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, 2022
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from             to

Commission File Number 001-34627

GENERAC HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	20-5654756
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)
S45 W29290 Hwy 59, Waukesha, WI	53189
(Address of principal executive offices)	(Zip Code)

(262) 544-4811

(Registrant’s telephone number, including area code)

Not Applicable

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

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

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

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

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

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

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

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

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

As of August 3, 2022, there were 63,830,918 shares of registrant’s common stock outstanding.

GENERAC HOLDINGS INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
	Signatures	32

PART I. FINANCIAL INFORMATION

Item 1.           Financial Statements

Generac Holdings Inc.

Condensed Consolidated Balance Sheets

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

(Unaudited)

	June 30,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	467,140		$	147,339
Accounts receivable, less allowance for credit losses		692,291			546,466
Inventories		1,240,524			1,089,705
Prepaid expenses and other assets		91,356			64,954
Total current assets		2,491,311			1,848,464
Property and equipment, net		446,007			440,852
Customer lists, net		217,152			238,722
Patents and technology, net		469,384			492,473
Other intangible assets, net		51,727			66,436
Tradenames, net		233,023			243,531
Goodwill		1,388,051			1,409,674
Deferred income taxes		14,091			15,740
Operating lease and other assets		162,205			121,888
Total assets	$	5,472,951		$	4,877,780
Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings	$	77,514		$	72,035
Accounts payable		614,009			674,208
Accrued wages and employee benefits		61,249			72,060
Other accrued liabilities		415,730			331,674
Current portion of long-term borrowings and finance lease obligations		3,674			5,930
Total current liabilities		1,172,176			1,155,907
Long-term borrowings and finance lease obligations		1,286,499			902,091
Deferred income taxes		151,643			205,964
Operating lease and other long-term liabilities		360,041			341,681
Total liabilities		2,970,359			2,605,643
Redeemable noncontrolling interests		82,830			58,050
Stockholders’ equity:
Common stock, par value $0.01, 500,000,000 shares authorized, 72,588,588 and 72,386,017 shares issued at June 30, 2022 and December 31, 2021, respectively		727			725
Additional paid-in capital		967,819			952,939
Treasury stock, at cost		(475,294	)		(448,976	)
Excess purchase price over predecessor basis		(202,116	)		(202,116	)
Retained earnings		2,210,582			1,965,957
Accumulated other comprehensive loss		(82,839	)		(54,755	)
Stockholders’ equity attributable to Generac Holdings Inc.		2,418,879			2,213,774
Noncontrolling interests		883			313
Total stockholders' equity		2,419,762			2,214,087
Total liabilities and stockholders’ equity	$	5,472,951		$	4,877,780

See notes to condensed consolidated financial statements.

1

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,
	2022			2021			2022			2021
Net sales	$	1,291,391		$	919,981		$	2,427,247		$	1,727,415
Costs of goods sold		834,406			580,246			1,609,514			1,065,866
Gross profit		456,985			339,735			817,733			661,549
Operating expenses:
Selling and service		120,066			78,777			218,309			147,201
Research and development		41,599			25,344			81,343			47,732
General and administrative		52,600			41,610			94,572			74,509
Amortization of intangibles		25,876			11,052			51,930			20,031
Total operating expenses		240,141			156,783			446,154			289,473
Income from operations		216,844			182,952			371,579			372,076
Other (expense) income:
Interest expense		(10,235	)		(7,721	)		(19,789	)		(15,444	)
Investment income		92			244			169			847
Loss on extinguishment of debt		(3,743	)		(831	)		(3,743	)		(831	)
Other, net		505			(373	)		751			2,936
Total other expense, net		(13,381	)		(8,681	)		(22,612	)		(12,492	)
Income before provision for income taxes		203,463			174,271			348,967			359,584
Provision for income taxes		45,826			46,362			74,434			81,730
Net income		157,637			127,909			274,533			277,854
Net income attributable to noncontrolling interests		1,278			873			4,316			1,825
Net income attributable to Generac Holdings Inc.	$	156,359		$	127,036		$	270,217		$	276,029
Net income attributable to Generac Holdings Inc. per common share - basic:	$	2.24		$	2.06		$	3.85		$	4.44
Weighted average common shares outstanding - basic:		63,662,510			62,605,166			63,607,711			62,533,725
Net income attributable to Generac Holdings Inc. per common share - diluted:	$	2.21		$	2.01		$	3.78		$	4.34
Weighted average common shares outstanding - diluted:		64,713,748			64,088,709			64,799,002			64,097,378
Comprehensive income attributable to Generac Holdings Inc.	$	120,864		$	119,246		$	243,229		$	273,062

