WAUKESHA, Wis., Feb. 16, 2022 (GLOBE NEWSWIRE) -- Generac Holdings Inc. (NYSE: GNRC) (“Generac” or the “Company”), a leading global designer and manufacturer of energy technology solutions and other power products, today reported financial results for its fourth quarter and full-year ended December 31, 2021 and initiated its outlook for the full year 2022.  

Fourth Quarter 2021 Highlights

  • Net sales increased 40% to a record $1.07 billion during the fourth quarter of 2021 as compared to $761 million in the prior-year fourth quarter. Core sales growth, which excludes both the impact of acquisitions and foreign currency, increased approximately 35%.
    • Residential product sales grew 42% to $706 million as compared to $499 million last year.
    • Commercial & Industrial (“C&I”) product sales increased 43% to $284 million as compared to $199 million in the prior year.
  • Net income attributable to the Company during the fourth quarter was $143 million, or $2.04 per share, as compared to $125 million, or $1.97 per share, for the same period of 2020.
  • Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was a record $162 million, or $2.51 per share, as compared to $136 million, or $2.12 per share, in the fourth quarter of 2020.
  • Adjusted EBITDA before deducting for noncontrolling interests, as defined in the accompanying reconciliation schedules, was a record $220 million, or 20.7% of net sales, as compared to $196 million, or 25.7% of net sales, in the prior year.
  • As previously disclosed, on October 1st, the Company closed on the acquisition of Tank Utility, a provider of IoT propane tank monitoring solutions that enable the optimization of propane fuel logistics, headquartered in Boston, Massachusetts.
  • As previously disclosed, on December 1st, the Company closed on the acquisition of ecobee, a leader in sustainable home technology solutions including smart home energy devices that deliver significant energy savings, security and peace of mind, headquartered in Toronto, Canada.
  • The Company is initiating its full-year 2022 net sales growth guidance to be approximately 32 to 36% compared to the prior year on an as-reported basis, which includes approximately 5 to 7% of net impact from acquisitions and foreign currency.   Adjusted EBITDA margin, before deducting for non-controlling interests, is expected to be approximately 22.0 to 23.0%.

Full-Year 2021 Highlights

  • Net sales increased 50% to a record $3.74 billion during 2021 as compared to $2.49 billion in 2020. Core sales growth, which excludes both the impact of acquisitions and foreign currency, increased approximately 46%.
    • Residential product sales increased 58% to $2.46 billion as compared to $1.56 billion last year.
    • C&I product sales grew 42% to $1.0 billion as compared to $702 million in the prior year.
  • Net income attributable to the Company during 2021 was a record $550 million, or $8.30 per share, as compared to $351 million, or $5.48 per share for 2020.  
  • Adjusted net income attributable to the Company was a record $619 million, or $9.63 per share, as compared to $412 million, or $6.47 per share, in 2020.
  • Adjusted EBITDA before deducting for non-controlling interests for 2021 was a record $861 million, or 23.1% of net sales, as compared to $584 million, or 23.5% of net sales, last year.
  • Cash flow from operations was $411 million as compared to $487 million in the prior year. Free cash flow was $306 million as compared to $427 million in 2020.

“We continued to experience exceptional demand during the fourth quarter and achieved record quarterly shipments and production levels as we exited 2021,” said Aaron Jagdfeld, President and Chief Executive Officer. “We’re proud of our execution during the quarter as the continued progress on our capacity expansion helped drive top line results ahead of our expectations despite ongoing supply chain challenges. We enter 2022 with considerable visibility and momentum given ongoing robust home standby demand, an expanding Energy Technology solutions portfolio, and strong global demand for our C&I products.”

Jagdfeld continued, “We are making important progress on Generac’s evolution into an energy technology solutions company as we completed several strategic acquisitions during the year and introduced a number of innovative technologies that will significantly expand our addressable markets. We also introduced a new enterprise strategy called ‘Powering a Smarter World’ focused on improving energy resiliency, optimizing energy efficiency, and protecting critical infrastructure. Our strong balance sheet and cash flow generation give us the confidence to make the necessary investments to further capitalize on the key mega-trends that support our long-term growth outlook.”

Additional Fourth Quarter 2021 Consolidated Highlights

Gross profit margin was 34.0% as compared to 39.4% in the prior-year fourth quarter. Gross margins continued to be pressured by a challenging supply chain and overall inflationary environment leading to higher input costs, which include increased commodity prices, logistics costs, labor and plant start-up costs. These costs were partially offset by the initial impacts of several pricing actions implemented throughout the past year, with the full impact expected to be realized throughout 2022 as the higher pricing works through backlog.

