_Exces

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