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 Generac’s 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 quarter’s 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 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 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 sold |
|
580,246 |
|
|
|
337,865 |
|
|
|
1,065,866 |
|
|
|
641,460 |
|
|
Gross
profit |
|
339,735 |
|
|
|
208,983 |
|
|
|
661,549 |
|
|
|
381,303 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling and service |
|
78,777 |
|
|
|
62,526 |
|
|
|
147,201 |
|
|
|
117,665 |
|
|
Research and development |
|
25,344 |
|
|
|
19,455 |
|
|
|
47,732 |
|
|
|
38,104 |
|
|
General and administrative |
|
41,610 |
|
|
|
29,782 |
|
|
|
74,509 |
|
|
|
57,671 |
|
|
Amortization of intangibles |
|
11,052 |
|
|
|
7,667 |
|
|
|
20,031 |
|
|
|
15,448 |
|
|
Total
operating expenses |
|
156,783 |
|
|
|
119,430 |
|
|
|
289,473 |
|
|
|
228,888 |
|
|
Income from
operations |
|
182,952 |
|
|
|
89,553 |
|
|
|
372,076 |
|
|
|
152,415 |
|
|
|
|
|
|
|
|
|
|
|
Other
(expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
(7,721 |
) |
|
|
(7,932 |
) |
|
|
(15,444 |
) |
|
|
(16,985 |
) |
|
Investment income |
|
244 |
|
|
|
660 |
|
|
|
847 |
|
|
|
1,620 |
|
|
Loss on extinguishment of debt |
|
(831 |
) |
|
|
– |
|
|
|
(831 |
) |
|
|
– |
|
|
Other, net |
|
(373 |
) |
|
|
(216 |
) |
|
|
2,936 |
|
|
|
(2,130 |
) |
|
Total other
expense, net |
|
(8,681 |
) |
|
|
(7,488 |
) |
|
|
(12,492 |
) |
|
|
(17,495 |
) |
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
174,271 |
|
|
|
82,065 |
|
|
|
359,584 |
|
|
|
134,920 |
|
|
Provision
for income taxes |
|
46,362 |
|
|
|
18,473 |
|
|
|
81,730 |
|
|
|
27,917 |
|
|
Net
income |
|
127,909 |
|
|
|
63,592 |
|
|
|
277,854 |
|
|
|
107,003 |
|
|
Net income
(loss) attributable to noncontrolling interests |
|
873 |
|
|
|
(2,553 |
) |
|
|
1,825 |
|
|
|
(3,602 |
) |
|
Net income
attributable to Generac Holdings Inc. |
$ |
127,036 |
|
|
$ |
66,145 |
|
|
$ |
276,029 |
|
|
$ |
110,605 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
basic: |
$ |
2.06 |
|
|
$ |
1.04 |
|
|
$ |
4.44 |
|
|
$ |
1.73 |
|
|
Weighted average common shares outstanding - basic: |
|
62,605,166 |
|
|
|
62,267,083 |
|
|
|
62,533,725 |
|
|
|
62,190,438 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
diluted: |
$ |
2.01 |
|
|
$ |
1.02 |
|
|
$ |
4.34 |
|
|
$ |
1.70 |
|
|
Weighted average common shares outstanding - diluted: |
|
64,088,709 |
|
|
|
63,364,253 |
|
|
|
64,097,378 |
|
|
|
63,363,721 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
119,246 |
|
|
$ |
66,758 |
|
|
$ |
273,062 |
|
|
$ |
63,660 |
|
|
|
|
|
|
|
|
|
|
|
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 losses |
|
480,889 |
|
|
|
374,906 |
|
|
Inventories |
|
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 finance lease
obligations |
|
4,233 |
|
|
|
4,147 |
|
|
Total
current liabilities |
|
836,249 |
|
|
|
641,524 |
|
|
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
842,607 |
|
|
|
841,764 |
|
|
Deferred
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 72,024,329 |
|
|
|
|
shares issued at June 30, 2021 and December 31, 2020,
respectively |
|
723 |
|
|
|
721 |
|
|
Additional 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 Holdings Inc. |
|
1,655,900 |
|
|
|
1,390,293 |
|
|
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 deferred financing
costs |
|
1,295 |
|
|
|
1,286 |
|
|
Loss 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 securitization transactions |
|
1,363 |
|
|
|
1,324 |
|
|
Contribution
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 lease obligations |
|
(53,095 |
) |
|
|
(2,460 |
) |
|
Payment 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 equivalents |
|
(239 |
) |
|
|
(1,251 |
) |
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
(265,042 |
) |
|
|
73,851 |
|
|
Cash 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 Segments |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Domestic |
$ |
784,146 |
|
$ |
460,774 |
|
$ |
1,476,884 |
|
$ |
836,804 |
|
International |
|
135,835 |
|
|
86,074 |
|
|
250,531 |
|
|
185,959 |
|
Total net sales |
$ |
919,981 |
|
$ |
546,848 |
|
$ |
1,727,415 |
|
$ |
1,022,763 |
|
|
|
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
|
Residential products |
$ |
599,991 |
|
$ |
341,352 |
|
$ |
1,142,140 |
|
$ |
598,971 |
|
Commercial & industrial products |
|
254,295 |
|
