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Represents the following significant and unusual charges not indicative of our ongoing operations: • A provision for judgments and legal expenses related to certain patent and securities lawsuits - $363 and $2,170 in the second and first quarter of 2024, respectively. • Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $365 in the first quarter of 2024. • A provision for a matter with the Consumer Product Safety Commission ("CPSC") concerning the imposition of civil fines for allegedly failing to timely submit a report under the Consumer Product Safety Act ("CPSA") in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021 - $5,800 in the first quarter of 2023. Represents unrealized losses of $(2,308) on the interest rate swaps, net of tax effect of $578, for the three months ended June 30, 2024. Represents favorable impact from the weakening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2023, particularly the Euro, British Pound, and Mexican Peso. Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions. Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under our Amended Credit Agreement. Includes gains/losses on dispositions of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. Represents unfavorable impact from the strengthening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2024, particularly the Euro and Mexican Peso. Represents unrealized gains of $1,687 on the interest rate swaps, net of tax effect of $(423) for the six months ended June 30, 2023. Excludes approximately 471,000 and 440,000 stock options and restricted stock awards for the three months and six months ended June 30, 2024, respectively, and 393,000 and 360,000 stock options and restricted stock awards for the three months and six months ended June 30, 2023, respectively, because they would be anti-dilutive. Includes a specific warranty provision recorded during the third quarter of 2022 in the amount of $37,338 to address certain clean energy product related matters. Represents unrealized gains of $336 on the interest rate swaps, net of tax effect of $(84), for the six months ended June 30, 2024. 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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 June 30, 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 August 2, 2024, there were 60,152,735 shares of registrant's common stock outstanding.

 

 

 
Table of Contents

  

 

GENERAC HOLDINGS INC.

TABLE OF CONTENTS

 

 

Page

PART I. FINANCIAL INFORMATION
     

Item 1.

Financial Statements

  
     
 

Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023

1
     
 

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023

2
     
 

Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023

3
     
 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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

17
     

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28
     

Item 4.

Controls and Procedures

28
   

PART II. OTHER INFORMATION
     

Item 1.

Legal Proceedings

28
     

Item 1A.

Risk Factors

28
     

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29
     
Item 3. Defaults Upon Senior Securities 29
     
Item 4. Mine Safety Disclosures 29
     
Item 5. Other Information 29
     

Item 6.

Exhibits

29
     
 

Signatures

30

 

 
Table of Contents

 

 
 

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,

 
  

2024

  

2023

 

Assets

        

Current assets:

        

Cash and cash equivalents

 $218,317  $200,994 

Accounts receivable, less allowance for credit losses of $34,546 and $33,925 at June 30, 2024 and December 31, 2023, respectively

  610,322   537,316 

Inventories

  1,152,133   1,167,484 

Prepaid expenses and other current assets

  74,886   91,898 

Total current assets

  2,055,658   1,997,692 
         

Property and equipment, net

  622,947   598,577 
         

Customer lists, net

  167,240   184,513 

Patents and technology, net

  398,452   417,441 

Other intangible assets, net

  21,963   27,127 

Tradenames, net

  211,406   216,995 

Goodwill

  1,432,933   1,432,384 

Deferred income taxes

  17,401   15,532 

Operating lease and other assets

  190,566   203,051 

Total assets

 $5,118,566  $5,093,312 
         

Liabilities and stockholders’ equity

        

Current liabilities:

        

Short-term borrowings

 $66,407  $81,769 

Accounts payable

  406,296   340,719 

Accrued wages and employee benefits

  61,433   54,970 

Accrued product warranty

  58,743   65,298 

Other accrued liabilities

  269,250   292,120 

Current portion of long-term borrowings and finance lease obligations

  50,428   45,895 

Total current liabilities

  912,557   880,771 
         

Long-term borrowings and finance lease obligations

  1,444,696   1,447,553 

Deferred income taxes

  70,889   90,012 

Deferred revenue

  176,020   167,008 

Operating lease and other long-term liabilities

  141,885   158,349 

Total liabilities

  2,746,047   2,743,693 
         

Redeemable noncontrolling interests

  –   6,549 
         

Stockholders’ equity:

        

Common stock, par value $0.01, 500,000,000 shares authorized, 73,608,578 and 73,195,055 shares issued at June 30, 2024 and December 31, 2023, respectively

  736   733 

Additional paid-in capital

  1,101,074   1,070,386 

Treasury stock, at cost, 13,446,797 and 13,057,298 shares at June 30, 2024 and December 31, 2023, respectively

  (1,088,426)  (1,032,921)

Excess purchase price over predecessor basis

  (202,116)  (202,116)

Retained earnings

  2,601,974   2,519,313 

Accumulated other comprehensive loss

  (43,529)  (15,143)

Stockholders’ equity attributable to Generac Holdings Inc.

  2,369,713   2,340,252 

Noncontrolling interests

  2,806   2,818 

Total stockholders' equity

  2,372,519   2,343,070 

Total liabilities and stockholders’ equity

 $5,118,566  $5,093,312 

 

See notes to condensed consolidated financial statements.

 

1
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 June 30,

    

Six Months Ended June 30,

  
   

2024

    

2023

    

2024

    

2023

  
                                 

Net sales

   $ 998,197     $ 1,000,420     $ 1,887,470     $ 1,888,330  

Costs of goods sold

     622,636       671,999       1,195,530       1,287,410  

Gross profit

     375,561       328,421       691,940       600,920  
                                 

Operating expenses:

                                

Selling and service

     128,153       115,743       236,739       216,431  

Research and development

     53,996       43,942       103,406       85,762  

General and administrative

     65,386       56,371       132,150       116,056  

Amortization of intangibles

     24,791       26,393       49,541       52,216  

Total operating expenses

     272,326       242,449       521,836       470,465  

Income from operations

     103,235       85,972       170,104       130,455  
                                 

Other (expense) income:

                                

Interest expense

     (23,318 )     (25,160 )     (46,923 )     (48,155 )

Investment income

     1,841       941       3,529       1,629  

Change in fair value of investment

     (2,117 )     -       (8,136 )     -  

Other, net

     (950 )     (331 )     (1,372 )     (497 )

Total other expense, net

     (24,544 )     (24,550 )     (52,902 )     (47,023 )
                                 

Income before provision for income taxes

     78,691       61,422       117,202       83,432  

Provision for income taxes

     19,638       15,907       31,671       23,756  

Net income

     59,053       45,515       85,531       59,676  

Net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Net income attributable to Generac Holdings Inc.

   $ 59,115     $ 45,198     $ 85,347     $ 57,628  
                                 

Net income attributable to Generac Holdings Inc. per common share - basic:

   $ 0.99     $ 0.70     $ 1.38     $ 0.76  

Weighted average common shares outstanding - basic:

     59,880,336       61,721,614       59,854,131       61,645,341  
                                 

Net income attributable to Generac Holdings Inc. per common share - diluted:

   $ 0.97     $ 0.70     $ 1.36     $ 0.75  

Weighted average common shares outstanding - diluted:

     60,641,740       62,348,184       60,559,904       62,429,911  
                                 

Comprehensive income attributable to Generac Holdings Inc.

   $ 34,397     $ 69,060     $ 56,961     $ 104,422  

 

See notes to condensed consolidated financial statements.

 

2
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 April 1, 2024

  73,492,146  $735  $1,081,985   (13,087,185) $(1,037,227) $(202,116) $2,542,859  $(18,832) $2,367,404  $2,908  $2,370,312 

Unrealized loss on interest rate swaps, net of tax benefit of $578

                              (1,730)  (1,730)      (1,730)

Foreign currency translation adjustment

                              (22,967)  (22,967)  (40)  (23,007)

Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price

  116,432   1   6,374                       6,375       6,375 

Net share settlement of restricted stock awards

              (3,972)  (590)              (590)      (590)

Stock repurchases

              (355,640)  (50,609)              (50,609)      (50,609)

Share-based compensation

          12,715                       12,715       12,715 

Net income (loss)

                          59,115       59,115   (62)  59,053 
                                             

Balance at June 30, 2024

  73,608,578  $736  $1,101,074   (13,446,797) $(1,088,426) $(202,116) $2,601,974  $(43,529) $2,369,713  $2,806  $2,372,519 

 

  

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  $1,070,386   (13,057,298) $(1,032,921) $(202,116) $2,519,313  $(15,143) $2,340,252  $2,818  $2,343,070 

Unrealized gain on interest rate swaps, net of tax of ($84)

                              252   252       252 

Foreign currency translation adjustment

                              (28,638)  (28,638)  (127)  (28,765)

Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price

  413,523   3   5,533   8,417   –               5,536       5,536 

Net share settlement of restricted stock awards

              (42,276)  (4,896)              (4,896)      (4,896)

Stock repurchases

              (355,640)  (50,609)              (50,609)      (50,609)

Share-based compensation

          25,155                       25,155       25,155 

Redemption value adjustment

                          (2,686)      (2,686)      (2,686)

Net income

                          85,347       85,347   115   85,462 
                                             

Balance at June 30, 2024

  73,608,578  $736  $1,101,074   (13,446,797) $(1,088,426) $(202,116) $2,601,974  $(43,529) $2,369,713  $2,806  $2,372,519 

 

  

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 April 1, 2023

  73,052,760  $731  $1,042,786   (10,855,203) $(779,533) $(202,116) $2,319,638  $(42,343) $2,339,163  $2,216  $2,341,379 

Unrealized gain on interest rate swaps, net of tax of ($1,922)

                              5,752   5,752       5,752 

Foreign currency translation adjustment

                              20,375   20,375   (5)  20,370 

Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price

  44,256   1   928                       929       929 

Net share settlement of restricted stock awards

              (3,145)  (359)              (359)      (359)

Share-based compensation

          10,045                       10,045       10,045 

Redemption value adjustment

                          (1,821)      (1,821)      (1,821)

Net income

                          45,198       45,198   263   45,461 
                                             

Balance at June 30, 2023

  73,097,016  $732  $1,053,759   (10,858,348) $(779,892) $(202,116) $2,363,015  $(16,216) $2,419,282  $2,474  $2,421,756 

 

  

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  $2,259,255 

Unrealized gain on interest rate swaps, net of tax of ($423)

                              1,264   1,264       1,264 

Foreign currency translation adjustment

                              47,622   47,622   55   47,677 

Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price

  384,816   4   1,832                       1,836       1,836 

Net share settlement of restricted stock awards

              (40,116)  (4,797)              (4,797)      (4,797)

Share-based compensation

          20,379                       20,379       20,379 

Payment of contingent consideration

  10,943   –   15,410   466,118   33,396               48,806       48,806 

Redemption value adjustment

                          (10,837)      (10,837)      (10,837)

Net income

                          57,628       57,628   545   58,173 
                                             

Balance at June 30, 2023

  73,097,016  $732  $1,053,759   (10,858,348) $(779,892) $(202,116) $2,363,015  $(16,216) $2,419,282  $2,474  $2,421,756 

 

See notes to condensed consolidated financial statements.

 

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Generac Holdings Inc.

Condensed Consolidated Statements of Cash Flows

(U.S. Dollars in Thousands)

(Unaudited)

 

   

Six Months Ended June 30,

  
   

2024

    

2023

  

Operating activities

                

Net income

   $ 85,531     $ 59,676  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation

     35,241       28,982  

Amortization of intangible assets

     49,541       52,216  

Amortization of original issue discount and deferred financing costs

     1,948       1,921  

Change in fair value of investment

     8,136       -  

Deferred income taxes

     (18,140 )     (14,152 )

Share-based compensation expense

     25,155       20,379  

Gain on disposal of assets

     (28 )     (532 )

Other noncash charges

     1,680       735  

Excess tax benefits from equity awards

     (602 )     (1,040 )

Net changes in operating assets and liabilities, net of acquisitions:

                

Accounts receivable

     (74,467 )     (15,535 )

Inventories

     12,245       (15,897 )

Other assets

     12,881       16,333  

Accounts payable

     73,994       (2,449 )

Accrued wages and employee benefits

     5,679       6,694  

Other accrued liabilities

     (29,232 )     (72,743 )

Net cash provided by operating activities

     189,562       64,588  
                 

Investing activities

                

Proceeds from sale of property and equipment

     85       1,801  

Proceeds from beneficial interests in securitization transactions

     –       1,472  

Contribution to tax equity investment

     (1,629 )     (6,627 )

Net proceeds from (purchase of) long-term investments

     104       (2,000 )

Expenditures for property and equipment

     (54,772 )     (53,900 )

Acquisition of business, net of cash acquired

     (17,812 )     (16,188 )

Net cash used in investing activities

     (74,024 )     (75,442 )
                 

Financing activities

                

Proceeds from short-term borrowings

     20,728       45,989  

Proceeds from long-term borrowings

     2,881       317,975  

Repayments of short-term borrowings

     (39,011 )     (21,125 )

Repayments of long-term borrowings and finance lease obligations

     (14,657 )     (160,557 )

Stock repurchases

     (50,609 )     –  

Payment of contingent acquisition consideration

     –       (4,979 )

Payment of deferred acquisition consideration

     (7,361 )     -  

Purchase of additional ownership interest

     (9,117 )     (104,844 )

Taxes paid related to equity awards

     (9,983 )     (9,186 )

Proceeds from the exercise of stock options

     10,620       6,223  

Net cash (used in) provided by financing activities

     (96,509 )     69,496  
                 

Effect of exchange rate changes on cash and cash equivalents

     (1,706 )     1,403  
                 

Net increase in cash and cash equivalents

     17,323       60,045  

Cash and cash equivalents at beginning of period

     200,994       132,723  

Cash and cash equivalents at end of period

   $ 218,317     $ 192,768  

 

See notes to condensed consolidated financial statements.

 

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Generac Holdings Inc.
Notes to Condensed Consolidated Financial Statements

(U.S. Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

 

 

1.   Description of Business and Basis of Presentation

 

Founded in 1959, Generac Holdings Inc. ("the Company") is a leading global designer and manufacturer of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products and services serving the residential, light commercial, and industrial markets. Generac’s power products and solutions are available globally through a broad network of independent dealers, distributors, retailers, e-commerce partners, wholesalers, and equipment rental companies, as well as sold direct to certain end user customers. A summary of acquisitions affecting the reporting periods presented include:

 

  ● In June 2024, the Company closed on the acquisition of the Commercial & Industrial Battery Energy Storage System ("C&I BESS") product offering from SunGrid Solutions Inc. located in Cambridge, Canada.
  ● In April 2024, the Company acquired Huntington Power Equipment, Inc. ("Huntington"), headquartered in Shelton, Connecticut. Huntington is an industrial and residential generator distributor as well as a provider of maintenance and repair services. 
  ●

In February 2023, the Company acquired REFU Storage Systems ("REFUstor"), headquartered in Pfullingen, Germany. REFUstor is a developer and supplier of battery storage hardware products, advanced software, and platform services for the C&I energy storage market.

 

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in conformity with U.S. generally accepted accounting principles ("GAAP"). All intercompany amounts and transactions have been eliminated in consolidation.

 

The condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operation, and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

 

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023.

 

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New Accounting Pronouncements

 

Changes to GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standard updates ("ASUs") to the FASB Accounting Standards Codification ("ASC"). 

 

In March 2024, the Securities and Exchange Commission ("SEC") adopted a final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, to enhance and standardize climate-related disclosures. The rule will require companies to disclose material Scope 1 and Scope 2 greenhouse gas emissions; climate-related risks, governance, and oversight; and the financial effects of severe weather events and other natural conditions. These disclosures will begin to be phased in beginning with the Company's annual report for the year ending December 31, 2025. While this rule has been stayed pending the outcome of legal challenges, the Company is currently assessing the impact of adoption on the Company's consolidated financial statements and related disclosures in the event the stay is lifted.

 

In December 2023, the FASB issued ASU 2023-09 Improvements to Income Tax Disclosures. The ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, the Company must consistently categorize and provide greater disaggregation of information in the rate reconciliation. It must also further disaggregate income taxes paid. The update is effective for fiscal years beginning after December 15, 2024, and interim periods for fiscal years beginning after December 15, 2025. Entities may apply the amendments prospectively or may elect retrospective application. The Company is evaluating the impact of the new required disclosures but do not expect the adoption of ASU 2023-09 to have a material impact on the Company's consolidated financial statements. 

 

In November 2023, the FASB issued ASU 2023-07 Segment Reporting - Improving Reportable Segment Disclosures (Topic 280). The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. The Company is evaluating the impact of the new required disclosures but do not expect the adoption of ASU 2023-07 to have a material impact on the Company's consolidated financial statements. 

 

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the six months ended June 30, 2024, that are of significance or potential significance to the Company's consolidated financial statements or disclosures. 

 
 

2.   Acquisitions

 

Fiscal 2024 Acquisitions

 

On June 26, 2024, the Company closed on the acquisition of the C&I BESS product offering from SunGrid Solutions Inc. located in Cambridge, Canada.

 

On April 1, 2024, the Company acquired Huntington, headquartered in Shelton, Connecticut. Huntington is an industrial and residential generator distributor as well as a provider of maintenance and repair services. 

 

The combined preliminary purchase price for both acquisitions is $17,812, net of cash acquired. The Company recorded its preliminary purchase price allocation for C&I BESS and Huntington during the second quarter of 2024, based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting will be finalized prior to June 30, 2025, and there have not been any material changes to the balances acquired as of June 30, 2024. The accompanying condensed consolidated financial statements include the results of C&I BESS and Huntington from their dates of acquisition through June 30, 2024. Pro forma and other financial information are not presented as the effects of the C&I BESS and Huntington acquisitions are not material to the Company's results of operations or financial position. 

 

Fiscal 2023 Acquisitions

 

On February 1, 2023, the Company acquired REFUstor, headquartered in Pfullingen, Germany. REFUstor is a developer and supplier of battery storage hardware products, advanced software, and platform services for the C&I energy storage market.

 

The Company recorded its preliminary purchase price allocation for REFUstor during the first quarter of 2023, based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting for REFUstor was finalized in the first quarter of 2024 and did not result in material adjustments to the Company's preliminary estimates. The accompanying condensed consolidated financial statements include the results of REFUstor from the date of acquisition through June 30, 2024. Pro forma and other financial information are not presented as the effects of the REFUstor acquisition are not material to the Company's results of operations or financial position. 

 

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3.   Redeemable Noncontrolling Interest

 

On March 1, 2016, the Company acquired a 65% ownership interest in PR Industrial S.r.l. and its subsidiaries (Pramac). The 35% noncontrolling interest in Pramac had an acquisition date fair value of $34,253 and was recorded as a redeemable noncontrolling interest in the consolidated balance sheets, as the noncontrolling interest holder had within its control the right to require the Company to redeem its interest in Pramac. In May 2021, the Company exercised its call option rights and paid a purchase price of $27,164 to purchase an additional 15% ownership interest in Pramac, bringing the Company's total ownership interest in Pramac to 80%. On March 8, 2023, the Company and the noncontrolling interest holder entered into an agreement whereby the Company acquired the remaining 20% ownership interest in Pramac for a purchase price of $116,754, which brought the Company's total ownership interest in Pramac to 100%. The purchase price included $105,264 of initial consideration (which included a cash payment of $104,844 and a $420 gain on a foreign currency settlement in the first quarter of 2023) and $11,490 of contingent deferred consideration to be paid in up to 135,205 restricted shares that were issued based on the twenty day volume weighted average price of the Company’s stock ending on December 31, 2022, and which shall vest upon achievement of certain earnings targets at the end of the earn-out period, December 31, 2025. 

 

On February 1, 2019, the Company acquired a 51% ownership interest in Captiva Energy Solutions Private Limited (Captiva). The 49% noncontrolling interest in Captiva had an acquisition date fair value of $3,165 and was recorded as a redeemable noncontrolling interest in the consolidated balance sheets, as the noncontrolling interest holder had within its control the right to require the Company to redeem its interest in Captiva. The noncontrolling interest holder has a put option to sell his interest to the Company any time after five years from the date of acquisition, or earlier upon the occurrence of certain circumstances. Further, the Company has a call option that it may redeem any time after five years from the date of acquisition, or earlier upon the occurrence of certain circumstances. The put and call option price is based on a multiple of earnings, subject to the terms of the acquisition agreement. In March 2022, the Company signed an agreement to purchase an additional 15% ownership interest in Captiva for a purchase price of $461, bringing the Company's total ownership interest in Captiva to 66%. In May 2022, the Company signed an amendment to the purchase agreement resulting in a revised purchase price of $375, which was paid with cash on hand. On April 5, 2024, the Company acquired the remaining 34% ownership interest in Captiva for $9,117.

 

The redeemable noncontrolling interests were recorded at the greater of the initial fair value, increased or decreased for the noncontrolling interests’ share of comprehensive income (loss), or the estimated redemption value, with any adjustments to the redemption value impacting retained earnings, but not net income. However, the redemption value adjustments are reflected in the earnings per share calculation, as detailed in Note 13, “Earnings Per Share,” to the condensed consolidated financial statements. The following table presents the changes in the redeemable noncontrolling interest for both Captiva and Pramac:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $9,117  $3,814  $6,549  $110,471 

Net income

  -   222   58   1,670 

Foreign currency translation

  -   (169)  (176)  (536)

Purchase of additional ownership interest

  (9,117)  -   (9,117)  (116,754)

Redemption value adjustment

  -   1,821   2,686   10,837 

Balance at end of period

 $-  $5,688  $-  $5,688 

 
 

4.   Derivative Instruments and Hedging Activities

 

The Company records all derivatives in accordance with ASC 815, Derivatives and Hedging, which requires derivative instruments to be reported in the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies, and interest rates. The Company does not hold or issue derivative financial instruments for trading purposes. 

 

The Company periodically utilizes commodity derivatives and foreign currency forward purchase and sales contracts in the normal course of business. Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in the Company’s condensed consolidated statements of comprehensive income. The commodity and foreign currency forward contract gains and losses are not material to the Company’s condensed consolidated financial statements for the periods presented. 

 

Additionally, during the fourth quarter of 2023, the Company acquired stock warrants described in more detail below.

 

Interest Rate Swaps

 

In 2017, the Company entered into twenty interest rate swap agreements, the final four of which expired in  May 2023. In March 2020, the Company entered into three additional interest rate swap agreements, which were still outstanding as of June 30, 2024.

 

In June 2022, in conjunction with the amendments to the Company's credit agreements discussed further in Note 11, “Credit Agreements,” to the condensed consolidated financial statements, the Company amended its interest rate swaps to match the underlying debt and reconfirmed hedge effectiveness. The Company formally documented all relationships between interest rate hedging instruments and the related hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. These interest rate swap agreements qualify as cash flow hedges and therefore, the effective portions of their gains or losses are reported as a component of accumulated other comprehensive loss (AOCL) in the condensed consolidated balance sheets.

 

The amount of gains/(losses), net of tax recognized, for the three and six months ended June 30, 2024, was $(1,730) and $252, respectively. The amount of gains, net of tax recognized, for the three and six months ended June 30, 2023, was $5,752 and $1,264, respectively. The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

 

Stock Warrants

 

During the fourth quarter of 2023, the Company entered into a $30,000 agreement with Wallbox N.V. to purchase 5% of its Class A common stock ("Wallbox Shares") and acquire stock warrants, which provide the rights to an incremental approximate 5% ownership in the Class A common stock outstanding of Wallbox N.V. upon exercise at a fixed price with anti-dilution protections for a period of time. In accordance with GAAP, the Company is required to adjust the carrying value of these investments to market value on a quarterly basis. The Company recognized a loss of $2,117 and $8,136 for the three and six months ended June 30, 2024, respectively, primarily due to a decrease in the stock price of Wallbox N.V. during the period, of which $1,035 and $6,268 related to the stock warrants, respectively. 

 

Fair Value 

 

The following table presents the fair value of all the Company’s derivatives:

 

  

June 30, 2024

  

December 31, 2023

 

Foreign currency contracts

 $(143)  $(147)

Interest rate swaps

  38,938   38,601 
Stock warrants  8,978   14,862 

 

In the condensed consolidated balance sheets, the fair value of the foreign currency contracts is included in other accrued liabilities at  June 30, 2024, and prepaid expenses and other current assets as well as other accrued liabilities at December 31, 2023. The fair value of the interest rate swaps and stock warrants is included in operating lease and other assets at both June 30, 2024, and December 31, 2023. Excluding the impact of credit risk, the fair value of the derivative contracts as of June 30, 2024 and December 31, 2023 is an asset of $49,052 and $55,042, respectively, which represents the amount the Company would receive to exit all of the agreements on those dates.

 

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5.   Fair Value Measurements

 

ASC 820-10, Fair Value Measurement, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term borrowings, and revolving facility ("Revolving Facility") borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based on their short-term nature. The fair value of the Term Loan B borrowing, which has a net carrying value of $525,777, was $530,000 (Level 2) on  June 30, 2024. The fair value of the Term Loan A borrowing, which has a net carrying value of $733,626, was $728,579 (Level 2) on June 30, 2024. These fair values were calculated based on independent valuations which contain inputs and significant value drivers that are observable. The fair value of the Revolving Facility approximates the carrying value. 

 

For the fair value of the derivatives measured on a recurring basis, refer to the fair value table in Note 4, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements. The fair value of the Company's interest rate swaps and commodity and foreign currency derivative contracts are classified as Level 2. The valuation techniques used to measure the fair value of these derivative contracts, all of which have counterparties with high credit ratings, were based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of the derivative contracts above considers the Company’s credit risk in accordance with ASC 820-10. The fair value of the Wallbox N.V. stock warrants is classified as Level 3. The fair value of these contracts is measured using a Black Scholes option pricing model, with significant inputs derived from or corroborated by observable market data as well as internal estimates, specifically the time period until exercise. The warrants expire at the earlier of when the price per share equals or exceeds $6.00 or in 2029. The time period until exercise assumption has a significant impact on the fair value of the warrants.

 

Equity Securities

 

Equity securities consist of shares of Wallbox N.V. Class A common stock. The Company owned 9,836,066 Wallbox Shares as of June 30, 2024. The Wallbox Shares are classified as Level 1 in the fair value hierarchy and are recognized at fair value using the closing price of Wallbox N.V. common stock quoted on the New York Stock Exchange ("NYSE") on the last trading day of the quarter. The Wallbox Shares are included in operating lease and other assets in the condensed consolidated balance sheets. The fair value of the Wallbox Shares was $12,885 and $17,213 as of June 30, 2024, and December 31, 2023, respectively.

 

Contingent Consideration

 

Certain of the Company's business combinations involve potential payment of future consideration that is contingent upon the achievement of certain milestones. As part of purchase accounting, a liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within general and administrative expenses in the Company's consolidated statements of comprehensive income. The fair value measurement of contingent consideration is typically categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs that are not observable in the market. 

 

The fair value of contingent consideration for Chilicon Power LLC ("Chilicon") and Pramac as of June 30, 2024, and December 31, 2023, was $39,228 and $38,937, respectively, and was reported in other long-term liabilities in the condensed consolidated balance sheets. The contingent consideration for Chilicon extends through December 31, 2028, while the contingent consideration for Pramac extends through December 31, 2025. 

