10-Q

Table Of Contents

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 June 30, 2016
	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)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☑ No ☐

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

Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
		(Do not check if a smaller reporting company)

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 August 1, 2016, there were 65,864,979 shares of registrant’s common stock outstanding.

GENERAC HOLDINGS INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015	2
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 6.	Exhibits	27
	Signatures	28

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)

	June 30,			December 31,
	2016			2015
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	75,641		$	115,857
Accounts receivable, less allowance for doubtful accounts		243,087			182,185
Inventories		366,745			325,375
Prepaid expenses and other assets		13,125			8,600
Total current assets		698,598			632,017
Property and equipment, net		206,700			184,213
Customer lists, net		49,883			39,313
Patents, net		54,009			53,772
Other intangible assets, net		3,179			2,768
Tradenames, net		159,952			161,057
Goodwill		716,845			669,719
Deferred income taxes		24,421			34,812
Other assets		2,948			964
Total assets	$	1,916,535		$	1,778,635
Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	33,649		$	8,594
Accounts payable		166,693			108,332
Accrued wages and employee benefits		22,193			13,101
Other accrued liabilities		88,609			82,540
Current portion of long-term borrowings and capital lease obligations		12,897			657
Total current liabilities		324,041			213,224
Long-term borrowings and capital lease obligations		1,034,836			1,037,132
Deferred income taxes		8,745			4,950
Other long-term liabilities		62,890			57,458
Total liabilities		1,430,512			1,312,764
Redeemable noncontrolling interests		35,685			–
Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 70,142,664 and 69,582,669 shares issued at June 30, 2016 and December 31, 2015, respectively		701			696
Additional paid-in capital		443,833			443,109
Treasury stock, at cost		(146,801	)		(111,516	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		389,269			358,173
Accumulated other comprehensive loss		(34,495	)		(22,475	)
Stockholders’ equity attributable to Generac Holdings, Inc.		450,391			465,871
Noncontrolling interests		(53	)		–
Total stockholders' equity		450,338			465,871
Total liabilities and stockholders’ equity	$	1,916,535		$	1,778,635

See notes to condensed consolidated financial statements.

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Generac Holdings Inc.

Condensed Consolidated Statements of Comprehensive Income

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

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net sales	$	367,376		$	288,360		$	653,911		$	600,178
Costs of goods sold		243,229			192,463			431,704			401,678
Gross profit		124,147			95,897			222,207			198,500
Operating expenses:
Selling and service		42,366			28,474			79,635			58,602
Research and development		9,889			8,412			18,086			16,575
General and administrative		19,593			13,564			37,426			27,770
Amortization of intangibles		8,217			5,980			16,014			11,175
Total operating expenses		80,065			56,430			151,161			114,122
Income from operations		44,082			39,467			71,046			84,378
Other (expense) income:
Interest expense		(11,380	)		(10,763	)		(22,415	)		(22,031	)
Investment income		4			35			36			72
Loss on extinguishment of debt		–			(3,427	)		–			(4,795	)
Costs related to acquisition		–			–			(417	)		–
Other, net		158			(1,840	)		545			(3,449	)
Total other expense, net		(11,218	)		(15,995	)		(22,251	)		(30,203	)
Income before provision for income taxes		32,864			23,472			48,795			54,175
Provision for income taxes		11,921			8,628			17,640			19,646
Net income		20,943			14,844			31,155			34,529
Income attributable to noncontrolling interests		55			-			59			-
Net income attributable to Generac Holdings Inc.	$	20,888		$	14,844		$	31,096		$	34,529
Net income attributable to Generac Holdings Inc. per common share - basic:	$	0.32		$	0.22		$	0.47		$	0.50
Weighted average common shares outstanding - basic:		65,870,714			68,961,877			65,955,455			68,886,672
Net income attributable to Generac Holdings Inc. per common share - diluted:	$	0.31		$	0.21		$	0.47		$	0.49
Weighted average common shares outstanding - diluted:		66,388,581			70,063,063			66,465,770			70,099,940
Comprehensive income	$	7,622		$	15,173		$	19,076		$	28,040

See notes to condensed consolidated financial statements.

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Generac Holdings Inc.

Condensed Consolidated Statements of Cash Flows

(U.S. Dollars in Thousands)

(Unaudited)

	Six Months Ended June 30,
	2016			2015
Operating activities
Net income	$	31,155		$	34,529
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation		10,429			7,988
Amortization of intangible assets		16,014			11,175
Amortization of original issue discount and deferred financing costs		2,122			3,344
Loss on extinguishment of debt		–			4,795
Deferred income taxes		9,072			8,935
Share-based compensation expense		5,386			5,090
Other		46			285
Net changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(9,389	)		29,944
Inventories		(1,046	)		(66,312	)
Other assets		2,297			(3,198	)
Accounts payable		17,537			17,377
Accrued wages and employee benefits		6,166			(1,735	)
Other accrued liabilities		(1,825	)		(1,744	)
Excess tax benefits from equity awards		(6,729	)		(8,894	)
Net cash provided by operating activities		81,235			41,579
Investing activities
Proceeds from sale of property and equipment		47			88
Expenditures for property and equipment		(14,004	)		(14,258	)
Acquisition of business, net of cash acquired		(60,886	)		233
Net cash used in investing activities		(74,843	)		(13,937	)
Financing activities
Proceeds from short-term borrowings		10,278			9,000
Proceeds from long-term borrowings		–			100,000
Repayments of short-term borrowings		(6,327	)		(11,366	)
Repayments of long-term borrowings and capital lease obligations		(10,652	)		(150,453	)
Stock repurchases		(34,576	)		–
Payment of debt issuance costs		–			(2,060	)
Cash dividends paid		(76	)		(1,427	)
Taxes paid related to the net share settlement of equity awards		(12,099	)		(12,347	)
Excess tax benefits from equity awards		6,729			8,901
Net cash used in financing activities		(46,723	)		(59,752	)
Effect of exchange rate changes on cash and cash equivalents		115			(2,076	)
Net decrease in cash and cash equivalents		(40,216	)		(34,186	)
Cash and cash equivalents at beginning of period		115,857			189,761
Cash and cash equivalents at end of period	$	75,641		$	155,575

See notes to condensed consolidated financial statements 

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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

Generac Holdings Inc. (the Company) is a leading designer and manufacturer of a wide range of power generation equipment and other engine powered products serving the residential, light-commercial, industrial, oil & gas and construction markets. Generac’s power products are available globally through a broad network of independent dealers, distributors, retailers, wholesalers and equipment rental companies, as well as sold direct to certain end user customers.

The Company has executed a number of acquisitions that support our strategic plan (as discussed in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2015). A summary of these acquisitions include the following:

● On October 3, 2011, the Company acquired substantially all of the assets of Magnum Products (Magnum), a supplier of generator powered light towers and mobile generators for a variety of industrial applications. The Magnum business is a strategic fit for the Company as it provides diversification through the introduction of new engine powered products, distribution channels and end markets.

● On December 8, 2012, the Company acquired the equity of Ottomotores UK and its affiliates (Ottomotores), with operations in Mexico City, Mexico and Curitiba, Brazil. Ottomotores is a leading manufacturer in the Mexican market for industrial diesel gensets and is a market participant throughout all of Latin America.

● On August 1, 2013, the Company acquired the equity of Tower Light SRL and its wholly-owned subsidiaries (Tower Light). Headquartered outside Milan, Italy, Tower Light is a leading developer and supplier of mobile light towers throughout Europe, the Middle East and Africa.

● On November 1, 2013, the Company purchased the assets of Baldor Electric Company’s generator division (Baldor Generators). Baldor Generators offers a complete line of power generation equipment throughout North America with power output up to 2.5MW, which expands the Company’s commercial and industrial product lines.

● On September 2, 2014, the Company acquired the equity of Pramac America LLC (Powermate), resulting in the ownership of the Powermate trade name and the right to license the DeWalt brand name for certain residential engine powered tools. This acquisition expands Generac’s residential product portfolio in the portable generator category.

● On October 1, 2014, the Company acquired MAC, Inc. (MAC). MAC is a leading manufacturer of premium-grade commercial and industrial mobile heaters for the United States and Canadian markets. The acquisition expands the Company’s portfolio of mobile power products and provides increased access to the oil & gas market.

● On August 1, 2015, the Company acquired Country Home Products and its subsidiaries (CHP). CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, which are primarily sold in North America under the DR® Power Equipment brand. The acquisition provides an expanded product lineup and additional scale to the Company’s residential engine powered products.

● On March 1, 2016, the Company acquired a majority ownership interest in PR Industrial S.r.l and its subsidiaries (Pramac). Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network.

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 (U.S. GAAP). All intercompany amounts and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet as of June 30, 2016, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2016 and 2015, and the condensed consolidated statements of cash flows for the six months ended June 30, 2016 and 2015 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments) 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 U.S. 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 disclosure normally included in consolidated financial statements prepared in accordance with U.S. 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 our Annual Report on Form 10-K for the year ended December 31, 2015.

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New Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. This guidance is the culmination of the FASB’s joint project with the International Accounting Standards Board to clarify the principles for recognizing revenue. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process that entities should follow in order to achieve that core principal. ASU 2014-09, as amended by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, becomes effective for the Company in 2018. The guidance can be applied either on a full retrospective basis or on a modified retrospective basis in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases. This guidance is being issued to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the statement of financial position and by disclosing key information about leasing arrangements. The guidance should be applied using a modified retrospective approach and is effective for the Company in 2019, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations and financial position.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This guidance is a part of the FASB’s initiative to reduce complexity in accounting standards, and includes simplification involving several aspects of the accounting for share-based payment transactions, including excess tax benefits and forfeitures. The guidance should be applied on a modified retrospective basis and is effective for the Company in 2017, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations, financial position and classification on the statements of cash flow.

In the first quarter of 2016, the Company adopted ASU 2015-03, Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. As a result, the Company adjusted the impacted line items in the December 31, 2015 condensed consolidated balance sheet to conform to the current period’s presentation; decreasing both the Deferred financing costs, net and Long-term borrowings and capital lease obligations line items by $12,965. Also in the first quarter of 2016, the Company adopted ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. As a result, the Company adjusted the impacted line items in the December 31, 2015 condensed consolidated balance sheet to conform to the current period’s presentation; decreasing the Deferred income taxes line item within current assets by $29,355, increasing the Deferred income taxes line item within noncurrent assets by $28,139, and decreasing the Deferred income taxes line within noncurrent liabilities by $1,216.

There are several other new accounting pronouncements issued by the FASB. Management does not believe any of these other accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

2. Acquisitions

Acquisition of Pramac

On March 1, 2016, the Company acquired a 65% ownership interest in Pramac for a purchase price, net of cash acquired, of $60,886. Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network. The acquisition purchase price was funded solely through cash on hand.

The 35% noncontrolling interest in Pramac had an acquisition date fair value of $34,253, and was recorded as a redeemable noncontrolling interest in the condensed consolidated balance sheet, as the noncontrolling interest party has within its control the right to require the Company to redeem its interest in Pramac. The noncontrolling interest holder has a put option to sell their interests to the Company any time within five years from the acquisition. The put option price is either (i) a fixed amount if voluntarily exercised within the first two years after the acquisition, or (ii) based on a multiple of earnings, subject to the terms of the acquisition. Additionally, the Company holds a call option that it may redeem commencing five years from the acquisition, or earlier upon the occurrence of certain circumstances. The call option price is based on a multiple of earnings that is subject to the terms of the acquisition. Both the put and call option only provide for the complete transfer of the noncontrolling interest, with no partial transfers of interest permitted.

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The Company recorded a preliminary purchase price allocation during the second quarter of 2016 based upon its estimates of the fair value of the acquired assets and assumed liabilities. The preliminary purchase price allocation was as follows:

	March 1, 2016
Accounts receivable	$	51,108
Inventories		40,180
Property and equipment		19,020
Intangible assets		27,620
Goodwill		53,665
Other assets		8,153
Total assets acquired		199,746
Short-term borrowings		21,105
Accounts payable		40,270
Long-term debt and capital lease obligations (including current portion)		18,599
Other liabilities		24,580
Redeemable noncontrolling interest		34,253
Noncontrolling interest		53
Net assets acquired	$	60,886

The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of Pramac from the date of acquisition through June 30, 2016.

Acquisition of CHP

On August 1, 2015, a subsidiary of the Company acquired CHP for a purchase price, net of cash acquired, of $74,570. Headquartered in Vergennes, Vermont, CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, with sales primarily in North America. The acquisition was funded solely through cash on hand.

The Company recorded a preliminary purchase price allocation during the third quarter of 2015 based upon its estimates of the fair value of the acquired assets and assumed liabilities. As a result, the Company recorded approximately $81,726 of intangible assets, including approximately $30,076 of goodwill, as of the acquisition date. The purchase price allocation was finalized in the fourth quarter of 2015, resulting in a $6,552 decrease to total intangible assets, including an increase of $6,208 in goodwill. The goodwill ascribed to this acquisition is not deductible for tax purposes. In addition, the Company assumed $12,000 of CHP’s debt in conjunction with this acquisition. The accompanying condensed consolidated financial statements include the results of CHP from the date of acquisition through June 30, 2016.

Pro Forma Information

The following unaudited pro forma information of the Company gives effect to these acquisitions as though the transactions had occurred on January 1, 2015:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net Sales:
As reported	$	367,376	$	288,360	$	653,911	$	600,178
Pro forma		367,376		369,815		683,258		744,326
Net income attributable to Generac Holdings Inc.:
As reported	$	20,888	$	14,844	$	31,096	$	34,529
Pro forma		21,683		18,454		32,168		35,847
Net income attributable to Generac Holdings Inc. per common share - diluted
As reported	$	0.31	$	0.21	$	0.47	$	0.49
Pro forma		0.33		0.26		0.48		0.51

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This unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated on January 1, 2015.

3. Derivative Instruments and Hedging Activities

The Company records all derivatives in accordance with Accounting Standards Codification (ASC) 815, Derivatives and Hedging, which requires derivative instruments be reported on the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies and interest rates. The Company does not hold or issue derivative financial instruments for trading purposes.

Commodities

The Company is exposed to significant price fluctuations in commodities it uses as raw materials, and periodically utilizes commodity derivatives to mitigate the impact of these potential price fluctuations on its financial results and its economic well-being. These derivatives typically have maturities of less than eighteen months. At June 30, 2016, December 31, 2015 and June 30, 2015, the Company had one, one and three commodity contracts outstanding, respectively, covering the purchases of copper.

Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net gains recognized for the three and six months ended June 30, 2016 were $82 and $76, respectively. Net losses recognized for the three and six months ended June 30, 2015 were $315 and $1,041, respectively.

Foreign Currencies

The Company is exposed to foreign currency exchange risk as a result of transactions denominated in currencies other than the U.S. Dollar. The Company periodically utilizes foreign currency forward purchase and sales contracts to manage the volatility associated with certain foreign currency purchases in the normal course of business. Contracts typically have maturities of twelve months or less. As of June 30, 2016, December 31, 2015 and June 30, 2015, the Company had twelve, six and two foreign currency contracts outstanding, respectively.

Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net gains (losses) recognized for the three and six months ended June 30, 2016 were $1 and $(178), respectively. Net losses recognized for the three and six months ended June 30, 2015 were $37 and $358, respectively.

Interest Rate Swaps

In October 2013, the Company entered into two interest rate swap agreements, and in May 2014, the Company entered into an additional interest rate swap agreement. The Company formally documented all relationships between interest rate hedging instruments and the related hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. These interest rate swap agreements qualify as cash flow hedges, and accordingly, the effective portions of the gains or losses are reported as a component of accumulated other comprehensive loss (AOCL). The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

Fair Value 

The following table presents the fair value of all of the Company’s derivatives:

	June 30, 2016			December 31, 2015
Commodity contracts	$	82		$	(400	)
Foreign currency contracts		87			(171	)
Interest rate swaps		(4,733	)		(2,618	)

The fair value of the commodity and foreign currency contracts are included in other assets, and the fair value of the interest rate swaps are included in other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015. Excluding the impact of credit risk, the fair value of the derivative contracts as of June 30, 2016 and December 31, 2015 is a liability of $4,672 and $3,248, respectively, which represents the amount the Company would need to pay to exit the agreements on those dates.

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The amount of losses recognized in AOCL in the condensed consolidated balance sheets on the effective portion of interest rate swaps designated as hedging instruments for the three and six months ended June 30, 2016 were $134 and $1,288, respectively. The amount of gains (losses) for the three and six months ended June 30, 2015 were $266 and $(1,006), respectively.

The amount of gains (losses) recognized in cost of goods sold in the condensed consolidated statements of comprehensive income for commodity and foreign currency contracts not designated as hedging instruments for the three and six months ended June 30, 2016 were $83 and $(102), respectively. The amount of losses for the three and six months ended June 30, 2015 were $352 and $1,399, respectively.

