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 third quarter ended September 30, 2020 and provided
an update on its outlook for the full year 2020.
Third Quarter
2020
Highlights
- Net sales increased
approximately 17% to $701 million during the third quarter of 2020
as compared to $601 million in the prior-year third quarter. Core
sales growth, which excludes both the impact of acquisitions and
foreign currency, increased approximately 16%.
- Residential product
sales increased 37% to $459 million as compared to $335 million
last year.
- Commercial &
Industrial (“C&I”) product sales decreased 18% to $176 million
as compared to $215 million in the prior year.
- Net income
attributable to the Company during the third quarter was $115
million, or $1.82 per share, as compared to $76 million, or $1.18
per share, for the same period of 2019.
- Adjusted net income
attributable to the Company, as defined in the accompanying
reconciliation schedules, was $133 million, or $2.08 per share, as
compared to $90 million, or $1.43 per share, in the third quarter
of 2019.
- Adjusted EBITDA
before deducting for noncontrolling interests, as defined in the
accompanying reconciliation schedules, was $179 million, or 25.5%
of net sales, as compared to $126 million, or 21.0% of net sales,
in the prior year.
- Cash flow from
operations was $155 million as compared to $111 million in the
prior year. Free cash flow, as defined in the accompanying
reconciliation schedules, was $148 million as compared to $101
million for 2019. The increase was primarily due to higher sales
volumes and resulting net income.
- The Company is
increasing its full-year 2020 sales growth guidance to now be
approximately 10 to 12% of year-over-year growth, which is an
increase from the baseline growth guidance of 5 to 8% previously
expected. Adjusted EBITDA margin, before deducting for
non-controlling interests, is now expected to be approximately 22.5
to 23.0%, which is an increase from the 21.5 to 22.0% previously
expected.
- On July 1st, 2020,
the Company closed on the acquisition of Energy Systems, its
industrial distributor located in Northern California.
- As previously
announced on September 1st, 2020, the Company acquired the assets
of Mean Green Products, LLC. Headquartered in Ross, Ohio, Mean
Green is a leading manufacturer of an innovative commercial line of
battery powered turf care products.
- On October 7th, we
closed on the acquisition of Enbala Power Networks Inc. (“Enbala”).
Based in Denver, Colorado, Enbala is one of the leading providers
of distributed energy optimization and control software needed to
ensure the operational stability of the world’s power grids.
“Third quarter revenue and adjusted EBITDA far exceeded all-time
records led by dramatic growth in sales of home standby and
portable generators,” said Aaron Jagdfeld, President and Chief
Executive Officer. “Power outage activity was much higher during
the quarter driven by more extreme and severe weather. When
combined with the “Home as a Sanctuary” trend that we began seeing
at the onset of the COVID-19 pandemic, demand for home standby
generators reached unprecedented levels during the quarter.
Shipments of our PWRcell energy storage systems recovered during
the third quarter and increased significantly from lower levels in
the second quarter, which were impacted by a slowdown in solar
installations due to the pandemic. As expected, our C&I
products were also negatively impacted, however, we realized some
meaningful benefits from our recent cost-reduction efforts that
were initiated in the second quarter.”
Jagdfeld continued, “We announced several strategic acquisitions
in recent months that enable us to enter exciting new markets. In
July, we closed on the acquisition of our industrial distributor in
Northern California, Energy Systems, to enhance our ability to
serve this very large, rapidly growing power generation market. In
September, we entered the battery-powered commercial mower market
with Mean Green Products, which will help accelerate the
electrification of our chore products. In October, we entered the
emerging market for “grid services” through the acquisition of
Enbala Power Networks, which plays into another secular trend
involving the evolution of the traditional electric utility model
and further advances our capabilities as an energy technology
solutions company.”
