GlobeNewswire Inc | Jul 28, 2021 06:00AM EDT

July 28, 2021

WAUKESHA, Wis., July 28, 2021 (GLOBE NEWSWIRE) -- Generac Holdings Inc. (NYSE: GNRC) (Generac or the Company), a leading global designer and manufacturer of energy technology solutions and other power products, today reported financial results for its second quarter ended June 30, 2021 and provided an update on its outlook for the full year 2021.

Second Quarter 2021 Highlights

-- Net sales increased 68% to a record $920 million during the second quarter of 2021 as compared to $547 million in the prior-year second quarter. Core sales growth, which excludes both the impact of acquisitions and foreign currency, increased approximately 64%. Residential product sales grew 76% to $600 million as compared to $341 million last year.Commercial & Industrial (C&I) product sales increased 64% to $254 million as compared to $155 million in the prior year. -- Net income attributable to the Company during the second quarter was $127 million, or $2.01 per share, as compared to $66 million, or $1.02 per share, for the same period of 2020. -- Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was a record $153 million, or $2.39 per share, as compared to $88 million, or $1.40 per share, in the second quarter of 2020. -- Adjusted EBITDA before deducting for noncontrolling interests, as defined in the accompanying reconciliation schedules, was a record $218 million, or 23.7% of net sales, as compared to $123 million, or 22.5% of net sales, in the prior year. -- Cash flow from operations was $122 million, a record for the second quarter of a year, as compared to $102 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was also a second quarter record at $96 million as compared to $89 million for 2020. The increase in cash flow was primarily due to higher net income in the current year quarter, which was partially offset by a higher level of income taxes paid and capital expenditures in the current year relative to the prior year quarter. -- On June 1st, the Company closed on the acquisition of Deep Sea Electronics Limited, an advanced controls designer and manufacturer headquartered in Hunmanby, United Kingdom. -- On July 2nd, the Company closed on the acquisition of Chilicon Power, LLC (Chilicon). Based in California, Chilicon is a designer and provider of grid-interactive microinverter and monitoring solutions for the solar market. -- The Company achieved a significant milestone by starting production of home standby generators at its new manufacturing facility in Trenton, South Carolina in early July.

Second quarter results were again exceptional with broad-based growth of 68% leading to all-time record revenue of $920 million. We are particularly proud of achieving this tremendous top-line growth along with a record level of adjusted EBITDA despite numerous supply chain challenges, said Aaron Jagdfeld, President and Chief Executive Officer. Shipments of home standby generators were almost double compared to the prior year due to incredible demand for these products and our successful capacity-expansion efforts. Our PWRcell energy storage systems were also up dramatically compared to the prior year as well as sequentially as these products continued to gain important traction in the rapidly expanding clean energy market. Additionally, shipments of C&I products were up significantly over the prior year as we continue to see demand recover across a number of markets and geographies from the prior-year pandemic lows, with growth of these products now solidly above 2019 levels.

Jagdfeld continued, We recently announced two strategic acquisitions we believe will enable us to expand our capabilities and accelerate our strategy to continue Generacs transition into an energy technology solutions company. In June, we closed on the acquisition of Deep Sea Electronics, which will improve our expertise and bandwidth for advanced systems controls and help us more quickly develop our product roadmap for the future. In early July, we further added to our suite of clean energy solutions by entering the large and growing microinverter market for solar applications with the acquisition of Chilicon Power.

Additional Second Quarter 2021 Consolidated Highlights

Gross profit margin was 36.9% as compared to 38.2% in the prior-year second quarter. The current quarters margin performance was impacted by higher input costs relating to raw materials, labor, logistics and plant start-up costs, which was partially offset by improved pricing along with favorable overhead absorption from higher sales volumes.

Operating expenses increased $37.4 million, or 31.3%, as compared to the second quarter of 2020. The increase was primarily driven by higher variable expenses from the significant increase in sales volumes, higher employee costs and incentive compensation, and the impact of acquisitions.