See notes to condensed consolidated financial statements.

2

Generac Holdings Inc.

Condensed Consolidated Statements of Stockholders' Equity

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

(Unaudited)

	Generac Holdings Inc.
														Excess Purchase Price			Retained			Accumulated
						Additional								Over			Earnings			Other			Total
	Common Stock					Paid-In		Treasury Stock						Predecessor			(Accumulated			Comprehensive			Stockholders'			Noncontrolling
	Shares			Amount		Capital		Shares			Amount			Basis			Deficit)			Income (Loss)			Equity			Interest			Total
Balance at April 1, 2022		72,589,905		$	727	$	959,890		(8,740,863	)	$	(471,833	)	$	(202,116	)	$	2,067,868		$	(46,402	)	$	2,308,134		$	478		$	2,308,612
Unrealized gain on interest rate swaps, net of tax of $2,408		–			–		–		–			–			–			–			7,129			7,129			–			7,129
Foreign currency translation adjustment		–			–		–		–			–			–			–			(43,566	)		(43,566	)		(256	)		(43,822	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		(1,317	)		–		194		–			–			–			–			–			194			–			194
Net share settlement of restricted stock awards		–			–		–		(14,588	)		(3,461	)		–			–			–			(3,461	)		–			(3,461	)
Share-based compensation		–			–		7,735		–			–			–			–			–			7,735			–			7,735
Redemption value adjustment		–			–		–		–			–			–			(13,645	)		–			(13,645	)		–			(13,645	)
Net income		–			–		–		–			–			–			156,359			–			156,359			661			157,020
Balance at June 30, 2022		72,588,588		$	727	$	967,819		(8,755,451	)	$	(475,294	)	$	(202,116	)	$	2,210,582		$	(82,839	)	$	2,418,879		$	883		$	2,419,762

	Generac Holdings Inc.
														Excess Purchase Price			Retained			Accumulated
					Additional									Over			Earnings			Other			Total
	Common Stock				Paid-In			Treasury Stock						Predecessor			(Accumulated			Comprehensive			Stockholders'			Noncontrolling
	Shares		Amount		Capital			Shares			Amount			Basis			Deficit)			Income (Loss)			Equity			Interest			Total
Balance at January 1, 2022		72,386,017	$	725	$	952,939			(8,667,031	)	$	(448,976	)	$	(202,116	)	$	1,965,957		$	(54,755	)	$	2,213,774		$	313		$	2,214,087
Unrealized gain on interest rate swaps, net of tax of $8,734		–		–		–			–			–			–			–			25,857			25,857			–			25,857
Foreign currency translation adjustment		–		–		–			–			–			–			–			(53,941	)		(53,941	)		(74	)		(54,015	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		202,571		2		(1,682	)		–			–			–			–			–			(1,680	)		–			(1,680	)
Net share settlement of restricted stock awards		–		–		–			(88,420	)		(26,318	)		–			–			–			(26,318	)		–			(26,318	)
Share-based compensation		–		–		16,562			–			–			–			–			–			16,562			–			16,562
Redemption value adjustment		–		–		–			–			–			–			(25,592	)		–			(25,592	)		–			(25,592	)
Net income		–		–		–			–			–			–			270,217			–			270,217			644			270,861
Balance at June 30, 2022		72,588,588	$	727	$	967,819			(8,755,451	)	$	(475,294	)	$	(202,116	)	$	2,210,582		$	(82,839	)	$	2,418,879		$	883		$	2,419,762

