GENERAC HOLDINGS INC. [GNRC] Filings

10-Q 1 gnrc20220930_10q.htm FORM 10-Q gnrc20220930_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2022

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File Number 001-34627

GENERAC HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	20-5654756
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

S45 W29290 Hwy 59, Waukesha, WI	53189
(Address of principal executive offices)	(Zip Code)

(262) 544-4811

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	GNRC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of November 3, 2022, there were 63,356,402 shares of registrant’s common stock outstanding.

Table of Contents

GENERAC HOLDINGS INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021	2

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021	3

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

	Signatures	32

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Generac Holdings Inc.

Condensed Consolidated Balance Sheets

(U.S. Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

	*September 30,*			*December 31,*
	*2022*			*2021*
Assets
Current assets:
Cash and cash equivalents	$	229,911		$	147,339
Accounts receivable, less allowance for credit losses		542,528			546,466
Inventories		1,424,691			1,089,705
Prepaid expenses and other current assets		116,139			64,954
Total current assets		2,313,269			1,848,464

Property and equipment, net		450,133			440,852

Customer lists, net		205,016			238,722
Patents and technology, net		455,845			492,473
Other intangible assets, net		44,207			66,436
Tradenames, net		228,170			243,531
Goodwill		1,359,588			1,409,674
Deferred income taxes		16,273			15,740
Operating lease and other assets		173,792			121,888
Total assets	$	5,246,293		$	4,877,780

Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	64,588		$	72,035
Accounts payable		523,552			674,208
Accrued wages and employee benefits		54,430			72,060
Accrued product warranty		100,451			59,052
Other accrued liabilities		354,053			272,622
Current portion of long-term borrowings and finance lease obligations		8,056			5,930
Total current liabilities		1,105,130			1,155,907

Long-term borrowings and finance lease obligations		1,282,856			902,091
Deferred income taxes		131,978			205,964
Operating lease and other long-term liabilities		319,788			341,681
Total liabilities		2,839,752			2,605,643

Redeemable noncontrolling interests		86,936			58,050

Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 72,640,001 and 72,386,017 shares issued at September 30, 2022 and December 31, 2021, respectively		728			725
Additional paid-in capital		976,001			952,939
Treasury stock, at cost		(599,304	)		(448,976	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		2,263,627			1,965,957
Accumulated other comprehensive loss		(120,406	)		(54,755	)
Stockholders’ equity attributable to Generac Holdings Inc.		2,318,530			2,213,774
Noncontrolling interests		1,075			313
Total stockholders' equity		2,319,605			2,214,087
Total liabilities and stockholders’ equity	$	5,246,293		$	4,877,780

See notes to condensed consolidated financial statements.

Table of Contents

Generac Holdings Inc.

Condensed Consolidated Statements of Comprehensive Income

(U.S. Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*
	*2022*			*2021*			*2022*			*2021*

Net sales	$	1,088,258		$	942,698		$	3,515,505		$	2,670,113
Costs of goods sold		727,154			606,704			2,336,668			1,672,570
Gross profit		361,104			335,994			1,178,837			997,543

Operating expenses:
Selling and service		170,381			82,242			388,690			229,443
Research and development		39,985			27,165			121,328			74,897
General and administrative		37,464			40,802			132,036			115,311
Amortization of intangibles		25,751			12,206			77,681			32,237
Total operating expenses		273,581			162,415			719,735			451,888
Income from operations		87,523			173,579			459,102			545,655

Other (expense) income:
Interest expense		(15,514	)		(7,980	)		(35,303	)		(23,424	)
Investment income		451			165			620			1,012
Loss on extinguishment of debt		–			–			(3,743	)		(831	)
Other, net		(420	)		(400	)		331			2,536
Total other expense, net		(15,483	)		(8,215	)		(38,095	)		(20,707	)

Income before provision for income taxes		72,040			165,364			421,007			524,948
Provision for income taxes		11,594			32,611			86,028			114,341
Net income		60,446			132,753			334,979			410,607
Net income attributable to noncontrolling interests		2,176			1,183			6,492			3,008
Net income attributable to Generac Holdings Inc.	$	58,270		$	131,570		$	328,487		$	407,599

Net income attributable to Generac Holdings Inc. per common share - basic:	$	0.84		$	1.98		$	4.69		$	6.42
Weighted average common shares outstanding - basic:		63,249,881			62,690,437			63,480,161			62,583,957

Net income attributable to Generac Holdings Inc. per common share - diluted:	$	0.83		$	1.93		$	4.61		$	6.27
Weighted average common shares outstanding - diluted:		64,267,638			64,208,116			64,630,346			64,146,281

Comprehensive income attributable to Generac Holdings Inc.	$	21,683		$	113,727		$	264,912		$	386,789

See notes to condensed consolidated financial statements.