Additional Third
Quarter
2020
Consolidated Highlights
Gross profit margin improved 320 basis points to 39.4% compared
to 36.2% in the prior-year third quarter. The increase was
primarily driven by favorable sales mix from significantly higher
shipments of residential products and a lower mix of C&I
products. Operating expenses increased $8.6 million, or 7.6%, as
compared to the third quarter of 2019. The increase was primarily
driven by incremental spend related to clean energy products and
higher incentive compensation. These increases were partially
offset by lower advertising and promotional costs, along with a
reduction in operating expenses for the International segment as a
result of restructuring actions initiated in the second quarter of
2020.
Provision for income taxes for the current year quarter was
$32.1 million, or an effective tax rate of 21.8%, as compared to
$20.1 million, or a 21.1% effective tax rate, for the prior year.
The increase in effective tax rate was primarily due to the prior
year having more favorable discrete tax items compared to the
current year quarter, which was partially offset by an overall more
favorable mix of pretax income in the current year quarter.
Business Segment Results
Domestic Segment
Domestic segment sales increased 22.6% to $606.9 million as
compared to $494.8 million in the prior year quarter. As a result
of the heightened awareness of the need for backup power, shipments
of home standby generators experienced very strong growth during
the quarter. In addition, significant power outage activity also
drove elevated shipments of portable generators and aftermarket
service parts. Shipments of the recently launched PWRcell energy
storage system also had a strong impact on growth following the
expected recovery in the solar market during the third quarter.
This residential products growth was partially offset by continued
weakness in sales of C&I mobile products following the onset of
the COVID-19 pandemic and lower oil prices.
Adjusted EBITDA for the segment was $171.4 million, or 28.2% of
net sales, as compared to $120.8 million in the prior year, or
24.4% of net sales. This margin increase was driven by favorable
sales mix and higher operating leverage from the significant
revenue growth.
International Segment
International segment sales decreased 11.1% to $94.5 million as
compared to $106.3 million in the prior year quarter. The decline
was driven by continued broad-based weakness in global C&I
product demand caused by the COVID-19 pandemic.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $7.4 million, or 7.9% of net sales,
as compared to $5.1 million, or 4.8% of net sales, in the prior
year. Decreased operating leverage on the lower sales volumes was
more than offset by lower operating expenses as a result of the
restructuring activities initiated in the second quarter of
2020.
Updated 2020
OutlookGiven the higher power outage environment
thus far in second half of 2020, along with increased production
rates in the fourth quarter for home standby generators, the
Company is raising its prior guidance for revenue growth for
full-year 2020, and now expects an increase of approximately 10 to
12% compared to the prior year. This compares to the previous
baseline guidance of 5 to 8% revenue growth.
As a result of the higher revenue expectations, net income
margin, before deducting for non-controlling interests, is now
expected to be approximately 13.0 to 13.5% for the full-year 2020,
which is an increase from the prior expectation of between 12.0% to
12.5%. The corresponding adjusted EBITDA margin is now expected to
be approximately 22.5 to 23.0%, which is an increase from the 21.5%
to 22.0% previously expected.
Conference Call and Webcast
Generac management will hold a conference call at 10:00 a.m. EDT
on Wednesday, October 28, 2020 to discuss third quarter 2020
operating results. The conference call can be accessed by dialing
(866) 415-3113 (domestic) or +1 (678) 509-7544 (international) and
entering passcode 2669599.
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 Company’s 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 2669599. 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, light 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;
- 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 or information technology systems;
- changes in environmental, health
and safety, or product compliance laws and regulations affecting
our products or operations; and
- 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,
distribution, and demand for certain of our products and
services.
