Generac Holdings Inc. (NYSE:GNRC)

The analysis of the financial ratios over the five-year period reveals several notable trends and shifts in the company's financial performance and structure.

Asset Turnover

Both reported and adjusted total asset turnover ratios remained relatively stable from 2017 through 2019 at approximately 0.82–0.83. However, there is a decline beginning in 2020, dropping to 0.77 and remaining steady through 2021, indicating a slight decrease in the efficiency with which the company utilizes its assets to generate revenue.

Liquidity

The reported current ratio exhibited an increasing trend from 2.1 in 2017 to a peak of 2.6 in 2020, before declining sharply to 1.6 in 2021. Adjusted current ratio values follow a similar pattern, rising from 2.3 in 2017 to 2.87 in 2020, then falling to 1.73 in 2021. This pattern suggests improving short-term liquidity up to 2020, followed by a significant reduction in 2021, which may signal increased current liabilities or reduced current assets relative to prior years.

Leverage Ratios

Reported debt to equity declined consistently from 1.66 in 2017 to 0.44 in 2021, with adjusted figures mirroring this downward trend from 1.32 to 0.40. Similarly, debt to capital ratios fell over the period, indicating a reduction in leverage and a potentially stronger equity position in the company's capital structure. Reported financial leverage decreased from 3.61 in 2017 to 2.2 in 2021, with adjusted financial leverage showing a corresponding decline from 2.81 to 1.82. These reductions collectively point to a more conservative use of debt financing over time.

Profitability

The net profit margin showed a positive trajectory throughout the period. Reported net profit margin increased from 9.53% in 2017 to 14.73% in 2021, and adjusted margins similarly rose from 13.33% to 15.73%. This improvement suggests enhanced efficiency or cost management contributing to higher profitability per sales dollar.

Return Measures

Reported return on equity (ROE) exhibited variability, peaking at 31.33% in 2018, then declining to around 24–25% in subsequent years. Adjusted ROE followed a similar downward pattern. Conversely, reported return on assets (ROA) steadily increased from 7.89% in 2017 to 11.29% in 2021, with adjusted ROA also rising from 10.92% to 12.13%. The rising ROA coupled with decreasing financial leverage indicates improved asset profitability without reliance on increased debt, while the falling ROE might reflect changes in capital structure or profit distribution.

The financial data over the periods ending December 31, 2017, through December 31, 2021, displays several notable trends in sales, asset base, and asset utilization for the analyzed company.

Net Sales

Net sales exhibited a consistent upward trajectory throughout the five-year period, increasing from approximately $1.67 billion in 2017 to $3.74 billion in 2021. This represents more than a doubling of revenue in this timeframe, highlighting strong growth in the company’s core operations.

Total Assets

Total assets also expanded markedly, rising from about $2.02 billion in 2017 to nearly $4.88 billion by the end of 2021. The asset base grew steadily year-over-year, reflecting significant investment or acquisition activities to support the increasing scale of operations.

Reported Total Asset Turnover

The reported total asset turnover ratio remained relatively stable at around 0.83 for the years 2017 through 2019, suggesting consistent efficiency in utilizing assets to generate sales during this initial period. However, a decline to 0.77 in both 2020 and 2021 indicates a slight decrease in asset turnover efficiency despite the rising sales and assets. This could suggest that the growth in assets outpaced the growth in sales in the latter years, potentially due to expanded asset investments not yet fully translated into proportional sales increases.

Adjusted Net Sales

The adjusted net sales figures mirror the trend seen in reported net sales, climbing steadily from around $1.69 billion in 2017 to approximately $3.76 billion in 2021. The adjustments result in slightly higher sales values than the reported figures but maintain the same growth pattern.

Adjusted Total Assets

Adjusted total assets also follow a similar trend to reported total assets, growing from about $2.07 billion in 2017 to nearly $4.87 billion in 2021. The adjusted figures consistently exceed the reported assets slightly, yet both show parallel growth trajectories.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio aligns closely with the reported ratio, holding steady at around 0.82-0.83 from 2017 to 2019 and then declining to 0.77 in the last two years. This consistency indicates that the adjustments in sales and assets do not materially affect interpretations regarding asset utilization efficiency trends.

Overall, the data indicates robust sales growth accompanied by significant asset expansion. While asset turnover ratios suggest consistent efficiency in the earlier years, the reduction in these ratios during the last two reported periods warrants attention to the potential diminishing returns on assets or a lag in sales realization relative to asset growth.