Table of Contents

Generac Holdings Inc.

Condensed Consolidated Statements of Stockholders' Equity

(U.S. Dollars in Thousands, Except Share Data)

(Unaudited)

	*Generac Holdings Inc.*
													*Excess Purchase Price*			*Retained*			*Accumulated*
					*Additional*								*Over*			*Earnings*			*Other*			*Total*
	*Common Stock*				*Paid-In*		*Treasury Stock*						*Predecessor*			*(Accumulated*			*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Deficit)*			*Income (Loss)*			*Equity*			*Interest*			*Total*
Balance at July 1, 2022		72,588,588	$	727	$	967,819		(8,755,451	)	$	(475,294	)	$	(202,116	)	$	2,210,582		$	(82,839	)	$	2,418,879		$	883		$	2,419,762
Unrealized gain on interest rate swaps, net of tax of $4,647		–		–		–		–			–			–			–			13,757			13,757			–			13,757
Foreign currency translation adjustment		–		–		–		–			–			–			–			(51,324	)		(51,324	)		(396	)		(51,720	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		51,413		1		1,321		–			–			–			–			–			1,322			–			1,322
Net share settlement of restricted stock awards		–		–		–		(455	)		(110	)		–			–			–			(110	)		–			(110	)
Stock repurchases		–		–		–		(536,633	)		(123,900	)		–			–			–			(123,900	)		–			(123,900	)
Share-based compensation		–		–		6,861		–			–			–			–			–			6,861			–			6,861
Redemption value adjustment		–		–		–		–			–			–			(5,225	)		–			(5,225	)		–			(5,225	)
Net income		–		–		–		–			–			–			58,270			–			58,270			588			58,858

Balance at September 30, 2022		72,640,001	$	728	$	976,001		(9,292,539	)	$	(599,304	)	$	(202,116	)	$	2,263,627		$	(120,406	)	$	2,318,530		$	1,075		$	2,319,605

	*Generac Holdings Inc.*
														*Excess Purchase Price*			*Retained*			*Accumulated*
					*Additional*									*Over*			*Earnings*			*Other*			*Total*
	*Common Stock*				*Paid-In*			*Treasury Stock*						*Predecessor*			*(Accumulated*			*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*		*Amount*		*Capital*			*Shares*			*Amount*			*Basis*			*Deficit)*			*Income (Loss)*			*Equity*			*Interest*			*Total*
Balance at January 1, 2022		72,386,017	$	725	$	952,939			(8,667,031	)	$	(448,976	)	$	(202,116	)	$	1,965,957		$	(54,755	)	$	2,213,774		$	313		$	2,214,087
Unrealized gain on interest rate swaps, net of tax of $13,381		–		–		–			–			–			–			–			39,614			39,614			–			39,614
Foreign currency translation adjustment		–		–		–			–			–			–			–			(105,265	)		(105,265	)		(470	)		(105,735	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		253,984		3		(361	)		–			–			–			–			–			(358	)		–			(358	)
Net share settlement of restricted stock awards		–		–		–			(88,875	)		(26,428	)		–			–			–			(26,428	)		–			(26,428	)
Stock repurchases		–		–		–			(536,633	)		(123,900	)		–			–			–			(123,900	)		–			(123,900	)
Share-based compensation		–		–		23,423			–			–			–			–			–			23,423			–			23,423
Redemption value adjustment		–		–		–			–			–			–			(30,817	)		–			(30,817	)		–			(30,817	)
Net income		–		–		–			–			–			–			328,487			–			328,487			1,232			329,719