4. Fair Value Measurements

ASC 820-10, Fair Value Measurement, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and ABL facility borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based upon their short-term nature. The fair value of Term Loan borrowings, which have an aggregate carrying value of $926,390, was approximately $914,810 (Level 2) at June 30, 2016, as calculated based on independent valuations whose inputs and significant value drivers are observable.

For the fair value of the assets and liabilities measured on a recurring basis, see the fair value table in Note 3, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements. The fair value of all derivative contracts is classified as Level 2. The valuation techniques used to measure the fair value of derivative contracts, all of which have counterparties with high credit ratings, were based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of derivative contracts above considers the Company’s credit risk in accordance with ASC 820-10.

5. Accumulated Other Comprehensive Loss

The following presents a tabular disclosure of changes in AOCL during the three and six months ended June 30, 2016 and 2015, net of tax:

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – April 1, 2016	$	(7,102	)	$	(11,362	)	$	(2,765	)		$	(21,229	)
Other comprehensive loss before reclassifications		(13,132	)		-			(134	)	(1)		(13,266	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(13,132	)		-			(134	)			(13,266	)
Ending Balance – June 30, 2016	$	(20,234	)	$	(11,362	)	$	(2,899	)		$	(34,495	)

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	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Gain (Loss) on Cash Flow Hedges				Total
Beginning Balance – April 1, 2015	$	(7,424	)	$	(13,243	)	$	(1,918	)		$	(22,585	)
Other comprehensive income before reclassifications		63			-			266		(2)		329
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive income		63			-			266				329
Ending Balance – June 30, 2015	$	(7,361	)	$	(13,243	)	$	(1,652	)		$	(22,256	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – January 1, 2016	$	(9,502	)	$	(11,362	)	$	(1,611	)		$	(22,475	)
Other comprehensive loss before reclassifications		(10,732	)		-			(1,288	)	(3)		(12,020	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(10,732	)		-			(1,288	)			(12,020	)
Ending Balance – June 30, 2016	$	(20,234	)	$	(11,362	)	$	(2,899	)		$	(34,495	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – January 1, 2015	$	(1,878	)	$	(13,243	)	$	(646	)		$	(15,767	)
Other comprehensive loss before reclassifications		(5,483	)		-			(1,006	)	(4)		(6,489	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(5,483	)		-			(1,006	)			(6,489	)
Ending Balance – June 30, 2015	$	(7,361	)	$	(13,243	)	$	(1,652	)		$	(22,256	)

(1)	Represents unrealized losses of $(219), net of tax benefit of $85 for the three months ended June 30, 2016.
(2)	Represents unrealized gains of $431, net of tax effect of $(165) for the three months ended June 30, 2015.
(3)	Represents unrealized losses of $(2,115), net of tax benefit of $827 for the six months ended June 30, 2016.
(4)	Represents unrealized losses of $(1,643), net of tax benefit of $637 for the six months ended June 30, 2015.

6. Segment Reporting

Effective in the second quarter of 2016, the Company changed its segment reporting from one reportable segment to two reportable segments - Domestic and International - as a result of the recent Pramac acquisition and the ongoing strategy to expand the business internationally. The Domestic segment includes the legacy Generac business and the impact of acquisitions that are based in the United States, all of which have revenues that are substantially derived from the U.S. and Canada. The International segment includes the Ottomotores, Tower Light and Pramac acquisitions, all of which have revenues that are substantially derived from outside of the U.S. and Canada. Both reportable segments design and manufacture a wide range of engine powered products. The Company has multiple operating segments, which it aggregates into the two reportable segments, based on materially similar economic characteristics, products, production processes, classes of customers and distribution methods.

	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
Reportable Segments	2016		2015		2016		2015
Domestic	$	286,720	$	258,117	$	534,736	$	545,729
International		80,656		30,243		119,175		54,449
Total net sales	$	367,376	$	288,360	$	653,911	$	600,178

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The Company's product offerings consist primarily of power products with a range of power output geared for varying end customer uses. Residential products and commercial & industrial products are each a class of products based on similar power output and end customer usage. The breakout of net sales between residential, commercial & industrial, and other products by product class is as follows:

	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
Product Classes	2016		2015		2016		2015
Residential products	$	181,735	$	133,466	$	340,716	$	290,300
Commercial & industrial products		156,730		134,580		259,720		268,343
Other		28,911		20,314		53,475		41,535
Total net sales	$	367,376	$	288,360	$	653,911	$	600,178

Management evaluates the performance of its segments based primarily on Adjusted EBITDA, which is a non-GAAP measure, and therefore reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based on the definition that is contained in the Company’s credit agreements.

	Adjusted EBITDA
	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Domestic	$	57,352		$	48,457		$	104,212		$	102,901
International		6,574			3,965			9,523			6,659
Total adjusted EBITDA	$	63,926		$	52,422		$	113,735		$	109,560
Interest expense		(11,380	)		(10,763	)		(22,415	)		(22,031	)
Depreciation and amortization		(13,650	)		(10,129	)		(26,443	)		(19,163	)
Non-cash write-down and other adjustments (1)		(2,909	)		(404	)		(2,782	)		(1,976	)
Non-cash share-based compensation expense (2)		(2,901	)		(2,582	)		(5,386	)		(5,090	)
Loss on extinguishment of debt (3)		-			(3,427	)		-			(4,795	)
Transaction costs and credit facility fees (4)		(237	)		(481	)		(760	)		(682	)
Business optimization expenses (5)		-			(1,444	)		(7,106	)		(1,738	)
Other		15			280			(48	)		90
Income before provision for income taxes	$	32,864		$	23,472		$	48,795		$	54,175

(1)	Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, foreign currency gains/losses and certain purchase accounting related adjustments.
(2)	Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
(3)	Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.
(4)	Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement; equity issuance, debt issuance or refinancing; together with certain fees relating to our senior secured credit facilities.
(5)	Represents charges relating to business optimization and restructuring costs.

The Company’s sales in the United States represented approximately 74% and 84% of total sales for the three months ended June 30, 2016 and 2015, respectively, and represented approximately 78% and 85% of total sales for the six months ended June 30, 2016 and 2015, respectively. Approximately 86% and 93% of the Company’s identifiable long-lived assets are located in the United States at June 30, 2016 and December 31, 2015, respectively.

7. Balance Sheet Details

Inventories consist of the following:

	June 30, 2016			December 31, 2015
Raw material	$	226,110		$	188,354
Work-in-process		4,347			2,856
Finished goods		150,032			144,747
Reserves for excess and obsolete		(13,744	)		(10,582	)
Total	$	366,745		$	325,375

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Property and equipment consists of the following:

	June 30, 2016			December 31, 2015
Land and improvements	$	12,354		$	8,553
Buildings and improvements		115,544			104,774
Machinery and equipment		78,434			72,280
Dies and tools		21,779			20,066
Vehicles		1,575			1,244
Office equipment and systems		58,440			29,395
Leasehold improvements		4,322			3,338
Construction in progress		10,507			30,482
Gross property and equipment		302,955			270,132
Accumulated depreciation		(96,255	)		(85,919	)
Total	$	206,700		$	184,213

8. Product Warranty Obligations

The Company records a liability for product warranty obligations at the time of sale to a customer based upon historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. Additionally, the Company sells extended warranty coverage for certain products. The sales of extended warranties are recorded as deferred revenue, which is recognized over the life of the contracts.

The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to extended warranty coverage:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Balance at beginning of period	$	31,904		$	29,277		$	30,197		$	30,909
Product warranty reserve assumed in acquisition		-			-			840			-
Payments		(4,900	)		(5,100	)		(8,552	)		(10,533	)
Provision for warranties issued		4,220			4,480			7,702			9,029
Changes in estimates for pre-existing warranties		(489	)		(472	)		548			(1,220	)
Balance at end of period	$	30,735		$	28,185		$	30,735		$	28,185

The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Balance at beginning of period	$	28,830		$	27,531		$	28,961		$	27,193
Deferred revenue on extended warranty contracts sold		1,619			810			2,763			2,190
Amortization of deferred revenue on extended warranty contracts		(1,367	)		(1,100	)		(2,642	)		(2,142	)
Balance at end of period	$	29,082		$	27,241		$	29,082		$	27,241

Product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows:

	June 30,		December 31,
	2016		2015
Product warranty liability
Current portion - other accrued liabilities	$	21,071	$	21,726
Long-term portion - other long-term liabilities		9,664		8,471
Total	$	30,735	$	30,197
Deferred revenue related to extended warranty
Current portion - other accrued liabilities	$	5,034	$	6,026
Long-term portion - other long-term liabilities		24,048		22,935
Total	$	29,082	$	28,961

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9. Credit Agreements

Short-term borrowings are included in the condensed consolidated balance sheets as follows:

	June 30,		December 31,
	2016		2015
ABL facility	$	-	$	-
Other lines of credit		33,649		8,594
Total	$	33,649	$	8,594

Long-term borrowings are included in the condensed consolidated balance sheets as follows:

	June 30,			December 31,
	2016			2015
Term loan	$	954,000		$	954,000
Original issue discount and deferred financing costs		(27,783	)		(29,905	)
ABL facility		100,000			100,000
Capital lease obligation		4,973			1,694
Other		16,543			12,000
Total		1,047,733			1,037,789
Less: current portion of debt		12,374			500
Less: current portion of capital lease obligation		523			157
Total	$	1,034,836		$	1,037,132

The Company’s credit agreements provide for a $1,200,000 term loan B credit facility (Term Loan) and include a $300,000 uncommitted incremental term loan facility. The Term Loan matures on May 31, 2020. The Term Loan is guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and is secured by associated collateral agreements which pledge a first priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, other than all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, which are secured by a second priority lien.

The Term Loan initially bore interest at rates based upon either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. Beginning in the second quarter of 2014, and measured each quarterly period thereafter, the applicable margin related to base rate loans is reduced to 1.50% and the applicable margin related to LIBOR rate loans is reduced to 2.50%, in each case, if the Borrower’s net debt leverage ratio, as defined in the Term Loan, falls below 3.00 to 1.00 for that measurement period. The Company’s net debt leverage ratio as of June 30, 2016 was above 3.00 to 1.00.

On May 18, 2015, the Company amended certain provisions and covenants of the Term Loan. In connection with this amendment and in accordance with ASC 470-50, Debt Modifications and Extinguishments, the Company capitalized $1,528 of fees paid to creditors as original issue discount on long-term borrowings and expensed $49 of transaction fees in the second quarter of 2015. As of June 30, 2016, the Company is in compliance with all covenants of the Term Loan. There are no financial maintenance covenants on the Term Loan.

The Company’s credit agreements also originally provided for a $150,000 senior secured ABL revolving credit facility (ABL Facility). The maturity date of the ABL Facility originally was May 31, 2018. Borrowings under the ABL Facility are guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and are secured by associated collateral agreements which pledge a first priority lien on all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, and a second priority lien on all other assets, including fixed assets and intangibles of the Company and certain domestic subsidiaries. ABL Facility borrowings initially bore interest at rates based upon either a base rate plus an applicable margin of 1.00% or adjusted LIBOR rate plus an applicable margin of 2.00%, in each case, subject to adjustments based upon average availability under the ABL Facility.

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On May 29, 2015, the Company amended its ABL Facility. The amendment (i) increased the ABL Facility from $150,000 to $250,000 (Amended ABL Facility), (ii) extended the maturity date from May 31, 2018 to May 29, 2020, (iii) increased the uncommitted incremental facility from $50,000 to $100,000, (iv) reduced the interest rate spread by 50 basis points and (v) reduced the unused line fee by 12.5 basis points across all tiers. Additionally, the amendment relaxes certain restrictions on the Company’s ability to, among other things, (i) make additional investments and acquisitions (including foreign acquisitions), (ii) make restricted payments and (iii) incur additional secured and unsecured debt (including foreign subsidiary debt). In connection with this amendment and in accordance with ASC 470-50, the Company capitalized $483 of new debt issuance costs in 2015.

On May 29, 2015, the Company borrowed $100,000 under the Amended ABL Facility, the proceeds of which were used as a voluntary prepayment towards the Term Loan. As of June 30, 2016, there was $100,000 outstanding under the Amended ABL Facility, leaving $142,123 of availability, net of outstanding letters of credit.

On March 30 and May 29, 2015, the Company made voluntary prepayments of the Term Loan of $50,000 and $100,000, respectively, which will be applied to the Excess Cash Flow payment requirement in the Term Loan. As a result of the prepayments, the Company wrote off $4,795 of original issue discount and capitalized debt issuance costs in the first half of 2015 as a loss on extinguishment of debt in the condensed consolidated statement of comprehensive income.

As of June 30, 2016 and December 31, 2015, short-term borrowings consisted of borrowings by our foreign subsidiaries on local lines of credit, which totaled $33,649 and $8,594, respectively. 

10. Stock Repurchase Program

On August 5, 2015, the Company’s Board of Directors approved a $200,000 stock repurchase program. Under the program, the Company may repurchase up to $200,000 of its common stock over 24 months from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchase may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s shares of common stock and general market and economic conditions, applicable legal requirements, and compliance with the terms of the Company’s outstanding indebtedness. The stock repurchase program may be suspended or discontinued at any time without prior notice. For the three months ended June 30, 2016, the Company repurchased 935,000 shares of its common stock for $34,576, funded with cash on hand. Since the inception of the program, the Company has repurchased 4,238,500 shares of its common stock for $134,518, funded with cash on hand.

11. Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the period, exclusive of restricted shares. Except where the result would be anti-dilutive, diluted earnings per share is calculated by assuming the vesting of unvested restricted stock and the exercise of stock options, as well as their related income tax benefits. The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net income attributable to Generac Holdings Inc. (numerator)	$	20,888	$	14,844	$	31,096	$	34,529
Weighted average shares (denominator)
Basic		65,870,714		68,961,877		65,955,455		68,886,672
Dilutive effect of stock compensation awards (1)		517,867		1,101,186		510,315		1,213,268
Diluted		66,388,581		70,063,063		66,465,770		70,099,940
Net income attributable to Generac Holdings Inc. per share
Basic	$	0.32	$	0.22	$	0.47	$	0.50
Diluted	$	0.31	$	0.21	$	0.47	$	0.49

(1) Excludes approximately 189,500 stock options and 3,000 shares of restricted stock for the three month period ended June 30, 2016, and 215,800 stock options and 3,400 shares of restricted stock for the six month period ended June 30, 2016, as the impact of such awards was anti-dilutive. Excludes approximately 142,900 stock options and 2,300 shares of restricted stock for the three month period ended June 30, 2015 and 104,400 stock options for the six month period ended June 30, 2015, as the impact of such awards was anti-dilutive.

12. Income Taxes

The effective income tax rates for the six months ended June 30, 2016 and 2015 were 36.2% and 36.3%, respectively.

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13. Commitments and Contingencies

The Company has an arrangement with a finance company to provide floor plan financing for selected dealers. The Company receives payment from the finance company after shipment of product to the dealer. The Company participates in the cost of dealer financing up to certain limits and has agreed to repurchase products repossessed by the finance company, but does not indemnify the finance company for any credit losses they incur. The amount financed by dealers which remained outstanding under this arrangement at June 30, 2016 and December 31, 2015 was approximately $36,200 and $32,400, respectively.

In the normal course of business, the Company is named as a defendant in various lawsuits in which claims are asserted against the Company. In the opinion of management, the liabilities, if any, which may result from such lawsuits are not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company.

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

This quarterly report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “forecast,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future”, “optimistic” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements contained in this quarterly report are based on assumptions that we have made in light of our industry experience and on our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. The forward-looking statements contained in this quarterly report include estimates regarding:

● our business, financial and operating results, and future economic performance; 

● proposed new product and service offerings; and 

● management's goals, expectations and objectives and other similar expressions concerning matters that are not historical facts.

Factors that could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements include:

● frequency and duration of power outages impacting demand for our products;

● availability, cost and quality of raw materials and key components used in producing our products; 

● the impact on our results of possible fluctuations in interest rates and foreign currency exchange rates;

● the possibility that the expected synergies, efficiencies and cost savings of our acquisitions will not be realized, or will not be realized within the expected time period;

● the risk that our acquisitions will not be integrated successfully;

● difficulties we may encounter as our business expands globally;

● competitive factors in the industry in which we operate;

● our dependence on our distribution network; 

● our ability to invest in, develop or adapt to changing technologies and manufacturing techniques; 

● loss of our key management and employees; 

● increase in product and other liability claims or recalls; and

● changes in environmental, health and safety laws and regulations.

Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary in material respects from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in our filings with the Securities and Exchange Commission, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 and in our Quarterly Reports on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

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Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Overview

We are a leading designer and manufacturer of a wide range of power generation equipment and other engine powered products serving the residential, light commercial, industrial, oil & gas and construction markets. Power generation is our primary focus, which differentiates us from our primary competitors that also have broad operations outside the power equipment market. As the only significant market participant focused predominantly on these products, we have one of the leading market positions in the power equipment market in North America and an expanding presence internationally. We believe we have one of the widest range of products in the marketplace, including residential, commercial and industrial standby generators, as well as portable and mobile generators used in a variety of applications. Other engine powered products that we design and manufacture include light towers which provide temporary lighting for various end markets; commercial and industrial mobile heaters used in the oil & gas, construction and other industrial markets; and a broad product line of outdoor power equipment for residential and commercial use.

