GENERAC HOLDINGS INC

Previous wording

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

Current wording

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

Previous wording

Solar, storage, and energy management markets are developing quickly. We believe the electric utility landscape will undergo significant changes in the decade ahead due to rising utility rates, grid instability and power quality issues, environmental concerns, and the continuing performance and cost improvements in renewable energy and energy storage technologies. On-site power generation from renewable sources and cleaner-burning natural gas generators are projected to become more prevalent as will the need to monitor, manage, and store this power – potentially developing into a significant market opportunity. Additionally, these markets are receiving an increasing level of regulatory and legislative support, most notably from the Inflation Reduction Act that was passed in 2022. This legislation includes significant subsidies and investment tax credits for consumers and businesses over the coming decade, as well as production tax credits for businesses that meet certain domestic manufacturing requirements in the production of renewable energy products. We believe this legislative support will provide necessary opportunity for long-term, value-creating investments for market participants in this space. We expect to further advance our capabilities in energy technology by increasing our product development, sourcing, distribution, and marketing efforts. In addition, we should be able to leverage our significant competencies in the residential standby generator market to build our market position in the emerging residential solar, storage, and energy management markets.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Factors influencing provision for income taxes and cash income taxes paid. The decrease in the effective tax rate was primarily driven by increased year-over-year pre-tax book income, which reduced the impact of certain discrete tax items in the current year quarter.

Current wording

Factors Influencing Provision for Income Taxes and Cash Income Taxes Paid

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Three*** months endedMarch 31, 2024,** comparedto the three months ended ***March 31, 2023

Current wording

Three*** months endedJune 30, 2024,** comparedto the three months ended ***June 30, 2023

Previous wording

Gross profit. Gross profit margin was 35.6% as compared to 30.7% in the prior-year first quarter. The increase in gross profit margin was primarily driven by favorable sales mix, production efficiencies, and realization of lower input costs.

Current wording

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

Previous wording

Provision for income taxes. Provision for income taxes for the current year quarter was $12.0 million, or an effective tax rate of 31.2%, as compared to $7.9 million, or a 35.7% effective tax rate, for the prior year. The decrease in the effective tax rate was primarily driven by increased year-over-year pre-tax book income, which reduced the impact of certain discrete tax items in the current year quarter.

Current wording

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

Previous wording

Net income attributable to Generac Holdings Inc. Net income attributable to Generac Holdings Inc. was $26.2 million compared to $12.4 million in the prior year quarter. This increase was primarily driven by the factors outlined above.

Current wording

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

Previous wording

Adjusted EBITDA. Adjusted EBITDA for the domestic segment was $99.2 million, or 13.8% of domestic segment total sales, as compared to $67.7 million, or 9.4% of total sales, in the prior year. This margin improvement was primarily driven by favorable sales mix and realization of positive cost benefits.

Current wording

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

Previous wording

Adjusted EBITDA for the international segment, before deducting for non-controlling interests, was $28.1 million, or 15.0% of international segment total sales, as compared to $32.4 million, or 15.0% of total sales, in the prior year. Favorable price and cost benefits were offset by reduced operating leverage on lower shipments during the quarter.

Current wording

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

Previous wording

Adjusted Net Income. Adjusted Net Income was $53.0 million compared to $39.4 million in the prior year quarter. This increase was primarily driven by higher net income in the current period.

Current wording

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

Previous wording

Net sales. Domestic segment total sales (including inter-segment sales) increased slightly to $720.5 million as compared to $720.0 million in the prior year. Higher home standby generator shipments and growth in C&I product sales to industrial distributors were mostly offset by lower C&I product shipments to telecom and national rental equipment customers and a reduction in portable generator sales.

Current wording

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

Previous wording

International segment total sales (including inter-segment sales) decreased 14% to $186.7 million as compared to $216.5 million in the prior year quarter, including an approximate 4% sales benefit from foreign currency and acquisitions. The total sales decline for the segment was primarily driven by lower inter-segment sales related to softness in the telecom market and weaker shipments in Europe, most notably for portable generators.

Current wording

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

Previous wording

Operating Expenses. Operating expenses increased by $21.5 million, or 9.4%, as compared to the prior-year first quarter. The operating expenses in the current quarter include $2.1 million of charges related to certain patent litigation matters (see Note 15, “Commitments and Contingencies” for additional information). The operating expenses in the prior year quarter include a $5.8 million provision for a matter with the CPSC (see Note 15, "Commitments and Contingencies" for additional information). The remaining increase in operating expenses was primarily driven by increased employee costs to support future growth and higher marketing spend to drive incremental awareness for our products.

Current wording

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

Previous wording

Other Expense. The increase in other expense, net was driven primarily by a $6.0 million expense for the change in fair value of our investment in warrants and equity securities of Wallbox N.V.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

As of March 31, 2024, there was $530 million outstanding under the Tranche B Term Loan Facility, $740.6 million outstanding under the Tranche A Term Loan Facility, and $150 million of funded Revolving Facility borrowings, leaving $1,099.2 million of unused capacity, net of outstanding letters of credit. Our Tranche B Term Loan Facility bears interest at rates based on either a base rate plus an applicable margin of 0.75% or adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%. Beginning on January 1, 2023, the Tranche A Term Loan Facility and Revolving Facility bear interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, based on our total leverage ratio and subject to a SOFR floor of 0.0%. At March 31, 2024, the interest rates for the Tranche A Term Loan Facility, Revolving Facility, and Tranche B Term Loan Facility were 6.93%, 6.93%, and 7.18%, respectively. See Note 4, "Derivative Instruments and Hedging Activities" and Item 7A of the Annual report on Form 10-K for further information on interest rate swaps, which help to reduce our borrowing costs.

