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 fourth quarter and full-year ended December 31,
2020 and initiated its outlook for the full year 2021.
Fourth Quarter 2020 Highlights
- Net sales increased
29% to a record $761 million during the fourth quarter of 2020 as
compared to $591 million in the prior-year fourth quarter. Core
sales growth, which excludes both the impact of acquisitions and
foreign currency, increased approximately 28%.- Residential product
sales increased 55% to $499 million as compared to $323 million
last year.- Commercial & Industrial (“C&I”) product sales
decreased 9% to $199 million as compared to $217 million in the
prior year.
- Net income
attributable to the Company during the fourth quarter was $125
million, or $1.97 per share, as compared to $70 million, or $1.12
per share, for the same period of 2019.
- Adjusted net income
attributable to the Company, as defined in the accompanying
reconciliation schedules, was a record $136 million, or $2.12 per
share, as compared to $97 million, or $1.53 per share, in the
fourth quarter of 2019.
- Adjusted EBITDA
before deducting for noncontrolling interests, as defined in the
accompanying reconciliation schedules, was a record $196 million,
or 25.7% of net sales, as compared to $129 million, or 21.9% of net
sales, in the prior year.
- Cash flow from
operations was a record $218 million as compared to $175 million in
the prior year. Free cash flow, as defined in the accompanying
reconciliation schedules, was a record $191 million as compared to
$160 million for 2019. The increase was primarily due to higher net
income in the current year quarter, partially offset by the lower
monetization of working capital and higher capital expenditures
relative to the prior year quarter.
- As previously
announced on October 7, 2020, the Company 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 that helps support the
operational stability of the world’s power grids.
- The Company is
initiating its full-year 2021 net sales growth guidance to be
approximately 25 to 30% compared to the prior year on an
as-reported basis, which includes approximately 2% of favorable
impact from acquisitions and foreign currency. Adjusted
EBITDA margin, before deducting for non-controlling interests, is
expected to be approximately 24.0 to 25.0%, which is an increase
from the 23.5% reported for the full-year 2020.
Full-Year 2020 Highlights
- Net sales increased 13% to a record $2.5 billion during 2020 as
compared to $2.2 billion in 2019, which includes $32 million of
contribution from acquisitions. Total core sales growth for the
year was approximately 12%.- Residential product sales increased
36% to $1.56 billion as compared to $1.14 billion last year.-
C&I product sales declined 19% to $702 million as compared to
$872 million in the prior year.
- Net income attributable to the Company
during 2020 was a record $351 million, or $5.48 per share, as
compared to $252 million, or $4.03 per share for 2019.
The current year net income includes $11.5 million of pre-tax
charges relating to restructuring costs and asset write-downs
recorded during the second quarter to address the impact of the
COVID-19 pandemic.
- Adjusted net income
attributable to the Company was a record $412 million, or $6.47 per
share, as compared to $318 million, or $5.06 per share, in
2019.
- Adjusted EBITDA
before deducting for non-controlling interests for 2020 was a
record $584 million, or 23.5% of net sales, as compared to $454
million, or 20.6% of net sales, last year.
- Cash flow from
operations was a record $487 million as compared to $309 million in
the prior year. Free cash flow was a record $427 million as
compared to $251 million in 2019.
“We continued to experience incredible demand for our home
standby generators due to significantly higher power outage
activity in recent quarters and the “Home as a Sanctuary” trend
gained further traction, resulting in substantial backlog for these
products as we enter 2021,” said Aaron Jagdfeld, President and
Chief Executive Officer. “In addition, shipments of our PWRcell
energy storage systems continued to further ramp during the quarter
and were significantly higher on a sequential basis, and have
considerable momentum heading into 2021. C&I
product shipments continued to be negatively impacted from the
COVID-19 pandemic, but the year-over-year revenue decline moderated
as we saw certain end markets began to recover.”
Jagdfeld continued, “2020 was a very challenging year and I am
extremely proud of the way our teams responded, particularly as we
maintained operations with our designation as an essential
business. In the face of a global pandemic, our record performance
during the year was even more impressive as we made important
progress with our evolution into an energy technology solutions
company. We expect 2021 to be another very strong year given the
significant momentum for our residential products and an expected
return to growth for our C&I products. Our strong
balance sheet and significant liquidity puts Generac in the
enviable position to further capitalize on our key mega trends and
drive additional shareholder value by expanding our addressable
markets.”