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 2019 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 September 30, |
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
701,355 |
|
|
$ |
601,135 |
|
|
$ |
1,724,118 |
|
|
$ |
1,613,404 |
|
|
Costs of
goods sold |
|
425,206 |
|
|
|
383,618 |
|
|
|
1,066,666 |
|
|
|
1,037,874 |
|
|
Gross
profit |
|
276,149 |
|
|
|
217,517 |
|
|
|
657,452 |
|
|
|
575,530 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling and service |
|
60,901 |
|
|
|
59,356 |
|
|
|
178,566 |
|
|
|
158,954 |
|
|
Research and development |
|
20,658 |
|
|
|
17,603 |
|
|
|
58,762 |
|
|
|
48,906 |
|
|
General and administrative |
|
31,061 |
|
|
|
27,596 |
|
|
|
88,732 |
|
|
|
80,016 |
|
|
Amortization of intangibles |
|
7,892 |
|
|
|
7,406 |
|
|
|
23,340 |
|
|
|
19,999 |
|
|
Total
operating expenses |
|
120,512 |
|
|
|
111,961 |
|
|
|
349,400 |
|
|
|
307,875 |
|
|
Income from
operations |
|
155,637 |
|
|
|
105,556 |
|
|
|
308,052 |
|
|
|
267,655 |
|
|
|
|
|
|
|
|
|
|
|
Other
(expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
(8,096 |
) |
|
|
(10,704 |
) |
|
|
(25,081 |
) |
|
|
(31,428 |
) |
|
Investment income |
|
301 |
|
|
|
523 |
|
|
|
1,921 |
|
|
|
1,889 |
|
|
Other, net |
|
(557 |
) |
|
|
(414 |
) |
|
|
(2,687 |
) |
|
|
(1,868 |
) |
|
Total other
expense, net |
|
(8,352 |
) |
|
|
(10,595 |
) |
|
|
(25,847 |
) |
|
|
(31,407 |
) |
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
147,285 |
|
|
|
94,961 |
|
|
|
282,205 |
|
|
|
236,248 |
|
|
Provision
for income taxes |
|
32,050 |
|
|
|
20,064 |
|
|
|
59,967 |
|
|
|
53,876 |
|
|
Net
income |
|
115,235 |
|
|
|
74,897 |
|
|
|
222,238 |
|
|
|
182,372 |
|
|
Net (loss)
income attributable to noncontrolling interests |
|
265 |
|
|
|
(677 |
) |
|
|
(3,337 |
) |
|
|
(21 |
) |
|
Net income
attributable to Generac Holdings Inc. |
$ |
114,970 |
|
|
$ |
75,574 |
|
|
$ |
225,575 |
|
|
$ |
182,393 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. per common share -
basic: |
$ |
1.86 |
|
|
$ |
1.20 |
|
|
$ |
3.59 |
|
|
$ |
2.95 |
|
|
Weighted average common shares outstanding - basic: |
|
62,353,473 |
|
|
|
61,973,447 |
|
|
|
62,244,872 |
|
|
|
61,878,500 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. per common share -
diluted: |
$ |
1.82 |
|
|
$ |
1.18 |
|
|
$ |
3.51 |
|
|
$ |
2.92 |
|
|
Weighted average common shares outstanding - diluted: |
|
63,761,380 |
|
|
|
62,770,592 |
|
|
|
63,546,132 |
|
|
|
62,519,205 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
123,887 |
|
|
$ |
64,904 |
|
|
$ |
187,548 |
|
|
$ |
161,828 |
|
|
Generac Holdings
Inc. |
|
Condensed
Consolidated Balance Sheets |
|
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
September
30, |
|
December
31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
513,944 |
|
|
$ |
322,883 |
|
|
Accounts receivable, less allowance for credit losses |
|
398,240 |
|
|
|
319,538 |
|
|
Inventories |
|
532,952 |
|
|
|
522,024 |
|
|
Prepaid expenses and other assets |
|
35,200 |
|
|
|
31,384 |
|
|
Total
current assets |
|
1,480,336 |
|
|
|
1,195,829 |
|
|
|
|
|
|
|
Property and
equipment, net |
|
321,360 |
|
|
|
316,976 |
|
|
|
|
|
|
|
Customer
lists, net |
|
47,702 |
|
|
|
55,552 |
|
|
Patents and
technology, net |
|
73,260 |
|
|
|
85,546 |
|
|
