GENERAC HOLDINGS INC
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 5, 2024
GNRC$176.78+2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001437749-24-024883
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001437749-24-033337
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 133 current paragraphs.
76 unchanged; 47 reworded; 7 added; 4 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 42 previous and 42 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Founded in 1959, Generac is a leading global designer, manufacturer, and provider of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products serving the residential, light commercial, and industrial markets. Generac introduced the first affordable backup generator and later commercialized the automatic home standby generator category. The Company has continued to expand its energy technology offerings in its mission to lead the evolution to more resilient, efficient, and sustainable energy solutions around the world.
Current report
In addition, total contribution from non-annualized acquisitions for the third quarter of 2024 was $4.5 million for the domestic segment.
Current report
In addition, total contribution from non-annualized acquisitions for the nine months ended September 30, 2024, was $8.4 million, including $7.3 million for the domestic segment and $1.1 million for the international segment.
Current report
Our credit agreements originally provided for a $1,200.0 million Tranche B Term Loan Facility (“original Term Loan B Facility”) and included a $300.0 million uncommitted incremental term loan on that facility. The original Term Loan B Facility initially bore interest at rates based on either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. After several amendments, the previous Term Loan B Facility bore 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%.
Current report
In July 2024, we extinguished the $530.0 million balance then outstanding under the former Tranche B Term Loan Facility and replaced it with a new $500.0 million Tranche B Term Loan Facility maturing on July 3, 2031. The new Tranche B Term Loan Facility continues to include a $300.0 million uncommitted incremental term loan on that facility. In accordance with ASC 470-50, we capitalized $3.0 million of debt issuance costs. Additionally, we wrote-off the unamortized deferred financing costs related to the former Tranche B Term Loan Facility of $4.3 million and expensed $0.6 million of fees paid to creditors as a loss on extinguishment of debt. As of September 30, 2024, the Tranche B Term Loan Facility bears interest at the adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%, resulting in a 6.95% combined rate as of September 30, 2024.
Current report
The Tranche B Term Loan Facility, Tranche A Term Loan Facility and Revolving Facility are guaranteed by substantially all of our wholly-owned domestic restricted subsidiaries and are secured by associated collateral agreements which pledge a first priority lien on virtually all of our assets, including fixed assets and intangibles, cash, trade accounts receivable, inventory, and other current assets and proceeds thereof.
Current report
(g)Represents fees paid to creditors and the write-off of the unamortized original issue discount and deferred financing costs in connection with the refinancing of our Tranche B Term Loan Facility.
Removed paragraphs (4)
Previous report
Generac is a leading energy technology solutions company that provides backup and prime power generation products for residential and commercial & industrial applications, solar + battery storage systems, energy monitoring & management devices and services, and engine- & battery-powered tools and equipment. As an energy technology solutions company that is “Powering a Smarter World”, our corporate purpose is to lead the evolution to more resilient, efficient, and sustainable energy solutions around the world.
Previous report
Our credit agreements originally provided for a $1.2 billion term loan B credit facility ("Tranche B Term Loan Facility") and currently include a $300.0 million uncommitted incremental term loan facility. Additionally, our credit agreements previously provided for a $500.0 million ABL Facility that was paid off and terminated in June 2022.
Previous report
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 report
On July 3, 2024, the Company extinguished its existing $530 million Term Loan B Facility and replaced it with a $500 million Term Loan B Facility maturing on July 3, 2031. The new Term Loan B Facility now requires quarterly installment payments equal to 0.25% of the original principal amount beginning October 2024, with a lump sum due upon maturity.
Reworded paragraphs (47)
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. 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.
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. 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. 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.
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. 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
Energy-as-a-Service models,“beyond standby”* applications, and energy services open new market opportunities*. We expect the evolution of the traditional electrical utility model toward decarbonized, digitized, and decentralized solutions will continue to drive the need for grid operators to access and control DERs. This will require highly intelligent software platforms that are able to optimize an increasingly complex supply and demand equation, such as our Concerto DERMS software platform. Additionally, growing interest in our C&I products across a variety of “beyond standby” applications is driving an increase in demand for subscription-like models for end customers, in which Generac will partner with third parties to deliver resiliency solutions that are also able to contribute to grid stability with minimal upfront capital outlays. We also believe that we can gain share in the C&I “behind the meter” energy storage market, including microgrid applications that require advanced system-level controls. The significant advancements made in recent years in the connectivity of our products are core to these newer capabilities, which play a key role in the evolution of Generac into an energy technology solutions company.