Additional Fourth Quarter 2020 Consolidated
Highlights
Gross profit margin improved 180 basis points to 39.4% compared
to 37.6% in the prior-year fourth 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 $11.4 million, or 9.7%, as
compared to the fourth quarter of 2019. The increase was primarily
driven by higher variable expenses from the significant increase in
sales volumes, incremental spend related to clean energy products,
and the impact of acquisitions. These increases were partially
offset by a reduction in operating expenses as a result of
restructuring actions initiated in the second quarter of 2020 and
an overall reduction in controllable operating expenses.
Provision for income taxes for the current year quarter was
$39.0 million, or an effective tax rate of 23.8%, as compared to
$13.4 million, or a 16.1% effective tax rate, for the prior
year. The increase in effective tax rate was primarily
due to the significant increase in pretax income in the current
year, while the prior year quarter was impacted by more favorable
discrete tax items. For the full year 2020, the effective tax rate
was 22.2% compared to 21.1% in the prior year.Business
Segment Results
Domestic Segment
Domestic segment sales increased 37.2% to $645.1 million as
compared to $470.1 million in the prior year quarter. This growth
was primarily driven by a significant increase in shipments of home
standby generators, followed by the continued ramp of PWRcell
energy storage systems. In addition, higher power outage activity
drove elevated shipments of portable generators and aftermarket
service parts, and shipments of chore products also improved at a
strong rate as compared to the prior year. This
broad-based residential products growth was partially offset by
continued weakness in sales of C&I mobile products due to the
impacts from the COVID-19 pandemic, while shipments to national
telecom account customers increased at a significant rate compared
to the prior year.
Adjusted EBITDA for the segment was $188.0 million, or 29.1% of
net sales, as compared to $122.9 million in the prior year, or
26.1% of net sales. This margin increase was driven by favorable
sales mix and higher operating leverage from the significant
revenue growth for residential products.
International Segment
International segment sales decreased 4.1% to $116.0 million as
compared to $120.9 million in the prior year quarter. The decline
was driven by continued weakness in global C&I product demand
in several regions caused by the COVID-19 pandemic. However, the
year-over-year decline in the fourth quarter was at a notably
lesser rate relative to recent quarters as certain regions are
beginning to show signs of recovery.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $7.8 million, or 6.8% of net sales,
as compared to $6.2 million, or 5.2% of net sales, in the prior
year. The improvement in margin was due to the
combination of lower operating expenses as a result of the
restructuring activities initiated in the second quarter of 2020,
partially offset by reduced operating leverage on the lower sales
volumes.
2021 OutlookKey demand metrics for home standby
generators continued to trend much higher during the fourth quarter
relative to prior year levels, leading to a substantial backlog for
these products at the end of 2020, and this strength has continued
thus far in the first quarter. In addition, the solar plus storage
market is projected to experience significant year-over-year growth
during 2021, contributing to the expectation of substantial growth
of PWRcell energy storage systems as the Company continues to
expand its presence in the clean energy market. Although demand for
C&I products during 2020 was negatively impacted from the onset
of the COVID-19 pandemic, shipments for these products are expected
to return to growth across a number of key end markets and
geographies.
As a result of these factors, the Company is initiating guidance
for 2021 that anticipates significant revenue growth as compared to
the prior year. Net sales are expected to increase between 25 to
30% as compared to the prior year on an as-reported basis, which
includes approximately 2% of favorable impact from acquisitions and
foreign currency.
Net income margin, before deducting for non-controlling
interests, is expected to be approximately 15.0 to 16.0% for the
full-year 2021, with the corresponding adjusted EBITDA margin
expected to be approximately 24.0 to 25.0%, which is an increase
from the 23.5% reported for the full-year 2020.
Operating and free cash flow generation is expected to be
strong, with the conversion of adjusted net income to free cash
flow expected to be approximately 90%.
Conference Call and Webcast
Generac management will hold a conference call at 10:00 a.m. EST
on Thursday, February 11, 2021 to discuss fourth quarter and
full-year 2020 operating results. The conference call can be
accessed by dialing (866) 415-3113 (domestic) or +1 (678) 509-7544
(international) and entering passcode 3877036.