Provision for income taxes for the current year quarter was $46.4 million, or an effective tax rate of 26.6%, as compared to $18.5 million, or a 22.5% effective tax rate, for the prior year. The increase in effective tax rate was primarily due to a discrete tax item resulting from a legislative tax rate change in a foreign jurisdiction which revalued deferred tax liabilities by $7.0 million, or approximately 4% tax rate impact, during the current year quarter.

Business Segment Results

Domestic Segment

Domestic segment sales increased 70% to $784.1 million as compared to $460.8 million in the prior year quarter, with the impact of acquisitions contributing approximately 2% of the revenue growth for the quarter. The core sales growth was driven by broad-based strength across both residential and C&I products highlighted by very strong growth with home standby generators, PWRcell energy storage systems, telecom national account customers and C&I mobile products.

Adjusted EBITDA for the segment was $203.9 million, or 26.0% of net sales, as compared to $121.3 million in the prior year, or 26.3% of net sales. This margin performance was impacted by higher input costs in the current year quarter, which were mostly offset by improved pricing and higher operating leverage from the substantial revenue growth for the segment during the quarter.

International Segment

International segment sales increased 58% to $135.8 million as compared to $86.1 million in the prior year quarter, with the impact of acquisitions and foreign currency contributing approximately 13% of the revenue growth for the quarter. The core sales growth for the segment was primarily due to strength in the European and Latin American regions that are seeing a sharp increase in demand as end markets recover off the prior-year COVID lows.

Adjusted EBITDA for the segment, before deducting for noncontrolling interests, was $13.7 million, or 10.1% of net sales, as compared to $1.9 million, or 2.2% of net sales, in the prior year. The increase in margin was primarily due to improved operating leverage on the higher sales volumes and the impact of the Deep Sea Electronics acquisition.

Updated 2021 Outlook

The Company continues to expand its production of home standby generators at a better-then-expected rate, and demand for PWRcell energy storage systems continues to increase combined with additional supply chain execution, which is leading to further increase in the shipment outlook for these products for the full-year 2021. The outlook for C&I products has also improved due to a further broad-based rebound in demand highlighted by a continued pickup in activity from telecom national account customers, overall stronger outlooks for domestic and international markets and the closing of the Deep Sea Electronics acquisition. However, the Company continues to experience higher input costs relative to our previous guidance due to rising commodities and significantly higher logistics costs.

As a result of these factors, the Company is increasing its full-year 2021 net sales growth guidance to now be approximately 47 to 50% compared to the prior year, which includes approximately 3% of favorable impact from acquisitions and foreign currency. This is an increase from the as-reported growth guidance of 40 to 45% previously expected.

Net income margin, before deducting for non-controlling interests, is now expected to be approximately 15.5 to 16.0% for the full-year 2021 as compared to the prior expectation of between 16.0 to 17.0%. The corresponding adjusted EBITDA margin is now expected to be 24.5 to 25.0%, as compared to the previous guidance range of approximately 24.5 to 25.5%.

Operating and free cash flow generation is still expected to be strong, with the conversion of adjusted net income to free cash flow still expected to be approximately 90%.

Conference Call and Webcast

Generac management will hold a conference call at 10:00 a.m. EDT on Wednesday, July 28, 2021 to discuss second quarter 2021 operating results. The conference call can be accessed by dialing (866) 415-3113 (domestic) or +1 (678) 509-7544 (international) and entering passcode 1966865.

The conference call will also be webcast simultaneously on Generac's website ( http://www.generac.com), accessed under the Investor Relations link. The webcast link will be made available on the Companys website prior to the start of the call within the Events section of the Investor Relations website.

Following the live webcast, a replay will be available on the Company's website. A telephonic replay will also be available approximately two hours after the call and can be accessed by dialing (855) 859-2056 (domestic) or +1 (404) 537-3406 (international) and entering passcode 1966865. The telephonic replay will be available for 7 days.

About Generac

Founded in 1959, Generac is a leading global designer and manufacturer of a wide range of energy technology solutions and other power products. As an industry leader serving residential, commercial, and industrial markets, Generac's 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.

Forward-looking Information

Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Forward-looking statements give Generac's current expectations and projections relating to the Company's 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.

