Analysis of Reportable Segments
Generac Holdings Inc. operates in 2 segments: Domestic and International.
Segment Profit Margin
Generac Holdings Inc., profit margin by reportable segment
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 25.14% | 26.97% | 24.60% | 24.60% | 22.42% |
| International | 11.52% | 5.14% | 5.51% | 8.09% | 7.19% |
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 segment profit margins reveals a distinct divergence in both the level of profitability and the stability of earnings between Domestic and International operations. The Domestic segment consistently serves as the primary driver of profitability, maintaining significantly higher margins than the International segment throughout the observed period.
- Domestic Segment Performance
- The Domestic segment exhibited a general upward trend in profit margins from 2017 through 2020, rising from 22.42% to a peak of 26.97%. A slight moderation occurred in 2021, with the margin declining to 25.14%. Despite this late-period contraction, the segment maintained a stable and robust margin profile, remaining above 22% for the entire five-year duration.
- International Segment Performance
- The International segment displayed considerably higher volatility and lower overall margins. After an initial increase to 8.09% in 2018, the margin experienced a two-year decline, reaching a low of 5.14% in 2020. This trend reversed sharply in 2021, with the profit margin ascending to 11.52%, marking the highest level of profitability for this segment within the analyzed timeframe.
- Comparative Margin Analysis
- A substantial margin gap persists between the two reportable segments. Even at its peak in 2021, the International segment's profit margin (11.52%) remained less than half of the Domestic segment's lowest recorded margin (22.42% in 2017). However, the International segment showed the most significant relative growth in the final year, while the Domestic segment reached a plateau of profitability.
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Segment Profit Margin: Domestic
Generac Holdings Inc.; Domestic; segment profit margin calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Adjusted EBITDA | 795,417) | 563,394) | 428,667) | 388,685) | 290,720) |
| Net sales | 3,164,050) | 2,088,808) | 1,742,898) | 1,580,325) | 1,296,578) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 25.14% | 26.97% | 24.60% | 24.60% | 22.42% |
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).
1 2021 Calculation
Segment profit margin = 100 × Adjusted EBITDA ÷ Net sales
= 100 × 795,417 ÷ 3,164,050 = 25.14%
The Domestic segment exhibited a consistent upward trajectory in both top-line revenue and operational earnings between 2017 and 2021. Net sales grew from approximately $1.30 billion to over $3.16 billion, while Adjusted EBITDA increased from $290.7 million to $795.4 million over the same five-year period.
- Revenue and EBITDA Growth
- A sustained increase in net sales is observed annually, with a significant acceleration occurring in 2021, where revenue grew by approximately 51% relative to 2020. Adjusted EBITDA followed a similar growth pattern, expanding consistently each year and peaking in 2021.
- Segment Profit Margin Trends
- The segment profit margin demonstrated a general expansionary trend from 2017 through 2020, rising from 22.42% to a peak of 26.97%. This suggests improved operational efficiency or pricing power during this window.
- Margin Compression in 2021
- Despite achieving record net sales and Adjusted EBITDA in 2021, the segment profit margin experienced a contraction, declining to 25.14% from the previous year's peak. This indicates that operating expenses or cost of goods sold grew at a faster rate than revenue during the period of most rapid expansion.
The overall financial performance indicates strong operational leverage through 2020, as profit margins expanded in tandem with revenue. The slight margin decline in 2021 suggests a period of transition or increased cost pressures accompanying the sharp increase in scale.
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Segment Profit Margin: International
Generac Holdings Inc.; International; segment profit margin calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Adjusted EBITDA | 66,008) | 20,379) | 25,448) | 35,867) | 27,010) |
| Net sales | 573,134) | 396,392) | 461,438) | 443,139) | 375,867) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 11.52% | 5.14% | 5.51% | 8.09% | 7.19% |
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).
1 2021 Calculation
Segment profit margin = 100 × Adjusted EBITDA ÷ Net sales
= 100 × 66,008 ÷ 573,134 = 11.52%
The International segment exhibits a period of fluctuating performance from 2017 through 2020, followed by a significant expansion in both scale and profitability in 2021.