Operating expenses increased $57.9 million, or 44.8%, as compared to the fourth quarter of 2020. The increase was primarily driven by the impact of acquisitions and related transaction costs, higher employee and marketing costs, and additional variable expenses from the significant increase in sales volumes.

Provision for income taxes for the current year quarter was $20.6 million, or an effective tax rate of 12.4%, as compared to $39.0 million, or a 23.8% effective tax rate, for the prior year. The decline in effective tax rate was primarily due to certain discrete items related to acquisitions and higher stock compensation deduction.

Cash flow from operations was $62 million during the fourth quarter, as compared to $218 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was $42 million as compared to $191 million in the fourth quarter of 2020. The decline in free cash flow was due to a much higher working capital investment in the current year quarter primarily due to supply chain and logistics challenges, partially offset by an increase in operating earnings and lower capital expenditures.

The Company repurchased 350,000 shares of its common stock during the fourth quarter for $126 million under its current share repurchase program. There is approximately $124 million remaining under the current share repurchase program as of December 31, 2021.

Business Segment Results

Domestic Segment

Domestic segment sales increased 39% to $896.4 million as compared to $645.1 million in the prior year quarter, with the impact of acquisitions contributing approximately 2% of the revenue growth for the quarter.   The strong core sales growth was broad based led by home standby generators and PWRcell® energy storage systems, while C&I channels experienced significant year-over-year growth in the quarter, highlighted by national telecom and rental equipment customers.

Adjusted EBITDA for the segment was $196.7 million, or 21.9% of net sales, as compared to $188.0 million in the prior year, or 29.1% of net sales. This margin performance was impacted by the previously mentioned higher input costs and the impact of acquisitions, partially offset by the early impacts of recent pricing actions.

International Segment

International segment sales increased 47% to $170.7 million as compared to $116.0 million in the prior year quarter, with the impact of acquisitions and foreign currency contributing approximately 21% of the revenue growth for the quarter.   The core sales growth for the segment was driven by broad-based strength across all regions as compared to the softer prior year impacted by COVID, with sales recovering well above 2019 levels.

Adjusted EBITDA for the segment, before deducting for noncontrolling interests, was $23.7 million, or 13.9% of net sales, as compared to $7.8 million, or 6.8% of net sales, in the prior year.   The increase in margin was primarily due to the positive impact of recent acquisitions, improved absorption and operating leverage, as well as price realization.

2022 Outlook

The Company is initiating guidance for 2022 that anticipates another year of exceptional revenue growth as compared to the prior year. This is expected to be driven primarily by ramping home standby production capacity throughout the year, significant growth in clean energy markets, strong broad-based global demand for C&I products, and recent acquisitions.   As a result, net sales are expected to increase between 32 to 36% as compared to the prior year on an as-reported basis, which includes approximately 5 to 7% of net impact from acquisitions and foreign currency.

Net income margin, before deducting for non-controlling interests, is expected to be approximately 13.0 to 14.0% for the full-year 2022, with the corresponding adjusted EBITDA margin expected to be approximately 22.0 to 23.0%.

Conference Call and Webcast

Generac management will hold a conference call at 10:00 a.m. EDT on Wednesday, February 16, 2022 to discuss fourth quarter and full-year 2021 operating results. The conference call can be accessed by dialing (866) 415-3113 (domestic) or +1 (678) 509-7544 (international) and entering passcode 9757974.

The conference call will also be webcast simultaneously on Generac's website (http://www.generac.com), accessed under the Investor Relations link. The webcast link will be made available on the Company’s website prior to the start of the call within the Events section of the Investor Relations website.

Following the live webcast, a replay will be available on the Company's website. A telephonic replay will also be available approximately two hours after the call and can be accessed by dialing (855) 859-2056 (domestic) or +1 (404) 537-3406 (international) and entering passcode 9757974. The telephonic replay will be available for 7 days.
        
About Generac

Generac is a leading energy technology company that provides backup and prime power systems for home and industrial applications, solar + battery storage solutions, smart home energy management devices and energy services, advanced power grid software platforms and engine- and battery-powered tools and equipment. Founded in 1959, Generac introduced the first affordable backup generator and later created the category of automatic home standby generator. The company is committed to sustainable, cleaner energy products poised to revolutionize the 21st century electrical grid.  