Balance at September 30, 2022		72,640,001	$	728	$	976,001			(9,292,539	)	$	(599,304	)	$	(202,116	)	$	2,263,627		$	(120,406	)	$	2,318,530		$	1,075		$	2,319,605

	*Generac Holdings Inc.*
													*Excess Purchase Price*			*Retained*			*Accumulated*
					*Additional*								*Over*			*Earnings*			*Other*			*Total*
	*Common Stock*				*Paid-In*		*Treasury Stock*						*Predecessor*			*(Accumulated*			*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Deficit)*			*Income (Loss)*			*Equity*			*Interest*			*Total*
Balance at July 1, 2021		72,252,980	$	723	$	542,893		(9,252,097	)	$	(358,481	)	$	(202,116	)	$	1,710,464		$	(37,583	)	$	1,655,900		$	38		$	1,655,938
Unrealized gain on interest rate swaps, net of tax of $993		–		–		–		–			–			–			–			2,941			2,941			–			2,941
Foreign currency translation adjustment		–		–		–		–			–			–			–			(20,899	)		(20,899	)		(8	)		(20,907	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		52,085		1		2,486		–			–			–			–			–			2,487			–			2,487
Common stock issued for business combination		30,640		–		12,000		–			–			–			–			–			12,000			–			12,000
Net share settlement of restricted stock awards		–		–		–		(397	)		(153	)		–			–			–			(153	)		–			(153	)
Share-based compensation		–		–		5,783		–			–			–			–			–			5,783			–			5,783
Redemption value adjustment		–		–		–		–			–			–			(7,557	)		–			(7,557	)		–			(7,557	)
Net income		–		–		–		–			–			–			131,570			–			131,570			175			131,745

Balance at September 30, 2021		72,335,705	$	724	$	563,162		(9,252,494	)	$	(358,634	)	$	(202,116	)	$	1,834,477		$	(55,541	)	$	1,782,072		$	205		$	1,782,277

	*Generac Holdings Inc.*
													*Excess Purchase Price*			*Retained*			*Accumulated*
					*Additional*								*Over*			*Earnings*			*Other*			*Total*
	*Common Stock*				*Paid-In*		*Treasury Stock*						*Predecessor*			*(Accumulated*			*Comprehensive*			*Stockholders'*			*Noncontrolling*
	*Shares*		*Amount*		*Capital*		*Shares*			*Amount*			*Basis*			*Deficit)*			*Income (Loss)*			*Equity*			*Interest*			*Total*
Balance at January 1, 2021		72,024,329	$	721	$	525,541		(9,173,731	)	$	(332,164	)	$	(202,116	)	$	1,432,565		$	(34,254	)	$	1,390,293		$	(89	)	$	1,390,204
Unrealized gain on interest rate swaps, net of tax of $5,128		–		–		–		–			–			–			–			15,184			15,184			–			15,184
Foreign currency translation adjustment		–		–		–		–			–			–			–			(36,471	)		(36,471	)		(13	)		(36,484	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		280,736		3		7,417		–			–			–			–			–			7,420			–			7,420
Common stock issued for business combination		30,640		–		12,000		–			–			–			–			–			12,000			–			12,000
Net share settlement of restricted stock awards		–		–		–		(78,763	)		(26,470	)		–			–			–			(26,470	)		–			(26,470	)
Share-based compensation		–		–		18,204		–			–			–			–			–			18,204			–			18,204
Redemption value adjustment		–		–		–		–			–			–			(5,687	)		–			(5,687	)		–			(5,687	)
Net income		–		–		–		–			–			–			407,599			–			407,599			307			407,906

Balance at September 30, 2021		72,335,705	$	724	$	563,162		(9,252,494	)	$	(358,634	)	$	(202,116	)	$	1,834,477		$	(55,541	)	$	1,782,072		$	205		$	1,782,277

See notes to condensed consolidated financial statements.

Table of Contents

Generac Holdings Inc.