Over the past several years, we have executed a number of acquisitions that support our strategic plan. A summary of these acquisitions can be found in Note 1, “Description of Business and Basis of Presentation,” to the condensed consolidated financial statements in Item 1 of this quarterly report on Form 10-Q.

Business Drivers and Operational Factors

In operating our business and monitoring its performance, we pay attention to a number of business drivers and trends as well as operational factors. The statements in this section are based on our current expectations.

Business Drivers and Trends

Our performance is affected by the demand for reliable power generation products, mobile product solutions and other engine powered products by our customer base. This demand is influenced by several important drivers and trends affecting our industry, including the following:

Increasing penetration opportunity.    Many potential customers are not aware of the costs and benefits of automatic backup power solutions. We estimate that penetration rates for home standby generators are only approximately 3.5% of U.S. single-family detached, owner-occupied households with a home value of over $100,000, as defined by the U.S. Census Bureau's 2013 American Housing Survey for the United States. The decision to purchase backup power for many light-commercial buildings such as convenience stores, restaurants and gas stations is more return-on-investment (ROI) driven and as a result these applications have relatively lower penetration rates as compared to buildings used in code-driven or mission critical applications such as hospitals, wastewater treatment facilities, 911 call centers, data centers and certain industrial locations. The emergence of lower cost, cleaner burning natural gas fueled generators has helped to increase the penetration of standby generators in the light-commercial market. In addition, the importance of backup power for telecommunications infrastructure is increasing due to the growing importance of uninterrupted voice and data services. Also, in recent years, a more stringent regulatory environment around the flaring of natural gas at oil & gas drilling and production sites has been a catalyst for increased demand for natural gas fueled generators, including mobile solutions. We believe by expanding our distribution network, continuing to develop our product line, and targeting our marketing efforts, we can continue to build awareness and increase penetration for our standby and mobile generators for residential, commercial and industrial purposes.

Effect of large scale and baseline power disruptions.    Power disruptions are an important driver of customer awareness and have historically influenced demand for generators. Increased frequency and duration of major power outage events, that have a broader impact beyond a localized level, increases product awareness and may drive consumers to accelerate their purchase of a standby or portable generator during the immediate and subsequent period, which we believe may last for six to twelve months following a major power outage event for standby generators. For example, the multiple major outage events that occurred during the second half of both 2011 and 2012 drove strong demand for portable and home standby generators, and the increased awareness of these products contributed to substantial organic revenue growth in 2012 with strong growth continuing during 2013. Major power disruptions are unpredictable by nature and, as a result, our sales levels and profitability may fluctuate from period to period. In addition, there are smaller, more localized power outages that occur frequently across the United States that drive the baseline level of demand for back-up power solutions. The level of baseline power outage activity occurring across the United States can also fluctuate, and may cause our financial results to fluctuate from year to year.

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Impact of residential investment cycle.    The market for residential generators is also affected by the residential investment cycle and overall consumer confidence and sentiment. When homeowners are confident of their household income, the value of their home and overall net worth, they are more likely to invest in their home. These trends can have an impact on demand for residential generators. Trends in the new housing market highlighted by residential housing starts can also impact demand for our residential generators. Demand for outdoor power equipment is also impacted by several of these factors, as well as weather precipitation patterns.

Impact of business capital investment cycle.   The market for our commercial and industrial products is affected by the overall capital investment cycle, including non-residential building construction, durable goods and infrastructure spending as well as investments in the exploration and production of oil & gas, as businesses or organizations either add new locations or make investments to upgrade existing locations or equipment. These trends can have a material impact on demand for these products. The capital investment cycle may differ for the various commercial and industrial end markets that we serve including light commercial, retail, telecommunications, industrial, data centers, healthcare, construction, oil & gas and municipal infrastructure, among others. The market for these products is also affected by general economic conditions and credit availability in the geographic regions that we serve. In addition, we believe demand for our mobile power products will continue to benefit from a secular shift towards renting versus buying this type of equipment.

Factors Affecting Results of Operations

We are subject to various factors that can affect our results of operations, which we attempt to mitigate through factors we can control, including continued product development, expanded distribution, pricing and cost control. Certain operational and other factors that affect our business include the following:

Effect of commodity, currency and component price fluctuations.    Industry-wide price fluctuations of key commodities, such as steel, copper, aluminum and other components we use in our products, together with foreign currency fluctuations, can have a material impact on our results of operations. We have historically attempted to mitigate the impact of rising commodity, currency and component prices through improved product design and sourcing, manufacturing efficiencies, price increases and select hedging transactions. Our results are also influenced by changes in fuel prices in the form of freight rates, which in some cases are accepted by our customers and in other cases are paid by us.

Seasonality.    Although there is demand for our products throughout the year, in each of the past three years approximately 23% to 27% of our net sales occurred in the first quarter, 22% to 25% in the second quarter, 24% to 27% in the third quarter and 25% to 28% in the fourth quarter, with different seasonality depending on the occurrence, timing and severity of major power outage activity in each year. Major outage activity is unpredictable by nature and, as a result, our sales levels and profitability may fluctuate from period to period. For example, there were multiple major power outage events that occurred during the second half of both 2011 and 2012, which were significant in terms of severity. As a result, the seasonality experienced during this time period, and for the subsequent quarters following the time period, varied relative to other periods where no major outage events occurred. We maintain a flexible production and supply chain infrastructure in order to respond to outage-driven peak demand.

Factors influencing interest expense and cash interest expense.   Interest expense can be impacted by a variety of factors, including market fluctuations in LIBOR, interest rate election periods, interest rate swap agreements, credit facility pricing grids, and repayments or borrowings of indebtedness. Cash interest expense increased during the six months ended June 30, 2016 compared to the six months ended June 30, 2015, primarily due to additional debt assumed in recent acquisitions and increased borrowings at other foreign subsidiaries. Refer to Note 9, “Credit Agreements,” to the condensed consolidated financial statements in Item 1 of this quarterly report on Form 10-Q for further information.

Factors influencing provision for income taxes and cash income taxes paid.   We had approximately $715 million of tax-deductible goodwill and intangible asset amortization remaining as of December 31, 2015 related to our acquisition by CCMP in 2006 that we expect to generate aggregate cash tax savings of approximately $279 million through 2021, assuming continued profitability and a 39% tax rate. The recognition of the tax benefit associated with these assets for tax purposes is expected to be $122 million annually through 2020 and $102 million in 2021, which generates annual cash tax savings of $48 million through 2020 and $40 million in 2021, assuming profitability and a 39% tax rate. As a result of the asset acquisition of the Magnum business in the fourth quarter of 2011, we had approximately $42.0 million of incremental tax deductible goodwill and intangible assets remaining as of December 31, 2015. We expect these assets to generate aggregate cash tax savings of $16.4 million through 2026 assuming continued profitability and a 39% tax rate. The amortization of these assets for tax purposes is expected to be $3.8 million annually through 2025 and $2.8 million in 2026, which generates an additional annual cash tax savings of $1.5 million through 2025 and $1.1 million in 2026, assuming profitability and a 39% tax rate. Based on current business plans, we believe that our cash tax obligations through 2026 will be significantly reduced by these tax attributes. Other acquisitions have resulted in additional tax deductible goodwill and intangible assets that will generate tax savings, but are not material to the Company’s consolidated financial statements.

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Results of Operations

Three months ended June 30, 2016 compared to the three months ended June 30, 2015

The following table sets forth our consolidated statement of operations data for the periods indicated:

	Three Months Ended June 30,
(U.S. Dollars in thousands)	2016			2015			$ Change		% Change
Net sales	$	367,376		$	288,360			79,016		27.4	%
Cost of goods sold		243,229			192,463			50,766		26.4	%
Gross profit		124,147			95,897			28,250		29.5	%
Operating expenses:
Selling and service		42,366			28,474			13,892		48.8	%
Research and development		9,889			8,412			1,477		17.6	%
General and administrative		19,593			13,564			6,029		44.4	%
Amortization of intangible assets		8,217			5,980			2,237		37.4	%
Total operating expenses		80,065			56,430			23,635		41.9	%
Income from operations		44,082			39,467			4,615		11.7	%
Total other income (expense), net		(11,218	)		(15,995	)		4,777		-29.9	%
Income before provision for income taxes		32,864			23,472			9,392		40.0	%
Provision for income taxes		11,921			8,628			3,293		38.2	%
Net income		20,943			14,844			6,099		41.1	%
Net income attributable to noncontrolling interests		55			-			55		N/A
Net income attributable to Generac Holdings Inc.	$	20,888		$	14,844			6,044		40.7	%

The following table sets forth our reportable segment information for the periods indicated:

	Net Sales
	Three Months Ended June 30,
	2016		2015		$ Change		% Change
Domestic	$	286,720	$	258,117		28,603		11.1	%
International		80,656		30,243		50,413		166.7	%
Total net sales	$	367,376	$	288,360		79,016		27.4	%

	Adjusted EBITDA
	Three Months Ended June 30,
	2016		2015		$ Change		% Change
Domestic	$	57,364	$	48,838		8,526		17.5	%
International		6,562		3,584		2,978		83.1	%
Total Adjusted EBITDA	$	63,926	$	52,422		11,504		21.9	%

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The following table sets forth our product class information for the periods indicated:

	Three Months Ended June 30,
	2016		2015		$ Change		% Change
Residential products	$	181,735	$	133,466		48,269		36.2	%
Commercial & industrial products		156,730		134,580		22,150		16.5	%
Other		28,911		20,314		8,597		42.3	%
Total net sales	$	367,376	$	288,360		79,016		27.4	%

Net sales.    The increase in Domestic sales for the three months ended June 30, 2016 was primarily due to the contribution from the CHP acquisition, which closed in August 2015, and an increase in shipments of home standby generators. These increases were partially offset by the ongoing significant declines in shipments of mobile products into oil & gas and general rental markets.

The increase in International sales for the three months ended June 30, 2016 was largely due to the contribution from the Pramac acquisition, which closed in March 2016, partially offset by declines in organic shipments into the United Kingdom and Latin American markets.

The total contribution from non-annualized recent acquisitions to the three months ended June 30, 2016 was $88.1 million.

Gross profit.    Gross profit margin for the second quarter of 2016 was 33.8% compared to 33.3% in the prior-year second quarter. The current year quarter includes $3.4 million of expense relating to the purchase accounting adjustment for the step-up in value of inventories relating to the Pramac acquisition. Excluding the impact of this adjustment, gross profit margin was 34.7%, an improvement of 140 basis points as compared to the prior year. The increase was primarily driven by the impact of lower commodity costs and overseas sourcing benefits from a stronger U.S. Dollar in recent quarters, along with favorable overall product mix, partially offset by the net mix impact from recent acquisitions.

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Operating expenses.    The increase in operating expenses was primarily due to the addition of recurring operating expenses associated with recent acquisitions.

Other expense.    The decrease in other expense was primarily due to a prior year non-cash $3.4 million loss on extinguishment of debt resulting from a voluntary $100.0 million prepayment of term loan debt.

Provision for income taxes.    The effective income tax rates for the three months ended June 30, 2016 and 2015 were 36.4% and 36.8%, respectively.

Net income attributable to Generac Holdings Inc.    The increase in net income attributable to Generac Holdings Inc. was primarily due to the factors outlined above, as adjusted for net income attributable to noncontrolling interests.

Adjusted EBITDA.    Adjusted EBITDA margins for the Domestic segment for the three months ended June 30, 2016 were 20.0% of net sales as compared to 18.8% of net sales for the three months ended June 30, 2015. This increase was primarily due to favorable product mix as well as the favorable impact of lower commodity costs and overseas sourcing benefits from a stronger U.S. Dollar in recent quarters, partially offset by higher operating expenses.

Adjusted EBITDA margins for the International segment for the three months ended June 30, 2016 were 8.2% of net sales as compared to 13.1% of net sales for the three months ended June 30, 2015. This decrease was primarily due to unfavorable product and customer mix along with lower absorption of fixed manufacturing overhead costs and reduced leverage of operating expenses on the lower organic sales volumes.

Adjusted Net Income.    Adjusted Net Income of $42.7 million for the three months ended June 30, 2016 increased 21.0% from $35.3 million for the three months ended June 30, 2015, due to the factors outlined above, partially offset by the adjusted net income attributable to noncontrolling interests and an increase in cash income tax expense.

See “Non-GAAP Measures” for a discussion of how we calculate Adjusted EBITDA and Adjusted Net Income and the limitations on their usefulness.

Six months ended June 30, 2016 compared to the six months ended June 30, 2015

The following table sets forth our consolidated statement of operations data for the periods indicated:

	Six Months Ended June 30,
(U.S. Dollars in thousands)	2016			2015			$ Change			% Change
Net sales	$	653,911		$	600,178			53,733			9.0	%
Cost of goods sold		431,704			401,678			30,026			7.5	%
Gross profit		222,207			198,500			23,707			11.9	%
Operating expenses:
Selling and service		79,635			58,602			21,033			35.9	%
Research and development		18,086			16,575			1,511			9.1	%
General and administrative		37,426			27,770			9,656			34.8	%
Amortization of intangible assets		16,014			11,175			4,839			43.3	%
Total operating expenses		151,161			114,122			37,039			32.5	%
Income from operations		71,046			84,378			(13,332	)		-15.8	%
Total other income (expense), net		(22,251	)		(30,203	)		7,952			-26.3	%
Income before provision for income taxes		48,795			54,175			(5,380	)		-9.9	%
Provision for income taxes		17,640			19,646			(2,006	)		-10.2	%
Net income		31,155			34,529			(3,374	)		-9.8	%
Net income attributable to noncontrolling interests		59			-			59			N/A
Net income attributable to Generac Holdings Inc.	$	31,096		$	34,529			(3,433	)		-9.9	%

 

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The following table sets forth our reportable segment information for the periods indicated:

	Net Sales
	Six Months Ended June 30,
	2016		2015		$ Change			% Change
Domestic	$	534,736	$	545,729		(10,993	)		-2.0	%
International		119,175		54,449		64,726			118.9	%
Total net sales	$	653,911	$	600,178		53,733			9.0	%

	Adjusted EBITDA
	Six Months Ended June 30,
	2016		2015		$ Change		% Change
Domestic	$	104,183	$	103,283		900		0.9	%
International		9,552		6,277		3,275		52.2	%
Total Adjusted EBITDA	$	113,735	$	109,560		4,175		3.8	%

The following table sets forth our product class information for the periods indicated:

	Six Months Ended June 30,
	2016		2015		$ Change			% Change
Residential products	$	340,716	$	290,300		50,416			17.4	%
Commercial & industrial products		259,720		268,343		(8,623	)		-3.2	%
Other		53,475		41,535		11,940			28.7	%
Total net sales	$	653,911	$	600,178		53,733			9.0	%

Net sales.    The decrease in Domestic sales for the six months ended June 30, 2016 was primarily due to a significant reduction in shipments of mobile products into oil & gas and general rental markets, partially offset by the contribution from the CHP acquisition.

The increase in International sales for the six months ended June 30, 2016 was largely due to the contribution from the Pramac acquisition, partially offset by declines in organic shipments into the United Kingdom and Latin American markets.

The total contribution from non-annualized recent acquisitions to the six months ended June 30, 2016 was $125.3 million.

Net income attributable to Generac Holdings Inc.    Net income attributable to Generac Holdings Inc. for the six months ended June 30, 2016 includes the impact of $7.1 million of non-recurring, pre-tax charges relating to business optimization and restructuring costs to address the impact of the significant and extended downturn for capital spending within the oil & gas industry. The cost actions taken include the consolidation of production facilities, headcount reductions, certain non-cash asset write-downs and other non-recurring product-related charges. The charges consist of $2.7 million classified within cost of goods sold and $4.4 million classified within operating expenses. The decrease in net income attributable to Generac Holdings Inc. was primarily due to these charges and the adjustment for net income attributable to noncontrolling interests, partially offset by the other factors outlined in this section.

Gross profit.    Gross profit margin for the first half of 2016 was 34.0% compared to 33.1% in the prior-year first half, which includes the impact of the aforementioned $2.7 million of business optimization charges classified within cost of goods sold, as well as $3.4 million of expense relating to the purchase accounting adjustment for the step-up in value of inventories relating to the Pramac acquisition. Excluding the impact of these adjustments, gross profit margin was 34.9%, an improvement of 180 basis points over the prior year. The increase was primarily due to favorable overall product mix as well as the favorable impact of lower commodity costs and overseas sourcing benefits from a stronger U.S. Dollar in recent quarters. In addition, gross margin in the prior year was negatively impacted by temporary increases in certain costs associated with the west coast port congestion as well as other overhead-related costs that did not repeat in the current year. These factors were partially offset by the net mix impact from recent acquisitions.