 

The following table provides a reconciliation of the activity for contingent consideration: 

 

Beginning balance, January 1, 2024

 $38,937 

Changes in fair value

  - 

Present value interest accretion

  291 

Ending balance, June 30, 2024

 $39,228 

 

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6.   Accumulated Other Comprehensive Loss

 

The following table presents a disclosure of changes in AOCL during the three and six months ended June 30, 2024 and 2023, net of tax:

 

  

Foreign Currency Translation Adjustments

   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – April 1, 2024

 $(49,253)  $30,421   $(18,832)

Other comprehensive income (loss)

  (22,967)

(1)

  (1,730)

(2)

  (24,697)

Ending Balance – June 30, 2024

 $(72,220)  $28,691   $(43,529)

 

  

Foreign Currency Translation Adjustments

   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – April 1, 2023

 $(74,298)  $31,955   $(42,343)

Other comprehensive income (loss)

  20,375 

(3)

  5,752 

(4)

  26,127 

Ending Balance – June 30, 2023

 $(53,923)  $37,707   $(16,216)

 

  Foreign Currency Translation Adjustments   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – January 1, 2024

 $(43,582)  $28,439   $(15,143)

Other comprehensive income (loss)

 

(28,638

)(1) 

252

 (5)  (28,386)

Ending Balance – June 30, 2024

 $(72,220)  $28,691   $(43,529)

 

  Foreign Currency Translation Adjustments   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – January 1, 2023

 $(101,545)  $36,443   $(65,102)

Other comprehensive income (loss)

  47,622 (3)  1,264 (6)  48,886 

Ending Balance – June 30, 2023

 $(53,923)  $37,707   $(16,216)

 

 (1)Represents unfavorable impact from the strengthening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2024, particularly the Euro and Mexican Peso.
 (2)Represents unrealized losses of $(2,308) on the interest rate swaps, net of tax effect of $578, for the three months ended June 30, 2024. 
 (3)Represents favorable impact from the weakening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2023, particularly the Euro, British Pound, and Mexican Peso.
 (4)Represents unrealized gains of $7,674 on the interest rate swaps, net of tax effect of $(1,922) for the three months ended June 30, 2023. 
 (5)Represents unrealized gains of $336 on the interest rate swaps, net of tax effect of $(84), for the six months ended June 30, 2024. 
 (6)Represents unrealized gains of $1,687 on the interest rate swaps, net of tax effect of $(423) for the six months ended June 30, 2023. 

 

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7.   Segment Reporting

 

The Company has two reportable segments for financial reporting purposes – domestic and international. The domestic segment includes the legacy Generac business and all historical acquisitions based in the U.S. and Canada, all of which have revenues substantially derived from the U.S. and Canada. The international segment includes all historical acquisitions not based in the U.S and Canada, all of which have revenues substantially derived from outside the U.S and Canada. Both reportable segments design and manufacture a wide range of energy technology solutions and other power products. The Company has multiple operating segments, which it aggregates into the two reportable segments, based on materially similar economic characteristics, products, production processes, classes of customers, distribution methods, organizational structure, and regional considerations.

 

The Company's product offerings consist primarily of power generation equipment, energy storage systems, energy management devices & solutions, and other power products geared for varying end customer uses. While Residential products and Commercial & Industrial ("C&I") products include similar products, they differ based on power output and end customer. The composition of net sales between residential, C&I, and other products & services by reportable segment is as follows:

 

  

Net Sales by Reportable Segment

 
  

Three Months Ended June 30, 2024

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $515,166  $23,233  $538,399 

Commercial & industrial products

  200,315   143,854   344,169 

Other

  102,077   13,552   115,629 

Total net sales

 $817,558  $180,639  $998,197 

 

  

Net Sales by Reportable Segment

 
  

Three Months Ended June 30, 2023

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $468,184  $30,403  $498,587 

Commercial & industrial products

  234,605   149,748   384,353 

Other

  101,750   15,730   117,480 

Total net sales

 $804,539  $195,881  $1,000,420 

 

  

Net Sales by Reportable Segment

 
  

Six Months Ended June 30, 2024

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $927,319  $40,030  $967,349 

Commercial & industrial products

  406,808   291,331   698,139 

Other

  195,768   26,214   221,982 

Total net sales

 $1,529,895  $357,575  $1,887,470 

 

  

Net Sales by Reportable Segment

 
  

Six Months Ended June 30, 2023

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $849,336  $68,114  $917,450 

Commercial & industrial products

  462,729   284,614   747,343 

Other

  196,862   26,675   223,537 

Total net sales

 $1,508,927  $379,403  $1,888,330 

 

Residential products consist primarily of automatic home standby generators ranging in output from 7.5kW to 150kW, portable generators, residential energy storage systems, energy management devices & solutions, and other outdoor power equipment. These products are predominantly sold through independent residential dealers, national and regional retailers, e-commerce merchants, electrical/HVAC/solar wholesalers, solar installers, and outdoor power equipment dealers. The residential products revenue consists of the sale of the product to the Company's distribution partners, who in turn sell or rent the product to the end consumer, including installation and maintenance services. In some cases, residential products are sold direct to the end consumer. Substantially all of the residential products' revenues are transferred to the customer at a point in time.

 

C&I products consist of larger output stationary generators used in C&I applications, with power outputs up to 3,250kW. Also included in C&I products are mobile generators, light towers, C&I battery energy storage systems, mobile heaters, mobile pumps, and related controllers for power generation equipment. These products are sold globally through industrial distributors and dealers, Engineering, Procurement, and Construction ("EPC") companies, equipment rental companies, and equipment distributors. The C&I products revenue consists of the sale of the product to the Company's distribution partners, who in turn sell or rent the product to the end customer, including installation and maintenance services. In some cases, C&I products are sold direct to the end customer. Substantially all of the C&I products' revenues are transferred to the customer at a point in time.

 

Other consists primarily of aftermarket service parts and product accessories sold to the Company's customers, the amortization of extended warranty deferred revenue, remote monitoring and grid services subscription revenue, as well as certain installation and maintenance service revenue. The aftermarket service parts and product accessories are generally transferred to the customer at a point in time, while the extended warranty and subscription revenue are recognized over the life of the contract. Other service revenue is recognized when the service is performed, sometimes based on achievement of milestones.

 

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The following table sets forth total sales by reportable segment and is inclusive of intersegment sales:

 

  

Three Months Ended June 30, 2024

  

Three Months Ended June 30, 2023

 
  

Domestic

  

International

  

Eliminations

  

Total

  

Domestic

  

International

  

Eliminations

  

Total

 

External net sales

 $817,558  $180,639  $-  $998,197  $804,539  $195,881  $-  $1,000,420 

Intersegment sales

  9,581   3,869   (13,450)  -   10,713   27,842   (38,555)  - 

Total sales

 $827,139  $184,508  $(13,450) $998,197  $815,252  $223,723  $(38,555) $1,000,420 

 

  

Six Months Ended June 30, 2024

  

Six Months Ended June 30, 2023

 
  

Domestic

  

International

  

Eliminations

  

Total

  

Domestic

  

International

  

Eliminations

  

Total

 

External net sales

 $1,529,895  $357,575  $-  $1,887,470  $1,508,927  $379,403  $-  $1,888,330 

Intersegment sales

  17,718   13,642   (31,360)  -   26,320   60,784   (87,104)  - 

Total sales

 $1,547,613  $371,217  $(31,360) $1,887,470  $1,535,247  $440,187  $(87,104) $1,888,330 

 

Management evaluates the performance of its segments based primarily on Adjusted EBITDA, which is reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based primarily on the definition that is contained in the Company’s credit agreements.

 

  

Adjusted EBITDA by Reportable Segment

 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Domestic

 $139,674  $103,202  $238,849  $170,863 

International

  25,015   33,343   53,073   65,757 

Total Adjusted EBITDA

 $164,689  $136,545  $291,922  $236,620 
                 

Interest expense

  (23,318)  (25,160)  (46,923)  (48,155)

Depreciation and amortization

  (42,880)  (41,247)  (84,782)  (81,198)

Non-cash write-down and other adjustments (1)

  (1,885)  4,152   (2,395)  7,312 

Non-cash share-based compensation expense (2)

  (12,715)  (10,045)  (25,155)  (20,379)

Transaction costs and credit facility fees (3)

  (1,267)  (1,149)  (2,692)  (2,240)

Business optimization and other charges (4)

  (1,140)  (1,760)  (1,626)  (2,860)

Provision for regulatory, legal, and clean energy product charges (5)

  (363)  -   (2,898)  (5,800)

Change in fair value of investment (6)

  (2,117)  -   (8,136)  - 

Other

  (313)  86   (113)  132 

Income before provision for income taxes

 $78,691  $61,422  $117,202  $83,432 

 

 

(1)

Includes gains/losses on dispositions of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. 
 

(2)

Represents share-based compensation expense to account for stock options, restricted stock, and other stock awards over their respective vesting periods.
 (3)Represents transaction costs incurred directly in connection with any investment, as defined in the Company's credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to the Company's senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under the Company's Amended Credit Agreement.
 

(4)

Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions.
 (5)

Represents the following significant and unusual charges not indicative of our ongoing operations:
•  A provision for judgments and legal expenses related to certain patent and securities lawsuits - $363 and $2,170 in the second and first quarter of 2024, respectively. 
•  Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $365 in the first quarter of 2024. 

•  A provision for a matter with the Consumer Product Safety Commission ("CPSC") concerning the imposition of civil fines for allegedly failing to timely submit a report under the Consumer Product Safety Act ("CPSA") in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021 - $5,800 in the first quarter of 2023.

 (6)Represents non-cash losses from changes in the fair value of the Company's investment in warrants and equity securities of Wallbox N.V.

 

The Company’s sales in the U.S. represented approximately 78% and 75% of total sales for the three months ended June 30, 2024 and 2023, respectively. The Company’s sales in the U.S. represented approximately 77% and 75% of total sales for the six months ended June 30, 2024 and 2023, respectively. Approximately 74% of the Company’s identifiable long-lived assets were located in the U.S. on  June 30, 2024 and December 31, 2023.

 

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8.   Balance Sheet Details

 

Inventories consist of the following:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Raw material

 $661,585  $677,428 

Work-in-process

  8,214   10,877 

Finished goods

  482,334   479,179 

Total

 $1,152,133  $1,167,484 

 

Property and equipment consists of the following:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Land and improvements

 $24,793  $22,556 

Buildings and improvements

  327,285   298,483 

Machinery and equipment

  288,220   271,879 

Dies and tools

  46,480   45,998 

Vehicles

  13,373   11,411 

Office & information technology equipment and internal use software

  198,606   185,601 

Leasehold improvements

  9,424   8,772 

Construction in progress

  75,484   98,083 

Gross property and equipment

  983,665   942,783 

Accumulated depreciation

  (360,718)  (344,206)

Total

 $622,947  $598,577 

 

Total property and equipment includes finance leases of $81,867 and $68,079 on  June 30, 2024 and  December 31, 2023, respectively, primarily consisting of buildings and improvements. Amortization of finance lease right of use assets is recorded within depreciation expense in the condensed consolidated statements of comprehensive income. The initial measurement of new finance lease right of use assets is accounted for as a non-cash item in the condensed consolidated statements of cash flows.

 

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9.   Product Warranty Obligations

 

The Company records a liability for standard product warranty obligations accounted for as assurance warranties at the time of sale of the related product to a customer based on historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. The following is a tabular reconciliation of the Company’s standard product warranty liability accounted for as an assurance warranty:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $111,126  $128,599  $116,408  $138,011 

Payments

  (20,733)  (25,490)  (42,080)  (51,642)

Provision for warranty issued

  16,745   17,352   32,049   33,217 

Changes in estimates for pre-existing warranties

  (859)  1,761   (98)  2,636 

Balance at end of period

 $106,279  $122,222  $106,279  $122,222 

 

The Company also sells extended warranty coverage for certain products, which it accounts for as a service warranty. The sales of extended warranties are recorded as deferred revenue, and typically have a duration of five to ten years. The deferred revenue related to extended warranty coverage is amortized over the duration of the extended warranty contract period, following the standard warranty period, using the straight-line method. The Company believes the straight-line method is appropriate because the performance obligation is satisfied based on the passage of time. The amortization of deferred revenue is recorded to net sales in the consolidated statements of comprehensive income. The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $163,793  $136,685  $155,870  $132,813 

Deferred revenue contracts issued

  15,089   10,433   29,873   20,159 

Amortization of deferred revenue contracts

  (7,180)  (6,196)  (14,041)  (12,050)

Balance at end of period

 $171,702  $140,922  $171,702  $140,922 

 

The timing of recognition of the Company’s deferred revenue balance related to extended warranties as of  June 30, 2024, is as follows:

 

Remainder of 2024

 $15,235 

2025

  32,467 

2026

  31,887 

2027

  26,787 

2028

  20,690 

After 2028

  44,636 

Total

 $171,702 

 

Standard product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Product warranty liability

        

Current portion - accrued product warranty

 $58,743  $65,298 

Long-term portion - other long-term liabilities

  47,536   51,110 

Total

 $106,279  $116,408 
         

Deferred revenue related to extended warranties

        

Current portion - other accrued liabilities

 $33,999  $28,203 

Long-term portion - deferred revenue

  137,703   127,667 

Total

 $171,702  $155,870 

 
 

10.   Contract Balances

 

While the Company’s standard payment terms for its customers are less than one year, the specific payment terms and conditions in its customer contracts vary. In certain cases, the Company’s customers pay for their goods in advance. These prepayments are recognized as customer deposits (contract liabilities) and recorded in other accrued liabilities in the condensed consolidated balance sheets. The balance of customer deposits was $20,004 and $19,173 on  June 30, 2024, and December 31, 2023, respectively. During the six months ended June 30, 2024, the Company recognized revenue of $13,148 related to amounts included in the December 31, 2023 customer deposit balance. The Company typically recognizes revenue within one year of the receipt of the customer deposit.

 

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11.   Credit Agreements

 

Short-term borrowings included in the condensed consolidated balance sheets as of June 30, 2024, and December 31, 2023, consisted of borrowings by the Company’s foreign subsidiaries on local lines of credit totaling $66,407 and $81,769, respectively.

 

Long-term borrowings are included in the condensed consolidated balance sheets as follows:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Tranche A Term Loan

 $735,938  $745,313 

Tranche B Term Loan

  530,000   530,000 

Original issue discount and deferred financing costs

  (10,735)  (12,685)

Revolving Facility

  150,000   150,000 

Finance lease obligation

  87,041   71,308 

Other

  2,880   9,512 

Total

  1,495,124   1,493,448 

Less: current portion of debt

  44,889   42,110 

Less: current portion of finance lease obligation

  5,539   3,785 

Total

 $1,444,696  $1,447,553 

 

Prior to the Tranche B Term Loan Facility extension discussed in Note 16, "Subsequent Events", as of June 30, 2024, the Tranche B Term Loan Facility matures on December 13, 2026, while the Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility is repayable in installments due at the end of each quarter commencing September 2023. Maturities of the Company's Tranche A Term Loan Facility, Tranche B Term Loan Facility, and Revolving Facility outstanding on  June 30, 2024, are as follows:

 

  

Tranche A Term Loan

  

Tranche B Term Loan

  

Revolving Facility

  

Total

 

2024

 $23,438  $-  $-  $23,438 

2025

  46,875   -   -   46,875 

2026

  65,625   530,000   -   595,625 

2027

  600,000   -   150,000   750,000 

Total

 $735,938  $530,000  $150,000  $1,415,938 

 

On July 3, 2024, the Company extinguished its existing $530,000 Term Loan B Facility and replaced it with a $500,000 Term Loan B Facility maturing on July 3, 2031. The new Term Loan B Facility is now repayable in quarterly installments equal to 0.25% of the original principal amount beginning October 2024, with a lump sum due upon maturity

 

The Company’s credit agreements originally provided for a $1,200,000 Tranche B Term Loan Facility and included a $300,000 uncommitted incremental term loan on that facility. The Tranche B Term Loan Facility initially bore interest at rates based on either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. After a number of amendments and as of June 30, 2024, the Tranche B Term Loan Facility bears interest at rates based on either a base rate plus an applicable margin of 0.75% or adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%. The interest rate for the Tranche B Term Loan Facility as of June 30, 2024, was 7.18%. 

 

The Tranche B Term Loan Facility does not require an Excess Cash Flow payment if the Company’s net secured leverage ratio is maintained below 3.75 to 1.00. As of June 30, 2024, the Company’s net secured leverage ratio was 1.86 to 1.00, and the Company was in compliance with all covenants of the Tranche B Term Loan Facility. There are no financial maintenance covenants on the Tranche B Term Loan Facility.

 

In June 2022, the Company amended and restated its existing credit agreements ("Amended Credit Agreement") that resulted in a new term loan facility in an aggregate principal amount of $750,000 ("Tranche A Term Loan Facility"), established a new $1,250,000 Revolving Facility, terminated the former asset-based lending facility ("ABL Facility"), and replaced all LIBOR provisions with SOFR provisions. Proceeds received by the Company from the Tranche A Term Loan Facility were used to repay the total existing outstanding balance on the Company's former ABL Facility and to make a $250,000 voluntary prepayment on the Tranche B Term Loan Facility, with the remaining funds used for future general corporate purposes. As a result of these prepayments, the Company wrote off $3,546 of original issue discount and capitalized debt issuance costs during the second quarter of 2022 as a loss on extinguishment of debt. 

 

The Tranche A Term Loan Facility and the Revolving Facility initially bore interest at a rate based on adjusted SOFR plus an applicable margin of 1.5% through December 31, 2022, subject to a SOFR floor of 0.0%. Beginning on January 1, 2023, the Tranche A Term Loan Facility and the Revolving Facility bear interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, based on the Company's total leverage ratio and subject to a SOFR floor of 0.0%. As of June 30, 2024, the interest rate for the Tranche A Term Loan Facility and Revolving Facility was 6.90%.

 

The Tranche A Term Loan Facility and the Revolving Facility contain certain financial covenants that require the Company to maintain a total leverage ratio below 3.75 to 1.00 as well as an interest coverage ratio above 3.00 to 1.00. As of June 30, 2024, the Company’s total leverage ratio was 1.95 to 1.00, and the Company's interest coverage ratio was 7.97 to 1.00. The Company was also in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2024. 

 

The Tranche B Term Loan Facility, Tranche A Term Loan Facility and Revolving Facility are guaranteed by substantially all of the Company’s wholly-owned domestic restricted subsidiaries and are secured by associated collateral agreements which pledge a first priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, cash, trade accounts receivable, inventory, and other current assets and proceeds thereof. 

 

In connection with the June 2022 refinancing and in accordance with ASC 470-50, the Company capitalized $10,330 of fees paid to creditors as deferred financing costs on long-term borrowings and expensed $800 of transaction fees. The Company evaluated on a lender-by-lender basis if the debt related to returning lenders on the Revolving Facility was significantly modified or not, resulting in the write-off of $197 in unamortized deferred financing costs related to the former ABL Facility as a loss on extinguishment of debt. 

 

As of June 30, 2024, there was $150,000 outstanding under the Revolving Facility, leaving $1,099,203 of unused capacity, net of outstanding letters of credit. 

 

See Note 5, "Derivative Instruments and Hedging Activities" and Item 7A of the Annual Report on Form 10-K for further information on interest rate swaps that are currently outstanding and partially offset the above interest expense on outstanding borrowings. 

 

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12.   Stock Repurchase Program

 

In September 2020, the Company’s Board of Directors approved a $250,000 stock repurchase program, which was exhausted in the third quarter of 2022. In  July 2022, the Company's Board of Directors approved another stock repurchase program, which commenced on August 5, 2022, and allowed for the repurchase of up to $500,000 of the Company's common stock over a 24-month period. Additionally, on February 12, 2024, the Company’s Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500,000 of the Company’s common stock over the next 24 months. The new program replaces the prior share repurchase program, which had approximately $26,297 remaining available for repurchase when the new program was approved. Pursuant to the approved program, the Company may repurchase its common stock from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of the Company's credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice.

 

During the second quarter of 2024, the Company repurchased 355,640 shares of common stock for $50,609. There were no share repurchases under the program during the first quarter of 2024. There were no share repurchases during the first and second quarters of 2023. Since the inception of all stock repurchase programs (starting in August 2015), the Company has repurchased 14,292,828 shares of common stock for $1,079,501 (at an average cost per share of $75.53). The Company has periodically reissued shares out of Treasury stock, including for acquisition earnout payments. 

 
 

13. Earnings Per Share

 

Basic earnings per share is calculated by dividing net income attributable to the common shareholders of the Company by the weighted average number of common shares outstanding during the period, exclusive of restricted shares. Except where the result would be anti-dilutive, diluted earnings per share is calculated by assuming the vesting of unvested restricted stock and the exercise of outstanding stock options, as well as the satisfaction of certain contingent acquisition consideration conditions as of the end of the period. Refer to Note 3, “Redeemable Noncontrolling Interest,” to the condensed consolidated financial statements for further information regarding the accounting for redeemable noncontrolling interests within earnings per share.

 

The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerator

                

Net income attributable to Generac Holdings Inc.

 $59,115  $45,198  $85,347  $57,628 

Redeemable noncontrolling interest redemption value adjustment

  -   (1,821)  (2,686)  (10,837)

Net income attributable to common shareholders

 $59,115  $43,377  $82,661  $46,791 
                 

Denominator

                

Weighted average shares, basic

  59,880,336   61,721,614   59,854,131   61,645,341 

Dilutive effect of stock compensation awards (1)

  761,404   626,570   705,773   784,570 

Dilutive effect of contingently issued shares

  -   -   -   - 

Diluted shares

  60,641,740   62,348,184   60,559,904   62,429,911 
                 

Net income attributable to common shareholders per share

                

Basic

 $0.99  $0.70  $1.38  $0.76 

Diluted

 $0.97  $0.70  $1.36  $0.75 

 

(1) Excludes approximately 471,000 and 440,000 stock options and restricted stock awards for the three months and six months ended June 30, 2024, respectively, and 393,000 and 360,000 stock options and restricted stock awards for the three months and six months ended June 30, 2023, respectively, because they would be anti-dilutive. 

 
 

14. Income Taxes

 

The effective income tax rates for the six months ended June 30, 2024 and 2023 were 27.0% and 28.5%, respectively. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior-year comparable period which did not repeat in the current year. 

 
 

15. Commitments and Contingencies

 

The Company has an arrangement with a finance company to provide floor plan financing for certain dealers. The Company receives payment from the finance company after shipment of product to the dealer. The Company participates in the cost of dealer financing up to certain limits and has agreed to repurchase products repossessed by the finance company, but does not indemnify the finance company for any credit losses they incur. The amount financed by dealers which remained outstanding under this arrangement on June 30, 2024, and December 31, 2023, was approximately $157,772 and $158,028, respectively.

 

On August 1, 2022, Power Home Solar, LLC d/b/a Pink Energy (PHS) filed a lawsuit in the Western District of Virginia against Generac Power Systems, Inc., a wholly-owned subsidiary of the Company (Generac Power). The complaint alleges breaches of warranty, product liability, and other various causes of action against Generac Power relating to the sale and performance of certain clean energy equipment and seeks to recover damages, including consequential damages, that PHS allegedly incurred. The Company disputes the allegations in the complaint, including that PHS can seek consequential damages or amounts greater than the $25,000 liability cap set forth in the agreement between the parties. Generac Power moved to dismiss the complaint and compel arbitration consistent with the parties’ agreement. PHS later filed a Chapter 7 bankruptcy petition in the Western District of North Carolina that identified Generac Power as one of its outstanding creditors. The parties agreed to toll PHS’s deadline to respond to the motion to dismiss and all other pretrial deadlines to allow the bankruptcy trustee to evaluate the complaint. The Trustee has not yet taken further action in this lawsuit. Generac Power intends to vigorously defend against the claims in the complaint, in whichever forum they may proceed. 

 

On October 28, 2022, Daniel Haak filed a putative consumer class action lawsuit against Generac Power in the Middle District of Florida. The complaint alleges breaches of warranty, tort-based, and unjust enrichment claims against Generac Power relating to the sale and performance of certain clean energy products, and seeks to recover damages, including consequential damages, that the plaintiff and putative class allegedly incurred. Additional putative class actions were filed by consumers raising similar claims and allegations in other district court cases. These putative class actions have been consolidated into a Multidistrict Litigation, In re: Generac Solar Power Systems Marketing, Sales Practices and Products Liability Litigation currently pending in the Eastern District of Wisconsin, Case No. 23-md-3078. Generac Power and the Company filed their answer to the consolidated master complaint after the court denied the motion to dismiss on May 24, 2024. Generac Power and the Company intend to vigorously defend against the consolidated master complaint. 

 

On December 1, 2022, Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System filed a putative securities class action lawsuit against the Company and certain of its officers in the Eastern District of Wisconsin. The court subsequently consolidated a later filed action and appointed a lead plaintiff. The lead plaintiff filed a consolidated complaint alleging violation of federal securities law related to disclosures of quality issues in Generac Power’s clean energy product, accounting for warranty reserves, reliance on channel partners, and demand for home standby generators (the “Oakland County Lawsuit”). The Company moved to dismiss the consolidated complaint on October 9, 2023. The Company disputes the allegations in the operative consolidated complaint and intends to vigorously defend against the claims in the consolidated class action. 

 

On February 3, 2023, a purported Company shareholder filed a shareholder derivative action against certain of the Company’s officers and directors in the United States District Court for the Eastern District of Wisconsin. The complaint seeks unspecified damages on behalf of the Company and certain other relief, such as certain reforms to corporate governance practices. The complaint (in which the Company is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of the Company’s public statements and legal compliance, and that the Company was damaged as a result of the breaches of fiduciary duties, and the defendants were unjustly enriched. The complaint also alleges, among other things, violations of Sections 14(a), 10(b) and 20(a) of the Securities Exchange Act of 1934, abuse of control, gross mismanagement, and waste of corporate assets. The Company has received several additional derivative actions filed in both state and federal courts raising similar claims and allegations, including issues raised in the Oakland County Lawsuit. The Company disputes the allegations in the shareholder derivative actions and intends to vigorously defend against the claims in the complaints.

 

On October 28, 2022, Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Michigan, as a result of which the Company became aware of an enforcement investigation by the U.S. Department of Justice ("DOJ"). The subpoena requests similar documents and information provided by the Company to the U.S. Environmental Protection Agency ("EPA") and the California Air Resource Board ("CARB") in response to civil document requests related to the Company’s compliance with emissions regulations for approximately 1.85 thousand portable generators produced by the Company in 2019 and 2020 and sold in 2020. The Company is cooperating with both the DOJ and the EPA and CARB inquiries. 

 

On November 30, 2022, the CPSC notified the Company of its intention to recommend the imposition of a civil penalty for failing to timely submit a report to the CPSC in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021. On May 3, 2023, the parties entered into a mutual settlement agreement. The agreement does not constitute an admission by Generac or a determination by the CPSC that Generac violated the CPSA. The terms of the settlement agreement require the Company to (i) abide by certain customary agency requirements regarding the ongoing commitment to the Company’s internal CPSA compliance practices and program, and (ii) pay a civil fine of $15,800. On July 21, 2023, Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Wisconsin, as a result of which the Company became aware of a continuing inquiry by the DOJ related to its statutory obligations under the CPSA in connection with this matter. Additionally, on October 23, 2023, the CPSC notified the Company that it is further investigating whether the Company complied with the reporting requirements to the CPSC in relation to certain portable generators that were subject to a voluntary recall previously announced on September 14, 2023. The Company is cooperating fully with both the CPSC and DOJ investigations and, at this time, is unable to predict the eventual scope, duration or final outcome of such investigations. 

