Generac Holdings Inc. (NYSE:GNRC)

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Generac Holdings Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
U.S. statutory tax rate	21.00%	21.00%	21.00%	21.00%	35.00%
State taxes	4.30%	4.30%	4.30%	4.70%	4.10%
State tax rate differential	0.00%	0.00%	-1.00%	0.00%	0.00%
Research and development credits	-1.00%	-1.10%	-0.80%	-1.30%	-1.40%
State credits	-1.10%	-1.50%	-1.00%	-1.00%	-0.20%
Share-based compensation	-3.80%	-1.00%	-0.60%	-0.50%	-1.40%
Nondeductible U.S. compensation	1.50%	0.00%	0.00%	0.00%	0.00%
Foreign tax deduction	-1.50%	0.00%	0.00%	0.00%	0.00%
Foreign deferred tax rate change	1.20%	0.00%	0.00%	0.00%	0.00%
Other	-1.10%	0.50%	-0.80%	-0.20%	-0.90%
Effective tax rate, before Tax Act impact	19.50%	22.20%	21.10%	22.70%	35.20%
Tax Act impact	0.00%	0.00%	0.00%	-0.20%	-13.90%
Effective tax rate	19.50%	22.20%	21.10%	22.50%	21.30%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The effective income tax rate exhibited a general downward trajectory over the five-year period, declining from 21.30% in 2017 to 19.50% in 2021. This progression was heavily influenced by a significant shift in the U.S. statutory tax environment and various recurring and non-recurring tax adjustments.

Statutory Tax Rate and Legislative Impact: A primary driver of tax volatility was the reduction of the U.S. statutory tax rate from 35.00% in 2017 to 21.00% starting in 2018. In 2017, the effective tax rate was significantly lowered by a Tax Act impact of -13.90%, which neutralized the higher statutory rate of the period. Following this transition, the statutory rate remained constant at 21.00% through 2021.
Recurring Tax Credits: Research and development credits provided a consistent downward adjustment to the effective tax rate, ranging from -0.80% in 2019 to -1.40% in 2017. Similarly, state credits consistently reduced the tax burden, with the most significant impact occurring in 2020 at -1.50%.
Compensation and Equity Adjustments: Share-based compensation emerged as an increasingly significant factor in reducing the effective tax rate. While the benefit ranged between -0.50% and -1.40% from 2017 to 2020, it expanded sharply to -3.80% in 2021. This benefit was partially offset in 2021 by the introduction of nondeductible U.S. compensation, which added 1.50% to the rate.
Foreign and Miscellaneous Adjustments: The 2021 fiscal year introduced new complexities, including a foreign tax deduction of -1.50% and a foreign deferred tax rate change of 1.20%. State taxes remained relatively stable, fluctuating between 4.10% and 4.70% over the analyzed period, while other miscellaneous adjustments fluctuated between -1.10% and 0.50%.

The culmination of these factors resulted in the lowest effective tax rate of the period in 2021. The increase in share-based compensation benefits and foreign tax deductions more than offset the negative impact of nondeductible compensation and deferred tax rate changes, leading to an effective rate of 19.50%.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Generac Holdings Inc., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Accrued expenses	37,797)	24,358)	21,053)	16,745)	15,138)
Deferred revenue	27,003)	15,851)	14,697)	12,418)	8,060)
Inventories	14,907)	11,795)	9,879)	8,500)	7,933)
Pension obligations	—)	—)	—)	1,062)	3,795)
Stock-based compensation	10,202)	8,348)	7,490)	5,960)	5,522)
Operating loss and credit carryforwards	68,368)	31,275)	28,356)	25,585)	23,771)
Bad debt	1,253)	1,633)	1,094)	1,363)	—)
Other	12,203)	8,558)	4,275)	2,516)	1,064)
Deferred tax assets, before valuation allowance	171,733)	101,818)	86,844)	74,149)	65,283)
Valuation allowance	(7,874)	(5,740)	(5,024)	(5,802)	(6,817)
Deferred tax assets	163,859)	96,078)	81,820)	68,347)	58,466)
Goodwill and intangible assets	(328,162)	(171,831)	(142,159)	(108,899)	(70,556)
Depreciation	(21,340)	(33,716)	(27,864)	(25,429)	(22,563)
Debt refinancing costs	(2,916)	(3,544)	(4,119)	(4,206)	(5,189)
Prepaid expenses	(1,664)	(1,259)	(1,073)	(950)	(709)
Deferred tax liabilities	(354,082)	(210,350)	(175,215)	(139,484)	(99,017)
Net deferred tax assets (liabilities)	(190,223)	(114,272)	(93,395)	(71,137)	(40,551)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The net deferred tax position shifted from a liability of 40.5 million USD in 2017 to a liability of 190.2 million USD by 2021. This trend indicates a substantial increase in the company's future tax obligations relative to its future tax benefits, driven primarily by the rapid expansion of deferred tax liabilities associated with intangible assets.