Current wording
Energy-as-a-Service models,“beyond standby”* applications, and energy services open new market opportunities*. We expect the evolution of the traditional electrical utility model toward decarbonized, digitized, and decentralized solutions will continue to drive the need for grid operators to access and control DERs. This will require highly intelligent software platforms that are able to optimize an increasingly complex supply and demand equation, such as our Concerto Distributed Energy Resource Management System ("DERMS") software platform. Additionally, growing interest in our C&I products across a variety of “beyond standby” applications is driving an increase in demand for subscription-like models for end customers, in which Generac will partner with third parties to deliver resiliency solutions that are also able to contribute to grid stability with minimal upfront capital outlays. We also believe that we can gain share in the C&I “behind the meter” energy storage market, including microgrid applications that require advanced system-level controls. The significant advancements made in recent years in the connectivity of our products are core to these newer capabilities, which play a key role in the evolution of Generac into an energy technology solutions company.
Previous wording
Natural gas generators, a continuing growth opportunity. We believe natural gas will continue to be an important and cleaner transition fuel of the future, in comparison to diesel, as the world continues to shift towards lower emission power generation sources. Demand for natural gas generators continues to represent an increasing portion of the overall C&I market, which we believe will continue to grow at a faster rate than traditional diesel fueled generators. We also continue to explore and expand our capabilities within new gaseous generator market opportunities, including continuous-duty, prime rated, distributed generation, demand response, microgrids, and overall use as a distributed energy resource in areas where grid stability is needed. Many of these applications are made possible by our natural gas generators having the capability to participate in available grid services programs, helping to offset the purchase price of the equipment over the product’s lifespan. Expanding our natural gas product offering into larger power nodes is also a part of this growth theme in taking advantage of the continuing shift from diesel to natural gas generators.
Current wording
Natural gas generators, a continuing growth opportunity. We believe natural gas will continue to be an important and cleaner transition fuel of the future, in comparison to diesel in the C&I market, as the world continues to shift towards lower emission power generation sources. Demand for natural gas generators continues to represent an increasing portion of the overall C&I market, which we believe will continue to grow at a faster rate than traditional diesel fueled generators. We also continue to explore and expand our capabilities within new gaseous generator market opportunities, including continuous-duty, prime rated, distributed generation, demand response, microgrids, and overall use as a distributed energy resource in areas where grid stability is needed. Many of these applications are made possible by our natural gas generators having the capability to participate in available grid services programs, helping to offset the purchase price of the equipment over the product’s lifespan. Expanding our natural gas product offering into larger power nodes is also a part of this growth theme in taking advantage of the continuing shift from diesel to natural gas generators.
Previous wording
We have historically attempted to mitigate the impact of any inflationary pressures through improved product design and sourcing, manufacturing efficiencies, price increases, and select hedging transactions. We have implemented multiple price increases over the past couple of years to help mitigate the impact of rising costs, and we continued to realize the benefit of these pricing actions in 2024. Our results are also influenced by changes in fuel prices in the form of freight rates, which in some cases are accepted by our customers and in other cases are paid by us.
Current wording
We have historically attempted to mitigate the impact of any inflationary pressures through improved product design and sourcing, manufacturing efficiencies, price increases, and select hedging transactions. Our results are also influenced by changes in fuel prices in the form of freight rates, which in some cases are accepted by our customers and in other cases are paid by us.
Previous wording
Three*** months endedJune 30, 2024,** comparedto the three months ended ***June 30, 2023
Current wording
Three*** months endedSeptember 30, 2024,** comparedto the three months ended ***September 30, 2023
Previous wording
Net sales. Domestic segment total sales (including inter-segment sales) increased 1% to $827.1 million in the three months ended June 30, 2024, as compared to $815.3 million in the prior-year second quarter, including a slight benefit from acquisitions. Higher home standby and portable generator shipments and growth in C&I product sales to industrial distributors were offset by lower C&I product shipments to telecom and national rental equipment customers.