 

On March 8, 2022, Ollnova Technologies Limited, a non-practicing entity, filed a patent infringement lawsuit against ecobee Inc. ("ecobee") in the United States District Court for the Eastern District of Texas (Case No. 22-cv-00072-JRG). Ollnova claimed that ecobee infringes on four of its patents. On October 5, 2023, a jury issued a verdict finding one of Ollnova’s patents invalid and that ecobee infringed at least one of the claims of the asserted patents and awarded a lump-sum payment of $11,500. ecobee filed motions for judgment as a matter of law and intends to appeal any adverse judgment. In the first quarter of 2024, the Company recorded an additional reserve of $1,826 for estimated prejudgment interest that will also be part of the appeal. 

 

On June 9, 2023, Spartronics Vietnam, Inc., a contract manufacturer of Generac Power’s clean energy products, filed multiple lawsuits against Generac Power and sub-suppliers accusing Generac Power of fraud, breaching its supply agreement with Spartronics, tortiously interfering with Spartronics’ relationships with its sub-suppliers, and requesting a determination of rights under the parties’ agreements in state and federal court. Spartronics subsequently filed additional third-party complaints against Generac Power raising similar claims and allegations. After a court granted Generac Power’s motion to compel arbitration, Spartronics filed a demand for arbitration of its claims. Generac Power denies the allegations in the complaints, including that Generac Power is responsible for Spartronics purchasing practices, and is pursuing a counterclaim in connection with the arbitration. 

 

On November 21, 2023, Christopher Walling filed a putative securities class action lawsuit against the Company and certain of its officers in the Western District of Wisconsin and was later appointed lead plaintiff. The complaint asserts claims for alleged violation of federal securities law related to statements concerning the Company’s financial outlook and the impact of macroeconomic trends on the demand for its products. The plaintiff seeks to represent a class of individuals who purchased or otherwise acquired common stock between May 3, 2023, and August 3, 2023, and seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s stock (the “Walling Lawsuit”). The Company moved to dismiss the amended complaint on June 21, 2024, and intends to vigorously defend against the claims in the amended complaint.

 

On February 14, 2024, a purported Company shareholder filed a derivative action against certain of the Company’s officers and directors in the United States District Court for the Eastern District of Wisconsin. The complaint (in which the Company is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of the Company’s public statements and legal compliance, including as to the claims raised in the Walling Lawsuit. The complaint seeks unspecified damages on behalf of the Company and certain other relief, including certain corporate governance reforms. The Company disputes the allegations in the shareholder derivative action and intends to vigorously defend against the claims in the complaint.

 

It is presently unlikely that any legal, regulatory or other proceedings pending against or involving the Company will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. However, in many of these matters, it is inherently difficult to determine whether a loss is probable or to estimate the size or range of the possible loss given the variety and potential outcomes of actual and potential claims, the uncertainty of future rulings, the behavior or incentives of adverse parties, and other factors outside the control of the Company. Accordingly, the Company’s loss reserves may change from time to time, and actual losses could exceed the amounts reserved by an amount that could be material to the Company’s consolidated financial position, results of operations or cash flows in any particular reporting period.

 

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16. Subsequent Events

 

On July 3, 2024, the Company extinguished its existing $530,000 Term Loan B Facility and replaced it with a $500,000 Term Loan B Facility maturing on July 3, 2031. The new Term Loan B Facility now requires quarterly installment payments equal to 0.25% of the original principal amount beginning October 2024, with a lump sum due upon maturity.

 

On August 1, 2024, the Company acquired the assets and liabilities of Ageto, LLC ("Ageto"). Ageto designs and integrates microgrid energy and control management systems and is headquartered in Fort Collins, Colorado. 

 

On August 5, 2024, the Company invested an incremental $35,000 in Wallbox N.V. to purchase an approximate additional 12% of its Class A common stock. Additionally, the Company maintains the rights to additional equity through warrants for an incremental approximate 5% ownership in Wallbox’s Class A common stock upon exercise at a fixed price with anti-dilution protections for a period of time.

 

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

 

This quarterly report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “forecast,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future,” “optimistic” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

 

The forward-looking statements contained in this quarterly report are based on assumptions that we have made in light of our industry experience and on our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. The forward-looking statements contained in this quarterly report include estimates regarding:

 

 

●

our business, financial and operating results, and future economic performance; 
 

●

proposed new product and service offerings; and 
 

●

management's goals, expectations, objectives, and other similar expressions concerning matters that are not historical facts.

 

Factors that could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements include:

 

 

●

 fluctuations in cost, availability, and quality of raw materials, key components and labor required to manufacture our products;
  ● our dependence on a small number of contract manufacturers and component suppliers, including single-source suppliers;
  ● our ability to protect our intellectual property rights or successfully defend against third party infringement claims;
  ● increase in product and other liability claims, warranty costs, recalls, or other claims;
  ● significant legal proceedings, claims, fines, penalties, tax assessments, lawsuits or government investigations;
  ● our ability to consummate our share repurchase programs;
  ● our failure or inability to adapt to, or comply with, current or future changes in applicable laws and regulations;
  ● scrutiny regarding our ESG practices;
  ● our ability to develop and enhance products and gain customer acceptance for our products;
  ● frequency and duration of power outages impacting demand for our products;
  ● changes in durable goods spending by consumers and businesses or other macroeconomic conditions, impacting demand for our products;
  ● our ability to accurately forecast demand for our products and effectively manage inventory levels relative to such forecast;
  ● our ability to remain competitive;
  ● our dependence on our dealer and distribution network;
  ● market reaction to changes in selling prices or mix of products;
  ● loss of our key management and employees;
  ● disruptions from labor disputes or organized labor activities;
  ● our ability to attract and retain employees;
  ● disruptions in our manufacturing operations;
  ● changes in U.S. trade policy;
  ● the possibility that the expected synergies, efficiencies and cost savings of our acquisitions, divestitures, restructurings, or realignments will not be realized, or will not be realized within the expected time period;
  ● risks related to sourcing components in foreign countries;
  ● compliance with environmental, health and safety laws and regulations;
  ●
government regulation of our products;
  ● failures or security breaches of our networks, information technology systems, or connected products;
  ● our ability to make payments on our indebtedness;
  ● terms of our credit facilities that may restrict our operations;
  ● our potential need for additional capital to finance our growth or refinancing our existing credit facilities; 
  ● risks of impairment of the value of our goodwill and other indefinite-lived assets;
  ● volatility of our stock price; and
  ● potential tax liabilities.

 

Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary in material respects from those projected in any forward-looking statements. In the current environment, some of the above factors have materialized and may cause actual results to vary from these forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in our filings with the Securities and Exchange Commission, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and in Part II, Item 1A of this Quarterly Report on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

 

Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

Overview

 

Generac is a leading energy technology solutions company that provides backup and prime power generation products for residential and commercial & industrial applications, solar + battery storage systems, energy monitoring & management devices and services, and engine- & battery-powered tools and equipment. As an energy technology solutions company that is “Powering a Smarter World”, our corporate purpose is to lead the evolution to more resilient, efficient, and sustainable energy solutions around the world.

 

We have a long history of providing power generation products across a variety of applications, and we maintain one of the leading market positions in the power equipment markets in North America and an expanding presence internationally. We believe we have one of the widest ranges of products in the power generation marketplace, including residential, commercial, and industrial standby generators, as well as portable and mobile generators used in a variety of applications. In recent years, the Company has been evolving its product portfolio by building out ecosystems of energy technology products, solutions, and services for homes and businesses. As part of this evolution, we have made significant investments into growing markets such as residential and C&I energy storage, solar module-level power electronics ("MLPE"), energy monitoring & management devices, and electric vehicle ("EV") charging. Central to these ecosystems are the Company’s next-generation connectivity devices, controls capabilities, and software platforms that facilitate the integration of our products and support the growing utilization of such distributed energy resources ("DERs") in grid services programs. In addition, we have been leveraging our leading position in the growing market for natural gas fueled generators, which we believe represents a cleaner transition fuel compared to diesel, to expand into applications beyond standby power, allowing us to participate in Energy-as-a-Service and microgrid projects for C&I customers. As the traditional centralized utility model evolves over time, we believe that a more decarbonized, digitized, and decentralized grid infrastructure will develop, and Generac’s energy technology solutions are uniquely and strategically positioned to participate in this next-generation grid referred to as “Grid 2.0”.

 

As our traditional power generation markets continue to grow due to multiple mega-trends that are driving increased penetration of our products, we believe we are in an excellent position to execute on this opportunity given our competitive strengths. In addition, our focus on more resilient, efficient and sustainable energy solutions has dramatically increased our served addressable market, and as a result, we believe that Generac is well positioned for success over the long-term.

 

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Mega-Trends, Strategic Growth Themes, and Additional Business Drivers

 

In 2021, we unveiled our “Powering A Smarter World” strategic plan, which serves as the framework for the significant investments we have made and will continue to make to capitalize on the long-term growth prospects of Generac. Our enterprise strategy is based on the combination of several key mega-trends that we believe will drive several significant strategic growth themes for our business.

 

Key Mega-Trends:

 

 

●

 “Grid 2.0”: which is the evolution of the traditional electrical utility model as the increasing reliance on intermittent renewable generation sources and the electrification of everything are leading to supply/demand imbalances and rising electricity costs, driving the migration towards distributed energy resources and decarbonization, digitization, and decentralization of the grid.
 

●

 Impact of climate change: which includes the expectation of more severe and volatile weather driving increased power outage activity, and more global regulation accelerating renewable investments. 
  ●
Home as a Sanctuary: which includes the trend of the increasing importance of the home – including more people working from home and aging in place – is leading to increasing sensitivity to power outages and need for peace of mind, combined with the more intelligent and connected home and desire for improved energy resiliency and efficiency.
  ● Emergence of cleaner alternative fuels: natural gas, and other alternative fuels, are important elements in the transition to a lower-carbon global energy supply.
  ● Growing investment in global infrastructure creating new opportunities: Upgrading of aging and underinvested legacy systems including transportation, power, healthcare and elderly care; along with expanding investment for increasingly critical technology infrastructure including data centers, telecom and EV charging.

 

Strategic Growth Themes:

 

Power quality issues continue to increase. Power disruptions are an important driver of consumer awareness for back-up power and have historically influenced demand for generators both in the United States and internationally. Increased frequency and duration of major power outage events, that have a broader impact beyond a localized level, increases product awareness and may drive consumers to accelerate their purchase of a standby or portable generator during the immediate and subsequent period, which we believe may last for six to twelve months following a major outage event. Energy storage systems offer similar resiliency advantages to consumers and can benefit from these same awareness drivers, at least for short duration power outages. The optional standby market for C&I power generation is also driven by power quality issues and the related need for backup power. Attitudes around climate change have shifted and undergone increased global focus in recent years, and an aging and underinvested electrical grid infrastructure remains highly vulnerable to the expectation of more severe and volatile weather. Additionally, rapid growth in renewable power sources such as solar and wind is resulting in increased intermittency of supply, further impairing the reliable supply of electricity at a time when demand is starting to increase meaningfully with the electrification of a wide range of consumer and commercial products, including transportation, HVAC systems, and other major appliances. These developments are causing a growing supply/demand imbalance for grid operators across North America, which has led to high-profile examples of rolling blackouts and calls for utility customers to reduce consumption to maintain grid integrity. In fact, the North American Electric Reliability Corporation has labeled significant portions of the United States and Canada as being at high risk of resource adequacy shortfalls during normal seasonal peak conditions in the 2024-2028 period due in part to these supply/demand dynamics. We are seeing increasing evidence that warnings of potential resource inadequacies are driving incremental consumer awareness of the need for backup power solutions. We believe utility supply shortfalls and related warnings may continue in the future, further expanding awareness of deteriorating power quality in North America. Taken together, we expect these factors to continue driving increased awareness of the need for backup power and demand for Generac’s products within multiple categories.

 

Home standby penetration opportunity is significant. Many potential customers are still not aware of the costs and benefits of automatic backup power solutions. With only approximately 6.25% penetration of the addressable market of homes in the United States (which we define as single-family detached, owner-occupied households with a home value of over $150,000, as defined by the U.S. Census Bureau's 2021 American Housing Survey for the United States), we believe there are significant opportunities to further penetrate the residential standby generator market both domestically and internationally. We believe by expanding our distribution network, continuing to develop our product lines, and targeting our marketing efforts, we can continue to build awareness and increase penetration for our home standby generators.

 

Solar, storage, and energy management markets are developing quickly. We believe the electric utility landscape will undergo significant changes in the decade ahead due to rising utility rates, grid instability and power quality issues, environmental concerns, and the continuing performance and cost improvements in renewable energy and energy storage technologies. On-site power generation from renewable sources and cleaner-burning natural gas generators are projected to become more prevalent as will the need to monitor, manage, and store this power – potentially developing into a significant market opportunity. While the market for residential solar and storage products continues to be soft in 2024, these markets are receiving an increasing level of regulatory and legislative support, most notably from the Inflation Reduction Act that was passed in 2022. This legislation includes significant subsidies and investment tax credits for consumers and businesses over the coming decade, as well as production tax credits for businesses that meet certain domestic manufacturing requirements in the production of renewable energy products. For example, in July 2024, we received a grant from the U.S. Department of Energy ("DOE") to facilitate the installation of residential solar and battery storage systems for disadvantaged Puerto Rican residents. The DOE grant provides for up to $200 million in funding for the purchase of such systems over the next five years. We believe legislative support such as this will provide necessary opportunity for long-term, value-creating investments for market participants in this space. We expect to further advance our capabilities in energy technology by increasing our product development, sourcing, distribution, and marketing efforts. In addition, we should be able to leverage our significant competencies in the residential standby generator market to build our market position in the emerging residential solar, storage, and energy management markets. 

 

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Energy-as-a-Service models, “beyond standby” applications, and energy services open new market opportunities. We expect the evolution of the traditional electrical utility model toward decarbonized, digitized, and decentralized solutions will continue to drive the need for grid operators to access and control DERs. This will require highly intelligent software platforms that are able to optimize an increasingly complex supply and demand equation, such as our Concerto DERMS software platform. Additionally, growing interest in our C&I products across a variety of “beyond standby” applications is driving an increase in demand for subscription-like models for end customers, in which Generac will partner with third parties to deliver resiliency solutions that are also able to contribute to grid stability with minimal upfront capital outlays. We also believe that we can gain share in the C&I “behind the meter” energy storage market, including microgrid applications that require advanced system-level controls. The significant advancements made in recent years in the connectivity of our products are core to these newer capabilities, which play a key role in the evolution of Generac into an energy technology solutions company.

 

Natural gas generators, a continuing growth opportunity. We believe natural gas will continue to be an important and cleaner transition fuel of the future, in comparison to diesel, as the world continues to shift towards lower emission power generation sources. Demand for natural gas generators continues to represent an increasing portion of the overall C&I market, which we believe will continue to grow at a faster rate than traditional diesel fueled generators. We also continue to explore and expand our capabilities within new gaseous generator market opportunities, including continuous-duty, prime rated, distributed generation, demand response, microgrids, and overall use as a distributed energy resource in areas where grid stability is needed. Many of these applications are made possible by our natural gas generators having the capability to participate in available grid services programs, helping to offset the purchase price of the equipment over the product’s lifespan. Expanding our natural gas product offering into larger power nodes is also a part of this growth theme in taking advantage of the continuing shift from diesel to natural gas generators.

 

Increasingly critical nature and growing power consumption of digital infrastructure. As the number of “connected” devices continues to rapidly increase and wireless networks are considered critical infrastructure in the United States, network reliability and up-time are necessary for our increasingly connected society. This will require highly resilient cell tower sites across the network, and therefore necessitates the need for backup power sources on site at these cell towers. Generac is the leading supplier of backup power to the telecommunications market in the United States, where approximately half of all existing tower sites have yet to be hardened with backup power. As more mission-critical data is transmitted over wireless networks, we believe this penetration rate must increase considerably to maintain a higher level of reliability across the network. We have relationships with key Tier 1 carriers and tower companies globally, in addition to having the distribution partners to provide service support to the global market. We believe these factors coupled with Generac’s ability to customize solutions to each customer’s needs help us to maintain our strength within the global telecommunications market.

 

Additionally, the rapid increase in data centers is driving increased demand for backup power solutions, given the critical nature of this infrastructure. AI requirements, hyperscalers, and the expansion of edge computing and “connected devices” are expected to double data center power consumption from 2022 to 2030. We believe this significant growth in power consumption, as well as the increasing dependency of society on this next-generation digital infrastructure, will drive demand for backup power and intelligent energy management solutions, both at the individual site level and for the broader electrical grid.

 

Other Business Drivers

 

Impact of residential investment cycle. The market for a number of our residential products is affected by the residential investment cycle and overall consumer confidence and sentiment. When homeowners are confident of their household income, the value of their home and overall net worth, they are more likely to invest in their home. These trends can have an impact on demand for residential generators, energy storage systems, and energy management devices. Trends in the new housing market, highlighted by residential housing starts, can also impact demand for these products. Demand for outdoor power equipment is also impacted by several of these factors, as well as weather patterns. The existence of renewable energy mandates, investment tax credits and other subsidies, which have become even more prevalent with the passing of the Inflation Reduction Act, can also have an impact on the demand for solar and energy storage systems. 

 

Impact of business capital investment and other economic cycles. The global market for our C&I products is affected by different capital investment cycles, which can vary widely across the different regions and markets that we serve. These cycles include non-residential building construction, durable goods and infrastructure spending, as well as investments in the exploration and production of oil & gas, as businesses or organizations either add new locations or make investments to upgrade existing locations or equipment. These trends and market conditions can have a material impact on demand for our products. For example, the market for telecom and rental equipment has declined in 2024 relative to 2023 levels. The capital investment cycle may differ for the various C&I end markets that we serve, including light commercial, retail, office, telecommunications, rental, industrial, data centers, healthcare, construction, oil & gas and municipal infrastructure, among others. The market for these products is also affected by general economic conditions, fluctuations in interest rates, and geopolitical matters in the various countries where we serve, as well as credit availability in those regions.

 

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Factors Affecting Results of Operations

 

We are subject to various factors that can affect our results of operations, which we attempt to mitigate through factors we can control, including continued product development, expanded distribution, pricing, cost control, and hedging. Certain operational and other factors that affect our business include the following:

 

Effect of commodity, currency, component price fluctuations, and resource availability.    Industry-wide price fluctuations of key commodities, such as steel, copper and aluminum, along with other components we use in our products, as well as changes in labor costs required to produce our products, can have a material impact on our results of operations. Acquisitions in recent years have increased our use of advanced electronic components and battery cells, as well as further expanded our commercial and operational presence outside of the United States. Our international acquisitions, along with our existing global supply chain, expose us to fluctuations in foreign currency exchange rates and regulatory tariffs that can also have a material impact on our results of operations. 

 

We have historically attempted to mitigate the impact of any inflationary pressures through improved product design and sourcing, manufacturing efficiencies, price increases, and select hedging transactions. We have implemented multiple price increases over the past couple of years to help mitigate the impact of rising costs, and we continued to realize the benefit of these pricing actions in 2024. Our results are also influenced by changes in fuel prices in the form of freight rates, which in some cases are accepted by our customers and in other cases are paid by us.

 

Seasonality.    Although there is demand for our products throughout the year, in each of the past five years, approximately 19% to 25% of our net sales occurred in the first quarter, 22% to 28% in the second quarter, 24% to 28% in the third quarter and 23% to 31% in the fourth quarter, with different seasonality depending primarily on the occurrence, timing and severity of major power outage activity in each year. Major outage activity is unpredictable by nature and, as a result, our sales levels and profitability may fluctuate from period to period. The seasonality experienced during a major power outage, and for the subsequent quarters following the event, will vary relative to other periods where no major outage events occurred.  

 

Geopolitical Conflict.    Current global conflicts, such as those between Russia and Ukraine as well as the Middle East crisis between Hamas and Israel, have created substantial uncertainty in the global economy, including sanctions and penalties imposed on certain countries from several governments. While we do not have a significant physical presence in these locations and do not have significant direct exposure to customers and vendors in those countries, we are unable to predict the impact that these actions will have on the global economy or on our future financial condition, results of operations, and cash flows. 

 

Acquisitions.   Over the years, we have executed a number of acquisitions that support our strategic plan. A summary of the recent acquisitions can be found in Note 1, “Description of Business and Basis of Presentation,” to the condensed consolidated financial statements in Item 1 of this Quarterly Report on Form 10-Q, and in Item 8 (Note 1, “Description of Business”) of the Annual Report on Form 10-K for the year ended December 31, 2023. 

 

Factors Influencing Interest Expense

 

Interest expense can be impacted by a variety of factors, including market fluctuations in SOFR, interest rate election periods, interest rate swap agreements, repayments or borrowings of indebtedness, and amendments to our credit agreements. In connection with our credit agreement amendment in June 2022, SOFR became the new benchmark interest rate for the new Tranche A Term Loan Facility and the Revolving Facility, and all LIBOR provisions in the existing Tranche B Term Loan Facility were replaced with SOFR provisions. Refer to Note 11, “Credit Agreements,” to the condensed consolidated financial statements for further information.

 

Factors Influencing Provision for Income Taxes and Cash Income Taxes Paid

 

The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior-year comparable period which did not repeat in the current year.

 

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (the "Act"). The Act in part provides funding and tax incentives for certain clean energy products and projects. While the Act did not have a material impact on the financial results of the current period, we will continue to review the Act and any regulations or guidance issued by the U.S. Treasury Department or by a state which may provide a tax benefit or expense. 

 

In 2021, the Organization for Economic Cooperation and Development ("OECD") released Pillar Two Global Anti-Base Erosion model rules, designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. The OECD continues to release guidance and countries are implementing legislation to adopt the rules, some of which became effective on January 1, 2024. The United States has not yet enacted legislation implementing Pillar Two. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods. There was no impact to the financial results of the current period, and we do not expect the rules to have a material impact on our effective tax rate for the year. We will update our future tax provisions based on new regulations or guidance accordingly. 

 

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Results of Operations

 

Three months ended June 30, 2024, compared to the three months ended June 30, 2023

 

The following table sets forth our consolidated statements of operations information for the periods indicated:

 

   

Three Months Ended June 30,

                  

(U.S. Dollars in thousands)

  

2024

    

2023

    

$ Change

    

% Change

  
                                 

Net sales

   $ 998,197     $ 1,000,420     $ (2,223 )     -0.2 %

Costs of goods sold

     622,636       671,999       (49,363 )     -7.3 %

Gross profit

     375,561       328,421       47,140       14.4 %

Operating expenses:

                                

Selling and service

     128,153       115,743       12,410       10.7 %

Research and development

     53,996       43,942       10,054       22.9 %

General and administrative

     65,386       56,371       9,015       16.0 %

Amortization of intangible assets

     24,791       26,393       (1,602 )     -6.1 %

Total operating expenses

     272,326       242,449       29,877       12.3 %

Income from operations

     103,235       85,972       17,263       20.1 %

Total other expense, net

     (24,544 )     (24,550 )     6       0.0 %

Income before provision for income taxes

     78,691       61,422       17,269       28.1 %

Provision for income taxes

     19,638       15,907       3,731       23.5 %

Net income

     59,053       45,515       13,538       29.7 %

Net income (loss) attributable to noncontrolling interests

     (62 )     317       (379 )     -119.6 %

Net income attributable to Generac Holdings Inc.

   $ 59,115     $ 45,198     $ 13,917       30.8 %

 

The following tables set forth our reportable segment information for the periods indicated:
  

   

Net Sales by Reportable Segment

                  
   

Three Months Ended June 30,

                  

(U.S. Dollars in thousands)

  

2024

    

2023

    

$ Change

    

% Change

  

Domestic

   $ 817,558     $ 804,539     $ 13,019       1.6 %

International

     180,639       195,881       (15,242 )     -7.8 %

Total net sales

   $ 998,197     $ 1,000,420     $ (2,223 )     -0.2 %

 

   

Total Sales by Reportable Segment

  
   

Three Months Ended June 30, 2024

    

Three Months Ended June 30, 2023

  
   

External Net Sales

    

Intersegment Sales

    

Total Sales

    

External Net Sales

    

Intersegment Sales

    

Total Sales

  

Domestic

   $ 817,558     $ 9,581     $ 827,139     $ 804,539     $ 10,713     $ 815,252  

International

     180,639       3,869       184,508       195,881       27,842       223,723  

Intercompany elimination

     -       (13,450 )     (13,450 )     -       (38,555 )     (38,555 )

Total net sales

   $ 998,197     $ -     $ 998,197     $ 1,000,420     $ -     $ 1,000,420  

 

   

Adjusted EBITDA by Reportable Segment

                  
   

Three Months Ended June 30,

                  
   

2024

    

2023

    

$ Change

    

% Change

  

Domestic

   $ 139,674     $ 103,202     $ 36,472       35.3 %

International

     25,015       33,343       (8,328 )     -25.0 %

Total Adjusted EBITDA

   $ 164,689     $ 136,545     $ 28,144       20.6 %

 

The following table sets forth our product class information for the periods indicated:

 

    Net Sales by Product Class                  
   

Three Months Ended June 30,

                  

(U.S. Dollars in thousands)

  

2024

    

2023

    

$ Change

    

% Change

  

Residential products

   $ 538,399     $ 498,587     $ 39,812       8.0 %

Commercial & industrial products

     344,169       384,353       (40,184 )     -10.5 %

Other

     115,629       117,480       (1,851 )     -1.6 %

Total net sales

   $ 998,197     $ 1,000,420     $ (2,223 )     -0.2 %

 

Net sales.   Domestic segment total sales (including inter-segment sales) increased 1% to $827.1 million in the three months ended June 30, 2024, as compared to $815.3 million in the prior-year second quarter, including a slight benefit from acquisitions. Higher home standby and portable generator shipments and growth in C&I product sales to industrial distributors were offset by lower C&I product shipments to telecom and national rental equipment customers.

 

International segment total sales (including inter-segment sales) decreased 18% to $184.5 million in the three months ended June 30, 2024, as compared to $223.7 million in the prior-year second quarter, including a slight benefit from foreign currency. The total sales decline for the segment was primarily driven by lower inter-segment sales related to softness in the telecom market and weaker shipments in Europe, most notably for portable generators.

 

Gross profit.   Gross profit margin for the second quarter of 2024 was 37.6%, as compared to 32.8% in the prior-year second quarter. The increase in gross profit margin was primarily driven by favorable sales mix, including higher home standby generator sales, and the realization of lower cost of goods sold. 

 

Operating Expenses.   Operating expenses increased by $29.9 million, or 12.3%, as compared to the prior-year second quarter. The growth in operating expenses was primarily driven by increased employee costs to support future growth and higher marketing spend to drive incremental awareness for our products.