Other
intangible assets, net |
|
9,216 |
|
|
|
8,259 |
|
|
Tradenames,
net |
|
145,977 |
|
|
|
148,377 |
|
|
Goodwill |
|
815,624 |
|
|
|
805,284 |
|
|
Deferred
income taxes |
|
3,596 |
|
|
|
2,933 |
|
|
Operating
lease and other assets |
|
77,004 |
|
|
|
46,913 |
|
|
Total
assets |
$ |
2,974,075 |
|
|
$ |
2,665,669 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
$ |
44,800 |
|
|
$ |
58,714 |
|
|
Accounts payable |
|
272,745 |
|
|
|
261,977 |
|
|
Accrued wages and employee benefits |
|
52,915 |
|
|
|
41,361 |
|
|
Other accrued liabilities |
|
182,377 |
|
|
|
132,629 |
|
|
Current portion of long-term borrowings and finance lease
obligations |
|
3,421 |
|
|
|
2,383 |
|
|
Total
current liabilities |
|
556,258 |
|
|
|
497,064 |
|
|
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
841,341 |
|
|
|
837,767 |
|
|
Deferred
income taxes |
|
105,520 |
|
|
|
96,328 |
|
|
Operating
lease and other long-term liabilities |
|
177,515 |
|
|
|
140,432 |
|
|
Total
liabilities |
|
1,680,634 |
|
|
|
1,571,591 |
|
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
63,545 |
|
|
|
61,227 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
72,011,902 and 71,667,726 |
|
|
|
|
shares issued at September 30, 2020 and December 31, 2019,
respectively |
|
720 |
|
|
|
717 |
|
|
Additional paid-in capital |
|
518,610 |
|
|
|
498,866 |
|
|
Treasury stock, at cost |
|
(331,513 |
) |
|
|
(324,551 |
) |
|
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained earnings |
|
1,306,530 |
|
|
|
1,084,383 |
|
|
Accumulated other comprehensive loss |
|
(62,039 |
) |
|
|
(24,917 |
) |
|
Stockholders’ equity attributable to Generac Holdings Inc. |
|
1,230,192 |
|
|
|
1,032,382 |
|
|
Noncontrolling interests |
|
(296 |
) |
|
|
469 |
|
|
Total
stockholders’ equity |
|
1,229,896 |
|
|
|
1,032,851 |
|
|
Total
liabilities and stockholders’ equity |
$ |
2,974,075 |
|
|
$ |
2,665,669 |
|
|
Generac Holdings
Inc. |
|
Condensed
Consolidated Statements of Cash Flows |
|
(U.S. Dollars in
Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
Operating activities |
|
|
|
Net income |
$ |
222,238 |
|
|
$ |
182,372 |
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation |
|
26,747 |
|
|
|
22,842 |
|
|
Amortization of intangible assets |
|
23,340 |
|
|
|
19,999 |
|
|
Amortization of original issue discount and deferred financing
costs |
|
1,940 |
|
|
|
3,597 |
|
|
Deferred income taxes |
|
15,433 |
|
|
|
19,514 |
|
|
Share-based compensation expense |
|
14,327 |
|
|
|
11,477 |
|
|
Other non-cash charges |
|
6,414 |
|
|
|
557 |
|
|
Net changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts receivable |
|
(85,474 |
) |
|
|
(45,543 |
) |
|
Inventories |
|
(14,604 |
) |
|
|
27,190 |
|
|
Other assets |
|
2,543 |
|
|
|
1,488 |
|
|
Accounts payable |
|
11,624 |
|
|
|
(83,174 |
) |
|
Accrued wages and employee benefits |
|
11,793 |
|
|
|
(7,517 |
) |
|
Other accrued liabilities |
|
38,211 |
|
|
|
(17,092 |
) |
|
Excess tax benefits from equity awards |
|
(6,222 |
) |
|
|
(1,908 |
) |
|
Net cash
provided by operating activities |
|
268,310 |
|
|
|
133,802 |
|
|
|
|
|
|
Investing activities |
|
|
|
Proceeds
from sale of property and equipment |
|
26 |
|
|
|
83 |
|
|
Proceeds
from beneficial interests in securitization transactions |
|
1,998 |