Current wording
Net sales. Domestic segment total sales (including inter-segment sales) increased 14% to $1,020.2 million in the three months ended September 30, 2024, as compared to $894.0 million in the prior-year third quarter, including a slight benefit from acquisitions. This was primarily driven by strong shipments of home standby and portable generators, as well as continued growth in C&I product sales to industrial distributors, partially offset by lower C&I product shipments for telecom, rental, and “beyond standby” applications.
Previous wording
International segment total sales (including inter-segment sales) decreased 18% to $184.5 million in the three months ended June 30, 2024, as compared to $223.7 million in the prior-year second quarter, including a slight benefit from foreign currency. The total sales decline for the segment was primarily driven by lower inter-segment sales related to softness in the telecom market and weaker shipments in Europe, most notably for portable generators.
Current wording
International segment total sales (including inter-segment sales) decreased 20% to $166.7 million in the three months ended September 30, 2024, as compared to $207.6 million in the prior-year third quarter, including a slight unfavorable impact from foreign currency. The total sales decline was primarily due to lower inter-segment sales related to softness in the telecom market and a decline in shipments of portable generators and C&I products in Europe due to weaker market conditions.
Previous 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.
Current wording
Gross profit. Gross profit margin for the third quarter of 2024 was 40.2%, as compared to 35.1% in the prior-year third quarter. The increase in gross margin was primarily driven by favorable sales mix given stronger home standby shipments and lower input costs.
Previous wording
Operating Expenses. Operating expenses increased by $29.9 million, or 12.3%, as compared to the prior-year second quarter. The growth in operating expenses was primarily driven by increased employee costs to support future growth and higher marketing spend to drive incremental awareness for our products.
Current wording
Operating Expenses. Operating expenses increased $32.6 million, or 12.0%, as compared to the prior-year third quarter. The growth in operating expenses was primarily driven by increased employee costs to support future growth, additional marketing spend to drive incremental awareness for our products, and higher variable expenses and incentive compensation given higher shipment volumes and profitability. This was partially offset by a $22.1 million provision for certain legal matters recorded in the prior year which did not repeat in the current year(see Note 15, “Commitments and Contingencies” for additional information).
Previous wording
Other Expense. The slight decrease in other expense, net was driven primarily by a decrease in interest expense due to lower borrowings compared to the prior-year second quarter. This was mostly offset by a $2.1 million expense for the change in fair value of our investment in warrants and equity securities of Wallbox N.V. during the second quarter of 2024.
Current wording
Other Expense. The decrease in other expense, net was driven primarily by a decrease in interest expense due to lower borrowings and lower interest rates compared to the prior-year third quarter. Additionally, during the third quarter of 2024, we recognized a gain on the change in fair value of our investment in warrants and equity securities of Wallbox of $5.2 million, partially offset by a loss on extinguishment of debt of $4.9 million related to the refinancing of our Tranche B Term Loan Facility.
Previous 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.
Current wording
Provision for income taxes. Provision for income taxes for the third quarter of 2024 was $33.5 million, or an effective tax rate of 22.7%, as compared to $19.4 million, or a 24.3% effective tax rate, for the prior-year third quarter. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior year quarter that did not repeat in the current year quarter.
Previous 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.
Current wording
Net income attributable to Generac Holdings Inc. Net income attributable to Generac Holdings Inc. in the third quarter of 2024 was $113.7 million compared to $60.4 million in the prior-year third quarter. This increase was primarily driven by the factors outlined above.
Previous 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.
Current wording
Adjusted EBITDA. Adjusted EBITDA for the domestic segment in the third quarter of 2024 was $211.6 million, or 20.7% of domestic segment total sales, as compared to $160.3 million, or 17.9% of total sales, in the prior-year third quarter. This margin improvement was primarily due to favorable sales mix and lower input costs, partially offset by higher operating expense investments to support future growth initiatives.
Previous 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.
Current wording
Adjusted EBITDA for the international segment in the third quarter of 2024, before deducting for non-controlling interests, was $20.3 million, or 12.2% of international segment total sales, as compared to $28.3 million, or 13.6% of total sales, in the prior-year third 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 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.
