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Note 6 - Segment Reporting
 6 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
6. Segment Reporting
 
Effective in the second quarter of 2016, the Company changed its segment reporting from one reportable segment to two reportable segments - Domestic and International - as a result of the recent Pramac acquisition and the ongoing strategy to expand the business internationally. The Domestic segment includes the legacy Generac business and the impact of acquisitions that are based in the United States, all of which have revenues that are substantially derived from the U.S. and Canada. The International segment includes the Ottomotores, Tower Light and Pramac acquisitions, all of which have revenues that are substantially derived from outside of the U.S. and Canada. Both reportable segments design and manufacture a wide range of engine powered products. The Company has multiple operating segments, which it aggregates into the two reportable segments, based on materially similar economic characteristics, products, production processes, classes of customers and distribution methods.
 
 
 
Net Sales
 
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
Reportable Segments
 
2016
 
 
2015
 
 
2016
 
 
2015
 
Domestic
   $ 286,720     $ 258,117     $ 534,736     $ 545,729  
International
     80,656       30,243       119,175       54,449  
Total net sales
   $ 367,376     $ 288,360     $ 653,911     $ 600,178  
 
The Company's product offerings consist primarily of power products with a range of power output geared for varying end customer uses. Residential products and commercial & industrial products are each a class of products based on similar power output and end customer usage. The breakout of net sales between residential, commercial & industrial, and other products by product class is as follows:
 
 
 
Net Sales
 
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
Product Classes
 
2016
 
 
2015
 
 
2016
 
 
2015
 
Residential products
   $ 181,735     $ 133,466     $ 340,716     $ 290,300  
Commercial & industrial products
     156,730       134,580       259,720       268,343  
Other
     28,911       20,314       53,475       41,535  
Total net sales
   $ 367,376     $ 288,360     $ 653,911     $ 600,178  
 
Management evaluates the performance of its segments based primarily on Adjusted EBITDA, which is a non-GAAP measure, and therefore reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based on the definition that is contained in the Company’s credit agreements.
 
 
 
Adjusted EBITDA
 
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
Domestic
   $ 57,352     $ 48,457     $ 104,212     $ 102,901  
International
     6,574       3,965       9,523       6,659  
Total adjusted EBITDA
   $ 63,926     $ 52,422     $ 113,735     $ 109,560  
                                 
Interest expense
     (11,380 )     (10,763 )     (22,415 )     (22,031 )
Depreciation and amortization
     (13,650 )     (10,129 )     (26,443 )     (19,163 )
Non-cash write-down and other adjustments (1)
     (2,909 )     (404 )     (2,782 )     (1,976 )
Non-cash share-based compensation expense (2)
     (2,901 )     (2,582 )     (5,386 )     (5,090 )
Loss on extinguishment of debt (3)
     -       (3,427 )     -       (4,795 )
Transaction costs and credit facility fees (4)
     (237 )     (481 )     (760 )     (682 )
Business optimization expenses (5)
     -       (1,444 )     (7,106 )     (1,738 )
Other
     15       280       (48 )     90  
Income before provision for income taxes
   $ 32,864     $ 23,472     $ 48,795     $ 54,175  
 
 
(1)
Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, foreign currency gains/losses and certain purchase accounting related adjustments.
 
(2)
Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
 
(3)
Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.
 
(4)
Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement; equity issuance, debt issuance or refinancing; together with certain fees relating to our senior secured credit facilities.
 
(5)
Represents charges relating to business optimization and restructuring costs.
 
The Company’s sales in the United States represented approximately 74% and 84% of total sales for the three months ended June 30, 2016 and 2015, respectively, and represented approximately 78% and 85% of total sales for the six months ended June 30, 2016 and 2015, respectively. Approximately 86% and 93% of the Company’s identifiable long-lived assets are located in the United States at June 30, 2016 and December 31, 2015, respectively.