	Generac Holdings Inc.
													Excess Purchase Price			Retained		Accumulated
					Additional								Over			Earnings		Other			Total
	Common Stock				Paid-In		Treasury Stock						Predecessor			(Accumulated		Comprehensive			Stockholders'			Noncontrolling
	Shares		Amount		Capital		Shares			Amount			Basis			Deficit)		Income (Loss)			Equity			Interest			Total
Balance at April 1, 2021		72,205,746	$	723	$	534,303		(9,251,818	)	$	(358,362	)	$	(202,116	)	$	1,581,681	$	(31,499	)	$	1,524,730		$	(161	)	$	1,524,569
Unrealized loss on interest rate swaps, net of tax of ($930)		–		–		–		–			–			–			–		(2,752	)		(2,752	)		–			(2,752	)
Foreign currency translation adjustment		–		–		–		–			–			–			–		(3,332	)		(3,332	)		(2	)		(3,334	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		47,234		–		1,617		–			–			–			–		–			1,617			–			1,617
Net share settlement of restricted stock awards		–		–		–		(279	)		(119	)		–			–		–			(119	)		–			(119	)
Share-based compensation		–		–		6,973		–			–			–			–		–			6,973			–			6,973
Redemption value adjustment		–		–		–		–			–			–			1,747		–			1,747			–			1,747
Net income		–		–		–		–			–			–			127,036		–			127,036			201			127,237
Balance at June 30, 2021		72,252,980	$	723	$	542,893		(9,252,097	)	$	(358,481	)	$	(202,116	)	$	1,710,464	$	(37,583	)	$	1,655,900		$	38		$	1,655,938

	Generac Holdings Inc.
													Excess Purchase Price			Retained		Accumulated
					Additional								Over			Earnings		Other			Total
	Common Stock				Paid-In		Treasury Stock						Predecessor			(Accumulated		Comprehensive			Stockholders'			Noncontrolling
	Shares		Amount		Capital		Shares			Amount			Basis			Deficit)		Income (Loss)			Equity			Interest			Total
Balance at January 1, 2021		72,024,329	$	721	$	525,541		(9,173,731	)	$	(332,164	)	$	(202,116	)	$	1,432,565	$	(34,254	)	$	1,390,293		$	(89	)	$	1,390,204
Unrealized gain on interest rate swaps, net of tax of $4,136		–		–		–		–			–			–			–		12,243			12,243			–			12,243
Foreign currency translation adjustment		–		–		–		–			–			–			–		(15,572	)		(15,572	)		(5	)		(15,577	)
Common stock issued under equity incentive plans, net of shares withheld for employee taxes and strike price		228,651		2		4,931		–			–			–			–		–			4,933			–			4,933
Net share settlement of restricted stock awards		–		–		–		(78,366	)		(26,317	)		–			–		–			(26,317	)		–			(26,317	)
Share-based compensation		–		–		12,421		–			–			–			–		–			12,421			–			12,421
Redemption value adjustment		–		–		–		–			–			–			1,870		–			1,870			–			1,870
Net income		–		–		–		–			–			–			276,029		–			276,029			132			276,161
Balance at June 30, 2021		72,252,980	$	723	$	542,893		(9,252,097	)	$	(358,481	)	$	(202,116	)	$	1,710,464	$	(37,583	)	$	1,655,900		$	38		$	1,655,938

See notes to condensed consolidated financial statements.

3

Generac Holdings Inc.