 

Other Expense.   The slight decrease in other expense, net was driven primarily by a decrease in interest expense due to lower borrowings compared to the prior-year second quarter. This was mostly offset by a $2.1 million expense for the change in fair value of our investment in warrants and equity securities of Wallbox N.V. during the second quarter of 2024. 

 

Provision for income taxes.   Provision for income taxes for the second quarter of 2024 was $19.6 million, or an effective tax rate of 25.0%, as compared to $15.9 million, or a 25.9% effective tax rate, for the prior-year second quarter. The decrease in the effective tax rate was primarily driven by unfavorable discrete tax items in the prior-year second quarter which did not repeat in the current year. 

 

Net income attributable to Generac Holdings Inc.   Net income attributable to Generac Holdings Inc. in the second quarter of 2024 was $59.1 million compared to $45.2 million in the prior-year second quarter. This increase was primarily driven by the factors outlined above. 

 

Adjusted EBITDA.   Adjusted EBITDA for the domestic segment in the second quarter of 2024 was $139.7 million, or 16.9% of domestic segment total sales, as compared to $103.2 million, or 12.7% of total sales, in the prior-year second quarter. This margin improvement was primarily driven by favorable sales mix and the realization of lower cost of goods sold, partially offset by higher operating expense investments to support future growth initiatives.

 

Adjusted EBITDA for the international segment in the second quarter of 2024, before deducting for non-controlling interests, was $25.0 million, or 13.6% of international segment total sales, as compared to $33.3 million, or 14.9% of total sales, in the prior-year second quarter. This margin decline was primarily due to reduced operating leverage on lower shipments during the quarter.

 

Adjusted Net Income.   Adjusted Net Income in the second quarter of 2024 was $81.7 million compared to $67.5 million in the prior-year second quarter. This increase was primarily driven by higher net income in the current period as outlined above. 

 

See “Non-GAAP Measures” for a discussion of how we calculate Adjusted EBITDA and Adjusted Net Income and the limitations on their usefulness. 

 

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Table of Contents

 

Results of Operations

 

Six months ended June 30, 2024, compared to the six months ended June 30, 2023

 

The following table sets forth our consolidated statements of operations information for the periods indicated:

 

   

Six Months Ended June 30,

                  

(U.S. Dollars in thousands)

  

2024

    

2023

    

$ Change

    

% Change

  
                                 

Net sales

   $ 1,887,470     $ 1,888,330     $ (860 )     0.0 %

Costs of goods sold

     1,195,530       1,287,410       (91,880 )     -7.1 %

Gross profit

     691,940       600,920       91,020       15.1 %

Operating expenses:

                                

Selling and service

     236,739       216,431       20,308       9.4 %

Research and development

     103,406       85,762       17,644       20.6 %

General and administrative

     132,150       116,056       16,094       13.9 %

Amortization of intangible assets

     49,541       52,216       (2,675 )     -5.1 %

Total operating expenses

     521,836       470,465       51,371       10.9 %

Income from operations

     170,104       130,455       39,649       30.4 %

Total other expense, net

     (52,902 )     (47,023 )     (5,879 )     12.5 %

Income before provision for income taxes

     117,202       83,432       33,770       40.5 %

Provision for income taxes

     31,671       23,756       7,915       33.3 %

Net income

     85,531       59,676       25,855       43.3 %

Net income attributable to noncontrolling interests

     184       2,048       (1,864 )     -91.0 %

Net income attributable to Generac Holdings Inc.

   $ 85,347     $ 57,628     $ 27,719       48.1 %

 

The following tables set forth our reportable segment information for the periods indicated:

 

   

Net Sales by Reportable Segment

                  
   

Six Months Ended June 30,

                  

(U.S. Dollars in thousands)

  

2024

    

2023

    

$ Change

    

% Change

  

Domestic

   $ 1,529,895     $ 1,508,927     $ 20,968       1.4 %

International

     357,575       379,403       (21,828 )     -5.8 %

Total net sales

   $ 1,887,470     $ 1,888,330     $ (860 )     0.0 %

 

   

Total Sales by Reportable Segment

  
   

Six Months Ended June 30, 2024

    

Six Months Ended June 30, 2023

  
   

External Net Sales

     Intersegment Sales    

Total Sales

    

External Net Sales

     Intersegment Sales    

Total Sales

  

Domestic

   $ 1,529,895     $ 17,718     $ 1,547,613     $ 1,508,927     $ 26,320     $ 1,535,247  

International

     357,575       13,642       371,217       379,403       60,784       440,187  

Intercompany elimination

     -       (31,360 )     (31,360 )     -       (87,104 )     (87,104 )

Total net sales

   $ 1,887,470     $ -     $ 1,887,470     $ 1,888,330     $ -     $ 1,888,330  

 

   

Adjusted EBITDA by Reportable Segment

                  
   

Six Months Ended June 30,

                  
   

2024

    

2023

    

$ Change

    

% Change

  

Domestic

   $ 238,849     $ 170,863     $ 67,986       39.8 %

International

     53,073       65,757       (12,684 )     -19.3 %

Total Adjusted EBITDA

   $ 291,922     $ 236,620     $ 55,302       23.4 %

 

The following table sets forth our product class information for the periods indicated:

 

   

Net Sales by Product Class

                  
   

Six Months Ended June 30,

                  

(U.S. Dollars in thousands)

  

2024

    

2023

    

$ Change

    

% Change

  

Residential products

   $ 967,349     $ 917,450     $ 49,899       5.4 %

Commercial & industrial products

     698,139       747,343       (49,204 )     -6.6 %

Other

     221,982       223,537       (1,555 )     -0.7 %

Total net sales

   $ 1,887,470     $ 1,888,330     $ (860 )     0.0 %

 

Net sales.   Domestic segment total sales (including inter-segment sales) increased 1% to $1,547.6 million in the six months ended June 30, 2024, as compared to $1,535.2 million in the prior-year comparable period, including a slight benefit from acquisitions. Higher home standby and portable generator shipments and growth in C&I product sales to industrial distributors were mostly offset by lower C&I product shipments to telecom and national rental equipment customers.

 

International segment total sales (including inter-segment sales) decreased 16% to $371.2 million in the six months ended June 30, 2024, as compared to $440.2 million in the prior-year comparable period, including a modest benefit from foreign currency and acquisitions. The total sales decline for the segment was primarily driven by lower inter-segment sales related to softness in the telecom market and weaker shipments in Europe, most notably for portable generators.

 

Gross profit.  Gross profit margin for the six months ended June 30, 2024, was 36.7%, as compared to 31.8% in the prior-year comparable period. The increase in gross profit margin was primarily driven by favorable sales mix, including higher home standby generator sales, and the realization of lower cost of goods sold. 

 

Operating Expenses.  Operating expenses for the six months ended June 30, 2024, increased by $51.4 million, or 10.9%, as compared to the prior-year comparable period. The operating expenses in the current period include $2.5 million of charges related to certain patent and securities litigation matters (see Note 15, “Commitments and Contingencies” for additional information). The operating expenses in the prior-year comparable period include a $5.8 million provision for a matter with the CPSC (see Note 15, "Commitments and Contingencies" for additional information). The growth in operating expenses was primarily driven by increased employee costs to support future growth and higher marketing spend to drive incremental awareness for our products. 

 

Other Expense.  The increase in other expense, net for the six months ended June 30, 2024, was driven primarily by a $8.1 million expense for the change in fair value of our investment in warrants and equity securities of Wallbox N.V. This was partially offset by an increase of $1.9 million in investment income driven by higher interest rates on cash invested. 

 

Provision for income taxes.   Provision for income taxes for the six months ended June 30, 2024, was $31.7 million, or an effective tax rate of 27.0%, as compared to $23.8 million, or a 28.5% effective tax rate in the prior-year comparable period. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior-year comparable period which did not repeat in the current year. 

 

Net income attributable to Generac Holdings Inc.    Net income attributable to Generac Holdings Inc. for the six months ended June 30, 2024, was $85.3 million as compared to $57.6 million in the prior-year comparable period. This increase was primarily driven by the factors outlined above. 

 

Adjusted EBITDA.    Adjusted EBITDA for the domestic segment in the six months ended June 30, 2024, was $238.8 million or 15.4% of total domestic segment sales as compared to $170.9 million or 11.1% in the prior-year comparable period. This margin improvement was primarily driven by favorable sales mix and the realization of lower cost of goods sold, partially offset by higher operating expense investments to support future growth initiatives. 

 

Adjusted EBITDA for the international segment in the six months ended June 30, 2024, before deducting for non-controlling interests, was $53.1 million, or 14.3% of international segment total sales, as compared to $65.8 million or 14.9% of total sales, in the prior-year comparable period. This margin decrease was primarily due to reduced operating leverage on lower shipments during the six-month period. 

 

Adjusted Net Income.    Adjusted Net Income in the six months ended June 30, 2024, was $134.6 million compared to $107.1 million in the prior-year comparable period. This increase was primarily driven by higher net income in the current period as outlined above. 

 

See “Non-GAAP Measures” for a discussion of how we calculate Adjusted EBITDA and Adjusted Net Income and the limitations on their usefulness. 

 

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Liquidity and Financial Condition

 

Our primary cash requirements include payment for raw materials and components, salaries and benefits, facility and lease costs, operating expenses, interest and principal payments on debt, and capital expenditures. We finance our operations primarily from cash flow generated from operations and, if necessary, borrowings under our revolving credit facility.

 

Our credit agreements originally provided for a $1.2 billion term loan B credit facility ("Tranche B Term Loan Facility") and currently include a $300.0 million uncommitted incremental term loan facility. Additionally, our credit agreements previously provided for a $500.0 million ABL Facility that was paid off and terminated in June 2022.

 

In June 2022, we amended and restated our existing credit agreements ("Amended Credit Agreement") that resulted in a new term loan facility in an aggregate principal amount of $750 million (Tranche A Term Loan Facility), a new $1.25 billion revolving facility ("Revolving Facility"), the termination of the former ABL Facility, and replacement of all LIBOR interest rate provisions with SOFR provisions. Proceeds received from the Tranche A Term Loan Facility were used to repay the total existing outstanding balance on our former ABL Facility and to make a $250 million voluntary prepayment on the Tranche B Term Loan Facility, with the remaining funds used for future general corporate purposes. As a result of these prepayments, we wrote off $3.5 million of original issue discount and capitalized debt issuance costs during the second quarter of 2022 as a loss on extinguishment of debt. The new Revolving Facility was unfunded at closing.

 

As of June 30, 2024, there was $530 million outstanding under the Tranche B Term Loan Facility, $735.9 million outstanding under the Tranche A Term Loan Facility, and $150 million of funded Revolving Facility borrowings, leaving $1,099.2 million of unused capacity, net of outstanding letters of credit. Our Tranche B Term Loan Facility bears interest at rates based on either a base rate plus an applicable margin of 0.75% or adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%. Beginning on January 1, 2023, the Tranche A Term Loan Facility and Revolving Facility bear interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, based on our total leverage ratio and subject to a SOFR floor of 0.0%. At June 30, 2024, the interest rates for the Tranche A Term Loan Facility, Revolving Facility, and Tranche B Term Loan Facility were 6.90%, 6.90%, and 7.18%, respectively. See Note 4, "Derivative Instruments and Hedging Activities" and Item 7A of the Annual report on Form 10-K for further information on interest rate swaps, which help to reduce our borrowing costs.

 

Prior to the Tranche B Term Loan Facility extension discussed in Note 16, "Subsequent Events", as of June 30, 2024, the Tranche B Term Loan Facility matures on December 13, 2026, while the Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility is repayable in installments due at the end of each quarter commencing September 2023. Maturities of the Company's Tranche A Term Loan Facility, Tranche B Term Loan Facility, and Revolving Facility outstanding on June 30, 2024, are as follows:

 

2024

   $ 23,438  

2025

     46,875  

2026

     595,625  

2027

     750,000  

Total

   $ 1,415,938  
 
On July 3, 2024, the Company extinguished its existing $530 million Term Loan B Facility and replaced it with a $500 million Term Loan B Facility maturing on July 3, 2031. The new Term Loan B Facility now requires quarterly installment payments equal to 0.25% of the original principal amount beginning October 2024, with a lump sum due upon maturity.
 
The Tranche B Term Loan Facility does not require an Excess Cash Flow payment (as defined in the Amended Credit Agreement) if our net secured leverage ratio is maintained below 3.75 to 1.00. As of June 30, 2024, our net secured leverage ratio was 1.86 to 1.00. The Tranche A Term Loan Facility and the Revolving Facility added certain financial covenants that require us to maintain a total leverage ratio below 3.75 to 1.00 as well as an interest coverage ratio above 3.00 to 1.00. As of June 30, 2024, our total leverage ratio was 1.95 to 1.00, and our interest coverage ratio was 7.97 to 1.00. We were also in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2024. 
 
As of June 30, 2024, we had total liquidity of $1,317.5 million which consists of $218.3 million of cash and cash equivalents and $1,099.2 million available under our Revolving Facility. We believe we have a strong liquidity position that allows us to execute our strategic plan and provides the flexibility to continue to invest in future growth opportunities.
 
In September 2020, our Board of Directors approved a $250.0 million stock repurchase program, which was exhausted in the third quarter of 2022. In July 2022, our Board of Directors approved another stock repurchase program, which commenced on August 5, 2022, and allowed for the repurchase of up to $500.0 million of our common stock over a 24-month period. Additionally, on February 12, 2024, our Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500.0 million of our common stock over the next 24 months. The new program replaces the prior share repurchase program, which had approximately $26.3 million remaining available for repurchase when the new program was approved. Pursuant to the approved program, we may repurchase our common stock from time to time, in amounts and at prices we deem appropriate, subject to market conditions and other considerations. The repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of our credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice.

 

During the second quarter of 2024, we repurchased 355,640 shares of our common stock for $50.6 million. There were no share repurchases under the program during the first quarter of 2024. There were no share repurchases during the first and second quarters of 2023. Since the inception of all stock repurchase programs (starting in August 2015), we have repurchased 14,292,828 shares of our common stock for $1,079.5 million (at an average cost per share of $75.53). We have periodically reissued shares out of Treasury stock, including for acquisition earnout payments. 

 

See Note 11, “Credit Agreements,” and Note 12, "Stock Repurchase Program," to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for more information on our credit agreements and stock repurchase programs.

 

We have an arrangement with a finance company to provide floor plan financing for qualifying dealers. This arrangement provides liquidity for our dealers by financing dealer purchases of Generac products with credit availability from the finance company. We receive payment from the finance company after shipment of product to the dealer, and our dealers are given a longer period of time to pay the finance company. If our dealers do not pay the finance company, we may be required to repurchase the applicable inventory held by the dealer. We do not indemnify the finance company for any credit losses they may incur. Total dealer purchases financed under this arrangement accounted for approximately 13% and 11% of net sales for the six months ended June 30, 2024 and 2023, respectively. The amount financed by dealers which remained outstanding was $157.8 million and $158.0 million as of June 30, 2024, and December 31, 2023, respectively.

 

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Long-term Liquidity

 

We believe our cash and cash equivalents, cash flow from operations, and availability under our Revolving Facility and other short-term lines of credit will provide us with sufficient capital to continue to run our operations. We may use a portion of our cash flow for debt repayments and common stock buybacks, impacting the amount available for working capital, capital expenditures, acquisitions, and other general corporate purposes. As we continue to expand our business, we may require additional capital to fund other shareholder value enhancing activities.

 

Cash Flow

 

Six months ended June 30, 2024, compared to the six months ended June 30, 2023

 

The following table summarizes our cash flows by category for the periods presented:

 

   

Six Months Ended June 30,

                  

(U.S. Dollars in thousands)

  

2024

    

2023

    

$ Change

    

% Change

  
                                 

Net cash provided by operating activities

   $ 189,562     $ 64,588     $ 124,974       193.5 %

Net cash used in investing activities

     (74,024 )     (75,442 )     1,418       1.9 %

Net cash (used in) provided by financing activities

     (96,509 )     69,496       (166,005 )     -238.9 %

Effect of exchange rate changes on cash and cash equivalents

     (1,706 )     1,403       (3,109 )     -221.6 %

Net increase in cash and cash equivalents

   $ 17,323     $ 60,045     $ (42,722 )   $ -71.1 %

 

The increase in operating cash flows for the six months ended June 30, 2024, was primarily driven by higher operating earnings and an increase in working capital in the prior-year comparable period. 

 

Net cash used in investing activities for the six months ended June 30, 2024, primarily represents cash payments of $54.8 million related to the purchase of property and equipment, $17.8 million for the acquisitions of Huntington and C&I BESS, $1.6 million for a tax equity investment, and $1.9 million for an investment in Earth Foundry II, LP, a venture capital fund. These were partially offset by $2.0 million of cash proceeds from the sale of our minority investment in Rolling Energy Resources. 

 

Net cash used in investing activities for the six months ended June 30, 2023, primarily represents cash payments of $53.9 million related to the purchase of property and equipment, $16.2 million for the acquisition of REFUstor, $6.6 million for a tax equity investment, and a $2.0 million minority investment in Rolling Energy Resources, an electric vehicle load management platform.

 

Net cash used in financing activities for the six months ended June 30, 2024, primarily represents proceeds of $20.7 million from short-term borrowings, $2.9 million from long-term borrowings, and $10.6 million from the exercise of stock options. These cash proceeds were more than offset by $53.7 million of debt repayments ($39.0 million of short-term borrowings and $14.7 million of long-term borrowings and finance lease obligations), $50.6 million of share repurchases, a $9.1 million payment for the remaining ownership interest in Captiva, a $6.0 million payment and $1.4 million payment of deferred acquisition consideration related to our Chilicon and Blue Pillar acquisitions, respectively, and $10.0 million for taxes paid related to equity awards. 

 

Net cash provided by financing activities for the six months ended June 30, 2023, primarily represents proceeds of $318.0 million from long-term borrowings, $46.0 million from short-term borrowings, and $6.2 million from the exercise of stock options. These cash proceeds were partially offset by $104.8 million in cash payments for the purchase of the remaining ownership interest in Pramac, $181.7 million of debt repayments ($21.1 million of short-term borrowings and $160.6 million of long-term borrowings and finance lease obligations), and $9.2 million of taxes paid related to equity awards. 

 

Contractual Obligations

 

There have been no material changes to our contractual obligations between the February 21, 2024, filing of our Annual Report on Form 10-K for the year ended December 31, 2023, and June 30, 2024, except for the changes in outstanding borrowings and interest rates as discussed in Note 11, “Credit Agreements,” to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

 

Critical Accounting Policies and Estimates

 

As discussed in our Annual Report on Form 10-K for the year ended December 31, 2023, in preparing the financial statements in accordance with U.S. GAAP, management is required to make estimates and assumptions that have an impact on the asset, liability, revenue and expense amounts reported. These estimates can also affect supplemental information disclosures of the Company, including information about contingencies, risk and financial condition. The Company believes, given current facts and circumstances, its estimates and assumptions are reasonable, adhere to U.S. GAAP, and are consistently applied. Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates, and estimates may vary as new facts and circumstances arise. The Company makes routine estimates and judgments in determining net realizable value of accounts receivable, inventories, property and equipment, prepaid expenses, product warranties and other reserves. Management believes the Company’s most critical accounting estimates and assumptions are in the following areas: goodwill and other indefinite-lived intangible asset impairment assessment; business combinations and purchase accounting; and income taxes.

 

There have been no material changes in our critical accounting policies since the February 21, 2024, filing of our Annual Report on Form 10-K for the year ended December 31, 2023.

 

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Non-GAAP Measures

 

Adjusted EBITDA

 

To supplement our condensed consolidated financial statements presented in accordance with U.S. GAAP, we provide the computation of Adjusted EBITDA attributable to the Company, which is defined as net income before noncontrolling interests adjusted for the following items: interest expense, depreciation expense, amortization of intangible assets, income tax expense, certain non-cash gains and losses including certain purchase accounting adjustments and contingent consideration adjustments, share-based compensation expense, certain transaction costs and credit facility fees, business optimization expenses, certain specific provisions, mark-to-market gains and losses on a minority investment, and Adjusted EBITDA attributable to noncontrolling interests, as set forth in the reconciliation table below. The computation of Adjusted EBITDA is based primarily on the definition included in our Credit Agreement.

 

We view Adjusted EBITDA as a key measure of our performance. We present Adjusted EBITDA not only due to its importance for purposes of our credit agreements but also because it assists us in comparing our performance across reporting periods on a consistent basis as it excludes items that we do not believe are indicative of our core operating performance. Our management uses Adjusted EBITDA:

 

 

•

for planning purposes, including the preparation of our annual operating budget and developing and refining our internal projections for future periods;
 

•

to allocate resources to enhance the financial performance of our business;
 

•

as a benchmark for the determination of the bonus component of compensation for our senior executives under our management incentive plan, as described further in our 2023 Proxy Statement;
 

•

to evaluate the effectiveness of our business strategies and as a supplemental tool in evaluating our performance against our budget for each period; and
 

•

in communications with our Board of Directors and investors concerning our financial performance.

 

We believe Adjusted EBITDA is used by securities analysts, investors, and other interested parties in the evaluation of the Company. Management believes the disclosure of Adjusted EBITDA offers an additional financial metric that, when coupled with results prepared in accordance with U.S. GAAP and the reconciliation to U.S. GAAP results, provides a more complete understanding of our results of operations and the factors and trends affecting our business. We believe Adjusted EBITDA is useful to investors for the following reasons:

 

 

•

Adjusted EBITDA and similar non-GAAP measures are widely used by investors to measure a company's operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, tax jurisdictions, capital structures, and the methods by which assets were acquired;
 

•

investors can use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of the Company, including our ability to service our debt and other cash needs; and
 

•

by comparing our Adjusted EBITDA in different historical periods, our investors can evaluate our operating performance excluding the impact of items described below.

 

The adjustments included in the reconciliation table listed below are presented to illustrate the operating performance of our business in a manner consistent with the presentation used by our management and Board of Directors. These adjustments eliminate the impact of a number of items that:

 

 

•

we do not consider indicative of our ongoing operating performance, such as non-cash write-downs and other charges, non-cash gains, write-offs relating to the retirement of debt, severance costs, and other restructuring-related business optimization expenses;
 

•

we believe to be akin to, or associated with, interest expense, such as administrative agent fees, revolving credit facility commitment fees, and letter of credit fees; or
 

•

are non-cash in nature, such as share-based compensation.

 

We explain in more detail in footnotes (a) through (f) below why we believe these adjustments are useful in calculating Adjusted EBITDA as a measure of our operating performance.

 

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Adjusted EBITDA does not represent, and should not be a substitute for, net income or cash flows from operations as determined in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

 

 

•

Adjusted EBITDA does not reflect our capital expenditures, or future requirements for capital expenditures or contractual commitments;
 

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
 

•

Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
 

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
 

•

several of the adjustments that we use in calculating Adjusted EBITDA, such as non-cash write-downs and other charges, while not involving cash expense, do have a negative impact on the value of our assets as reflected in our consolidated balance sheet prepared in accordance with U.S. GAAP; and
 

•

other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

 

Furthermore, as noted above, one of our uses of Adjusted EBITDA is as a benchmark for determining elements of compensation for our senior executives. At the same time, some or all of these senior executives have responsibility for monitoring our financial results, generally including the adjustments in calculating Adjusted EBITDA (subject ultimately to review by our Board of Directors in the context of the Board's review of our quarterly financial statements). While many of the adjustments (for example, transaction costs and credit facility fees) involve mathematical application of items reflected in our financial statements, others involve a degree of judgment and discretion. While we believe all of these adjustments are appropriate, and while the quarterly calculations are subject to review by our Board of Directors in the context of the Board's review of our quarterly financial statements and certification by our Chief Financial Officer in a compliance certificate provided to the lenders under our Amended Credit Agreement, this discretion may be viewed as an additional limitation on the use of Adjusted EBITDA as an analytical tool.

 

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only supplementally.

 

The following table presents a reconciliation of net income to Adjusted EBITDA attributable to Generac Holdings Inc.:

 

   

Three Months Ended June 30,

    

Six Months Ended June 30,

  

(U.S. Dollars in thousands)

  

2024

    

2023

    

2024

    

2023

  
                                 

Net income attributable to Generac Holdings Inc.

   $ 59,115     $ 45,198     $ 85,347     $ 57,628  

Net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Net income

     59,053       45,515       85,531       59,676  

Interest expense

     23,318       25,160       46,923       48,155  

Depreciation and amortization

     42,880       41,247       84,782       81,198  

Provision for income taxes

     19,638       15,907       31,671       23,756  

Non-cash write-down and other adjustments (a)

     1,885       (4,152 )     2,395       (7,312 )

Non-cash share-based compensation expense (b)

     12,715       10,045       25,155       20,379  

Transaction costs and credit facility fees (c)

     1,267       1,149       2,692       2,240  

Business optimization and other charges (d)

     1,140       1,760       1,626       2,860  

Provision for legal, regulatory, and clean energy product charges (e)

     363       -       2,898       5,800  

Change in fair value of investment (f)

     2,117       -       8,136       -  

Other

     313       (86 )     113       (132 )

Adjusted EBITDA

     164,689       136,545       291,922       236,620  

Adjusted EBITDA attributable to noncontrolling interests

     (37 )     520       440       3,653  

Adjusted EBITDA attributable to Generac Holdings Inc.

   $ 164,726     $ 136,025     $ 291,482     $ 232,967  

 

(a)  Represents the following non-cash charges, gains, and other adjustments: gains/losses on the disposition of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. We believe that adjusting net income for these items is useful for the following reasons:

 

  •

The gains/losses on disposals of assets and sales of certain investments result from the sale of assets that are no longer useful in our business and therefore represent gains or losses that are not from our core operations.
  •

The adjustments for unrealized mark-to-market gains and losses on commodity contracts represent non-cash items to reflect changes in the fair value of forward contracts that have not been settled or terminated. We believe it is useful to adjust net income for these items because the charges do not represent a cash outlay in the period in which the charge is incurred, although Adjusted EBITDA must always be used together with our U.S. GAAP statements of comprehensive income and cash flows to capture the full effect of these contracts on our operating performance.
  • Purchase accounting and contingent consideration related adjustments relate to the acquisition of businesses and the accounting related to those acquisitions.

 

(b)  Represents share-based compensation expense to account for stock options, restricted stock, and other stock awards over their respective vesting period.

 

(c)  Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under our Amended Credit Agreement.

 

(d)  Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions.

 

(e)  Represents the following significant and unusual charges not indicative of our ongoing operations:
       •  A provision for judgments and legal expenses related to certain patent and securities lawsuits - $0.4 million and $2.1 million in the second and first quarter of 2024, respectively.
       •  Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $0.4 million in the first quarter of 2024.

       •  A provision for a matter with the CPSC concerning the imposition of civil fines for allegedly failing to timely submit a report under the CPSA in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021 - $5.8 million in the first quarter of 2023.

 

(f) Represents non-cash losses from changes in the fair value of our investment in warrants and equity securities of Wallbox N.V.