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 3877036. 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, information technology systems, or connected
products;
- changes in environmental, health
and safety, or product compliance laws and regulations affecting
our products, operations, or customer demand; 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. |
Consolidated
Statements of Comprehensive Income |
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
761,082 |
|
|
$ |
590,932 |
|
|
$ |
2,485,200 |
|
|
$ |
2,204,336 |
|
Costs of
goods sold |
|
460,880 |
|
|
|
368,710 |
|
|
|
1,527,546 |
|
|
|
1,406,584 |
|
Gross
profit |
|
300,202 |
|
|
|
222,222 |
|
|
|
957,654 |
|
|
|
797,752 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling and service |
|
67,807 |
|
|
|
58,729 |
|
|
|
246,373 |
|
|
|
217,683 |
|
Research and development |
|
21,489 |
|
|
|
19,488 |
|
|
|
80,251 |
|
|
|
68,394 |
|
General and administrative |
|
30,912 |
|
|
|
30,852 |
|
|
|
119,644 |
|
|
|
110,868 |
|
Amortization of intangibles |
|
8,940 |
|
|
|
8,645 |
|
|
|
32,280 |
|
|
|
28,644 |
|
Total
operating expenses |
|
129,148 |
|
|
|
117,714 |
|
|
|
478,548 |
|
|
|
425,589 |
|
Income from
operations |
|
171,054 |
|
|
|
104,508 |
|
|
|
479,106 |
|
|
|
372,163 |
|
|
|
|
|
|
|
|
|
Other
(expense) income: |
|
|
|
|
|
|
|
Interest expense |
|
(7,910 |
) |
|
|
(10,116 |
) |
|
|
(32,991 |
) |
|
|
(41,544 |
) |
Investment income |
|
261 |
|
|
|
878 |
|
|
|
2,182 |
|
|
|
2,767 |
|
Loss on extinguishment of debt |
|
– |
|
|
|
(926 |
) |
|
|
– |
|
|
|
(926 |
) |
Loss on pension settlement |
|
– |
|
|
|
(10,920 |
) |
|
|
– |
|
|
|
(10,920 |
) |
Other, net |
|
581 |
|
|
|
(65 |
) |
|
|
(2,106 |
) |
|
|
(1,933 |
) |
Total other
expense, net |
|
(7,068 |
) |
|
|
(21,149 |
) |
|
|
(32,915 |
) |
|
|
(52,556 |
) |
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
163,986 |
|
|
|
83,359 |
|
|
|
446,191 |
|
|
|
319,607 |
|
Provision
for income taxes |
|
39,006 |
|
|
|
13,423 |
|
|
|
98,973 |
|
|
|
67,299 |
|
Net
income |
|
124,980 |
|
|
|
69,936 |
|
|
|
347,218 |
|
|
|
252,308 |
|
Net (loss)
income attributable to noncontrolling interests |
|
(21 |
) |
|
|
322 |
|
|
|
(3,358 |
) |
|
|
301 |
|
Net income
attributable to Generac Holdings Inc. |
$ |
125,001 |
|
|
$ |
69,614 |
|
|
$ |
350,576 |
|
|
$ |
252,007 |
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign currency translation adjustment |
$ |
23,664 |
|
|
$ |
9,862 |
|
|
$ |
4,948 |
|
|
$ |
2,210 |
|
Net unrealized gain (loss) on derivatives |
|
4,121 |
|
|
|
1,043 |
|
|
|
(14,285 |
) |
|
|
(13,855 |
) |
Pension liability adjustment |
|
– |
|
|
|
10,541 |
|
|
|
– |
|
|
|
10,541 |
|
Other comprehensive income (loss) |
|
27,785 |
|
|
|
21,446 |
|
|
|
(9,337 |
) |
|
|
(1,104 |
) |
Total
comprehensive income |
|
152,765 |
|
|
|
91,382 |
|
|
|
337,881 |
|
|
|
251,204 |
|
Comprehensive income attributable to noncontrolling interests |
|
2,068 |
|
|
|
1,371 |
|
|
|
(364 |
) |
|
|
(635 |
) |
Comprehensive income attributable to Generac Holdings Inc. |
$ |
150,697 |
|
|
$ |
90,011 |
|
|
$ |
338,245 |
|
|
$ |
251,839 |
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. per common share -