Condensed Consolidated Statements of Cash Flows

(U.S. Dollars in Thousands)

(Unaudited)

	*Nine Months Ended September 30,*
	*2022*			*2021*
Operating activities
Net income	$	334,979		$	410,607
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		39,043			30,445
Amortization of intangible assets		77,681			32,237
Amortization of original issue discount and deferred financing costs		2,261			1,941
Loss on extinguishment of debt		3,743			831
Deferred income taxes		(83,272	)		8,210
Share-based compensation expense		23,423			18,204
Gain on disposal of assets		(555	)		(4,018	)
Other noncash (gains) charges		7,037			(12	)
Net changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(20,810	)		(116,768	)
Inventories		(353,618	)		(322,954	)
Other assets		(7,033	)		(6,874	)
Accounts payable		(136,289	)		269,951
Accrued wages and employee benefits		(17,418	)		4,497
Other accrued liabilities		105,544			49,987
Excess tax benefits from equity awards		(17,068	)		(26,880	)
Net cash (used in) provided by operating activities		(42,352	)		349,404

Investing activities
Proceeds from sale of property and equipment		2,049			182
Proceeds from sale of investment		1,308			4,968
Proceeds from beneficial interests in securitization transactions		2,745			2,240
Contribution to equity method investment		(14,930	)		(781	)
Expenditures for property and equipment		(64,833	)		(87,456	)
Acquisition of business, net of cash acquired		(11,421	)		(465,926	)
Net cash used in investing activities		(85,082	)		(546,773	)

Financing activities
Proceeds from short-term borrowings		237,182			127,816
Proceeds from long-term borrowings		935,614			50,000
Repayments of short-term borrowings		(239,550	)		(105,206	)
Repayments of long-term borrowings and finance lease obligations		(540,481	)		(54,889	)
Stock repurchases		(123,900	)		–
Payment of contingent acquisition consideration		(16,135	)		(3,750	)
Payment of debt issuance costs		(10,330	)		(1,185	)
Purchase of additional ownership interest		(375	)		(27,164	)
Cash dividends paid to noncontrolling interest of subsidiary		(309	)		–
Taxes paid related to equity awards		(40,472	)		(49,569	)
Proceeds from exercise of stock options		13,627			30,502
Net cash provided by (used in) financing activities		214,871			(33,445	)

Effect of exchange rate changes on cash and cash equivalents		(4,865	)		(588	)

Net increase (decrease) in cash and cash equivalents		82,572			(231,402	)
Cash and cash equivalents at beginning of period		147,339			655,128
Cash and cash equivalents at end of period	$	229,911		$	423,726

See notes to condensed consolidated financial statements.

Table of Contents

Generac Holdings Inc.
Notes to Condensed Consolidated Financial Statements

(U.S. Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

1. Description of Business and Basis of Presentation

Founded in 1959, Generac Holdings Inc. (the Company) is a leading global designer and manufacturer of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products serving the residential, light commercial, and industrial markets. Generac’s power products and solutions are available globally through a broad network of independent dealers, distributors, retailers, e-commerce partners, wholesalers, and equipment rental companies, as well as sold direct to certain end user customers.

Over the years, the Company has executed a number of acquisitions that support its strategic plan (as discussed in Item 1 of the Annual Report on Form 10-K for the year ended December 31, 2021). A summary of acquisitions affecting the reporting periods presented include:

	●	In June 2021, the Company acquired Deep Sea Electronics Limited (Deep Sea), founded in 1975 and headquartered in Hunmanby, United Kingdom. Deep Sea is an industry leading designer and manufacturer of a diverse suite of flexible control solutions focused on the global power generation and transfer switch markets.
	●	In July 2021, the Company acquired Chilicon Power, LLC (Chilicon), a designer and provider of grid-interactive microinverter and monitoring solutions for the solar market. Based in Los Angeles, California, Chilicon's power inversion and monitoring system technologies maximize photovoltaic (solar power) system production, lower installer operational cost, and promote end-user satisfaction.
	●	In September 2021, the Company acquired Apricity Code Corporation (Apricity Code), an advanced engineering and product design company located in Bend, Oregon.
	●	In September 2021, the Company acquired Off Grid Energy Ltd (Off Grid Energy), a designer and manufacturer of industrial-grade mobile energy storage systems. Headquartered in Rugby, United Kingdom, Off Grid Energy offers a diverse range of energy storage solutions that provide cleaner and more flexible energy for industrial and mobile applications.
	●	In October 2021, the Company acquired Tank Utility, Inc. (Tank Utility). Headquartered in Boston, Massachusetts, Tank Utility is a provider of IoT propane tank monitoring that enables the optimization of propane fuel logistics.
	●	In December 2021, the Company acquired ecobee Inc. (ecobee), founded in 2007 and headquartered in Toronto, Canada. ecobee is a leader in sustainable home technology solutions including smart thermostats that deliver significant energy savings, security, and peace of mind.
	●	In June 2022, the Company acquired Electronic Environments Co. LLC and related subsidiaries (collectively EEC). Headquartered in Marlborough, Massachusetts, EEC is an industrial generator distributor as well as a provider of data center and telecom facility design, build, maintenance, and repair services.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in conformity with U.S. generally accepted accounting principles (GAAP). All intercompany amounts and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operation, and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2021.