|
|
|
2,036 |
|
|
Expenditures
for property and equipment |
|
(33,940 |
) |
|
|
(45,447 |
) |
|
Acquisition
of business, net of cash acquired |
|
(22,815 |
) |
|
|
(120,863 |
) |
|
Net cash
used in investing activities |
|
(54,731 |
) |
|
|
(164,191 |
) |
|
|
|
|
|
Financing activities |
|
|
|
Proceeds
from short-term borrowings |
|
198,087 |
|
|
|
68,802 |
|
|
Proceeds
from long-term borrowings |
|
297 |
|
|
|
– |
|
|
Repayments
of short-term borrowings |
|
(210,854 |
) |
|
|
(45,437 |
) |
|
Repayments
of long-term borrowings and finance lease obligations |
|
(3,584 |
) |
|
|
(3,110 |
) |
|
Payment of
contingent acquisition consideration |
|
(4,000 |
) |
|
|
– |
|
|
Cash
dividends paid to noncontrolling interest of subsidiary |
|
– |
|
|
|
(285 |
) |
|
Taxes paid
related to equity awards |
|
(13,533 |
) |
|
|
(5,749 |
) |
|
Proceeds
from the exercise of stock options |
|
11,991 |
|
|
|
7,957 |
|
|
Net cash
(used in) provided by financing activities |
|
(21,596 |
) |
|
|
22,178 |
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(922 |
) |
|
|
(233 |
) |
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
191,061 |
|
|
|
(8,444 |
) |
|
Cash and
cash equivalents at beginning of period |
|
322,883 |
|
|
|
224,482 |
|
|
Cash and
cash equivalents at end of period |
$ |
513,944 |
|
|
$ |
216,038 |
|
|
|
|
|
|
Generac Holdings
Inc. |
|
|
|
|
Segment Reporting
and Product Class Information |
|
|
|
|
(U.S. Dollars in
Thousands) |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Reportable Segments |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Domestic (1) |
$ |
606,875 |
|
$ |
494,810 |
|
$ |
1,443,680 |
|
$ |
1,272,840 |
International (1) |
|
94,480 |
|
|
106,325 |
|
|
280,438 |
|
|
340,564 |
Total net sales |
$ |
701,355 |
|
$ |
601,135 |
|
$ |
1,724,118 |
|
$ |
1,613,404 |
|
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
Residential products |
$ |
458,877 |
|
$ |
335,029 |
|
$ |
1,057,848 |
|
$ |
821,233 |
Commercial & industrial products |
|
176,200 |
|
|
214,905 |
|
|
503,156 |
|
|
654,458 |
Other |
|
66,278 |
|
|
51,201 |
|
|
163,114 |
|
|
137,713 |
Total net sales |
$ |
701,355 |
|
$ |
601,135 |
|
$ |
1,724,118 |
|
$ |
1,613,404 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Domestic (1) |
$ |
171,359 |
|
$ |
120,833 |
|
$ |
374,065 |
|
$ |
305,747 |
International (1) |
|
7,419 |
|
|
5,120 |
|
|
13,877 |
|
|
19,220 |
Total adjusted EBITDA (2) |
$ |
178,778 |
|
$ |
125,953 |
|
$ |
387,942 |
|
$ |
324,967 |
|
|
|
|
|
|
|
|
|
(1) In the fourth quarter of 2019, management determined that the
Latin American export operations of the legacy Generac business
(GPS LATAM) should have been included in the International
reportable segment. Previously, GPS LATAM was reported in the
Domestic segment, in amounts that were not material. To reflect
this change, management has chosen to correct the net sales and
adjusted EBITDA by segment as follows: For the three and nine
months ended September 30, 2019, net sales of $3,353 and $10,509,
and adjusted EBITDA of $384 and $976, respectively, were moved from
the Domestic segment to the International segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) See reconciliation of Adjusted EBITDA to Net income
attributable to Generac Holdings Inc. on the following