- Net Sales Trends
- Net sales grew from US$ 375.9 million in 2017 to US$ 461.4 million in 2019. A contraction occurred in 2020, with sales declining to US$ 396.4 million, before a sharp recovery in 2021, where sales reached a five-year high of US$ 573.1 million.
- Segment Profit Margin Volatility
- Profit margins showed inconsistency during the initial four-year period, peaking at 8.09% in 2018 before declining consecutively to 5.51% in 2019 and 5.14% in 2020. This trend was reversed in 2021, as the margin expanded to 11.52%, more than doubling the profitability seen in the previous year.
- Adjusted EBITDA Performance
- Adjusted EBITDA followed the trajectory of the profit margins, declining from a 2018 high of US$ 35.9 million to a period low of US$ 20.4 million in 2020. A substantial surge occurred in 2021, with Adjusted EBITDA rising to US$ 66.0 million, representing a year-over-year increase of approximately 224%.
The divergence between the growth in net sales and the growth in Adjusted EBITDA in 2021 indicates significant operating leverage. While sales increased by approximately 44% between 2020 and 2021, the disproportionate growth in EBITDA suggests that the segment achieved greater cost efficiency or a more favorable product mix during this period.
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Segment Return on Assets (Segment ROA)
Generac Holdings Inc., ROA by reportable segment
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 21.26% | 21.18% | 20.19% | 20.80% | 18.10% |
| International | 5.81% | 3.54% | 4.69% | 6.43% | 6.53% |
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).
Analysis of the Segment Return on Assets (ROA) reveals a significant disparity in asset utilization efficiency between the Domestic and International segments from 2017 to 2021. While the Domestic segment demonstrates sustained growth and stability, the International segment exhibits higher volatility and a substantially lower return profile.
- Domestic Segment Performance
- The Domestic segment experienced a consistent upward trajectory in ROA over the five-year period. Starting at 18.10% in 2017, the ratio increased to 20.80% in 2018 and remained resiliently above the 20% threshold through 2021, ultimately reaching 21.26%. This trend indicates a high and improving capacity to generate earnings from its domestic asset base.
- International Segment Performance
- The International segment's ROA displayed a general downward trend for the majority of the analyzed timeframe. From an initial 6.53% in 2017, the return declined progressively to a period low of 3.54% in 2020. A moderate recovery was observed in 2021, with the ROA ascending to 5.81%, although it remained below 2017 levels.
- Comparative Asset Efficiency
- A substantial performance gap exists between the two segments. The Domestic segment consistently outperformed the International segment by a wide margin; specifically, the lowest recorded Domestic ROA (18.10%) was nearly three times higher than the International segment's peak performance (6.53%). This divergence underscores a concentrated reliance on the domestic market for efficient asset productivity.
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Segment ROA: Domestic
Generac Holdings Inc.; Domestic; segment ROA calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Adjusted EBITDA | 795,417) | 563,394) | 428,667) | 388,685) | 290,720) |
| Assets | 3,742,101) | 2,659,597) | 2,123,251) | 1,868,554) | 1,606,606) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 21.26% | 21.18% | 20.19% | 20.80% | 18.10% |
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).
1 2021 Calculation
Segment ROA = 100 × Adjusted EBITDA ÷ Assets
= 100 × 795,417 ÷ 3,742,101 = 21.26%
The Domestic segment demonstrates a period of sustained operational expansion and consistent asset utilization from 2017 through 2021. A strong correlation is observed between the growth of the asset base and the increase in earnings, indicating a scalable operational model that maintains efficiency during rapid growth.
- Profitability Growth
- Adjusted EBITDA exhibited a consistent upward trajectory, increasing from 290,720 thousand US dollars in 2017 to 795,417 thousand US dollars by 2021. The most significant acceleration occurred between 2020 and 2021, where earnings grew by approximately 41%, reflecting a substantial increase in the segment's cash flow generation capabilities.
- Asset Base Expansion
- The total assets employed by the segment grew steadily from 1,606,606 thousand US dollars in 2017 to 3,742,101 thousand US dollars in 2021. This growth indicates significant investment in infrastructure or working capital to support the expanding scale of domestic operations, with the most pronounced increase occurring in the final year of the period analyzed.