Condensed Consolidated Statements of Cash Flows

(U.S. Dollars in Thousands)

(Unaudited)

	Six Months Ended June 30,
	2022			2021
Operating activities
Net income	$	274,533		$	277,854
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		25,629			19,435
Amortization of intangible assets		51,930			20,031
Amortization of original issue discount and deferred financing costs		1,287			1,295
Loss on extinguishment of debt		3,743			831
Deferred income taxes		(61,625	)		7,003
Share-based compensation expense		16,562			12,421
Gain on disposal of assets		(587	)		(3,978	)
Other noncash (gains) charges		(2,037	)		(142	)
Net changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(143,308	)		(96,846	)
Inventories		(158,232	)		(163,820	)
Other assets		1,637			(4,172	)
Accounts payable		(54,583	)		186,041
Accrued wages and employee benefits		(11,876	)		2,537
Other accrued liabilities		86,616			38,028
Excess tax benefits from equity awards		(15,996	)		(21,525	)
Net cash provided by operating activities		13,693			274,993
Investing activities
Proceeds from sale of property and equipment		1,883			74
Proceeds from sale of investment		1,308			4,902
Proceeds from beneficial interests in securitization transactions		1,843			1,363
Contribution to equity method investment		(10,229	)		(216	)
Expenditures for property and equipment		(46,503	)		(54,222	)
Acquisition of business, net of cash acquired		(11,421	)		(419,017	)
Net cash used in investing activities		(63,119	)		(467,116	)
Financing activities
Proceeds from short-term borrowings		216,681			57,589
Proceeds from long-term borrowings		935,000			50,000
Repayments of short-term borrowings		(208,244	)		(73,675	)
Repayments of long-term borrowings and finance lease obligations		(538,401	)		(53,095	)
Payment of contingent acquisition consideration		–			(3,750	)
Payment of debt issuance costs		(10,330	)		(1,185	)
Purchase of additional ownership interest		(375	)		(27,164	)
Taxes paid related to equity awards		(38,347	)		(39,967	)
Proceeds from exercise of stock options		10,383			18,567
Net cash provided by (used in) financing activities		366,367			(72,680	)
Effect of exchange rate changes on cash and cash equivalents		2,860			(239	)
Net increase (decrease) in cash and cash equivalents		319,801			(265,042	)
Cash and cash equivalents at beginning of period		147,339			655,128
Cash and cash equivalents at end of period	$	467,140		$	390,086

See notes to condensed consolidated financial statements.

4

Generac Holdings Inc.
Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

1.   Description of Business and Basis of Presentation

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

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

● In June 2021, the Company acquired Deep Sea Electronics Limited (Deep Sea), founded in 1975 and headquartered in Hunmanby, United Kingdom. Deep Sea is an industry leading designer and manufacturer of a diverse suite of flexible control solutions focused on the global power generation and transfer switch markets.

● In July 2021, the Company acquired Chilicon Power, LLC (Chilicon), a designer and provider of grid-interactive microinverter and monitoring solutions for the solar market. Based in Los Angeles, California, Chilicon's power inversion and monitoring system technologies maximize photovoltaic (solar power) system production, lower installer operational cost, and promote end-user satisfaction.

● In September 2021, the Company acquired Apricity Code Corporation (Apricity Code), an advanced engineering and product design company located in Bend, Oregon.

● In September 2021, the Company acquired Off Grid Energy Ltd (Off Grid Energy), a designer and manufacturer of industrial-grade mobile energy storage systems. Headquartered in Rugby, United Kingdom, Off Grid Energy offers a diverse range of energy storage solutions that provide cleaner and more flexible energy for industrial and mobile applications. 

● In October 2021, the Company acquired Tank Utility, Inc. (Tank Utility). Headquartered in Boston, Massachusetts, Tank Utility is a provider of IoT propane tank monitoring that enables the optimization of propane fuel logistics.

● In December 2021, the Company acquired ecobee Inc. (ecobee), founded in 2007 and headquartered in Toronto, Canada. ecobee is a leader in sustainable home technology solutions including smart thermostats that deliver significant energy savings, security, and peace of mind. 

