gnrc20200331

gnrc20200331_10q.htm

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, 2021

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 April 29, 2021, there were 62,954,539 shares of registrant’s common stock outstanding.

Table of Contents

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, 2021 and December 31, 2020	1

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and 2020	2

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

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 6.	Exhibits	27

	Signatures	28

Table of Contents

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,*
	*2021*			*2020*
Assets
Current assets:
Cash and cash equivalents	$	744,814		$	655,128
Accounts receivable, less allowance for credit losses		428,702			374,906
Inventories		644,576			603,317
Prepaid expenses and other assets		39,515			36,382
Total current assets		1,857,607			1,669,733

Property and equipment, net		345,563			343,936

Customer lists, net		46,476			49,205
Patents and technology, net		80,250			86,727
Other intangible assets, net		9,182			9,932
Tradenames, net		145,074			146,159
Goodwill		849,294			855,228
Deferred income taxes		1,360			1,497
Operating lease and other assets		87,332			73,006
Total assets	$	3,422,138		$	3,235,423

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	26,534		$	39,282
Accounts payable		387,933			330,247
Accrued wages and employee benefits		46,736			63,036
Other accrued liabilities		245,009			204,812
Current portion of long-term borrowings and finance lease obligations		4,053			4,147
Total current liabilities		710,265			641,524

Long-term borrowings and finance lease obligations		841,516			841,764
Deferred income taxes		122,196			115,769
Operating lease and other long-term liabilities		160,338			179,955
Total liabilities		1,834,315			1,779,012

Redeemable noncontrolling interests		63,254			66,207

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 72,205,746 and 72,024,329 shares issued at March 31, 2021 and December 31, 2020, respectively		723			721
Additional paid-in capital		534,303			525,541
Treasury stock, at cost		(358,362	)		(332,164	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		1,581,681			1,432,565
Accumulated other comprehensive loss		(31,499	)		(34,254	)
Stockholders’ equity attributable to Generac Holdings Inc.		1,524,730			1,390,293
Noncontrolling interests		(161	)		(89	)
Total stockholders' equity		1,524,569			1,390,204
Total liabilities and stockholders’ equity	$	3,422,138		$	3,235,423

See notes to condensed consolidated financial statements.

Table of Contents

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,*
	*2021*			*2020*

Net sales	$	807,434		$	475,915
Costs of goods sold		485,620			303,595
Gross profit		321,814			172,320

Operating expenses:
Selling and service		68,424			55,139
Research and development		22,388			18,649
General and administrative		32,899			27,889
Amortization of intangibles		8,979			7,781
Total operating expenses		132,690			109,458
Income from operations		189,124			62,862

Other (expense) income:
Interest expense		(7,723	)		(9,053	)
Investment income		603			960
Other, net		3,309			(1,914	)
Total other expense, net		(3,811	)		(10,007	)

Income before provision for income taxes		185,313			52,855
Provision for income taxes		35,368			9,444
Net income		149,945			43,411
Net income (loss) attributable to noncontrolling interests		952			(1,049	)
Net income attributable to Generac Holdings Inc.	$	148,993		$	44,460

Net income attributable to Generac Holdings Inc. per common share - basic:	$	2.39		$	0.69
Weighted average common shares outstanding - basic:		62,478,734			62,126,481

Net income attributable to Generac Holdings Inc. per common share - diluted:	$	2.33		$	0.68
Weighted average common shares outstanding - diluted:		64,099,073			63,283,737

Comprehensive income attributable to Generac Holdings Inc.	$	153,816		$	(3,098	)

See notes to condensed consolidated financial statements.

Table of Contents

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 2021		72,024,329	$	721	$	525,541		(9,173,731	)	$	(332,164	)	$	(202,116	)	$	1,432,565	$	(34,254	)	$	1,390,293		$	(89	)	$	1,390,204
Unrealized gain on interest rate swaps, net of tax of $5,065		–		–		–		–			–			–			–		14,995			14,995			–			14,995
Foreign currency translation adjustment		–		–		–		–			–			–			–		(12,240	)		(12,240	)		(3	)		(12,243	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		181,417		2		3,314		–			–			–			–		–			3,316			–			3,316
Net share settlement of restricted stock awards		–		–		–		(78,087	)		(26,198	)		–			–		–			(26,198	)		–			(26,198	)
Share-based compensation		–		–		5,448		–			–			–			–		–			5,448			–			5,448
Redemption value adjustment		–		–		–		–			–			–			123		–			123			–			123
Net income		–		–		–		–			–			–			148,993		–			148,993			(69	)		148,924

Balance at March 31, 2021		72,205,746	$	723	$	534,303		(9,251,818	)	$	(358,362	)	$	(202,116	)	$	1,581,681	$	(31,499	)	$	1,524,730		$	(161	)	$	1,524,569

	*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, 2020		71,667,726	$	717	$	498,866		(9,103,013	)	$	(324,551	)	$	(202,116	)	$	1,084,383		$	(24,917	)	$	1,032,382		$	469		$	1,032,851
Accounting standard adoption impact		–		–		–		–			–			–			(1,147	)		–			(1,147	)		–			(1,147	)
Unrealized loss on interest rate swaps, net of tax of ($5,341)		–		–		–		–			–			–			–			(15,813	)		(15,813	)		–			(15,813	)
Foreign currency translation adjustment		–		–		–		–			–			–			–			(33,214	)		(33,214	)		(4	)		(33,218	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		176,949		2		755		–			–			–			–			–			757			–			757
Net share settlement of restricted stock awards		–		–		–		(66,881	)		(6,835	)		–			–			–			(6,835	)		–			(6,835	)
Share-based compensation		–		–		4,574		–			–			–			–			–			4,574			–			4,574
Redemption value adjustment		–		–		–		–			–			–			(1,522	)		–			(1,522	)		–			(1,522	)
Net income		–		–		–		–			–			–			44,460			–			44,460			(420	)		44,040

SEC Form 10-Q filed by Generac Holdlings Inc.