Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document Information [Line Items] | ||
Entity Registrant Name | GENERAC HOLDINGS INC. | |
Entity Central Index Key | 1,474,735 | |
Trading Symbol | gnrc | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Common Stock, Shares Outstanding (in shares) | 63,837,342 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 54,163 | $ 115,857 |
Accounts receivable, less allowance for doubtful accounts | 244,722 | 182,185 |
Inventories | 359,363 | 325,375 |
Prepaid expenses and other assets | 13,185 | 8,600 |
Total current assets | 671,433 | 632,017 |
Property and equipment, net | 207,504 | 184,213 |
Customer lists, net | 49,776 | 39,313 |
Patents, net | 50,640 | 53,772 |
Other intangible assets, net | 3,111 | 2,768 |
Tradenames, net | 161,451 | 161,057 |
Goodwill | 711,794 | 669,719 |
Deferred income taxes | 9,298 | 34,812 |
Other assets | 3,506 | 964 |
Total assets | 1,868,513 | 1,778,635 |
Current liabilities: | ||
Short-term Borrowings | 35,517 | 8,594 |
Accounts payable | 145,894 | 108,332 |
Accrued wages and employee benefits | 21,041 | 13,101 |
Other accrued liabilities | 92,415 | 82,540 |
Current portion of long-term borrowings and capital lease obligations | 38,712 | 657 |
Total current liabilities | 333,579 | 213,224 |
Long-term borrowings and capital lease obligations | 1,013,671 | 1,037,132 |
Deferred income taxes | 8,806 | 4,950 |
Other long-term liabilities | 62,330 | 57,458 |
Total liabilities | 1,418,386 | 1,312,764 |
Redeemable noncontrolling interests | 36,269 | |
Stockholders’ equity: | ||
Common stock, par value $0.01, 500,000,000 shares authorized, 70,144,760 and 69,582,669 shares issued at September 30, 2016 and December 31, 2015, respectively | 701 | 696 |
Additional paid-in capital | 446,267 | 443,109 |
Treasury stock, at cost | (212,358) | (111,516) |
Excess purchase price over predecessor basis | (202,116) | (202,116) |
Retained earnings | 415,452 | 358,173 |
Accumulated other comprehensive loss | (34,031) | (22,475) |
Stockholders' equity attributable to Generac Holdings, Inc. | 413,915 | 465,871 |
Noncontrolling interests | (57) | |
Total stockholders' equity | 413,858 | 465,871 |
Total liabilities and stockholders’ equity | $ 1,868,513 | $ 1,778,635 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
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) | 70,144,760 | 69,582,669 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Net sales | $ 373,121 | $ 359,291 | $ 1,027,032 | $ 959,469 | |
Costs of goods sold | 235,349 | 228,965 | 667,053 | 630,643 | |
Gross profit | 137,772 | 130,326 | 359,979 | 328,826 | |
Operating expenses: | |||||
Selling and service | 44,429 | 34,715 | 124,064 | 93,317 | |
Research and development | 9,426 | 8,332 | 27,512 | 24,907 | |
General and administrative | 18,066 | 13,127 | 55,492 | 40,897 | |
Amortization of intangibles | 9,511 | 6,285 | 25,525 | 17,460 | |
Total operating expenses | 81,432 | 62,459 | 232,593 | 176,581 | |
Income from operations | 56,340 | 67,867 | 127,386 | 152,245 | |
Other (expense) income: | |||||
Interest expense | (11,299) | (10,210) | (33,714) | (32,241) | |
Investment income | 39 | 36 | 111 | ||
Loss on extinguishment of debt | [1] | (4,795) | |||
Loss on change in contractual interest rate | [2] | (2,957) | (2,381) | (2,957) | (2,381) |
Costs related to acquisition | (577) | (153) | (994) | (153) | |
Other, net | 19 | (1,908) | 564 | (5,357) | |
Total other expense, net | (14,814) | (14,613) | (37,065) | (44,816) | |
Income before provision for income taxes | 41,526 | 53,254 | 90,321 | 107,429 | |
Provision for income taxes | 15,514 | 19,218 | 33,154 | 38,864 | |
Net income | 26,012 | 34,036 | 57,167 | 68,565 | |
Net loss attributable to noncontrolling interests | (171) | (112) | |||
Net income attributable to Generac Holdings Inc. | $ 26,183 | $ 34,036 | $ 57,279 | $ 68,565 | |
Net income attributable to Generac Holdings Inc. per common share - basic: (in dollars per share) | $ 0.41 | $ 0.50 | $ 0.87 | $ 1 | |
Weighted average common shares outstanding - basic: (in shares) | 64,615,935 | 68,175,466 | 65,506,469 | 68,642,479 | |
Net income attributable to Generac Holdings Inc. per common share - diluted: (in dollars per share) | $ 0.40 | $ 0.49 | $ 0.87 | $ 0.98 | |
Weighted average common shares outstanding - diluted: (in shares) | 65,126,117 | 69,182,465 | 65,992,127 | 69,781,300 | |
Comprehensive income | $ 26,647 | $ 31,899 | $ 45,723 | $ 59,939 | |
[1] | Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments. | ||||
[2] | For the three and nine months ended September 30, 2016, represents a non-cash loss relating to the continued 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio remaining above 3.0 times based on current projections. For the three and nine months ended September 30, 2015, represents a non-cash loss relating to a 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio rising above 3.0 effective third quarter 2015 and remaining above 3.0 times based on projections at the time. |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | ||
Operating activities | |||
Net income | $ 57,167 | $ 68,565 | |
Adjustment to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 15,818 | 12,300 | |
Amortization of intangible assets | 25,525 | 17,460 | |
Amortization of original issue discount and deferred financing costs | 3,229 | 4,368 | |
Loss on extinguishment of debt | [1] | 4,795 | |
Loss on change in contractual interest rate | [2] | 2,957 | 2,381 |
Deferred income taxes | 22,909 | 27,319 | |
Share-based compensation expense | [3] | 7,805 | 6,889 |
Other | (45) | 377 | |
Net changes in operating assets and liabilities, net of acquisitions: | |||
Accounts receivable | (11,642) | (14,838) | |
Inventories | 6,177 | (28,319) | |
Other assets | 2,663 | 572 | |
Accounts payable | (2,618) | (12,226) | |
Accrued wages and employee benefits | 4,981 | (1,167) | |
Other accrued liabilities | 1,341 | (2,644) | |
Excess tax benefits from equity awards | (6,754) | (8,973) | |
Net cash provided by operating activities | 129,513 | 76,859 | |
Investing activities | |||
Proceeds from sale of property and equipment | 1,349 | 105 | |
Expenditures for property and equipment | (20,847) | (20,108) | |
Acquisition of business, net of cash acquired | (61,386) | (74,477) | |
Net cash used in investing activities | (80,884) | (94,480) | |
Financing activities | |||
Proceeds from short-term borrowings | 14,117 | 14,320 | |
Proceeds from long-term borrowings | 100,000 | ||
Repayments of short-term borrowings | (8,244) | (15,198) | |
Repayments of long-term borrowings and capital lease obligations | (10,976) | (150,595) | |
Stock repurchases | (99,934) | (64,378) | |
Payment of debt issuance costs | (2,067) | ||
Cash dividends paid | (76) | (1,429) | |
Taxes paid related to the net share settlement of equity awards | (12,308) | (12,380) | |
Excess tax benefits from equity awards | 6,754 | 8,973 | |
Net cash used in financing activities | (110,667) | (122,754) | |
Effect of exchange rate changes on cash and cash equivalents | 344 | (2,932) | |
Net decrease in cash and cash equivalents | (61,694) | (143,307) | |
Cash and cash equivalents at beginning of period | 115,857 | 189,761 | |
Cash and cash equivalents at end of period | $ 54,163 | $ 46,454 | |
[1] | Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments. | ||
[2] | For the three and nine months ended September 30, 2016, represents a non-cash loss relating to the continued 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio remaining above 3.0 times based on current projections. For the three and nine months ended September 30, 2015, represents a non-cash loss relating to a 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio rising above 3.0 effective third quarter 2015 and remaining above 3.0 times based on projections at the time. | ||
[3] | Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods. |
Note 1 - Description of Busines