 

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Adjusted Net Income

 

To further supplement our condensed consolidated financial statements in accordance with U.S. GAAP, we provide the computation of Adjusted Net Income attributable to the Company, which is defined as net income before noncontrolling interest adjusted for the following items: amortization of intangible assets, amortization of deferred financing costs and original issue discount related to our debt, intangible impairment charges (if any), certain transaction costs and other purchase accounting adjustments, business optimization expenses, certain specific provisions, other non-cash gains and losses or charges, mark-to-market gains and losses on a minority investment, and adjusted net income attributable to noncontrolling interests, as set forth in the reconciliation table below.

 

We believe Adjusted Net Income is used by securities analysts, investors and other interested parties in the evaluation of the Company’s operations. Management believes the disclosure of Adjusted Net Income offers an additional financial metric that, when used in conjunction with U.S. GAAP results and the reconciliation to U.S. GAAP results, provides a more complete understanding of our ongoing results of operations, and the factors and trends affecting our business.

 

The adjustments included in the reconciliation table listed below are presented to illustrate the operating performance of our business in a manner consistent with the presentation used by investors and securities analysts. Similar to the Adjusted EBITDA reconciliation, these adjustments eliminate the impact of a number of items we do not consider indicative of our ongoing operating performance or cash flows, such as amortization costs, transaction costs and write-offs relating to the retirement of debt. 

 

Similar to Adjusted EBITDA, Adjusted Net Income does not represent, and should not be a substitute for, net income or cash flows from operations as determined in accordance with U.S. GAAP. Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

 

 

•

Adjusted Net Income does not reflect changes in, or cash requirements for, our working capital needs;
 

•

although amortization is a non-cash charge, the assets being amortized may have to be replaced in the future, and Adjusted Net Income does not reflect any cash requirements for such replacements; and
 

•

other companies may calculate Adjusted Net Income differently than we do, limiting its usefulness as a comparative measure.

 

The following table presents a reconciliation of net income to Adjusted Net Income attributable to Generac Holdings Inc.: 

 

   

Three Months Ended June 30,

    

Six Months Ended June 30,

  

(U.S. Dollars in thousands, except share and per share data)

  

2024

    

2023

    

2024

    

2023

  
                                 

Net income attributable to Generac Holdings Inc.

   $ 59,115     $ 45,198     $ 85,347     $ 57,628  

Net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Net income

     59,053       45,515       85,531       59,676  

Amortization of intangible assets

     24,791       26,393       49,541       52,216  

Amortization of deferred finance costs and original issue discount

     975       967       1,948       1,921  

Transaction costs and other purchase accounting adjustments (a)

     681       669       1,525       1,387  

Loss/(gain) attributable to business or asset dispositions (b)

     28       -       65       (119 )

Business optimization and other charges (c)

     1,140       1,760       1,626       2,860  

Provision for legal, regulatory, and clean energy product charges (c)

     363       -       2,898       5,800  

Change in fair value of investment (c)

     2,117       -       8,136       -  

Tax effect of add backs

     (7,520 )     (7,460 )     (16,445 )     (14,590 )

Adjusted net income

     81,628       67,844       134,825       109,151  

Adjusted net income (loss) attributable to noncontrolling interests

     (62 )     317       184       2,048  

Adjusted net income attributable to Generac Holdings Inc.

   $ 81,690     $ 67,527     $ 134,641     $ 107,103  
                                 

Adjusted net income per common share attributable to Generac Holdings Inc. - diluted:

   $ 1.35     $ 1.08     $ 2.22     $ 1.72  

Weighted average common shares outstanding - diluted:

     60,641,740       62,348,184       60,559,904       62,429,911  

 

(a)  Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, and certain purchase accounting and contingent consideration adjustments.

 

(b)  Represents gains and losses attributable to the disposition of a business or assets occurring in other than ordinary course, as defined in our credit agreement.

 

(c)  See reconciliation of net income to Adjusted EBITDA attributable to Generac Holdings Inc. above. 

 

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New Accounting Standards

 

Refer to Note 1, “Description of Business and Basis of Presentation,” to the condensed consolidated financial statements for further information on the new accounting standards applicable to the Company.

 

Item 3.          Quantitative and Qualitative Disclosures about Market Risk

 

Refer to Note 4, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements for a discussion of changes in commodity, currency and interest rate related risks and hedging activities. Also, see Note 4 for further discussion of Wallbox N.V. warrant derivative instruments. Otherwise, there have been no material changes in market risk from the information provided in Item 7A (Quantitative and Qualitative Disclosures About Market Risk) of our Annual Report on Form 10-K for the year ended December 31, 2023.

 

Item 4.           Controls and Procedures

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes during the three months ended June 30, 2024, in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1.          Legal Proceedings

 

See Note 15, "Commitments and Contingencies," to the condensed consolidated financial statements for further information on the Company's legal proceedings.

 

Item 1A.       Risk Factors

 

There have been no material changes in our risk factors since the February 21, 2024, filing of our Annual Report on Form 10-K for the year ended December 31, 2023.

 

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

 

The following table summarizes the stock repurchase activity for the three months ended June 30, 2024, which consisted of stock repurchases made as authorized under previously announced stock repurchase programs, as well as the withholding of shares upon the vesting of restricted stock awards to pay related withholding taxes on behalf of the recipient:

 

   

Total Number of Shares Purchased

    

Average Price Paid per Share

    

Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs

    

Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs

  
                                 
04/01/2024 – 04/30/2024     -     $ -       -     $ 500,000,000  
05/01/2024 – 05/31/2024     164,100     $ 145.70       164,100     $ 476,091,409  
06/01/2024 – 06/30/2024     195,512     $ 139.56       191,540     $ 449,390,726  

Total

     359,612     $ 142.36                  

 

For equity compensation plan information, please refer to our Annual Report on Form 10-K for the year ended December 31, 2023. For information on the Company’s stock repurchase plans, refer to Note 12, “Stock Repurchase Program,” to the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

 

Item 3.           Defaults Upon Senior Securities

 

None.

 

Item 4.           Mine Safety Disclosures

 

None.

 

 

Item 5.           Other Information

 

Adoption:  On May 31, 2024, Raj Kanuru, Executive Vice President, General Counsel and Secretary, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 3,000 shares of the Company’s common stock beginning no earlier than October 4, 2024 and until December 31, 2024.

 
 

Item 6.           Exhibits

 

Exhibits
Number

  

Description
10.1 Amended and Restated 2019 Equity Incentive Plan (incorporated by reference to Appendix A to the Definitive Proxy Statement on Schedule 14A of the Company filed with the SEC on April 29, 2024). 
   

31.1*

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   

31.2*

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   

32.1**

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
   

32.2**

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
   

101*

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related Notes to Condensed Consolidated Financial Statements.
   

104

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 formatted as inline XBRL (included in Exhibit 101).
   

 

* Filed herewith.

**

Furnished herewith

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Generac Holdings Inc.
   
 

By:

/s/ York A. Ragen
   

York A. Ragen
   

Chief Financial Officer
(Duly Authorized Officer and Principal Financial and Accounting Officer)

 

Dated: August 6, 2024

 

30

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

 

I, Aaron Jagdfeld, certify that:

 

 

1.

I have reviewed this quarterly report on Form 10-Q of Generac Holdings Inc.; 

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

 

 

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

 

 

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

 

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 

 

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

 

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

 

Date:  August 6, 2024

 

 

/s/ Aaron Jagdfeld

 

 

 

Name:

 

Aaron Jagdfeld

 

 

 

Title:

 

Chief Executive Officer

 

 

 

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

 

I, York A. Ragen, certify that:

 

 

1.

I have reviewed this quarterly report on Form 10-Q of Generac Holdings Inc.; 

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

 

 

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

 

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 

 

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

 

 

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

 

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 

 

 

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

 

 

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

 

Date: August 6, 2024

 

 

/s/ York A. Ragen

 

 

 

Name:

 

York A. Ragen

 

 

 

Title:

 

Chief Financial Officer

 

 

Exhibit 32.1

 

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

        Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of Generac Holdings Inc. (the “Company”), does hereby certify that to my knowledge:

 

 

1.

the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2024 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

 

2.

the information contained in the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2024 fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

Date: August 6, 2024

 

 

/s/ Aaron Jagdfeld

 

 

 

Name:

 

Aaron Jagdfeld

 

 

 

Title:

 

Chief Executive Officer

 

 

Exhibit 32.2

 

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

        Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Financial Officer of Generac Holdings Inc. (the “Company”), does hereby certify that to my knowledge:

 

 

1.

the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2024 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

 

2.

the information contained in the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2024 fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

Date: August 6, 2024

 

 

/s/ York A. Ragen

 

 

 

Name:

 

York A. Ragen

 

 

 

Title:

 

Chief Financial Officer

 

 

 

 

 

 

 

 
v3.24.2.u1
Document And Entity Information - shares
 6 Months Ended
Jun. 30, 2024
Aug. 02, 2024
Document Information [Line Items]    
Entity Central Index Key 0001474735  
Entity Registrant Name GENERAC HOLDINGS INC.  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Document Transition Report false  
Entity File Number 001-34627  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 20-5654756  
Entity Address, Address Line One S45 W29290 Hwy 59  
Entity Address, City or Town Waukesha  
Entity Address, State or Province WI  
Entity Address, Postal Zip Code 53189  
City Area Code 262  
Local Phone Number 544-4811  
Title of 12(b) Security Common Stock, $0.01 par value  
Trading Symbol GNRC  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   60,152,735
v3.24.2.u1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Current assets:    
Cash and cash equivalents $ 218,317 $ 200,994
Accounts receivable, less allowance for credit losses of $34,546 and $33,925 at June 30, 2024 and December 31, 2023, respectively 610,322 537,316
Inventories 1,152,133 1,167,484
Prepaid expenses and other current assets 74,886 91,898
Total current assets 2,055,658 1,997,692
Property and equipment, net 622,947 598,577
Customer lists, net 167,240 184,513
Patents and technology, net 398,452 417,441
Other intangible assets, net 21,963 27,127
Tradenames, net 211,406 216,995
Goodwill 1,432,933 1,432,384
Deferred income taxes 17,401 15,532
Operating lease and other assets 190,566 203,051
Total assets 5,118,566 5,093,312
Current liabilities:    
Short-term borrowings 66,407 81,769
Accounts payable 406,296 340,719
Accrued wages and employee benefits 61,433 54,970
Accrued product warranty 58,743 65,298
Other accrued liabilities 269,250 292,120
Current portion of long-term borrowings and finance lease obligations 50,428 45,895
Total current liabilities 912,557 880,771
Long-term borrowings and finance lease obligations 1,444,696 1,447,553
Deferred income taxes 70,889 90,012
Deferred revenue 176,020 167,008
Operating lease and other long-term liabilities 141,885 158,349
Total liabilities 2,746,047 2,743,693
Redeemable noncontrolling interests 0 6,549
Stockholders’ equity:    
Common stock, par value $0.01, 500,000,000 shares authorized, 73,608,578 and 73,195,055 shares issued at June 30, 2024 and December 31, 2023, respectively 736 733
Additional paid-in capital 1,101,074 1,070,386
Treasury stock, at cost, 13,446,797 and 13,057,298 shares at June 30, 2024 and December 31, 2023, respectively (1,088,426) (1,032,921)
Excess purchase price over predecessor basis (202,116) (202,116)
Retained earnings 2,601,974 2,519,313
Accumulated other comprehensive loss (43,529) (15,143)
Stockholders’ equity attributable to Generac Holdings Inc. 2,369,713 2,340,252
Noncontrolling interests 2,806 2,818
Total stockholders' equity 2,372,519 2,343,070
Total liabilities and stockholders’ equity $ 5,118,566 $ 5,093,312
v3.24.2.u1
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Accounts receivable, allowance for doubtful accounts $ 34,546 $ 33,925
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 500,000,000 500,000,000
Common stock, shares issued (in shares) 73,608,578 73,195,055
Treasury stock, shares (in shares) 13,446,797 13,057,298
v3.24.2.u1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Net sales $ 998,197 $ 1,000,420 $ 1,887,470 $ 1,888,330
Costs of goods sold 622,636 671,999 1,195,530 1,287,410
Gross profit 375,561 328,421 691,940 600,920
Operating expenses:        
Selling and service 128,153 115,743 236,739 216,431
Research and development 53,996 43,942 103,406 85,762
General and administrative 65,386 56,371 132,150 116,056
Amortization of intangibles 24,791 26,393 49,541 52,216
Total operating expenses 272,326 242,449 521,836 470,465
Income from operations 103,235 85,972 170,104 130,455
Other (expense) income:        
Interest expense (23,318) (25,160) (46,923) (48,155)
Investment income 1,841 941 3,529 1,629
Change in fair value of investment (2,117) 0 (8,136) 0
Other, net (950) (331) (1,372) (497)
Total other expense, net (24,544) (24,550) (52,902) (47,023)
Income before provision for income taxes 78,691 61,422 117,202 83,432
Provision for income taxes 19,638 15,907 31,671 23,756
Net income 59,053 45,515 85,531 59,676
Net income (loss) attributable to noncontrolling interests (62) 317 184 2,048
Net income attributable to Generac Holdings Inc. $ 59,115 $ 45,198 $ 85,347 $ 57,628
Net income attributable to Generac Holdings Inc. per common share - basic: (in dollars per share) $ 0.99 $ 0.7 $ 1.38 $ 0.76
Weighted average common shares outstanding - basic: (in shares) 59,880,336 61,721,614 59,854,131 61,645,341
Net income attributable to Generac Holdings Inc. per common share - diluted: (in dollars per share) $ 0.97 $ 0.7 $ 1.36 $ 0.75
Weighted average common shares outstanding - diluted: (in shares) 60,641,740 62,348,184 60,559,904 62,429,911
Comprehensive income attributable to Generac Holdings Inc. $ 34,397 $ 69,060 $ 56,961 $ 104,422
v3.24.2.u1
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock, Common [Member]
Excess Purchase Price over Predecessor Basis [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Parent [Member]
Noncontrolling Interest [Member]
Total
Balance (in shares) at Dec. 31, 2022 72,701,257   (11,284,350)            
Balance at Dec. 31, 2022 $ 728,000 $ 1,016,138,000 $ (808,491,000) $ (202,116,000) $ 2,316,224,000 $ (65,102,000) $ 2,257,381,000 $ 1,874,000 $ 2,259,255,000
Balance (in shares) at Mar. 31, 2023 73,052,760   (10,855,203)            
Balance at Mar. 31, 2023 $ 731,000 1,042,786,000 $ (779,533,000) (202,116,000) 2,319,638,000 (42,343,000) 2,339,163,000 2,216,000 2,341,379,000
Balance (in shares) at Dec. 31, 2022 72,701,257   (11,284,350)            
Balance at Dec. 31, 2022 $ 728,000 1,016,138,000 $ (808,491,000) (202,116,000) 2,316,224,000 (65,102,000) 2,257,381,000 1,874,000 2,259,255,000
Unrealized gain (loss) on interest rate swaps, net of tax           1,264,000 1,264,000   1,264,000
Foreign currency translation adjustment           47,622,000 47,622,000 55,000 47,677,000
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price (in shares) 384,816                
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price $ 4,000 1,832,000         1,836,000   1,836,000
Net share settlement of restricted stock awards (in shares)     (40,116)            
Net share settlement of restricted stock awards     $ (4,797,000)       (4,797,000)   (4,797,000)
Share-based compensation   20,379,000         20,379,000   20,379,000
Net income attributable to Generac Holdings Inc.         57,628,000   57,628,000   57,628,000
Net income (loss)               545,000  
Net income (loss)                 58,173,000
Redemption value adjustment         (10,837,000)   (10,837,000)   (10,837,000)
Payment of contingent consideration (in shares) 10,943   466,118            
Payment of contingent consideration $ 0 15,410,000 $ 33,396,000       48,806,000   48,806,000
Balance (in shares) at Jun. 30, 2023 73,097,016   (10,858,348)            
Balance at Jun. 30, 2023 $ 732,000 1,053,759,000 $ (779,892,000) (202,116,000) 2,363,015,000 (16,216,000) 2,419,282,000 2,474,000 2,421,756,000
Balance (in shares) at Mar. 31, 2023 73,052,760   (10,855,203)            
Balance at Mar. 31, 2023 $ 731,000 1,042,786,000 $ (779,533,000) (202,116,000) 2,319,638,000 (42,343,000) 2,339,163,000 2,216,000 2,341,379,000
Unrealized gain (loss) on interest rate swaps, net of tax           5,752,000 5,752,000   5,752,000
Foreign currency translation adjustment           20,375,000 20,375,000 (5,000) 20,370,000
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price (in shares) 44,256                
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price $ 1,000 928,000         929,000   929,000
Net share settlement of restricted stock awards (in shares)     (3,145)            
Net share settlement of restricted stock awards     $ (359,000)       (359,000)   (359,000)
Share-based compensation   10,045,000         10,045,000   10,045,000
Net income attributable to Generac Holdings Inc.         45,198,000   45,198,000   45,198,000
Net income (loss)               263,000  
Net income (loss)                 45,461,000
Redemption value adjustment         (1,821,000)   (1,821,000)   (1,821,000)
Balance (in shares) at Jun. 30, 2023 73,097,016   (10,858,348)            
Balance at Jun. 30, 2023 $ 732,000 1,053,759,000 $ (779,892,000) (202,116,000) 2,363,015,000 (16,216,000) 2,419,282,000 2,474,000 2,421,756,000
Balance (in shares) at Dec. 31, 2023 73,195,055   (13,057,298)            
Balance at Dec. 31, 2023 $ 733,000 1,070,386,000 $ (1,032,921,000) (202,116,000) 2,519,313,000 (15,143,000) 2,340,252,000 2,818,000 2,343,070,000
Balance (in shares) at Mar. 31, 2024 73,492,146   (13,087,185)            
Balance at Mar. 31, 2024 $ 735,000 1,081,985,000 $ (1,037,227,000) (202,116,000) 2,542,859,000 (18,832,000) 2,367,404,000 2,908,000 2,370,312,000
Balance (in shares) at Dec. 31, 2023 73,195,055   (13,057,298)            
Balance at Dec. 31, 2023 $ 733,000 1,070,386,000 $ (1,032,921,000) (202,116,000) 2,519,313,000 (15,143,000) 2,340,252,000 2,818,000 2,343,070,000
Unrealized gain (loss) on interest rate swaps, net of tax           252,000 252,000   252,000
Foreign currency translation adjustment           (28,638,000) (28,638,000) (127,000) (28,765,000)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price (in shares) 413,523                
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price $ 3,000 5,533,000         5,536,000   5,536,000
Net share settlement of restricted stock awards (in shares)     (42,276)            
Net share settlement of restricted stock awards     $ (4,896,000)       (4,896,000)   (4,896,000)
Stock repurchases (in shares)     (355,640)            
Stock repurchases     $ (50,609,000)       (50,609,000)   (50,609,000)
Share-based compensation   25,155,000         25,155,000   25,155,000
Net income attributable to Generac Holdings Inc.         85,347,000   85,347,000   85,347,000
Net income (loss)               115,000  
Net income (loss)                 85,462,000
Redemption value adjustment         (2,686,000)   (2,686,000)   (2,686,000)
Balance (in shares) at Jun. 30, 2024 73,608,578   (13,446,797)            
Balance at Jun. 30, 2024 $ 736,000 1,101,074,000 $ (1,088,426,000) (202,116,000) 2,601,974,000 (43,529,000) 2,369,713,000 2,806,000 2,372,519,000
Balance (in shares) at Mar. 31, 2024 73,492,146   (13,087,185)            
Balance at Mar. 31, 2024 $ 735,000 1,081,985,000 $ (1,037,227,000) (202,116,000) 2,542,859,000 (18,832,000) 2,367,404,000 2,908,000 2,370,312,000
Unrealized gain (loss) on interest rate swaps, net of tax           (1,730,000) (1,730,000)   (1,730,000)
Foreign currency translation adjustment           (22,967,000) (22,967,000) (40,000) (23,007,000)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price (in shares) 116,432                
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price $ 1,000 6,374,000         6,375,000   6,375,000
Net share settlement of restricted stock awards (in shares)     (3,972)            
Net share settlement of restricted stock awards     $ (590,000)       (590,000)   (590,000)
Stock repurchases (in shares)     (355,640)            
Stock repurchases     $ (50,609)       (50,609)   (50,609)
Share-based compensation   12,715,000         12,715,000   12,715,000
Net income attributable to Generac Holdings Inc.         59,115,000   59,115,000   59,115,000
Net income (loss)               (62,000)  
Net income (loss)                 59,053,000
Redemption value adjustment                 0
Balance (in shares) at Jun. 30, 2024 73,608,578   (13,446,797)            
Balance at Jun. 30, 2024 $ 736,000 $ 1,101,074,000 $ (1,088,426,000) $ (202,116,000) $ 2,601,974,000 $ (43,529,000) $ 2,369,713,000 $ 2,806,000 $ 2,372,519,000
v3.24.2.u1
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parentheticals) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
AOCI Attributable to Parent [Member]        
Unrealized gain (loss) on interest rate swaps, tax $ 578 $ 1,922 $ 84 $ 423
v3.24.2.u1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Operating activities    
Net income $ 85,531 $ 59,676
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 35,241 28,982
Amortization of intangible assets 49,541 52,216
Amortization of original issue discount and deferred financing costs 1,948 1,921
Change in fair value of investment 8,136 0
Deferred income taxes (18,140) (14,152)
Share-based compensation expense [1] 25,155 20,379
Gain on disposal of assets (28) (532)
Other noncash charges 1,680 735
Excess tax benefits from equity awards (602) (1,040)
Net changes in operating assets and liabilities, net of acquisitions:    
Accounts receivable (74,467) (15,535)
Inventories 12,245 (15,897)
Other assets 12,881 16,333
Accounts payable 73,994 (2,449)
Accrued wages and employee benefits 5,679 6,694
Other accrued liabilities (29,232) (72,743)
Net cash provided by operating activities 189,562 64,588
Investing activities    
Proceeds from sale of property and equipment 85 1,801
Proceeds from beneficial interests in securitization transactions 0 1,472
Contribution to tax equity investment (1,629) (6,627)
Net proceeds from (purchase of) long-term investments 104 (2,000)
Expenditures for property and equipment (54,772) (53,900)
Acquisition of business, net of cash acquired (17,812) (16,188)
Net cash used in investing activities (74,024) (75,442)
Financing activities    
Proceeds from short-term borrowings 20,728 45,989
Proceeds from long-term borrowings 2,881 317,975
Repayments of short-term borrowings (39,011) (21,125)
Repayments of long-term borrowings and finance lease obligations (14,657) (160,557)
Stock repurchases (50,609) 0
Payment of contingent acquisition consideration 0 (4,979)
Payment of deferred acquisition consideration (7,361) 0
Purchase of additional ownership interest (9,117) (104,844)
Taxes paid related to equity awards (9,983) (9,186)
Proceeds from the exercise of stock options 10,620 6,223
Net cash (used in) provided by financing activities (96,509) 69,496
Effect of exchange rate changes on cash and cash equivalents (1,706) 1,403
Net increase in cash and cash equivalents 17,323 60,045
Cash and cash equivalents at beginning of period 200,994 132,723
Cash and cash equivalents at end of period $ 218,317 $ 192,768
[1] Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
v3.24.2.u1
Note 1 - Description of Business and Basis of Presentation
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Business Description and Basis of Presentation [Text Block]

1.   Description of Business and Basis of Presentation

 

Founded in 1959, Generac Holdings Inc. ("the Company") is a leading global designer and manufacturer of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products and services serving the residential, light commercial, and industrial markets. Generac’s power products and solutions are available globally through a broad network of independent dealers, distributors, retailers, e-commerce partners, wholesalers, and equipment rental companies, as well as sold direct to certain end user customers. A summary of acquisitions affecting the reporting periods presented include:

 

  ● In June 2024, the Company closed on the acquisition of the Commercial & Industrial Battery Energy Storage System ("C&I BESS") product offering from SunGrid Solutions Inc. located in Cambridge, Canada.
  ● In April 2024, the Company acquired Huntington Power Equipment, Inc. ("Huntington"), headquartered in Shelton, Connecticut. Huntington is an industrial and residential generator distributor as well as a provider of maintenance and repair services. 
  ●

In February 2023, the Company acquired REFU Storage Systems ("REFUstor"), headquartered in Pfullingen, Germany. REFUstor is a developer and supplier of battery storage hardware products, advanced software, and platform services for the C&I energy storage market.

 

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in conformity with U.S. generally accepted accounting principles ("GAAP"). All intercompany amounts and transactions have been eliminated in consolidation.

 

The condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operation, and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

 

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023.

 

New Accounting Pronouncements

 

Changes to GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standard updates ("ASUs") to the FASB Accounting Standards Codification ("ASC"). 

 

In March 2024, the Securities and Exchange Commission ("SEC") adopted a final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, to enhance and standardize climate-related disclosures. The rule will require companies to disclose material Scope 1 and Scope 2 greenhouse gas emissions; climate-related risks, governance, and oversight; and the financial effects of severe weather events and other natural conditions. These disclosures will begin to be phased in beginning with the Company's annual report for the year ending December 31, 2025. While this rule has been stayed pending the outcome of legal challenges, the Company is currently assessing the impact of adoption on the Company's consolidated financial statements and related disclosures in the event the stay is lifted.

 

In December 2023, the FASB issued ASU 2023-09 Improvements to Income Tax Disclosures. The ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, the Company must consistently categorize and provide greater disaggregation of information in the rate reconciliation. It must also further disaggregate income taxes paid. The update is effective for fiscal years beginning after December 15, 2024, and interim periods for fiscal years beginning after December 15, 2025. Entities may apply the amendments prospectively or may elect retrospective application. The Company is evaluating the impact of the new required disclosures but do not expect the adoption of ASU 2023-09 to have a material impact on the Company's consolidated financial statements. 

 

In November 2023, the FASB issued ASU 2023-07 Segment Reporting - Improving Reportable Segment Disclosures (Topic 280). The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. The Company is evaluating the impact of the new required disclosures but do not expect the adoption of ASU 2023-07 to have a material impact on the Company's consolidated financial statements. 

 

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the six months ended June 30, 2024, that are of significance or potential significance to the Company's consolidated financial statements or disclosures. 

 
v3.24.2.u1
Note 2 - Acquisitions
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Business Combination Disclosure [Text Block]

2.   Acquisitions

 

Fiscal 2024 Acquisitions

 

On June 26, 2024, the Company closed on the acquisition of the C&I BESS product offering from SunGrid Solutions Inc. located in Cambridge, Canada.

 

On April 1, 2024, the Company acquired Huntington, headquartered in Shelton, Connecticut. Huntington is an industrial and residential generator distributor as well as a provider of maintenance and repair services. 

 

The combined preliminary purchase price for both acquisitions is $17,812, net of cash acquired. The Company recorded its preliminary purchase price allocation for C&I BESS and Huntington during the second quarter of 2024, based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting will be finalized prior to June 30, 2025, and there have not been any material changes to the balances acquired as of June 30, 2024. The accompanying condensed consolidated financial statements include the results of C&I BESS and Huntington from their dates of acquisition through June 30, 2024. Pro forma and other financial information are not presented as the effects of the C&I BESS and Huntington acquisitions are not material to the Company's results of operations or financial position. 

 

Fiscal 2023 Acquisitions

 

On February 1, 2023, the Company acquired REFUstor, headquartered in Pfullingen, Germany. REFUstor is a developer and supplier of battery storage hardware products, advanced software, and platform services for the C&I energy storage market.