Growth in Deferred Tax Assets: Deferred tax assets, before valuation allowance, grew consistently from 65.3 million USD in 2017 to 171.7 million USD in 2021. The primary contributors to this growth were operating loss and credit carryforwards, which surged from 23.8 million USD to 68.4 million USD, particularly showing a sharp increase between 2020 and 2021. Accrued expenses and deferred revenue also exhibited strong upward trends, increasing to 37.8 million USD and 27.0 million USD, respectively, by the end of the period.
Valuation Allowance Stability: The valuation allowance remained relatively small and stable relative to the total deferred tax assets, fluctuating between 5.0 million USD and 7.9 million USD. This suggests a high level of confidence in the recoverability of the deferred tax assets over the analyzed five-year period.
Expansion of Deferred Tax Liabilities: Deferred tax liabilities increased significantly from 99.0 million USD in 2017 to 354.1 million USD in 2021. The overwhelming driver of this increase was the liability related to goodwill and intangible assets, which grew from 70.6 million USD to 328.2 million USD. This pattern typically correlates with aggressive acquisition activity or the recognition of significant intangible assets that are amortized for tax purposes but not for financial reporting.
Secondary Liability Trends: Liabilities related to depreciation showed a peak of 33.7 million USD in 2020 before declining to 21.3 million USD in 2021. Other liability components, such as debt refinancing costs and prepaid expenses, remained minimal and showed a general downward trend in magnitude over the five-year span.
Net Position Divergence: While both assets and liabilities grew, the rate of increase for liabilities far exceeded that of the assets. The net deferred tax liability grew by approximately 369% from 2017 to 2021, reflecting a growing gap between the book value and tax basis of the company's assets, specifically within the realm of intangible acquisitions.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Generac Holdings Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
	Deferred tax assets	15,740)	1,497)	2,933)	163)	3,238)
	Deferred tax liabilities	205,964)	115,769)	96,328)	71,300)	43,789)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The deferred tax position from 2017 to 2021 is characterized by a substantial and growing net deferred tax liability. Throughout the analyzed period, deferred tax liabilities consistently exceeded deferred tax assets, indicating that the company has significant future tax obligations resulting from temporary differences between financial accounting and tax accounting.

Deferred Tax Liabilities Growth: A consistent and accelerating upward trend is observed in deferred tax liabilities. Starting at 43,789 thousand USD in 2017, the balance grew steadily each year, reaching 205,964 thousand USD by December 31, 2021. This represents an overall increase of approximately 370% over five years. The most significant growth occurred between 2020 and 2021, where the liability increased by 90,195 thousand USD, nearly doubling the previous year's balance.
Deferred Tax Assets Volatility: Deferred tax assets demonstrated significant volatility during the period. A sharp decline occurred in 2018, with assets falling from 3,238 thousand USD to 163 thousand USD. While there was a subsequent recovery in 2019 and another decline in 2020, a substantial spike is noted in 2021, with assets rising to 15,740 thousand USD. This late-period increase suggests a significant shift in temporary differences or the recognition of new tax credits or losses carried forward.
Net Tax Position Analysis: The gap between deferred tax liabilities and assets widened considerably over the five-year horizon. In 2017, the net deferred tax liability was 40,551 thousand USD. By 2021, despite the increase in deferred tax assets, the net deferred tax liability expanded to 190,224 thousand USD. This divergence highlights an increasing accumulation of taxable temporary differences relative to deductible temporary differences.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Generac Holdings Inc., Financial Data: Reported vs. Adjusted