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Summary of Accounting Policies

Goodwill and Other Indefinite-Lived Intangible Assets

The Company applies a fair value-based impairment test to the carrying value of goodwill and other indefinite-lived intangible assets on an annual basis (as of October 31) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. As disclosed in Note 2, "Significant Accounting Policies - Goodwill and Other Indefinite-Lived Intangible Assets," to the consolidated financial statements in Item 8 of its 2021 Annual Report on Form 10-K, the Company concluded there was no impairment in its goodwill and other indefinite-lived intangible assets as of October 31, 2021.

During the three months ended September 30, 2022, the Company identified a triggering event for its clean energy reporting unit requiring an interim impairment assessment to be performed due to the loss of a key customer as well as certain clean energy product warranty-related matters. Estimates and assumptions used when preparing the discounted cash flow analysis for purposes of the interim impairment test were based on updated projections that are subject to various risks and uncertainties, including forecasted revenues, expenses, and cash flows as well as the current discount rate based on the estimated weighted average cost of capital for the business.

Based on the interim impairment assessment as of September 30, 2022, the Company determined that the goodwill and indefinite-lived intangible assets ascribed to the clean energy reporting unit are not impaired. If management's estimates of future operating results change or if there are changes to other assumptions due to the economic environment, the estimate of the fair values may change significantly. Such change could result in impairment charges in future periods, which could have a significant impact on the Company's operating results and financial condition.

New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standard updates (ASUs) to the FASB Accounting Standards Codification (ASC). ASUs issued were assessed and have already been adopted in a prior period or determined to be either not applicable or are not expected to have a material impact on the Company’s consolidated financial statements.

2. Acquisitions

Fiscal 2022 Acquisitions

On June 30, 2022, the Company acquired Electronic Environments Co. LLC and related subsidiaries (collectively EEC). Headquartered in Marlborough, Massachusetts, EEC is an industrial generator distributor as well as a provider of data center and telecom facility design, build, maintenance, and repair services.

The accompanying condensed consolidated financial statements include the results of EEC from the date of acquisition through September 30, 2022. Pro forma and other financial information is not presented as the effects of the EEC acquisition are not material to the Company's results of operations or financial position prior to the acquisition date.

Fiscal 2021 Acquisitions

Acquisition of Deep Sea

On June 1, 2021, the Company acquired Deep Sea for a purchase price, net of cash acquired, of $420,700. Headquartered in Hunmanby, United Kingdom, Deep Sea is a designer and manufacturer of a diverse suite of flexible control solutions focused on the global power generation and transfer switch markets. The acquisition purchase price was funded solely through cash on hand.

The Company finalized the Deep Sea purchase price allocation during the second quarter of 2022 based on its estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. As a result, the Company recorded $437,874 of intangible assets, including $263,604 of goodwill recorded in the International segment, as of the acquisition date. The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of Deep Sea from the date of acquisition through September 30, 2022.