- Return on Assets (ROA) Performance
- Segment ROA remained remarkably stable despite the rapid expansion of both earnings and assets. After an initial increase from 18.10% in 2017 to 20.80% in 2018, the ratio fluctuated minimally, ending at 21.26% in 2021. This stability suggests that the segment successfully managed its asset growth, ensuring that new investments yielded returns proportional to the existing asset base.
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Segment ROA: International
Generac Holdings Inc.; International; segment ROA calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Adjusted EBITDA | 66,008) | 20,379) | 25,448) | 35,867) | 27,010) |
| Assets | 1,135,679) | 575,826) | 542,418) | 557,760) | 413,358) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 5.81% | 3.54% | 4.69% | 6.43% | 6.53% |
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).
1 2021 Calculation
Segment ROA = 100 × Adjusted EBITDA ÷ Assets
= 100 × 66,008 ÷ 1,135,679 = 5.81%
The International segment experienced a period of fluctuating profitability and asset expansion between 2017 and 2021. The financial trajectory is characterized by a multi-year decline in asset efficiency followed by a significant rebound in the final year.
- Segment ROA Performance
- A steady downward trend in Segment ROA is observed from 2017 to 2020, with the ratio declining from 6.53% to a period low of 3.54%. This contraction indicates a diminishing return on the assets deployed within the international segment over this four-year window.
- EBITDA and Asset Divergence
- Between 2018 and 2020, a negative correlation emerged between earnings and asset growth. While assets increased from US$ 557.8 million to US$ 575.8 million, Adjusted EBITDA declined from US$ 35.9 million to US$ 20.4 million. This divergence is the primary driver behind the compression of the Segment ROA during this interval.
- Analysis of the 2021 Recovery
- A sharp reversal in performance occurred in 2021, marked by a substantial increase in Adjusted EBITDA to US$ 66.0 million. Although the asset base nearly doubled to US$ 1.14 billion, the growth in earnings significantly outpaced the expansion of assets, resulting in a recovery of the Segment ROA to 5.81%.
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Segment Asset Turnover
Generac Holdings Inc., asset turnover by reportable segment
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 0.85 | 0.79 | 0.82 | 0.85 | 0.81 |
| International | 0.50 | 0.69 | 0.85 | 0.79 | 0.91 |
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 asset turnover ratios for the reportable segments from 2017 through 2021 reveal a divergence in operational efficiency, characterized by stability in domestic operations and a significant decline in international asset utilization.
- Domestic Segment Analysis
- The domestic segment maintained a relatively stable asset turnover ratio throughout the five-year period. The ratio fluctuated within a narrow range, starting at 0.81 in 2017, peaking at 0.85 in 2018, and dipping to a low of 0.79 in 2020. By the end of 2021, the ratio returned to 0.85, indicating a consistent ability to generate revenue relative to the asset base employed in domestic operations.
- International Segment Analysis
- The international segment experienced a pronounced downward trend in efficiency. Although it began the period with the highest turnover ratio of all segments at 0.91 in 2017, it ended 2021 at 0.50. While a temporary recovery to 0.85 was observed in 2019, the subsequent decline over the following two years suggests a substantial reduction in the productivity of international assets.
- Comparative Efficiency Trends
- A shift in relative performance is observable between the two segments. In 2017, the international segment was more efficient at utilizing assets to generate sales than the domestic segment. However, by 2021, this relationship inverted significantly, with the domestic segment's turnover ratio surpassing the international segment's ratio by 0.35 points. This suggests that asset growth or revenue stagnation in the international segment has outpaced the efficiency gains seen in domestic operations.
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Segment Asset Turnover: Domestic
Generac Holdings Inc.; Domestic; segment asset turnover calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net sales | 3,164,050) | 2,088,808) | 1,742,898) | 1,580,325) | 1,296,578) |
| Assets | 3,742,101) | 2,659,597) | 2,123,251) | 1,868,554) | 1,606,606) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.85 | 0.79 | 0.82 | 0.85 | 0.81 |
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).
