Name: Generac Holdings Inc. (NYSE:GNRC) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Generac Holdings Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income	556,569)	347,218)	252,308)	241,220)	161,135)
Depreciation	42,155)	36,493)	32,265)	25,296)	23,127)
Amortization of intangible assets	49,886)	32,280)	28,644)	22,112)	28,861)
Amortization of original issue discount and deferred financing costs	2,589)	2,598)	4,712)	4,749)	3,516)
Loss on extinguishment of debt	831)	—)	926)	1,332)	—)
Loss on pension settlement	—)	—)	10,920)	—)	—)
Deferred income taxes	(2,096)	21,195)	18,733)	23,600)	21,439)
Share-based compensation expense	23,954)	20,882)	16,694)	14,563)	10,205)
Gain on disposal of assets	(4,393)	—)	—)	—)	—)
Other	206)	7,145)	1,086)	2,474)	410)
Accounts receivable	(131,861)	(55,976)	8,231)	(43,243)	(29,771)
Inventories	(470,991)	(77,983)	26,369)	(152,594)	(16,278)
Other assets	(819)	12,859)	(358)	(6,362)	(14,783)
Accounts payable	297,323)	66,040)	(69,404)	86,359)	42,788)
Accrued wages and employee benefits	5,814)	20,157)	(3,724)	12,626)	6,105)
Other accrued liabilities	73,798)	60,593)	(16,252)	16,972)	27,514)
Excess tax benefits from equity awards	(31,809)	(6,968)	(2,263)	(1,877)	(3,152)
Net changes in operating assets and liabilities, net of acquisitions	(258,545)	18,722)	(57,401)	(88,119)	12,423)
Adjustments to reconcile net income to net cash provided by operating activities	(145,413)	139,315)	56,579)	6,007)	99,981)
Net cash provided by operating activities	411,156)	486,533)	308,887)	247,227)	261,116)
Proceeds from sale of property and equipment	259)	179)	95)	214)	82)
Proceeds from sale of investment	4,968)	—)	—)	—)	—)
Proceeds from beneficial interest in securitization transactions	4,609)	2,651)	2,630)	3,933)	—)
Contribution to equity method investment	(3,660)	—)	—)	—)	—)
Expenditures for property and equipment	(109,992)	(62,128)	(60,802)	(47,601)	(33,261)
Acquisition of businesses, net of cash acquired	(713,471)	(64,797)	(112,001)	(65,440)	1,257)
Net cash used in investing activities	(817,287)	(124,095)	(170,078)	(108,894)	(31,922)
Proceeds from short-term borrowings	272,818)	257,593)	73,340)	53,965)	101,991)
Proceeds from long-term borrowings	150,088)	277)	1,660)	51,425)	3,069)
Repayments of short-term borrowings	(239,113)	(277,719)	(59,518)	(27,880)	(114,874)
Repayments of long-term borrowings and finance lease obligations	(108,556)	(4,758)	(53,049)	(101,827)	(117,475)
Stock repurchases	(125,992)	—)	—)	(25,656)	(30,012)
Payment of contingent acquisition consideration	(3,750)	(4,000)	(5,550)	—)	—)
Payment of debt issuance costs	(1,185)	—)	(1,473)	(1,702)	(3,901)
Purchase of additional ownership interest	(27,164)	—)	—)	—)	—)
Cash dividends paid to noncontrolling interest of subsidiary	—)	—)	(285)	(314)	—)
Taxes paid related to equity awards	(58,903)	(14,910)	(6,438)	(5,659)	(5,892)
Proceeds from the exercise of stock options	38,787)	13,089)	9,395)	5,614)	6,951)
Net cash used in financing activities	(102,970)	(30,428)	(41,918)	(52,034)	(160,143)
Effect of exchange rate changes on cash and cash equivalents	1,312)	235)	1,510)	(289)	2,149)
Net increase (decrease) in cash and cash equivalents	(507,789)	332,245)	98,401)	86,010)	71,200)
Cash and cash equivalents at beginning of period	655,128)	322,883)	224,482)	138,472)	67,272)
Cash and cash equivalents at end of period	147,339)	655,128)	322,883)	224,482)	138,472)

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).

Net income exhibited consistent growth from 2017 to 2021, rising from 161.1 million US dollars to 556.6 million US dollars. While net cash provided by operating activities generally trended upward, peaking at 486.5 million US dollars in 2020, there was a decline to 411.2 million US dollars in 2021 despite the increase in net income. This divergence suggests a significant increase in working capital requirements during the final year of the period.

Working Capital Management: A substantial increase in operating asset requirements is observed in 2021, specifically regarding inventories and accounts receivable. Inventory outflows reached 471.0 million US dollars and accounts receivable outflows reached 131.9 million US dollars in 2021. These were partially offset by a significant increase in accounts payable, which provided 297.3 million US dollars in cash flow, indicating an aggressive expansion of the balance sheet to support growth or manage supply chain constraints.
Investment and Capital Expenditure: Expenditures for property and equipment showed a steady upward trajectory, increasing from 33.3 million US dollars in 2017 to 109.9 million US dollars in 2021. The most notable shift occurred in 2021, where cash used for the acquisition of businesses spiked to 713.5 million US dollars, compared to 64.8 million US dollars in 2020. This represents a strategic pivot toward inorganic growth and significant capital deployment.
Financing and Liquidity Trends: Financing activities were characterized by a reliance on short-term borrowings to manage liquidity, with proceeds from such borrowings peaking at 272.8 million US dollars in 2021. Stock repurchases increased sharply in 2021 to 126.0 million US dollars. The combination of massive acquisition spending and increased shareholder returns led to a substantial decrease in the cash position, which fell from 655.1 million US dollars at the start of 2021 to 147.3 million US dollars by the end of the period.
Non-Cash Adjustments: Depreciation and amortization expenses grew steadily over the five-year period, reflecting the expanding asset base. Share-based compensation expense also trended upward, increasing from 10.2 million US dollars in 2017 to 24.0 million US dollars in 2021, acting as a consistent non-cash add-back to reconcile net income to operating cash flow.

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