Forward-looking Information

Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Forward-looking statements give Generac's current expectations and projections relating to the Company's financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "forecast," "project," "plan," "intend," "believe," "confident," "may," "should," "can have," "likely," "future," “optimistic” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

Any such forward looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Although Generac believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Generac's actual financial results and cause them to differ materially from those anticipated in any forward-looking statements, including:

  • frequency and duration of power outages impacting demand for our products;
  • availability, cost and quality of raw materials, key components from our global supply chain and labor needed in producing our products;
  • the possibility that the expected synergies, efficiencies and cost savings of our acquisitions will not be realized, or will not be realized within the expected time period;
  • the risk that our acquisitions will not be integrated successfully;
  • the impact on our results of possible fluctuations in interest rates, foreign currency exchange rates, commodities, product mix, logistics costs and regulatory tariffs;
  • the duration and impact of the COVID-19 pandemic;
  • difficulties we may encounter as our business expands globally or into new markets;
  • our dependence on our distribution network;
  • our ability to invest in, develop or adapt to changing technologies and manufacturing techniques;
  • loss of our key management and employees;
  • increase in product and other liability claims or recalls;
  • failures or security breaches of our networks, information technology systems, or connected products;
  • changes in environmental, health and safety, or product compliance laws and regulations affecting our products, operations, or customer demand;
  • significant legal proceedings, claims, lawsuits or government investigations.

Should one or more of these risks or uncertainties materialize, Generac's 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 or will continue to be impacted by the COVID-19 pandemic, which 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 Generac's filings with the U.S. Securities and Exchange Commission (“SEC”), particularly in the Risk Factors section of the 2020 Annual Report on Form 10-K and in its periodic reports on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

Any forward-looking statement made by Generac in this press release speaks only as of the date on which it is made.  Generac undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP Financial Metrics

Core Sales

The Company references core sales to further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP. Core sales excludes the impact of acquisitions and fluctuations in foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparison of net sales performance with prior and future periods.

Adjusted EBITDA

The computation of adjusted EBITDA attributable to the Company and adjusted EBITDA margin is based on the definition of EBITDA contained in Generac's credit agreement dated as of May 31, 2013, as amended. To supplement the Company's condensed consolidated financial statements presented in accordance with U.S. GAAP, Generac provides a summary to show the computation of adjusted EBITDA, which excludes the impact of noncontrolling interests, taking into account certain charges and gains that were recognized during the periods presented.

Adjusted Net Income

To further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company provides a summary to show the computation of adjusted net income attributable to the Company. Adjusted net income attributable to the Company is defined as net income before noncontrolling interests and provision for income taxes adjusted for the following items: cash income tax expense, amortization of intangible assets, amortization of deferred financing costs and original issue discount related to the Company's debt, intangible impairment charges, certain transaction costs and other purchase accounting adjustments, losses on extinguishment of debt, business optimization expenses, certain other non-cash gains and losses, and adjusted net income attributable to non-controlling interests.

Free Cash Flow

In addition, we reference free cash flow to further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP. Free cash flow is defined as net cash provided by operating activities, plus proceeds from beneficial interests in securitization transactions, less expenditures for property and equipment, and is intended to be a measure of operational cash flow taking into account additional capital expenditure investment into the business.

The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with U.S. GAAP.  Please see the accompanying Reconciliation Schedules and our SEC filings for additional discussion of the basis for Generac's reporting of Non-GAAP financial measures, which includes why the Company believes these measures provide useful information to investors and the additional purposes for which management uses the non-GAAP financial information.

SOURCE: Generac Holdings Inc.

CONTACT:
Michael W. Harris
Vice President – Corporate Development & Investor Relations
(262) 506-6064
InvestorRelations@generac.com

Generac Holdings Inc.
Consolidated Statements of Comprehensive Income
(U.S. Dollars in Thousands, Except Share and Per Share Data)
(Unaudited)
      
 Three Months Ended December 31, Year Ended December 31,
  2021   2020   2021   2020 
        
Net sales$1,067,071  $761,082  $3,737,184  $2,485,200 
Costs of goods sold 704,532   460,880   2,377,102   1,527,546 
Gross profit 362,539   300,202   1,360,082   957,654 
        