Acquisition of Chilicon

On July 2, 2021, the Company acquired Chilicon for a purchase price, net of cash acquired, of $61,129. Based in Los Angeles, California, Chilicon is a designer and provider of grid-interactive microinverter and monitoring solutions for the solar market. Chilicon's power inversion and monitoring system technologies maximize photovoltaic (solar power) system production, lower installer operational cost, and promote end-user satisfaction. Total consideration consisted of the following:

Cash paid at closing	$	11,821
Deferred cash payment (1)		6,000
Common stock issued at closing		12,000
Contingent consideration (2)		31,308
Total purchase price	$	61,129

(1)	Payable on the third business day after December 31, 2023.
(2)	Payable in common stock issued upon achievement of certain performance targets within 45 calendar days following the conclusion of the earnout period, December 31, 2025.

The Company finalized the Chilicon purchase price allocation during the second quarter of 2022 based on its estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. As a result, the Company recorded $70,174 of intangible assets, including $36,974 of goodwill recorded in the Domestic segment, as of the acquisition date. The goodwill ascribed to the Chilicon acquisition is not deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of Chilicon from the date of acquisition through September 30, 2022.

Acquisition of Off Grid Energy

On September 1, 2021, the Company acquired Off Grid Energy for a purchase price of $56,949, net of cash acquired and inclusive of the then estimated contingent consideration of $29,054 payable in cash based on earnout period performance. The contingent consideration was paid during the third quarter of 2022 in the amount of $16,135. Headquartered in Rugby, United Kingdom, Off Grid Energy is a designer and manufacturer of industrial-grade mobile energy storage systems. The acquisition purchase price was funded through cash on hand.

The Company finalized the Off Grid Energy purchase price allocation during the third quarter of 2022 based on its estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. As a result, the Company recorded $56,076 of intangible assets, including $21,531 of goodwill recorded in the International segment, as of the acquisition date. The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of Off Grid Energy from the date of acquisition through September 30, 2022.

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Acquisition of ecobee

On December 1, 2021, the Company acquired ecobee for a purchase price, net of cash acquired, of $735,632. Headquartered in Toronto, Canada, ecobee is a leader in sustainable home technology solutions including smart thermostats that deliver significant energy savings, security and peace of mind. The purchase price consisted of the following:

Cash paid at closing	$	225,458
Common stock issued at closing		420,774
Contingent consideration (1)		89,400
Total purchase price	$	735,632

(1)	To be paid in the form of common stock issued upon achievement of certain performance targets following the end of two earnout periods, one ended June 30, 2022, and one ending June 30, 2023.

The Company recorded its preliminary ecobee purchase price allocation during the fourth quarter of 2021, which has been updated subsequently based on its estimates of the fair value of the acquired assets and assumed liabilities at the time of each update. The updates did not result in material adjustments to the Company's preliminary estimates. As a result, the Company recorded $799,228 of intangible assets, including $241,328 of goodwill recorded in the Domestic segment, as of the acquisition date. A portion of the goodwill ascribed to this acquisition is deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of ecobee from the date of acquisition through September 30, 2022.

The allocation of the purchase price to identifiable assets and liabilities is based on the preliminary valuations performed to determine the fair value of the net assets as of the acquisition date. The measurement period for the valuation of net assets acquired ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but not to exceed 12 months following the acquisition date. As the Company finalizes valuations, adjustments in purchase price allocations may require a change in the amounts allocated to net assets acquired during the periods in which the adjustments are determined.

Other Acquisitions

On September 1, 2021, the Company acquired Apricity Code, an advanced engineering and product design company located in Bend, Oregon.

On October 1, 2021, the Company acquired Tank Utility, a provider of IoT propane tank monitoring that enables the optimization of propane fuel logistics.

The combined purchase price for these two acquisitions was $29,945, net of cash acquired, and was funded solely through cash on hand. The Company finalized its purchase price allocation during the third quarter of 2022 based upon the Company's estimates of the fair value of the acquired assets and assumed liabilities. The finalization did not result in material adjustments to the Company's preliminary estimates. The accompanying condensed consolidated financial statements include the results of these two acquired businesses since the dates of acquisition through September 30, 2022.

Pro forma financial information is not presented for the 2021 acquisitions as the effects of the acquisitions individually and in the aggregate are not material to the Company's results of operations or financial position prior to the acquisition dates.

Summary Purchase Price Allocations

The fair values assigned to certain assets acquired and liabilities assumed, as of the acquisition dates, are as follows for the 2021 acquisitions:

Deep Sea

ecobee