Any such forward looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Although Generac believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Generac's actual financial results and cause them to differ materially from those anticipated in any forward-looking statements, including:

-- frequency and duration of power outages impacting demand for our products; -- availability, cost and quality of raw materials and key components from our global supply chain and labor needed in producing our products; -- the impact on our results of possible fluctuations in interest rates, foreign currency exchange rates, commodities, product mix and regulatory tariffs; -- 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; -- the duration and scope of the impacts of the COVID-19 pandemic are uncertain and may or will continue to adversely affect our operations, supply chain, and distribution for certain of our products and services; -- difficulties we may encounter as our business expands globally or into new markets; -- 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; -- failures or security breaches of our networks, information technology systems, or connected products; and -- changes in environmental, health and safety, or product compliance laws and regulations affecting our products, operations, or customer demand.

Should one or more of these risks or uncertainties materialize, Generac's actual results may vary in material respects from those projected in any forward-looking statements. In the current environment, some of the above factors have materialized and may or will continue to be impacted by the COVID-19 pandemic, which may cause actual results to vary from these forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in Generac's filings with the U.S. Securities and Exchange Commission (SEC), particularly in the Risk Factors section of the 2020 Annual Report on Form 10-K and in its periodic reports on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.

Any forward-looking statement made by Generac in this press release speaks only as of the date on which it is made. Generac undertakes 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.

Non-GAAP Financial Metrics

Core Sales

The Company references core sales to further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP. Core sales excludes the impact of acquisitions and fluctuations in foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparison of net sales performance with prior and future periods.

Adjusted EBITDA

The computation of adjusted EBITDA attributable to the Company and adjusted EBITDA margin is based on the definition of EBITDA contained in Generac's credit agreement dated as of May 31, 2013, as amended. To supplement the Company's condensed consolidated financial statements presented in accordance with U.S. GAAP, Generac provides a summary to show the computation of adjusted EBITDA, which excludes the impact of noncontrolling interests, taking into account certain charges and gains that were recognized during the periods presented.

Adjusted Net Income

To further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company provides a summary to show the computation of adjusted net income attributable to the Company. Adjusted net income attributable to the Company is defined as net income before noncontrolling interests 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 the Company's 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 non-controlling interests.

Free Cash Flow

In addition, we reference free cash flow to further supplement Generac's condensed consolidated financial statements presented in accordance with U.S. GAAP. Free cash flow is defined as net cash provided by operating activities, plus proceeds from beneficial interests in securitization transactions, less expenditures for property and equipment, and is intended to be a measure of operational cash flow taking into account additional capital expenditure investment into the business.

The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with U.S. GAAP. Please see the accompanying Reconciliation Schedules and our SEC filings for additional discussion of the basis for Generac's reporting of Non-GAAP financial measures, which includes why the Company believes these measures provide useful information to investors and the additional purposes for which management uses the non-GAAP financial information.

SOURCE: Generac Holdings Inc.

CONTACT: Michael W. HarrisVice President Corporate Development & Investor Relations (262) 506-6064InvestorRelations@generac.com