Generac Holdings Inc., adjustments to financial statements

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Adjustment to Total Assets
Total assets (as reported)	4,877,780)	3,235,423)	2,665,669)	2,426,314)	2,019,964)
Less: Noncurrent deferred tax assets, net	15,740)	1,497)	2,933)	163)	3,238)
Total assets (adjusted)	4,862,040)	3,233,926)	2,662,736)	2,426,151)	2,016,726)
Adjustment to Total Liabilities
Total liabilities (as reported)	2,605,643)	1,779,012)	1,571,591)	1,604,049)	1,416,204)
Less: Noncurrent deferred tax liabilities, net	205,964)	115,769)	96,328)	71,300)	43,789)
Total liabilities (adjusted)	2,399,679)	1,663,243)	1,475,263)	1,532,749)	1,372,415)
Adjustment to Stockholders’ Equity Attributable To Generac Holdings Inc.
Stockholders’ equity attributable to Generac Holdings Inc. (as reported)	2,213,774)	1,390,293)	1,032,382)	760,549)	559,552)
Less: Net deferred tax assets (liabilities)	(190,223)	(114,272)	(93,395)	(71,137)	(40,551)
Stockholders’ equity attributable to Generac Holdings Inc. (adjusted)	2,403,997)	1,504,565)	1,125,777)	831,686)	600,103)
Adjustment to Net Income Attributable To Generac Holdings Inc.
Net income attributable to Generac Holdings Inc. (as reported)	550,494)	350,576)	252,007)	238,257)	159,386)
Add: Deferred income tax expense (benefit)	(1,073)	20,498)	19,520)	24,614)	18,986)
Net income attributable to Generac Holdings Inc. (adjusted)	549,421)	371,074)	271,527)	262,871)	178,372)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

An analysis of the financial adjustments between 2017 and 2021 reveals a consistent trend of growth across all primary financial metrics. The removal of deferred taxes leads to a systemic modification of the balance sheet and income statement, resulting in a strengthened equity position and a reduction in total liabilities.

Balance Sheet Asset and Liability Adjustments: Adjusted total assets remain marginally lower than reported total assets across the entire period. The variance is relatively small, though it increased significantly in 2021, where the adjustment reduced assets by approximately 15.7 million US dollars. Conversely, a substantial divergence is observed in total liabilities. Adjusted total liabilities are consistently and significantly lower than reported figures. This gap widened progressively from 2017, where the difference was approximately 43.8 million US dollars, to 2021, where the difference expanded to approximately 206 million US dollars, indicating a significant accumulation of deferred tax liabilities over the five-year period.
Impact on Stockholders' Equity: The removal of deferred taxes results in a consistent increase in stockholders' equity attributable to the company. Because the reduction in adjusted liabilities far outweighs the reduction in adjusted assets, the net effect is a higher adjusted equity value. This positive adjustment grew from 40.6 million US dollars in 2017 to 190.2 million US dollars by 2021. This trend suggests that the reported equity figures understate the company's net worth when deferred tax obligations are excluded.
Net Income Variance: Adjusted net income generally exceeded reported net income from 2017 through 2020, suggesting that the removal of deferred tax expenses improved the reported bottom line. The most significant positive adjustment occurred in 2018, with an increase of approximately 24.6 million US dollars. However, this trend shifted in 2021, where adjusted net income was slightly lower than reported net income, indicating a reversal in the impact of tax adjustments for that specific fiscal year.
Overall Growth Trajectory: Beyond the tax adjustments, a strong upward trajectory is evident. Reported total assets grew from approximately 2 billion US dollars in 2017 to nearly 4.9 billion US dollars in 2021. Similarly, reported stockholders' equity increased nearly fourfold over the same period, rising from 559.6 million US dollars to 2.2 billion US dollars, demonstrating robust capital accumulation.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Generac Holdings Inc., Financial Ratios: Reported vs. Adjusted

Generac Holdings Inc., adjusted financial ratios

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net Profit Margin
Reported net profit margin	14.73%	14.11%	11.43%	11.77%	9.53%
Adjusted net profit margin	14.70%	14.93%	12.32%	12.99%	10.67%
Total Asset Turnover
Reported total asset turnover	0.77	0.77	0.83	0.83	0.83
Adjusted total asset turnover	0.77	0.77	0.83	0.83	0.83
Financial Leverage
Reported financial leverage	2.20	2.33	2.58	3.19	3.61
Adjusted financial leverage	2.02	2.15	2.37	2.92	3.36
Return on Equity (ROE)
Reported ROE	24.87%	25.22%	24.41%	31.33%	28.48%
Adjusted ROE	22.85%	24.66%	24.12%	31.61%	29.72%
Return on Assets (ROA)
Reported ROA	11.29%	10.84%	9.45%	9.82%	7.89%
Adjusted ROA	11.30%	11.47%	10.20%	10.83%	8.84%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

An analysis of the financial ratios between 2017 and 2021 reveals a general improvement in profitability and a strategic reduction in financial risk, with the removal of deferred taxes providing a clearer view of underlying operational performance.