Operating expenses.    Excluding the impact of the aforementioned $4.4 million of business optimization charges classified within operating expenses, operating expenses increased $32.6 million, or 28.6%, to $146.7 million for the six months ended June 30, 2016 from $114.1 million for the six months ended June 30, 2015. The increase was primarily due to the addition of recurring operating expenses associated with recent acquisitions.

Other expense.    The decrease in other expense was primarily due to a prior year non-cash $4.8 million loss on extinguishment of debt resulting from $150.0 million of voluntary prepayments of term loan debt.

Provision for income taxes.    The effective income tax rates for the six months ended June 30, 2016 and 2015 were 36.2% and 36.3%, respectively.

Adjusted EBITDA.    Adjusted EBITDA margins for the Domestic segment for the six months ended June 30, 2016 were 19.5% of net sales as compared to 18.9% of net sales for the six months ended June 30, 2015. This increase was primarily due to favorable product mix as well as the favorable impact of lower commodity costs and overseas sourcing benefits from a stronger U.S. Dollar in recent quarters, partially offset by higher operating expenses.

Adjusted EBITDA margins for the International segment for the six months ended June 30, 2016 were 8.0% of net sales as compared to 12.2% of net sales for the six months ended June 30, 2015. This decrease was primarily due to unfavorable product and customer mix along with lower absorption of fixed manufacturing overhead costs and reduced leverage of operating expenses on the lower organic sales volumes.

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Adjusted Net Income.    Adjusted Net Income of $73.6 million for the six months ended June 30, 2016 increased 5.6% from $69.7 million for the six months ended June 30, 2015, due to a decrease in cash income tax expense and the factors outlined above, partially offset by the adjusted net income attributable to noncontrolling interests.

See “Non-GAAP Measures” for a discussion of how we calculate Adjusted EBITDA and Adjusted Net Income and the limitations on their usefulness.

Liquidity and Financial Condition

Our primary cash requirements include payment for our raw material and component supplies, salaries & benefits, operating expenses, interest and principal payments on our debt and capital expenditures. We finance our operations primarily through cash flow generated from operating activities and, if necessary, borrowings under our Amended ABL Facility.

The Company’s credit agreements provide for a $1.2 billion Term Loan and include a $300.0 million uncommitted incremental term loan facility. The Term Loan matures on May 31, 2020. The Term Loan initially bore interest at rates based upon either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. Beginning in the second quarter of 2014, and measured each subsequent quarter thereafter, the applicable margin related to base rate loans is reduced to 1.50% and the applicable margin related to LIBOR rate loans is reduced to 2.50%, to the extent that the Company’s net debt leverage ratio, as defined in the Term Loan, is below 3.00 to 1.00 for that measurement period. The Company’s net debt leverage ratio as of June 30, 2016 was above 3.00 to 1.00. As of June 30, 2016, the Company is in compliance with all covenants of the Term Loan. There are no financial maintenance covenants on the Term Loan.

The Company’s credit agreements also provide for the $250.0 million Amended ABL Facility. The maturity date of the Amended ABL Facility is May 29, 2020. In May 2015, the Company borrowed $100.0 million under the Amended ABL Facility, which was used as a voluntary prepayment of Term Loan borrowings. As of June 30, 2016, there was $100.0 million outstanding under the Amended ABL Facility, and the Company is in compliance with all covenants of the Amended ABL Facility.

For additional information regarding our credit agreements and their potential impact, see Note 9, “Credit Agreements” of our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

At June 30, 2016, we had cash and cash equivalents on hand of $75.6 million and $142.1 million of availability under our Amended ABL Facility, net of outstanding letters of credit.

In August 2015, the Company’s Board of Directors approved a $200.0 million stock repurchase program. Under the program, the Company may repurchase up to $200.0 million of its common stock over 24 months from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchase may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s shares of common stock and general market and economic conditions, applicable legal requirements, and compliance with the terms of the Company’s outstanding indebtedness. The repurchases will be funded from cash on hand or available borrowings. The stock repurchase program may be suspended or discontinued at any time without prior notice. For the three months ended June 30, 2016, the Company repurchased 935,000 shares of its common stock for $34.6 million, funded with cash on hand. Since the inception of the program, the Company has repurchased 4,238,500 shares of its common stock for $134.5 million, funded with cash on hand.

Long-term Liquidity

We believe that our cash flow from operations and availability under the Amended ABL Facility, combined with relatively low ongoing capital expenditure requirements and favorable tax attributes (which result in a lower cash tax rate as compared to the U.S. statutory tax rate) provide us with sufficient capital to continue to grow our business in the future. We will use a portion of our cash flow to pay interest and principal on our outstanding debt as well as repurchase shares of our common stock, impacting the amount available for working capital, capital expenditures and other general corporate purposes. As we continue to expand our business, we may require additional capital to fund working capital, capital expenditures or acquisitions.

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Cash Flow

Six months ended June 30, 2016 compared to the six months ended June 30, 2015

The following table summarizes our cash flows by category for the periods presented:

	Six Months Ended June 30,
(U.S. Dollars in thousands)	2016			2015			$ Change			% Change
Net cash provided by operating activities	$	81,235		$	41,579			39,656			95.4	%
Net cash used in investing activities		(74,843	)		(13,937	)		(60,906	)		437.0	%
Net cash used in financing activities		(46,723	)		(59,752	)		13,029			-21.8	%

The 95.4% increase in net cash provided by operating activities was primarily driven by a large reduction in working capital during the current year as compared to a large increase in the prior year.

The increase in net cash used in investing activities for the six months ended June 30, 2016 was primarily due to cash payments of $60.9 million related to the acquisition of Pramac in the first quarter of 2016.

Net cash used in financing activities for the six months ended June 30, 2016 primarily represents $34.6 million of payments for the repurchase of the Company’s common stock, $17.0 million of debt repayments ($10.7 million of long-term borrowings and $6.3 million of short-term borrowings) and $12.1 million related to the net share settlement of equity awards. These payments were partially offset by $10.3 million cash proceeds from short-term borrowings and a $6.7 million cash inflow related to excess tax benefits of equity awards.

Net cash used in financing activities for the six months ended June 30, 2015 primarily represents $161.8 million of debt repayments ($150.4 million of long-term borrowings and $11.4 million of short-term borrowings) partially offset by $109.0 million cash proceeds from borrowings ($100.0 million from long-term borrowings under the ABL facility and $9.0 million from short-term borrowings). In addition, the Company paid $12.3 million related to the net share settlement of equity awards, which was partially offset by $8.9 million of cash inflow related to the excess tax benefits of equity awards.

Contractual Obligations

In connection with the Pramac acquisition on March 1, 2016, the Company assumed $21.1 million of short-term borrowings and $18.6 million of long-term debt and capital lease obligations. Refer to Note 2, “Acquisitions,” to the condensed consolidated financial statements for further information. Other than the assumption of the Pramac debt, there have been no material changes to our contractual obligations since the February 26, 2016 filing of our Annual Report on Form 10-K for the year ended December 31, 2015.

Off-Balance Sheet Arrangements

There have been no material changes to off-balance sheet arrangements since the February 26, 2016 filing of our Annual Report on Form 10-K for the year ended December 31, 2015.

Critical Accounting Policies

There have been no material changes in our critical accounting policies since the February 26, 2016 filing of our Annual Report on Form 10-K for the year ended December 31, 2015.

As discussed in our Annual Report on Form 10-K for the year ended December 31, 2015, in preparing the financial statements in accordance with U.S. GAAP, we are required to make estimates and assumptions that have an impact on the asset, liability, revenue and expense amounts reported. These estimates can also affect our supplemental information disclosures, including information about contingencies, risk and financial condition. We believe, given current facts and circumstances, that our estimates and assumptions are reasonable, adhere to U.S. GAAP and are consistently applied. Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates and estimates may vary as new facts and circumstances arise. We make routine estimates and judgments in determining net realizable value of accounts receivable, inventories, property and equipment, and prepaid expenses. We believe that our most critical accounting estimates and assumptions are in the following areas: goodwill and other intangible asset impairment assessment; business combinations and purchase accounting; defined benefit pension obligations; estimates of allowance for doubtful accounts, excess and obsolete inventory reserves, product warranty and other contingencies; derivative accounting; income taxes and share based compensation.

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Non-GAAP Measures

Adjusted EBITDA

The computation of Adjusted EBITDA attributable to the Generac Holdings Inc. is based on the definition of EBITDA contained in our credit agreement dated as of May 31, 2013, as amended. To supplement our condensed consolidated financial statements presented in accordance with U.S. GAAP, we provide the computation of Adjusted EBITDA attributable to the Company, taking into account certain charges and gains that were recognized during the periods presented.

We view Adjusted EBITDA as a key measure of our performance. We present Adjusted EBITDA not only due to its importance for purposes of our credit agreements but also because it assists us in comparing our performance across reporting periods on a consistent basis as it excludes items that we do not believe are indicative of our core operating performance. Our management uses Adjusted EBITDA:

• for planning purposes, including the preparation of our annual operating budget and developing and refining our internal projections for future periods;

• to allocate resources to enhance the financial performance of our business;

• as a benchmark for the determination of the bonus component of compensation for our senior executives under our management incentive plan, as described further in our 2016 proxy statement;

• to evaluate the effectiveness of our business strategies and as a supplemental tool in evaluating our performance against our budget for each period; and

• in communications with our Board of Directors and investors concerning our financial performance.

We believe Adjusted EBITDA is used by securities analysts, investors and other interested parties in the evaluation of the Company. Management believes the disclosure of Adjusted EBITDA offers an additional financial metric that, when coupled with U.S. GAAP results and the reconciliation to U.S. GAAP results, provides a more complete understanding of our results of operations and the factors and trends affecting our business. We believe Adjusted EBITDA is useful to investors for the following reasons:

• Adjusted EBITDA and similar non-GAAP measures are widely used by investors to measure a company's operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, tax jurisdictions, capital structures and the methods by which assets were acquired;

• investors can use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of our company, including our ability to service our debt and other cash needs; and

• by comparing our Adjusted EBITDA in different historical periods, our investors can evaluate our operating performance excluding the impact of items described below.

The adjustments included in the reconciliation table listed below are provided for under our Term Loan and Amended ABL Facility, and also are presented to illustrate the operating performance of our business in a manner consistent with the presentation used by our management and Board of Directors. These adjustments eliminate the impact of a number of items that:

• we do not consider indicative of our ongoing operating performance, such as non-cash write-downs and other charges, non-cash gains and write-offs relating to the retirement of debt, severance costs and other restructuring-related business optimization expenses;

• we believe to be akin to, or associated with, interest expense, such as administrative agent fees, revolving credit facility commitment fees and letter of credit fees; or

• are non-cash in nature, such as share-based compensation.

We explain in more detail in footnotes (a) through (f) below why we believe these adjustments are useful in calculating Adjusted EBITDA as a measure of our operating performance.

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Adjusted EBITDA does not represent, and should not be a substitute for, net income or cash flows from operations as determined in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

• Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

• several of the adjustments that we use in calculating Adjusted EBITDA, such as non-cash write-downs and other charges, while not involving cash expense, do have a negative impact on the value of our assets as reflected in our consolidated balance sheet prepared in accordance with U.S. GAAP; and

• other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Furthermore, as noted above, one of our uses of Adjusted EBITDA is as a benchmark for determining elements of compensation for our senior executives. At the same time, some or all of these senior executives have responsibility for monitoring our financial results, generally including the adjustments in calculating Adjusted EBITDA (subject ultimately to review by our Board of Directors in the context of the Board's review of our quarterly financial statements). While many of the adjustments (for example, transaction costs and credit facility fees), involve mathematical application of items reflected in our financial statements, others involve a degree of judgment and discretion. While we believe all of these adjustments are appropriate, and while the quarterly calculations are subject to review by our Board of Directors in the context of the Board's review of our quarterly financial statements and certification by our Chief Financial Officer in a compliance certificate provided to the lenders under our Term Loan and Amended ABL Facility credit agreements, this discretion may be viewed as an additional limitation on the use of Adjusted EBITDA as an analytical tool.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only supplementally.

The following table presents a reconciliation of net income to Adjusted EBITDA attributable to Generac Holdings Inc.:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars in thousands)	2016			2015			2016		2015
Net income attributable to Generac Holdings Inc.	$	20,888		$	14,844		$	31,096	$	34,529
Net income attributable to noncontrolling interests (a)		55			-			59		-
Net income		20,943			14,844			31,155		34,529
Interest expense		11,380			10,763			22,415		22,031
Depreciation and amortization		13,650			10,129			26,443		19,163
Provision for income taxes		11,921			8,628			17,640		19,646
Non-cash write-down and other adjustments (b)		2,909			404			2,782		1,976
Non-cash share-based compensation expense (c)		2,901			2,582			5,386		5,090
Loss on extinguishment of debt (d)		-			3,427			-		4,795
Transaction costs and credit facility fees (e)		237			481			760		682
Business optimization expenses (f)		-			1,444			7,106		1,738
Other		(15	)		(280	)		48		(90	)
Adjusted EBITDA		63,926			52,422			113,735		109,560
Adjusted EBITDA attributable to noncontrolling interests		1,623			-			2,307		-
Adjusted EBITDA attributable to Generac Holdings Inc.	$	62,303		$	52,422		$	111,428	$	109,560

(a)   Includes the noncontrolling interests' share of expenses related to Pramac purchase accounting adjustments, including the step-up in value of inventories and intangible amortization, of $4.3 million and $5.5 million for the three and six months ended June 30, 2016, respectively.

(b)   Represents the following non-cash charges for the three and six months ended June 30, 2016 and 2015: gains/losses on disposals of assets, unrealized mark-to-market adjustments on commodity contracts, foreign currency gains/losses and certain purchase accounting related adjustments.

We believe that adjusting net income for these non-cash charges is useful for the following reasons:

● The gains/losses on disposals of assets result from the sale of assets that are no longer useful in our business and therefore represent gains or losses that are not from our core operations;

● The adjustments for unrealized mark-to-market gains and losses on commodity contracts represent non-cash items to reflect changes in the fair value of forward contracts that have not been settled or terminated. We believe it is useful to adjust net income for these items because the charges do not represent a cash outlay in the period in which the charge is incurred, although Adjusted EBITDA must always be used together with our U.S. GAAP statements of comprehensive income and cash flows to capture the full effect of these contracts on our operating performance; and

● The purchase accounting adjustments represent non-cash items to reflect fair value at the date of acquisition, and therefore do not reflect our ongoing operations.

24

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(c)  Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their vesting period.

(d)  Represents the non-cash write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.

(e) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities, such as administrative agent fees and revolving credit facility commitment fees under our Term Loan and Amended ABL Facility, which we believe to be akin to, or associated with, interest expense and whose inclusion in Adjusted EBITDA is therefore similar to the inclusion of interest expense in that calculation.

(f) For the six months ended June 30, 2016, represents charges relating to business optimization and restructuring costs to address the significant and extended downturn for capital spending within the oil & gas industry. For the three and six months ended June 30, 2015, represents severance and other non-recurring restructuring charges related to the integration of our facilities, which represent expenses that are not from our core operations and do not reflect our ongoing operations.

Adjusted Net Income

To further supplement our condensed consolidated financial statements in accordance with U.S. GAAP, we provide the computation of Adjusted Net Income attributable to the Company, which is defined as net income before noncontrolling interest and provision for income taxes adjusted for the following items: cash income tax expense, amortization of intangible assets, amortization of deferred financing costs and original issue discount related to our debt, intangible impairment charges, certain transaction costs and other purchase accounting adjustments, losses on extinguishment of debt, business optimization expenses, certain other non-cash gains and losses, and adjusted net income attributable to noncontrolling interests, as set forth in the reconciliation table below.

We believe Adjusted Net Income is used by securities analysts, investors and other interested parties in the evaluation of our company’s operations. Management believes the disclosure of Adjusted Net Income offers an additional financial metric that, when used in conjunction with U.S. GAAP results and the reconciliation to U.S. GAAP results, provides a more complete understanding of our results of operations, our cash flows, and the factors and trends affecting our business.

The adjustments included in the reconciliation table listed below are presented to illustrate the operating performance of our business in a manner consistent with the presentation used by investors and securities analysts. Similar to the Adjusted EBITDA reconciliation, these adjustments eliminate the impact of a number of items we do not consider indicative of our ongoing operating performance or cash flows, such as amortization costs, transaction costs and write-offs relating to the retirement of debt. We also make adjustments to present cash taxes paid as a result of our favorable tax attributes.

Similar to Adjusted EBITDA, Adjusted Net Income does not represent, and should not be a substitute for, net income or cash flows from operations as determined in accordance with U.S. GAAP. Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

• Adjusted Net Income does not reflect changes in, or cash requirements for, our working capital needs;

• although amortization is a non-cash charge, the assets being amortized may have to be replaced in the future, and Adjusted Net Income does not reflect any cash requirements for such replacements; and

• other companies may calculate Adjusted Net Income differently than we do, limiting its usefulness as a comparative measure.