Current wording
Adjusted Net Income. Adjusted Net Income in the third quarter of 2024 was $135.6 million compared to $101.9 million in the prior-year third quarter. This increase was primarily driven by higher net income in the current period as outlined above, partially offset by certain add backs as detailed in "Non-GAAP Measures"
Previous wording
Six months ended June 30, 2024, compared to the six months ended June 30, 2023
Current wording
Nine months ended September 30, 2024, compared to the nine months ended September 30, 2023
Previous 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.
Current wording
Net sales. Domestic segment total sales (including inter-segment sales) increased 6% to $2,567.8 million in thenine months ended September 30, 2024, as compared to $2,429.3 million in the prior-year comparable period, including a slight benefit from acquisitions. Higher home standby and portable generator shipments were partially offset by lower C&I product shipments for telecom, rental, and "beyond standby" applications.
Previous 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.
Current wording
International segment total sales (including inter-segment sales) decreased 17% to $537.9 million in thenine months ended September 30, 2024, as compared to $647.8 million in the prior-year comparable period, including a slight 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 a decline in shipments of portable generators and C&I products in Europe due to weaker market conditions.
Previous wording
Gross profit. Gross profit margin for thesix months ended June 30, 2024, was 36.7%, as compared to 31.8% in the prior-year comparable period. The increase in gross profit margin was primarily driven by favorable sales mix, including higher home standby generator sales, and the realization of lower cost of goods sold.
Current wording
Gross profit. Gross profit margin for thenine months ended September 30, 2024, was 38.0%, as compared to 33.0% in the prior-year comparable period. The increase in gross profit margin was primarily driven by favorable sales mix, including higher home standby generator sales, and the realization of lower cost of goods sold.
Previous 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.
Current wording
Operating Expenses. Operating expenses for thenine months ended September 30, 2024, increased by $84.0 million, or 11.3%, as compared to the prior-year comparable period. The operating expenses in the current period include $4.9 million of charges related to certain legal matters (see Note 15, “Commitments and Contingencies” for additional information). The operating expenses in the prior-year comparable period include $22.1 million of charges related to certain legal matters referenced previously and a $5.8 million provision for a matter with the CPSC (see Note 15, "Commitments and Contingencies" for additional information). The remaining 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, and higher variable expenses and incentive compensation given higher shipment volumes and profitability.
Previous 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.
Current wording
Other Expense. The increase in other expense, net for the nine months ended September 30, 2024, was driven primarily by a $4.9 million loss on extinguishment of debt and a $2.9 million expense for the change in fair value of our investment in warrants and equity securities of Wallbox. This was partially offset by an increase of $2.5 million in investment income driven by higher interest rates on cash invested and a decrease of $3.0 million in interest expense driven by decreased borrowings compared to the prior-year comparable period.
Previous wording
Provision for income taxes. Provision for income taxes for the six months ended June 30, 2024, was $31.7 million, or an effective tax rate of 27.0%, as compared to $23.8 million, or a 28.5% effective tax rate in the prior-year comparable period. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior-year comparable period which did not repeat in the current year.
Current wording
Provision for income taxes. Provision for income taxes for the nine months ended September 30, 2024, was $65.1 million, or an effective tax rate of 24.6%, as compared to $43.2 million, or a 26.4% effective tax rate in the prior-year comparable period. The decrease in effective tax rate was primarily driven by certain unfavorable discrete tax items in the prior-year comparable period which did not repeat in the current year.
Previous wording
Net income attributable to Generac Holdings Inc. Net income attributable to Generac Holdings Inc. for thesix months ended June 30, 2024, was $85.3 million as compared to $57.6 million in the prior-year comparable period. This increase was primarily driven by the factors outlined above.
Current wording
Net income attributable to Generac Holdings Inc. Net income attributable to Generac Holdings Inc. for thenine months ended September 30, 2024, was $199.1 million as compared to $118.0 million in the prior-year comparable period. This increase was primarily driven by the factors outlined above.
Previous wording
Adjusted EBITDA. Adjusted EBITDA for the domestic segment in thesix months ended June 30, 2024, was $238.8 million or 15.4% of total domestic segment sales as compared to $170.9 million or 11.1% in the prior-year comparable period. This margin improvement was primarily driven by favorable sales mix and the realization of lower cost of goods sold, partially offset by higher operating expense investments to support future growth initiatives.
