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Note 7 - Segment Reporting | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Segment Reporting Disclosure [Text Block] | 7. Segment Reporting The Company has two reportable segments for financial reporting purposes – Domestic and International. The Domestic segment includes the legacy Generac business (excluding its traditional Latin American export operations), and the acquisitions that are based in the U.S. and Canada, all of which have revenues substantially derived from the U.S. and Canada. The International segment includes the legacy Generac business’ Latin American export operations, and the Ottomotores, Tower Light, Pramac, Motortech, Selmec, Deep Sea, and Off Grid Energy acquisitions, all of which have revenues substantially derived from outside the U.S. and Canada. Both reportable segments design and manufacture a wide range of energy technology solutions and other power 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, distribution methods, organizational structure, and regional considerations. The Company's product offerings consist primarily of power generation equipment, energy storage systems, energy management devices & solutions, and other power products geared for varying end customer uses. Residential products and 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 & services by reportable segment is as follows:
|  | Net Sales by Segment |
|  | Three Months Ended September 30, 2022 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 635,772 |  |  | $ | 28,343 |  |  | $ | 664,115 |
Commercial & industrial products |  |  | 196,485 |  |  |  | 114,701 |  |  |  | 311,186 |
Other |  |  | 98,875 |  |  |  | 14,082 |  |  |  | 112,957 |
Total net sales |  | $ | 931,132 |  |  | $ | 157,126 |  |  | $ | 1,088,258 |
|  | Net Sales by Segment |
|  | Three Months Ended September 30, 2021 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 585,150 |  |  | $ | 23,666 |  |  | $ | 608,816 |
Commercial & industrial products |  |  | 140,824 |  |  |  | 117,485 |  |  |  | 258,309 |
Other |  |  | 64,790 |  |  |  | 10,783 |  |  |  | 75,573 |
Total net sales |  | $ | 790,764 |  |  | $ | 151,934 |  |  | $ | 942,698 |
|  | Net Sales by Segment |
|  | Nine Months Ended September 30, 2022 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 2,246,113 |  |  | $ | 90,959 |  |  | $ | 2,337,072 |
Commercial & industrial products |  |  | 515,771 |  |  |  | 383,492 |  |  |  | 899,263 |
Other |  |  | 241,353 |  |  |  | 37,817 |  |  |  | 279,170 |
Total net sales |  | $ | 3,003,237 |  |  | $ | 512,268 |  |  | $ | 3,515,505 |
|  | Net Sales by Segment |
|  | Nine Months Ended September 30, 2021 |
Product Classes |  | Domestic |  |  | International |  |  | Total |
Residential products |  | $ | 1,690,707 |  |  | $ | 60,250 |  |  | $ | 1,750,957 |
Commercial & industrial products |  |  | 402,357 |  |  |  | 312,637 |  |  |  | 714,994 |
Other |  |  | 174,584 |  |  |  | 29,578 |  |  |  | 204,162 |
Total net sales |  | $ | 2,267,648 |  |  | $ | 402,465 |  |  | $ | 2,670,113 |
Residential products consist primarily of automatic home standby generators ranging in output from 7.5kW to 150kW, portable generators, energy storage systems, energy management devices & solutions, and other outdoor power equipment. These products are predominantly sold through independent residential dealers, national and regional retailers, e-commerce merchants, electrical/HVAC/solar wholesalers, solar installers, and outdoor power equipment dealers. The residential products revenue consists of the sale of the product to our distribution partners, which in turn they 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 with power outputs up to 3,250kW. Also included in C&I products are mobile generators, light towers, mobile energy storage systems, mobile heaters, mobile pumps, and related controllers for power generation equipment. These products are sold globally 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 they 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 consists primarily of aftermarket service parts and product accessories sold to our customers, the amortization of extended warranty deferred revenue, remote monitoring and grid services subscription revenue, as well as certain installation and maintenance service revenue. The aftermarket service parts and product accessories are generally transferred to the customer at a point in time, while the extended warranty revenue and subscription revenue are recognized over the life of the contract. Other service revenue is recognized when the service is performed. The following table sets forth total sales by reportable segment and inclusive of intersegment sales:
|  | Three Months Ended September 30, 2022 |  |  | Three Months Ended September 30, 2021 |