Profitability Margins: Reported net profit margins demonstrate a steady upward trend, increasing from 9.53% in 2017 to 14.73% in 2021. Adjusted margins, which exclude the impact of deferred taxes, were consistently higher than reported margins from 2017 through 2020. By 2021, the convergence of reported (14.73%) and adjusted (14.70%) margins suggests that the impact of deferred taxes on net profitability has become negligible.
Asset Efficiency: Total asset turnover remained stable at 0.83 from 2017 to 2019 before declining to 0.77 in 2020 and 2021. There is no variance between reported and adjusted total asset turnover ratios across the entire period, indicating that deferred tax adjustments do not influence the measurement of asset utilization efficiency.
Financial Leverage: A significant downward trend in financial leverage is observed, falling from a reported 3.61 in 2017 to 2.20 in 2021. Adjusted financial leverage is consistently lower than reported leverage throughout the period, suggesting that deferred tax liabilities inflate the reported leverage ratios. The reduction in both metrics indicates a systematic deleveraging of the balance sheet.
Return on Assets (ROA): ROA shows a positive trajectory, with reported values rising from 7.89% in 2017 to 11.29% in 2021. Adjusted ROA remained higher than reported ROA for most of the period, peaking at 11.47% in 2020, which reflects a stronger operational return when deferred tax distortions are removed.
Return on Equity (ROE): ROE exhibited a peak in 2018 at 31.33% (reported) and 31.61% (adjusted) before declining and stabilizing between 24% and 25% in subsequent years. Notably, while adjusted ROE was higher than reported ROE in 2017 and 2018, it became lower than reported ROE from 2019 onward, reaching 22.85% compared to 24.87% in 2021.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Generac Holdings Inc.	550,494)	350,576)	252,007)	238,257)	159,386)
Net sales	3,737,184)	2,485,200)	2,204,336)	2,023,464)	1,672,445)
Profitability Ratio
Net profit margin¹	14.73%	14.11%	11.43%	11.77%	9.53%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Generac Holdings Inc.	549,421)	371,074)	271,527)	262,871)	178,372)
Net sales	3,737,184)	2,485,200)	2,204,336)	2,023,464)	1,672,445)
Profitability Ratio
Adjusted net profit margin²	14.70%	14.93%	12.32%	12.99%	10.67%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Net profit margin = 100 × Net income attributable to Generac Holdings Inc. ÷ Net sales
= 100 × 550,494 ÷ 3,737,184 = 14.73%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Generac Holdings Inc. ÷ Net sales
= 100 × 549,421 ÷ 3,737,184 = 14.70%

A sustained upward trajectory in overall profitability is observed from 2017 through 2021. Both reported and adjusted net income figures demonstrate consistent growth, with reported net income increasing from US$159.4 million in 2017 to US$550.5 million in 2021, while adjusted net income rose from US$178.4 million to US$549.4 million over the same period.

Net Profit Margin Trends: Profitability margins exhibited an overall expansion, though the growth was not entirely linear. The reported net profit margin grew from 9.53% in 2017 to 14.73% in 2021. A slight contraction is noted in 2019, where the reported margin decreased to 11.43% from 11.77% in 2018, prior to a significant acceleration in 2020 and 2021.
Adjusted Net Profit Margin Analysis: The adjusted net profit margin followed a similar pattern to the reported margin, starting at 10.67% in 2017 and peaking at 14.93% in 2020 before settling at 14.70% in 2021. The 2019 dip to 12.32% mirrors the trend seen in reported figures, indicating systemic factors affecting margins during that fiscal year rather than isolated accounting adjustments.
Convergence of Reported and Adjusted Metrics: A notable divergence between reported and adjusted profit margins existed from 2017 to 2020, with adjusted margins consistently remaining higher than reported margins. This indicates that non-recurring items or specific adjustments typically had a negative impact on reported earnings. However, by 2021, these two metrics converged, with the reported margin (14.73%) and adjusted margin (14.70%) reaching near-parity, suggesting a minimal variance between adjusted and reported performance in the final year of the period.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net sales	3,737,184)	2,485,200)	2,204,336)	2,023,464)	1,672,445)
Total assets	4,877,780)	3,235,423)	2,665,669)	2,426,314)	2,019,964)
Activity Ratio
Total asset turnover¹	0.77	0.77	0.83	0.83	0.83
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales	3,737,184)	2,485,200)	2,204,336)	2,023,464)	1,672,445)
Adjusted total assets	4,862,040)	3,233,926)	2,662,736)	2,426,151)	2,016,726)
Activity Ratio
Adjusted total asset turnover²	0.77	0.77	0.83	0.83	0.83

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 3,737,184 ÷ 4,877,780 = 0.77

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 3,737,184 ÷ 4,862,040 = 0.77

The financial trajectory from 2017 through 2021 is characterized by a substantial expansion of the total asset base accompanied by a subsequent decline in asset efficiency. Total assets grew consistently over the five-year period, more than doubling in value by the end of the analyzed timeframe.