The company's current assets exhibited a consistent upward trend over the analyzed period, increasing from approximately $819 million at the end of 2017 to about $1.85 billion by the close of 2021. This growth reflects a substantial accumulation of short-term resources available within the normal operating cycle.

Current liabilities also presented an overall rising trajectory, starting at around $389 million in 2017 and reaching approximately $1.16 billion in 2021. Notably, there was a pronounced escalation between 2020 and 2021, where current liabilities nearly doubled, indicating a potentially greater short-term obligation load in the most recent period.

The reported current ratio, which measures liquidity by comparing current assets to current liabilities, fluctuated over these five years. It initially decreased slightly from 2.1 in 2017 to 2.0 in 2018, then increased to a peak of 2.6 in 2020, suggesting improved short-term financial health. However, in 2021, this ratio dropped sharply to 1.6, reflecting that current liabilities grew at a faster pace than current assets in that year, thus weakening liquidity from a reported perspective.

When adjusted figures are considered, adjusted current assets followed a pattern closely mirroring the reported assets, starting from approximately $823 million in 2017 and reaching nearly $1.86 billion by 2021. Similarly, adjusted current liabilities showed growth from about $358 million in 2017 to around $1.08 billion in 2021, with an especially notable increase in 2021.

The adjusted current ratio improved steadily from 2.3 in 2017 to a high of 2.87 in 2020, indicating strengthening liquidity under adjusted measures. Yet, akin to the reported ratio, it declined considerably to 1.73 in 2021. This sharp decline signals a contraction in short-term financial flexibility and a higher relative burden of current liabilities despite the adjustment.

In summary, the data portrays an expanding scale of operations, as evidenced by rising current assets and liabilities. Liquidity ratios improved moderately until 2020 but deteriorated significantly in 2021, highlighting a potential area of concern regarding the company's ability to meet short-term obligations. The consistent pattern across both reported and adjusted metrics reinforces the observation that the company experienced a marked decrease in liquidity in the latest fiscal year.

The financial data reveals several significant trends in the company's capital structure and leverage over the five-year period ending in 2021.

Total debt

The nominal total debt slightly decreased from 928,722 thousand US dollars in 2017 to 885,193 thousand US dollars in 2020, indicating a gradual reduction in gross liabilities. However, in 2021, total debt increased markedly to 980,056 thousand US dollars, reversing the prior declining trend.

Stockholders’ equity attributable to the company

Equity shows a strong upward trajectory, nearly quadrupling from 559,552 thousand US dollars in 2017 to 2,213,774 thousand US dollars in 2021. This suggests substantial growth in retained earnings and/or equity injections, reflecting an expanding shareholder base or accumulation of comprehensive income.

Reported debt to equity ratio

This ratio declined consistently from 1.66 in 2017 to 0.44 in 2021, indicating that debt levels have become increasingly small relative to equity. This trend implies a strengthening equity position relative to debt and a lowering of financial leverage.

Adjusted total debt

Adjusted debt figures mirror the pattern of total debt but at slightly higher levels throughout all years, reflecting possible inclusion of additional liabilities or off-balance-sheet obligations. It decreased from 972,646 thousand US dollars in 2017 to a low of 935,873 thousand US dollars in 2019, then rose somewhat to 1,083,975 thousand US dollars in 2021.

Adjusted total stockholders’ equity

Adjusted equity also ascends steadily, from 735,479 thousand US dollars in 2017 up to 2,680,245 thousand US dollars in 2021. This upward trend is consistent with the reported equity figures, further underscoring growth in the company’s net assets.

Adjusted debt to equity ratio

Similar to the reported ratio, the adjusted debt to equity ratio steadily decreases from 1.32 in 2017 to 0.40 in 2021. This confirms a trend toward reduced relative leverage when considering a broader measure of debt and equity.

Overall, the analysis highlights a significant strengthening of the company’s equity base, with leverage ratios markedly declining over the period. Although total and adjusted debt experienced modest fluctuations, increases in equity substantially outpaced liabilities, enhancing financial stability. The sharp growth in equity combined with decreasing debt-to-equity ratios suggests improved creditworthiness and potentially greater capacity for investment or borrowing flexibility.

The analysis of the financial data reveals notable trends in the debt and capital structure over the five-year period ending in 2021.