Operating expenses:       
Selling and service 89,577   67,807   319,020   246,373 
Research and development 29,406   21,489   104,303   80,251 
General and administrative 37,758   30,113   144,272   118,233 
Acquisition related costs 12,668   799   21,465   1,411 
Amortization of intangibles 17,649   8,940   49,886   32,280 
Total operating expenses 187,058   129,148   638,946   478,548 
Income from operations 175,481   171,054   721,136   479,106 
        
Other (expense) income:       
Interest expense (9,529)  (7,910)  (32,953)  (32,991)
Investment income 403   261   1,415   2,182 
Loss on extinguishment of debt –   –   (831)  – 
Other, net 223   581   2,759   (2,106)
Total other expense, net (8,903)  (7,068)  (29,610)  (32,915)
        
Income before provision for income taxes 166,578   163,986   691,526   446,191 
Provision for income taxes 20,616   39,006   134,957   98,973 
Net income 145,962   124,980   556,569   347,218 
Net income (loss) attributable to noncontrolling interests 3,067   (21)  6,075   (3,358)
Net income attributable to Generac Holdings Inc.$142,895  $125,001  $550,494  $350,576 
        
Other comprehensive income (loss):       
Foreign currency translation adjustment (4,559) $23,664  $(41,030) $4,948 
Net unrealized gain (loss) on derivatives 5,345   4,121   20,529   (14,285)
Other comprehensive income (loss) 786   27,785   (20,501)  (9,337)
Total comprehensive income 146,748   152,765   536,068   337,881 
Comprehensive income attributable to noncontrolling interests 2,964   2,068   5,496   (364)
Comprehensive income attributable to Generac Holdings Inc.$143,784  $150,697  $530,572  $338,245 
        
Net income attributable to common shareholders per common share - basic:$2.09  $2.02  $8.51  $5.61 
Weighted average common shares outstanding - basic: 62,992,455   62,389,159   62,686,001   62,280,889 
        
Net income attributable to common shareholders per common share - diluted:$2.04  $1.97  $8.30  $5.48 
Weighted average common shares outstanding - diluted: 64,487,071   63,985,879   64,253,408   63,737,734 
        


Generac Holdings Inc.
Consolidated Balance Sheets
(U.S. Dollars in Thousands, Except Share and Per Share Data)
(Unaudited)
    
 December 31,  December 31,
  2021   2020 
Assets   
Current assets:   
Cash and cash equivalents$147,339  $655,128 
Accounts receivable, less allowance for credit losses of $12,025 and $12,001 at December 31, 2021 and 2020, respectively 546,466   374,906 
Inventories 1,089,705   603,317 
Prepaid expenses and other assets 64,954   36,382 
Total current assets 1,848,464   1,669,733 
    
Property and equipment, net 440,852   343,936 
    
Customer lists, net 238,722   49,205 
Patents and technology, net 492,473   86,727 
Other intangible assets, net 66,436   9,932 
Tradenames, net 243,531   146,159 
Goodwill 1,409,674   855,228 
Deferred income taxes 15,740   1,497 
Operating lease and other assets 121,888   73,006 
Total assets$4,877,780  $3,235,423 
    
Liabilities and stockholders’ equity   
Current liabilities:   
Short-term borrowings$72,035  $39,282 
Accounts payable 674,208   330,247 
Accrued wages and employee benefits 72,060   63,036 
Other accrued liabilities 331,674   204,812 
Current portion of long-term borrowings and finance lease obligations 5,930   4,147 
Total current liabilities 1,155,907   641,524 
    
Long-term borrowings and finance lease obligations 902,091   841,764 
Deferred income taxes 205,964   115,769 
Operating lease and other long-term liabilities 341,681   179,955 
Total liabilities 2,605,643   1,779,012 
    
Redeemable noncontrolling interest 58,050   66,207 
    
Stockholders’ equity:   
Common stock, par value $0.01, 500,000,000 shares authorized, 72,386,017 and 72,024,329   
shares issued at December 31, 2021 and December 31, 2020, respectively 725   721 
Additional paid-in capital 952,939   525,541 
Treasury stock, at cost, 8,667,031 and 9,173,731 shares at December 31, 2021 and 2020, respectively (448,976)  (332,164)
Excess purchase price over predecessor basis (202,116)  (202,116)
Retained earnings 1,965,957   1,432,565 
Accumulated other comprehensive loss (54,755)  (34,254)
Stockholders’ equity attributable to Generac Holdings Inc. 2,213,774   1,390,293 
Noncontrolling interests 313   (89)
Total stockholders’ equity 2,214,087   1,390,204 
Total liabilities and stockholders’ equity$4,877,780  $3,235,423 
    