Current wording
Adjusted EBITDA. Adjusted EBITDA for the domestic segment in thenine months ended September 30, 2024, was $450.4 million or 17.5% of total domestic segment sales as compared to $331.1 million or 13.6% in the prior-year comparable period. This margin improvement was primarily driven by favorable sales mix and the realization of lower cost of goods sold, partially offset by higher operating expense investments to support future growth initiatives.
Previous wording
Adjusted EBITDA for the international segment in thesix months ended June 30, 2024, before deducting for non-controlling interests, was $53.1 million, or 14.3% of international segment total sales, as compared to $65.8 million or 14.9% of total sales, in the prior-year comparable period. This margin decrease was primarily due to reduced operating leverage on lower shipments during the six-month period.
Current wording
Adjusted EBITDA for the international segment in thenine months ended September 30, 2024, before deducting for non-controlling interests, was $73.4 million, or 13.6% of international segment total sales, as compared to $94.1 million or 14.5% of total sales, in the prior-year comparable period. This margin decrease was primarily due to reduced operating leverage on lower shipments during the nine-month period.
Previous wording
Adjusted Net Income. Adjusted Net Income in the six months ended June 30, 2024, was $134.6 million compared to $107.1 million in the prior-year comparable period. This increase was primarily driven by higher net income in the current period as outlined above.
Current wording
Adjusted Net Income. Adjusted Net Income in the nine months ended September 30, 2024, was $270.2 million compared to $209.1 million in the prior-year comparable period. This increase was primarily driven by higher net income in the current period as outlined above, partially offset by certain add backs as detailed in "Non-GAAP Measures".
Previous 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.
Current wording
In June 2022, we amended and restated our existing credit agreements ("Amended Credit Agreement") resulting in a new term loan A facility in an aggregate principal amount of $750.0 million ("Tranche A Term Loan Facility"), established a new $1,250.0 million Revolving Facility, and replaced all LIBOR provisions with SOFR provisions. The Tranche A Term Loan Facility and the Revolving Facility initially bore interest at a rate based on adjusted SOFR plus an applicable margin of 1.5% through December 31, 2022, subject to a SOFR floor of 0.0%. Beginning on January 1, 2023, the Tranche A Term Loan Facility and the Revolving Facility bear interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, based on the Company's total leverage ratio and subject to a SOFR floor of 0.0%, resulting in a 6.93% combined interest rate for the Tranche A Term Loan Facility and Revolving Facility as of September 30, 2024.
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 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.
Current wording
The Tranche A Term Loan Facility and the Revolving Facility contain 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 September 30, 2024, our total leverage ratio was 1.79 to 1.00, and our interest coverage ratio was 8.69 to 1.00. We were also in compliance with all other covenants of the Amended Credit Agreement as of September 30, 2024.
Previous 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:
Current wording
The Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility is repayable in installments maturing at the end of each quarter commencing September 2023, with a balloon payment due June 2027. The Tranche B Term Loan Facility matures on July 3, 2031, and is repayable in installments maturing at the end of each quarter commencing September 2024, with a balloon payment due July 2031. Maturities of our Tranche A Term Loan Facility, Tranche B Term Loan Facility, and Revolving Facility outstanding on September 30, 2024, are as follows:
Previous 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.
Current wording
As of September 30, 2024, we had total liquidity of $1,313.4 million which consists of $214.2 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
In September 2020, our Board of Directors approved a $250.0 million stock repurchase program, which was exhausted in the third quarter of 2022. In July 2022, our Board of Directors approved another stock repurchase program, which commenced on August 5, 2022, and allowed for the repurchase of up to $500.0 million of our common stock over a 24-month period. Additionally, on February 12, 2024, our Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500.0 million of our common stock over the next 24 months. The new program replaces the prior share repurchase program, which had approximately $26.3 million remaining available for repurchase when the new program was approved. Pursuant to the approved program, we may repurchase our common stock from time to time, in amounts and at prices we deem appropriate, subject to market conditions and other considerations. The repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of our credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice.