Total Debt

Total debt exhibits a general decline from 928.7 million US dollars at the end of 2017 to 885.2 million US dollars in 2020, followed by an increase to 980.1 million US dollars in 2021. This pattern suggests initial deleveraging or repayment of debt, with a subsequent rise potentially indicating new borrowing or refinancing activities towards the end of the period.

Total Capital

Total capital consistently grows each year, rising from 1.49 billion US dollars in 2017 to 3.19 billion US dollars in 2021. This substantial increase, particularly notable in the last two years, reflects a strengthening of the company’s financial base, possibly due to equity issuance, retained earnings growth, or asset appreciation.

Reported Debt to Capital Ratio

The reported debt to capital ratio steadily declines from 0.62 in 2017 to 0.31 in 2021. This ratio halving over five years indicates a marked improvement in financial leverage, with the company relying less on debt relative to its total capital. This trend suggests enhanced financial stability and reduced risk from a creditor standpoint.

Adjusted Total Debt

The adjusted total debt follows a similar trajectory to total debt, decreasing from 972.6 million US dollars in 2017 to 948.9 million US dollars in 2020, before increasing to 1.08 billion US dollars in 2021. The adjusted figures, consistently higher than reported debt, suggest additional liabilities or off-balance sheet items included in this adjustment.

Adjusted Total Capital

Adjusted total capital steadily increases from 1.71 billion US dollars in 2017 to 3.76 billion US dollars in 2021. The growth trend mirrors that of unadjusted total capital, supporting the view of a strengthening capital structure even when adjustments are considered.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio decreases from 0.57 in 2017 to 0.29 in 2021. This indicates a consistent reduction in leverage when adjustments are accounted for, slightly lower than the reported ratios, emphasizing improved solvency and a conservative capital position across the years analyzed.

Overall, the data suggests a strategic move by the company to solidify its capital base and reduce its debt reliance over the period in review, culminating in a healthier and more balanced financial structure by the end of 2021.

The annual financial data reveals several notable trends in the company's asset base, equity, and leverage ratios over the five-year period.

Total Assets

The total assets increased steadily from US$2,019,964 thousand in 2017 to US$4,877,780 thousand in 2021, showing consistent growth with a particularly sharp rise between 2020 and 2021. This indicates expanding operational scale and asset accumulation over time.

Stockholders’ Equity Attributable to Generac Holdings Inc.

Stockholders’ equity also displayed a robust upward trend, rising from US$559,552 thousand in 2017 to US$2,213,774 thousand in 2021. The growth in equity was substantial and accelerated in the later years, suggesting enhanced capital strength and retained earnings.

Reported Financial Leverage Ratio

The reported financial leverage ratio decreased consistently from 3.61 in 2017 to 2.20 in 2021. This declining trend points to a reduction in reliance on debt relative to equity, reflecting improved financial stability or deleveraging efforts.

Adjusted Total Assets

The adjusted total assets followed a similar trajectory to reported total assets, increasing from US$2,065,455 thousand in 2017 to US$4,874,065 thousand in 2021. This parallel movement supports the reliability of adjusted figures for analysis.

Adjusted Total Stockholders’ Equity

Adjusted equity rose markedly from US$735,479 thousand in 2017 to US$2,680,245 thousand in 2021, demonstrating an even stronger growth trend than reported equity figures. This suggests adjustments reflect a better capitalization scenario.

Adjusted Financial Leverage Ratio

Adjusted financial leverage decreased steadily from 2.81 in 2017 to 1.82 in 2021, mirroring the trend in reported leverage but at a generally lower ratio. This reinforces the observation of reducing dependency on external financing and enhanced equity backing.

Overall, the data evidences a period of solid financial growth characterized by asset expansion, strengthening equity positions, and lowering financial leverage. The progressive decrease in leverage ratios, both reported and adjusted, indicates improved solvency and potentially conservative capital management strategies over the five-year span.

The financial data reveals a consistent upward trend in the company’s profitability and sales over the five-year period from 2017 to 2021. Both net income attributable to the company and adjusted net income have shown substantial growth, with net income increasing from $159.4 million in 2017 to $550.5 million in 2021, and adjusted net income rising from $225.6 million to $591.3 million in the same period. This indicates improving operational efficiency or favorable market conditions contributing to enhanced earnings.

Net sales and adjusted net sales have also increased significantly, from approximately $1.67 billion to $3.74 billion and $1.69 billion to $3.76 billion respectively, over the five years. This demonstrates strong revenue growth, likely driven by expanded market share, product demand, or pricing power.

