Generac (US:GNRC)2023-02-21 16:00Distribution Network and Sales - The company has the industry's largest network of factory direct independent generator dealers in North America, with significant investments made to grow this dealer network [76]. - In 2022, no single customer accounted for more than 4% of the company's sales, indicating a well-balanced distribution network [75]. - The company has expanded its dealer network globally through acquisitions and organic growth, enhancing international sales opportunities [78]. - The company focuses on a diverse omni-channel distribution model, which includes e-commerce and retail channels, to enhance product awareness and reach [79]. - The Domestic segment accounted for $3,867,866 in external net sales in 2022, compared to $3,164,050 in 2021, marking an increase of about 21.9% [399]. - The International segment's external net sales were $696,871 in 2022, up from $573,134 in 2021, representing a growth of approximately 21.7% [399]. - Total sales for the Domestic segment in 2022, including intersegment sales, amounted to $3,928,597, while the International segment totaled $790,570 [399]. Research and Development - The company has approximately 1,000 engineers focused on R&D, driving technological innovation and product enhancements [84]. - Recent acquisitions have significantly enhanced the company's R&D capabilities, particularly in energy storage and power conversion [85]. - The company’s research and development expenses for 2022 were $159.8 million, an increase of 53.1% from $104.3 million in 2021 [302]. - Research and development expenditures were $159,774 million, $104,303 million, and $80,251 million for the years ended December 31, 2022, 2021, and 2020, respectively [339]. Financial Performance - Generac Holdings Inc. reported net sales of $4,564.7 million for the year ended December 31, 2022, an increase of 22.2% compared to $3,737.2 million in 2021 [302]. - The company's gross profit for 2022 was $1,522.0 million, up from $1,360.1 million in 2021, reflecting a gross margin of approximately 33.3% [302]. - Operating expenses increased to $955.7 million in 2022 from $638.9 million in 2021, primarily due to higher selling and service costs and increased research and development expenses [302]. - Generac's net income attributable to the company for 2022 was $399.5 million, a decrease of 27.4% from $550.5 million in 2021 [302]. - Total assets increased to $5,169.5 million as of December 31, 2022, compared to $4,877.8 million in 2021 [299]. - Total liabilities rose to $2,799.7 million in 2022, up from $2,605.6 million in 2021 [299]. - Cash and cash equivalents decreased to $132.7 million in 2022 from $147.3 million in 2021 [299]. - Net income for the year ended December 31, 2022, was $408.87 million, a decrease from $556.57 million in 2021 [308]. - Operating cash flow for 2022 was $58.52 million, significantly lower than $411.16 million in 2021 [308]. - Total revenue for 2022 was $1.02 billion, reflecting a decrease compared to previous years [308]. Acquisitions and Investments - Generac has executed multiple acquisitions, including Enbala Power Networks in October 2020 and ecobee Inc. in December 2021, to enhance its energy technology solutions [315]. - The Company acquired EEC and Blue Pillar for a combined purchase price of $25,654 million, funded solely through cash on hand [355]. - The acquisition of ecobee was for a total purchase price of $735,577 million, including $225,403 million in cash and $420,774 million in common stock [363]. - The Company recorded $806,131 million of intangible assets from the ecobee acquisition, including $248,231 million of goodwill [365]. - The Company incurred total acquisition-related costs of $1,459 million, $21,465 million, and $1,411 million for the years ended December 31, 2022, 2021, and 2020, respectively [350]. Employee and Workforce - As of December 31, 2022, Generac had 9,500 employees, including 9,160 full-time and 340 part-time and temporary employees [112]. - Approximately 4,500 employees were directly or indirectly involved in manufacturing at Generac's facilities [112]. - The company maintains an ongoing global employee engagement initiative, measuring progress through global employee engagement surveys [111]. - Generac's Healthy & Thriving Total Rewards programs are designed to meet the diverse needs of its workforce, focusing on health, wellness, and safety [109]. - Generac is committed to diversity, equity, and inclusion (DEI), sponsoring employee-led Business Employee Resource Groups (BERGs) to enhance networking and learning opportunities [110]. Supply Chain and Manufacturing - The company has made significant investments in manufacturing capacity, including new facilities in Trenton, South Carolina, Hidalgo, Mexico, and Hamilton, Ohio [90]. - The company experienced supply chain challenges since 2020 due to the COVID-19 pandemic, although logistics delays eased in 2022 [92]. - The company experienced an increase in commodity and component costs in 2021 and 2022 due to supply chain challenges and inflation, implementing multiple price increases to mitigate these costs [275]. Government Incentives and ESG - The company is positioned to benefit from government incentives related to renewable energy, including those from the Inflation Reduction Act passed in 2022 [102]. - The company is committed to building an effective ESG program, with a second ESG report published in April 2022 to track progress on sustainability goals [107].