Generac Holdings 10-Q 2023-03-31

Filed 2023-05-09. 2 sections, 158K 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, 2023

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 May 3, 2023, there were 62,193,347 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 March 31, 2023 and December 31, 2022	1

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	2

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	4

	Notes to Condensed Consolidated Financial Statements	5

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	27

	Signatures	28

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,*
	*2023*			*2022*
Assets
Current assets:
Cash and cash equivalents	$	137,365		$	132,723
Accounts receivable, less allowance for credit losses of $28,660 and $27,664 at March 31, 2023 and December 31, 2022, respectively		490,384			522,458
Inventories		1,438,296			1,405,384
Prepaid expenses and other assets		119,729			121,783
Total current assets		2,185,774			2,182,348

Property and equipment, net		490,143			467,604

Customer lists, net		202,556			206,987
Patents and technology, net		445,333			454,757
Other intangible assets, net		37,633			41,719
Tradenames, net		225,198			227,251
Goodwill		1,426,332			1,400,880
Deferred income taxes		8,320			12,746
Operating lease and other assets		189,843			175,170
Total assets	$	5,211,132		$	5,169,462

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	64,093		$	48,990
Accounts payable		426,191			446,050
Accrued wages and employee benefits		48,088			45,741
Accrued product warranty		80,902			89,141
Other accrued liabilities		273,039			349,389
Current portion of long-term borrowings and finance lease obligations		18,029			12,733
Total current liabilities		910,342			992,044

Long-term borrowings and finance lease obligations		1,527,355			1,369,085
Deferred income taxes		110,447			125,691
Operating lease and other long-term liabilities		317,795			312,916
Total liabilities		2,865,939			2,799,736

Redeemable noncontrolling interests		3,814			110,471

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 73,052,760 and 72,701,257 shares issued at March 31, 2023 and December 31, 2022, respectively		731			728
Additional paid-in capital		1,042,786			1,016,138
Treasury stock, at cost, 10,855,203 and 11,284,350 shares at March 31, 2023 and December 31, 2022, respectively		(779,533	)		(808,491	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		2,319,638			2,316,224
Accumulated other comprehensive loss		(42,343	)		(65,102	)
Stockholders’ equity attributable to Generac Holdings Inc.		2,339,163			2,257,381
Noncontrolling interests		2,216			1,874
Total stockholders' equity		2,341,379			2,259,255
Total liabilities and stockholders’ equity	$	5,211,132		$	5,169,462

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,
	*2023*		*2022*

Net sales		$ 887,910		$ 1,135,856
Costs of goods sold		615,411		775,108
Gross profit		272,499		360,748

Operating expenses:
Selling and service		100,688		98,243
Research and development		41,820		39,744
General and administrative		59,685		41,972
Amortization of intangibles		25,823		26,054
Total operating expenses		228,016		206,013
Income from operations		44,483		154,735

Other (expense) income:
Interest expense		(22,995)		(9,554)
Investment income		688		77
Other, net		(166)		246
Total other expense, net		(22,473)		(9,231)

Income before provision for income taxes		22,010		145,504
Provision for income taxes		7,849		28,608
Net income		14,161		116,896
Net income attributable to noncontrolling interests		1,731		3,038
Net income attributable to Generac Holdings Inc.		$ 12,430		$ 113,858

Net income attributable to Generac Holdings Inc. per common share - basic:		$ 0.06		$ 1.61
Weighted average common shares outstanding - basic:		61,556,044		63,449,380

Net income attributable to Generac Holdings Inc. per common share - diluted:		$ 0.05		$ 1.57
Weighted average common shares outstanding - diluted:		62,294,447		64,828,819

Comprehensive income attributable to Generac Holdings Inc.		$ 35,362		$ 122,365

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 Price*					*Accumulated*
					*Additional*								*Over*					*Other*			*Total*
	Common Stock				*Paid-In*		Treasury Stock						*Predecessor*			*Retained*		*Comprehensive*			*Stockholders'*		*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Earnings*		*Income (Loss)*			*Equity*		*Interest*		*Total*
Balance at January 1, 2023		72,701,257	$	728	$	1,016,138		(11,284,350	)	$	(808,491	)	$	(202,116	)	$	2,316,224	$	(65,102	)	$	2,257,381	$	1,874

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