 

The Company recorded its preliminary purchase price allocation for REFUstor during the first quarter of 2023, based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting for REFUstor was finalized in the first quarter of 2024 and did not result in material adjustments to the Company's preliminary estimates. The accompanying condensed consolidated financial statements include the results of REFUstor from the date of acquisition through June 30, 2024. Pro forma and other financial information are not presented as the effects of the REFUstor acquisition are not material to the Company's results of operations or financial position. 

 
v3.24.2.u1
Note 3 - Redeemable Noncontrolling Interest
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Redeemable Noncontrolling Interest [Text Block]

3.   Redeemable Noncontrolling Interest

 

On March 1, 2016, the Company acquired a 65% ownership interest in PR Industrial S.r.l. and its subsidiaries (Pramac). The 35% noncontrolling interest in Pramac had an acquisition date fair value of $34,253 and was recorded as a redeemable noncontrolling interest in the consolidated balance sheets, as the noncontrolling interest holder had within its control the right to require the Company to redeem its interest in Pramac. In May 2021, the Company exercised its call option rights and paid a purchase price of $27,164 to purchase an additional 15% ownership interest in Pramac, bringing the Company's total ownership interest in Pramac to 80%. On March 8, 2023, the Company and the noncontrolling interest holder entered into an agreement whereby the Company acquired the remaining 20% ownership interest in Pramac for a purchase price of $116,754, which brought the Company's total ownership interest in Pramac to 100%. The purchase price included $105,264 of initial consideration (which included a cash payment of $104,844 and a $420 gain on a foreign currency settlement in the first quarter of 2023) and $11,490 of contingent deferred consideration to be paid in up to 135,205 restricted shares that were issued based on the twenty day volume weighted average price of the Company’s stock ending on December 31, 2022, and which shall vest upon achievement of certain earnings targets at the end of the earn-out period, December 31, 2025. 

 

On February 1, 2019, the Company acquired a 51% ownership interest in Captiva Energy Solutions Private Limited (Captiva). The 49% noncontrolling interest in Captiva had an acquisition date fair value of $3,165 and was recorded as a redeemable noncontrolling interest in the consolidated balance sheets, as the noncontrolling interest holder had within its control the right to require the Company to redeem its interest in Captiva. The noncontrolling interest holder has a put option to sell his interest to the Company any time after five years from the date of acquisition, or earlier upon the occurrence of certain circumstances. Further, the Company has a call option that it may redeem any time after five years from the date of acquisition, or earlier upon the occurrence of certain circumstances. The put and call option price is based on a multiple of earnings, subject to the terms of the acquisition agreement. In March 2022, the Company signed an agreement to purchase an additional 15% ownership interest in Captiva for a purchase price of $461, bringing the Company's total ownership interest in Captiva to 66%. In May 2022, the Company signed an amendment to the purchase agreement resulting in a revised purchase price of $375, which was paid with cash on hand. On April 5, 2024, the Company acquired the remaining 34% ownership interest in Captiva for $9,117.

 

The redeemable noncontrolling interests were recorded at the greater of the initial fair value, increased or decreased for the noncontrolling interests’ share of comprehensive income (loss), or the estimated redemption value, with any adjustments to the redemption value impacting retained earnings, but not net income. However, the redemption value adjustments are reflected in the earnings per share calculation, as detailed in Note 13, “Earnings Per Share,” to the condensed consolidated financial statements. The following table presents the changes in the redeemable noncontrolling interest for both Captiva and Pramac:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $9,117  $3,814  $6,549  $110,471 

Net income

  -   222   58   1,670 

Foreign currency translation

  -   (169)  (176)  (536)

Purchase of additional ownership interest

  (9,117)  -   (9,117)  (116,754)

Redemption value adjustment

  -   1,821   2,686   10,837 

Balance at end of period

 $-  $5,688  $-  $5,688 

 
v3.24.2.u1
Note 4 - Derivative Instruments and Hedging Activities
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

4.   Derivative Instruments and Hedging Activities

 

The Company records all derivatives in accordance with ASC 815, Derivatives and Hedging, which requires derivative instruments to be reported in the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies, and interest rates. The Company does not hold or issue derivative financial instruments for trading purposes. 

 

The Company periodically utilizes commodity derivatives and foreign currency forward purchase and sales contracts in the normal course of business. Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in the Company’s condensed consolidated statements of comprehensive income. The commodity and foreign currency forward contract gains and losses are not material to the Company’s condensed consolidated financial statements for the periods presented. 

 

Additionally, during the fourth quarter of 2023, the Company acquired stock warrants described in more detail below.

 

Interest Rate Swaps

 

In 2017, the Company entered into twenty interest rate swap agreements, the final four of which expired in  May 2023. In March 2020, the Company entered into three additional interest rate swap agreements, which were still outstanding as of June 30, 2024.

 

In June 2022, in conjunction with the amendments to the Company's credit agreements discussed further in Note 11, “Credit Agreements,” to the condensed consolidated financial statements, the Company amended its interest rate swaps to match the underlying debt and reconfirmed hedge effectiveness. The Company formally documented all relationships between interest rate hedging instruments and the related hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. These interest rate swap agreements qualify as cash flow hedges and therefore, the effective portions of their gains or losses are reported as a component of accumulated other comprehensive loss (AOCL) in the condensed consolidated balance sheets.

 

The amount of gains/(losses), net of tax recognized, for the three and six months ended June 30, 2024, was $(1,730) and $252, respectively. The amount of gains, net of tax recognized, for the three and six months ended June 30, 2023, was $5,752 and $1,264, respectively. The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

 

Stock Warrants

 

During the fourth quarter of 2023, the Company entered into a $30,000 agreement with Wallbox N.V. to purchase 5% of its Class A common stock ("Wallbox Shares") and acquire stock warrants, which provide the rights to an incremental approximate 5% ownership in the Class A common stock outstanding of Wallbox N.V. upon exercise at a fixed price with anti-dilution protections for a period of time. In accordance with GAAP, the Company is required to adjust the carrying value of these investments to market value on a quarterly basis. The Company recognized a loss of $2,117 and $8,136 for the three and six months ended June 30, 2024, respectively, primarily due to a decrease in the stock price of Wallbox N.V. during the period, of which $1,035 and $6,268 related to the stock warrants, respectively. 

 

Fair Value 

 

The following table presents the fair value of all the Company’s derivatives:

 

  

June 30, 2024

  

December 31, 2023

 

Foreign currency contracts

 $(143)  $(147)

Interest rate swaps

  38,938   38,601 
Stock warrants  8,978   14,862 

 

In the condensed consolidated balance sheets, the fair value of the foreign currency contracts is included in other accrued liabilities at  June 30, 2024, and prepaid expenses and other current assets as well as other accrued liabilities at December 31, 2023. The fair value of the interest rate swaps and stock warrants is included in operating lease and other assets at both June 30, 2024, and December 31, 2023. Excluding the impact of credit risk, the fair value of the derivative contracts as of June 30, 2024 and December 31, 2023 is an asset of $49,052 and $55,042, respectively, which represents the amount the Company would receive to exit all of the agreements on those dates.

 
v3.24.2.u1
Note 5 - Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

5.   Fair Value Measurements

 

ASC 820-10, Fair Value Measurement, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term borrowings, and revolving facility ("Revolving Facility") borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based on their short-term nature. The fair value of the Term Loan B borrowing, which has a net carrying value of $525,777, was $530,000 (Level 2) on  June 30, 2024. The fair value of the Term Loan A borrowing, which has a net carrying value of $733,626, was $728,579 (Level 2) on June 30, 2024. These fair values were calculated based on independent valuations which contain inputs and significant value drivers that are observable. The fair value of the Revolving Facility approximates the carrying value. 

 

For the fair value of the derivatives measured on a recurring basis, refer to the fair value table in Note 4, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements. The fair value of the Company's interest rate swaps and commodity and foreign currency derivative contracts are classified as Level 2. The valuation techniques used to measure the fair value of these derivative contracts, all of which have counterparties with high credit ratings, were based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of the derivative contracts above considers the Company’s credit risk in accordance with ASC 820-10. The fair value of the Wallbox N.V. stock warrants is classified as Level 3. The fair value of these contracts is measured using a Black Scholes option pricing model, with significant inputs derived from or corroborated by observable market data as well as internal estimates, specifically the time period until exercise. The warrants expire at the earlier of when the price per share equals or exceeds $6.00 or in 2029. The time period until exercise assumption has a significant impact on the fair value of the warrants.

 

Equity Securities

 

Equity securities consist of shares of Wallbox N.V. Class A common stock. The Company owned 9,836,066 Wallbox Shares as of June 30, 2024. The Wallbox Shares are classified as Level 1 in the fair value hierarchy and are recognized at fair value using the closing price of Wallbox N.V. common stock quoted on the New York Stock Exchange ("NYSE") on the last trading day of the quarter. The Wallbox Shares are included in operating lease and other assets in the condensed consolidated balance sheets. The fair value of the Wallbox Shares was $12,885 and $17,213 as of June 30, 2024, and December 31, 2023, respectively.

 

Contingent Consideration

 

Certain of the Company's business combinations involve potential payment of future consideration that is contingent upon the achievement of certain milestones. As part of purchase accounting, a liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within general and administrative expenses in the Company's consolidated statements of comprehensive income. The fair value measurement of contingent consideration is typically categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs that are not observable in the market. 

 

The fair value of contingent consideration for Chilicon Power LLC ("Chilicon") and Pramac as of June 30, 2024, and December 31, 2023, was $39,228 and $38,937, respectively, and was reported in other long-term liabilities in the condensed consolidated balance sheets. The contingent consideration for Chilicon extends through December 31, 2028, while the contingent consideration for Pramac extends through December 31, 2025. 

 

The following table provides a reconciliation of the activity for contingent consideration: 

 

Beginning balance, January 1, 2024

 $38,937 

Changes in fair value

  - 

Present value interest accretion

  291 

Ending balance, June 30, 2024

 $39,228 

 
v3.24.2.u1
Note 6 - Accumulated Other Comprehensive Loss
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Comprehensive Income (Loss) Note [Text Block]

6.   Accumulated Other Comprehensive Loss

 

The following table presents a disclosure of changes in AOCL during the three and six months ended June 30, 2024 and 2023, net of tax:

 

  

Foreign Currency Translation Adjustments

   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – April 1, 2024

 $(49,253)  $30,421   $(18,832)

Other comprehensive income (loss)

  (22,967)

(1)

  (1,730)

(2)

  (24,697)

Ending Balance – June 30, 2024

 $(72,220)  $28,691   $(43,529)

 

  

Foreign Currency Translation Adjustments

   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – April 1, 2023

 $(74,298)  $31,955   $(42,343)

Other comprehensive income (loss)

  20,375 

(3)

  5,752 

(4)

  26,127 

Ending Balance – June 30, 2023

 $(53,923)  $37,707   $(16,216)

 

  Foreign Currency Translation Adjustments   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – January 1, 2024

 $(43,582)  $28,439   $(15,143)

Other comprehensive income (loss)

 

(28,638

)(1) 

252

 (5)  (28,386)

Ending Balance – June 30, 2024

 $(72,220)  $28,691   $(43,529)

 

  Foreign Currency Translation Adjustments   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – January 1, 2023

 $(101,545)  $36,443   $(65,102)

Other comprehensive income (loss)

  47,622 (3)  1,264 (6)  48,886 

Ending Balance – June 30, 2023

 $(53,923)  $37,707   $(16,216)

 

 (1)Represents unfavorable impact from the strengthening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2024, particularly the Euro and Mexican Peso.
 (2)Represents unrealized losses of $(2,308) on the interest rate swaps, net of tax effect of $578, for the three months ended June 30, 2024. 
 (3)Represents favorable impact from the weakening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2023, particularly the Euro, British Pound, and Mexican Peso.
 (4)Represents unrealized gains of $7,674 on the interest rate swaps, net of tax effect of $(1,922) for the three months ended June 30, 2023. 
 (5)Represents unrealized gains of $336 on the interest rate swaps, net of tax effect of $(84), for the six months ended June 30, 2024. 
 (6)Represents unrealized gains of $1,687 on the interest rate swaps, net of tax effect of $(423) for the six months ended June 30, 2023. 

 
v3.24.2.u1
Note 7 - Segment Reporting
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

7.   Segment Reporting

 

The Company has two reportable segments for financial reporting purposes – domestic and international. The domestic segment includes the legacy Generac business and all historical acquisitions based in the U.S. and Canada, all of which have revenues substantially derived from the U.S. and Canada. The international segment includes all historical acquisitions not based in the U.S and Canada, all of which have revenues substantially derived from outside the U.S and Canada. Both reportable segments design and manufacture a wide range of energy technology solutions and other power products. The Company has multiple operating segments, which it aggregates into the two reportable segments, based on materially similar economic characteristics, products, production processes, classes of customers, distribution methods, organizational structure, and regional considerations.

 

The Company's product offerings consist primarily of power generation equipment, energy storage systems, energy management devices & solutions, and other power products geared for varying end customer uses. While Residential products and Commercial & Industrial ("C&I") products include similar products, they differ based on power output and end customer. The composition of net sales between residential, C&I, and other products & services by reportable segment is as follows:

 

  

Net Sales by Reportable Segment

 
  

Three Months Ended June 30, 2024

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $515,166  $23,233  $538,399 

Commercial & industrial products

  200,315   143,854   344,169 

Other

  102,077   13,552   115,629 

Total net sales

 $817,558  $180,639  $998,197 

 

  

Net Sales by Reportable Segment

 
  

Three Months Ended June 30, 2023

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $468,184  $30,403  $498,587 

Commercial & industrial products

  234,605   149,748   384,353 

Other

  101,750   15,730   117,480 

Total net sales

 $804,539  $195,881  $1,000,420 

 

  

Net Sales by Reportable Segment

 
  

Six Months Ended June 30, 2024

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $927,319  $40,030  $967,349 

Commercial & industrial products

  406,808   291,331   698,139 

Other

  195,768   26,214   221,982 

Total net sales

 $1,529,895  $357,575  $1,887,470 

 

  

Net Sales by Reportable Segment

 
  

Six Months Ended June 30, 2023

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $849,336  $68,114  $917,450 

Commercial & industrial products

  462,729   284,614   747,343 

Other

  196,862   26,675   223,537 

Total net sales

 $1,508,927  $379,403  $1,888,330 

 

Residential products consist primarily of automatic home standby generators ranging in output from 7.5kW to 150kW, portable generators, residential energy storage systems, energy management devices & solutions, and other outdoor power equipment. These products are predominantly sold through independent residential dealers, national and regional retailers, e-commerce merchants, electrical/HVAC/solar wholesalers, solar installers, and outdoor power equipment dealers. The residential products revenue consists of the sale of the product to the Company's distribution partners, who in turn sell or rent the product to the end consumer, including installation and maintenance services. In some cases, residential products are sold direct to the end consumer. Substantially all of the residential products' revenues are transferred to the customer at a point in time.

 

C&I products consist of larger output stationary generators used in C&I applications, with power outputs up to 3,250kW. Also included in C&I products are mobile generators, light towers, C&I battery energy storage systems, mobile heaters, mobile pumps, and related controllers for power generation equipment. These products are sold globally through industrial distributors and dealers, Engineering, Procurement, and Construction ("EPC") companies, equipment rental companies, and equipment distributors. The C&I products revenue consists of the sale of the product to the Company's distribution partners, who in turn sell or rent the product to the end customer, including installation and maintenance services. In some cases, C&I products are sold direct to the end customer. Substantially all of the C&I products' revenues are transferred to the customer at a point in time.

 

Other consists primarily of aftermarket service parts and product accessories sold to the Company's customers, the amortization of extended warranty deferred revenue, remote monitoring and grid services subscription revenue, as well as certain installation and maintenance service revenue. The aftermarket service parts and product accessories are generally transferred to the customer at a point in time, while the extended warranty and subscription revenue are recognized over the life of the contract. Other service revenue is recognized when the service is performed, sometimes based on achievement of milestones.

 

The following table sets forth total sales by reportable segment and is inclusive of intersegment sales:

 

  

Three Months Ended June 30, 2024

  

Three Months Ended June 30, 2023

 
  

Domestic

  

International

  

Eliminations

  

Total

  

Domestic

  

International

  

Eliminations

  

Total

 

External net sales

 $817,558  $180,639  $-  $998,197  $804,539  $195,881  $-  $1,000,420 

Intersegment sales

  9,581   3,869   (13,450)  -   10,713   27,842   (38,555)  - 

Total sales

 $827,139  $184,508  $(13,450) $998,197  $815,252  $223,723  $(38,555) $1,000,420 

 

  

Six Months Ended June 30, 2024

  

Six Months Ended June 30, 2023

 
  

Domestic

  

International

  

Eliminations

  

Total

  

Domestic

  

International

  

Eliminations

  

Total

 

External net sales

 $1,529,895  $357,575  $-  $1,887,470  $1,508,927  $379,403  $-  $1,888,330 

Intersegment sales

  17,718   13,642   (31,360)  -   26,320   60,784   (87,104)  - 

Total sales

 $1,547,613  $371,217  $(31,360) $1,887,470  $1,535,247  $440,187  $(87,104) $1,888,330 

 

Management evaluates the performance of its segments based primarily on Adjusted EBITDA, which is reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based primarily on the definition that is contained in the Company’s credit agreements.

 

  

Adjusted EBITDA by Reportable Segment

 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Domestic

 $139,674  $103,202  $238,849  $170,863 

International

  25,015   33,343   53,073   65,757 

Total Adjusted EBITDA

 $164,689  $136,545  $291,922  $236,620 
                 

Interest expense

  (23,318)  (25,160)  (46,923)  (48,155)

Depreciation and amortization

  (42,880)  (41,247)  (84,782)  (81,198)

Non-cash write-down and other adjustments (1)

  (1,885)  4,152   (2,395)  7,312 

Non-cash share-based compensation expense (2)

  (12,715)  (10,045)  (25,155)  (20,379)

Transaction costs and credit facility fees (3)

  (1,267)  (1,149)  (2,692)  (2,240)

Business optimization and other charges (4)

  (1,140)  (1,760)  (1,626)  (2,860)

Provision for regulatory, legal, and clean energy product charges (5)

  (363)  -   (2,898)  (5,800)

Change in fair value of investment (6)

  (2,117)  -   (8,136)  - 

Other

  (313)  86   (113)  132 

Income before provision for income taxes

 $78,691  $61,422  $117,202  $83,432 

 

 

(1)

Includes gains/losses on dispositions of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments. 
 

(2)

Represents share-based compensation expense to account for stock options, restricted stock, and other stock awards over their respective vesting periods.
 (3)Represents transaction costs incurred directly in connection with any investment, as defined in the Company's credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to the Company's senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under the Company's Amended Credit Agreement.
 

(4)

Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions.
 (5)

Represents the following significant and unusual charges not indicative of our ongoing operations:
•  A provision for judgments and legal expenses related to certain patent and securities lawsuits - $363 and $2,170 in the second and first quarter of 2024, respectively. 
•  Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $365 in the first quarter of 2024. 

•  A provision for a matter with the Consumer Product Safety Commission ("CPSC") concerning the imposition of civil fines for allegedly failing to timely submit a report under the Consumer Product Safety Act ("CPSA") in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021 - $5,800 in the first quarter of 2023.

 (6)Represents non-cash losses from changes in the fair value of the Company's investment in warrants and equity securities of Wallbox N.V.

 

The Company’s sales in the U.S. represented approximately 78% and 75% of total sales for the three months ended June 30, 2024 and 2023, respectively. The Company’s sales in the U.S. represented approximately 77% and 75% of total sales for the six months ended June 30, 2024 and 2023, respectively. Approximately 74% of the Company’s identifiable long-lived assets were located in the U.S. on  June 30, 2024 and December 31, 2023.

 
v3.24.2.u1
Note 8 - Balance Sheet Details
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Supplemental Balance Sheet Disclosures [Text Block]

8.   Balance Sheet Details

 

Inventories consist of the following:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Raw material

 $661,585  $677,428 

Work-in-process

  8,214   10,877 

Finished goods

  482,334   479,179 

Total

 $1,152,133  $1,167,484 

 

Property and equipment consists of the following:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Land and improvements

 $24,793  $22,556 

Buildings and improvements

  327,285   298,483 

Machinery and equipment

  288,220   271,879 

Dies and tools

  46,480   45,998 

Vehicles

  13,373   11,411 

Office & information technology equipment and internal use software

  198,606   185,601 

Leasehold improvements

  9,424   8,772 

Construction in progress

  75,484   98,083 

Gross property and equipment

  983,665   942,783 

Accumulated depreciation

  (360,718)  (344,206)

Total

 $622,947  $598,577 

 

Total property and equipment includes finance leases of $81,867 and $68,079 on  June 30, 2024 and  December 31, 2023, respectively, primarily consisting of buildings and improvements. Amortization of finance lease right of use assets is recorded within depreciation expense in the condensed consolidated statements of comprehensive income. The initial measurement of new finance lease right of use assets is accounted for as a non-cash item in the condensed consolidated statements of cash flows.

 
v3.24.2.u1
Note 9 - Product Warranty Obligations
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Product Warranty Disclosure [Text Block]

9.   Product Warranty Obligations

 

The Company records a liability for standard product warranty obligations accounted for as assurance warranties at the time of sale of the related product to a customer based on historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. The following is a tabular reconciliation of the Company’s standard product warranty liability accounted for as an assurance warranty:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $111,126  $128,599  $116,408  $138,011 

Payments

  (20,733)  (25,490)  (42,080)  (51,642)

Provision for warranty issued

  16,745   17,352   32,049   33,217 

Changes in estimates for pre-existing warranties

  (859)  1,761   (98)  2,636 

Balance at end of period

 $106,279  $122,222  $106,279  $122,222 

 

The Company also sells extended warranty coverage for certain products, which it accounts for as a service warranty. The sales of extended warranties are recorded as deferred revenue, and typically have a duration of five to ten years. The deferred revenue related to extended warranty coverage is amortized over the duration of the extended warranty contract period, following the standard warranty period, using the straight-line method. The Company believes the straight-line method is appropriate because the performance obligation is satisfied based on the passage of time. The amortization of deferred revenue is recorded to net sales in the consolidated statements of comprehensive income. The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $163,793  $136,685  $155,870  $132,813 

Deferred revenue contracts issued

  15,089   10,433   29,873   20,159 

Amortization of deferred revenue contracts

  (7,180)  (6,196)  (14,041)  (12,050)

Balance at end of period

 $171,702  $140,922  $171,702  $140,922 

 

The timing of recognition of the Company’s deferred revenue balance related to extended warranties as of  June 30, 2024, is as follows:

 

Remainder of 2024

 $15,235 

2025

  32,467 

2026

  31,887 

2027

  26,787 

2028

  20,690 

After 2028

  44,636 

Total

 $171,702 

 

Standard product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Product warranty liability

        

Current portion - accrued product warranty

 $58,743  $65,298 

Long-term portion - other long-term liabilities

  47,536   51,110 

Total

 $106,279  $116,408 
         

Deferred revenue related to extended warranties

        

Current portion - other accrued liabilities

 $33,999  $28,203 

Long-term portion - deferred revenue

  137,703   127,667 

Total

 $171,702  $155,870 

 
v3.24.2.u1
Note 10 - Contract Balances
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

10.   Contract Balances

 

While the Company’s standard payment terms for its customers are less than one year, the specific payment terms and conditions in its customer contracts vary. In certain cases, the Company’s customers pay for their goods in advance. These prepayments are recognized as customer deposits (contract liabilities) and recorded in other accrued liabilities in the condensed consolidated balance sheets. The balance of customer deposits was $20,004 and $19,173 on  June 30, 2024, and December 31, 2023, respectively. During the six months ended June 30, 2024, the Company recognized revenue of $13,148 related to amounts included in the December 31, 2023 customer deposit balance. The Company typically recognizes revenue within one year of the receipt of the customer deposit.

 
v3.24.2.u1
Note 11 - Credit Agreements
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

11.   Credit Agreements

 

Short-term borrowings included in the condensed consolidated balance sheets as of June 30, 2024, and December 31, 2023, consisted of borrowings by the Company’s foreign subsidiaries on local lines of credit totaling $66,407 and $81,769, respectively.

 

Long-term borrowings are included in the condensed consolidated balance sheets as follows:

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Tranche A Term Loan

 $735,938  $745,313 

Tranche B Term Loan

  530,000   530,000 

Original issue discount and deferred financing costs

  (10,735)  (12,685)

Revolving Facility

  150,000   150,000 

Finance lease obligation

  87,041   71,308 

Other

  2,880   9,512 

Total

  1,495,124   1,493,448 

Less: current portion of debt

  44,889   42,110 

Less: current portion of finance lease obligation

  5,539   3,785 

Total

 $1,444,696  $1,447,553 

 

Prior to the Tranche B Term Loan Facility extension discussed in Note 16, "Subsequent Events", as of June 30, 2024, the Tranche B Term Loan Facility matures on December 13, 2026, while the Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility is repayable in installments due at the end of each quarter commencing September 2023. Maturities of the Company's Tranche A Term Loan Facility, Tranche B Term Loan Facility, and Revolving Facility outstanding on  June 30, 2024, are as follows:

 

  

Tranche A Term Loan

  

Tranche B Term Loan

  

Revolving Facility

  

Total

 

2024

 $23,438  $-  $-  $23,438 

2025

  46,875   -   -   46,875 

2026

  65,625   530,000   -   595,625 

2027

  600,000   -   150,000   750,000 

Total

 $735,938  $530,000  $150,000  $1,415,938 

 

On July 3, 2024, the Company extinguished its existing $530,000 Term Loan B Facility and replaced it with a $500,000 Term Loan B Facility maturing on July 3, 2031. The new Term Loan B Facility is now repayable in quarterly installments equal to 0.25% of the original principal amount beginning October 2024, with a lump sum due upon maturity

 

The Company’s credit agreements originally provided for a $1,200,000 Tranche B Term Loan Facility and included a $300,000 uncommitted incremental term loan on that facility. The Tranche B Term Loan Facility initially bore interest at rates based on either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. After a number of amendments and as of June 30, 2024, the Tranche B Term Loan Facility bears interest at rates based on either a base rate plus an applicable margin of 0.75% or adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%. The interest rate for the Tranche B Term Loan Facility as of June 30, 2024, was 7.18%. 

 

The Tranche B Term Loan Facility does not require an Excess Cash Flow payment if the Company’s net secured leverage ratio is maintained below 3.75 to 1.00. As of June 30, 2024, the Company’s net secured leverage ratio was 1.86 to 1.00, and the Company was in compliance with all covenants of the Tranche B Term Loan Facility. There are no financial maintenance covenants on the Tranche B Term Loan Facility.

 

In June 2022, the Company amended and restated its existing credit agreements ("Amended Credit Agreement") that resulted in a new term loan facility in an aggregate principal amount of $750,000 ("Tranche A Term Loan Facility"), established a new $1,250,000 Revolving Facility, terminated the former asset-based lending facility ("ABL Facility"), and replaced all LIBOR provisions with SOFR provisions. Proceeds received by the Company from the Tranche A Term Loan Facility were used to repay the total existing outstanding balance on the Company's former ABL Facility and to make a $250,000 voluntary prepayment on the Tranche B Term Loan Facility, with the remaining funds used for future general corporate purposes. As a result of these prepayments, the Company wrote off $3,546 of original issue discount and capitalized debt issuance costs during the second quarter of 2022 as a loss on extinguishment of debt. 

