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Note 3 - Acquisitions | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
3. | Acquisitions
Fiscal 2023 Acquisitions On February 1, 2023, the Company acquired REFUstor, headquartered in Pfullingen, Germany. REFUstor is a developer and supplier of battery storage hardware products, advanced software, and platform services for the commercial and industrial energy storage market. The Company recorded its preliminary purchase price allocation for REFUstor during the first quarter of 2023, based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting will be finalized prior to March 31, 2024, and there have not been any material changes to the balances acquired as of December 31, 2023. The accompanying consolidated financial statements include the results of REFUstor from the date of acquisition through December 31, 2023. Fiscal 2022 Acquisitions On June 30, 2022, the Company acquired EEC. Headquartered in Marlborough, Massachusetts, EEC is an industrial generator distributor as well as a provider of data center and telecom facility design, build, maintenance, and repair services. On October 3, 2022, the Company acquired Blue Pillar, an industrial IoT platform developer that designs, deploys, and manages industrial IoT network solutions to enable distributed energy generation monitoring and control. The combined purchase price for these two acquisitions was $25,654, net of cash acquired. The Company recorded its preliminary purchase price allocation for EEC and Blue Pillar during the second quarter and fourth quarter of 2022, respectively, based on its estimates of the fair value of the acquired assets and assumed liabilities. Purchase accounting for EEC was finalized in the second quarter of 2023 and did not result in material adjustments to the Company's preliminary estimates. Purchase accounting for Blue Pillar was finalized in the fourth quarter of 2023 and did not result in material adjustments to the Company's preliminary estimates. The combined purchase price for EEC and Blue Pillar has increased to $27,658 due to working capital adjustments. The accompanying consolidated financial statements include the results of the acquired businesses since the dates of acquisition through December 31, 2023. 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 a 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 finalized the Deep Sea purchase price allocation during the second quarter of 2022 based on 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 $437,874 of intangible assets, including $263,604 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, 2023. Acquisition of Chilicon On July 2, 2021, the Company acquired Chilicon for a purchase price, net of cash acquired, of $61,129 inclusive of estimated contingent consideration. Based in Los Angeles, California, Chilicon is a designer and provider of grid-interactive microinverter and monitoring solutions for the solar market. Total consideration consisted of the following:
Cash paid at closing |  | $ | 11,821 |
Deferred cash payment (1) |  |  | 6,000 |
Common stock issued at closing |  |  | 12,000 |
Contingent consideration (2) |  |  | 31,308 |
Total purchase price |  | $ | 61,129 |
(1) | Paid on January 4, 2024.
(2) | Payable in common stock issued upon achievement of certain performance targets within 45 calendar days following the conclusion of the contingent consideration period, December 31, 2028.
The Company finalized the Chilicon purchase price allocation during the second quarter of 2022 based on 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 $70,174 of intangible assets, including $36,974 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, 2023. Acquisition of Off Grid Energy On September 1, 2021, the Company acquired Off Grid Energy for a purchase price of $56,949, net of cash acquired and inclusive of the then estimated contingent consideration of $29,054 payable in cash based on the contingent consideration period performance. The contingent consideration was paid during the third quarter of 2022 in the amount of $16,135. 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 finalized the Off Grid Energy purchase price allocation during the third quarter of 2022 based on 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 $56,076 of intangible assets, including $21,531 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, 2023. Acquisition of ecobee On December 1, 2021, the Company acquired ecobee for a purchase price, net of cash acquired, of $735,577 inclusive of estimated contingent consideration. 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 purchase price consisted of the following:
Cash paid at closing |  | $ | 225,403 |
Common stock issued at closing |  |  | 420,774 |
Contingent consideration (1) |  |  | 89,400 |
Total purchase price |  | $ | 735,577 |
(1) | The contingent consideration for the period ended June 30, 2022, was paid during the fourth quarter of 2022 in the amount of $47,123 in shares of common stock, or 196,531 shares of common stock, and $542 was paid with cash on hand. Additionally, during the fourth quarter of 2022, the Company entered into a definitive agreement to accelerate the measurement and payment for the remaining contingent consideration period ending June 30, 2023. The parties agreed to a final payment amount of $45,000 issued with 466,188 shares of common stock and $479 of cash. The $45,000 was paid during the first quarter of 2023.