Note 1 - Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Business Description and Basis of Presentation [Text Block] | 1. Description of Business and Basis of Presentation Generac Holdings Inc. (the Company) is a leading designer and manufacturer of a wide range of power generation equipment and other engine powered products serving the residential, light-commercial and industrial markets. Generac’s power products are available globally through a broad network of independent dealers, distributors, retailers, wholesalers and equipment rental companies, as well as sold direct to certain end user customers. T he Company has executed a number of acquisitions that support our strategic plan (as discussed in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2015). A summary of these acquisitions include the following: ● I n October 2011, the Company acquired substantially all of the assets of Magnum Products (Magnum), a supplier of generator powered light towers and mobile generators for a variety of industrial applications. The Magnum business is a strategic fit for the Company as it provides diversification through the introduction of new engine powered products, distribution channels and end markets. ● I n December 2012, the Company acquired the equity of Ottomotores UK and its affiliates (Ottomotores), with operations in Mexico City, Mexico and Curitiba, Brazil. Ottomotores is a leading manufacturer in the Mexican market for industrial diesel gensets and is a market participant throughout all of Latin America. ● I n August 2013, the Company acquired the equity of Tower Light SRL and its wholly-owned subsidiaries (Tower Light). Headquartered outside Milan, Italy, Tower Light is a leading developer and supplier of mobile light towers throughout Europe, the Middle East and Africa. ● I n November 2013, the Company purchased the assets of Baldor Electric Company’s generator division (Baldor Generators). Baldor Generators offers a complete line of power generation equipment throughout North America with power output up to 2.5MW, which expands the Company’s commercial and industrial product lines. ● I n September 2014, the Company acquired the equity of Pramac America LLC (Powermate), resulting in the ownership of the Powermate trade name and the right to license the DeWalt brand name for certain residential engine powered tools. This acquisition expands Generac’s residential product portfolio in the portable generator category. ● I n October 2014, the Company acquired MAC, Inc. (MAC). MAC is a leading manufacturer of premium-grade commercial and industrial mobile heaters for the United States and Canadian markets. The acquisition expands the Company’s portfolio of mobile power products and provides increased access to the oil & gas market. ● I n August 2015, the Company acquired Country Home Products and its subsidiaries (CHP). CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, which are primarily sold in North America under the DR® Power Equipment brand. The acquisition provides an expanded product lineup and additional scale to the Company’s residential engine powered products. ● I n March 2016, the Company acquired a majority ownership interest in PR Industrial S.r.l and its subsidiaries (Pramac). Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network. 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 (U.S. GAAP). All intercompany amounts and transactions have been eliminated in consolidation. The condensed conso lidated balance sheet as of September 30, 2016, the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2016 and 2015, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2016 and 2015 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments) 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 U.S. 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 disclosure normally included in consolidated financial statements prepared in accordance with U.S. 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 our Annual Report on Form 10-K for the year ended December 31, 2015. New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606): D eferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients In February 2016, the FASB issued ASU 2016-02, Leases In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In the first quarter of 2016, the Company adopted ASU 2015-03, Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs Income Taxes: Balance Sheet Classification of Deferred Taxes There are several other new accounting pronouncements issued by the FASB. Management does not believe any of these other accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements. |
Note 2 - Acquisitions
Note 2 - Acquisitions | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Business Combination Disclosure [Text Block] | 2. Acquisitions Acquisition of Pramac On March 1, 2016, the Company acquired a 65% ownership interest in Pramac for a purchase price, net of cash acquired, of $60,886. Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network. The acquisition purchase price was funded solely through cash on hand. 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 condensed consolidated balance sheet, as the noncontrolling interest party has within its control the right to require the Company to redeem its interest in Pramac. The noncontrolling interest holder has a put option to sell their interests to the Company any time within five years from the acquisition. The put option price is either (i) a fixed amount if voluntarily exercised within the first two years after the acquisition, or (ii) based on a multiple of earnings, subject to the terms of the acquisition. Additionally, the Company holds a call option that it may redeem commencing five years from the acquisition, or earlier upon the occurrence of certain circumstances. The call option price is based on a multiple of earnings that is subject to the terms of the acquisition. Both the put and call option only provide for the complete transfer of the noncontrolling interest, with no partial transfers of interest permitted. The Company recorded a preliminary purchase price allocation during the first quarter of 2016, and was updated in the third quarter of 2016, based upon its estimates of the fair value of the acquired assets and assumed liabilities. The preliminary purchase price allocation as of September 30, 2016 was as follows: March 1, 2016 Accounts receivable $ 51,108 Inventories 40,070 Property and equipment 19,129 Intangible assets 34,471 Goodwill 47,682 Other assets 8,153 Total assets acquired 200,613 Short-term borrowings 21,105 Accounts payable 40,270 Long-term debt and capital lease obligations (including current portion) 18,599 Other liabilities 25,447 Redeemable noncontrolling interest 34,253 Noncontrolling interest 53 Net assets acquired $ 60,886 The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of Pramac from the date of acquisition through September 30, 2016. Acquisition of CHP On August 1, 2015, a subsidiary of the Company acquired CHP for a purchase price, net of cash acquired, of $74,570. Headquartered in Vergennes, Vermont, CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, with sales primarily in North America. The acquisition was funded solely through cash on hand. The Company recorded a preliminary purchase price allocation during the third quarter of 2015 based upon its estimates of the fair value of the acquired assets and assumed liabilities. As a result, the Company recorded approximately $81,726 of intangible assets, including approximately $30,076 of goodwill, as of the acquisition date. The purchase price allocation was finalized in the fourth quarter of 2015, resulting in a $6,552 decrease to total intangible assets, including an increase of $6,208 in goodwill. The goodwill ascribed to this acquisition is not deductible for tax purposes. In addition, the Company assumed $12,000 of CHP’s debt in conjunction with this acquisition. The accompanying condensed consolidated financial statements include the results of CHP from the date of acquisition through September 30, 2016. P ro Forma Information The following unaudited pro forma information of t he Company gives effect to these acquisitions as though the transactions had occurred on January 1, 2015: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net Sales: As reported $ 373,121 $ 359,291 $ 1,027,032 $ 959,469 Pro forma 373,121 415,260 1,056,379 1,159,587 Net income attributable to Generac Holdings Inc.: As reported $ 26,183 $ 34,036 $ 57,279 $ 68,565 Pro forma 26,257 32,675 58,989 68,380 Net income attributable to Generac Holdings Inc. per common share - diluted As reported $ 0.40 $ 0.49 $ 0.87 $ 0.98 Pro forma 0.40 0.47 0.89 0.98 Th is unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated on January 1, 2015. |
Note 3 - Derivative Instruments
Note 3 - Derivative Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 3 . Derivative Instruments and Hedging Activities The Company records all derivatives in accordance with Accounting Standards Codification (ASC) 815, Derivatives and Hedging Commodities The Company is exposed to significant price fluctuations in commodities it uses as raw materials, and periodically utilizes commodity derivatives to mitigate the impact of these potential price fluctuations on its financial results and its economic well-being. These derivatives typically have maturities of less than eighteen months. At September 30, 2016, December 31, 2015 and September 30, 2015, the Company had one, one and three commodity contracts outstanding, respectively, covering the purchases of copper. Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net gains (losses) recognized for the three and nine months ended September 30, 2016 were $(10) and $66, respectively. Net gains (losses) recognized for the three and nine months ended September 30, 2015 were $(667) and $(1,708), respectively. Foreign Currencies The Company is exposed to foreign currency exchange risk as a result of transactions denominated in currencies other than the U.S. Dollar. The Company periodically utilizes foreign currency forward purchase and sales contracts to manage the volatility associated with certain foreign currency purchases and sales in the normal course of business. Contracts typically have maturities of twelve months or less. As of September 30, 2016, December 31, 2015 and September 30, 2015, the Company had fifteen, six and three foreign currency contracts outstanding, respectively. Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net gains (losses) recognized for the three and nine months ended September 30, 2016 were $24 and $(154), respectively. Net gains (losses) recognized for the three and nine months ended September 30, 2015 were $(107) and $(465), respectively. Interest Rate Swaps In October 2013, the Company entered into two interest rate swap agreements, and in May 2014, the Company entered into an additional interest rate swap agreement. 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 accordingly, the effective portions of the gains or losses are reported as a component of accumulated other comprehensive loss (AOCL). 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. Fair Value The following table presents the fair value of all of the Company’s derivatives: September 30 , 6 December 31, 5 Commodity contracts $ 48 $ (400 ) Foreign currency contracts 417 (171 ) Interest rate swaps (3,454 ) (2,618 ) The fair value of the commodity and foreign currency contracts are included in other assets, and the fair value of the interest rate swaps are included in other long-term liabilities in the condensed consolidated balance sheets as of September 30, 2016 Excluding the impact of credit risk, the fair value of the derivative contracts as of September 30, 2016 and December 31, 2015 is a liability of $3,067 and $3,248, respectively, which represents the amount the Company would need to pay to exit the agreements on those dates. The amount of gains (losses) recognized in AOCL in the condensed consolidated balance sheets on the effective portion of interest rate swaps designated as hedging instruments for the three and nine months ended September 30, 2016 were $779 and $(509), respectively. The amount of gains (losses) for the three and nine months ended September 30, 2015 were $(1,065) and $(2,071), respectively. The amount of gains (losses) recognized in cost of goods sold in the condensed consolidated statements of comprehensive income for commodity and foreign currency contracts not designated as hedging instruments for the three and nine months ended September 30, 2016 were $14 and $(88), respectively. The amount of gains (losses) for the three and nine months ended September 30, 2015 were $(774) and $(2,173), respectively. |
Note 4 - Fair Value Measurement
Note 4 - Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Fair Value Disclosures [Text Block] | 4 . Fair Value Measurements ASC 820-10, Fair Value Measurement The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and ABL facility borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based upon their short-term nature. The fair value of Term Loan borrowings, which have an aggregate carrying value of $930,409, was approximately $933,875 (Level 2) at September 30, 2016, as calculated based on independent valuations whose inputs and significant value drivers are observable. For the fair value of the assets and liabilities measured on a recurring basis, se e the fair value table in Note 3, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements. The fair value of all derivative contracts is classified as Level 2. The valuation techniques used to measure the fair value of 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 derivative contracts above considers the Company’s credit risk in accordance with ASC 820-10. |
Note 5 - Accumulated Other Comp
Note 5 - Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Comprehensive Income (Loss) Note [Text Block] | 5 . Accumulated Other Comprehensive Loss The following presents a tabular disclosure of changes in AOCL during the three and nine months ended September 30, 2016 and 2015, net of tax: Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Gain (Loss) on Cash Flow Hedges Total Beginning Balance – July 1, 2016 $ (20,234 ) $ (11,362 ) $ (2,899 ) $ (34,495 ) Other comprehensive gain (loss) before reclassifications (315 ) - 779 (1) 464 Amounts reclassified from AOCL - - - - Net current-period other comprehensive income (loss) (315 ) - 779 464 Ending Balance – September 30, 2016 $ (20,549 ) $ (11,362 ) $ (2,120 ) $ (34,031 ) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Loss on Cash Flow Hedges Total Beginning Balance – July 1, 2015 $ (7,361 ) $ (13,243 ) $ (1,652 ) $ (22,256 ) Other comprehensive loss before reclassifications (1,072 ) - (1,065 ) (2) (2,137 ) Amounts reclassified from AOCL - - - - Net current-period other comprehensive loss (1,072 ) - (1,065 ) (2,137 ) Ending Balance – September 30, 2015 $ (8,433 ) $ (13,243 ) $ (2,717 ) $ (24,393 ) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Loss on Cash Flow Hedges Total Beginning Balance – January 1, 2016 $ (9,502 ) $ (11,362 ) $ (1,611 ) $ (22,475 ) Other comprehensive loss before reclassifications (11,047 ) - (509 ) (3) (11,556 ) Amounts reclassified from AOCL - - - - Net current-period other comprehensive loss (11,047 ) - (509 ) (11,556 ) Ending Balance – September 30, 2016 $ (20,549 ) $ (11,362 ) $ (2,120 ) $ (34,031 ) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Loss on Cash Flow Hedges Total Beginning Balance – January 1, 2015 $ (1,878 ) $ (13,243 ) $ (646 ) $ (15,767 ) Other comprehensive loss before reclassifications (6,555 ) - (2,071 ) (4) (8,626 ) Amounts reclassified from AOCL - - - - Net current-period other comprehensive loss (6,555 ) - (2,071 ) (8,626 ) Ending Balance – September 30, 2015 $ (8,433 ) $ (13,243 ) $ (2,717 ) $ (24,393 ) (1) Represents unrealized gains of $1,279, net of tax effect of $(500) for the three months ended September 30, 2016. (2) Re presents unrealized losses of $(1,727), net of tax benefit of $662 for the three months ended September 30, 2015. (3) Represents unrealized losses of $(836), net of tax benefit of $327 for the nine months ended September 30, 2016. (4) Repre sents unrealized losses of $(3,370), net of tax benefit of $1,299 for the nine months ended September 30, 2015. |
Note 6 - Segment Reporting
Note 6 - Segment Reporting | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | 6 . Segment Reporting Effective i n the second quarter of 2016, the Company changed its segment reporting from one reportable segment to two reportable segments - Domestic and International - as a result of the recent Pramac acquisition and the ongoing strategy to expand the business internationally. The Domestic segment includes the legacy Generac business and the impact of acquisitions that are based in the United States, all of which have revenues that are substantially derived from the U.S. and Canada. The International segment includes the Ottomotores, Tower Light and Pramac acquisitions, all of which have revenues that are substantially derived from outside of the U.S. and Canada. Both reportable segments design and manufacture a wide range of engine powered 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 and distribution methods. Net Sales Three Months Ended September 30, Nine Months Ended September 30, Reportable Segments 2016 2015 2016 2015 Domestic $ 299,095 $ 332,213 $ 833,831 $ 877,942 International 74,026 27,078 193,201 81,527 Total net sales $ 373,121 $ 359,291 $ 1,027,032 $ 959,469 The Company's product offerings consist primarily of power generation equipment and other engine powered products geared for varying end customer uses. Residential products and commercial & industrial products are each a class of products based on similar power output and end customer usage. The breakout of net sales between residential, commercial & industrial, and other products by product class is as follows: Net Sales Three Months Ended September 30, Nine Months Ended September 30, Product Classes 2016 2015 2016 2015 Residential products $ 192,856 $ 184,968 $ 533,572 $ 475,268 Commercial & industrial products 149,676 148,234 409,396 416,577 Other 30,589 26,089 84,064 67,624 Total net sales $ 373,121 $ 359,291 $ 1,027,032 $ 959,469 Management evaluates the performance of its segments based primarily on Adjusted EBITDA, and therefore is reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based on the definition that is contained in the Company’s credit agreements. Adjusted EBITDA Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Domestic $ 69,309 $ 77,117 $ 173,521 $ 180,018 International 3,527 4,055 13,050 10,714 Total adjusted EBITDA $ 72,836 $ 81,172 $ 186,571 $ 190,732 Interest expense (11,299 ) (10,210 ) (33,714 ) (32,241 ) Depreciation and amortization (14,900 ) (10,597 ) (41,343 ) (29,760 ) Non-cash write-down and other adjustments (1) 1,093 (2,115 ) (1,689 ) (4,091 ) Non-cash share-based compensation expense (2) (2,419 ) (1,799 ) (7,805 ) (6,889 ) Loss on extinguishment of debt (3) - - - (4,795 ) Loss on change in contractual interest rate (4) (2,957 ) (2,381 ) (2,957 ) (2,381 ) Transaction costs and credit facility fees (5) (739 ) (317 ) (1,499 ) (999 ) Business optimization expenses (6) (58 ) (5 ) (7,164 ) (1,743 ) Other (31 ) (494 ) (79 ) (404 ) Income before provision for income taxes $ 41,526 $ 53,254 $ 90,321 $ 107,429 (1) Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, foreign currency gains/losses and certain purchase accounting related 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 the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments. (4) For the three and nine months ended September 30, 2016, represents a non-cash loss relating to the continued 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio remaining above 3.0 times based on current projections. For the three and nine months ended September 30, 2015, represents a non-cash loss relating to a 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio rising above 3.0 effective third quarter 2015 and remaining above 3.0 times based on projections at the time. (5) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement; equity issuance, debt issuance or refinancing; together with certain fees relating to our senior secured credit facilities. (6) Represents charges relating to business optimization and restructuring costs. T he Company’s sales in the United States represented approximately 77% and 88% of total sales for the three months ended September 30, 2016 and 2015, respectively, and represented approximately 78% and 86% of total sales for the nine months ended September 30, 2016 and 2015, respectively. Approximately 86% and 93% of the Company’s identifiable long-lived assets are located in the United States at September 30, 2016 and December 31, 2015, respectively. |
Note 7 - Balance Sheet Details
Note 7 - Balance Sheet Details | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Supplemental Balance Sheet Disclosures [Text Block] | 7 . Balance Sheet Details Inventories consist of the following: September 30, 2016 December 31, 2015 Raw material $ 218,787 $ 179,769 Work-in-process 3,014 2,567 Finished goods 137,562 143,039 Total $ 359,363 $ 325,375 Property and equipment consists of the following: September 30, 2016 December 31, 2015 Land and improvements $ 12,124 $ 8,553 Buildings and improvements 117,795 104,774 Machinery and equipment 79,875 72,280 Dies and tools 22,813 20,066 Vehicles 1,535 1,244 Office equipment and systems 59,866 29,395 Leasehold improvements 4,256 3,338 Construction in progress 10,550 30,482 Gross property and equipment 308,814 270,132 Accumulated depreciation (101,310 ) (85,919 ) Total $ 207,504 $ 184,213 |
Note 8 - Product Warranty Oblig
Note 8 - Product Warranty Obligations | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Product Warranty Disclosure [Text Block] | 8 . Product Warranty Obligations The Company records a liability for product warranty obligations at the time of sale to a customer based upon historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. Additionally, the Company sells extended warranty coverage for certain products. The sales of extended warranties are recorded as deferred revenue, which is recognized over the life of the contracts. The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to extended warranty coverage: Three Months E nded September 30 , Nine Months Ended September 30, 201 6 201 5 201 6 201 5 Balance at beginning of period $ 30,735 $ 28,185 $ 30,197 $ 30,909 Product warranty reserve assumed in acquisition - 351 840 351 Payments (5,424 ) (5,812 ) (13,976 ) (16,345 ) Provision for warranties issued 5,762 6,033 13,464 15,062 Changes in estimates for pre-existing warranties 286 105 834 (1,115 ) Balance at end of period $ 31,359 $ 28,862 $ 31,359 $ 28,862 The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage : Three Months E nded September 30 , Nine Months Ended September 30 , 201 6 201 5 201 6 201 5 Balance at beginning of period $ 29,082 $ 27,241 $ 28,961 $ 27,193 Deferred revenue on extended warranty contracts assumed in acquisition - 291 - 291 Deferred revenue on extended warranty contracts sold 2,843 1,694 5,606 3,884 Amortization of deferred revenue on extended warranty contracts (1,430 ) (1,138 ) (4,072 ) (3,280 ) Balance at end of period $ 30,495 $ 28,088 $ 30,495 $ 28,088 Product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows: September 30 , December 31, 201 6 201 5 Product warranty liability Current portion - other accrued liabilities $ 21,159 $ 21,726 Long-term portion - other long-term liabilities 10,200 8,471 Total $ 31,359 $ 30,197 Deferred revenue related to extended warranty Current portion - other accrued liabilities $ 6,131 $ 6,026 Long-term portion - other long-term liabilities 24,364 22,935 Total $ 30,495 $ 28,961 |
Note 9 - Credit Agreements
Note 9 - Credit Agreements | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | 9 . Credit Agreements Short-term borrowings are included in the condensed consolidated balance sheets as follows: September 30 , December 31, 201 6 201 5 ABL facility $ - $ - Other lines of credit 35,517 8,594 Total $ 35,517 $ 8,594 Long-term borrowings are included in the condensed consolidated balance sheets as follows: September 30 , December 31, 201 6 201 5 Term loan $ 954,000 $ 954,000 Original issue discount and deferred financing costs (23,719 ) (29,905 ) ABL facility 100,000 100,000 Capital lease obligation 5,431 1,694 Other 16,671 12,000 Total 1,052,383 1,037,789 Less: current portion of debt 38,122 500 Less: current portion of capital lease obligation 590 157 Total $ 1,013,671 $ 1,037,132 The Company’s credit agreements provide for a $1,200,000 term loan B credit facility (Term Loan) and include a $300,000 uncommitted incremental term loan facility. The Term Loan matures on May 31, 2020. The Term Loan is guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and is secured by associated collateral agreements which pledge a first priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, other than all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, which are secured by a second priority lien. The Term Loan initially bore interest at rates based upon 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%. Beginning in the second quarter of 2014, and measured each quarterly period thereafter, the applicable margin related to base rate loans is reduced to 1.50% and the applicable margin related to LIBOR rate loans is reduced to 2.50%, in each case, if the Borrower’s net debt leverage ratio, as defined in the Term Loan, falls below 3.00 to 1.00 for that measurement period. The Company’s net debt leverage ratio as of September 30, 2016 was above 3.00 to 1.00. Because the Company ’s net debt leverage ratio was above 3.00 to 1.00 on July 1, 2015, it realized a 25 basis point increase in borrowing costs in the third quarter of 2015. As a result, the Company recorded a cumulative catch-up loss of $2,381 in the third quarter of 2015, which represents the additional cash interest expected to be paid while the net debt leverage ratio is expected to be above 3.00 to 1.00 using current forecasts at that time. As the Company ’s net debt leverage ratio continued to be above 3.00 to 1.00 on July 1, 2016, the Company recorded a cumulative catch-up loss of $2,957 in the third quarter of 2016, which represents the additional cash interest expected to be paid while the net debt leverage ratio is expected to be above 3.00 to 1.00 using current forecasts at that time. On May 18, 2015, the Company amended certain provisions and covenants of the Term Loan. In connection with this amendment and in accordance with ASC 470-50, Debt Modifications and Extinguishments The Company ’s credit agreements also originally provided for a $150,000 senior secured ABL revolving credit facility (ABL Facility). The maturity date of the ABL Facility originally was May 31, 2018. Borrowings under the ABL Facility are guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and are secured by associated collateral agreements which pledge a first priority lien on all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, and a second priority lien on all other assets, including fixed assets and intangibles of the Company and certain domestic subsidiaries. ABL Facility borrowings initially bore interest at rates based upon either a base rate plus an applicable margin of 1.00% or adjusted LIBOR rate plus an applicable margin of 2.00%, in each case, subject to adjustments based upon average availability under the ABL Facility. On May 29, 2015, the Company amended its ABL Facility. The amendment (i) increased the ABL Facility from $150,000 to $250,000 (Amended ABL Facility), (ii) extended the maturity date from May 31, 2018 to May 29, 2020, (iii) increased the uncommitted incremental facility from $50,000 to $100,000, (iv) reduced the interest rate spread by 50 basis points and (v) reduced the unused line fee by 12.5 basis points across all tiers. Additionally, the amendment relaxed certain restrictions on the Company’s ability to, among other things, (i) make additional investments and acquisitions (including foreign acquisitions), (ii) make restricted payments and (iii) incur additional secured and unsecured debt (including foreign subsidiary debt). In connection with this amendment and in accordance with ASC 470-50, the Company capitalized $490 of new debt issuance costs in 2015. On May 29, 2015, the Company borrowed $100,000 under the Amended ABL Facility, the proceeds of which were used as a voluntary prepayment towards the Term Loan. As of September 30, 2016, there was $100,000 outstanding under the Amended ABL Facility, leaving $144,924 of availability, net of outstanding letters of credit. On March 30 and May 29, 2015 , the Company made voluntary prepayments of the Term Loan of $50,000 and $100,000, respectively, which will be applied to the Excess Cash Flow payment requirement in the Term Loan. As a result of the prepayments, the Company wrote off $4,795 of original issue discount and capitalized debt issuance costs in the first half of 2015 as a loss on extinguishment of debt in the condensed consolidated statement of comprehensive income. As of September 30, 2016 and December 31, 2015, short-term borrowings consisted of borrowings by our foreign subsidiaries on local lines of credit, which totaled $35,517 and $8,594, respectively. |