reconciliation schedule. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Generac Holdings
Inc. |
|
|
|
|
|
Reconciliation
Schedules |
|
|
|
|
|
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income to Adjusted EBITDA reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
114,970 |
|
|
$ |
75,574 |
|
|
$ |
225,575 |
|
|
$ |
182,393 |
|
|
Net (loss) income attributable to noncontrolling interests |
|
265 |
|
|
|
(677 |
) |
|
|
(3,337 |
) |
|
|
(21 |
) |
|
Net
income |
|
|
|
|
115,235 |
|
|
|
74,897 |
|
|
|
222,238 |
|
|
|
182,372 |
|
|
Interest expense |
|
|
|
8,096 |
|
|
|
10,704 |
|
|
|
25,081 |
|
|
|
31,428 |
|
|
Depreciation and amortization |
|
|
17,168 |
|
|
|
15,494 |
|
|
|
50,087 |
|
|
|
42,841 |
|
|
Provision for income taxes |
|
|
32,050 |
|
|
|
20,064 |
|
|
|
59,967 |
|
|
|
53,876 |
|
|
Non-cash write-down and other adjustments (1) |
|
477 |
|
|
|
347 |
|
|
|
1,868 |
|
|
|
673 |
|
|
Non-cash share-based compensation expense (2) |
|
4,353 |
|
|
|
3,549 |
|
|
|
14,327 |
|
|
|
11,477 |
|
|
Transaction costs and credit facility fees (3) |
|
568 |
|
|
|
358 |
|
|
|
1,160 |
|
|
|
2,047 |
|
|
Business optimization and other charges (4) |
|
531 |
|
|
|
567 |
|
|
|
12,503 |
|
|
|
809 |
|
|
Other |
|
|
|
|
300 |
|
|
|
(27 |
) |
|
|
711 |
|
|
|
(556 |
) |
|
Adjusted EBITDA |
|
|
|
178,778 |
|
|
|
125,953 |
|
|
|
387,942 |
|
|
|
324,967 |
|
|
Adjusted EBITDA attributable to noncontrolling interests |
|
920 |
|
|
|
909 |
|
|
|
950 |
|
|
|
3,722 |
|
|
Adjusted EBITDA attributable to Generac Holdings Inc. |
$ |
177,858 |
|
|
$ |
125,044 |
|
|
$ |
386,992 |
|
|
$ |
321,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
gains/losses on disposals of assets, unrealized mark-to-market
adjustments on commodity contracts, and certain foreign currency
related adjustments. A full description of these and the other
reconciliation adjustments contained in these schedules is included
in Generac's SEC filings. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Represents
share-based compensation expense to account for stock options,
restricted stock and other stock awards over their respective
vesting periods. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) For the three and
nine months ended September 30, 2020, represents severance,
non-cash asset write-downs, and other charges to address the impact
of the COVID-19 pandemic and decline in oil prices. For the three
and nine months ended September 30, 2019, represents severance and
other charges related to the consolidation of certain of our
facilities. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income to Adjusted net income
reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
114,970 |
|
|
$ |
75,574 |
|
|
$ |
225,575 |
|
|
$ |
182,393 |
|
|
Net (loss) income attributable to noncontrolling interests |
|
265 |
|
|
|
(677 |
) |
|
|
(3,337 |
) |
|
|
(21 |
) |
|
Net
income |
|
|
|
|
115,235 |
|
|
|
74,897 |
|
|
|
222,238 |
|
|
|
182,372 |
|
|
Provision for income taxes |
|
|
32,050 |
|
|
|
20,064 |
|
|
|
59,967 |
|
|
|
53,876 |
|
|
Income before provision for income taxes |
|
147,285 |
|
|
|
94,961 |
|
|
|
282,205 |
|
|
|
236,248 |
|
|
Amortization of intangible assets |
|
|
7,892 |
|
|
|
7,406 |
|
|
|
23,340 |
|
|
|