Current wording
In July 2022, our Board of Directors approved a stock repurchase program, which commenced on August 5, 2022, and allowed for the repurchase of up to $500.0 million of our common stock over a 24-month period. Additionally, on February 12, 2024, our Board of Directors approved a new stock repurchase program that allows for the repurchase of up to $500.0 million of our common stock over the following 24 months. The new program replaces the prior share repurchase program, which had $26.3 million remaining available for repurchase when the new program was approved. Pursuant to the approved program, we may repurchase our common stock from time to time, in amounts and at prices we deem appropriate, subject to market conditions and other considerations. The repurchases may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and in compliance with the terms of our credit agreements. The repurchases may be funded with cash on hand, available borrowings, or proceeds from potential debt or other capital markets sources. The stock repurchase program may be suspended or discontinued at any time without prior notice.
Previous 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.
Current wording
During the third quarter of 2024, we repurchased 690,711 shares of our common stock for $102.1 million. 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. During the third quarter of 2023, we repurchased 875,580 shares of our common stock for $100.3 million. There were no share repurchases during the first and second quarters of 2023. We have periodically reissued shares out of Treasury stock, including for acquisition contingent consideration payments.
Previous 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.
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 12% and 17% of net sales for the nine months ended September 30, 2024 and 2023, respectively. The amount financed by dealers which remained outstanding was $146.4 million and $158.0 million as of September 30, 2024, and December 31, 2023, respectively.
Previous wording
Sixmonths endedJune 30, 2024*,**** compared to thesix* months endedJune 30, 2023**
Current wording
Ninemonths endedSeptember 30, 2024*,**** compared to thenine* months endedSeptember 30, 2023**
Previous 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.
Current wording
The increase in operating cash flows for the nine months ended September 30, 2024, was primarily driven by higher operating earnings coupled with a decrease in working capital in the current year period and an increase in working capital in the prior-year comparable period.
Previous 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.
Current wording
The $141.8 million net cash used in investing activities for the nine months ended September 30, 2024, primarily represents cash payments of $83.4 million related to the purchase of property and equipment, $21.8 million for the acquisitions of Huntington, C&I BESS, and Ageto, $1.6 million for a tax equity investment, and $35 million for an incremental minority investment in Wallbox.
Previous 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.
Current wording
The $98.4 million net cash used in investing activities for the nine months ended September 30, 2023, primarily represents cash payments of $77.7 million related to the purchase of property and equipment, $16.0 million for the acquisition of REFUstor, and $6.6 million for a tax equity investment.
Previous 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.
Current wording
The $246.6 million net cash used in financing activities for the nine months ended September 30, 2024, primarily represents proceeds of $29.2 million from short-term borrowings, $506.5 million from long-term borrowings, and $12.4 million from the exercise of stock options. These cash proceeds were more than offset by $609.5 million of debt repayments ($48.9 million of short-term borrowings and $560.6 million of long-term borrowings and finance lease obligations), $152.7 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, $12.3 million for taxes paid related to equity awards, and a $3.6 million of payments for debt issuance costs related to our Tranche B Term Loan Facility refinancing.
Previous 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.
Current wording
The $77.6 million net cash used in financing activities for the nine months ended September 30, 2023, primarily represents proceeds of $345.4 million from long-term borrowings, $49.1 million from short-term borrowings, and $7.1 million from the exercise of stock options. These cash proceeds were more than offset by $104.8 million in cash payments used to purchase the remaining ownership interest in Pramac, $100.3 million used for stock repurchases, $259.0 million of debt repayments ($25.9 million of short-term borrowings and $233.1 million of long-term borrowings and finance lease obligations), $10.1 million of taxes paid related to equity awards, and $5.0 million for payment of contingent acquisition consideration.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The Tranche B Term Loan Facility does not require an Excess Cash Flow payment (as defined in our Amended Credit Agreement) if our net secured leverage ratio is maintained below 3.75 to 1.00. As of September 30, 2024, our net secured leverage ratio was 1.70 to 1.00, and we were in compliance with all covenants of the Tranche B Term Loan Facility. There are no financial maintenance covenants on the Tranche B Term Loan Facility.
Current report — wording carried from elsewhere
As of September 30, 2024, there was $150.0 million outstanding under the Revolving Facility, leaving $1,099.2 million of unused capacity, net of outstanding letters of credit.
Current report — wording carried from elsewhere
on July 29, 2021 - $5.8 million in the first quarter of 2023.