Note 10 - Stock Repurchase Prog
Note 10 - Stock Repurchase Program | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Treasury Stock [Text Block] | 10. Stock Repurchase Program I n August 2015, the Company’s Board of Directors approved a $200,000 stock repurchase program. Under the program, the Company may repurchase up to $200,000 of its common stock over 24 months from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. For the three months ended September 30, 2016, the Company repurchased 1,798,206 shares of its common stock for $65,358. Since the inception of the program, the Company has repurchased 6,036,706 shares of its common stock for $199,876, all funded with cash on hand. The repurchases in the third quarter of 2016 completed the total authorized amount under the program. |
Note 11 - Earnings Per Share
Note 11 - Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | 11 . Earnings Per Share Basic earnings per share is calculated by dividing net income attributable to 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 stock options, as well as their related income tax benefits. The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income attributable to Generac Holdings Inc. (numerator) $ 26,183 $ 34,036 $ 57,279 $ 68,565 Weighted average shares (denominator) Basic 64,615,935 68,175,466 65,506,469 68,642,479 Dilutive effect of stock compensation awards (1) 510,182 1,006,999 485,658 1,138,821 Diluted 65,126,117 69,182,465 65,992,127 69,781,300 Net income attributable to Generac Holdings Inc. per share Basic $ 0.41 $ 0.50 $ 0.87 $ 1.00 Diluted $ 0.40 $ 0.49 $ 0.87 $ 0.98 (1) Excludes approximately 208,400 stock options for the three month period ended September 30, 2016 and 172,900 stock options for the nine month period ended September 30, 2016, as the impact of such awards was anti-dilutive. Excludes approximately 250,900 stock options and 11,000 shares of restricted stock for the three month period ended September 30, 2015 and 138,900 stock options and 800 shares of restricted stock for the nine month period ended September 30, 2015, as the impact of such awards was anti-dilutive. |
Note 12 - Income Taxes
Note 12 - Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | 12 . Income Taxes The effective income tax rates for the nine months ended September 30, 2016 and 2015 were 36.7% and 36.2%, respectively. |
Note 13 - Commitments and Conti
Note 13 - Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | 1 3 . Commitments and Contingencies The Company has an arrangement with a finance company to provide floor plan financing for selected 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 at September 30, 2016 and December 31, 2015 was approximately $30,500 and $32,400, respectively. In the normal course of business, the Company is named as a defendant in various lawsuits in which claims are asserted against the Company. In the opinion of management, the liabilities, if any, which may result from such lawsuits are not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company. |
Note 14 - Subsequent Events
Note 14 - Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | 1 4 . Subsequent Events On October 24 , 2016, the Company’s Board of Directors approved a $250,000 stock repurchase program. Under the stock repurchase program, the Company may repurchase an additional $250,000 of its common stock over the next 24 months. 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 Company's repurchase 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 will depend on a number of factors, including the market price of the Company’s shares of common stock and general market and economic conditions, applicable legal requirements, and compliance with the terms of the Company’s outstanding indebtedness. The repurchases will be funded from 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. On November 2, 2016, the Company made a $25,000 voluntary prepayment of the Term Loan. Additionally on November 2, 2016, the Company amended its Term Loan to extend the maturity date from May 31, 2020 to May 31, 2023. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606): D eferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients In February 2016, the FASB issued ASU 2016-02, Leases In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In the first quarter of 2016, the Company adopted ASU 2015-03, Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs Income Taxes: Balance Sheet Classification of Deferred Taxes There are several other new accounting pronouncements issued by the FASB. Management does not believe any of these other accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements. |
Note 2 - Acquisitions (Tables)
Note 2 - Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | March 1, 2016 Accounts receivable $ 51,108 Inventories 40,070 Property and equipment 19,129 Intangible assets 34,471 Goodwill 47,682 Other assets 8,153 Total assets acquired 200,613 Short-term borrowings 21,105 Accounts payable 40,270 Long-term debt and capital lease obligations (including current portion) 18,599 Other liabilities 25,447 Redeemable noncontrolling interest 34,253 Noncontrolling interest 53 Net assets acquired $ 60,886 |
Business Acquisition, Pro Forma Information [Table Text Block] | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net Sales: As reported $ 373,121 $ 359,291 $ 1,027,032 $ 959,469 Pro forma 373,121 415,260 1,056,379 1,159,587 Net income attributable to Generac Holdings Inc.: As reported $ 26,183 $ 34,036 $ 57,279 $ 68,565 Pro forma 26,257 32,675 58,989 68,380 Net income attributable to Generac Holdings Inc. per common share - diluted As reported $ 0.40 $ 0.49 $ 0.87 $ 0.98 Pro forma 0.40 0.47 0.89 0.98 |
Note 3 - Derivative Instrumen22
Note 3 - Derivative Instruments and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule Of Derivative Assets (Liabilities) at Fair Value [Table Text Block] | September 30 , 6 December 31, 5 Commodity contracts $ 48 $ (400 ) Foreign currency contracts 417 (171 ) Interest rate swaps (3,454 ) (2,618 ) |
Note 5 - Accumulated Other Co23
Note 5 - Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Gain (Loss) on Cash Flow Hedges Total Beginning Balance – July 1, 2016 $ (20,234 ) $ (11,362 ) $ (2,899 ) $ (34,495 ) Other comprehensive gain (loss) before reclassifications (315 ) - 779 (1) 464 Amounts reclassified from AOCL - - - - Net current-period other comprehensive income (loss) (315 ) - 779 464 Ending Balance – September 30, 2016 $ (20,549 ) $ (11,362 ) $ (2,120 ) $ (34,031 ) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Loss on Cash Flow Hedges Total Beginning Balance – July 1, 2015 $ (7,361 ) $ (13,243 ) $ (1,652 ) $ (22,256 ) Other comprehensive loss before reclassifications (1,072 ) - (1,065 ) (2) (2,137 ) Amounts reclassified from AOCL - - - - Net current-period other comprehensive loss (1,072 ) - (1,065 ) (2,137 ) Ending Balance – September 30, 2015 $ (8,433 ) $ (13,243 ) $ (2,717 ) $ (24,393 ) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Loss on Cash Flow Hedges Total Beginning Balance – January 1, 2016 $ (9,502 ) $ (11,362 ) $ (1,611 ) $ (22,475 ) Other comprehensive loss before reclassifications (11,047 ) - (509 ) (3) (11,556 ) Amounts reclassified from AOCL - - - - Net current-period other comprehensive loss (11,047 ) - (509 ) (11,556 ) Ending Balance – September 30, 2016 $ (20,549 ) $ (11,362 ) $ (2,120 ) $ (34,031 ) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Unrealized Loss on Cash Flow Hedges Total Beginning Balance – January 1, 2015 $ (1,878 ) $ (13,243 ) $ (646 ) $ (15,767 ) Other comprehensive loss before reclassifications (6,555 ) - (2,071 ) (4) (8,626 ) Amounts reclassified from AOCL - - - - Net current-period other comprehensive loss (6,555 ) - (2,071 ) (8,626 ) Ending Balance – September 30, 2015 $ (8,433 ) $ (13,243 ) $ (2,717 ) $ (24,393 ) |
Note 6 - Segment Reporting (Tab