basic: |
$ |
2.02 |
|
|
$ |
1.14 |
|
|
$ |
5.61 |
|
|
$ |
4.09 |
|
Weighted average common shares outstanding - basic: |
|
62,389,159 |
|
|
|
62,056,624 |
|
|
|
62,280,889 |
|
|
|
61,926,986 |
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. per common share -
diluted: |
$ |
1.97 |
|
|
$ |
1.12 |
|
|
$ |
5.48 |
|
|
$ |
4.03 |
|
Weighted average common shares outstanding - diluted: |
|
63,985,879 |
|
|
|
63,219,078 |
|
|
|
63,737,734 |
|
|
|
62,865,446 |
|
|
|
|
|
|
|
|
|
Generac Holdings
Inc. |
Consolidated Balance
Sheets |
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
(Unaudited) |
|
|
|
|
|
December
31, |
|
December
31, |
|
|
2020 |
|
|
|
2019 |
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
655,128 |
|
|
$ |
322,883 |
|
Accounts receivable, less allowance for credit losses of $12,001
and $6,968 at December 31, 2020 and 2019, respectively |
|
374,906 |
|
|
|
319,538 |
|
Inventories |
|
603,317 |
|
|
|
522,024 |
|
Prepaid expenses and other assets |
|
36,382 |
|
|
|
31,384 |
|
Total
current assets |
|
1,669,733 |
|
|
|
1,195,829 |
|
|
|
|
|
Property and
equipment, net |
|
343,936 |
|
|
|
316,976 |
|
|
|
|
|
Customer
lists, net |
|
49,205 |
|
|
|
55,552 |
|
Patents and
technology, net |
|
86,727 |
|
|
|
85,546 |
|
Other
intangible assets, net |
|
9,932 |
|
|
|
8,259 |
|
Tradenames,
net |
|
146,159 |
|
|
|
148,377 |
|
Goodwill |
|
855,228 |
|
|
|
805,284 |
|
Deferred
income taxes |
|
1,497 |
|
|
|
2,933 |
|
Operating
lease and other assets |
|
73,006 |
|
|
|
46,913 |
|
Total
assets |
$ |
3,235,423 |
|
|
$ |
2,665,669 |
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Short-term borrowings |
$ |
39,282 |
|
|
$ |
58,714 |
|
Accounts payable |
|
330,247 |
|
|
|
261,977 |
|
Accrued wages and employee benefits |
|
63,036 |
|
|
|
41,361 |
|
Other accrued liabilities |
|
204,812 |
|
|
|
132,629 |
|
Current portion of long-term borrowings and finance lease
obligations |
|
4,147 |
|
|
|
2,383 |
|
Total
current liabilities |
|
641,524 |
|
|
|
497,064 |
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
841,764 |
|
|
|
837,767 |
|
Deferred
income taxes |
|
115,769 |
|
|
|
96,328 |
|
Operating
lease and other long-term liabilities |
|
179,955 |
|
|
|
140,432 |
|
Total
liabilities |
|
1,779,012 |
|
|
|
1,571,591 |
|
|
|
|
|
Redeemable
noncontrolling interest |
|
66,207 |
|
|
|
61,227 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
72,024,329 and 71,667,726 shares issued at December 31, 2020 and
2019, respectively |
|
721 |
|
|
|
717 |
|
Additional paid-in capital |
|
525,541 |
|
|
|
498,866 |
|
Treasury stock, at cost, 9,173,731 and 9,103,013 shares at December
31, 2020 and 2019, respectively |
|
(332,164 |
) |
|
|
(324,551 |
) |
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
Retained earnings |
|
1,432,565 |
|
|
|
1,084,383 |
|
Accumulated other comprehensive loss |
|
(34,254 |
) |
|
|
(24,917 |
) |
Stockholders’ equity attributable to Generac Holdings Inc. |
|
1,390,293 |
|
|
|
1,032,382 |
|
Noncontrolling interests |
|
(89 |
) |
|
|
469 |
|
Total
stockholders’ equity |
|
1,390,204 |
|
|
|
1,032,851 |
|
Total
liabilities and stockholders’ equity |
$ |
3,235,423 |
|
|
$ |
2,665,669 |
|
