Generac (US:GNRC)2022-08-07 16:00PART I. FINANCIAL INFORMATION This part presents Generac's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements Generac's unaudited condensed consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets Total assets and liabilities increased from December 2021 to June 2022, with cash and equivalents significantly rising Condensed Consolidated Balance Sheets | Metric | June 30, 2022 ($ Thousands) | December 31, 2021 ($ Thousands) | | :------------------------------------------ | :---------------------------- | :------------------------------ | | Total Assets | 5,472,951 | 4,877,780 | | Total Liabilities | 2,970,359 | 2,605,643 | | Cash and cash equivalents | 467,140 | 147,339 | | Inventories | 1,240,524 | 1,089,705 | | Long-term borrowings and finance lease obligations | 1,286,499 | 902,091 | Condensed Consolidated Statements of Comprehensive Income Net sales and gross profit increased significantly, but net income slightly decreased for the six-month period Net Sales and Gross Profit (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2022 ($ Thousands) | Three Months Ended June 30, 2021 ($ Thousands) | % Change | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------- | | Net sales | 1,291,391 | 919,981 | 40.4% | | Gross profit | 456,985 | 339,735 | 34.5% | | Income from operations | 216,844 | 182,952 | 18.5% | | Net income attributable to Generac Holdings Inc. | 156,359 | 127,036 | 23.1% | | Diluted EPS | $2.21 | $2.01 | - | Net Sales and Gross Profit (Six Months Ended June 30) | Metric | Six Months Ended June 30, 2022 ($ Thousands) | Six Months Ended June 30, 2021 ($ Thousands) | % Change | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------- | | Net sales | 2,427,247 | 1,727,415 | 40.5% | | Gross profit | 817,733 | 661,549 | 23.6% | | Income from operations | 371,579 | 372,076 | -0.1% | | Net income attributable to Generac Holdings Inc. | 270,217 | 276,029 | -2.1% | | Diluted EPS | $3.78 | $4.34 | - | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased from January to June 2022, driven by net income, partially offset by comprehensive loss Total Stockholders' Equity (Generac Holdings Inc.) | Item | June 30, 2022 ($ Thousands) | January 1, 2022 ($ Thousands) | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Total Stockholders' Equity (Generac Holdings Inc.) | 2,418,879 | 2,213,774 | | Retained Earnings | 2,210,582 | 1,965,957 | | Accumulated Other Comprehensive Loss | (82,839) | (54,755) | Condensed Consolidated Statements of Cash Flows Operating cash flow significantly decreased, investing cash outflow decreased, and financing cash inflow increased due to new debt Cash Flow Summary (Six Months Ended June 30) | Category | Six Months Ended June 30, 2022 ($ Thousands) | Six Months Ended June 30, 2021 ($ Thousands) | % Change | | :-------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------- | | Net cash provided by operating activities | 13,693 | 274,993 | -95.0% | | Net cash used in investing activities | (63,119) | (467,116) | 86.5% | | Net cash provided by (used in) financing activities | 366,367 | (72,680) | 604.1% | Notes to Condensed Consolidated Financial Statements This section provides detailed notes to Generac's condensed consolidated financial statements, covering business, accounting, acquisitions, and financial instruments 1. Description of Business and Basis of Presentation This section outlines Generac's business as a global energy technology solutions provider and the basis of financial statement presentation - Generac is a leading global designer and manufacturer of energy technology solutions, including power generation equipment, energy storage systems, and grid service devices, serving residential, light commercial, and industrial markets21 - The condensed consolidated financial statements are unaudited and prepared in conformity with U.S. GAAP, with management making estimates and assumptions2324 - Generac has executed several strategic acquisitions, including Electronic Environments Co. LLC (EEC) in June 2022, and Deep Sea, Chilicon, Apricity Code, Off Grid Energy, Tank Utility, and ecobee in 20212225 New Accounting Pronouncements This section discusses the assessment and adoption of new accounting standard updates by the FASB - New Accounting Standard Updates (ASUs) issued by the FASB have been assessed and either adopted in a prior period or are not expected to have a material impact on Generac's consolidated financial statements26 2. Acquisitions This section details Generac's recent acquisitions, including Electronic Environments Co. LLC in 2022 and several others in 2021 - In June 2022, Generac acquired Electronic Environments Co. LLC (EEC), an industrial generator distributor and provider of data center and telecom facility services2527 - Fiscal 2021 acquisitions included Deep Sea Electronics (control solutions), Chilicon Power (solar microinverters), Off Grid Energy (mobile energy storage), ecobee (smart home technology), Apricity Code (engineering/design), and Tank Utility (IoT propane monitoring)252830313538 Summary Purchase Price Allocations for 2021 Acquisitions (Assets Acquired) | Asset Category | Deep Sea ($ Thousands) | ecobee ($ Thousands) | All Other ($ Thousands) | Total ($ Thousands) | | :-------------------------- | :--------------------- | :------------------- | :---------------------- | :------------------ | | Accounts receivable | 9,574 | 23,337 | 13,852 | 46,763 | | Inventories | 9,970 | 7,258 | 7,034 | 24,262 | | Intangible assets | 174,270 | 555,400 | 81,171 | 810,841 | | Goodwill | 263,604 | 243,346 | 80,871 | 587,821 | | Net assets acquired | 420,700 | 735,632 | 148,023 | 1,304,355 | 3. Redeemable Noncontrolling Interest This section details changes in Generac's ownership interests in subsidiaries, including Pramac and Captiva - Generac increased its ownership in PR Industrial S.r.l. (Pramac) to 80% in May 2021 by exercising a call option for $27,164 thousand44 - In May 2022, Generac increased its ownership in Captiva Energy Solutions Private Limited (Captiva) to 66% for $375 thousand45 Changes in Redeemable Noncontrolling Interest (Six Months Ended June 30) | Item | 2022 ($ Thousands) | 2021 ($ Thousands) | | :-------------------------- | :------------------- | :------------------- | | Balance at beginning of period | 58,050 | 66,207 | | Net income | 3,672 | 1,693 | | Purchase of additional ownership interest | (375) | (27,164) | | Redemption value adjustment | 25,592 | (1,870) | | Balance at end of