The net profit margin, calculated on a reported basis, improved steadily from 9.53% in 2017 to 14.73% in 2021, signaling increased profitability relative to sales. The adjusted net profit margin, which may exclude certain non-recurring or non-cash items, also rose from 13.33% to 15.73% during the same period. The margins show a pattern of steady improvement reflecting better cost management, operational leverage, or premium pricing capabilities.

Overall, the data indicates strong growth both in absolute terms and relative profitability. The increasing divergence between net income and adjusted net income suggests the company has managed to enhance its underlying earnings quality. Sales growth outpacing inflationary or market growth metrics could imply competitive advantages or successful business strategies. The consistent improvement in profit margins supports a positive outlook on the company’s efficiency and pricing structure.

Net Income

Increased nearly 3.5 times from 2017 to 2021, reflecting robust profitability gains.

Net Sales

More than doubled over five years, indicating strong revenue expansion.

Reported Net Profit Margin

Improved by over 5 percentage points, showcasing better profit retention from sales.

Adjusted Net Income

Grew steadily, outperforming reported net income, suggesting improved core earnings.

Adjusted Net Sales

Followed similar growth trajectory as reported net sales, confirming consistent revenue trends.

Adjusted Net Profit Margin

Higher margins than reported figures and steadily increasing, indicating efficiency in operations.

The financial data reveals notable growth in key financial metrics over the five-year period ending December 31, 2021. Net income attributable to the company demonstrated a consistent upward trajectory, increasing from $159,386 thousand in 2017 to $550,494 thousand in 2021. This represents a more than threefold increase, highlighting strong profitability gains.

Stockholders’ equity attributable to the company also expanded significantly, rising from $559,552 thousand in 2017 to $2,213,774 thousand in 2021. This increase indicates substantial growth in the company’s net assets and capital base over the period.

Despite the growth in net income and equity, the reported return on equity (ROE) fluctuated somewhat, peaking at 31.33% in 2018 before declining to 24.87% in 2021. This pattern suggests that while profitability increased in absolute terms, the efficiency in generating profits from equity employed slightly moderated after 2018.

Adjusted financial measures show a similar pattern. Adjusted net income grew steadily from $225,637 thousand in 2017 to $591,294 thousand in 2021, closely mirroring the trend in reported net income but at higher absolute values, indicating the impact of adjustments improving the profitability metric. Adjusted total stockholders’ equity also nearly quadrupled, increasing from $735,479 thousand in 2017 to $2,680,245 thousand in 2021, reflecting significant capital strength.

The adjusted ROE followed a downward trend, starting at 30.68% in 2017 and decreasing each year to 22.06% in 2021. This trend, consistent with the reported ROE, indicates a reduction in returns generated on equity despite rising net income and equity bases, suggesting increased equity relative to earnings.

Net Income and Equity Growth

Both reported and adjusted net income and equity figures increased substantially over the five-year period, indicating strong financial growth and capital accumulation.

Return on Equity

Despite absolute growth in net income and equity, both reported and adjusted ROE ratios declined after peaking in the earlier years, implying a reduced efficiency in profit generation relative to equity.

Adjusted vs. Reported Measures

Adjusted financial results consistently exceed reported figures, reflecting beneficial adjustments that enhance profitability and equity metrics.

The financial data indicates a positive trend in the company's profitability and asset base over the five-year period ending December 31, 2021. Both net income attributable to the company and adjusted net income have shown consistent growth, with net income increasing from $159,386 thousand in 2017 to $550,494 thousand in 2021, and adjusted net income rising from $225,637 thousand to $591,294 thousand over the same period.

Total assets and adjusted total assets also display a steady upward trajectory, reflecting expansion in the company's resource base. Total assets grew from approximately $2,019,964 thousand in 2017 to $4,877,780 thousand in 2021, while adjusted total assets moved similarly from $2,065,455 thousand to $4,874,065 thousand.

The return on assets (ROA), both reported and adjusted, exhibits an improving trend, which suggests enhanced asset utilization efficiency and stronger profitability. Reported ROA increased from 7.89% in 2017 to 11.29% in 2021, and adjusted ROA moved from 10.92% to 12.13% during the same period. This improvement in returns, alongside growth in net income, implies that the company has been able to generate higher earnings relative to its asset base.

Overall, the data reflects substantial growth in earnings and assets, accompanied by improving profitability ratios, signifying a period of financial strengthening and operational efficiency enhancement for the company.