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

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

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

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

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

5

 

New Accounting Pronouncements

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

2.   Acquisitions

Fiscal 2022 Acquisitions

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

Fiscal 2021 Acquisitions

Acquisition of Deep Sea

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

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

Acquisition of Chilicon

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

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

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

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

Acquisition of Off Grid Energy

On September 1, 2021, the Company acquired Off Grid Energy for a purchase price of $56,949, net of cash acquired and inclusive of estimated contingent consideration of $29,054 that is to be paid in cash upon achievement of certain performance targets at the end of the earnout period which ended on March 31, 2022. The contingent consideration is expected to be paid during Q3 2022. Headquartered in Rugby, United Kingdom, Off Grid Energy is a designer and manufacturer of industrial-grade mobile energy storage systems. The acquisition purchase price was funded through cash on hand.

The Company recorded its preliminary purchase price allocation during the third quarter of 2021, and it was updated in the fourth quarter of 2021 as well as in the first and second quarters of 2022, based upon the Company's estimates of the fair value of the acquired assets and assumed liabilities at that time. As a result, the Company recorded $56,076 of intangible assets, including $21,531 of goodwill recorded in the International segment, as of the acquisition date. The goodwill ascribed to this acquisition is not deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of Off Grid Energy from the date of acquisition through June 30, 2022. 

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

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Acquisition of ecobee

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

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

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

The Company recorded its preliminary purchase price allocation during the fourth quarter of 2021, which was updated in the first and second quarters of 2022, based upon the Company's estimates of the fair value of the acquired assets and assumed liabilities at that time. As a result, the Company recorded $798,746 of intangible assets, including $243,346 of goodwill recorded in the Domestic segment, as of the acquisition date. A portion of the goodwill ascribed to this acquisition is deductible for tax purposes. The accompanying condensed consolidated financial statements include the results of ecobee from the date of acquisition through June 30, 2022. 

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

Other Acquisitions

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

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

The combined purchase price for these two acquisitions was $29,945, net of cash acquired, and was funded solely through cash on hand. The Company recorded its preliminary purchase price allocation for Apricity Code and Tank Utility during the third and fourth quarters of 2021, respectively, and then updated in the first and second quarters of 2022, based upon the Company's estimates of the fair value of the acquired assets and assumed liabilities. The accompanying consolidated financial statements include the results of these two acquired businesses since the dates of acquisition through June 30, 2022. 

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

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

Summary Purchase Price Allocations

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

	Deep Sea		ecobee		All Other		Total
Accounts receivable	$	9,574	$	23,337	$	13,852	$	46,763
Inventories		9,970		7,258		7,034		24,262
Prepaid expenses and other assets		1,181		5,689		6,594		13,464
Property and equipment		8,838		3,588		480		12,906
Intangible assets		174,270		555,400		81,171		810,841
Goodwill		263,604		243,346		80,871		587,821
Deferred income taxes		-		46,721		6,547		53,268
Other assets		151		11,722		8,526		20,399
Total assets acquired		467,588		897,061		205,075		1,569,724
Accounts payable		8,998		25,968		7,473		42,439
Accrued wages and employee benefits		2,106		1,354		872		4,332
Other accrued liabilities		1,737		19,898		18,258		39,893
Short-term borrowings		-		-		800		800
Current portion of long-term debt		-		-		233		233
Deferred income taxes		33,957		80,447		19,930		134,334
Other long-term liabilities		90		33,762		7,862		41,714
Long-term borrowings and finance lease obligations		-		-		1,624		1,624
Net assets acquired	$	420,700	$	735,632	$	148,023	$	1,304,355

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3.   Redeemable Noncontrolling Interest

On March 1, 2016, the Company acquired a 65% ownership interest in PR Industrial S.r.l. and its subsidiaries (Pramac). 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 sheets, as the noncontrolling interest holder had within its control the right to require the Company to redeem its interest in Pramac. In February 2019, the Company amended its agreement with the noncontrolling interest holder of Pramac, extending the agreement by five years, allowing the Company to exercise its call option rights in partial increments at certain times during the five-year period, and providing that the noncontrolling interest holder no longer held the right to put its shares to the Company until April 1, 2021. The put and call option price is based on a multiple of earnings, subject to a floor and the terms of the acquisition agreement, as amended. In May 2021, the Company exercised its call option rights and paid a purchase price of $27,164 to purchase an additional 15% ownership interest in Pramac, bringing the Company's total ownership interest in Pramac to 80%. The Company still holds its call option right to purchase the remaining 20% ownership interest in partial increments over the next 3 years.  