1 2021 Calculation
Segment asset turnover = Net sales ÷ Assets
= 3,164,050 ÷ 3,742,101 = 0.85
The Domestic segment experienced substantial growth in both revenue and asset scale between 2017 and 2021, while maintaining a consistent level of asset utilization efficiency. The expansion of the asset base closely tracked the increase in net sales, suggesting a disciplined approach to scaling operations.
- Net Sales Trajectory
- Net sales demonstrated a continuous upward trend over the five-year period, rising from 1,296,578 thousand US dollars in 2017 to 3,164,050 thousand US dollars in 2021. The most significant growth occurred between 2020 and 2021, where sales increased by approximately 51.5%, indicating a sharp acceleration in market demand or pricing power during the final year of the analyzed period.
- Asset Base Expansion
- Total assets grew steadily from 1,606,606 thousand US dollars in 2017 to 3,742,101 thousand US dollars in 2021. The growth in assets mirrored the sales trajectory, with a notable increase of roughly 40.7% in the 2021 fiscal year. This parallel growth indicates that the increase in revenue was supported by a corresponding expansion in the company's resource base.
- Segment Asset Turnover Analysis
- The segment asset turnover ratio remained relatively stable, fluctuating within a narrow range between 0.79 and 0.85. After peaking at 0.85 in 2018, the ratio experienced a slight decline to a low of 0.79 in 2020. However, it recovered to 0.85 in 2021. This stability suggests that for every dollar invested in assets, the domestic segment consistently generated between 0.79 and 0.85 dollars in sales, regardless of the overall scale of the business.
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Segment Asset Turnover: International
Generac Holdings Inc.; International; segment asset turnover calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net sales | 573,134) | 396,392) | 461,438) | 443,139) | 375,867) |
| Assets | 1,135,679) | 575,826) | 542,418) | 557,760) | 413,358) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.50 | 0.69 | 0.85 | 0.79 | 0.91 |
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).
1 2021 Calculation
Segment asset turnover = Net sales ÷ Assets
= 573,134 ÷ 1,135,679 = 0.50
The International segment exhibits a divergent trend between revenue growth and asset utilization from 2017 to 2021. While net sales reached a five-year peak at the end of the period, the efficiency with which assets were deployed to generate those sales declined steadily.
- Net Sales Performance
- Revenue demonstrated an overall upward trajectory, increasing from 375.9 million in 2017 to 573.1 million in 2021. A temporary contraction occurred in 2020, where sales fell to 396.4 million, before a substantial recovery was realized in 2021.
- Asset Expansion
- The asset base grew significantly over the observed period, rising from 413.4 million in 2017 to 1.1 billion in 2021. The most pronounced increase occurred between 2020 and 2021, during which total assets nearly doubled, indicating significant capital investment or acquisition activity within the segment.
- Segment Asset Turnover Analysis
- A consistent downward trend in asset turnover is observed, with the ratio falling from 0.91 in 2017 to 0.50 in 2021. This indicates a reduction in asset productivity, as the expansion of the asset base consistently outpaced the growth in net sales. The most severe compression occurred in 2021, where the turnover ratio reached its lowest point, reflecting a misalignment between the rapid increase in assets and the corresponding growth in revenue.
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Segment Capital Expenditures to Depreciation
Generac Holdings Inc., capital expenditures to depreciation by reportable segment
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 1.51 | 0.98 | 0.78 | 1.07 | 0.77 |
| International | 0.37 | 0.65 | 1.68 | 0.79 | 0.29 |
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 capital expenditures to depreciation ratios for the reportable segments indicates diverging investment strategies between domestic and international operations from 2017 through 2021.
- Domestic Segment
- The domestic segment demonstrates a general upward trend in its capital investment relative to depreciation. Starting at 0.77 in 2017, the ratio fluctuated between 0.78 and 1.07 during the 2018-2020 period before experiencing a significant increase to 1.51 in 2021. This progression suggests a shift from asset maintenance toward aggressive capacity expansion or technological upgrades, as capital expenditures began to substantially exceed annual depreciation by the end of the observed period.