The Company finalized the ecobee purchase price allocation during the fourth quarter of 2022 based on 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 $806,131 of intangible assets, including $248,231 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, 2023. 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 two acquisitions was $29,945, net of cash acquired, and was funded solely through cash on hand. The Company finalized its purchase price allocation during the third quarter of 2022 based on the Company's 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 these two acquired businesses since the dates of acquisition through December 31, 2023. 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 |
|  |  | 2023 Acquisitions |  |  |  | 2022 Acquisitions |  |  |  | Deep Sea |  |  |  | ecobee |  |  |  | All Other |  |  |  | Total |
Accounts receivable |  | $ | 347 |  |  | $ | 11,965 |  |  | $ | 9,574 |  |  | $ | 23,337 |  |  | $ | 13,852 |  |  | $ | 46,763 |
Inventories |  |  | 1,239 |  |  |  | 2,955 |  |  |  | 9,970 |  |  |  | 7,258 |  |  |  | 7,034 |  |  |  | 24,262 |
Prepaid expenses and other current assets |  |  | 166 |  |  |  | 4,456 |  |  |  | 1,181 |  |  |  | 5,689 |  |  |  | 6,594 |  |  |  | 13,464 |
Property and equipment |  |  | 5,843 |  |  |  | 708 |  |  |  | 8,838 |  |  |  | 3,588 |  |  |  | 480 |  |  |  | 12,906 |
Intangible assets |  |  | 6,174 |  |  |  | 10,032 |  |  |  | 174,270 |  |  |  | 557,900 |  |  |  | 81,171 |  |  |  | 813,341 |
Goodwill |  |  | 5,363 |  |  |  | 8,714 |  |  |  | 263,604 |  |  |  | 248,231 |  |  |  | 83,859 |  |  |  | 595,694 |
Deferred income taxes |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 40,020 |  |  |  | 5,694 |  |  |  | 45,714 |
Other assets |  |  | 837 |  |  |  | 1,954 |  |  |  | 151 |  |  |  | 9,289 |  |  |  | 8,526 |  |  |  | 17,966 |
Total assets acquired |  |  | 19,969 |  |  |  | 40,784 |  |  |  | 467,588 |  |  |  | 895,312 |  |  |  | 207,210 |  |  |  | 1,570,110 |
Accounts payable |  |  | 1,278 |  |  |  | 1,826 |  |  |  | 8,998 |  |  |  | 25,968 |  |  |  | 7,473 |  |  |  | 42,439 |
Accrued wages and employee benefits |  |  | 264 |  |  |  | 1,662 |  |  |  | 2,106 |  |  |  | 1,354 |  |  |  | 872 |  |  |  | 4,332 |
Other accrued liabilities |  |  | 236 |  |  |  | 7,917 |  |  |  | 1,737 |  |  |  | 19,898 |  |  |  | 18,258 |  |  |  | 39,893 |
Short-term borrowings |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 800 |  |  |  | 800 |
Current portion of long-term borrowings and finance lease obligations |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 233 |  |  |  | 233 |
Deferred income taxes |  |  | 2,007 |  |  |  | 564 |  |  |  | 33,957 |  |  |  | 78,753 |  |  |  | 19,930 |  |  |  | 132,640 |
Other long-term liabilities |  |  | 57 |  |  |  | 1,157 |  |  |  | 90 |  |  |  | 33,762 |  |  |  | 9,997 |  |  |  | 43,849 |
Long-term debt |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,624 |  |  |  | 1,624 |
Net assets acquired |  | $ | 16,127 |  |  | $ | 27,658 |  |  | $ | 420,700 |  |  | $ | 735,577 |  |  | $ | 148,023 |  |  | $ | 1,304,300 |
The allocations of the purchase price to identifiable assets and liabilities for the 2022 and 2021 acquisitions are based on the final valuations performed to determine the fair value of the net assets as of their respective acquisition dates. Unaudited 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, 2021.
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Net Sales: |  |  |  |  |  |  |  |  |  |  |  |
As reported |  | $ | 4,022,667 |  |  | $ | 4,564,737 |  |  | $ | 3,737,184 |
Pro forma |  |  | 4,022,826 |  |  |  | 4,600,162 |  |  |  | 3,933,666 |
Net income attributable to Generac Holdings Inc.: |  |  |  |  |  |  |  |  |  |  |  |
As reported |  | $ | 214,606 |  |  | $ | 399,502 |  |  | $ | 550,494 |
Pro forma (1) |  |  | 214,343 |  |  |  | 395,261 |  |  |  | 461,193 |
Net income attributable to Generac Holdings Inc. per common share - diluted |  |  |  |  |  |  |  |  |  |  |  |
As reported |  | $ | 3.27 |  |  | $ | 5.42 |  |  | $ | 8.30 |
Pro forma |  |  | 3.27 |  |  |  | 5.36 |  |  |  | 6.91 |
| (1) | Includes additional pro forma intangible amortization from all acquisitions as though the transactions had occurred on January 1, 2021 of $111, $2,465, and $70,152 for the years ended December 31, 2023, 2022, and 2021, 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, 2021.

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