Current wording

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

Previous wording

The Tranche B Term Loan Facility matures on December 13, 2026, while the Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility is repayable in installments due at the end of each quarter commencing September 2023. Payments on the Revolving Facility are not due until 2027. The aggregate debt repayments required on these facilities is as follows:

Current wording

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

Previous wording

The Tranche B Term Loan Facility does not require an Excess Cash Flow payment (as defined in the Amended Credit Agreement) if our net secured leverage ratio is maintained below 3.75 to 1.00. As of March 31, 2024, our net secured leverage ratio was 1.87 to 1.00. The Tranche A Term Loan Facility and the Revolving Facility added certain financial covenants that require us to maintain a total leverage ratio below 3.75 to 1.00 as well as an interest coverage ratio above 3.00 to 1.00. As of March 31, 2024, our total leverage ratio was 1.99 to 1.00, and our interest coverage ratio was 7.39 to 1.00. We were also in compliance with all other covenants of the Amended Credit Agreement as of March 31, 2024.

Current wording

The Tranche B Term Loan Facility does not require an Excess Cash Flow payment (as defined in the Amended Credit Agreement) if our net secured leverage ratio is maintained below 3.75 to 1.00. As of June 30, 2024, our net secured leverage ratio was 1.86 to 1.00. The Tranche A Term Loan Facility and the Revolving Facility added certain financial covenants that require us to maintain a total leverage ratio below 3.75 to 1.00 as well as an interest coverage ratio above 3.00 to 1.00. As of June 30, 2024, our total leverage ratio was 1.95 to 1.00, and our interest coverage ratio was 7.97 to 1.00. We were also in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2024.

Previous wording

As of March 31, 2024, we had total liquidity of $1,348.6 million which consists of $249.4 million of cash and cash equivalents and $1,099.2 million available under our Revolving Facility. We believe we have a strong liquidity position that allows us to execute our strategic plan and provides the flexibility to continue to invest in future growth opportunities.

Current wording

As of June 30, 2024, we had total liquidity of $1,317.5 million which consists of $218.3 million of cash and cash equivalents and $1,099.2 million available under our Revolving Facility. We believe we have a strong liquidity position that allows us to execute our strategic plan and provides the flexibility to continue to invest in future growth opportunities.

Previous wording

There were no share repurchases under the programs during the three months ended March 31, 2024 and 2023. Since the inception of all stock repurchase programs (starting in August 2015), we have repurchased 13,937,188 shares of our common stock for $1,028.9 million (at an average cost per share of $73.82). We have periodically reissued shares out of Treasury stock, including for earnout payments.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

We have an arrangement with a finance company to provide floor plan financing for selected dealers. This arrangement provides liquidity for our dealers by financing dealer purchases of Generac products with credit availability from the finance company. We receive payment from the finance company after shipment of product to the dealer, and our dealers are given a longer period of time to pay the finance company. If our dealers do not pay the finance company, we may be required to repurchase the applicable inventory held by the dealer. We do not indemnify the finance company for any credit losses they may incur. Total dealer purchases financed under this arrangement accounted for approximately 12% and 10% of net sales for the three months ended March 31, 2024 and 2023, respectively. The amount financed by dealers which remained outstanding was $153.5 million and $158.0 million as of March 31, 2024, and December 31, 2023, respectively.

Current wording

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

Previous wording

The increase in operating cash flows for the three months ended March 31, 2024, was primarily driven by higher operating earnings, a reduction in working capital in the current year quarter, and a large one-time cash tax payment in the prior year period, which did not repeat.

Current wording

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

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024, primarily represents cash payments of $26.8 million related to the purchase of property and equipment, and $1.6 million for a tax equity investment. These were partially offset by $2.0 million of cash proceeds from the sale of our minority investment in Rolling Energy Resources.

Current wording

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

Previous wording

Net cash used in investing activities for the three months ended March 31, 2023, primarily represents cash payments of $24.0 million related to the purchase of property and equipment, $16.2 million for the acquisition of REFUstor, and a $2.0 million minority investment in Rolling Energy Resources.

Current wording

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

Previous wording

Net cash used in financing activities for the three months ended March 31, 2024, primarily represents proceeds of $9.0 million from short-term borrowings, $0.5 million from long-term borrowings, and $0.3 million from the exercise of stock options. These cash proceeds were more than offset by $25.5 million of debt repayments ($18.5 million of short-term borrowings and $7.0 million of long-term borrowings and finance lease obligations), a $9.1 million payment for the remaining ownership interest in Captiva, a $6.0 million payment of deferred acquisition consideration related to our Chilicon acquisition, and $5.5 million for taxes paid related to equity awards.

Current wording

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

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2023, primarily represents proceeds of $267.9 million from long-term borrowings, $19.5 million from short-term borrowings, and $5.0 million from the exercise of stock options. These cash proceeds were partially offset by $104.8 million in cash payments used to purchase the remaining ownership interest in Pramac, $118.7 million of debt repayments ($5.1 million of short-term borrowings and $113.6 million of long-term borrowings and finance lease obligations), and $4.7 million of taxes paid related to equity awards.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

• A provision for judgments and legal expenses related to certain patent lawsuits - $2.1 million in 2024.

Current wording

• A provision for judgments and legal expenses related to certain patent and securities lawsuits - $0.4 million and $2.1 million in the second and first quarter of 2024, respectively.

Previous wording

• Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $0.4 million in 2024.

Current wording

• Additional customer support costs related to a clean energy product customer that filed for bankruptcy in 2022 – $0.4 million in the first quarter of 2024.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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