Note 6 - Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Net Sales Three Months Ended September 30, Nine Months Ended September 30, Reportable Segments 2016 2015 2016 2015 Domestic $ 299,095 $ 332,213 $ 833,831 $ 877,942 International 74,026 27,078 193,201 81,527 Total net sales $ 373,121 $ 359,291 $ 1,027,032 $ 959,469 Adjusted EBITDA Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Domestic $ 69,309 $ 77,117 $ 173,521 $ 180,018 International 3,527 4,055 13,050 10,714 Total adjusted EBITDA $ 72,836 $ 81,172 $ 186,571 $ 190,732 Interest expense (11,299 ) (10,210 ) (33,714 ) (32,241 ) Depreciation and amortization (14,900 ) (10,597 ) (41,343 ) (29,760 ) Non-cash write-down and other adjustments (1) 1,093 (2,115 ) (1,689 ) (4,091 ) Non-cash share-based compensation expense (2) (2,419 ) (1,799 ) (7,805 ) (6,889 ) Loss on extinguishment of debt (3) - - - (4,795 ) Loss on change in contractual interest rate (4) (2,957 ) (2,381 ) (2,957 ) (2,381 ) Transaction costs and credit facility fees (5) (739 ) (317 ) (1,499 ) (999 ) Business optimization expenses (6) (58 ) (5 ) (7,164 ) (1,743 ) Other (31 ) (494 ) (79 ) (404 ) Income before provision for income taxes $ 41,526 $ 53,254 $ 90,321 $ 107,429 |
Revenue from External Customers by Products and Services [Table Text Block] | Net Sales Three Months Ended September 30, Nine Months Ended September 30, Product Classes 2016 2015 2016 2015 Residential products $ 192,856 $ 184,968 $ 533,572 $ 475,268 Commercial & industrial products 149,676 148,234 409,396 416,577 Other 30,589 26,089 84,064 67,624 Total net sales $ 373,121 $ 359,291 $ 1,027,032 $ 959,469 |
Note 7 - Balance Sheet Details
Note 7 - Balance Sheet Details (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | September 30, 2016 December 31, 2015 Raw material $ 218,787 $ 179,769 Work-in-process 3,014 2,567 Finished goods 137,562 143,039 Total $ 359,363 $ 325,375 |
Property, Plant and Equipment [Table Text Block] | September 30, 2016 December 31, 2015 Land and improvements $ 12,124 $ 8,553 Buildings and improvements 117,795 104,774 Machinery and equipment 79,875 72,280 Dies and tools 22,813 20,066 Vehicles 1,535 1,244 Office equipment and systems 59,866 29,395 Leasehold improvements 4,256 3,338 Construction in progress 10,550 30,482 Gross property and equipment 308,814 270,132 Accumulated depreciation (101,310 ) (85,919 ) Total $ 207,504 $ 184,213 |
Note 8 - Product Warranty Obl26
Note 8 - Product Warranty Obligations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Product Warranty Liability [Table Text Block] | Three Months E nded September 30 , Nine Months Ended September 30, 201 6 201 5 201 6 201 5 Balance at beginning of period $ 30,735 $ 28,185 $ 30,197 $ 30,909 Product warranty reserve assumed in acquisition - 351 840 351 Payments (5,424 ) (5,812 ) (13,976 ) (16,345 ) Provision for warranties issued 5,762 6,033 13,464 15,062 Changes in estimates for pre-existing warranties 286 105 834 (1,115 ) Balance at end of period $ 31,359 $ 28,862 $ 31,359 $ 28,862 Three Months E nded September 30 , Nine Months Ended September 30 , 201 6 201 5 201 6 201 5 Balance at beginning of period $ 29,082 $ 27,241 $ 28,961 $ 27,193 Deferred revenue on extended warranty contracts assumed in acquisition - 291 - 291 Deferred revenue on extended warranty contracts sold 2,843 1,694 5,606 3,884 Amortization of deferred revenue on extended warranty contracts (1,430 ) (1,138 ) (4,072 ) (3,280 ) Balance at end of period $ 30,495 $ 28,088 $ 30,495 $ 28,088 |
Product Warranty Obligations Included In Consolidated Balance Sheet [Table Text Block] | September 30 , December 31, 201 6 201 5 Product warranty liability Current portion - other accrued liabilities $ 21,159 $ 21,726 Long-term portion - other long-term liabilities 10,200 8,471 Total $ 31,359 $ 30,197 Deferred revenue related to extended warranty Current portion - other accrued liabilities $ 6,131 $ 6,026 Long-term portion - other long-term liabilities 24,364 22,935 Total $ 30,495 $ 28,961 |
Note 9 - Credit Agreements (Tab
Note 9 - Credit Agreements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Short-term Debt [Table Text Block] | September 30 , December 31, 201 6 201 5 ABL facility $ - $ - Other lines of credit 35,517 8,594 Total $ 35,517 $ 8,594 |
Schedule of Long-term Debt Instruments [Table Text Block] | September 30 , December 31, 201 6 201 5 Term loan $ 954,000 $ 954,000 Original issue discount and deferred financing costs (23,719 ) (29,905 ) ABL facility 100,000 100,000 Capital lease obligation 5,431 1,694 Other 16,671 12,000 Total 1,052,383 1,037,789 Less: current portion of debt 38,122 500 Less: current portion of capital lease obligation 590 157 Total $ 1,013,671 $ 1,037,132 |
Note 11 - Earnings Per Share (T
Note 11 - Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Tables | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income attributable to Generac Holdings Inc. (numerator) $ 26,183 $ 34,036 $ 57,279 $ 68,565 Weighted average shares (denominator) Basic 64,615,935 68,175,466 65,506,469 68,642,479 Dilutive effect of stock compensation awards (1) 510,182 1,006,999 485,658 1,138,821 Diluted 65,126,117 69,182,465 65,992,127 69,781,300 Net income attributable to Generac Holdings Inc. per share Basic $ 0.41 $ 0.50 $ 0.87 $ 1.00 Diluted $ 0.40 $ 0.49 $ 0.87 $ 0.98 |
Note 1 - Description of Busin29
Note 1 - Description of Business and Basis of Presentation (Details Textual) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Decrease in Long-term Borrowings [Member] | December 31, 2015 [Member] | |
Prior Period Reclassification Adjustment | $ 12,965 |
Decrease in Deferred Financing Costs [Member] | December 31, 2015 [Member] | |
Prior Period Reclassification Adjustment | 12,965 |
Decrease in Deferred Income Taxes Within Current Assets [Member] | December 31, 2015 [Member] | |
Prior Period Reclassification Adjustment | 29,355 |
Increase in Deferred Income Taxes within Noncurrent Assets [Member] | December 31, 2015 [Member] | |
Prior Period Reclassification Adjustment | 28,139 |
Decrease in Deferred Income Taxes within Noncurrent Liabilities [Member] | December 31, 2015 [Member] | |
Prior Period Reclassification Adjustment | $ 1,216 |
Number of Countries Where Product is Sold by Subsidiary | 150 |
Note 2 - Acquisitions (Details
Note 2 - Acquisitions (Details Textual) $ in Thousands | Mar. 01, 2016USD ($) | Aug. 01, 2015USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Pramac [Member] | |||||
Business Acquisition, Percentage of Voting Interests Acquired | 65.00% | ||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 60,886 | ||||
Number of Countries Where Product is Sold by Subsidiary | 150 | ||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 35.00% | ||||
Redeemable Noncontrolling Interest, Equity, Fair Value | $ 34,253 | ||||
Noncontrolling Interest, Term of Put Option | 5 years | ||||
Noncontrolling Interest, Term of Put Option in which Option Price is Fixed | 2 years | ||||
Goodwill | $ 47,682 | ||||
CHP [Member] | |||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 74,570 | ||||
Business Acquisition, Purchase Price Allocation, Intangible Assets Including Goodwill | 81,726 | ||||
Goodwill | 30,076 | ||||
Increase (Decrease) in Intangible Assets, Non-current | $ (6,552) | ||||
Goodwill, Period Increase (Decrease) | 6,208 | ||||
Noncash or Part Noncash Acquisition, Debt Assumed | $ 12,000 | ||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 61,386 | $ 74,477 | |||
Number of Countries Where Product is Sold by Subsidiary | 150 | ||||
Goodwill | $ 669,719 | $ 711,794 |
Note 2 - Acquisitions - Prelimi
Note 2 - Acquisitions - Preliminary Price Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Mar. 01, 2016 | Dec. 31, 2015 |
Pramac [Member] | |||
Accounts receivable | $ 51,108 | ||
Inventories | 40,070 | ||
Property and equipment | 19,129 | ||
Intangible assets | 34,471 | ||
Goodwill | 47,682 | ||
Other assets | 8,153 | ||
Total assets acquired | 200,613 | ||
Short-term borrowings | 21,105 | ||
Accounts payable | 40,270 | ||
Long-term debt and capital lease obligations (including current portion) | 18,599 | ||
Other liabilities | 25,447 | ||
Redeemable noncontrolling interest | 34,253 | ||
Noncontrolling interest | 53 | ||
Net assets acquired | $ 60,886 | ||
Goodwill | $ 711,794 | $ 669,719 |
Note 2 - Acquisitions - Unaudit
Note 2 - Acquisitions - Unaudited Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
As reported | $ 373,121 | $ 359,291 | $ 1,027,032 | $ 959,469 |
Pro forma | 373,121 | 415,260 | 1,056,379 | 1,159,587 |
As reported | 26,183 | 34,036 | 57,279 | 68,565 |
Pro forma | $ 26,257 | $ 32,675 | $ 58,989 | $ 68,380 |
As reported (in dollars per share) | $ 0.40 | $ 0.49 | $ 0.87 | $ 0.98 |
Pro forma (in dollars per share) | $ 0.40 | $ 0.47 | $ 0.89 | $ 0.98 |
Note 3 - Derivative Instrumen33
Note 3 - Derivative Instruments and Hedging Activities (Details Textual) $ in Thousands | Oct. 23, 2013 | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Commodity Contract [Member] | Maximum [Member] | ||||||
Derivative, Remaining Maturity | 1 year 180 days | |||||
Commodity Contract [Member] | Not Designated as Hedging Instrument [Member] | Cost of Sales [Member] | ||||||
Derivative, Gain (Loss) on Derivative, Net | $ (10) | $ (667) | $ 66 | $ (1,708) | ||