 

The Tranche A Term Loan Facility and the Revolving Facility initially bore interest at a rate based on adjusted SOFR plus an applicable margin of 1.5% through December 31, 2022, subject to a SOFR floor of 0.0%. Beginning on January 1, 2023, the Tranche A Term Loan Facility and the Revolving Facility bear interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, based on the Company's total leverage ratio and subject to a SOFR floor of 0.0%. As of June 30, 2024, the interest rate for the Tranche A Term Loan Facility and Revolving Facility was 6.90%.

 

The Tranche A Term Loan Facility and the Revolving Facility contain certain financial covenants that require the Company to maintain a total leverage ratio below 3.75 to 1.00 as well as an interest coverage ratio above 3.00 to 1.00. As of June 30, 2024, the Company’s total leverage ratio was 1.95 to 1.00, and the Company's interest coverage ratio was 7.97 to 1.00. The Company was also in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2024. 

 

The Tranche B Term Loan Facility, Tranche A Term Loan Facility and Revolving Facility are guaranteed by substantially all of the Company’s wholly-owned domestic restricted subsidiaries and are secured by associated collateral agreements which pledge a first priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, cash, trade accounts receivable, inventory, and other current assets and proceeds thereof. 

 

In connection with the June 2022 refinancing and in accordance with ASC 470-50, the Company capitalized $10,330 of fees paid to creditors as deferred financing costs on long-term borrowings and expensed $800 of transaction fees. The Company evaluated on a lender-by-lender basis if the debt related to returning lenders on the Revolving Facility was significantly modified or not, resulting in the write-off of $197 in unamortized deferred financing costs related to the former ABL Facility as a loss on extinguishment of debt. 

 

As of June 30, 2024, there was $150,000 outstanding under the Revolving Facility, leaving $1,099,203 of unused capacity, net of outstanding letters of credit. 

 

See Note 5, "Derivative Instruments and Hedging Activities" and Item 7A of the Annual Report on Form 10-K for further information on interest rate swaps that are currently outstanding and partially offset the above interest expense on outstanding borrowings. 

 
v3.24.2.u1
Note 12 - Stock Repurchase Program
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Treasury Stock [Text Block]

12.   Stock Repurchase Program

 

In September 2020, the Company’s Board of Directors approved a $250,000 stock repurchase program, which was exhausted in the third quarter of 2022. In  July 2022, the Company's Board of Directors approved another stock repurchase program, which commenced on August 5, 2022, and allowed for the repurchase of up to $500,000 of the Company's common stock over a 24-month period. Additionally, on February 12, 2024, the Company’s Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500,000 of the Company’s common stock over the next 24 months. The new program replaces the prior share repurchase program, which had approximately $26,297 remaining available for repurchase when the new program was approved. Pursuant to the approved program, the Company may repurchase its common stock from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of the Company's credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice.

 

During the second quarter of 2024, the Company repurchased 355,640 shares of common stock for $50,609. There were no share repurchases under the program during the first quarter of 2024. There were no share repurchases during the first and second quarters of 2023. Since the inception of all stock repurchase programs (starting in August 2015), the Company has repurchased 14,292,828 shares of common stock for $1,079,501 (at an average cost per share of $75.53). The Company has periodically reissued shares out of Treasury stock, including for acquisition earnout payments. 

 
v3.24.2.u1
Note 13 - Earnings Per Share
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Earnings Per Share [Text Block]

13. Earnings Per Share

 

Basic earnings per share is calculated by dividing net income attributable to the common shareholders of the Company by the weighted average number of common shares outstanding during the period, exclusive of restricted shares. Except where the result would be anti-dilutive, diluted earnings per share is calculated by assuming the vesting of unvested restricted stock and the exercise of outstanding stock options, as well as the satisfaction of certain contingent acquisition consideration conditions as of the end of the period. Refer to Note 3, “Redeemable Noncontrolling Interest,” to the condensed consolidated financial statements for further information regarding the accounting for redeemable noncontrolling interests within earnings per share.

 

The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share:

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerator

                

Net income attributable to Generac Holdings Inc.

 $59,115  $45,198  $85,347  $57,628 

Redeemable noncontrolling interest redemption value adjustment

  -   (1,821)  (2,686)  (10,837)

Net income attributable to common shareholders

 $59,115  $43,377  $82,661  $46,791 
                 

Denominator

                

Weighted average shares, basic

  59,880,336   61,721,614   59,854,131   61,645,341 

Dilutive effect of stock compensation awards (1)

  761,404   626,570   705,773   784,570 

Dilutive effect of contingently issued shares

  -   -   -   - 

Diluted shares

  60,641,740   62,348,184   60,559,904   62,429,911 
                 

Net income attributable to common shareholders per share

                

Basic

 $0.99  $0.70  $1.38  $0.76 

Diluted

 $0.97  $0.70  $1.36  $0.75 

 

(1) Excludes approximately 471,000 and 440,000 stock options and restricted stock awards for the three months and six months ended June 30, 2024, respectively, and 393,000 and 360,000 stock options and restricted stock awards for the three months and six months ended June 30, 2023, respectively, because they would be anti-dilutive. 

 
v3.24.2.u1
Note 14 - Income Taxes
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

14. Income Taxes

 

The effective income tax rates for the six months ended June 30, 2024 and 2023 were 27.0% and 28.5%, respectively. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior-year comparable period which did not repeat in the current year. 

 
v3.24.2.u1
Note 15 - Commitments and Contingencies
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

15. Commitments and Contingencies

 

The Company has an arrangement with a finance company to provide floor plan financing for certain dealers. The Company receives payment from the finance company after shipment of product to the dealer. The Company participates in the cost of dealer financing up to certain limits and has agreed to repurchase products repossessed by the finance company, but does not indemnify the finance company for any credit losses they incur. The amount financed by dealers which remained outstanding under this arrangement on June 30, 2024, and December 31, 2023, was approximately $157,772 and $158,028, respectively.

 

On August 1, 2022, Power Home Solar, LLC d/b/a Pink Energy (PHS) filed a lawsuit in the Western District of Virginia against Generac Power Systems, Inc., a wholly-owned subsidiary of the Company (Generac Power). The complaint alleges breaches of warranty, product liability, and other various causes of action against Generac Power relating to the sale and performance of certain clean energy equipment and seeks to recover damages, including consequential damages, that PHS allegedly incurred. The Company disputes the allegations in the complaint, including that PHS can seek consequential damages or amounts greater than the $25,000 liability cap set forth in the agreement between the parties. Generac Power moved to dismiss the complaint and compel arbitration consistent with the parties’ agreement. PHS later filed a Chapter 7 bankruptcy petition in the Western District of North Carolina that identified Generac Power as one of its outstanding creditors. The parties agreed to toll PHS’s deadline to respond to the motion to dismiss and all other pretrial deadlines to allow the bankruptcy trustee to evaluate the complaint. The Trustee has not yet taken further action in this lawsuit. Generac Power intends to vigorously defend against the claims in the complaint, in whichever forum they may proceed. 

 

On October 28, 2022, Daniel Haak filed a putative consumer class action lawsuit against Generac Power in the Middle District of Florida. The complaint alleges breaches of warranty, tort-based, and unjust enrichment claims against Generac Power relating to the sale and performance of certain clean energy products, and seeks to recover damages, including consequential damages, that the plaintiff and putative class allegedly incurred. Additional putative class actions were filed by consumers raising similar claims and allegations in other district court cases. These putative class actions have been consolidated into a Multidistrict Litigation, In re: Generac Solar Power Systems Marketing, Sales Practices and Products Liability Litigation currently pending in the Eastern District of Wisconsin, Case No. 23-md-3078. Generac Power and the Company filed their answer to the consolidated master complaint after the court denied the motion to dismiss on May 24, 2024. Generac Power and the Company intend to vigorously defend against the consolidated master complaint. 

 

On December 1, 2022, Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System filed a putative securities class action lawsuit against the Company and certain of its officers in the Eastern District of Wisconsin. The court subsequently consolidated a later filed action and appointed a lead plaintiff. The lead plaintiff filed a consolidated complaint alleging violation of federal securities law related to disclosures of quality issues in Generac Power’s clean energy product, accounting for warranty reserves, reliance on channel partners, and demand for home standby generators (the “Oakland County Lawsuit”). The Company moved to dismiss the consolidated complaint on October 9, 2023. The Company disputes the allegations in the operative consolidated complaint and intends to vigorously defend against the claims in the consolidated class action. 

 

On February 3, 2023, a purported Company shareholder filed a shareholder derivative action against certain of the Company’s officers and directors in the United States District Court for the Eastern District of Wisconsin. The complaint seeks unspecified damages on behalf of the Company and certain other relief, such as certain reforms to corporate governance practices. The complaint (in which the Company is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of the Company’s public statements and legal compliance, and that the Company was damaged as a result of the breaches of fiduciary duties, and the defendants were unjustly enriched. The complaint also alleges, among other things, violations of Sections 14(a), 10(b) and 20(a) of the Securities Exchange Act of 1934, abuse of control, gross mismanagement, and waste of corporate assets. The Company has received several additional derivative actions filed in both state and federal courts raising similar claims and allegations, including issues raised in the Oakland County Lawsuit. The Company disputes the allegations in the shareholder derivative actions and intends to vigorously defend against the claims in the complaints.

 

On October 28, 2022, Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Michigan, as a result of which the Company became aware of an enforcement investigation by the U.S. Department of Justice ("DOJ"). The subpoena requests similar documents and information provided by the Company to the U.S. Environmental Protection Agency ("EPA") and the California Air Resource Board ("CARB") in response to civil document requests related to the Company’s compliance with emissions regulations for approximately 1.85 thousand portable generators produced by the Company in 2019 and 2020 and sold in 2020. The Company is cooperating with both the DOJ and the EPA and CARB inquiries. 

 

On November 30, 2022, the CPSC notified the Company of its intention to recommend the imposition of a civil penalty for failing to timely submit a report to the CPSC in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021. On May 3, 2023, the parties entered into a mutual settlement agreement. The agreement does not constitute an admission by Generac or a determination by the CPSC that Generac violated the CPSA. The terms of the settlement agreement require the Company to (i) abide by certain customary agency requirements regarding the ongoing commitment to the Company’s internal CPSA compliance practices and program, and (ii) pay a civil fine of $15,800. On July 21, 2023, Generac Power received a grand jury subpoena from the U.S. Attorney for the Eastern District of Wisconsin, as a result of which the Company became aware of a continuing inquiry by the DOJ related to its statutory obligations under the CPSA in connection with this matter. Additionally, on October 23, 2023, the CPSC notified the Company that it is further investigating whether the Company complied with the reporting requirements to the CPSC in relation to certain portable generators that were subject to a voluntary recall previously announced on September 14, 2023. The Company is cooperating fully with both the CPSC and DOJ investigations and, at this time, is unable to predict the eventual scope, duration or final outcome of such investigations. 

 

On March 8, 2022, Ollnova Technologies Limited, a non-practicing entity, filed a patent infringement lawsuit against ecobee Inc. ("ecobee") in the United States District Court for the Eastern District of Texas (Case No. 22-cv-00072-JRG). Ollnova claimed that ecobee infringes on four of its patents. On October 5, 2023, a jury issued a verdict finding one of Ollnova’s patents invalid and that ecobee infringed at least one of the claims of the asserted patents and awarded a lump-sum payment of $11,500. ecobee filed motions for judgment as a matter of law and intends to appeal any adverse judgment. In the first quarter of 2024, the Company recorded an additional reserve of $1,826 for estimated prejudgment interest that will also be part of the appeal. 

 

On June 9, 2023, Spartronics Vietnam, Inc., a contract manufacturer of Generac Power’s clean energy products, filed multiple lawsuits against Generac Power and sub-suppliers accusing Generac Power of fraud, breaching its supply agreement with Spartronics, tortiously interfering with Spartronics’ relationships with its sub-suppliers, and requesting a determination of rights under the parties’ agreements in state and federal court. Spartronics subsequently filed additional third-party complaints against Generac Power raising similar claims and allegations. After a court granted Generac Power’s motion to compel arbitration, Spartronics filed a demand for arbitration of its claims. Generac Power denies the allegations in the complaints, including that Generac Power is responsible for Spartronics purchasing practices, and is pursuing a counterclaim in connection with the arbitration. 

 

On November 21, 2023, Christopher Walling filed a putative securities class action lawsuit against the Company and certain of its officers in the Western District of Wisconsin and was later appointed lead plaintiff. The complaint asserts claims for alleged violation of federal securities law related to statements concerning the Company’s financial outlook and the impact of macroeconomic trends on the demand for its products. The plaintiff seeks to represent a class of individuals who purchased or otherwise acquired common stock between May 3, 2023, and August 3, 2023, and seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s stock (the “Walling Lawsuit”). The Company moved to dismiss the amended complaint on June 21, 2024, and intends to vigorously defend against the claims in the amended complaint.

 

On February 14, 2024, a purported Company shareholder filed a derivative action against certain of the Company’s officers and directors in the United States District Court for the Eastern District of Wisconsin. The complaint (in which the Company is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of the Company’s public statements and legal compliance, including as to the claims raised in the Walling Lawsuit. The complaint seeks unspecified damages on behalf of the Company and certain other relief, including certain corporate governance reforms. The Company disputes the allegations in the shareholder derivative action and intends to vigorously defend against the claims in the complaint.

 

It is presently unlikely that any legal, regulatory or other proceedings pending against or involving the Company will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. However, in many of these matters, it is inherently difficult to determine whether a loss is probable or to estimate the size or range of the possible loss given the variety and potential outcomes of actual and potential claims, the uncertainty of future rulings, the behavior or incentives of adverse parties, and other factors outside the control of the Company. Accordingly, the Company’s loss reserves may change from time to time, and actual losses could exceed the amounts reserved by an amount that could be material to the Company’s consolidated financial position, results of operations or cash flows in any particular reporting period.

 
v3.24.2.u1
Note 16 - Subsequent Events
 6 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Subsequent Events [Text Block]

16. Subsequent Events

 

On July 3, 2024, the Company extinguished its existing $530,000 Term Loan B Facility and replaced it with a $500,000 Term Loan B Facility maturing on July 3, 2031. The new Term Loan B Facility now requires quarterly installment payments equal to 0.25% of the original principal amount beginning October 2024, with a lump sum due upon maturity.

 

On August 1, 2024, the Company acquired the assets and liabilities of Ageto, LLC ("Ageto"). Ageto designs and integrates microgrid energy and control management systems and is headquartered in Fort Collins, Colorado. 

 

On August 5, 2024, the Company invested an incremental $35,000 in Wallbox N.V. to purchase an approximate additional 12% of its Class A common stock. Additionally, the Company maintains the rights to additional equity through warrants for an incremental approximate 5% ownership in Wallbox’s Class A common stock upon exercise at a fixed price with anti-dilution protections for a period of time.

 
v3.24.2.u1
Insider Trading Arrangements
 6 Months Ended
Jun. 30, 2024
shares
Insider Trading Arr Line Items  
Material Terms of Trading Arrangement [Text Block]

Item 5.           Other Information

 

Adoption:  On May 31, 2024, Raj Kanuru, Executive Vice President, General Counsel and Secretary, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 3,000 shares of the Company’s common stock beginning no earlier than October 4, 2024 and until December 31, 2024.

 
Trading Arrangement Adoption Date May 31, 2024
Trading Arrangement, Individual Name Raj Kanuru
Trading Arrangement, Individual Title Executive Vice President, General Counsel and Secretary
Rule 10b5-1 Arrangement Adopted [Flag] true
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
Trading Arrangement, Securities Aggregate Available Amount 3,000
v3.24.2.u1
Note 3 - Redeemable Noncontrolling Interest (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Redeemable Noncontrolling Interest [Table Text Block]
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $9,117  $3,814  $6,549  $110,471 

Net income

  -   222   58   1,670 

Foreign currency translation

  -   (169)  (176)  (536)

Purchase of additional ownership interest

  (9,117)  -   (9,117)  (116,754)

Redemption value adjustment

  -   1,821   2,686   10,837 

Balance at end of period

 $-  $5,688  $-  $5,688 
v3.24.2.u1
Note 4 - Derivative Instruments and Hedging Activities (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule Of Derivative Assets (Liabilities) at Fair Value [Table Text Block]
  

June 30, 2024

  

December 31, 2023

 

Foreign currency contracts

 $(143)  $(147)

Interest rate swaps

  38,938   38,601 
Stock warrants  8,978   14,862 
v3.24.2.u1
Note 5 - Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block]

Beginning balance, January 1, 2024

 $38,937 

Changes in fair value

  - 

Present value interest accretion

  291 

Ending balance, June 30, 2024

 $39,228 
v3.24.2.u1
Note 6 - Accumulated Other Comprehensive Loss (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]
  

Foreign Currency Translation Adjustments

   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – April 1, 2024

 $(49,253)  $30,421   $(18,832)

Other comprehensive income (loss)

  (22,967)

(1)

  (1,730)

(2)

  (24,697)

Ending Balance – June 30, 2024

 $(72,220)  $28,691   $(43,529)
  

Foreign Currency Translation Adjustments

   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – April 1, 2023

 $(74,298)  $31,955   $(42,343)

Other comprehensive income (loss)

  20,375 

(3)

  5,752 

(4)

  26,127 

Ending Balance – June 30, 2023

 $(53,923)  $37,707   $(16,216)
  Foreign Currency Translation Adjustments   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – January 1, 2024

 $(43,582)  $28,439   $(15,143)

Other comprehensive income (loss)

 

(28,638

)(1) 

252

 (5)  (28,386)

Ending Balance – June 30, 2024

 $(72,220)  $28,691   $(43,529)
  Foreign Currency Translation Adjustments   Unrealized Gain (Loss) on Cash Flow Hedges   

Total

 

Beginning Balance – January 1, 2023

 $(101,545)  $36,443   $(65,102)

Other comprehensive income (loss)

  47,622 (3)  1,264 (6)  48,886 

Ending Balance – June 30, 2023

 $(53,923)  $37,707   $(16,216)
v3.24.2.u1
Note 7 - Segment Reporting (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Disaggregation of Revenue [Table Text Block]
  

Net Sales by Reportable Segment

 
  

Three Months Ended June 30, 2024

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $515,166  $23,233  $538,399 

Commercial & industrial products

  200,315   143,854   344,169 

Other

  102,077   13,552   115,629 

Total net sales

 $817,558  $180,639  $998,197 
  

Net Sales by Reportable Segment

 
  

Three Months Ended June 30, 2023

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $468,184  $30,403  $498,587 

Commercial & industrial products

  234,605   149,748   384,353 

Other

  101,750   15,730   117,480 

Total net sales

 $804,539  $195,881  $1,000,420 
  

Net Sales by Reportable Segment

 
  

Six Months Ended June 30, 2024

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $927,319  $40,030  $967,349 

Commercial & industrial products

  406,808   291,331   698,139 

Other

  195,768   26,214   221,982 

Total net sales

 $1,529,895  $357,575  $1,887,470 
  

Net Sales by Reportable Segment

 
  

Six Months Ended June 30, 2023

 

Product Classes

 

Domestic

  

International

  

Total

 

Residential products

 $849,336  $68,114  $917,450 

Commercial & industrial products

  462,729   284,614   747,343 

Other

  196,862   26,675   223,537 

Total net sales

 $1,508,927  $379,403  $1,888,330 
Reconciliation of Revenue from Segments to Consolidated [Table Text Block]
  

Three Months Ended June 30, 2024

  

Three Months Ended June 30, 2023

 
  

Domestic

  

International

  

Eliminations

  

Total

  

Domestic

  

International

  

Eliminations

  

Total

 

External net sales

 $817,558  $180,639  $-  $998,197  $804,539  $195,881  $-  $1,000,420 

Intersegment sales

  9,581   3,869   (13,450)  -   10,713   27,842   (38,555)  - 

Total sales

 $827,139  $184,508  $(13,450) $998,197  $815,252  $223,723  $(38,555) $1,000,420 
  

Six Months Ended June 30, 2024

  

Six Months Ended June 30, 2023

 
  

Domestic

  

International

  

Eliminations

  

Total

  

Domestic

  

International

  

Eliminations

  

Total

 

External net sales

 $1,529,895  $357,575  $-  $1,887,470  $1,508,927  $379,403  $-  $1,888,330 

Intersegment sales

  17,718   13,642   (31,360)  -   26,320   60,784   (87,104)  - 

Total sales

 $1,547,613  $371,217  $(31,360) $1,887,470  $1,535,247  $440,187  $(87,104) $1,888,330 
Schedule of Segment Reporting Information, by Segment [Table Text Block]
  

Adjusted EBITDA by Reportable Segment

 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Domestic

 $139,674  $103,202  $238,849  $170,863 

International

  25,015   33,343   53,073   65,757 

Total Adjusted EBITDA

 $164,689  $136,545  $291,922  $236,620 
                 

Interest expense

  (23,318)  (25,160)  (46,923)  (48,155)

Depreciation and amortization

  (42,880)  (41,247)  (84,782)  (81,198)

Non-cash write-down and other adjustments (1)

  (1,885)  4,152   (2,395)  7,312 

Non-cash share-based compensation expense (2)

  (12,715)  (10,045)  (25,155)  (20,379)

Transaction costs and credit facility fees (3)

  (1,267)  (1,149)  (2,692)  (2,240)

Business optimization and other charges (4)

  (1,140)  (1,760)  (1,626)  (2,860)

Provision for regulatory, legal, and clean energy product charges (5)

  (363)  -   (2,898)  (5,800)

Change in fair value of investment (6)

  (2,117)  -   (8,136)  - 

Other

  (313)  86   (113)  132 

Income before provision for income taxes

 $78,691  $61,422  $117,202  $83,432 
v3.24.2.u1
Note 8 - Balance Sheet Details (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
  

June 30,

  

December 31,

 
  

2024

  

2023

 

Raw material

 $661,585  $677,428 

Work-in-process

  8,214   10,877 

Finished goods

  482,334   479,179 

Total

 $1,152,133  $1,167,484 
Property, Plant and Equipment [Table Text Block]
  

June 30,

  

December 31,

 
  

2024

  

2023

 

Land and improvements

 $24,793  $22,556 

Buildings and improvements

  327,285   298,483 

Machinery and equipment

  288,220   271,879 

Dies and tools

  46,480   45,998 

Vehicles

  13,373   11,411 

Office & information technology equipment and internal use software

  198,606   185,601 

Leasehold improvements

  9,424   8,772 

Construction in progress

  75,484   98,083 

Gross property and equipment

  983,665   942,783 

Accumulated depreciation

  (360,718)  (344,206)

Total

 $622,947  $598,577 
v3.24.2.u1
Note 9 - Product Warranty Obligations (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Product Warranty Liability [Table Text Block]
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $111,126  $128,599  $116,408  $138,011 

Payments

  (20,733)  (25,490)  (42,080)  (51,642)

Provision for warranty issued

  16,745   17,352   32,049   33,217 

Changes in estimates for pre-existing warranties

  (859)  1,761   (98)  2,636 

Balance at end of period

 $106,279  $122,222  $106,279  $122,222 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Balance at beginning of period

 $163,793  $136,685  $155,870  $132,813 

Deferred revenue contracts issued

  15,089   10,433   29,873   20,159 

Amortization of deferred revenue contracts

  (7,180)  (6,196)  (14,041)  (12,050)

Balance at end of period

 $171,702  $140,922  $171,702  $140,922 
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

Remainder of 2024

 $15,235 

2025

  32,467 

2026

  31,887 

2027

  26,787 

2028

  20,690 

After 2028

  44,636 

Total

 $171,702 
Product Warranty Obligations Included In Consolidated Balance Sheet [Table Text Block]
  

June 30,

  

December 31,

 
  

2024

  

2023

 

Product warranty liability

        

Current portion - accrued product warranty

 $58,743  $65,298 

Long-term portion - other long-term liabilities

  47,536   51,110 

Total

 $106,279  $116,408 
         

Deferred revenue related to extended warranties

        

Current portion - other accrued liabilities

 $33,999  $28,203 

Long-term portion - deferred revenue

  137,703   127,667 

Total

 $171,702  $155,870 
v3.24.2.u1
Note 11 - Credit Agreements (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Long-Term Debt Instruments [Table Text Block]
  

June 30,

  

December 31,

 
  

2024

  

2023

 

Tranche A Term Loan

 $735,938  $745,313 

Tranche B Term Loan

  530,000   530,000 

Original issue discount and deferred financing costs

  (10,735)  (12,685)

Revolving Facility

  150,000   150,000 

Finance lease obligation

  87,041   71,308 

Other

  2,880   9,512 

Total

  1,495,124   1,493,448 

Less: current portion of debt

  44,889   42,110 

Less: current portion of finance lease obligation

  5,539   3,785 

Total

 $1,444,696  $1,447,553 
Schedule of Maturities of Long-Term Debt [Table Text Block]
  

Tranche A Term Loan

  

Tranche B Term Loan

  

Revolving Facility

  

Total

 

2024

 $23,438  $-  $-  $23,438 

2025

  46,875   -   -   46,875 

2026

  65,625   530,000   -   595,625 

2027

  600,000   -   150,000   750,000 

Total

 $735,938  $530,000  $150,000  $1,415,938 
v3.24.2.u1
Note 13 - Earnings Per Share (Tables)
 6 Months Ended
Jun. 30, 2024
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerator

                

Net income attributable to Generac Holdings Inc.