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The following table presents a reconciliation of net income to Adjusted Net Income attributable to Generac Holdings Inc.:

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. Dollars in thousands, except share and per share data)	2016			2015			2016			2015
Net income attributable to Generac Holdings Inc.	$	20,888		$	14,844		$	31,096		$	34,529
Net income attributable to noncontrolling interests		55			-			59			-
Net income		20,943			14,844			31,155			34,529
Provision for income taxes		11,921			8,628			17,640			19,646
Income before provision for income taxes		32,864			23,472			48,795			54,175
Amortization of intangible assets		8,217			5,980			16,014			11,175
Amortization of deferred finance costs and original issue discount		1,066			1,639			2,122			3,344
Loss on extinguishment of debt		-			3,427			-			4,795
Transaction costs and other purchase accounting adjustments (a)		3,443			240			4,690			503
Business optimization expenses		-			1,444			7,106			1,738
Adjusted net income before provision for income taxes		45,590			36,202			78,727			75,730
Cash income tax expense (b)		(1,450	)		(920	)		(3,270	)		(6,035	)
Adjusted net income		44,140			35,282			75,457			69,695
Adjusted net income attributable to noncontrolling interests		1,451			-			1,881			-
Adjusted net income attributable to Generac Holdings Inc.	$	42,689		$	35,282		$	73,576		$	69,695
Adjusted net income per common share attributable to Generac Holdings, Inc. - diluted:	$	0.64		$	0.50		$	1.11		$	0.99
Weighted average common shares outstanding - diluted:		66,388,581			70,063,063			66,465,770			70,099,940

(a) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, and certain purchase accounting adjustments.

(b) Amount for the three and six months ended June 30, 2016 is based on an anticipated cash income tax rate of approximately 5% for the full year-ended 2016. Amount for the three and six months ended June 30, 2015 is based on an anticipated cash income tax rate of approximately 6% for the full year-ended 2015. Cash income tax expense for the respective periods is based on the projected taxable income and corresponding cash tax rate for the full year after considering the effects of current and deferred income tax items, and is calculated for each respective period by applying the derived cash tax rate to the period’s pretax income.

New Accounting Standards

Refer to Note 1, “Description of Business and Basis of Presentation,” to the condensed consolidated financial statements for further information on the new accounting standards applicable to the Company.

Item 3.          Quantitative and Qualitative Disclosures about Market Risk

Refer to Note 3, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements for a discussion of changes in commodity, currency and interest rate related risks and hedging activities. Otherwise, there have been no material changes in market risk from the information provided in Item 7A (Quantitative and Qualitative Disclosures About Market Risk) of our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 4.           Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

In January 2016, the Company implemented a new global enterprise resource planning (ERP) system for a majority of our business. In connection with this ERP system implementation, we have updated our internal controls over financial reporting, as necessary, to accommodate modifications to our business processes and accounting procedures. Additional implementations will occur at the Company’s remaining locations over a multi-year period.

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On March 1, 2016, the Company acquired a 65% ownership interest in Pramac. As a result of the acquisition, we are in the process of reviewing the internal control structure of Pramac and, if necessary, will make appropriate changes as we incorporate our controls and procedures into the acquired business. We intend to exclude the operations of Pramac from the scope of our Management Report on Internal Control Over Financial Reporting for the year ended December 31, 2016.

Other than the continuing assessment of controls for the ERP system implementation and Pramac acquisition noted above, there have been no changes during the three months ended June 30, 2016 in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.          Legal Proceedings

From time to time, we are involved in legal proceedings primarily involving product liability, employment matters and general commercial disputes arising in the ordinary course of our business. As of June 30, 2016, we believe that there is no litigation pending that would have a material effect on our results of operations or financial condition.

Item 1A.      Risk Factors

There have been no material changes in our risk factors since the February 26, 2016 filing of our Annual Report on Form 10-K for the year ended December 31, 2015.

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

The following table summarizes our stock repurchase activity for the three months ended June 30, 2016, which consisted of the withholding of shares upon the vesting of restricted stock awards to pay related withholding taxes on behalf of the recipient and shares repurchased under the Company’s $200.0 million stock repurchase program:

			Total Number of Shares Purchased		Average Price Paid per Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs		Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs
04/01/2016	–	04/30/2016		-		-		-		100,057,756
05/01/2016	–	05/31/2016		480,825	$	36.04		480,000		82,757,189
06/01/2016	–	06/30/2016		455,000		37.97		455,000		65,481,994
Total				935,825	$	36.98

For equity compensation plan information, please refer to our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 6.           Exhibits

See “Exhibit Index” for documents filed herewith and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Generac Holdings Inc.
By:	/s/ York A. Ragen
	York A. Ragen
	Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

Dated: August 5, 2016

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Item 6. EXHIBIT INDEX

Exhibits Number	Description
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 Securities Exchange Act Rules 13a-14(a) and 15d-14(a), pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14 Securities Exchange Act Rules 13a-14(a) and 15d-14(a), pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) related Notes to Condensed Consolidated Financial Statements.

*	Filed herewith.
**	Furnished herewith.

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

I, Aaron Jagdfeld, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Generac Holdings Inc.; 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 5, 2016	/s/ Aaron Jagdfeld
	Name:	Aaron Jagdfeld
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

I, York A. Ragen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Generac Holdings Inc.; 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 5, 2016	/s/ York A. Ragen
	Name:	York A. Ragen
	Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Executive Officer of Generac Holdings Inc. (the “Company”), does hereby certify that to my knowledge:

1. the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2016 fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 5, 2016	/s/ Aaron Jagdfeld
	Name:	Aaron Jagdfeld
	Title:	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Chief Financial Officer of Generac Holdings Inc. (the “Company”), does hereby certify that to my knowledge:

1. the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2016 fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 5, 2016	/s/ York A. Ragen
	Name:	York A. Ragen
	Title:	Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 01, 2016
Document Information [Line Items]
Entity Registrant Name	GENERAC HOLDINGS INC.
Entity Central Index Key	0001474735
Trading Symbol	gnrc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding (in shares)		65,864,979
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 75,641	$ 115,857
Accounts receivable, less allowance for doubtful accounts	243,087	182,185
Inventories	366,745	325,375
Prepaid expenses and other assets	13,125	8,600
Total current assets	698,598	632,017
Property and equipment, net	206,700	184,213
Customer lists, net	49,883	39,313
Patents, net	54,009	53,772
Other intangible assets, net	3,179	2,768
Tradenames, net	159,952	161,057
Goodwill	716,845	669,719
Deferred income taxes	24,421	34,812
Other assets	2,948	964
Total assets	1,916,535	1,778,635
Current liabilities:
Short-term borrowings	33,649	8,594
Accounts payable	166,693	108,332
Accrued wages and employee benefits	22,193	13,101
Other accrued liabilities	88,609	82,540
Current portion of long-term borrowings and capital lease obligations	12,897	657
Total current liabilities	324,041	213,224
Long-term borrowings and capital lease obligations	1,034,836	1,037,132
Deferred income taxes	8,745	4,950
Other long-term liabilities	62,890	57,458
Total liabilities	1,430,512	1,312,764
Redeemable noncontrolling interests	35,685
Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 70,142,664 and 69,582,669 shares issued at June 30, 2016 and December 31, 2015, respectively	701	696
Additional paid-in capital	443,833	443,109
Treasury stock, at cost	(146,801)	(111,516)
Excess purchase price over predecessor basis	(202,116)	(202,116)
Retained earnings	389,269	358,173
Accumulated other comprehensive loss	(34,495)	(22,475)
Stockholders' equity attributable to Generac Holdings, Inc.	450,391	465,871
Noncontrolling interests	(53)
Total stockholders' equity	450,338	465,871
Total liabilities and stockholders’ equity	$ 1,916,535	$ 1,778,635

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	70,142,664	69,582,669

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net sales		$ 367,376	$ 288,360	$ 653,911	$ 600,178
Costs of goods sold		243,229	192,463	431,704	401,678
Gross profit		124,147	95,897	222,207	198,500
Operating expenses:
Selling and service		42,366	28,474	79,635	58,602
Research and development		9,889	8,412	18,086	16,575
General and administrative		19,593	13,564	37,426	27,770
Amortization of intangibles		8,217	5,980	16,014	11,175
Total operating expenses		80,065	56,430	151,161	114,122
Income from operations		44,082	39,467	71,046	84,378
Other (expense) income:
Interest expense		(11,380)	(10,763)	(22,415)	(22,031)
Investment income		4	35	36	72
Loss on extinguishment of debt	[1]		(3,427)		(4,795)
Costs related to acquisition				(417)
Other, net		158	(1,840)	545	(3,449)
Total other expense, net		(11,218)	(15,995)	(22,251)	(30,203)
Income before provision for income taxes		32,864	23,472	48,795	54,175
Provision for income taxes		11,921	8,628	17,640	19,646
Net income		20,943	14,844	31,155	34,529
Income attributable to noncontrolling interests		55		59
Net income attributable to Generac Holdings Inc.		$ 20,888	$ 14,844	$ 31,096	$ 34,529
Net income attributable to Generac Holdings Inc. per common share - basic: (in dollars per share)		$ 0.32	$ 0.22	$ 0.47	$ 0.50
Weighted average common shares outstanding - basic: (in shares)		65,870,714	68,961,877	65,955,455	68,886,672
Net income attributable to Generac Holdings Inc. per common share - diluted: (in dollars per share)		$ 0.31	$ 0.21	$ 0.47	$ 0.49
Weighted average common shares outstanding - diluted: (in shares)		66,388,581	70,063,063	66,465,770	70,099,940
Comprehensive income		$ 7,622	$ 15,173	$ 19,076	$ 28,040

[1] Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015
Operating activities
Net income		$ 31,155	$ 34,529
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation		10,429	7,988
Amortization of intangible assets		16,014	11,175
Amortization of original issue discount and deferred financing costs		2,122	3,344
Loss on extinguishment of debt	[1]		4,795
Deferred income taxes		9,072	8,935
Share-based compensation expense	[2]	5,386	5,090
Other		46	285
Net changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(9,389)	29,944
Inventories		(1,046)	(66,312)
Other assets		2,297	(3,198)
Accounts payable		17,537	17,377
Accrued wages and employee benefits		6,166	(1,735)
Other accrued liabilities		(1,825)	(1,744)
Excess tax benefits from equity awards		(6,729)	(8,894)
Net cash provided by operating activities		81,235	41,579
Investing activities
Proceeds from sale of property and equipment		47	88
Expenditures for property and equipment		(14,004)	(14,258)
Acquisition of business, net of cash acquired		(60,886)	233
Net cash used in investing activities		(74,843)	(13,937)
Financing activities
Proceeds from short-term borrowings		10,278	9,000
Proceeds from long-term borrowings			100,000
Repayments of short-term borrowings		(6,327)	(11,366)
Repayments of long-term borrowings and capital lease obligations		(10,652)	(150,453)
Stock repurchases		(34,576)
Payment of debt issuance costs			(2,060)
Cash dividends paid		(76)	(1,427)
Taxes paid related to the net share settlement of equity awards		(12,099)	(12,347)
Excess tax benefits from equity awards		6,729	8,901
Net cash used in financing activities		(46,723)	(59,752)
Effect of exchange rate changes on cash and cash equivalents		115	(2,076)
Net decrease in cash and cash equivalents		(40,216)	(34,186)
Cash and cash equivalents at beginning of period		115,857	189,761
Cash and cash equivalents at end of period		$ 75,641	$ 155,575

[1] Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.

[2] Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.

XML

Note 1 - Description of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1.

Description of Business and

Basis of Presentation

Generac Holdings Inc. (the Company) is a leading designer and manufacturer of a wide range of power generation equipment and other engine powered products serving the residential, light-commercial, industrial, oil & gas and construction markets. Generac’s power products are available globally through a broad network of independent dealers, distributors, retailers, wholesalers and equipment rental companies, as well as sold direct to certain end user customers.

The Company has executed a number of acquisitions that support our strategic plan (as discussed in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2015). A summary of these acquisitions include the following:

● On October 3, 2011, the Company acquired substantially all of the assets of Magnum Products (Magnum), a supplier of generator powered light towers and mobile generators for a variety of industrial applications. The Magnum business is a strategic fit for the Company as it provides diversification through the introduction of new engine powered products, distribution channels and end markets.

● On December 8, 2012, the Company acquired the equity of Ottomotores UK and its affiliates (Ottomotores), with operations in Mexico City, Mexico and Curitiba, Brazil. Ottomotores is a leading manufacturer in the Mexican market for industrial diesel gensets and is a market participant throughout all of Latin America.

● On August 1, 2013, the Company acquired the equity of Tower Light SRL and its wholly-owned subsidiaries (Tower Light). Headquartered outside Milan, Italy, Tower Light is a leading developer and supplier of mobile light towers throughout Europe, the Middle East and Africa.

● On November 1, 2013, the Company purchased the assets of Baldor Electric Company’s generator division (Baldor Generators). Baldor Generators offers a complete line of power generation equipment throughout North America with power output up to 2.5MW, which expands the Company’s commercial and industrial product lines.

● On September 2, 2014, the Company acquired the equity of Pramac America LLC (Powermate), resulting in the ownership of the Powermate trade name and the right to license the DeWalt brand name for certain residential engine powered tools. This acquisition expands Generac’s residential product portfolio in the portable generator category.

● On October 1, 2014, the Company acquired MAC, Inc. (MAC). MAC is a leading manufacturer of premium-grade commercial and industrial mobile heaters for the United States and Canadian markets. The acquisition expands the Company’s portfolio of mobile power products and provides increased access to the oil & gas market.

● On August 1, 2015, the Company acquired Country Home Products and its subsidiaries (CHP). CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, which are primarily sold in North America under the DR® Power Equipment brand. The acquisition provides an expanded product lineup and additional scale to the Company’s residential engine powered products.

● On March 1, 2016, the Company acquired a majority ownership interest in PR Industrial S.r.l and its subsidiaries (Pramac). Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network.

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 (U.S. GAAP). All intercompany amounts and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet as of June 30, 2016, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2016 and 2015, and the condensed consolidated statements of cash flows for the six months ended June 30, 2016 and 2015 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments) 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 U.S. 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 disclosure normally included in consolidated financial statements prepared in accordance with U.S. 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 our Annual Report on Form 10-K for the year ended December 31, 2015.

New Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09,

Revenue from Contracts with Customers

. This guidance is the culmination of the FASB’s joint project with the International Accounting Standards Board to clarify the principles for recognizing revenue. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process that entities should follow in order to achieve that core principal. ASU 2014-09, as amended by ASU 2015-14,

Revenue from Contracts with Customers (Topic

606): D

eferral of the Effective Date

, ASU 2016-08,

Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations

, ASU 2016-10,

Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing

,

and ASU 2016-12,

Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients

, becomes effective for the Company in 2018. The guidance can be applied either on a full retrospective basis or on a modified retrospective basis in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations.

In February 2016, the FASB issued ASU 2016-02,

Leases

. This guidance is being issued to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the statement of financial position and by disclosing key information about leasing arrangements. The guidance should be applied using a modified retrospective approach and is effective for the Company in 2019, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations and financial position.

In March 2016, the FASB issued ASU 2016-09,

Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting

. This guidance is a part of the FASB’s initiative to reduce complexity in accounting standards, and includes simplification involving several aspects of the accounting for share-based payment transactions, including excess tax benefits and forfeitures. The guidance should be applied on a modified retrospective basis and is effective for the Company in 2017, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations, financial position and classification on the statements of cash flow.

In the first quarter of 2016, the Company adopted ASU 2015-03,

Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs

. As a result, the Company adjusted the impacted line items in the December 31, 2015 condensed consolidated balance sheet to conform to the current period’s presentation; decreasing both the Deferred financing costs, net and Long-term borrowings and capital lease obligations line items by $12,965. Also in the first quarter of 2016, the Company adopted ASU 2015-17,

Income Taxes: Balance Sheet Classification of Deferred Taxes

. As a result, the Company adjusted the impacted line items in the December 31, 2015 condensed consolidated balance sheet to conform to the current period’s presentation; decreasing the Deferred income taxes line item within current assets by $29,355, increasing the Deferred income taxes line item within noncurrent assets by $28,139, and decreasing the Deferred income taxes line within noncurrent liabilities by $1,216.

There are several other new accounting pronouncements issued by the FASB. Management does not believe any of these other accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

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Note 2 - Acquisitions

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2. Acquisitions

Acquisition of Pramac

On March 1, 2016, the Company acquired a 65% ownership interest in Pramac for a purchase price, net of cash acquired, of $60,886. Headquartered in Siena, Italy, Pramac is a leading global manufacturer of stationary, mobile and portable generators primarily sold under the Pramac® brand. Pramac products are sold in over 150 countries through a broad distribution network. The acquisition purchase price was funded solely through cash on hand.