Commodity Contract [Member] | ||||||
Derivative, Number of Instruments Held | 1 | 3 | 1 | 3 | 1 | |
Foreign Exchange Contract [Member] | Maximum [Member] | ||||||
Derivative, Remaining Maturity | 1 year | |||||
Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member] | Cost of Sales [Member] | ||||||
Derivative, Gain (Loss) on Derivative, Net | $ 24 | $ (107) | $ (154) | $ (465) | ||
Foreign Exchange Contract [Member] | ||||||
Derivative, Number of Instruments Held | 15 | 3 | 15 | 3 | 6 | |
Interest Rate Swap [Member] | ||||||
Number of New Contracts Entered | 2 | |||||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 779 | $ (1,065) | $ (509) | $ (2,071) | ||
Commodity and Foreign Currency Contracts [Member] | ||||||
Derivative Assets (Liabilities), Net Fair Value of Derivative Contracts, Excluding Impact of Credit Risk | (3,067) | (3,067) | $ (3,248) | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ 14 | $ (774) | $ (88) | $ (2,173) |
Note 3 - Derivative Instrumen34
Note 3 - Derivative Instruments and Hedging Activities - Fair Value of Derivatives (Details) - Fair Value, Inputs, Level 2 [Member] - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Commodity Contract [Member] | ||
Fair Value of Derivates | $ 48 | $ (400) |
Foreign Exchange Contract [Member] | ||
Fair Value of Derivates | 417 | (171) |
Interest Rate Swap [Member] | ||
Fair Value of Derivates | $ (3,454) | $ (2,618) |
Note 4 - Fair Value Measureme35
Note 4 - Fair Value Measurements (Details Textual) - Fair Value, Inputs, Level 2 [Member] $ in Thousands | Sep. 30, 2016USD ($) |
Long-term Debt | $ 930,409 |
Long-term Debt, Fair Value | $ 933,875 |
Note 5 - Accumulated Other Co36
Note 5 - Accumulated Other Comprehensive Loss (Details Textual) - Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
OCI, before Reclassifications, before Tax, Attributable to Parent | $ 1,279 | $ (1,727) | $ (836) | $ (3,370) |
Other Comprehensive Income (Loss) before Reclassifications, Tax | $ 500 | $ (662) | $ (327) | $ (1,299) |
Note 5 - Accumulated Other Co37
Note 5 - Accumulated Other Comprehensive Loss - Disclosure of Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |||||
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||||||||
Balance | $ (20,234) | $ (7,361) | $ (9,502) | $ (1,878) | ||||
Other comprehensive gain (loss) before reclassifications | (315) | (1,072) | (11,047) | (6,555) | ||||
Amounts reclassified from AOCL | ||||||||
Net current-period other comprehensive income (loss) | (315) | (1,072) | (11,047) | (6,555) | ||||
Balance | (20,549) | (8,433) | (20,549) | (8,433) | ||||
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||||||||
Balance | (11,362) | (13,243) | (11,362) | (13,243) | ||||
Other comprehensive gain (loss) before reclassifications | ||||||||
Amounts reclassified from AOCL | ||||||||
Net current-period other comprehensive income (loss) | ||||||||
Balance | (11,362) | (13,243) | (11,362) | (13,243) | ||||
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member] | ||||||||
Balance | (2,899) | (1,652) | (1,611) | (646) | ||||
Other comprehensive gain (loss) before reclassifications | 779 | [1] | (1,065) | [2] | (509) | [3] | (2,071) | [4] |
Amounts reclassified from AOCL | ||||||||
Net current-period other comprehensive income (loss) | 779 | (1,065) | (509) | (2,071) | ||||
Balance | (2,120) | (2,717) | (2,120) | (2,717) | ||||
Balance | (34,495) | (22,256) | (22,475) | (15,767) | ||||
Other comprehensive gain (loss) before reclassifications | 464 | (2,137) | (11,556) | (8,626) | ||||
Amounts reclassified from AOCL | ||||||||
Net current-period other comprehensive income (loss) | 464 | (2,137) | (11,556) | (8,626) | ||||
Balance | $ (34,031) | $ (24,393) | $ (34,031) | $ (24,393) | ||||
[1] | Represents unrealized gains of $1,279, net of tax effect of $(500) for the three months ended September 30, 2016. | |||||||
[2] | Represents unrealized losses of $(1,727), net of tax benefit of $662 for the three months ended September 30, 2015. | |||||||
[3] | Represents unrealized losses of $(836), net of tax benefit of $327 for the nine months ended September 30, 2016. | |||||||
[4] | Represents unrealized losses of $(3,370), net of tax benefit of $1,299 for the nine months ended September 30, 2015. |
Note 6 - Segment Reporting (Det
Note 6 - Segment Reporting (Details Textual) | Jul. 01, 2016 | Jul. 01, 2015 | Sep. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Term Loan [Member] | ||||||||||||
Debt Instrument, Interest Rate, Increase (Decrease) | 0.25% | 0.25% | 0.25% | 0.25% | ||||||||
Net Debt Leverage Ratio Not Achieved | 3 | 3 | 3 | 3 | 3 | 3 | 3 | |||||
Geographic Concentration Risk [Member] | Sales Revenue, Net [Member] | UNITED STATES | ||||||||||||
Concentration Risk, Percentage | 77.00% | 88.00% | 78.00% | 86.00% | ||||||||
Geographic Concentration Risk [Member] | Net Assets, Geographic Area [Member] | UNITED STATES | ||||||||||||
Concentration Risk, Percentage | 86.00% | 93.00% | ||||||||||
Number of Reportable Segments | 1 | 2 |
Note 6 - Segment Reporting - Ne
Note 6 - Segment Reporting - Net Sales by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Domestic [Member] | |||||
As reported | $ 299,095 | $ 332,213 | $ 833,831 | $ 877,942 | |
Total adjusted EBITDA | 69,309 | 77,117 | 173,521 | 180,018 | |
International [Member] | |||||
As reported | 74,026 | 27,078 | 193,201 | 81,527 | |
Total adjusted EBITDA | 3,527 | 4,055 | 13,050 | 10,714 | |
As reported | 373,121 | 359,291 | 1,027,032 | 959,469 | |
Total adjusted EBITDA | 72,836 | 81,172 | 186,571 | 190,732 | |
Interest expense | (11,299) | (10,210) | (33,714) | (32,241) | |
Depreciation and amortization | (14,900) | (10,597) | (41,343) | (29,760) | |
Non-cash write-down and other adjustments | [1] | 1,093 | (2,115) | (1,689) | (4,091) |
Non-cash share-based compensation expense | [2] | (2,419) | (1,799) | (7,805) | (6,889) |
Loss on extinguishment of debt | [3] | (4,795) | |||
Gain Loss on Change in Cash Flows Related to Debt | [4] | (2,957) | (2,381) | (2,957) | (2,381) |
Transaction costs and credit facility fees | [5] | (739) | (317) | (1,499) | (999) |
Business optimization expenses | [6] | (58) | (5) | (7,164) | (1,743) |
Other | (31) | (494) | (79) | (404) | |
Income before provision for income taxes | $ 41,526 | $ 53,254 | $ 90,321 | $ 107,429 | |
[1] | Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, foreign currency gains/losses and certain purchase accounting related 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 the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments. | ||||
[4] | For the three and nine months ended September 30, 2016, represents a non-cash loss relating to the continued 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio remaining above 3.0 times based on current projections. For the three and nine months ended September 30, 2015, represents a non-cash loss relating to a 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio rising above 3.0 effective third quarter 2015 and remaining above 3.0 times based on projections at the time. | ||||
[5] | Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement; equity issuance, debt issuance or refinancing; together with certain fees relating to our senior secured credit facilities. | ||||
[6] | Represents charges relating to business optimization and restructuring costs. |
Note 6 - Segment Reporting - 40
Note 6 - Segment Reporting - Net Sales by Products and Services (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Residential Power Products [Member] | ||||
As reported | $ 192,856 | $ 184,968 | $ 533,572 | $ 475,268 |
Commercial and Industrial Power Products [Member] | ||||
As reported | 149,676 | 148,234 | 409,396 | 416,577 |
Other Products and Services [Member] | ||||
As reported | 30,589 | 26,089 | 84,064 | 67,624 |
As reported | $ 373,121 | $ 359,291 | $ 1,027,032 | $ 959,469 |
Note 7 - Balance Sheet Detail41
Note 7 - Balance Sheet Details - Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Raw material | $ 218,787 | $ 179,769 |
Work-in-process | 3,014 | 2,567 |
Finished goods | 137,562 | 143,039 |
Total | $ 359,363 | $ 325,375 |
Note 7 - Balance Sheet Detail42
Note 7 - Balance Sheet Details - Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Land and Land Improvements [Member] | ||
Property and equipment, gross | $ 12,124 | $ 8,553 |
Building and Building Improvements [Member] | ||
Property and equipment, gross | 117,795 | 104,774 |
Machinery and Equipment [Member] | ||
Property and equipment, gross | 79,875 | 72,280 |
Dies and Tools [Member] | ||
Property and equipment, gross | 22,813 | 20,066 |
Vehicles [Member] | ||
Property and equipment, gross | 1,535 | 1,244 |
Office Equipment [Member] | ||
Property and equipment, gross | 59,866 | 29,395 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 4,256 | 3,338 |
Construction in Progress [Member] | ||
Property and equipment, gross | 10,550 | 30,482 |
Property and equipment, gross | 308,814 | 270,132 |
Accumulated depreciation | (101,310) | (85,919) |
Total | $ 207,504 | $ 184,213 |
Note 8 - Product Warranty Obl43