 $59,115  $45,198  $85,347  $57,628 

Redeemable noncontrolling interest redemption value adjustment

  -   (1,821)  (2,686)  (10,837)

Net income attributable to common shareholders

 $59,115  $43,377  $82,661  $46,791 
                 

Denominator

                

Weighted average shares, basic

  59,880,336   61,721,614   59,854,131   61,645,341 

Dilutive effect of stock compensation awards (1)

  761,404   626,570   705,773   784,570 

Dilutive effect of contingently issued shares

  -   -   -   - 

Diluted shares

  60,641,740   62,348,184   60,559,904   62,429,911 
                 

Net income attributable to common shareholders per share

                

Basic

 $0.99  $0.70  $1.38  $0.76 

Diluted

 $0.97  $0.70  $1.36  $0.75 
v3.24.2.u1
Note 2 - Acquisitions (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2024
Jun. 30, 2023
Payments to Acquire Businesses, Net of Cash Acquired   $ 17,812 $ 16,188
C&I BESS and Huntington [Member]      
Payments to Acquire Businesses, Net of Cash Acquired $ 17,812    
v3.24.2.u1
Note 3 - Redeemable Noncontrolling Interest (Details Textual) - USD ($)
shares in Thousands, $ in Thousands
 1 Months Ended 6 Months Ended
Apr. 05, 2024
Mar. 08, 2023
Feb. 01, 2019
May 31, 2022
Mar. 31, 2022
May 31, 2021
Jun. 30, 2024
Jun. 30, 2023
Mar. 01, 2016
Payments for Repurchase of Redeemable Noncontrolling Interest             $ 9,117 $ 104,844  
Pramac [Member]                  
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners           20.00%     35.00%
Captiva Energy Solutions [Member]                  
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners     49.00%            
Pramac [Member]                  
Business Acquisition, Percentage of Voting Interests Acquired           15.00%     65.00%
Redeemable Noncontrolling Interest, Equity, Fair Value, Total                 $ 34,253
Payments for Repurchase of Redeemable Noncontrolling Interest   $ 116,754       $ 27,164      
Business Combination, Step Acquisition, Equity Interest in Acquiree, including Subsequent Acquisition, Percentage, Total   100.00%       80.00%      
Business Combination, Consideration Transferred   $ 105,264              
Payments to Acquire Businesses, Gross   104,844              
Gain (Loss), Foreign Currency Transaction, before Tax   420              
Business Combination, Consideration Transferred, Liabilities Incurred   $ 11,490              
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in shares)   135,205              
Captiva Energy Solutions [Member]                  
Business Acquisition, Percentage of Voting Interests Acquired 34.00%   51.00%   15.00%        
Redeemable Noncontrolling Interest, Equity, Fair Value, Total     $ 3,165            
Payments for Repurchase of Redeemable Noncontrolling Interest $ 9,117     $ 375 $ 461        
Business Combination, Step Acquisition, Equity Interest in Acquiree, including Subsequent Acquisition, Percentage, Total       66.00%          
Business Acquisition, Noncontrolling Interest, Term of Put Option (Year)     5 years            
v3.24.2.u1
Note 3 - Redeemable Noncontrolling Interest - Redeemable Noncontrolling Interest (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Redemption value adjustment $ 0 $ 1,821 $ 2,686 $ 10,837
Redeemable Noncontrolling Interest [Member]        
Balance 9,117 3,814 6,549 110,471
Net income 0 222 58 1,670
Foreign currency translation 0 (169) (176) (536)
Purchase of additional ownership interest (9,117) 0 (9,117) (116,754)
Redemption value adjustment 0 1,821 2,686 10,837
Balance $ 0 $ 5,688 $ 0 $ 5,688
v3.24.2.u1
Note 4 - Derivative Instruments and Hedging Activities (Details Textual)
$ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2024
USD ($)
Dec. 31, 2023
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Dec. 31, 2017
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax $ (1,730)   $ 5,752 $ 252 $ 1,264  
Gain (Loss) on Investments (2,117)   0 (8,136) 0  
Derivative Assets (Liabilities), Net Fair Value of Derivative Contracts, Excluding Impact of Credit Risk 49,052 $ 55,042   49,052    
Wallbox N.V. [Member]            
Payments to Acquire Investments   $ 30,000        
Investment Owned, Net Assets, Percentage   5.00%        
Gain (Loss) on Investments $ (2,117)     $ (8,136)    
Wallbox N.V. [Member] | Option to Purchase Additional Interest [Member]            
Investment Owned, Net Assets, Percentage   5.00%        
Commodity Contract [Member]            
Derivative, Number of Instruments Held, Total 0     0    
Interest Rate Swap [Member]            
Number of New Contracts Entered 3         20
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax $ (1,730)   $ 5,752 $ 252 $ 1,264  
Stock Warrants [Member] | Wallbox N.V. [Member]            
Unrealized Gain (Loss) on Derivatives $ (1,035)     $ (6,268)    
v3.24.2.u1
Note 4 - Derivative Instruments and Hedging Activities - Fair Value of Derivatives (Details) - Fair Value, Inputs, Level 2 [Member] - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Foreign Exchange Contract [Member]    
Fair Value of Derivatives $ (143) $ (147)
Interest Rate Swap [Member]    
Fair Value of Derivatives 38,938 38,601
Stock Warrants [Member]    
Fair Value of Derivatives $ 8,978 $ 14,862
v3.24.2.u1
Note 5 - Fair Value Measurements (Details Textual) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Other Long-term Liabilities [Member]    
Business Combination, Contingent Consideration, Liability $ 39,228 $ 38,937
Fair Value, Inputs, Level 3 [Member] | Stock Warrants [Member]    
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) $ 6  
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]    
Investment Owned, Balance, Shares (in shares) 9,836,066  
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | Operating Lease and Other Assets [Member]    
Long-Term Investments $ 12,885 $ 17,213
Tranche B Term Loan Facility [Member]    
Long-Term Debt 525,777  
Tranche B Term Loan Facility [Member] | Fair Value, Inputs, Level 2 [Member]    
Debt Instrument, Fair Value Disclosure 530,000  
Tranche A Term Loan Facility [Member]    
Long-Term Debt 733,626  
Tranche A Term Loan Facility [Member] | Fair Value, Inputs, Level 2 [Member]    
Debt Instrument, Fair Value Disclosure $ 728,579  
v3.24.2.u1
Note 5 - Fair Value Measurements - Reconciliation of Contingent Consideration (Details) - Contingent Consideration Liability [Member]
$ in Thousands
 6 Months Ended
Jun. 30, 2024
USD ($)
Balance $ 38,937
Changes in fair value 0
Present value interest accretion 291
Balance $ 39,228
v3.24.2.u1
Note 6 - Accumulated Other Comprehensive Loss (Details Textual) - Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Other Comprehensive Income (Loss), before Reclassifications, before Tax $ (2,308) $ 7,674 $ 336 $ 1,687
Other Comprehensive Income (Loss) before Reclassifications, Tax $ 578 $ (1,922) $ (84) $ (423)
v3.24.2.u1
Note 6 - Accumulated Other Comprehensive Loss - Disclosure of Changes in Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Balance $ 2,370,312 $ 2,341,379 $ 2,343,070 $ 2,259,255
Balance 2,372,519 2,421,756 2,372,519 2,421,756
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]        
Balance (49,253) (74,298) (43,582) (101,545)
Other comprehensive income (loss) [1] (22,967)   (28,638)  
Balance (72,220) (53,923) (72,220) (53,923)
Other comprehensive income (loss) [2]   20,375   47,622
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]        
Balance 30,421 31,955 28,439 36,443
Other comprehensive income (loss) (1,730) [3]   252 [4]  
Balance 28,691 37,707 28,691 37,707
Other comprehensive income (loss)   5,752 [5]   1,264 [6]
AOCI Attributable to Parent [Member]        
Balance (18,832) (42,343) (15,143) (65,102)
Other comprehensive income (loss) (24,697)   (28,386)  
Balance $ (43,529) (16,216) $ (43,529) (16,216)
Other comprehensive income (loss)   $ 26,127   $ 48,886
[1] Represents unfavorable impact from the strengthening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2024, particularly the Euro and Mexican Peso.
[2] Represents favorable impact from the weakening of the U.S. dollar against foreign currencies during the three and six months ended June 30, 2023, particularly the Euro, British Pound, and Mexican Peso.
[3] Represents unrealized losses of $(2,308) on the interest rate swaps, net of tax effect of $578, for the three months ended June 30, 2024.
[4] Represents unrealized gains of $336 on the interest rate swaps, net of tax effect of $(84), for the six months ended June 30, 2024.
[5] Represents unrealized gains of $7,674 on the interest rate swaps, net of tax effect of $(1,922) for the three months ended June 30, 2023.
[6] Represents unrealized gains of $1,687 on the interest rate swaps, net of tax effect of $(423) for the six months ended June 30, 2023.
v3.24.2.u1
Note 7 - Segment Reporting (Details Textual)
$ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2024
USD ($)
Mar. 31, 2024
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Dec. 31, 2023
Number of Reportable Segments       2    
Provision for Product Charges [1] $ (363)   $ 0 $ (2,898) $ (5,800)  
Geographic Concentration Risk [Member] | Revenue Benchmark [Member] | UNITED STATES            
Concentration Risk, Percentage 78.00%   75.00% 77.00% 75.00%  
Geographic Concentration Risk [Member] | Long-lived Assets [Member] | UNITED STATES            
Concentration Risk, Percentage       74.00%   74.00%
Patents and Securites [Member]            
Provision for Product Charges $ 363 $ 2,170        
Clean Energy Product [Member]            
Provision for Product Charges   365        
Product [Member]            
Provision for Product Charges   $ 5,800        
[1] Represents the following significant and unusual charges not indicative of our ongoing operations: • A provision for judgments and legal expenses related to certain patent and securities lawsuits - $363 and $2,170 in the second and first quarter of 2024, respectively. • Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $365 in the first quarter of 2024. • A provision for a matter with the Consumer Product Safety Commission ("CPSC") concerning the imposition of civil fines for allegedly failing to timely submit a report under the Consumer Product Safety Act ("CPSA") in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021 - $5,800 in the first quarter of 2023.
v3.24.2.u1
Note 7 - Segment Reporting - Net Sales by Products and Services (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Net sales $ 998,197 $ 1,000,420 $ 1,887,470 $ 1,888,330
Residential Power Products [Member]        
Net sales 538,399 498,587 967,349 917,450
Commercial and Industrial Power Products [Member]        
Net sales 344,169 384,353 698,139 747,343
Other Products and Services [Member]        
Net sales 115,629 117,480 221,982 223,537
Domestic [Member]        
Net sales 817,558 804,539 1,529,895 1,508,927
Domestic [Member] | Residential Power Products [Member]        
Net sales 515,166 468,184 927,319 849,336
Domestic [Member] | Commercial and Industrial Power Products [Member]        
Net sales 200,315 234,605 406,808 462,729
Domestic [Member] | Other Products and Services [Member]        
Net sales 102,077 101,750 195,768 196,862
International [Member]        
Net sales 180,639 195,881 357,575 379,403
International [Member] | Residential Power Products [Member]        
Net sales 23,233 30,403 40,030 68,114
International [Member] | Commercial and Industrial Power Products [Member]        
Net sales 143,854 149,748 291,331 284,614
International [Member] | Other Products and Services [Member]        
Net sales $ 13,552 $ 15,730 $ 26,214 $ 26,675
v3.24.2.u1
Note 7 - Segment Reporting - Total Sales by Reportable Segment (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Total sales $ 998,197 $ 1,000,420 $ 1,887,470 $ 1,888,330
External Net Sales [Member]        
Total sales 998,197 1,000,420 1,887,470 1,888,330
Intersegment Sales [Member]        
Total sales 0 0 0 0
Intersegment Eliminations [Member]        
Total sales (13,450) (38,555) (31,360) (87,104)
Intersegment Eliminations [Member] | External Net Sales [Member]        
Total sales 0 0 0 0
Intersegment Eliminations [Member] | Intersegment Sales [Member]        
Total sales (13,450) (38,555) (31,360) (87,104)
Domestic [Member]        
Total sales 817,558 804,539 1,529,895 1,508,927
Domestic [Member] | Operating Segments [Member]        
Total sales 827,139 815,252 1,547,613 1,535,247
Domestic [Member] | Operating Segments [Member] | External Net Sales [Member]        
Total sales 817,558 804,539 1,529,895 1,508,927
Domestic [Member] | Operating Segments [Member] | Intersegment Sales [Member]        
Total sales 9,581 10,713 17,718 26,320
International [Member]        
Total sales 180,639 195,881 357,575 379,403
International [Member] | Operating Segments [Member]        
Total sales 184,508 223,723 371,217 440,187
International [Member] | Operating Segments [Member] | External Net Sales [Member]        
Total sales 180,639 195,881 357,575 379,403
International [Member] | Operating Segments [Member] | Intersegment Sales [Member]        
Total sales $ 3,869 $ 27,842 $ 13,642 $ 60,784
v3.24.2.u1
Note 7 - Segment Reporting - Segment Information (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Total adjusted EBITDA $ 164,689 $ 136,545 $ 291,922 $ 236,620
Interest expense (23,318) (25,160) (46,923) (48,155)
Depreciation and amortization (42,880) (41,247) (84,782) (81,198)
Non-cash write-down and other adjustments (1) [1] (1,885) 4,152 (2,395) 7,312
Non-cash share-based compensation expense (2) [2] (12,715) (10,045) (25,155) (20,379)
Transaction costs and credit facility fees (3) [3] (1,267) (1,149) (2,692) (2,240)
Business optimization and other charges (4) [4] (1,140) (1,760) (1,626) (2,860)
Provision for regulatory, legal, and clean energy product charges (5) [5] (363) 0 (2,898) (5,800)
Change in fair value of investment (6) [6] (2,117) 0 (8,136) 0
Other (313) 86 (113) 132
Income before provision for income taxes 78,691 61,422 117,202 83,432
Domestic [Member]        
Total adjusted EBITDA 139,674 103,202 238,849 170,863
International [Member]        
Total adjusted EBITDA $ 25,015 $ 33,343 $ 53,073 $ 65,757
[1] Includes gains/losses on dispositions of assets other than in the ordinary course of business, gains/losses on sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration adjustments.
[2] Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
[3] Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities, such as administrative agent fees and credit facility commitment fees under our Amended Credit Agreement.
[4] Represents severance and other restructuring charges related to the consolidation of certain operating facilities and organizational functions.
[5] Represents the following significant and unusual charges not indicative of our ongoing operations: • A provision for judgments and legal expenses related to certain patent and securities lawsuits - $363 and $2,170 in the second and first quarter of 2024, respectively. • Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $365 in the first quarter of 2024. • A provision for a matter with the Consumer Product Safety Commission ("CPSC") concerning the imposition of civil fines for allegedly failing to timely submit a report under the Consumer Product Safety Act ("CPSA") in relation to certain portable generators that were subject to a voluntary recall previously announced on July 29, 2021 - $5,800 in the first quarter of 2023.
[6] Represents non-cash losses from changes in the fair value of the Company's investment in warrants and equity securities of Wallbox N.V.
v3.24.2.u1
Note 8 - Balance Sheet Details (Details Textual) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Finance Lease, Right-of-Use Asset, after Accumulated Amortization $ 81,867 $ 68,079
v3.24.2.u1
Note 8 - Balance Sheet Details - Inventories (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Raw material $ 661,585 $ 677,428
Work-in-process 8,214 10,877
Finished goods 482,334 479,179
Total $ 1,152,133 $ 1,167,484
v3.24.2.u1
Note 8 - Balance Sheet Details - Property and Equipment (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Property and equipment, gross $ 983,665 $ 942,783
Accumulated depreciation (360,718) (344,206)
Total 622,947 598,577
Land and Land Improvements [Member]    
Property and equipment, gross 24,793 22,556
Building and Building Improvements [Member]    
Property and equipment, gross 327,285 298,483
Machinery and Equipment [Member]    
Property and equipment, gross 288,220 271,879
Dies and Tools [Member]    
Property and equipment, gross 46,480 45,998
Vehicles [Member]    
Property and equipment, gross 13,373 11,411
Office Equipment [Member]    
Property and equipment, gross 198,606 185,601
Leasehold Improvements [Member]    
Property and equipment, gross 9,424 8,772
Construction in Progress [Member]    
Property and equipment, gross $ 75,484 $ 98,083
v3.24.2.u1
Note 9 - Product Warranty Obligations (Details Textual)
 6 Months Ended
Jun. 30, 2024
Minimum [Member]  
Extended Warranty Term (Year) 5 years
Maximum [Member]  
Extended Warranty Term (Year) 10 years
v3.24.2.u1
Note 9 - Product Warranty Obligations - Reconciliation of Product Warranty Liability (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Balance at beginning of period $ 111,126 $ 128,599 $ 116,408 $ 138,011
Payments (20,733) (25,490) (42,080) (51,642)
Provision for warranty issued 16,745 17,352 32,049 33,217
Changes in estimates for pre-existing warranties [1] (859) 1,761 (98) 2,636
Balance at end of period 106,279 122,222 106,279 122,222
Balance at beginning of period 163,793 136,685 155,870 132,813
Deferred revenue contracts issued 15,089 10,433 29,873 20,159
Amortization of deferred revenue contracts (7,180) (6,196) (14,041) (12,050)
Balance at end of period $ 171,702 $ 140,922 $ 171,702 $ 140,922
[1] Includes a specific warranty provision recorded during the third quarter of 2022 in the amount of $37,338 to address certain clean energy product related matters.
v3.24.2.u1
Note 9 - Product Warranty Obligations - Recognition of Deferred Revenue Related to Extended Warranties (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Revenue performance obligation $ 171,702
v3.24.2.u1
Note 9 - Product Warranty Obligations - Recognition of Deferred Revenue Related to Extended Warranties 2 (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
Revenue performance obligation $ 171,702
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01  
Revenue performance obligation 15,235
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01  
Revenue performance obligation 32,467
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01  
Revenue performance obligation 31,887
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01  
Revenue performance obligation 26,787
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01  
Revenue performance obligation 20,690
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01  
Revenue performance obligation $ 44,636
v3.24.2.u1
Note 9 - Product Warranty Obligations - Recognition of Deferred Revenue Related to Extended Warranties (Details) (Parentheticals)
Jun. 30, 2024
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01  
Revenue performance period (Year) 6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01  
Revenue performance period (Year) 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01  
Revenue performance period (Year) 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01  
Revenue performance period (Year) 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01  
Revenue performance period (Year) 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01  
Revenue performance period (Year) 1 year
v3.24.2.u1
Note 9 - Product Warranty Obligations - Deferred Product Obligations (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Current portion - accrued product warranty $ 58,743   $ 65,298      
Long-term portion - other long-term liabilities 47,536   51,110      
Total 106,279 $ 111,126 116,408 $ 122,222 $ 128,599 $ 138,011
Current portion - other accrued liabilities 33,999   28,203      
Long-term portion - deferred revenue 137,703   127,667      
Total $ 171,702 $ 163,793 $ 155,870 $ 140,922 $ 136,685 $ 132,813
v3.24.2.u1
Note 10 - Contract Balances (Details Textual) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Contract with Customer, Liability $ 20,004 $ 19,173
Contract with Customer, Liability, Revenue Recognized $ 13,148  
v3.24.2.u1
Note 11 - Credit Agreements (Details Textual) - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Jul. 03, 2024
Jan. 01, 2023
May 31, 2013
Jun. 30, 2022
Jun. 30, 2022
Jun. 30, 2024
Dec. 31, 2022
Dec. 31, 2023
Short-Term Debt           $ 66,407   $ 81,769
Revolving Credit Facility [Member]                
Line of Credit Facility, Maximum Borrowing Capacity       $ 1,250,000 $ 1,250,000      
Covenant Maximum Total Leverage Ratio             3.75  
Covenant Minimum Interest Coverage Ratio             3  
Total Leverage Ratio           1.95    
Interest Coverage Ratio           7.97    
Debt Issuance Costs, Net, Total       10,330 10,330      
Debt Instrument, Fee Amount       800 800      
Long-Term Line of Credit           $ 150,000    
Line of Credit Facility, Remaining Borrowing Capacity           $ 1,099,203    
ABL Revolving Credit Facility [Member]                
Write off of Deferred Debt Issuance Cost       197        
Tranche B Term Loan Facility [Member]                
Line of Credit Facility, Maximum Borrowing Capacity     $ 1,200,000          
Uncommitted Incremental Term Loan Facility     $ 300,000          
Debt Instrument, SOFR Floor           0.00%    
Debt Instrument, Interest Rate, Effective Percentage           7.18%    
Repayments of Long-Term Debt, Total       250,000        
Gain (Loss) on Extinguishment of Debt, Total         (3,546)      
Long-Term Debt, Maturity Date     Dec. 13, 2026          
Tranche B Term Loan Facility [Member] | Maximum [Member]                
Threshold for Secured Leverage Ratio Excess Cash Flow Payment Requirement           3.75    
Secured Leverage Ratio           1.86    
Tranche B Term Loan Facility [Member] | Base Rate [Member]                
Debt Instrument, Basis Spread on Variable Rate     1.75%     0.75%    
Tranche B Term Loan Facility [Member] | Adjusted LIBOR Rate [Member]                
Debt Instrument, Basis Spread on Variable Rate     2.75%          
Tranche B Term Loan Facility [Member] | LIBOR Floor Rate [Member]                
Debt Instrument, Basis Spread on Variable Rate     0.75%          
Tranche B Term Loan Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                
Debt Instrument, Basis Spread on Variable Rate           1.75%    
Tranche B Term Loan Facility [Member] | Subsequent Event [Member]                
Extinguishment of Debt, Amount $ 530,000              
Debt Instrument, Face Amount $ 500,000              
Debt Instrument, Quarterly Payments as A Percentage of Original Principal 0.25%              
Tranche A Term Loan Facility [Member]                
Line of Credit Facility, Maximum Borrowing Capacity       $ 750,000 $ 750,000      
Tranche A Term Loan Facility and Revolving Credit Facility [Member]                
Debt Instrument, SOFR Floor   0.00%            
Debt Instrument, Interest Rate, Effective Percentage           6.90%    
Long-Term Debt, Maturity Date       Jun. 29, 2027 Jun. 29, 2027      
Tranche A Term Loan Facility and Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]                
Debt Instrument, Basis Spread on Variable Rate             1.50%  
Tranche A Term Loan Facility and Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Maximum [Member]                
Debt Instrument, Basis Spread on Variable Rate   1.75%            
Tranche A Term Loan Facility and Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Minimum [Member]                
Debt Instrument, Basis Spread on Variable Rate   1.25%            
v3.24.2.u1
Note 11 - Credit Agreements - Long-term Borrowings (Details) - USD ($)
$ in Thousands
Jun. 30, 2024
Dec. 31, 2023
Original issue discount and deferred financing costs $ (10,735) $ (12,685)
Finance lease obligation 87,041 71,308
Other 2,880 9,512
Total 1,495,124 1,493,448
Less: current portion of debt 44,889 42,110
Less: current portion of finance lease obligation 5,539 3,785
Total 1,444,696 1,447,553
Revolving Credit Facility [Member]    
Revolving Facility 150,000 150,000
Tranche A Term Loan Facility [Member]    
Term Loan 735,938 745,313
Tranche B Term Loan Facility [Member]    
Term Loan $ 530,000 $ 530,000
v3.24.2.u1
Note 11 - Credit Agreements - Maturities of Long-term Borrowings Outstanding (Details)
$ in Thousands
Jun. 30, 2024
USD ($)
2024 $ 23,438
2025 46,875
2026 595,625
2027 750,000
Total 1,415,938
Tranche A Term Loan Facility [Member]  
2024 23,438
2025 46,875
2026 65,625
2027 600,000
Total 735,938
Tranche B Term Loan Facility [Member]  
2024 0
2025 0
2026 530,000
2027 0
Total 530,000
ABL Revolving Credit Facility [Member]  
2024 0
2025 0
2026 0
2027 150,000
Total $ 150,000
v3.24.2.u1
Note 12 - Stock Repurchase Program (Details Textual) - USD ($)
 1 Months Ended 3 Months Ended 6 Months Ended 107 Months Ended
Feb. 12, 2024
Sep. 30, 2020
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2024
Aug. 05, 2022
Stock Repurchase Program, Authorized Amount $ 500,000,000 $ 250,000,000             $ 500,000,000
Stock Repurchase Program, Period in Force (Year) 24 months 24 years              
Stock Repurchase Program, Remaining Authorized Repurchase Amount $ 26,297,000                
Treasury Stock, Value, Acquired, Cost Method     $ 50,609       $ 50,609,000    
Treasury Stock, Common [Member]                  
Treasury Stock, Shares, Acquired (in shares)     355,640       355,640    
Treasury Stock, Value, Acquired, Cost Method     $ 50,609       $ 50,609,000    
Stock Repurchase Program [Member] | Treasury Stock, Common [Member]                  
Treasury Stock, Shares, Acquired (in shares)     355,640 0 0 0   14,292,828  
Treasury Stock, Value, Acquired, Cost Method     $ 50,609,000         $ 1,079,501,000  
Shares Acquired, Average Cost Per Share (in dollars per share)               $ 75.53  
v3.24.2.u1
Note 13 - Earnings Per Share (Details Textual) - shares
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Share-Based Payment Arrangement [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 471,000 393,000 440,000 360,000
v3.24.2.u1
Note 13 - Earnings Per Share - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Net income attributable to Generac Holdings Inc. $ 59,115 $ 45,198 $ 85,347 $ 57,628
Redeemable noncontrolling interest redemption value adjustment 0 (1,821) (2,686) (10,837)
Net income attributable to common shareholders $ 59,115 $ 43,377 $ 82,661 $ 46,791
Weighted average shares, basic (in shares) 59,880,336 61,721,614 59,854,131 61,645,341
Dilutive effect of stock compensation awards (in shares) [1] 761,404 626,570 705,773 784,570
Dilutive effect of contingently issued shares (in shares) 0 0 0 0
Diluted shares (in shares) 60,641,740 62,348,184 60,559,904 62,429,911
Net income attributable to Generac Holdings Inc. per common share - basic: (in dollars per share) $ 0.99 $ 0.7 $ 1.38 $ 0.76
Net income attributable to Generac Holdings Inc. per common share - diluted: (in dollars per share) $ 0.97 $ 0.7 $ 1.36 $ 0.75
[1] Excludes approximately 471,000 and 440,000 stock options and restricted stock awards for the three months and six months ended June 30, 2024, respectively, and 393,000 and 360,000 stock options and restricted stock awards for the three months and six months ended June 30, 2023, respectively, because they would be anti-dilutive.
v3.24.2.u1
Note 14 - Income Taxes (Details Textual)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Effective Income Tax Rate Reconciliation, Percent 27.00% 28.50%
v3.24.2.u1
Note 15 - Commitments and Contingencies (Details Textual) - USD ($)
$ in Thousands
Oct. 05, 2023
May 03, 2023
Aug. 01, 2022
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Amount Financed by Dealers       $ 157,772   $ 158,028
Consumer Product Safety Commission [Member]            
Settlement Agreement, Civil Fine Payments   $ 15,800        
Power Home Solar, LLC Against Generac Power Systems, Inc. [Member] | Minimum [Member]            
Loss Contingency, Damages Sought, Value     $ 25,000      
Case No. 22-cv-00072-JRG [Member]            
Litigation Settlement, Amount Awarded to Other Party $ 11,500          
Case No. 22-cv-00072-JRG [Member] | Estimated Prejudgment Interest [Member]            
Loss Contingency Accrual         $ 1,826  
v3.24.2.u1
Note 16 - Subsequent Events (Details Textual) - USD ($)
$ in Millions
 3 Months Ended
Jul. 22, 2024
Jul. 03, 2024
Dec. 31, 2023
Wallbox N.V. [Member]      
Payments to Acquire Investments     $ 30
Investment Owned, Net Assets, Percentage     5.00%
Wallbox N.V. [Member] | Option to Purchase Additional Interest [Member]      
Investment Owned, Net Assets, Percentage     5.00%
Subsequent Event [Member] | Wallbox N.V. [Member]      
Payments to Acquire Investments $ 35    
Investment Owned, Net Assets, Percentage 12.00%    
Subsequent Event [Member] | Wallbox N.V. [Member] | Option to Purchase Additional Interest [Member]      
Investment Owned, Net Assets, Percentage 5.00%    
Tranche B Term Loan Facility [Member] | Subsequent Event [Member]      
Extinguishment of Debt, Amount   $ 530  
Debt Instrument, Face Amount   $ 500  
Debt Instrument, Quarterly Payments as A Percentage of Original Principal   0.25%  
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