Asset Base Expansion: Reported total assets increased from 2,019,964 thousand US dollars in 2017 to 4,877,780 thousand US dollars in 2021. The most significant growth occurred between 2020 and 2021, where assets increased by approximately 51% within a single fiscal year.
Adjusted Total Asset Turnover Trend: The adjusted total asset turnover ratio remained stable at 0.83 from 2017 through 2019. A decline to 0.77 was observed in 2020, a level that remained constant through 2021. This downward shift indicates that revenue growth did not keep pace with the rapid expansion of the asset base during the final two years of the period.
Analysis of Asset Adjustments: A comparison between reported and adjusted total assets reveals negligible variances across all five years. Because the differences between reported and adjusted asset values are immaterial, the reported total asset turnover and adjusted total asset turnover ratios are identical for every year analyzed, indicating that adjustments had no impact on the perceived operational efficiency.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Total assets	4,877,780)	3,235,423)	2,665,669)	2,426,314)	2,019,964)
Stockholders’ equity attributable to Generac Holdings Inc.	2,213,774)	1,390,293)	1,032,382)	760,549)	559,552)
Solvency Ratio
Financial leverage¹	2.20	2.33	2.58	3.19	3.61
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	4,862,040)	3,233,926)	2,662,736)	2,426,151)	2,016,726)
Adjusted stockholders’ equity attributable to Generac Holdings Inc.	2,403,997)	1,504,565)	1,125,777)	831,686)	600,103)
Solvency Ratio
Adjusted financial leverage²	2.02	2.15	2.37	2.92	3.36

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= 4,877,780 ÷ 2,213,774 = 2.20

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity attributable to Generac Holdings Inc.
= 4,862,040 ÷ 2,403,997 = 2.02

A consistent deleveraging trend is evident between 2017 and 2021, characterized by a substantial increase in stockholders' equity relative to total assets. This shift indicates a strengthening of the capital structure and a reduced dependency on external financing over the five-year period.

Asset and Equity Expansion: Total assets grew from approximately 2.02 billion USD in 2017 to 4.88 billion USD in 2021. During the same period, reported stockholders' equity increased more aggressively, rising from 559.6 million USD to 2.21 billion USD. The growth rate of equity exceeded that of assets, which served as the primary driver for the reduction in financial leverage.
Impact of Adjusted Equity: Adjusted stockholders' equity remained consistently higher than reported equity throughout the analyzed period. The variance between these two figures expanded over time, increasing from approximately 40.6 million USD in 2017 to 190.2 million USD in 2021. These adjustments effectively increase the equity base used for leverage calculations.
Financial Leverage Trajectory: Reported financial leverage decreased steadily from 3.61 in 2017 to 2.20 in 2021. The adjusted financial leverage followed a similar downward trajectory, declining from 3.36 in 2017 to 2.02 in 2021. The adjusted ratio remained consistently lower than the reported ratio, implying that the adjusted perspective presents a more conservative risk profile and a stronger solvency position.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Generac Holdings Inc.	550,494)	350,576)	252,007)	238,257)	159,386)
Stockholders’ equity attributable to Generac Holdings Inc.	2,213,774)	1,390,293)	1,032,382)	760,549)	559,552)
Profitability Ratio
ROE¹	24.87%	25.22%	24.41%	31.33%	28.48%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Generac Holdings Inc.	549,421)	371,074)	271,527)	262,871)	178,372)
Adjusted stockholders’ equity attributable to Generac Holdings Inc.	2,403,997)	1,504,565)	1,125,777)	831,686)	600,103)
Profitability Ratio
Adjusted ROE²	22.85%	24.66%	24.12%	31.61%	29.72%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ ROE = 100 × Net income attributable to Generac Holdings Inc. ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= 100 × 550,494 ÷ 2,213,774 = 24.87%

² Adjusted ROE = 100 × Adjusted net income attributable to Generac Holdings Inc. ÷ Adjusted stockholders’ equity attributable to Generac Holdings Inc.
= 100 × 549,421 ÷ 2,403,997 = 22.85%

A sustained increase in both reported and adjusted net income is evident from 2017 through 2021. Reported net income grew from $159.4 million to $550.5 million, representing a significant expansion in absolute profitability over the five-year period.

