Generac Holdings 10-Q 2024-03-31

Filed 2024-05-07. 2 sections, 161K 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 March 31, 2024

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, 2024, there were 60,614,444 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, 2024, and December 31, 2023	1

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023	2

	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2024 and 2023	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	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,*
	*2024*			*2023*
Assets
Current assets:
Cash and cash equivalents	$	249,355		$	200,994
Accounts receivable, less allowance for credit losses of $34,594 and $33,925 at March 31, 2024 and December 31, 2023, respectively		520,725			537,316
Inventories		1,182,350			1,167,484
Prepaid expenses and other current assets		101,483			91,898
Total current assets		2,053,913			1,997,692

Property and equipment, net		605,466			598,577

Customer lists, net		175,632			184,513
Patents and technology, net		407,928			417,441
Other intangible assets, net		23,956			27,127
Tradenames, net		214,136			216,995
Goodwill		1,429,495			1,432,384
Deferred income taxes		16,035			15,532
Operating lease and other assets		202,959			203,051
Total assets	$	5,129,520		$	5,093,312

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	78,086		$	81,769
Accounts payable		381,352			340,719
Accrued wages and employee benefits		46,198			54,970
Accrued product warranty		61,801			65,298
Other accrued liabilities		287,026			292,120
Current portion of long-term borrowings and finance lease obligations		43,438			45,895
Total current liabilities		897,901			880,771

Long-term borrowings and finance lease obligations		1,439,736			1,447,553
Deferred income taxes		84,923			90,012
Deferred revenue		172,500			167,008
Operating lease and other long-term liabilities		155,031			158,349
Total liabilities		2,750,091			2,743,693

Redeemable noncontrolling interests		9,117			6,549

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 73,492,146 and 73,195,055 shares issued at March 31, 2024 and December 31, 2023, respectively		735			733
Additional paid-in capital		1,081,985			1,070,386
Treasury stock, at cost, 13,087,185 and 13,057,298 shares at March 31, 2024 and December 31, 2023, respectively		(1,037,227	)		(1,032,921	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		2,542,859			2,519,313
Accumulated other comprehensive loss		(18,832	)		(15,143	)
Stockholders’ equity attributable to Generac Holdings Inc.		2,367,404			2,340,252
Noncontrolling interests		2,908			2,818
Total stockholders' equity		2,370,312			2,343,070
Total liabilities and stockholders’ equity	$	5,129,520		$	5,093,312

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,
	*2024*			*2023*

Net sales	$	889,273		$	887,910
Costs of goods sold		572,894			615,411
Gross profit		316,379			272,499

Operating expenses:
Selling and service		108,586			100,688
Research and development		49,410			41,820
General and administrative		66,764			59,685
Amortization of intangibles		24,750			25,823
Total operating expenses		249,510			228,016
Income from operations		66,869			44,483

Other (expense) income:
Interest expense		(23,605	)		(22,995	)
Investment income		1,688			688
Change in fair value of investment		(6,019	)		-
Other, net		(422	)		(166	)
Total other expense, net		(28,358	)		(22,473	)

Income before provision for income taxes		38,511			22,010
Provision for income taxes		12,033			7,849
Net income		26,478			14,161
Net income attributable to noncontrolling interests		246			1,731
Net income attributable to Generac Holdings Inc.	$	26,232		$	12,430

Net income attributable to Generac Holdings Inc. per common share - basic:	$	0.39		$	0.06
Weighted average common shares outstanding - basic:		59,849,362			61,556,044

Net income attributable to Generac Holdings Inc. per common share - diluted:	$	0.39		$	0.05
Weighted average common shares outstanding - diluted:		60,486,125			62,294,447

Comprehensive income attributable to Generac Holdings Inc.	$	22,564		$	35,362

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*	*Retained*	*Accumulated*
					*Additional*				*Over*	*Earnings*	*Other*	*Total*
	Common Stock				*Paid-In*		Treasury Stock		*Predecessor*	*(Accumulated*	*Comprehensive*	*Stockholders'*	*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*	*Amount*	*Basis*	*Deficit)*	*Income (Loss)*	*Equity*	*Interest*	*Total*
Balance at January 1, 2024		73,195,055	$	733	$	1,07

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