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, 2021 2020 2021 2020 Net sales $ 919,981 $ 546,848 $ 1,727,415 $ 1,022,763 Costs of goods 580,246 337,865 1,065,866 641,460 soldGross profit 339,735 208,983 661,549 381,303 Operating expenses:Selling and 78,777 62,526 147,201 117,665 serviceResearch and 25,344 19,455 47,732 38,104 developmentGeneral and 41,610 29,782 74,509 57,671 administrativeAmortization 11,052 7,667 20,031 15,448 of intangiblesTotaloperating 156,783 119,430 289,473 228,888 expensesIncome from 182,952 89,553 372,076 152,415 operations Other(expense) income:Interest (7,721 ) (7,932 ) (15,444 ) (16,985 ) expenseInvestment 244 660 847 1,620 incomeLoss onextinguishment (831 ) ? (831 ) ? of debtOther, net (373 ) (216 ) 2,936 (2,130 ) Total other (8,681 ) (7,488 ) (12,492 ) (17,495 ) expense, net Income beforeprovision for 174,271 82,065 359,584 134,920 income taxesProvision for 46,362 18,473 81,730 27,917 income taxesNet income 127,909 63,592 277,854 107,003 Net income(loss)attributable 873 (2,553 ) 1,825 (3,602 ) tononcontrollinginterestsNet incomeattributable $ 127,036 $ 66,145 $ 276,029 $ 110,605 to GeneracHoldings Inc. Net incomeattributableto common $ 2.06 $ 1.04 $ 4.44 $ 1.73 shareholdersper commonshare - basic:Weightedaverage commonshares 62,605,166 62,267,083 62,533,725 62,190,438 outstanding -basic: Net incomeattributableto commonshareholders $ 2.01 $ 1.02 $ 4.34 $ 1.70 per commonshare -diluted:Weightedaverage commonshares 64,088,709 63,364,253 64,097,378 63,363,721 outstanding -diluted: Comprehensiveincomeattributable $ 119,246 $ 66,758 $ 273,062 $ 63,660 to GeneracHoldings Inc.

Generac Holdings Inc. Condensed Consolidated Balance Sheets (U.S. Dollars in Thousands, Except Share and Per Share Data) (Unaudited) June 30, December 31, 2021 2020 Assets Current assets: Cash and cash equivalents $ 390,086 $ 655,128 Accounts receivable, less allowance for credit 480,889 374,906 lossesInventories 772,861 603,317 Prepaid expenses and other assets 48,697 36,382 Total current assets 1,692,533 1,669,733 Property and equipment, net 392,518 343,936 Customer lists, net 158,720 49,205 Patents and technology, net 97,536 86,727 Other intangible assets, net 10,295 9,932 Tradenames, net 172,982 146,159 Goodwill 1,109,908 855,228 Deferred income taxes 2,246 1,497 Operating lease and other assets 70,188 73,006 Total assets $ 3,706,926 $ 3,235,423 Liabilities and stockholders? equity Current liabilities: Short-term borrowings $ 23,760 $ 39,282 Accounts payable 526,375 330,247 Accrued wages and employee benefits 67,494 63,036 Other accrued liabilities 214,387 204,812 Current portion of long-term borrowings and 4,233 4,147 finance lease obligationsTotal current liabilities 836,249 641,524 Long-term borrowings and finance lease 842,607 841,764 obligationsDeferred income taxes 158,522 115,769 Operating lease and other long-term liabilities 176,365 179,955 Total liabilities 2,013,743 1,779,012 Redeemable noncontrolling interest 37,245 66,207 Stockholders? equity: Common stock, par value $0.01, 500,000,000 shares authorized, 72,252,980 and 72,024,329shares issued at June 30, 2021 and December 31, 723 721 2020, respectivelyAdditional paid-in capital 542,893 525,541 Treasury stock, at cost (358,481 ) (332,164 ) Excess purchase price over predecessor basis (202,116 ) (202,116 ) Retained earnings 1,710,464 1,432,565 Accumulated other comprehensive loss (37,583 ) (34,254 ) Stockholders? equity attributable to Generac 1,655,900 1,390,293 Holdings Inc.Noncontrolling interests 38 (89 ) Total stockholders? equity 1,655,938 1,390,204 Total liabilities and stockholders? equity $ 3,706,926 $ 3,235,423