|
|
|
|
Generac Holdings
Inc. |
Consolidated
Statements of Cash Flows |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Year Ended December 31, |
|
2020 |
|
2019 |
Operating activities |
|
|
|
Net income |
$ |
347,218 |
|
|
$ |
252,308 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation |
|
36,493 |
|
|
|
32,265 |
|
Amortization of intangible assets |
|
32,280 |
|
|
|
28,644 |
|
Amortization of original issue discount and deferred financing
costs |
|
2,598 |
|
|
|
4,712 |
|
Loss on extinguishment of debt |
|
– |
|
|
|
926 |
|
Loss on pension settlement |
|
– |
|
|
|
10,920 |
|
Deferred income taxes |
|
21,195 |
|
|
|
18,733 |
|
Share-based compensation expense |
|
20,882 |
|
|
|
16,694 |
|
Other non-cash charges |
|
7,145 |
|
|
|
1,086 |
|
Net changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts receivable |
|
(55,976 |
) |
|
|
8,231 |
|
Inventories |
|
(77,983 |
) |
|
|
26,369 |
|
Other assets |
|
12,859 |
|
|
|
(358 |
) |
Accounts payable |
|
66,040 |
|
|
|
(69,404 |
) |
Accrued wages and employee benefits |
|
20,157 |
|
|
|
(3,724 |
) |
Other accrued liabilities |
|
60,593 |
|
|
|
(16,252 |
) |
Excess tax benefits from equity awards |
|
(6,968 |
) |
|
|
(2,263 |
) |
Net cash
provided by operating activities |
|
486,533 |
|
|
|
308,887 |
|
|
|
|
|
Investing activities |
|
|
|
Proceeds
from sale of property and equipment |
|
179 |
|
|
|
95 |
|
Proceeds
from beneficial interests in securitization transactions |
|
2,651 |
|
|
|
2,630 |
|
Expenditures
for property and equipment |
|
(62,128 |
) |
|
|
(60,802 |
) |
Acquisition
of business, net of cash acquired |
|
(64,797 |
) |
|
|
(112,001 |
) |
Net cash
used in investing activities |
|
(124,095 |
) |
|
|
(170,078 |
) |
|
|
|
|
Financing activities |
|
|
|
Proceeds
from short-term borrowings |
|
257,593 |
|
|
|
73,340 |
|
Proceeds
from long-term borrowings |
|
277 |
|
|
|
1,660 |
|
Repayments
of short-term borrowings |
|
(277,719 |
) |
|
|
(59,518 |
) |
Repayments
of long-term borrowings and finance lease obligations |
|
(4,758 |
) |
|
|
(53,049 |
) |
Payment of
contingent acquisition consideration |
|
(4,000 |
) |
|
|
(5,550 |
) |
Payment of
debt issuance costs |
|
– |
|
|
|
(1,473 |
) |
Cash
dividends paid to noncontrolling interest of subsidiary |
|
– |
|
|
|
(285 |
) |
Taxes paid
related to equity awards |
|
(14,910 |
) |
|
|
(6,438 |
) |
Proceeds
from the exercise of stock options |
|
13,089 |
|
|
|
9,395 |
|
Net cash
used in financing activities |
|
(30,428 |
) |
|
|
(41,918 |
) |
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
235 |
|
|
|
1,510 |
|
|
|
|
|
Net increase
in cash and cash equivalents |
|
332,245 |
|
|
|
98,401 |
|
Cash and
cash equivalents at beginning of period |
|
322,883 |
|
|
|
224,482 |
|
Cash and
cash equivalents at end of period |
$ |
655,128 |
|
|
$ |
322,883 |
|
|
|
|
|
Supplemental disclosure of cash flow
information |
|
|
|
Cash
paid during the period |
|
|
|
Interest |
$ |
28,765 |
|
|
$ |
35,465 |
|
Income
taxes |
|
61,861 |
|
|
|
61,767 |
|
|
|
|
|
Generac Holdings
Inc. |
Segment Reporting
and Product Class Information |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Net Sales |
|
Three Months Ended December 31, |
