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Note 3 - Acquisitions | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
3. | Acquisitions
Fiscal 2021 Acquisition of Deep Sea On June 1, 2021, the Company acquired Deep Sea for a purchase price, net of cash acquired, of $420,700. Headquartered in Hunmanby, United Kingdom, Deep Sea is an industry leading designer and manufacturer of a diverse suite of flexible control solutions focused on the global power generation and transfer switch markets. The acquisition purchase price was funded solely through cash on hand. The Company recorded its preliminary purchase price allocation during the second quarter of 2021, and was updated in the third and fourth quarters of 2021, based upon its estimates of the fair value of the acquired assets and assumed liabilities at that time. As a result, the Company recorded $437,864 of intangible assets, including $266,427 of goodwill recorded in the International segment, as of the acquisition date. The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying consolidated financial statements include the results of Deep Sea from the date of acquisition through December 31, 2021. Acquisition of Chilicon On July 2, 2021, the Company acquired Chilicon for a purchase price, net of cash acquired, of $61,129. Based in Los Angeles, California, Chilicon is a designer and provider of grid-interactive microinverter and monitoring solutions for the solar market. Chilicon's power inversion and monitoring system technologies maximize photovoltaic (solar power) system production, lower installer operational cost, and promote end-user satisfaction. The fair value of the consideration transferred consisted of the following:
Cash |  | $ | 11,821 |
Deferred cash payment (1) |  |  | 6,000 |
Common stock issued |  |  | 12,000 |
Contingent consideration (2) |  |  | 31,308 |
Total purchase price |  | $ | 61,129 |
(1) | Payable on the third business day after December 31, 2023.
(2) | Payable within 45 calendar days following the conclusion of the earnout period, December 31, 2025. To be paid in the form of common stock issued upon achievement of certain performance targets at the end of the earnout period.
The Company recorded its preliminary purchase price allocation during the third quarter of 2021, and was updated in the fourth quarter of 2021, based upon its estimates of the fair value of the acquired assets and assumed liabilities at that time. As a result, the Company recorded $69,992 of intangible assets, including $37,492 of goodwill recorded in the Domestic segment, as of the acquisition date. The goodwill ascribed to the Chilicon acquisition is not deductible for tax purposes. The accompanying consolidated financial statements include the results of Chilicon from the date of acquisition through December 31, 2021. Acquisition of Off Grid Energy On September 1, 2021, the Company acquired Off Grid Energy for a purchase price of $53,438, net of cash acquired and inclusive of estimated contingent consideration of $29,054 that is to be paid in cash upon achievement of certain performance targets at the end of the earnout period, March 31, 2022. Headquartered in Rugby, United Kingdom, Off Grid Energy is a designer and manufacturer of industrial-grade mobile energy storage systems. The acquisition purchase price was funded through cash on hand. The Company recorded its preliminary purchase price allocation during the third quarter of 2021, and was updated in the fourth quarter of 2021, based upon its estimates of the fair value of the acquired assets and assumed liabilities at that time. As a result, the Company recorded $52,565 of intangible assets, including $18,020 of goodwill recorded in the International segment, as of the acquisition date. The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying consolidated financial statements include the results of Off Grid Energy from the date of acquisition through December 31, 2021. Acquisition of ecobee On December 1, 2021, the Company acquired ecobee for a purchase price, net of cash acquired, of $734,638. Headquartered in Toronto, Canada, ecobee is a leader in sustainable home technology solutions including smart thermostats that deliver significant energy savings, security and peace of mind. The fair value of the consideration transferred consisted of the following:
Cash |  | $ | 224,464 |
Common stock issued |  |  | 420,774 |
Contingent consideration (1) |  |  | 89,400 |
Total purchase price |  | $ | 734,638 |
(1) | To be paid in the form of common stock issued upon achievement of certain performance targets at the end of each of the two earnout periods, ending June 30, 2022, and June 30, 2023.