Generac Holdings Inc. Condensed Consolidated Statements of Cash Flows (U.S. Dollars in Thousands) (Unaudited) Six Months Ended June 30, 2021 2020 Operating activities Net income $ 277,854 $ 107,003 Adjustment to reconcile net income to net cash provided by operating activities:Depreciation 19,435 17,471 Amortization of intangible assets 20,031 15,448 Amortization of original issue discount and 1,295 1,286 deferred financing costsLoss on extinguishment of debt 831 ? Deferred income taxes 7,003 8,029 Share-based compensation expense 12,421 9,974 Loss (gain) on disposal of assets (3,978 ) ? Other, net (142 ) 8,906 Net changes in operating assets and liabilities, net of acquisitions:Accounts receivable (96,846 ) (19,021 ) Inventories (163,820 ) (35,316 ) Other assets (4,172 ) (1,220 ) Accounts payable 186,041 (22,987 ) Accrued wages and employee benefits 2,537 (3,604 ) Other accrued liabilities 38,028 31,851 Excess tax benefits from equity awards (21,525 ) (4,706 ) Net cash provided by operating activities 274,993 113,114 Investing activities Proceeds from sale of property and equipment 74 12 Proceeds from sale of investment 4,902 ? Proceeds from beneficial interests in 1,363 1,324 securitization transactionsContribution to equity method investment (216 ) ? Expenditures for property and equipment (54,222 ) (26,332 ) Acquisition of business, net of cash acquired (419,017 ) ? Net cash used in investing activities (467,116 ) (24,996 ) Financing activities Proceeds from short-term borrowings 57,589 122,489 Proceeds from long-term borrowings 50,000 81 Repayments of short-term borrowings (73,675 ) (125,745 ) Repayments of long-term borrowings and finance (53,095 ) (2,460 ) lease obligationsPayment of contingent acquisition consideration (3,750 ) (4,000 ) Payment of debt issuance costs (1,185 ) ? Purchase of additional ownership interest (27,164 ) ? Taxes paid related to equity awards (39,967 ) (10,951 ) Proceeds from the exercise of stock options 18,567 7,570 Net cash used in financing activities (72,680 ) (13,016 ) Effect of exchange rate changes on cash and cash (239 ) (1,251 ) equivalents Net increase (decrease) in cash and cash (265,042 ) 73,851 equivalentsCash and cash equivalents at beginning of period 655,128 322,883 Cash and cash equivalents at end of period $ 390,086 $ 396,734

Generac Holdings Inc. Segment Reporting and Product Class Information (U.S. Dollars in Thousands) (Unaudited) Net Sales Three Months Ended June 30, Six Months Ended June 30, Reportable 2021 2020 2021 2020 SegmentsDomestic $ 784,146 $ 460,774 $ 1,476,884 $ 836,804 International 135,835 86,074 250,531 185,959 Total net $ 919,981 $ 546,848 $ 1,727,415 $ 1,022,763 sales Product ClassesResidential $ 599,991 $ 341,352 $ 1,142,140 $ 598,971 productsCommercial &industrial 254,295 154,890 456,686 326,957 productsOther 65,695 50,606 128,589 96,835 Total net $ 919,981 $ 546,848 $ 1,727,415 $ 1,022,763 sales Adjusted EBITDA Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Domestic $ 203,931 $ 121,256 $ 411,004 $ 204,030 International 13,748 1,884 20,869 5,134 Totaladjusted $ 217,679 $ 123,140 $ 431,873 $ 209,164 EBITDA (1) (1) See reconciliation of Adjusted EBITDA toNet income attributable to Generac Holdings Inc. on the following reconciliationschedule.

