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Note 8 - Segment Reporting | 9 Months Ended
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Sep. 30, 2018
Notes to Financial Statements |
Segment Reporting Disclosure [Text Block] | 8 . Segment Reporting The Company has two reportable segments for financial reporting purposes - Domestic and International. The Domestic segment includes the legacy Generac business and the impact of acquisitions 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, Pramac, Motortech and Selmec businesses, 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 power generation equipment and other 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. The Company's product offerings consist primarily of power generation equipment and other engine powered products geared for varying end customer uses. Residential products and commercial & industrial (C&I) products are each a similar class of products based on similar power output and end customer. The breakout of net sales between residential, C&I, and other products by reportable segment is as follows:
|  | Net Sales by Segment |
|  | Three Months Ended September 30, 2018 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 300,387 |  |  | $ | 11,531 |  |  | $ | 311,918 |
Commercial & industrial products |  |  | 121,952 |  |  |  | 84,414 |  |  |  | 206,366 |
Other |  |  | 30,920 |  |  |  | 10,311 |  |  |  | 41,231 |
Total net sales |  | $ | 453,259 |  |  | $ | 106,256 |  |  | $ | 559,515 |
|  | Three Months Ended September 30, 2017 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 236,821 |  |  | $ | 14,382 |  |  | $ | 251,203 |
Commercial & industrial products |  |  | 101,122 |  |  |  | 72,720 |  |  |  | 173,842 |
Other |  |  | 24,966 |  |  |  | 5,828 |  |  |  | 30,794 |
Total net sales |  | $ | 362,909 |  |  | $ | 92,930 |  |  | $ | 455,839 |
|  | Nine Months Ended September 30, 2018 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 711,203 |  |  | $ | 37,587 |  |  | $ | 748,790 |
Commercial & industrial products |  |  | 340,244 |  |  |  | 256,875 |  |  |  | 597,119 |
Other |  |  | 83,078 |  |  |  | 23,111 |  |  |  | 106,189 |
Total net sales |  | $ | 1,134,525 |  |  | $ | 317,573 |  |  | $ | 1,452,098 |
|  | Nine Months Ended September 30, 2017 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 563,636 |  |  | $ | 40,252 |  |  | $ | 603,888 |
Commercial & industrial products |  |  | 284,796 |  |  |  | 209,702 |  |  |  | 494,498 |
Other |  |  | 67,051 |  |  |  | 15,762 |  |  |  | 82,813 |
Total net sales |  | $ | 915,483 |  |  | $ | 265,716 |  |  | $ | 1,181,199 |
Residential products consist primarily of automatic home standby generators ranging in output from 6kW to 60kW, portable generators, power washers and other outdoor power equipment. These products are sold through independent residential dealers, national and regional retailers, e-commerce merchants, electrical and HVAC wholesalers and outdoor power equipment dealers. The residential products revenue consists of the sale of the product to our distribution partners, which in turn sell or rent the product to the end consumer, including installation and maintenance services. In some cases, residential products are sold direct to the end consumer. Substantially all of the residential products revenues are transferred to the customer at a point in time. C&I products consist of larger output stationary generators used in C&I applications and fueled by diesel, natural gas, liquid propane and bi-fuel, with power outputs ranging from 10kW up to 3,250kW. Also included in C&I products are mobile generators, light towers, mobile heaters and mobile pumps. These products are sold through industrial distributors and dealers, equipment rental companies and equipment distributors. The C&I products revenue consists of the sale of the product to our distribution partners, which in turn sell or rent the product to the end customer, including installation and maintenance services. In some cases, C&I products are sold direct to the end customer. Substantially all of the C&I products revenues are transferred to the customer at a point in time. Other products consist primarily of aftermarket service parts sold to our dealers, product accessories and proprietary engines sold to third -party original equipment manufacturers. Substantially all of the Other products revenues are transferred to the customer at a point in time. Management evaluates the performance of its segments based primarily on Adjusted EBITDA, which is reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based on the definition that is contained in the Company’s credit agreements.
|  | Adjusted EBITDA |
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Domestic |  | $ | 117,108 |  |  | $ | 82,817 |  |  | $ | 273,185 |  |  | $ | 188,400 |
International |  |  | 7,366 |  |  |  | 5,625 |  |  |  | 25,300 |  |  |  | 16,471 |
Total adjusted EBITDA |  | $ | 124,474 |  |  | $ | 88,442 |  |  | $ | 298,485 |  |  | $ | 204,871 |
Interest expense |  |  | (9,824 | ) |  |  | (10,672 | ) |  |  | (30,939 | ) |  |  | (32,353 | )
Depreciation and amortization |  |  | (11,841 | ) |  |  | (13,108 | ) |  |  | (35,124 | ) |  |  | (38,691 | )
Non-cash write-down and other adjustments (1) |  |  | (900 | ) |  |  | (756 | ) |  |  | (3,522 | ) |  |  | (2,632 | )
Non-cash share-based compensation expense (2) |  |  | (2,919 | ) |  |  | (2,584 | ) |  |  | (9,910 | ) |  |  | (8,402 | )
Loss on extinguishment of debt (3) |  |  | - |  |  |  | - |  |  |  | (1,332 | ) |  |  | - |
Transaction costs and credit facility fees (4) |  |  | (1,767 | ) |  |  | (234 | ) |  |  | (2,470 | ) |  |  | (970 | )
Business optimization expenses (5) |  |  | (583 | ) |  |  | (487 | ) |  |  | (750 | ) |  |  | (1,933 | )
Other |  |  | (46 | ) |  |  | (421 | ) |  |  | (45 | ) |  |  | (451 | )
Income before provision for income taxes |  | $ | 96,594 |  |  | $ | 60,180 |  |  | $ | 214,393 |  |  | $ | 119,439 |
| ( 1 ) | Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, transactional 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 non-cash write-off of original issue discount and deferred financing costs due to a voluntary prepayment of Term Loan debt.
| ( 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 78% and 76% of total sales for the three month periods ended September 30, 2018 and 2017, respectively, and represented approximately 74% of total sales for the nine month periods ended September 30, 2018 and 2017. Approximately 80% and 85% of the Company’s identifiable long-lived assets were located in the United States at September 30, 2018 and December 31, 2017, respectively.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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