- International Segment
- The international segment exhibits high volatility with a distinct peak-and-decline pattern. The ratio rose sharply from 0.29 in 2017 to a peak of 1.68 in 2019, indicating a period of intensive capital investment. However, this trend reversed abruptly, with the ratio falling to 0.65 in 2020 and further declining to 0.37 by 2021. The current trajectory suggests a contraction in capital spending relative to the depreciation of existing international assets.
Comparatively, the investment focus shifted over the five-year period. While the international segment saw its highest relative investment in 2019, the domestic segment accelerated its investment pace toward 2021. By the conclusion of the period, the domestic segment became the primary driver of capital growth, while international investment fell back to levels near those recorded at the start of the analysis.
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Segment Capital Expenditures to Depreciation: Domestic
Generac Holdings Inc.; Domestic; segment capital expenditures to depreciation calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Capital expenditures | 100,672) | 51,867) | 36,007) | 38,242) | 29,258) |
| Depreciation and amortization | 66,675) | 53,020) | 46,145) | 35,586) | 37,962) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.51 | 0.98 | 0.78 | 1.07 | 0.77 |
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).
1 2021 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation and amortization
= 100,672 ÷ 66,675 = 1.51
The Domestic segment exhibited a significant acceleration in capital investment between 2017 and 2021, transitioning from a period of conservative replacement spending to a phase of aggressive expansion. While capital expenditures and depreciation remained relatively aligned for the first four years of the period, a substantial divergence occurred in 2021, indicating a strategic pivot toward increasing the asset base.
- Capital Expenditure Trends
- Investment in capital assets grew from 29.26 million US dollars in 2017 to 100.67 million US dollars in 2021. This trajectory was characterized by steady growth through 2020, followed by a sharp increase in 2021, where expenditures nearly doubled compared to the previous year.
- Depreciation and Amortization Patterns
- Depreciation and amortization expenses followed a generally upward trend, rising from 37.96 million US dollars in 2017 to 66.68 million US dollars in 2021. The modest decline observed in 2018 was followed by consistent annual increases, reflecting a growing pool of depreciable assets.
- Analysis of the Capital Expenditure to Depreciation Ratio
- The ratio fluctuated between 0.77 and 1.07 from 2017 to 2020, suggesting that capital spending was primarily focused on maintaining existing capacity or replacing worn-out assets. However, the ratio surged to 1.51 in 2021, signifying that the segment's investment in new capital assets significantly exceeded the depreciation of its existing asset base, which is a strong indicator of growth and capacity expansion.
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Segment Capital Expenditures to Depreciation: International
Generac Holdings Inc.; International; segment capital expenditures to depreciation calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Capital expenditures | 9,320) | 10,261) | 24,795) | 9,359) | 4,003) |
| Depreciation and amortization | 25,366) | 15,753) | 14,764) | 11,822) | 14,026) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 0.37 | 0.65 | 1.68 | 0.79 | 0.29 |
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).
1 2021 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation and amortization
= 9,320 ÷ 25,366 = 0.37
The International segment experienced a significant fluctuation in its capital investment strategy between 2017 and 2021, characterized by a period of aggressive asset expansion followed by a transition toward asset maintenance and increased depreciation.
- Capital Expenditure Trends
- Capital expenditures exhibited a steep upward trajectory from 2017 to 2019, rising from US$ 4,003 thousand to a peak of US$ 24,795 thousand. This expansionary phase was followed by a sharp correction in 2020, where spending fell to US$ 10,261 thousand, and remained relatively stable at US$ 9,320 thousand in 2021.
- Depreciation and Amortization Patterns
- Depreciation and amortization expenses remained relatively range-bound between 2017 and 2020, oscillating between US$ 11,822 thousand and US$ 15,753 thousand. A substantial increase was recorded in 2021, with expenses rising to US$ 25,366 thousand, which suggests that the heavy investments made in previous years began to weigh more heavily on the income statement through scheduled depreciation.
- Analysis of the Capital Expenditures to Depreciation Ratio
- The ratio followed a distinct bell-shaped curve, beginning at 0.29 in 2017 and peaking at 1.68 in 2019. The breach of the 1.0 threshold in 2019 indicates a period of growth where the segment invested in new productive assets at a rate significantly higher than the consumption of existing assets. Subsequently, the ratio declined to 0.65 in 2020 and further to 0.37 in 2021, signaling a shift toward a conservative capital allocation strategy where depreciation now substantially exceeds new capital outlays.