|
Year Ended December 31, |
Reportable Segments |
2020 |
|
2019 |
|
2020 |
|
2019 |
Domestic |
$ |
645,128 |
|
$ |
470,058 |
|
$ |
2,088,808 |
|
$ |
1,742,898 |
International |
|
115,954 |
|
|
120,874 |
|
|
396,392 |
|
|
461,438 |
Total net
sales |
$ |
761,082 |
|
$ |
590,932 |
|
$ |
2,485,200 |
|
$ |
2,204,336 |
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
Residential
products |
$ |
498,653 |
|
$ |
322,490 |
|
$ |
1,556,501 |
|
$ |
1,143,723 |
Commercial
& industrial products |
|
198,596 |
|
|
217,137 |
|
|
701,751 |
|
|
871,595 |
Other |
|
63,833 |
|
|
51,305 |
|
|
226,948 |
|
|
189,018 |
Total net
sales |
$ |
761,082 |
|
$ |
590,932 |
|
$ |
2,485,200 |
|
$ |
2,204,336 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Domestic |
$ |
188,004 |
|
$ |
122,920 |
|
$ |
563,394 |
|
$ |
428,667 |
International |
|
7,827 |
|
|
6,228 |
|
|
20,379 |
|
|
25,448 |
Total
adjusted EBITDA (1) |
$ |
195,831 |
|
$ |
129,148 |
|
$ |
583,773 |
|
$ |
454,115 |
|
|
|
|
|
|
|
|
(1) 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 December 31, |
|
Year Ended December 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
125,001 |
|
|
$ |
69,614 |
|
|
$ |
350,576 |
|
|
$ |
252,007 |
|
Net (loss)
income attributable to noncontrolling interests |
|
(21 |
) |
|
|
322 |
|
|
|
(3,358 |
) |
|
|
301 |
|
Net
income |
|
124,980 |
|
|
|
69,936 |
|
|
|
347,218 |
|
|
|
252,308 |
|
Interest
expense |
|
7,910 |
|
|
|
10,116 |
|
|
|
32,991 |
|
|
|
41,544 |
|
Depreciation
and amortization |
|
18,686 |
|
|
|
17,926 |
|
|
|
68,773 |
|
|
|
60,767 |
|
Provision
for income taxes |
|
39,006 |
|
|
|
13,423 |
|
|
|
98,973 |
|
|
|
67,299 |
|
Non-cash
write-down and other adjustments (1) |
|
(2,195 |
) |
|
|
(433 |
) |
|
|
(327 |
) |
|
|
240 |
|
Non-cash
share-based compensation expense (2) |
|
6,555 |
|
|
|
5,217 |
|
|
|
20,882 |
|
|
|
16,694 |
|
Loss on
extinguishment of debt (3) |
|
- |
|
|
|
926 |
|
|
|
- |
|
|
|
926 |
|
Loss on
pension settlement (4) |
|
- |
|
|
|
10,920 |
|
|
|
- |
|
|
|
10,920 |
|
Transaction
costs and credit facility fees (5) |
|
991 |
|
|
|
677 |
|
|
|
2,151 |
|
|
|
2,724 |
|
Business
optimization and other charges (6) |
|
(345 |
) |
|
|
763 |
|
|
|
12,158 |
|
|
|
1,572 |
|
Other |
|
243 |
|
|
|
(323 |
) |
|
|
954 |
|
|
|
(879 |
) |
Adjusted
EBITDA |
|
195,831 |
|
|
|
129,148 |
|
|
|
583,773 |
|
|
|
454,115 |
|
Adjusted
EBITDA attributable to noncontrolling interests |
|
1,408 |
|
|
|
1,243 |
|
|
|
2,358 |
|
|
|
4,965 |
|
Adjusted
EBITDA attributable to Generac Holdings Inc. |
$ |
194,423 |
|
|
$ |
127,905 |
|
|
$ |
581,415 |
|
|
$ |
449,150 |
|
|
|
|
|
|
|
|
|
(1) Includes
gains/losses on disposals of assets, unrealized mark-to-market
adjustments on commodity contracts, and certain foreign currency
and purchase accounting 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 the
write-off of original issue discount and capitalized debt issuance
costs due to voluntary debt prepayments. |
|
|
|
|
|
|
|
|
(4) Represents pre-tax
settlement charges related to the termination of the Company’s
domestic pension plan in the fourth quarter of 2019. |
|
|
|
|
|
|
|
|
(5) 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. |