The 35% noncontrolling interest in Pramac had an acquisition date fair value of $34,253, and was recorded as a redeemable noncontrolling interest in the condensed consolidated balance sheet, as the noncontrolling interest party has within its control the right to require the Company to redeem its interest in Pramac. The noncontrolling interest holder has a put option to sell their interests to the Company any time within five years from the acquisition. The put option price is either (i) a fixed amount if voluntarily exercised within the first two years after the acquisition, or (ii) based on a multiple of earnings, subject to the terms of the acquisition. Additionally, the Company holds a call option that it may redeem commencing five years from the acquisition, or earlier upon the occurrence of certain circumstances. The call option price is based on a multiple of earnings that is subject to the terms of the acquisition. Both the put and call option only provide for the complete transfer of the noncontrolling interest, with no partial transfers of interest permitted.

The Company recorded a preliminary purchase price allocation during the second quarter of 2016 based upon its estimates of the fair value of the acquired assets and assumed liabilities. The preliminary purchase price allocation was as follows:

	March 1, 2016
Accounts receivable	$	51,108
Inventories		40,180
Property and equipment		19,020
Intangible assets		27,620
Goodwill		53,665
Other assets		8,153
Total assets acquired		199,746
Short-term borrowings		21,105
Accounts payable		40,270
Long-term debt and capital lease obligations (including current portion)		18,599
Other liabilities		24,580
Redeemable noncontrolling interest		34,253
Noncontrolling interest		53
Net assets acquired	$	60,886

The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of Pramac from the date of acquisition through June 30, 2016.

Acquisition of CHP

On August 1, 2015, a subsidiary of the Company acquired CHP for a purchase price, net of cash acquired, of $74,570. Headquartered in Vergennes, Vermont, CHP is a leading manufacturer of high-quality, innovative, professional-grade engine powered equipment used in a wide variety of property maintenance applications, with sales primarily in North America. The acquisition was funded solely through cash on hand.

The Company recorded a preliminary purchase price allocation during the third quarter of 2015 based upon its estimates of the fair value of the acquired assets and assumed liabilities. As a result, the Company recorded approximately $81,726 of intangible assets, including approximately $30,076 of goodwill, as of the acquisition date. The purchase price allocation was finalized in the fourth quarter of 2015, resulting in a $6,552 decrease to total intangible assets, including an increase of $6,208 in goodwill. The goodwill ascribed to this acquisition is not deductible for tax purposes. In addition, the Company assumed $12,000 of CHP’s debt in conjunction with this acquisition. The accompanying condensed consolidated financial statements include the results of CHP from the date of acquisition through June 30, 2016.

Pro Forma Information

The following unaudited pro forma information of the Company gives effect to these acquisitions as though the transactions had occurred on January 1, 2015:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net Sales:
As reported	$	367,376	$	288,360	$	653,911	$	600,178
Pro forma		367,376		369,815		683,258		744,326
Net income attributable to Generac Holdings Inc.:
As reported	$	20,888	$	14,844	$	31,096	$	34,529
Pro forma		21,683		18,454		32,168		35,847
Net income attributable to Generac Holdings Inc. per common share - diluted
As reported	$	0.31	$	0.21	$	0.47	$	0.49
Pro forma		0.33		0.26		0.48		0.51

This unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated on January 1, 2015.

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Note 3 - Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

3

. Derivative Instruments and Hedging Activities

The Company records all derivatives in accordance with Accounting Standards Codification (ASC) 815,

Derivatives and Hedging

, which requires derivative instruments be reported on the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company is exposed to market risk such as changes in commodity prices, foreign currencies and interest rates. The Company does not hold or issue derivative financial instruments for trading purposes.

Commodities

The Company is exposed to significant price fluctuations in commodities it uses as raw materials, and periodically utilizes commodity derivatives to mitigate the impact of these potential price fluctuations on its financial results and its economic well-being. These derivatives typically have maturities of less than eighteen months. At June 30, 2016, December 31, 2015 and June 30, 2015, the Company had one, one and three commodity contracts outstanding, respectively, covering the purchases of copper.

Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net gains recognized for the three and six months ended June 30, 2016 were $82 and $76, respectively. Net losses recognized for the three and six months ended June 30, 2015 were $315 and $1,041, respectively.

Foreign Currencies

The Company is exposed to foreign currency exchange risk as a result of transactions denominated in currencies other than the U.S. Dollar. The Company periodically utilizes foreign currency forward purchase and sales contracts to manage the volatility associated with certain foreign currency purchases in the normal course of business. Contracts typically have maturities of twelve months or less. As of June 30, 2016, December 31, 2015 and June 30, 2015, the Company had twelve, six and two foreign currency contracts outstanding, respectively.

Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in cost of goods sold in the Company’s condensed consolidated statements of comprehensive income. Net gains (losses) recognized for the three and six months ended June 30, 2016 were $1 and $(178), respectively. Net losses recognized for the three and six months ended June 30, 2015 were $37 and $358, respectively.

Interest Rate Swaps

In October 2013, the Company entered into two interest rate swap agreements, and in May 2014, the Company entered into an additional interest rate swap agreement. The Company formally documented all relationships between interest rate hedging instruments and the related hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. These interest rate swap agreements qualify as cash flow hedges, and accordingly, the effective portions of the gains or losses are reported as a component of accumulated other comprehensive loss (AOCL). The cash flows of the swaps are recognized as adjustments to interest expense each period. The ineffective portions of the derivatives’ changes in fair value, if any, are immediately recognized in earnings.

Fair Value

The following table presents the fair value of all of the Company’s derivatives:

	June 30, 2016			December 31, 2015
Commodity contracts	$	82		$	(400	)
Foreign currency contracts		87			(171	)
Interest rate swaps		(4,733	)		(2,618	)

The fair value of the commodity and foreign currency contracts are included in other assets, and the fair value of the interest rate swaps are included in other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015. Excluding the impact of credit risk, the fair value of the derivative contracts as of June 30, 2016 and December 31, 2015 is a liability of $4,672 and $3,248, respectively, which represents the amount the Company would need to pay to exit the agreements on those dates.

The amount of losses recognized in AOCL in the condensed consolidated balance sheets on the effective portion of interest rate swaps designated as hedging instruments for the three and six months ended June 30, 2016 were $134 and $1,288, respectively. The amount of gains (losses) for the three and six months ended June 30, 2015 were $266 and $(1,006), respectively.

The amount of gains (losses) recognized in cost of goods sold in the condensed consolidated statements of comprehensive income for commodity and foreign currency contracts not designated as hedging instruments for the three and six months ended June 30, 2016 were $83 and $(102), respectively. The amount of losses for the three and six months ended June 30, 2015 were $352 and $1,399, respectively.

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Note 4 - Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

4

. Fair Value Measurements

ASC 820-10,

Fair Value Measurement

, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820-10 clarifies that fair value is an exit price, representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the pronouncement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and ABL facility borrowings), excluding Term Loan borrowings, approximates the fair value of these instruments based upon their short-term nature. The fair value of Term Loan borrowings, which have an aggregate carrying value of $926,390, was approximately $914,810 (Level 2) at June 30, 2016, as calculated based on independent valuations whose inputs and significant value drivers are observable.

For the fair value of the assets and liabilities measured on a recurring basis, see the fair value table in Note 3, “Derivative Instruments and Hedging Activities,” to the condensed consolidated financial statements. The fair value of all derivative contracts is classified as Level 2. The valuation techniques used to measure the fair value of derivative contracts, all of which have counterparties with high credit ratings, were based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. The fair value of derivative contracts above considers the Company’s credit risk in accordance with ASC 820-10.

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Note 5 - Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

5

. Accumulated Other Comprehensive Loss

The following presents a tabular disclosure of changes in AOCL during the three and six months ended June 30, 2016 and 2015, net of tax:

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – April 1, 2016	$	(7,102	)	$	(11,362	)	$	(2,765	)		$	(21,229	)
Other comprehensive loss before reclassifications		(13,132	)		-			(134	)	(1)		(13,266	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(13,132	)		-			(134	)			(13,266	)
Ending Balance – June 30, 2016	$	(20,234	)	$	(11,362	)	$	(2,899	)		$	(34,495	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Gain (Loss) on Cash Flow Hedges				Total
Beginning Balance – April 1, 2015	$	(7,424	)	$	(13,243	)	$	(1,918	)		$	(22,585	)
Other comprehensive income before reclassifications		63			-			266		(2)		329
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive income		63			-			266				329
Ending Balance – June 30, 2015	$	(7,361	)	$	(13,243	)	$	(1,652	)		$	(22,256	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – January 1, 2016	$	(9,502	)	$	(11,362	)	$	(1,611	)		$	(22,475	)
Other comprehensive loss before reclassifications		(10,732	)		-			(1,288	)	(3)		(12,020	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(10,732	)		-			(1,288	)			(12,020	)
Ending Balance – June 30, 2016	$	(20,234	)	$	(11,362	)	$	(2,899	)		$	(34,495	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – January 1, 2015	$	(1,878	)	$	(13,243	)	$	(646	)		$	(15,767	)
Other comprehensive loss before reclassifications		(5,483	)		-			(1,006	)	(4)		(6,489	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(5,483	)		-			(1,006	)			(6,489	)
Ending Balance – June 30, 2015	$	(7,361	)	$	(13,243	)	$	(1,652	)		$	(22,256	)

(1)	Represents unrealized losses of $(219), net of tax benefit of $85 for the three months ended June 30, 2016.
(2)	Represents unrealized gains of $431, net of tax effect of $(165) for the three months ended June 30, 2015.
(3)	Represents unrealized losses of $(2,115), net of tax benefit of $827 for the six months ended June 30, 2016.
(4)	Represents unrealized losses of $(1,643), net of tax benefit of $637 for the six months ended June 30, 2015.

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Note 6 - Segment Reporting

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

6. Segment Reporting

Effective in the second quarter of 2016, the Company changed its segment reporting from one reportable segment to two reportable segments - Domestic and International - as a result of the recent Pramac acquisition and the ongoing strategy to expand the business internationally. The Domestic segment includes the legacy Generac business and the impact of acquisitions that are based in the United States, all of which have revenues that are substantially derived from the U.S. and Canada. The International segment includes the Ottomotores, Tower Light and Pramac acquisitions, all of which have revenues that are substantially derived from outside of the U.S. and Canada. Both reportable segments design and manufacture a wide range of engine powered products. The Company has multiple operating segments, which it aggregates into the two reportable segments, based on materially similar economic characteristics, products, production processes, classes of customers and distribution methods.

	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
Reportable Segments	2016		2015		2016		2015
Domestic	$	286,720	$	258,117	$	534,736	$	545,729
International		80,656		30,243		119,175		54,449
Total net sales	$	367,376	$	288,360	$	653,911	$	600,178

The Company's product offerings consist primarily of power products with a range of power output geared for varying end customer uses. Residential products and commercial & industrial products are each a class of products based on similar power output and end customer usage. The breakout of net sales between residential, commercial & industrial, and other products by product class is as follows:

	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
Product Classes	2016		2015		2016		2015
Residential products	$	181,735	$	133,466	$	340,716	$	290,300
Commercial & industrial products		156,730		134,580		259,720		268,343
Other		28,911		20,314		53,475		41,535
Total net sales	$	367,376	$	288,360	$	653,911	$	600,178

Management evaluates the performance of its segments based primarily on Adjusted EBITDA, which is a non-GAAP measure, and therefore reconciled to Income before provision for income taxes below. The computation of Adjusted EBITDA is based on the definition that is contained in the Company’s credit agreements.

	Adjusted EBITDA
	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Domestic	$	57,352		$	48,457		$	104,212		$	102,901
International		6,574			3,965			9,523			6,659
Total adjusted EBITDA	$	63,926		$	52,422		$	113,735		$	109,560
Interest expense		(11,380	)		(10,763	)		(22,415	)		(22,031	)
Depreciation and amortization		(13,650	)		(10,129	)		(26,443	)		(19,163	)
Non-cash write-down and other adjustments (1)		(2,909	)		(404	)		(2,782	)		(1,976	)
Non-cash share-based compensation expense (2)		(2,901	)		(2,582	)		(5,386	)		(5,090	)
Loss on extinguishment of debt (3)		-			(3,427	)		-			(4,795	)
Transaction costs and credit facility fees (4)		(237	)		(481	)		(760	)		(682	)
Business optimization expenses (5)		-			(1,444	)		(7,106	)		(1,738	)
Other		15			280			(48	)		90
Income before provision for income taxes	$	32,864		$	23,472		$	48,795		$	54,175

(1)	Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, foreign currency gains/losses and certain purchase accounting related adjustments.
(2)	Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
(3)	Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.
(4)	Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement; equity issuance, debt issuance or refinancing; together with certain fees relating to our senior secured credit facilities.
(5)	Represents charges relating to business optimization and restructuring costs.

The Company’s sales in the United States represented approximately 74% and 84% of total sales for the three months ended June 30, 2016 and 2015, respectively, and represented approximately 78% and 85% of total sales for the six months ended June 30, 2016 and 2015, respectively. Approximately 86% and 93% of the Company’s identifiable long-lived assets are located in the United States at June 30, 2016 and December 31, 2015, respectively.

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Note 7 - Balance Sheet Details

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Supplemental Balance Sheet Disclosures [Text Block]

7

. Balance Sheet Details

Inventories consist of the following:

	June 30, 2016			December 31, 2015
Raw material	$	226,110		$	188,354
Work-in-process		4,347			2,856
Finished goods		150,032			144,747
Reserves for excess and obsolete		(13,744	)		(10,582	)
Total	$	366,745		$	325,375

Property and equipment consists of the following:

	June 30, 2016			December 31, 2015
Land and improvements	$	12,354		$	8,553
Buildings and improvements		115,544			104,774
Machinery and equipment		78,434			72,280
Dies and tools		21,779			20,066
Vehicles		1,575			1,244
Office equipment and systems		58,440			29,395
Leasehold improvements		4,322			3,338
Construction in progress		10,507			30,482
Gross property and equipment		302,955			270,132
Accumulated depreciation		(96,255	)		(85,919	)
Total	$	206,700		$	184,213

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Note 8 - Product Warranty Obligations

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

8

. Product Warranty Obligations

The Company records a liability for product warranty obligations at the time of sale to a customer based upon historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. Additionally, the Company sells extended warranty coverage for certain products. The sales of extended warranties are recorded as deferred revenue, which is recognized over the life of the contracts.

The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to extended warranty coverage:

	Three Months E nded June 30 ,						Six Months Ended June 30,
	201 6			201 5			2016			2015
Balance at beginning of period	$	31,904		$	29,277		$	30,197		$	30,909
Product warranty reserve assumed in acquisition		-			-			840			-
Payments		(4,900	)		(5,100	)		(8,552	)		(10,533	)
Provision for warranties issued		4,220			4,480			7,702			9,029
Changes in estimates for pre-existing warranties		(489	)		(472	)		548			(1,220	)
Balance at end of period	$	30,735		$	28,185		$	30,735		$	28,185

The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

	Three Months E nded June 30 ,						Six Months Ended June 30,
	201 6			201 5			2016			2015
Balance at beginning of period	$	28,830		$	27,531		$	28,961		$	27,193
Deferred revenue on extended warranty contracts sold		1,619			810			2,763			2,190
Amortization of deferred revenue on extended warranty contracts		(1,367	)		(1,100	)		(2,642	)		(2,142	)
Balance at end of period	$	29,082		$	27,241		$	29,082		$	27,241

Product warranty obligations and extended warranty related deferred revenues are included in the condensed consolidated balance sheets as follows:

	June 30 ,		December 31,
	201 6		201 5
Product warranty liability
Current portion - other accrued liabilities	$	21,071	$	21,726
Long-term portion - other long-term liabilities		9,664		8,471
Total	$	30,735	$	30,197
Deferred revenue related to extended warranty
Current portion - other accrued liabilities	$	5,034	$	6,026
Long-term portion - other long-term liabilities		24,048		22,935
Total	$	29,082	$	28,961

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Note 9 - Credit Agreements

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

9

. Credit Agreements

Short-term borrowings are included in the condensed consolidated balance sheets as follows:

	June 30 ,		December 31,
	201 6		201 5
ABL facility	$	-	$	-
Other lines of credit		33,649		8,594
Total	$	33,649	$	8,594

Long-term borrowings are included in the condensed consolidated balance sheets as follows:

	June 30 ,			December 31,
	201 6			201 5
Term loan	$	954,000		$	954,000
Original issue discount and deferred financing costs		(27,783	)		(29,905	)
ABL facility		100,000			100,000
Capital lease obligation		4,973			1,694
Other		16,543			12,000
Total		1,047,733			1,037,789
Less: current portion of debt		12,374			500
Less: current portion of capital lease obligation		523			157
Total	$	1,034,836		$	1,037,132

The Company’s credit agreements provide for a $1,200,000 term loan B credit facility (Term Loan) and include a $300,000 uncommitted incremental term loan facility. The Term Loan matures on May 31, 2020. The Term Loan is guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and is secured by associated collateral agreements which pledge a first priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, other than all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, which are secured by a second priority lien.