Generac Holdings Inc.
Consolidated Statements of Cash Flows
(U.S. Dollars in Thousands)
(Unaudited)
    
 Year Ended December 31,
  2021   2020 
Operating activities   
Net income$556,569  $347,218 
Adjustment to reconcile net income to net cash provided by operating activities:   
Depreciation 42,155   36,493 
Amortization of intangible assets 49,886   32,280 
Amortization of original issue discount and deferred financing costs 2,589   2,598 
Loss on extinguishment of debt 831   – 
Deferred income taxes (2,096)  21,195 
Share-based compensation expense 23,954   20,882 
Loss (gain) on disposal of assets (4,393)  – 
Other, net 206   7,145 
Net changes in operating assets and liabilities, net of acquisitions:   
Accounts receivable (131,861)  (55,976)
Inventories (470,991)  (77,983)
Other assets (819)  12,859 
Accounts payable 297,323   66,040 
Accrued wages and employee benefits 5,814   20,157 
Other accrued liabilities 73,798   60,593 
Excess tax benefits from equity awards (31,809)  (6,968)
Net cash provided by operating activities 411,156   486,533 
    
Investing activities   
Proceeds from sale of property and equipment 259   179 
Proceeds from sale of investment 4,968   – 
Proceeds from beneficial interests in securitization transactions 4,609   2,651 
Contribution to equity method investment (3,660)  – 
Expenditures for property and equipment (109,992)  (62,128)
Acquisition of business, net of cash acquired (713,471)  (64,797)
Net cash used in investing activities (817,287)  (124,095)
    
Financing activities   
Proceeds from short-term borrowings 272,818   257,593 
Proceeds from long-term borrowings 150,088   277 
Repayments of short-term borrowings (239,113)  (277,719)
Repayments of long-term borrowings and finance lease obligations (108,556)  (4,758)
Stock repurchases (125,992)  – 
Payment of contingent acquisition consideration (3,750)  (4,000)
Payment of debt issuance costs (1,185)  – 
Purchase of additional ownership interest (27,164)  – 
Taxes paid related to equity awards (58,903)  (14,910)
Proceeds from the exercise of stock options 38,787   13,089 
Net cash used in financing activities (102,970)  (30,428)
    
Effect of exchange rate changes on cash and cash equivalents 1,312   235 
    
Net (decrease) increase in cash and cash equivalents (507,789)  332,245 
Cash and cash equivalents at beginning of period 655,128   322,883 
Cash and cash equivalents at end of period$147,339  $655,128 
    
Supplemental disclosure of cash flow information   
Cash paid during the period   
Interest$27,842  $28,765 
Income taxes 156,728   61,861 
    


Generac Holdings Inc. 
Segment Reporting and Product Class Information 
(U.S. Dollars in Thousands) 
(Unaudited) 
          
  Net Sales 
  Three Months Ended December 31, Year Ended December 31, 
Reportable Segments 2021  2020  2021  2020 
Domestic$896,402 $645,128 $3,164,050 $2,088,808 
International 170,669  115,954  573,134  396,392 
Total net sales$1,067,071 $761,082 $3,737,184 $2,485,200 
          
Product Classes        
Residential products$705,808 $498,653 $2,456,765 $1,556,501 
Commercial & industrial products 284,004  198,596  998,998  701,751 
Other 77,259  63,833  281,421  226,948 
Total net sales$1,067,071 $761,082 $3,737,184 $2,485,200 
          
  Adjusted EBITDA 
  Three Months Ended December 31, Year Ended December 31, 
   2021  2020  2021  2020 
Domestic$196,691 $188,004 $795,417 $563,394 
International 23,664  7,827  66,008  20,379 
Total adjusted EBITDA (1)$220,355 $195,831 $861,425 $583,773 
          
(1) See reconciliation of Adjusted EBITDA to Net income attributable to Generac Holdings Inc. on the following reconciliation schedule.     
          