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Net sales
Generac Holdings Inc., net sales by reportable segment
US$ in thousands
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 3,164,050) | 2,088,808) | 1,742,898) | 1,580,325) | 1,296,578) |
| International | 573,134) | 396,392) | 461,438) | 443,139) | 375,867) |
| Total | 3,737,184) | 2,485,200) | 2,204,336) | 2,023,464) | 1,672,445) |
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).
Total net sales experienced a consistent upward trajectory from 2017 through 2021, growing from $1.67 billion to $3.74 billion. While growth remained steady between 2017 and 2020, a significant acceleration occurred in 2021, where total revenue increased by approximately 50% over the previous year.
- Domestic Segment Growth
- The domestic segment served as the primary driver of overall revenue expansion. Sales grew steadily from $1.297 billion in 2017 to $2.089 billion in 2020, followed by a substantial surge to $3.164 billion in 2021. This indicates a strong and accelerating demand within the domestic market, particularly in the final year of the analyzed period.
- International Segment Volatility
- The international segment exhibited more volatility compared to the domestic market. After an initial increase from $375.9 million in 2017 to a peak of $461.4 million in 2019, sales declined by approximately 14% in 2020 to $396.4 million. However, a strong recovery was observed in 2021, with net sales rising to $573.1 million.
- Revenue Composition and Concentration
- There is a noticeable shift in the revenue mix toward domestic operations. In 2017, domestic sales accounted for approximately 77.5% of total net sales. By 2021, this concentration increased to approximately 84.7%. This trend highlights an increasing reliance on the domestic market for total revenue generation as domestic growth outpaced international expansion.
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Adjusted EBITDA
Generac Holdings Inc., adjusted ebitda by reportable segment
US$ in thousands
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 795,417) | 563,394) | 428,667) | 388,685) | 290,720) |
| International | 66,008) | 20,379) | 25,448) | 35,867) | 27,010) |
| Total | 861,425) | 583,773) | 454,115) | 424,552) | 317,730) |
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).
Total Adjusted EBITDA exhibited a strong upward trajectory from 2017 through 2021, increasing from 317.7 million to 861.4 million. The growth pattern indicates a steady climb between 2017 and 2019, followed by an acceleration in growth during the 2020 and 2021 fiscal years.
- Domestic Segment Growth
- The Domestic segment showed consistent and substantial expansion, with Adjusted EBITDA rising from 290.7 million in 2017 to 795.4 million in 2021. This segment maintained a positive growth rate every year, with the most significant absolute increase occurring between 2020 and 2021.
- International Segment Performance
- The International segment experienced significant volatility during the analyzed period. While an initial increase was noted in 2018, the segment saw a decline in Adjusted EBITDA through 2019 and 2020, reaching a period low of 20.4 million. A sharp reversal occurred in 2021, with Adjusted EBITDA surging to 66.0 million, representing a substantial year-over-year increase.
- Segmental Contribution Analysis
- The overall financial performance is heavily weighted toward the Domestic segment. Throughout the period, the Domestic segment remained the primary driver of total Adjusted EBITDA, accounting for approximately 91% of the total in 2017 and increasing its share to approximately 92% by 2021.
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Assets
Generac Holdings Inc., assets by reportable segment
US$ in thousands
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 3,742,101) | 2,659,597) | 2,123,251) | 1,868,554) | 1,606,606) |
| International | 1,135,679) | 575,826) | 542,418) | 557,760) | 413,358) |
| Total | 4,877,780) | 3,235,423) | 2,665,669) | 2,426,314) | 2,019,964) |
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).
Total assets exhibited a consistent upward trajectory between 2017 and 2021, increasing from $2,019,964 thousand to $4,877,780 thousand. The most significant expansion occurred in the final year of the period, with total assets growing by approximately 50% from 2020 to 2021.