|  | Domestic |  |  | International |  |  | Eliminations |  |  | Total |  |  | Domestic |  |  | International |  |  | Eliminations |  |  | Total |
External net sales |  | $ | 931,132 |  |  | $ | 157,126 |  |  | $ | - |  |  | $ | 1,088,258 |  |  | $ | 790,764 |  |  | $ | 151,934 |  |  | $ | - |  |  | $ | 942,698 |
Intersegment sales |  |  | 15,485 |  |  |  | 25,416 |  |  |  | (40,901 | ) |  |  | - |  |  |  | 11,470 |  |  |  | 7,826 |  |  |  | (19,296 | ) |  |  | - |
Total sales |  | $ | 946,617 |  |  | $ | 182,542 |  |  | $ | (40,901 | ) |  | $ | 1,088,258 |  |  | $ | 802,234 |  |  | $ | 159,760 |  |  | $ | (19,296 | ) |  | $ | 942,698 |
|  | Nine Months Ended September 30, 2022 |  |  | Nine Months Ended September 30, 2021 |
|  | Domestic |  |  | International |  |  | Eliminations |  |  | Total |  |  | Domestic |  |  | International |  |  | Eliminations |  |  | Total |
External net sales |  | $ | 3,003,237 |  |  | $ | 512,268 |  |  | $ | - |  |  | $ | 3,515,505 |  |  | $ | 2,267,648 |  |  | $ | 402,465 |  |  | $ | - |  |  | $ | 2,670,113 |
Intersegment sales |  |  | 44,742 |  |  |  | 59,075 |  |  |  | (103,817 | ) |  |  | - |  |  |  | 26,949 |  |  |  | 16,378 |  |  |  | (43,327 | ) |  |  | - |
Total sales |  | $ | 3,047,979 |  |  | $ | 571,343 |  |  | $ | (103,817 | ) |  | $ | 3,515,505 |  |  | $ | 2,294,597 |  |  | $ | 418,843 |  |  | $ | (43,327 | ) |  | $ | 2,670,113 |
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 defined as net income before noncontrolling interest adjusted for the following items: interest expense, depreciation expense, amortization of intangible assets, income tax expense, certain non-cash gains and losses including certain purchase accounting adjustments and contingent consideration adjustments, share-based compensation expense, losses on extinguishment of debt, certain transaction costs and credit facility fees, business optimization expenses, certain specific provisions, and adjusted EBITDA attributable to noncontrolling interests.
|  | Adjusted EBITDA |
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Domestic |  | $ | 159,810 |  |  | $ | 187,726 |  |  | $ | 572,159 |  |  | $ | 598,730 |
International |  |  | 24,006 |  |  |  | 21,475 |  |  |  | 79,532 |  |  |  | 42,344 |
Total adjusted EBITDA |  | $ | 183,816 |  |  | $ | 209,201 |  |  | $ | 651,691 |  |  | $ | 641,074 |
Interest expense |  |  | (15,514 | ) |  |  | (7,980 | ) |  |  | (35,303 | ) |  |  | (23,424 | )
Depreciation and amortization |  |  | (39,165 | ) |  |  | (23,216 | ) |  |  | (116,724 | ) |  |  | (62,682 | )
Non-cash write-down and other adjustments (1) |  |  | 6,840 |  |  |  | (3,333 | ) |  |  | 10,025 |  |  |  | (638 | )
Non-cash share-based compensation expense (2) |  |  | (6,861 | ) |  |  | (5,783 | ) |  |  | (23,423 | ) |  |  | (18,204 | )
Loss on extinguishment of debt (3) |  |  | - |  |  |  | - |  |  |  | (3,743 | ) |  |  | (831 | )
Transaction costs and credit facility fees (4) |  |  | (1,250 | ) |  |  | (3,385 | ) |  |  | (3,831 | ) |  |  | (9,471 | )
Business optimization and other charges (5) |  |  | (622 | ) |  |  | - |  |  |  | (3,371 | ) |  |  | (159 | )
Provision for clean energy product charges (6) |  |  | (55,265 | ) |  |  | - |  |  |  | (55,265 | ) |  |  | - |
Other |  |  | 61 |  |  |  | (140 | ) |  |  | 951 |  |  |  | (717 | )
Income before provision for income taxes |  | $ | 72,040 |  |  | $ | 165,364 |  |  | $ | 421,007 |  |  | $ | 524,948 |
| (1) | Includes gains/losses on disposals of assets and sales of certain investments, unrealized mark-to-market adjustments on commodity contracts, certain foreign currency related adjustments, and certain purchase accounting and contingent consideration 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 primarily 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) | The current year period predominantly represents severance and other non-recurring restructuring charges related to the suspension of operations at certain of our facilities.
| (6) | Represents a specific credit loss provision of $17,926 for a clean energy product customer that filed for bankruptcy, as well as a warranty provision of $37,338 to address certain clean energy product warranty-related matters.
The Company’s sales in the U.S. represented approximately 82% of total sales for the three months ended September 30, 2022 and 2021. The Company’s sales in the U.S. represented approximately 82% of total sales for the nine months ended September 30, 2022 and 2021. Approximately 78% and 75% of the Company’s identifiable long-lived assets were located in the U.S. at September 30, 2022 and December 31, 2021, 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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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