Generac Holdings Inc. Reconciliation Schedules (U.S. Dollars in Thousands, Except Share and Per Share Data) (Unaudited) Net income toAdjusted EBITDA reconciliation Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net incomeattributable to $ 127,036 $ 66,145 $ 276,029 $ 110,605 Generac HoldingsInc.Net income(loss)attributable to 873 (2,553 ) 1,825 (3,602 ) noncontrollinginterestsNet income 127,909 63,592 277,854 107,003 Interest 7,721 7,932 15,444 16,985 expenseDepreciationand 21,229 16,803 39,466 32,919 amortizationProvision for 46,362 18,473 81,730 27,917 income taxesNon-cashwrite-down and 1,173 (893 ) (2,695 ) 1,391 otheradjustments (1)Non-cashshare-based 6,973 5,400 12,421 9,974 compensationexpense (2)Loss onextinguishment 831 - 831 - of debt (3)Transactioncosts and credit 5,172 358 6,086 592 facility fees(4)Businessoptimization and - 11,460 159 11,972 other charges(5)Other 309 15 577 411 Adjusted 217,679 123,140 431,873 209,164 EBITDAAdjusted EBITDAattributable to 2,015 132 4,207 30 noncontrollinginterestsAdjusted EBITDAattributable to $ 215,664 $ 123,008 $ 427,666 $ 209,134 Generac HoldingsInc. (1) Includes gains/losses on disposals of assetsand sales of certain investments, unrealizedmark-to-market adjustments on commodity contracts,and certain foreign currency related adjustments. A full description of these and the otherreconciliation adjustments contained in theseschedules is included in Generac's SEC filings. (2) Represents share-based compensation expense toaccount for stock options, restricted stock and other stock awards over their respective vestingperiods. (3) Represents the non-cash write-off of original issue discount and deferred financing costs due to voluntary prepayment of Term Loan debt. (4) Represents transaction costs incurred directlyin connection with any investment, as defined inour credit agreement, equity issuance or debt issuance or refinancing, together with certainfees relating to our senior secured creditfacilities. (5) For the six months ended June 30, 2021,represents severance and other charges related tothe consolidation of certain of our facilities.For the three and six months ended June 30, 2020, represents severance, non-cash asset write-downs,and other charges to address the impact of theCOVID-19 pandemic and decline in oil prices. Net income toAdjusted net incomereconciliation Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net incomeattributable to $ 127,036 $ 66,145 $ 276,029 $ 110,605 Generac HoldingsInc.Net income(loss)attributable to 873 (2,553 ) 1,825 (3,602 ) noncontrollinginterestsNet income 127,909 63,592 277,854 107,003 Provision for 46,362 18,473 81,730 27,917 income taxesIncome beforeprovision for 174,271 82,065 359,584 134,920 income taxesAmortizationof intangible 11,052 7,667 20,031 15,448 assetsAmortization ofdeferred financecosts and 649 644 1,295 1,286 original issuediscountLoss onextinguishment 831 ? 831 ? of debt (3)Transactioncosts and otherpurchase 4,954 191 5,643 231 accountingadjustments (6)(Gain)/lossattributable tobusiness or - ? (3,991 ) ? assetdispositions (7)Businessoptimization and - 11,460 159 11,972 other charges(5)Adjusted netincome before 191,757 102,027 383,552 163,857 provision forincome taxesCash incometax expense (37,406 ) (13,877 ) (75,274 ) (21,222 ) (8)Adjusted net 154,351 88,150 308,278 142,635 incomeAdjusted netincome (loss)attributable to 1,121 (342 ) 2,344 (923 ) noncontrollinginterestsAdjusted netincomeattributable to $ 153,230 $ 88,492 $ 305,934 $ 143,558 Generac HoldingsInc. Adjusted netincomeattributable to Generac HoldingsInc. percommon share - $ 2.39 $ 1.40 $ 4.77 $ 2.27 diluted:Weighted averagecommon shares 64,088,709 63,364,253 64,097,378 63,363,721 outstanding -diluted: (6) Represents transaction costs incurred directlyin connection with any investment, as defined inour credit agreement, equity issuance or debt issuance or refinancing, and certain purchaseaccounting adjustments. (7) Represents gains and losses attributable tothe disposition of a business or assets occurring in other than ordinary course, as defined in ourcredit agreement. (8) Amount for the three and six months ended June30, 2021 is based on an anticipated cash incometax rate of approximately 21.0% to 21.5% for thefull year ending 2021. Amount for the three andsix months ended June 30, 2020 is based on ananticipated cash income tax rate at the time ofapproximately 17% for the full year ended 2020. Cash income tax expense for the respective periodsis based on the projected taxable income andcorresponding cash tax rate for the full yearafter considering the effects of current anddeferred income tax items, and is calculated foreach respective period by applying the derivedcash tax rate to the period?s pretax income. Free Cash Flow Reconciliation Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net cashprovided by $ 122,450 $ 101,768 $ 274,993 $ 113,114 operatingactivitiesProceeds frombeneficialinterests in 651 706 1,363 1,324 securitizationtransactionsExpenditures forproperty and (26,753 ) (13,438 ) (54,222 ) (26,332 ) equipmentFree cash $ 96,348 $ 89,036 $ 222,134 $ 88,106 flow