Earnings Growth and Convergence: Both reported and adjusted net income figures exhibited continuous year-over-year growth. While adjusted net income was consistently higher than reported net income between 2017 and 2020, the two metrics converged in 2021, with reported net income ($550.5 million) slightly exceeding adjusted net income ($549.4 million).
Equity Expansion: Stockholders' equity experienced substantial growth, with reported equity increasing from $559.6 million in 2017 to $2,213.8 million in 2021. Adjusted equity followed a similar upward trajectory, increasing from $600.1 million to $2,404.0 million over the same period, indicating a significant accumulation of capital.
Return on Equity (ROE) Trends: ROE peaked in 2018, with reported ROE reaching 31.33% and adjusted ROE reaching 31.61%. Following this peak, both metrics underwent a correction. Reported ROE stabilized between 24% and 25% from 2019 to 2021, while adjusted ROE showed a more pronounced downward trend, ending at 22.85% in 2021. This decline in ROE, despite rising net income, indicates that the growth in the equity base outpaced the growth in earnings.
Comparative Analysis of Adjusted vs. Reported Metrics: A shift in the relationship between reported and adjusted ROE is observed. In 2017 and 2018, adjusted ROE was higher than reported ROE. However, from 2019 onward, reported ROE remained consistently higher than adjusted ROE, with the gap widening by 2021 to 2.02 percentage points.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Generac Holdings Inc.	550,494)	350,576)	252,007)	238,257)	159,386)
Total assets	4,877,780)	3,235,423)	2,665,669)	2,426,314)	2,019,964)
Profitability Ratio
ROA¹	11.29%	10.84%	9.45%	9.82%	7.89%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Generac Holdings Inc.	549,421)	371,074)	271,527)	262,871)	178,372)
Adjusted total assets	4,862,040)	3,233,926)	2,662,736)	2,426,151)	2,016,726)
Profitability Ratio
Adjusted ROA²	11.30%	11.47%	10.20%	10.83%	8.84%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ ROA = 100 × Net income attributable to Generac Holdings Inc. ÷ Total assets
= 100 × 550,494 ÷ 4,877,780 = 11.29%

² Adjusted ROA = 100 × Adjusted net income attributable to Generac Holdings Inc. ÷ Adjusted total assets
= 100 × 549,421 ÷ 4,862,040 = 11.30%

A consistent upward trajectory in both profitability and asset accumulation is evident from 2017 through 2021. Net income, both reported and adjusted, demonstrates significant growth, while total assets have expanded substantially, indicating an aggressive scaling of the operational base.

Net Income Trends: Reported net income grew from 159,386 thousand US dollars in 2017 to 550,494 thousand US dollars in 2021. Adjusted net income followed a similar pattern, starting at 178,372 thousand US dollars and reaching 549,421 thousand US dollars by the end of the period. The gap between reported and adjusted figures was most pronounced between 2017 and 2020, narrowing significantly in 2021, which suggests a convergence of operational and reported performance.
Asset Expansion: Total assets experienced steady growth, increasing from 2,019,964 thousand US dollars in 2017 to 4,877,780 thousand US dollars in 2021. The adjusted total assets remained closely aligned with the reported figures throughout the five-year period, indicating that the adjustments made to the asset base were minimal and did not materially alter the overall asset profile.
Return on Assets (ROA) Analysis: The Adjusted ROA demonstrates an overall improvement in asset efficiency, rising from 8.84% in 2017 to 11.30% in 2021. A slight contraction was noted in 2019, where the Adjusted ROA dipped to 10.20% from the previous year's 10.83%, before rebounding to a peak of 11.47% in 2020. The Adjusted ROA consistently exceeded the Reported ROA from 2017 to 2020, though both metrics converged in 2021 at approximately 11.30% and 11.29%, respectively.

The data indicates that the growth in net income outpaced the growth in total assets over the long term, leading to an overall increase in the return on assets. The close alignment of reported and adjusted ROA in the final year suggests that non-recurring items or adjustments had a negligible impact on the efficiency ratio by 2021.

AI Ask an analyst for more