The Company recorded its preliminary purchase price allocation during the fourth quarter of 2021 based upon its estimates of the fair value of the acquired assets and assumed liabilities at that time. As a result, the Company recorded $795,613 of intangible assets, including $231,213 of goodwill recorded in the Domestic segment, as of the acquisition date. A portion of the goodwill ascribed to this acquisition is deductible for tax purposes. The accompanying consolidated financial statements include the results of ecobee from the date of acquisition through December 31, 2021. Other Acquisitions On September 1, 2021, the Company acquired Apricity Code, an advanced engineering and product design company located in Bend, Oregon. On October 1, 2021, the Company acquired Tank Utility, a provider of IoT propane tank monitoring that enables the optimization of propane fuel logistics. The combined purchase price for these acquisitions was $30,086 and was funded solely through cash on hand. The Company recorded its preliminary purchase price allocation for Apricity Code and Tank Utility during the third quarter and fourth quarter of 2021, respectively, based upon its estimates of the fair value of the acquired assets and assumed liabilities. The accompanying consolidated financial statements include the results of these two acquired businesses since the dates of acquisition through December 31, 2021. Fiscal 2020 Acquisition of Enbala On October 7, 2020, the Company acquired Enbala for a purchase price, net of cash acquired, of $41,982. The acquisition purchase price was funded solely through cash on hand. The Company finalized its purchase price allocation during the third quarter of 2021 based upon its estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. As a result, the Company recorded $46,338 of intangible assets, including $27,038 of goodwill recorded in the Domestic segment, as of the acquisition date. A portion of the goodwill ascribed to this acquisition is deductible for tax purposes. The accompanying consolidated financial statements include the results of Enbala from the date of acquisition through December 31, 2021. Other Acquisitions On July 1, 2020, the Company acquired Energy Systems, its industrial distributor in northern California. On September 1, 2020, the Company acquired Mean Green, a designer and manufacturer of commercial grade, battery-powered turf care products. The combined purchase price for these acquisitions was $22,958 and was funded solely through cash on hand. The Company finalized its purchase price allocation for these two acquisitions during the third quarter of 2021 based upon its estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. The accompanying consolidated financial statements include the results of the acquired businesses since the dates of acquisition through December 31, 2021. Fiscal 2019 Acquisition of Pika On April 26, 2019, the Company acquired Pika for a purchase price, net of cash acquired, of $49,068. The acquisition purchase price was funded solely through cash on hand. The Company finalized the Pika purchase price allocation during the first quarter of 2020 based upon its estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. As a result, the Company recorded $58,196 of intangible assets, including $19,896 of goodwill recorded in the Domestic segment, as of the acquisition date. The goodwill ascribed to the acquisition is not deductible for tax purposes. The accompanying consolidated financial statements include the results of Pika from the date of acquisition through December 31, 2021. Acquisition of Neurio On March 12, 2019, the Company acquired Neurio for a purchase price of $59,071, net of cash acquired and inclusive of a deferred payment of $7,922 which was made during the third quarter of 2019. The acquisition purchase price was funded solely through cash on hand. The Company finalized the Neurio purchase price allocation during the first quarter of 2020 based upon its estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. As a result, the Company recorded $58,762 of intangible assets, including $17,862 of goodwill recorded in the Domestic segment, as of the acquisition date. Substantially all of the goodwill ascribed to this acquisition is deductible for tax purposes. The accompanying consolidated financial statements include the results of Neurio from the date of acquisition through December 31, 2021. Other Acquisitions In February 2019, the Company acquired a majority share of Captiva, a manufacturer of customized industrial generators in Kolkata, India. The purchase price was immaterial to the Company and was funded solely through cash on hand. The accompanying consolidated financial statements include the results of the acquired business from the date of acquisition through December 31, 2021. Summary Purchase Price Allocations The fair values assigned to certain assets acquired and liabilities assumed for all acquisitions completed during the reporting period, as of the acquisition dates, are as follows:
|  | 2021 Acquisitions |  |  |  |  |  |  |  |  |
|  | Deep Sea |  |  | ecobee |  |  | All Other |  |  | Total |  |  | 2020 Acquisitions |  |  | 2019 Acquisitions |
Accounts receivable |  | $ | 9,574 |  |  | $ | 23,337 |  |  | $ | 13,853 |  |  | $ | 46,764 |  |  | $ | 5,094 |  |  | $ | 4,643 |
Inventories |  |  | 9,970 |  |  |  | 7,258 |  |  |  | 7,034 |  |  |  | 24,262 |  |  |  | 3,575 |  |  |  | 4,313 |
Prepaid expenses and other assets |  |  | 826 |  |  |  | 5,531 |  |  |  | 6,594 |  |  |  | 12,951 |  |  |  | 858 |  |  |  | 304 |
Property and equipment |  |  | 8,838 |  |  |  | 12,838 |  |  |  | 480 |  |  |  | 22,156 |  |  |  | 635 |  |  |  | 384 |
Intangible assets |  |  | 171,437 |  |  |  | 564,400 |  |  |  | 74,394 |  |  |  | 810,231 |  |  |  | 26,235 |  |  |  | 79,200 |
Goodwill |  |  | 266,427 |  |  |  | 231,213 |  |  |  | 82,121 |  |  |  | 579,761 |  |  |  | 40,395 |  |  |  | 41,428 |
Deferred income taxes |  |  | - |  |  |  | 52,329 |  |  |  | 6,547 |  |  |  | 58,876 |  |  |  | - |  |  |  | 3,217 |
Other assets |  |  | 151 |  |  |  | 4,031 |  |  |  | 8,526 |  |  |  | 12,708 |  |  |  | 1,122 |  |  |  | 133 |
Total assets acquired |  |  | 467,223 |  |  |  | 900,937 |  |  |  | 199,549 |  |  |  | 1,567,709 |  |  |  | 77,914 |  |  |  | 133,622 |
Accounts payable |  |  | 8,998 |  |  |  | 29,855 |  |  |  | 7,675 |  |  |  | 46,528 |  |  |  | 4,088 |  |  |  | 4,380 |
Accrued wages and employee benefits |  |  | 2,106 |  |  |  | 1,354 |  |  |  | 862 |  |  |  | 4,322 |  |  |  | 700 |  |  |  | 4,408 |
Other accrued liabilities |  |  | 2,272 |  |  |  | 18,830 |  |  |  | 18,258 |  |  |  | 39,360 |  |  |  | 2,151 |  |  |  | 602 |
Short-term borrowings |  |  | - |  |  |  | - |  |  |  | 800 |  |  |  | 800 |  |  |  | - |  |  |  |  |
Current portion of long-term borrowings and finance lease obligations |  |  | - |  |  |  | 1,068 |  |  |  | 233 |  |  |  | 1,301 |  |  |  | - |  |  |  | 937 |
Deferred income taxes |  |  | 33,057 |  |  |  | 81,429 |  |  |  | 18,169 |  |  |  | 132,655 |  |  |  | 3,827 |  |  |  | 9,958 |
Other long-term liabilities |  |  | 90 |  |  |  | 24,097 |  |  |  | 7,275 |  |  |  | 31,462 |  |  |  | 2,208 |  |  |  | 778 |
Long-term debt |  |  | - |  |  |  | 9,666 |  |  |  | 1,624 |  |  |  | 11,290 |  |  |  | - |  |  |  | - |
Redeemable non-controlling interest |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,165 |
Net assets acquired |  | $ | 420,700 |  |  | $ | 734,638 |  |  | $ | 144,653 |  |  | $ | 1,299,991 |  |  | $ | 64,940 |  |  | $ | 109,394 |
The allocations of the purchase price to identifiable assets and liabilities for the 2021 acquisitions are based on the preliminary valuations performed to determine the fair value of the net assets as of their respective acquisition dates. The measurement period for the valuation of net assets acquired ends as soon as information on the facts and circumstances that existed as of the acquisition dates becomes available, but not to exceed 12 months following the acquisition date. As the Company finalizes valuations, adjustments in purchase price allocations may require a change in the amounts allocated to net assets acquired during the periods in which the adjustments are determined. Pro Forma Information The following unaudited pro forma information of the Company gives effect to all acquisitions as though the transactions had occurred on January 1, 2019. Refer to Note 1, “Description of Business,” for further information on the acquisitions included in the table.
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Net Sales: |  |  |  |  |  |  |  |  |  |  |  |
As reported |  | $ | 3,737,184 |  |  | $ | 2,485,200 |  |  | $ | 2,204,336 |
Pro forma |  |  | 3,877,995 |  |  |  | 2,712,813 |  |  |  | 2,408,671 |
Net income attributable to Generac Holdings Inc.: |  |  |  |  |  |  |  |  |  |  |  |
As reported |  | $ | 550,494 |  |  | $ | 350,576 |  |  | $ | 252,007 |
Pro forma (1) |  |  | 465,983 |  |  |  | 276,579 |  |  |  | 135,778 |
Net income attributable to Generac Holdings Inc. per common share - diluted |  |  |  |  |  |  |  |  |  |  |  |
As reported |  | $ | 8.30 |  |  | $ | 5.48 |  |  | $ | 4.03 |
Pro forma |  |  | 7.16 |  |  |  | 4.29 |  |  |  | 2.15 |
| (1) | Includes additional pro forma intangible amortization from the effect of all acquisitions as though the transactions had occurred on January 1, 2019 of $63,524, $78,840, and $83,100 for the years ended December 31, 2021, 2020, and 2019, respectively
This unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated on January 1, 2019.

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