Note 8 - Product Warranty Obligations - Reconciliation of Product Warranty Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Balance at beginning of period | $ 30,735 | $ 28,185 | $ 30,197 | $ 30,909 |
Product warranty reserve assumed in acquisition | 351 | 840 | 351 | |
Payments | (5,424) | (5,812) | (13,976) | (16,345) |
Provision for warranties issued | 5,762 | 6,033 | 13,464 | 15,062 |
Changes in estimates for pre-existing warranties | 286 | 105 | 834 | (1,115) |
Balance at end of period | 31,359 | 28,862 | 31,359 | 28,862 |
Balance at beginning of period | 29,082 | 27,241 | 28,961 | 27,193 |
Deferred revenue on extended warranty contracts assumed in acquisition | 291 | 291 | ||
Deferred revenue on extended warranty contracts sold | 2,843 | 1,694 | 5,606 | 3,884 |
Amortization of deferred revenue on extended warranty contracts | (1,430) | (1,138) | (4,072) | (3,280) |
Balance at end of period | $ 30,495 | $ 28,088 | $ 30,495 | $ 28,088 |
Note 8 - Product Warranty Obl44
Note 8 - Product Warranty Obligations - Deferred Product Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Current portion - other accrued liabilities | $ 21,159 | $ 21,726 | ||||
Long-term portion - other long-term liabilities | 10,200 | 8,471 | ||||
Total | 31,359 | $ 30,735 | 30,197 | $ 28,862 | $ 28,185 | $ 30,909 |
Current portion - other accrued liabilities | 6,131 | 6,026 | ||||
Long-term portion - other long-term liabilities | 24,364 | 22,935 | ||||
Total | $ 30,495 | $ 29,082 | $ 28,961 | $ 28,088 | $ 27,241 | $ 27,193 |
Note 9 - Credit Agreements (Det
Note 9 - Credit Agreements (Details Textual) $ in Thousands | Jul. 01, 2016 | Jul. 01, 2015 | May 29, 2015USD ($) | Mar. 30, 2015USD ($) | Dec. 31, 2016 | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2016 | Dec. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | May 18, 2015USD ($) | May 31, 2013USD ($) | |
Term Loan [Member] | Base Rate [Member] | Net Debt Leverage Ratio Threshold [Member] | ||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | |||||||||||||||
Term Loan [Member] | Base Rate [Member] | ||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||||||||||||||
Term Loan [Member] | Adjusted LIBOR Rate [Member] | Net Debt Leverage Ratio Threshold [Member] | ||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |||||||||||||||
Term Loan [Member] | Adjusted LIBOR Rate [Member] | ||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.75% | |||||||||||||||
Term Loan [Member] | LIBOR Floor Rate [Member] | ||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||||||||||||||
Term Loan [Member] | Scenario, Forecast [Member] | ||||||||||||||||
Net Debt Leverage Ratio Not Achieved | 3 | |||||||||||||||
Term Loan [Member] | ||||||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,200,000 | |||||||||||||||
Uncommitted Incremental Term Loan Facility | $ 300,000 | |||||||||||||||
Net Debt Leverage Ratio Threshold | 3 | |||||||||||||||
Net Debt Leverage Ratio Not Achieved | 3 | 3 | 3 | 3 | 3 | 3 | 3 | |||||||||
Debt Instrument, Interest Rate, Increase (Decrease) | 0.25% | 0.25% | 0.25% | 0.25% | ||||||||||||
Gain Loss on Change in Cash Flows Related to Debt | $ (2,957) | $ (2,381) | ||||||||||||||
Debt Issuance Costs, Net | $ 1,528 | |||||||||||||||
Debt Instrument, Fee Amount | 49 | |||||||||||||||
Repayments of Long-term Debt | $ 100,000 | $ 50,000 | ||||||||||||||
Write off of Deferred Debt Issuance Cost | $ 4,795 | |||||||||||||||
Base Rate [Member] | ABL Revolving Credit Facility [Member] | ||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | |||||||||||||||
Adjusted LIBOR Rate [Member] | ABL Revolving Credit Facility [Member] | ||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.00% | |||||||||||||||
ABL Revolving Credit Facility [Member] | ||||||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 150,000 | $ 150,000 | ||||||||||||||
Uncommitted Incremental Term Loan Facility | 50,000 | |||||||||||||||
Amended ABL Facility [Member] | ||||||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 250,000 | |||||||||||||||
Uncommitted Incremental Term Loan Facility | $ 100,000 | |||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||||||||||||||
Debt Issuance Costs, Net | $ 490 | |||||||||||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.125% | |||||||||||||||
Proceeds from Lines of Credit | $ 100,000 | |||||||||||||||
Long-term Line of Credit | $ 100,000 | $ 100,000 | ||||||||||||||
Line of Credit Facility, Remaining Borrowing Capacity | 144,924 | 144,924 | ||||||||||||||
Gain Loss on Change in Cash Flows Related to Debt | [1] | (2,957) | $ (2,381) | (2,957) | $ (2,381) | |||||||||||
Short-term Debt | $ 35,517 | $ 8,594 | $ 8,594 | $ 35,517 | ||||||||||||
[1] | For the three and nine months ended September 30, 2016, represents a non-cash loss relating to the continued 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio remaining above 3.0 times based on current projections. For the three and nine months ended September 30, 2015, represents a non-cash loss relating to a 25 basis point increase in borrowing costs as a result of the credit agreement leverage ratio rising above 3.0 effective third quarter 2015 and remaining above 3.0 times based on projections at the time. |
Note 9 - Credit Agreements - Sh
Note 9 - Credit Agreements - Short-term Borrowings (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
ABL Revolving Credit Facility [Member] | ||
Short-term Borrowings | $ 0 | $ 0 |
Other Lines of Credit [Member] | ||
Short-term Borrowings | 35,517,000 | 8,594,000 |
Short-term Borrowings | $ 35,517,000 | $ 8,594,000 |
Note 9 - Credit Agreements - Lo
Note 9 - Credit Agreements - Long-term Borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Term loan | $ 954,000 | $ 954,000 |
Original issue discount and deferred financing costs | (23,719) | (29,905) |
ABL facility | 100,000 | 100,000 |
Capital lease obligation | 5,431 | 1,694 |
Other | 16,671 | 12,000 |
Total | 1,052,383 | 1,037,789 |
Less: current portion of debt | 38,122 | 500 |
Less: current portion of capital lease obligation | 590 | 157 |
Total | $ 1,013,671 | $ 1,037,132 |
Note 10 - Stock Repurchase Pr48
Note 10 - Stock Repurchase Program (Details Textual) - USD ($) $ in Thousands | Aug. 05, 2015 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 |
Treasury Stock [Member] | |||||
Shares Acquired Under Stock Repurchases Program, Shares | 1,798,206 | 6,036,706 | |||
Stock Repurchase Program, Authorized Amount | $ 200,000 | ||||
Stock Repurchase Program, Period in Force | 2 years | ||||
Payments for Repurchase of Common Stock | $ 65,358 | $ 99,934 | $ 64,378 | $ 199,876 |
Note 11 - Earnings Per Share (D
Note 11 - Earnings Per Share (Details Textual) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 208,400 | 250,900 | 172,900 | 138,900 |
Restricted Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 11,000 | 800 |
Note 11 - Earnings Per Share -
Note 11 - Earnings Per Share - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Net income attributable to Generac Holdings Inc. (numerator) | $ 26,183 | $ 34,036 | $ 57,279 | $ 68,565 | |
Weighted average common shares outstanding - basic: (in shares) | 64,615,935 | 68,175,466 | 65,506,469 | 68,642,479 | |
Dilutive effect of stock compensation awards (in shares) | [1] | 510,182 | 1,006,999 | 485,658 | 1,138,821 |
Weighted average common shares outstanding - diluted: (in shares) | 65,126,117 | 69,182,465 | 65,992,127 | 69,781,300 | |
Net income attributable to Generac Holdings Inc. per common share - basic: (in dollars per share) | $ 0.41 | $ 0.50 | $ 0.87 | $ 1 | |
Net income attributable to Generac Holdings Inc. per common share - diluted: (in dollars per share) | $ 0.40 | $ 0.49 | $ 0.87 | $ 0.98 | |
[1] | Excludes approximately 208,400 stock options for the three month period ended September 30, 2016 and 172,900 stock options for the nine month period ended September 30, 2016, as the impact of such awards was anti-dilutive. Excludes approximately 250,900 stock options and 11,000 shares of restricted stock for the three month period ended September 30, 2015 and 138,900 stock options and 800 shares of restricted stock for the nine month period ended September 30, 2015, as the impact of such awards was anti-dilutive. |
Note 12 - Income Taxes (Details
Note 12 - Income Taxes (Details Textual) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Effective Income Tax Rate Reconciliation, Percent | 36.70% | 36.20% |
Note 13 - Commitments and Con52
Note 13 - Commitments and Contingencies (Details Textual) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Amount Financed by Dealers | $ 30.5 | $ 32.4 |
Note 14 - Subsequent Events (De
Note 14 - Subsequent Events (Details Textual) - USD ($) $ in Thousands | Nov. 02, 2016 | May 29, 2015 | Mar. 30, 2015 | Oct. 24, 2016 | Aug. 05, 2015 |
Subsequent Event [Member] | Term Loan [Member] | |||||
Repayments of Long-term Debt | $ 25,000 | ||||
Subsequent Event [Member] | |||||
Stock Repurchase Program, Authorized Amount | $ 250,000 | ||||
Term Loan [Member] | |||||
Repayments of Long-term Debt | $ 100,000 | $ 50,000 | |||
Stock Repurchase Program, Authorized Amount | $ 200,000 |