Generac Holdings Inc. 
Reconciliation Schedules 
(U.S. Dollars in Thousands, Except Share and Per Share Data) 
(Unaudited) 
            
Net income to Adjusted EBITDA reconciliation        
    Three Months Ended December 31, Year Ended December 31, 
     2021   2020   2021   2020  
            
Net income attributable to Generac Holdings Inc.$142,895  $125,001  $550,494  $350,576  
Net income (loss) attributable to noncontrolling interests 3,067   (21)  6,075   (3,358) 
Net income    145,962   124,980   556,569   347,218  
Interest expense   9,529   7,910   32,953   32,991  
Depreciation and amortization  29,359   18,686   92,041   68,773  
Provision for income taxes  20,616   39,006   134,957   98,973  
Non-cash write-down and other adjustments (1) (3,708)  (2,195)  (3,070)  (327) 
Non-cash share-based compensation expense (2) 5,750   6,555   23,954   20,882  
Loss on extinguishment of debt (3)  -   -   831   -  
Transaction costs and credit facility fees (4) 12,886   991   22,357   2,151  
Business optimization and other charges (5) (126)  (345)  33   12,158  
Other    87   243   800   954  
Adjusted EBITDA   220,355   195,831   861,425   583,773  
Adjusted EBITDA attributable to noncontrolling interests 2,897   1,408   9,351   2,358  
Adjusted EBITDA attributable to Generac Holdings Inc.$217,458  $194,423  $852,074  $581,415  
            
(1) Includes gains/losses on disposals of assets and gains on certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting adjustments. A full description of these and the other reconciliation adjustments contained in these schedules is included in Generac's SEC filings.     
            
(2) Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.     
            
(3) Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayment. 
            
(4) 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.     
            
(5) For the year ended December 31, 2020, represents severance, non-cash asset write-downs, and other charges to address the impact of the COVID-19 pandemic and decline in oil prices.     
            
Net income to Adjusted net income reconciliation        
    Three Months Ended December 31, Year Ended December 31, 
     2021   2020   2021   2020  
            
Net income attributable to Generac Holdings Inc.$142,895  $125,001  $550,494  $350,576  
Net income (loss) attributable to noncontrolling interests 3,067   (21)  6,075   (3,358) 
Net income    145,962   124,980   556,569   347,218  
Provision for income taxes  20,616   39,006   134,957   98,973  
Income before provision for income taxes 166,578   163,986   691,526   446,191  
Amortization of intangible assets  17,649   8,940   49,886   32,280  
Amortization of deferred finance costs and original issue discount 648   658   2,589   2,598  
Loss on extinguishment of debt (3)  -   –   831   –  
Transaction costs and other purchase accounting adjustments (6) 8,525   (1,940)  19,655   (1,328) 
(Gain)/loss attributable to business or asset dispositions (7) (392)  –   (4,383)  –  
Business optimization and other charges (5) (126)  (345)  33   12,158  
Adjusted net income before provision for income taxes 192,882   171,299   760,137   491,899  
Cash income tax expense (8)  (29,667)  (34,881)  (136,231)  (79,723) 
Adjusted net income   163,215   136,418   623,906   412,176  
Adjusted net income (loss) attributable to noncontrolling interests 1,355   693   4,971   (32) 
Adjusted net income attributable to Generac Holdings Inc.$161,860  $135,725  $618,935  $412,208  
            
Adjusted net income attributable to Generac Holdings Inc. per        
common share - diluted: $2.51  $2.12  $9.63  $6.47  
Weighted average common shares outstanding - diluted: 64,487,071   63,985,879   64,253,408   63,737,734  
            
(6) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, and certain purchase accounting adjustments.     
            
(7) Represents gains on certain investments occurring in other than ordinary course, as defined in our credit agreement.     
            
(8) Amount for the three months and year ended December 31, 2021 is based on an anticipated cash income tax rate of approximately 19.7% for the year ended 2021. Amount for the three months and year ended December 31, 2020 is based on an anticipated cash income tax rate of approximately 17.9% for the year ended 2020. Cash income tax expense for the respective periods is based on the projected taxable income and corresponding cash tax rate for the full year after considering the effects of current and deferred income tax items, and is calculated for each respective period by applying the derived cash tax rate to the period’s pretax income.     
            
Free Cash Flow Reconciliation         
    Three Months Ended December 31, Year Ended December 31, 
     2021   2020   2021   2020  
            
Net cash provided by operating activities$61,752  $218,223  $411,156  $486,533  
Proceeds from beneficial interests in securitization transactions 2,369   653   4,609   2,651  
Expenditures for property and equipment (22,536)  (28,188)  (109,992)  (62,128) 
Free cash flow  $41,585  $190,688  $305,773  $427,056  
            


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Source: Generac Holdings Inc

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