The Term Loan initially bore interest at rates based upon either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. Beginning in the second quarter of 2014, and measured each quarterly period thereafter, the applicable margin related to base rate loans is reduced to 1.50% and the applicable margin related to LIBOR rate loans is reduced to 2.50%, in each case, if the Borrower’s net debt leverage ratio, as defined in the Term Loan, falls below 3.00 to 1.00 for that measurement period. The Company’s net debt leverage ratio as of June 30, 2016 was above 3.00 to 1.00.

On May 18, 2015, the Company amended certain provisions and covenants of the Term Loan. In connection with this amendment and in accordance with ASC 470-50,

Debt Modifications and Extinguishments

, the Company capitalized $1,528 of fees paid to creditors as original issue discount on long-term borrowings and expensed $49 of transaction fees in the second quarter of 2015. As of June 30, 2016, the Company is in compliance with all covenants of the Term Loan. There are no financial maintenance covenants on the Term Loan.

The Company’s credit agreements also originally provided for a $150,000 senior secured ABL revolving credit facility (ABL Facility). The maturity date of the ABL Facility originally was May 31, 2018. Borrowings under the ABL Facility are guaranteed by all of the Company’s wholly-owned domestic restricted subsidiaries, and are secured by associated collateral agreements which pledge a first priority lien on all cash, trade accounts receivable, inventory, and other current assets and proceeds thereof, and a second priority lien on all other assets, including fixed assets and intangibles of the Company and certain domestic subsidiaries. ABL Facility borrowings initially bore interest at rates based upon either a base rate plus an applicable margin of 1.00% or adjusted LIBOR rate plus an applicable margin of 2.00%, in each case, subject to adjustments based upon average availability under the ABL Facility.

On May 29, 2015, the Company amended its ABL Facility. The amendment (i) increased the ABL Facility from $150,000 to $250,000 (Amended ABL Facility), (ii) extended the maturity date from May 31, 2018 to May 29, 2020, (iii) increased the uncommitted incremental facility from $50,000 to $100,000, (iv) reduced the interest rate spread by 50 basis points and (v) reduced the unused line fee by 12.5 basis points across all tiers. Additionally, the amendment relaxes certain restrictions on the Company’s ability to, among other things, (i) make additional investments and acquisitions (including foreign acquisitions), (ii) make restricted payments and (iii) incur additional secured and unsecured debt (including foreign subsidiary debt). In connection with this amendment and in accordance with ASC 470-50, the Company capitalized $483 of new debt issuance costs in 2015.

On May 29, 2015, the Company borrowed $100,000 under the Amended ABL Facility, the proceeds of which were used as a voluntary prepayment towards the Term Loan. As of June 30, 2016, there was $100,000 outstanding under the Amended ABL Facility, leaving $142,123 of availability, net of outstanding letters of credit.

On March 30 and May 29, 2015, the Company made voluntary prepayments of the Term Loan of $50,000 and $100,000, respectively, which will be applied to the Excess Cash Flow payment requirement in the Term Loan. As a result of the prepayments, the Company wrote off $4,795 of original issue discount and capitalized debt issuance costs in the first half of 2015 as a loss on extinguishment of debt in the condensed consolidated statement of comprehensive income.

As of June 30, 2016 and December 31, 2015, short-term borrowings consisted of borrowings by our foreign subsidiaries on local lines of credit, which totaled $33,649 and $8,594, respectively. 

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Note 10 - Stock Repurchase Program

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Treasury Stock [Text Block]

10. Stock Repurchase Program

On August 5, 2015, the Company’s Board of Directors approved a $200,000 stock repurchase program. Under the program, the Company may repurchase up to $200,000 of its common stock over 24 months from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions and other considerations. The repurchase may be executed using open market purchases, privately negotiated agreements or other transactions. The actual timing, number and value of shares repurchased under the program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s shares of common stock and general market and economic conditions, applicable legal requirements, and compliance with the terms of the Company’s outstanding indebtedness. The stock repurchase program may be suspended or discontinued at any time without prior notice. For the three months ended June 30, 2016, the Company repurchased 935,000 shares of its common stock for $34,576, funded with cash on hand. Since the inception of the program, the Company has repurchased 4,238,500 shares of its common stock for $134,518, funded with cash on hand.

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Note 11 - Earnings Per Share

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

11

. Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the period, exclusive of restricted shares. Except where the result would be anti-dilutive, diluted earnings per share is calculated by assuming the vesting of unvested restricted stock and the exercise of stock options, as well as their related income tax benefits. The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net income attributable to Generac Holdings Inc. (numerator)	$	20,888	$	14,844	$	31,096	$	34,529
Weighted average shares (denominator)
Basic		65,870,714		68,961,877		65,955,455		68,886,672
Dilutive effect of stock compensation awards (1)		517,867		1,101,186		510,315		1,213,268
Diluted		66,388,581		70,063,063		66,465,770		70,099,940
Net income attributable to Generac Holdings Inc. per share
Basic	$	0.32	$	0.22	$	0.47	$	0.50
Diluted	$	0.31	$	0.21	$	0.47	$	0.49

(1) Excludes approximately 189,500 stock options and 3,000 shares of restricted stock for the three month period ended June 30, 2016, and 215,800 stock options and 3,400 shares of restricted stock for the six month period ended June 30, 2016, as the impact of such awards was anti-dilutive. Excludes approximately 142,900 stock options and 2,300 shares of restricted stock for the three month period ended June 30, 2015 and 104,400 stock options for the six month period ended June 30, 2015, as the impact of such awards was anti-dilutive.

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Note 12 - Income Taxes

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12

. Income Taxes

The effective income tax rates for the six months ended June 30, 2016 and 2015 were 36.2% and 36.3%, respectively.

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Note 13 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

1

3

. Commitments and Contingencies

The Company has an arrangement with a finance company to provide floor plan financing for selected dealers. The Company receives payment from the finance company after shipment of product to the dealer. The Company participates in the cost of dealer financing up to certain limits and has agreed to repurchase products repossessed by the finance company, but does not indemnify the finance company for any credit losses they incur. The amount financed by dealers which remained outstanding under this arrangement at June 30, 2016 and December 31, 2015 was approximately $36,200 and $32,400, respectively.

In the normal course of business, the Company is named as a defendant in various lawsuits in which claims are asserted against the Company. In the opinion of management, the liabilities, if any, which may result from such lawsuits are not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09,

Revenue from Contracts with Customers

. This guidance is the culmination of the FASB’s joint project with the International Accounting Standards Board to clarify the principles for recognizing revenue. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process that entities should follow in order to achieve that core principal. ASU 2014-09, as amended by ASU 2015-14,

Revenue from Contracts with Customers (Topic

606): D

eferral of the Effective Date

, ASU 2016-08,

Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations

, ASU 2016-10,

Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing

,

and ASU 2016-12,

Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients

, becomes effective for the Company in 2018. The guidance can be applied either on a full retrospective basis or on a modified retrospective basis in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations.

In February 2016, the FASB issued ASU 2016-02,

Leases

. This guidance is being issued to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the statement of financial position and by disclosing key information about leasing arrangements. The guidance should be applied using a modified retrospective approach and is effective for the Company in 2019, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations and financial position.

In March 2016, the FASB issued ASU 2016-09,

Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting

. This guidance is a part of the FASB’s initiative to reduce complexity in accounting standards, and includes simplification involving several aspects of the accounting for share-based payment transactions, including excess tax benefits and forfeitures. The guidance should be applied on a modified retrospective basis and is effective for the Company in 2017, with early adoption permitted. The Company is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations, financial position and classification on the statements of cash flow.

In the first quarter of 2016, the Company adopted ASU 2015-03,

Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs

. As a result, the Company adjusted the impacted line items in the December 31, 2015 condensed consolidated balance sheet to conform to the current period’s presentation; decreasing both the Deferred financing costs, net and Long-term borrowings and capital lease obligations line items by $12,965. Also in the first quarter of 2016, the Company adopted ASU 2015-17,

Income Taxes: Balance Sheet Classification of Deferred Taxes

. As a result, the Company adjusted the impacted line items in the December 31, 2015 condensed consolidated balance sheet to conform to the current period’s presentation; decreasing the Deferred income taxes line item within current assets by $29,355, increasing the Deferred income taxes line item within noncurrent assets by $28,139, and decreasing the Deferred income taxes line within noncurrent liabilities by $1,216.

There are several other new accounting pronouncements issued by the FASB. Management does not believe any of these other accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

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Note 2 - Acquisitions (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	March 1, 2016
Accounts receivable	$	51,108
Inventories		40,180
Property and equipment		19,020
Intangible assets		27,620
Goodwill		53,665
Other assets		8,153
Total assets acquired		199,746
Short-term borrowings		21,105
Accounts payable		40,270
Long-term debt and capital lease obligations (including current portion)		18,599
Other liabilities		24,580
Redeemable noncontrolling interest		34,253
Noncontrolling interest		53
Net assets acquired	$	60,886

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net Sales:
As reported	$	367,376	$	288,360	$	653,911	$	600,178
Pro forma		367,376		369,815		683,258		744,326
Net income attributable to Generac Holdings Inc.:
As reported	$	20,888	$	14,844	$	31,096	$	34,529
Pro forma		21,683		18,454		32,168		35,847
Net income attributable to Generac Holdings Inc. per common share - diluted
As reported	$	0.31	$	0.21	$	0.47	$	0.49
Pro forma		0.33		0.26		0.48		0.51

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Note 3 - Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule Of Derivative Assets (Liabilities) at Fair Value [Table Text Block]

	June 30, 2016			December 31, 2015
Commodity contracts	$	82		$	(400	)
Foreign currency contracts		87			(171	)
Interest rate swaps		(4,733	)		(2,618	)

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Note 5 - Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – April 1, 2016	$	(7,102	)	$	(11,362	)	$	(2,765	)		$	(21,229	)
Other comprehensive loss before reclassifications		(13,132	)		-			(134	)	(1)		(13,266	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(13,132	)		-			(134	)			(13,266	)
Ending Balance – June 30, 2016	$	(20,234	)	$	(11,362	)	$	(2,899	)		$	(34,495	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Gain (Loss) on Cash Flow Hedges				Total
Beginning Balance – April 1, 2015	$	(7,424	)	$	(13,243	)	$	(1,918	)		$	(22,585	)
Other comprehensive income before reclassifications		63			-			266		(2)		329
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive income		63			-			266				329
Ending Balance – June 30, 2015	$	(7,361	)	$	(13,243	)	$	(1,652	)		$	(22,256	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – January 1, 2016	$	(9,502	)	$	(11,362	)	$	(1,611	)		$	(22,475	)
Other comprehensive loss before reclassifications		(10,732	)		-			(1,288	)	(3)		(12,020	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(10,732	)		-			(1,288	)			(12,020	)
Ending Balance – June 30, 2016	$	(20,234	)	$	(11,362	)	$	(2,899	)		$	(34,495	)

	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan			Unrealized Loss on Cash Flow Hedges				Total
Beginning Balance – January 1, 2015	$	(1,878	)	$	(13,243	)	$	(646	)		$	(15,767	)
Other comprehensive loss before reclassifications		(5,483	)		-			(1,006	)	(4)		(6,489	)
Amounts reclassified from AOCL		-			-			-				-
Net current-period other comprehensive loss		(5,483	)		-			(1,006	)			(6,489	)
Ending Balance – June 30, 2015	$	(7,361	)	$	(13,243	)	$	(1,652	)		$	(22,256	)

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Note 6 - Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
Reportable Segments	2016		2015		2016		2015
Domestic	$	286,720	$	258,117	$	534,736	$	545,729
International		80,656		30,243		119,175		54,449
Total net sales	$	367,376	$	288,360	$	653,911	$	600,178

	Adjusted EBITDA
	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Domestic	$	57,352		$	48,457		$	104,212		$	102,901
International		6,574			3,965			9,523			6,659
Total adjusted EBITDA	$	63,926		$	52,422		$	113,735		$	109,560
Interest expense		(11,380	)		(10,763	)		(22,415	)		(22,031	)
Depreciation and amortization		(13,650	)		(10,129	)		(26,443	)		(19,163	)
Non-cash write-down and other adjustments (1)		(2,909	)		(404	)		(2,782	)		(1,976	)
Non-cash share-based compensation expense (2)		(2,901	)		(2,582	)		(5,386	)		(5,090	)
Loss on extinguishment of debt (3)		-			(3,427	)		-			(4,795	)
Transaction costs and credit facility fees (4)		(237	)		(481	)		(760	)		(682	)
Business optimization expenses (5)		-			(1,444	)		(7,106	)		(1,738	)
Other		15			280			(48	)		90
Income before provision for income taxes	$	32,864		$	23,472		$	48,795		$	54,175

Revenue from External Customers by Products and Services [Table Text Block]

	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
Product Classes	2016		2015		2016		2015
Residential products	$	181,735	$	133,466	$	340,716	$	290,300
Commercial & industrial products		156,730		134,580		259,720		268,343
Other		28,911		20,314		53,475		41,535
Total net sales	$	367,376	$	288,360	$	653,911	$	600,178

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Note 7 - Balance Sheet Details (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30, 2016			December 31, 2015
Raw material	$	226,110		$	188,354
Work-in-process		4,347			2,856
Finished goods		150,032			144,747
Reserves for excess and obsolete		(13,744	)		(10,582	)
Total	$	366,745		$	325,375

Property, Plant and Equipment [Table Text Block]

	June 30, 2016			December 31, 2015
Land and improvements	$	12,354		$	8,553
Buildings and improvements		115,544			104,774
Machinery and equipment		78,434			72,280
Dies and tools		21,779			20,066
Vehicles		1,575			1,244
Office equipment and systems		58,440			29,395
Leasehold improvements		4,322			3,338
Construction in progress		10,507			30,482
Gross property and equipment		302,955			270,132
Accumulated depreciation		(96,255	)		(85,919	)
Total	$	206,700		$	184,213

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Note 8 - Product Warranty Obligations (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Product Warranty Liability [Table Text Block]

	Three Months E nded June 30 ,						Six Months Ended June 30,
	201 6			201 5			2016			2015
Balance at beginning of period	$	31,904		$	29,277		$	30,197		$	30,909
Product warranty reserve assumed in acquisition		-			-			840			-
Payments		(4,900	)		(5,100	)		(8,552	)		(10,533	)
Provision for warranties issued		4,220			4,480			7,702			9,029
Changes in estimates for pre-existing warranties		(489	)		(472	)		548			(1,220	)
Balance at end of period	$	30,735		$	28,185		$	30,735		$	28,185

	Three Months E nded June 30 ,						Six Months Ended June 30,
	201 6			201 5			2016			2015
Balance at beginning of period	$	28,830		$	27,531		$	28,961		$	27,193
Deferred revenue on extended warranty contracts sold		1,619			810			2,763			2,190
Amortization of deferred revenue on extended warranty contracts		(1,367	)		(1,100	)		(2,642	)		(2,142	)
Balance at end of period	$	29,082		$	27,241		$	29,082		$	27,241

Product Warranty Obligations Included In Consolidated Balance Sheet [Table Text Block]

	June 30 ,		December 31,
	201 6		201 5
Product warranty liability
Current portion - other accrued liabilities	$	21,071	$	21,726
Long-term portion - other long-term liabilities		9,664		8,471
Total	$	30,735	$	30,197
Deferred revenue related to extended warranty
Current portion - other accrued liabilities	$	5,034	$	6,026
Long-term portion - other long-term liabilities		24,048		22,935
Total	$	29,082	$	28,961

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Note 9 - Credit Agreements (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Short-term Debt [Table Text Block]

	June 30 ,		December 31,
	201 6		201 5
ABL facility	$	-	$	-
Other lines of credit		33,649		8,594
Total	$	33,649	$	8,594

Schedule of Long-term Debt Instruments [Table Text Block]

	June 30 ,			December 31,
	201 6			201 5
Term loan	$	954,000		$	954,000
Original issue discount and deferred financing costs		(27,783	)		(29,905	)
ABL facility		100,000			100,000
Capital lease obligation		4,973			1,694
Other		16,543			12,000
Total		1,047,733			1,037,789
Less: current portion of debt		12,374			500
Less: current portion of capital lease obligation		523			157
Total	$	1,034,836		$	1,037,132

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Note 11 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net income attributable to Generac Holdings Inc. (numerator)	$	20,888	$	14,844	$	31,096	$	34,529
Weighted average shares (denominator)
Basic		65,870,714		68,961,877		65,955,455		68,886,672
Dilutive effect of stock compensation awards (1)		517,867		1,101,186		510,315		1,213,268
Diluted		66,388,581		70,063,063		66,465,770		70,099,940
Net income attributable to Generac Holdings Inc. per share
Basic	$	0.32	$	0.22	$	0.47	$	0.50
Diluted	$	0.31	$	0.21	$	0.47	$	0.49