19,999 |
|
|
Amortization of deferred finance costs and original issue
discount |
|
654 |
|
|
|
1,221 |
|
|
|
1,940 |
|
|
|
3,597 |
|
|
Transaction costs and other purchase accounting adjustments
(5) |
|
381 |
|
|
|
165 |
|
|
|
612 |
|
|
|
1,373 |
|
|
Business optimization and other charges (4) |
|
531 |
|
|
|
567 |
|
|
|
12,503 |
|
|
|
809 |
|
|
Adjusted net income before provision for income taxes |
|
156,743 |
|
|
|
104,320 |
|
|
|
320,600 |
|
|
|
262,026 |
|
|
Cash income tax expense (6) |
|
|
(23,620 |
) |
|
|
(15,083 |
) |
|
|
(44,842 |
) |
|
|
(39,698 |
) |
|
Adjusted net income |
|
|
|
133,123 |
|
|
|
89,237 |
|
|
|
275,758 |
|
|
|
222,328 |
|
|
Adjusted net income attributable to noncontrolling interests |
|
198 |
|
|
|
(738 |
) |
|
|
(725 |
) |
|
|
958 |
|
|
Adjusted net income attributable to Generac Holdings Inc. |
$ |
132,925 |
|
|
$ |
89,975 |
|
|
$ |
276,483 |
|
|
$ |
221,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per common share attributable to Generac
Holdings Inc. - diluted: |
$ |
2.08 |
|
|
$ |
1.43 |
|
|
$ |
4.35 |
|
|
$ |
3.54 |
|
|
Weighted average common shares outstanding - diluted: |
|
63,761,380 |
|
|
|
62,770,592 |
|
|
|
63,546,132 |
|
|
|
62,519,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Amounts for the
three and nine months ended September 30, 2020 are now based on an
anticipated cash income tax rate of approximately 16% for the year
ending December 31, 2020. Amounts for the three and nine months
ended September 30, 2019 were based on an anticipated cash income
tax rate of approximately 17% for the year ended December 31, 2019.
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 full year cash tax rate to the period’s pretax
income. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
155,196 |
|
|
$ |
111,188 |
|
|
$ |
268,310 |
|
|
$ |
133,802 |
|
|
Proceeds from beneficial interests in securitization
transactions |
|
674 |
|
|
|
640 |
|
|
|
1,998 |
|
|
|
2,036 |
|
|
Expenditures for property and equipment |
|
(7,608 |
) |
|
|
(11,071 |
) |
|
|
(33,940 |
) |
|
|
(45,447 |
) |
|
Free cash flow |
|
|
$ |
148,262 |
|
|
$ |
100,757 |
|
|
$ |
236,368 |
|
|
$ |
90,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
114,970 |
|
|
$ |
75,574 |
|
|
$ |
225,575 |
|
|
$ |
182,393 |
|
|
Redeemable noncontrolling interest redemption value adjustment |
|
811 |
|
|
|
(1,485 |
) |
|
|
(2,281 |
) |
|
|
191 |
|
|
Net income attributable to common shareholders |
$ |
115,781 |
|
|
$ |
74,089 |
|
|
$ |
223,294 |
|
|
$ |
182,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
Weighted average shares, basic |
|
|
62,353,473 |
|
|
|
61,973,447 |
|
|
|
62,244,872 |
|
|
|
61,878,500 |
|
|
Dilutive effect of stock compensation awards |
|
1,407,907 |
|
|
|
797,145 |
|
|
|
1,301,260 |
|
|
|
640,705 |
|
|
Diluted shares |
|
|
|
63,761,380 |
|
|
|
62,770,592 |
|
|
|
63,546,132 |
|
|
|
62,519,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per share |
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
1.86 |
|
|
$ |
1.20 |
|
|
$ |
3.59 |
|
|
$ |
2.95 |
|
|
Diluted |
|
|
|
$ |
1.82 |
|
|
$ |
1.18 |
|
|
$ |
3.51 |
|
|
$ |
2.92 |
|
|
Generac (NYSE:GNRC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Generac (NYSE:GNRC)
Historical Stock Chart
From Sep 2023 to Sep 2024