On February 1, 2019, the Company acquired a 51% ownership interest in Captiva Energy Solutions Private Limited (Captiva). The 49% noncontrolling interest in Captiva had an acquisition date fair value of $3,165 and was recorded as a redeemable noncontrolling interest in the condensed consolidated balance sheets, as the noncontrolling interest holder had within its control the right to require the Company to redeem its interest in Captiva. The noncontrolling interest holder has a put option to sell his interest to the Company any time after five years from the date of acquisition, or earlier upon the occurrence of certain circumstances. Further, the Company has a call option that it may redeem any time after five years from the date of acquisition, or earlier upon the occurrence of certain circumstances. The put and call option price is based on a multiple of earnings, subject to the terms of the acquisition agreement. In March 2022, the Company signed an agreement to purchase an additional 15% ownership interest in Captiva for a purchase price of $461, bringing the Company's total ownership interest in Captiva to 66%. In May 2022, the Company signed an amendment to the purchase agreement resulting in a revised purchase price of $375, which was paid with cash on hand. The Company still holds its call option right to purchase the remaining 34% ownership interest any time after five years from the date of acquisition, or earlier upon the occurrence of certain circumstances.

For both transactions, the redeemable noncontrolling interest is recorded at the greater of the initial fair value, increased or decreased for the noncontrolling interests’ share of comprehensive income (loss), or the estimated redemption value, with any adjustments to the redemption value impacting retained earnings, but not net income. However, the redemption value adjustments are reflected in the earnings per share calculation, as detailed in Note 13, “Earnings Per Share,” to the condensed consolidated financial statements. The following table presents the changes in the redeemable noncontrolling interest:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Balance at beginning of period	$	71,511		$	63,254		$	58,050		$	66,207
Net income		816			672			3,672			1,693
Foreign currency translation		(3,228	)		2,230			(4,109	)		(1,621	)
Purchase of additional ownership interest		86			(27,164	)		(375	)		(27,164	)
Redemption value adjustment		13,645			(1,747	)		25,592			(1,870	)
Balance at end of period	$	82,830		$	37,245		$	82,830		$	37,245

4.   Derivative Instruments and Hedging Activities

The Company records all derivatives in accordance with ASC 815, Derivatives and Hedging, which requires derivative instruments to 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.

The Company periodically utilizes commodity derivatives and foreign currency forward purchase and sales contracts in the normal course of business. Because these contracts do not qualify for hedge accounting, the related gains and losses are recorded in the Company’s condensed consolidated statements of comprehensive income. These gains and losses are not material to the Company’s condensed consolidated financial statements for the periods presented.

Interest Rate Swaps

In 2017, the Company entered into twenty interest rate swap agreements, eight of which were still outstanding as of June 30, 2022. In December 2019, in conjunction with an amendment to its term loan, the Company amended those interest rate swaps to remove the LIBOR floor, which also resulted in minor reductions to the future dated swap fixed rates. In March 2020, the Company entered into three additional interest rate swap agreements, bringing the total outstanding interest rate swaps to eleven as of June 30, 2022.

In June 2022, in conjunction with the amendments to the Company's credit agreements discussed further in Note 11, “Credit Agreements,” to the condensed consolidated financial statements, the Company amended its interest rate swaps to match that of the underlying debt and reconfirmed hedge effectiveness. 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 therefore, the effective portions of their gains or losses are reported as a component of accumulated other comprehensive loss (AOCL) in the condensed consolidated balance sheets.

The amount of gains, net of tax, recognized for the three and six months ended June 30, 2022 were $7,129 and $25,857, respectively. The amount of gains and losses, net of tax, rec