- Domestic Segment Asset Trends
- The domestic asset base experienced uninterrupted annual growth, rising from $1,606,606 thousand in 2017 to $3,742,101 thousand in 2021. Growth accelerated notably in the latter part of the period, particularly between 2020 and 2021, where assets increased by over $1 billion.
- International Segment Asset Trends
- International assets displayed higher volatility compared to the domestic segment. After an initial increase in 2018, a slight contraction was observed in 2019, followed by a period of recovery. A substantial surge occurred in 2021, with assets nearly doubling from $575,826 thousand in 2020 to $1,135,679 thousand.
- Segmental Asset Composition
- The overall asset distribution remained heavily concentrated in the domestic market throughout the five-year period. While the international segment saw significant absolute growth by 2021, the domestic segment continued to represent the primary driver of the total asset base expansion.
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Depreciation and amortization
Generac Holdings Inc., depreciation and amortization by reportable segment
US$ in thousands
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 66,675) | 53,020) | 46,145) | 35,586) | 37,962) |
| International | 25,366) | 15,753) | 14,764) | 11,822) | 14,026) |
| Total | 92,041) | 68,773) | 60,909) | 47,408) | 51,988) |
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).
Total depreciation and amortization expenses exhibited a general upward trajectory between 2017 and 2021, with the exception of a moderate decline in 2018. Aggregate expenses rose from 51,988 thousand dollars in 2017 to 92,041 thousand dollars by the end of 2021, reflecting an overall increase in the company's non-cash charges over the five-year period.
- Domestic Segment Analysis
- The domestic segment represents the primary driver of depreciation and amortization costs. Following a decrease to 35,586 thousand dollars in 2018, expenses increased consistently each subsequent year, reaching 66,675 thousand dollars by December 31, 2021. This steady growth suggests a continuous expansion of the domestic asset base or the introduction of new capital assets.
- International Segment Analysis
- International expenses remained relatively stable from 2017 through 2020, with values ranging between 11,822 thousand and 15,753 thousand dollars. A significant acceleration is observed in 2021, where expenses rose to 25,366 thousand dollars, indicating a substantial increase in international capital investment or the acquisition of new assets during that fiscal year.
- Aggregate Trend and Composition
- A correlated dip is observed across both segments in 2018, followed by a period of sustained growth. The Domestic segment consistently accounts for the majority of the total expenditure, although the International segment showed the most pronounced percentage increase in the final year of the period. The total expenses in 2021 represent a 77% increase compared to the 2017 baseline.
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Capital expenditures
Generac Holdings Inc., capital expenditures by reportable segment
US$ in thousands
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Domestic | 100,672) | 51,867) | 36,007) | 38,242) | 29,258) |
| International | 9,320) | 10,261) | 24,795) | 9,359) | 4,003) |
| Total | 109,992) | 62,128) | 60,802) | 47,601) | 33,261) |
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).
Total capital expenditures exhibited a strong upward trajectory from 2017 to 2021, increasing from 33,261 thousand US dollars to 109,992 thousand US dollars. This growth reflects a significant expansion in asset investment over the five-year period, with the most substantial acceleration occurring between 2020 and 2021.
- Domestic Segment Expenditure
- The domestic segment served as the primary driver of capital investment. Expenditures grew steadily from 29,258 thousand US dollars in 2017 to 51,867 thousand US dollars in 2020, before experiencing a sharp increase to 100,672 thousand US dollars in 2021. This final surge represents a nearly 94% increase in a single year, indicating a concentrated effort to expand domestic capacity or infrastructure.
- International Segment Expenditure
- Investment in the international segment followed a non-linear pattern. Spending rose from 4,003 thousand US dollars in 2017 to a peak of 24,795 thousand US dollars in 2019. However, this trend reversed sharply in 2020 and 2021, with expenditures returning to levels near 9,300 thousand US dollars, suggesting a period of aggressive international expansion followed by a correction or a shift in strategic priority.
- Comparative Segmental Analysis
- A clear shift in capital allocation is observed over the period. In 2019, international expenditures accounted for approximately 40.8% of the total capital spend. By 2021, the international share plummeted to approximately 8.5%, as the domestic segment became the overwhelming focus of the organization's investment strategy.
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