|
|
|
|
|
|
|
|
(6) For the three
months and year ended December 31, 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
months and year ended December 31, 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 December 31, |
|
Year Ended December 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
125,001 |
|
|
$ |
69,614 |
|
|
$ |
350,576 |
|
|
$ |
252,007 |
|
Net (loss)
income attributable to noncontrolling interests |
|
(21 |
) |
|
|
322 |
|
|
|
(3,358 |
) |
|
|
301 |
|
Net
income |
|
124,980 |
|
|
|
69,936 |
|
|
|
347,218 |
|
|
|
252,308 |
|
Provision
for income taxes |
|
39,006 |
|
|
|
13,423 |
|
|
|
98,973 |
|
|
|
67,299 |
|
Income
before provision for income taxes |
|
163,986 |
|
|
|
83,359 |
|
|
|
446,191 |
|
|
|
319,607 |
|
Amortization
of intangible assets |
|
8,940 |
|
|
|
8,645 |
|
|
|
32,280 |
|
|
|
28,644 |
|
Amortization
of deferred finance costs and original issue discount |
|
658 |
|
|
|
1,115 |
|
|
|
2,598 |
|
|
|
4,712 |
|
Loss on
extinguishment of debt (3) |
|
- |
|
|
|
926 |
|
|
|
- |
|
|
|
926 |
|
Loss on
pension settlement (4) |
|
- |
|
|
|
10,920 |
|
|
|
- |
|
|
|
10,920 |
|
Transaction
costs and other purchase accounting adjustments (7) |
|
(1,940 |
) |
|
|
(499 |
) |
|
|
(1,328 |
) |
|
|
874 |
|
Business
optimization and other charges (6) |
|
(345 |
) |
|
|
763 |
|
|
|
12,158 |
|
|
|
1,572 |
|
Adjusted net
income before provision for income taxes |
|
171,299 |
|
|
|
105,229 |
|
|
|
491,899 |
|
|
|
367,255 |
|
Cash income
tax expense (8) |
|
(34,881 |
) |
|
|
(8,247 |
) |
|
|
(79,723 |
) |
|
|
(47,945 |
) |
Adjusted net
income |
|
136,418 |
|
|
|
96,982 |
|
|
|
412,176 |
|
|
|
319,310 |
|
Adjusted net
income attributable to noncontrolling interests |
|
693 |
|
|
|
530 |
|
|
|
(32 |
) |
|
|
1,488 |
|
Adjusted net
income attributable to Generac Holdings Inc. |
$ |
135,725 |
|
|
$ |
96,452 |
|
|
$ |
412,208 |
|
|
$ |
317,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income per common share attributable to Generac Holdings Inc. -
diluted: |
$ |
2.12 |
|
|
$ |
1.53 |
|
|
$ |
6.47 |
|
|
$ |
5.06 |
|
Weighted
average common shares outstanding - diluted: |
|
63,985,879 |
|
|
|
63,219,078 |
|
|
|
63,737,734 |
|
|
|
62,865,446 |
|
|
|
|
|
|
|
|
|
(7) 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. |
|
|
|
|
|
|
|
|
(8) Amounts for the
three months and year ended December 31, 2020 are now based on an
anticipated cash income tax rate of 17.9% for the year ending
December 31, 2020. Amounts for the three months and year ended
December 31, 2019 were based on an anticipated cash income tax rate
of 15% 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 December 31, |
|
Year Ended December 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
218,223 |
|
|
$ |
175,085 |
|
|
$ |
486,533 |
|
|
$ |
308,887 |
|
Proceeds
from beneficial interests in securitization transactions |
|
653 |
|
|
|
594 |
|
|
|
2,651 |
|
|
|
2,630 |
|
Expenditures
for property and equipment |
|
(28,188 |
) |
|
|
(15,355 |
) |
|
|
(62,128 |
) |
|
|
(60,802 |
) |
Free cash
flow |
$ |
190,688 |
|
|
$ |
160,324 |
|
|
$ |
427,056 |
|
|
$ |
250,715 |
|
|
|
|
|
|
|
|
|
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