Generac Holdings 10-Q 2023-09-30

Filed 2023-11-07. 2 sections, 197K 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, 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 November 1, 2023, there were 61,431,577 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 September 30, 2023 and December 31, 2022	1

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022	2

	Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022	3

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 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	27

Item 4.	Controls and Procedures	27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	28

Item 3.	Defaults Upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information	28

Item 6.	Exhibits	28

	Signatures	29

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,*
	*2023*			*2022*
Assets
Current assets:
Cash and cash equivalents	$	161,525		$	132,723
Accounts receivable, less allowance for credit losses of $29,580 and $27,664 at September 30, 2023 and December 31, 2022, respectively		589,226			522,458
Inventories		1,311,129			1,405,384
Prepaid expenses and other current assets		105,169			121,783
Total current assets		2,167,049			2,182,348

Property and equipment, net		511,893			467,604

Customer lists, net		188,513			206,987
Patents and technology, net		426,552			454,757
Other intangible assets, net		30,317			41,719
Tradenames, net		219,012			227,251
Goodwill		1,417,564			1,400,880
Deferred income taxes		17,140			12,746
Operating lease and other non-current assets		188,301			175,170
Total assets	$	5,166,341		$	5,169,462

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	74,346		$	48,990
Accounts payable		394,168			446,050
Accrued wages and employee benefits		56,454			45,741
Accrued product warranty		70,572			89,141
Other accrued liabilities		267,217			349,389
Current portion of long-term borrowings and finance lease obligations		37,337			12,733
Total current liabilities		900,094			992,044

Long-term borrowings and finance lease obligations		1,465,141			1,369,085
Deferred income taxes		113,390			125,691
Deferred revenue		160,264			143,726
Operating lease and other long-term liabilities		155,326			169,190
Total liabilities		2,794,215			2,799,736

Redeemable noncontrolling interests		5,639			110,471

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 73,108,913 and 72,701,257 shares issued at September 30, 2023 and December 31, 2022, respectively		732			728
Additional paid-in capital		1,064,418			1,016,138
Treasury stock, at cost, 11,739,423 and 11,284,350 shares at September 30, 2023 and December 31, 2022, respectively		(880,858	)		(808,491	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		2,423,346			2,316,224
Accumulated other comprehensive loss		(41,614	)		(65,102	)
Stockholders’ equity attributable to Generac Holdings Inc.		2,363,908			2,257,381
Noncontrolling interests		2,579			1,874
Total stockholders' equity		2,366,487			2,259,255
Total liabilities and stockholders’ equity	$	5,166,341		$	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 September 30,						Nine Months Ended September 30,
	*2023*			*2022*			*2023*			*2022*

Net sales	$	1,070,667		$	1,088,258		$	2,958,997		$	3,515,505
Costs of goods sold		694,880			727,154			1,982,290			2,336,668
Gross profit		375,787			361,104			976,707			1,178,837

Operating expenses:
Selling and service		117,929			170,381			334,360			388,690
Research and development		43,312			39,985			129,074			121,328
General and administrative		83,052			37,464			199,108			132,036
Amortization of intangibles		26,718			25,751			78,934			77,681
Total operating expenses		271,011			273,581			741,476			719,735
Income from operations		104,776			87,523			235,231			459,102

Other (expense) income:
Interest expense		(24,707	)		(15,514	)		(72,862	)		(35,303	)
Investment income		1,160			451			2,789			620
Loss on extinguishment of debt		-			-			-			(3,743	)
Other, net		(1,167	)		(420	)		(1,664	)		331
Total other expense, net		(24,714	)		(15,483	)		(71,737	)		(38,095	)

Income before provision for income taxes		80,062			72,040			163,494			421,007
Provision for income taxes		19,428			11,594			43,184			86,028
Net income		60,634			60,446			120,310			334,979
Net income attributable to noncontrolling interests		257			2,176			2,305			6,492
Net income attributable to Generac Holdings Inc.	$	60,377		$	58,270		$	118,005		$	328,487

Net income attributable to Generac Holdings Inc. per common share - basic:	$	0.98		$	0.84		$	1.74		$	4.69
Weighted average common shares outstanding - basic:		61,368,440			63,249,881			61,552,949			63,480,161

Net income attributable to Generac Holdings Inc. per common share - diluted:	$	0.97		$	0.83		$	1.72		$	4.61
Weighted average common shares outstanding - diluted:		62,091,163			64,267,638			62,362,743			64,630,346

Comprehensive income attributable to Generac Holdings Inc.	$	37,041		$	21,683		$	141,463		$	264,912

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)

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