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Note 1 - Description of Business and Basis of Presentation (Details Textual) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Decrease in Deferred Financing Costs [Member] | December 31, 2015 [Member]
Prior Period Reclassification Adjustment	$ 12,965
Decrease in Long-term Borrowings [Member] | December 31, 2015 [Member]
Prior Period Reclassification Adjustment	12,965
Decrease in Deferred Income Taxes Within Current Assets [Member] | December 31, 2015 [Member]
Prior Period Reclassification Adjustment	29,355
Increase in Deferred Income Taxes within Noncurrent Assets [Member] | December 31, 2015 [Member]
Prior Period Reclassification Adjustment	28,139
Decrease in Deferred Income Taxes within Noncurrent Liabilities [Member] | December 31, 2015 [Member]
Prior Period Reclassification Adjustment	$ 1,216
Number of Countries Where Product is Sold by Subsidiary	150

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Note 2 - Acquisitions (Details Textual) $ in Thousands			3 Months Ended	6 Months Ended
	Mar. 01, 2016 USD ($)	Aug. 01, 2015 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
Pramac [Member]
Business Acquisition, Percentage of Voting Interests Acquired	65.00%
Payments to Acquire Businesses, Net of Cash Acquired	$ 60,886
Number of Countries Where Product is Sold by Subsidiary	150
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	35.00%
Redeemable Noncontrolling Interest, Equity, Fair Value	$ 34,253
Noncontrolling Interest, Term of Put Option	5 years
Noncontrolling Interest, Term of Put Option in which Option Price is Fixed	2 years
Goodwill	$ 53,665
CHP [Member]
Payments to Acquire Businesses, Net of Cash Acquired		$ 74,570
Business Acquisition, Purchase Price Allocation, Intangible Assets Including Goodwill		81,726
Goodwill		30,076
Increase (Decrease) in Intangible Assets, Non-current			$ (6,552)
Goodwill, Period Increase (Decrease)			6,208
Noncash or Part Noncash Acquisition, Debt Assumed		$ 12,000
Payments to Acquire Businesses, Net of Cash Acquired				$ 60,886	$ (233)
Number of Countries Where Product is Sold by Subsidiary				150
Goodwill			$ 669,719	$ 716,845

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Note 2 - Preliminary Price Allocation (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Mar. 01, 2016	Dec. 31, 2015
Pramac [Member]
Accounts receivable		$ 51,108
Inventories		40,180
Property and equipment		19,020
Intangible assets		27,620
Goodwill		53,665
Other assets		8,153
Total assets acquired		199,746
Short-term borrowings		21,105
Accounts payable		40,270
Long-term debt and capital lease obligations (including current portion)		18,599
Other liabilities		24,580
Redeemable noncontrolling interest		34,253
Noncontrolling interest		53
Net assets acquired		$ 60,886
Goodwill	$ 716,845		$ 669,719

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Note 2 - Unaudited Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
As reported	$ 367,376	$ 288,360	$ 653,911	$ 600,178
Pro forma	367,376	369,815	683,258	744,326
As reported	20,888	14,844	31,096	34,529
Pro forma	$ 21,683	$ 18,454	$ 32,168	$ 35,847
As reported (in dollars per share)	$ 0.31	$ 0.21	$ 0.47	$ 0.49
Pro forma (in dollars per share)	$ 0.33	$ 0.26	$ 0.48	$ 0.51

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Note 3 - Derivative Instruments and Hedging Activities (Details Textual) $ in Thousands		3 Months Ended		6 Months Ended
	Oct. 23, 2013	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Commodity Contract [Member] | Maximum [Member]
Derivative, Remaining Maturity		1 year 180 days
Commodity Contract [Member] | Not Designated as Hedging Instrument [Member] | Cost of Sales [Member]
Derivative, Gain (Loss) on Derivative, Net		$ 82	$ (315)	$ 76	$ (1,041)
Commodity Contract [Member]
Derivative, Number of Instruments Held		1	3	1	3	1
Foreign Exchange Contract [Member] | Maximum [Member]
Derivative, Remaining Maturity		1 year
Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member] | Cost of Sales [Member]
Derivative, Gain (Loss) on Derivative, Net		$ 1	$ (37)	$ (178)	$ (358)
Foreign Exchange Contract [Member]
Derivative, Number of Instruments Held		12	2	12	2	6
Interest Rate Swap [Member]
Number of New Contracts Entered	2
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net		$ (134)	$ 266	$ (1,288)	$ (1,006)
Commodity and Foreign Currency Contracts [Member]
Derivative Assets (Liabilities), Net Fair Value of Derivative Contracts, Excluding Impact of Credit Risk		(4,672)		(4,672)		$ (3,248)
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net		$ 83	$ (352)	$ (102)	$ (1,399)

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Note 3 - Fair Value of Derivatives (Details) - Fair Value, Inputs, Level 2 [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Commodity Contract [Member]
Fair Value of Derivates	$ 82	$ (400)
Foreign Exchange Contract [Member]
Fair Value of Derivates	87	(171)
Interest Rate Swap [Member]
Fair Value of Derivates	$ (4,733)	$ (2,618)

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Note 4 - Fair Value Measurements (Details Textual) - Fair Value, Inputs, Level 2 [Member] $ in Thousands	Jun. 30, 2016 USD ($)
Long-term Debt	$ 926,390
Long-term Debt, Fair Value	$ 914,810

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Note 5 - Accumulated Other Comprehensive Loss (Details Textual) - Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
OCI, before Reclassifications, before Tax, Attributable to Parent	$ (219)	$ 431	$ (2,115)	$ (1,643)
Other Comprehensive Income (Loss) before Reclassifications, Tax	$ (85)	$ 165	$ (827)	$ (637)

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Note 5 - Disclosure of Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2016		Jun. 30, 2015		Jun. 30, 2016		Jun. 30, 2015
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance	$ (7,102)		$ (7,424)		$ (9,502)		$ (1,878)
Other comprehensive loss before reclassifications	(13,132)		63		(10,732)		(5,483)
Amounts reclassified from AOCL
Net current-period other comprehensive loss	(13,132)		63		(10,732)		(5,483)
Balance	(20,234)		(7,361)		(20,234)		(7,361)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Balance	(11,362)		(13,243)		(11,362)		(13,243)
Other comprehensive loss before reclassifications
Amounts reclassified from AOCL
Net current-period other comprehensive loss
Balance	(11,362)		(13,243)		(11,362)		(13,243)
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Balance	(2,765)		(1,918)		(1,611)		(646)
Other comprehensive loss before reclassifications	(134)	[1]	266	[2]	(1,288)	[3]	(1,006)	[4]
Amounts reclassified from AOCL
Net current-period other comprehensive loss	(134)		266		(1,288)		(1,006)
Balance	(2,899)		(1,652)		(2,899)		(1,652)
Balance	(21,229)		(22,585)		(22,475)		(15,767)
Other comprehensive loss before reclassifications	(13,266)		329		(12,020)		(6,489)
Amounts reclassified from AOCL
Net current-period other comprehensive loss	(13,266)		329		(12,020)		(6,489)
Balance	$ (34,495)		$ (22,256)		$ (34,495)		$ (22,256)

[1] Represents unrealized losses of $(219), net of tax benefit of $85 for the three months ended June 30, 2016.

[2] Represents unrealized gains of $431, net of tax effect of $(165) for the three months ended June 30, 2015.

[3] Represents unrealized losses of $(2,115), net of tax benefit of $827 for the six months ended June 30, 2016.

[4] Represents unrealized losses of $(1,643), net of tax benefit of $637 for the six months ended June 30, 2015.

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Note 6 - Segment Reporting (Details Textual)	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Geographic Concentration Risk [Member] | Sales Revenue, Net [Member] | UNITED STATES
Concentration Risk, Percentage	74.00%		84.00%	78.00%	85.00%
Geographic Concentration Risk [Member] | Net Assets, Geographic Area [Member] | UNITED STATES
Concentration Risk, Percentage				86.00%		93.00%
Number of Reportable Segments	2	1

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Note 6 - Net Sales by Reportable Segment (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Domestic [Member]
As reported		$ 286,720	$ 258,117	$ 534,736	$ 545,729
Total adjusted EBITDA		57,352	48,457	104,212	102,901
International [Member]
As reported		80,656	30,243	119,175	54,449
Total adjusted EBITDA		6,574	3,965	9,523	6,659
As reported		367,376	288,360	653,911	600,178
Total adjusted EBITDA		63,926	52,422	113,735	109,560
Interest expense		(11,380)	(10,763)	(22,415)	(22,031)
Depreciation and amortization		(13,650)	(10,129)	(26,443)	(19,163)
Non-cash write-down and other adjustments (1)	[1]	(2,909)	(404)	(2,782)	(1,976)
Non-cash share-based compensation expense (2)	[2]	(2,901)	(2,582)	(5,386)	(5,090)
Loss on extinguishment of debt (3)	[3]		(3,427)		(4,795)
Transaction costs and credit facility fees (4)	[4]	(237)	(481)	(760)	(682)
Business optimization expenses (5)	[5]		(1,444)	(7,106)	(1,738)
Other		15	280	(48)	90
Income before provision for income taxes		$ 32,864	$ 23,472	$ 48,795	$ 54,175

[1] Includes gains/losses on disposal of assets, unrealized mark-to-market adjustments on commodity contracts, foreign currency gains/losses and certain purchase accounting related adjustments.

[2] Represents share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.

[3] Represents the write-off of original issue discount and capitalized debt issuance costs due to voluntary debt prepayments.

[4] Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement; equity issuance, debt issuance or refinancing; together with certain fees relating to our senior secured credit facilities.

[5] Represents charges relating to business optimization and restructuring costs.

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Note 6 - Net Sales by Products and Services (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Residential Power Products [Member]
As reported	$ 181,735	$ 133,466	$ 340,716	$ 290,300
Commercial and Industrial Power Products [Member]
As reported	156,730	134,580	259,720	268,343
Other Products and Services [Member]
As reported	28,911	20,314	53,475	41,535
As reported	$ 367,376	$ 288,360	$ 653,911	$ 600,178

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Note 7 - Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Raw material	$ 226,110	$ 188,354
Work-in-process	4,347	2,856
Finished goods	150,032	144,747
Reserves for excess and obsolete	(13,744)	(10,582)
Total	$ 366,745	$ 325,375

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Note 7 - Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Land and Land Improvements [Member]
Property and equipment, gross	$ 12,354	$ 8,553
Building and Building Improvements [Member]
Property and equipment, gross	115,544	104,774
Machinery and Equipment [Member]
Property and equipment, gross	78,434	72,280
Dies and Tools [Member]
Property and equipment, gross	21,779	20,066
Vehicles [Member]
Property and equipment, gross	1,575	1,244
Office Equipment [Member]
Property and equipment, gross	58,440	29,395
Leasehold Improvements [Member]
Property and equipment, gross	4,322	3,338
Construction in Progress [Member]
Property and equipment, gross	10,507	30,482
Property and equipment, gross	302,955	270,132
Accumulated depreciation	(96,255)	(85,919)
Total	$ 206,700	$ 184,213

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Note 8 - Reconciliation of Product Warranty Liability (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Balance at beginning of period	$ 31,904	$ 29,277	$ 30,197	$ 30,909
Product warranty reserve assumed in acquisition			840
Payments	(4,900)	(5,100)	(8,552)	(10,533)
Provision for warranties issued	4,220	4,480	7,702	9,029
Changes in estimates for pre-existing warranties	(489)	(472)	548	(1,220)
Balance at end of period	30,735	28,185	30,735	28,185
Balance at beginning of period	28,830	27,531	28,961	27,193
Deferred revenue on extended warranty contracts sold	1,619	810	2,763	2,190
Amortization of deferred revenue on extended warranty contracts	(1,367)	(1,100)	(2,642)	(2,142)
Balance at end of period	$ 29,082	$ 27,241	$ 29,082	$ 27,241

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Note 8 - Deferred Product Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Current portion - other accrued liabilities	$ 21,071		$ 21,726
Long-term portion - other long-term liabilities	9,664		8,471
Total	30,735	$ 31,904	30,197	$ 28,185	$ 29,277	$ 30,909
Current portion - other accrued liabilities	5,034		6,026
Long-term portion - other long-term liabilities	24,048		22,935
Total	$ 29,082	$ 28,830	$ 28,961	$ 27,241	$ 27,531	$ 27,193

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Note 9 - Credit Agreements (Details Textual) $ in Thousands			3 Months Ended	6 Months Ended
	May 29, 2015 USD ($)	Mar. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)	May 18, 2015 USD ($)	May 31, 2013 USD ($)
Term Loan [Member] | Base Rate [Member] | Net Debt Leverage Ratio Threshold [Member]
Debt Instrument, Basis Spread on Variable Rate			1.50%
Term Loan [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			1.75%
Term Loan [Member] | Adjusted LIBOR Rate [Member] | Net Debt Leverage Ratio Threshold [Member]
Debt Instrument, Basis Spread on Variable Rate			2.50%
Term Loan [Member] | Adjusted LIBOR Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			2.75%
Term Loan [Member] | LIBOR Floor Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			0.75%
Term Loan [Member]
Line of Credit Facility, Maximum Borrowing Capacity							$ 1,200,000
Uncommitted Incremental Term Loan Facility							300,000
Net Debt Leverage Ratio Threshold			3
Net Debt Leverage Ratio Achieved			3
Debt Issuance Costs, Net						$ 1,528
Debt Instrument, Fee Amount						$ 49
Repayments of Long-term Debt	$ 100,000	$ 50,000
Write off of Deferred Debt Issuance Cost				$ 4,795
Base Rate [Member] | ABL Revolving Credit Facility [Member]
Debt Instrument, Basis Spread on Variable Rate			1.00%
Adjusted LIBOR Rate [Member] | ABL Revolving Credit Facility [Member]
Debt Instrument, Basis Spread on Variable Rate			2.00%
ABL Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	150,000						$ 150,000
Uncommitted Incremental Term Loan Facility	50,000
Amended ABL Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	250,000
Uncommitted Incremental Term Loan Facility	$ 100,000
Debt Instrument, Basis Spread on Variable Rate	0.50%
Debt Issuance Costs, Net	$ 483
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.125%
Proceeds from Lines of Credit	$ 100,000
Long-term Line of Credit			$ 100,000
Line of Credit Facility, Remaining Borrowing Capacity			142,123
Short-term Debt			$ 33,649		$ 8,594

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Note 9 - Short-term Borrowings (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
ABL Revolving Credit Facility [Member]
Short-term Debt	$ 0	$ 0
Other Lines of Credit [Member]
Short-term Debt	33,649,000	8,594,000
Short-term Debt	$ 33,649,000	$ 8,594,000

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Note 9 - Long-term Borrowings (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Term loan	$ 954,000	$ 954,000
Original issue discount and deferred financing costs	(27,783)	(29,905)
ABL facility	100,000	100,000
Capital lease obligation	4,973	1,694
Other	16,543	12,000
Total	1,047,733	1,037,789
Less: current portion of debt	12,374	500
Less: current portion of capital lease obligation	523	157
Total	$ 1,034,836	$ 1,037,132

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Note 10 - Stock Repurchase Program (Details Textual) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended		11 Months Ended
	Aug. 05, 2015	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016
Treasury Stock [Member]
Shares Acquired Under Stock Repurchases Program, Shares		935,000			4,238,500
Stock Repurchase Program, Authorized Amount	$ 200,000
Stock Repurchase Program, Period in Force	2 years
Payments for Repurchase of Common Stock		$ 34,576	$ 34,576		$ 134,518

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Note 11 - Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	189,500	142,900	215,800	104,400
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	3,000	2,300	3,400

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Note 11 - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net income attributable to Generac Holdings Inc. (numerator)		$ 20,888	$ 14,844	$ 31,096	$ 34,529
Weighted average common shares outstanding - basic: (in shares)		65,870,714	68,961,877	65,955,455	68,886,672
Dilutive effect of stock compensation awards (in shares)	[1]	517,867	1,101,186	510,315	1,213,268
Weighted average common shares outstanding - diluted: (in shares)		66,388,581	70,063,063	66,465,770	70,099,940
Net income attributable to Generac Holdings Inc. per common share - basic: (in dollars per share)		$ 0.32	$ 0.22	$ 0.47	$ 0.50
Net income attributable to Generac Holdings Inc. per common share - diluted: (in dollars per share)		$ 0.31	$ 0.21	$ 0.47	$ 0.49

[1] Excludes approximately 189,500 stock options and 3,000 shares of restricted stock for the three month period ended June 30, 2016, and 215,800 stock options and 3,400 shares of restricted stock for the six month period ended June 30, 2016, as the impact of such awards was anti-dilutive. Excludes approximately 142,900 stock options and 2,300 shares of restricted stock for the three month period ended June 30, 2015 and 104,400 stock options for the six month period ended June 30, 2015, as the impact of such awards was anti-dilutive.

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Note 12 - Income Taxes (Details Textual)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Effective Income Tax Rate Reconciliation, Percent	36.20%	36.30%

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Note 13 - Commitments and Contingencies (Details Textual) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Amount Financed by Dealers	$ 36.2	$ 32.4