|
154,890 |
|
|
456,686 |
|
|
326,957 |
|
Other |
|
65,695 |
|
|
50,606 |
|
|
128,589 |
|
|
96,835 |
|
Total net sales |
$ |
919,981 |
|
$ |
546,848 |
|
$ |
1,727,415 |
|
$ |
1,022,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Total adjusted EBITDA (1) |
$ |
217,679 |
|
$ |
123,140 |
|
$ |
431,873 |
|
$ |
209,164 |
|
|
|
|
|
|
|
|
|
|
|
(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 June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
127,036 |
|
|
$ |
66,145 |
|
|
$ |
276,029 |
|
|
$ |
110,605 |
|
|
Net income (loss) attributable to noncontrolling interests |
|
873 |
|
|
|
(2,553 |
) |
|
|
1,825 |
|
|
|
(3,602 |
) |
|
Net
income |
|
|
|
|
127,909 |
|
|
|
63,592 |
|
|
|
277,854 |
|
|
|
107,003 |
|
|
Interest expense |
|
|
|
7,721 |
|
|
|
7,932 |
|
|
|
15,444 |
|
|
|
16,985 |
|
|
Depreciation and amortization |
|
|
21,229 |
|
|
|
16,803 |
|
|
|
39,466 |
|
|
|
32,919 |
|
|
Provision for income taxes |
|
|
46,362 |
|
|
|
18,473 |
|
|
|
81,730 |
|
|
|
27,917 |
|
|
Non-cash write-down and other adjustments (1) |
|
1,173 |
|
|
|
(893 |
) |
|
|
(2,695 |
) |
|
|
1,391 |
|
|
Non-cash share-based compensation expense (2) |
|
6,973 |
|
|
|
5,400 |
|
|
|
12,421 |
|
|
|
9,974 |
|
|
Loss on extinguishment of debt (3) |
|
|
831 |
|
|
|
- |
|
|
|
831 |
|
|
|
- |
|
|
Transaction costs and credit facility fees (4) |
|
5,172 |
|
|
|
358 |
|
|
|
6,086 |
|
|
|
592 |
|
|
Business optimization and other charges (5) |
|
- |
|
|
|
11,460 |
|
|
|
159 |
|
|
|
11,972 |
|
|
Other |
|
|
|
|
309 |
|
|
|
15 |
|
|
|
577 |
|
|
|
411 |
|
|
Adjusted EBITDA |
|
|
|
217,679 |
|
|
|
123,140 |
|
|
|
431,873 |
|
|
|
209,164 |
|
|
Adjusted EBITDA attributable to noncontrolling interests |
|
2,015 |
|
|
|
132 |
|
|
|
4,207 |
|
|
|
30 |
|
|
Adjusted EBITDA attributable to Generac Holdings Inc. |
$ |
215,664 |
|
|
$ |
123,008 |
|
|
$ |
427,666 |
|
|
$ |
209,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
gains/losses on disposals of assets and sales of certain
investments, 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 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 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) For the six months
ended June 30, 2021, represents severance and other charges related
to the 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 the
COVID-19 pandemic and decline in oil prices. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income to Adjusted net income
reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
127,036 |
|
|
$ |
66,145 |
|
|
$ |
276,029 |
|
|
$ |
110,605 |
|
|
Net income (loss) attributable to noncontrolling interests |
|
873 |
|
|
|
(2,553 |
) |
|
|
1,825 |
|
|
|
(3,602 |
) |
|
Net
income |
|
|
|
|
127,909 |
|
|
|
63,592 |
|
|
|
277,854 |
|
|
|
107,003 |
|
|
Provision for income taxes |
|
|
46,362 |
|
|
|
18,473 |
|
|
|
81,730 |
|
|
|
27,917 |
|
|
Income before provision for income taxes |
|
174,271 |
|
|
|
82,065 |
|
|
|
359,584 |
|
|
|
134,920 |
|
|
Amortization of intangible assets |
|
|
11,052 |
|
|
|
7,667 |
|
|
|
20,031 |
|
|
|
15,448 |
|
|
Amortization of deferred finance costs and original issue
discount |
|
649 |
|
|
|
644 |
|
|
|
1,295 |
|
|
|
1,286 |
|
|
Loss on extinguishment of debt (3) |
|
|
831 |
|
|
|
– |
|
|
|
831 |
|
|
|
– |
|
|
Transaction costs and other purchase accounting adjustments
(6) |
|
4,954 |
|
|
|
191 |
|
|
|
5,643 |
|
|
|
231 |
|
|
(Gain)/loss attributable to business or asset dispositions (7) |
|
- |
|
|
|
– |
|
|
|
(3,991 |
) |
|
|
– |
|
|
Business optimization and other charges (5) |
|
- |
|
|
|
11,460 |
|
|
|
159 |
|
|
|
11,972 |
|
|
Adjusted net income before provision for income taxes |
|
191,757 |
|
|
|
102,027 |
|
|
|
383,552 |
|
|
|
163,857 |
|
|
Cash income tax expense (8) |
|
|
(37,406 |
) |
|
|
(13,877 |
) |
|
|
(75,274 |
) |
|
|
(21,222 |
) |
|
Adjusted net income |
|
|
|
154,351 |
|
|
|
88,150 |
|
|
|
308,278 |
|
|
|
142,635 |
|
|
Adjusted net income (loss) attributable to noncontrolling
interests |
|
1,121 |
|
|
|
(342 |
) |
|
|
2,344 |
|
|
|
(923 |
) |
|
Adjusted net income attributable to Generac Holdings Inc. |
$ |
153,230 |
|
|
$ |
88,492 |
|
|
$ |
305,934 |
|
|
$ |
143,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to Generac Holdings Inc. per |
|
|
|
|
|
|
|
|
common share - diluted: |
|
$ |
2.39 |
|
|
$ |
1.40 |
|
|
$ |
4.77 |
|
|
$ |
2.27 |
|
|
Weighted average common shares outstanding - diluted: |
|
64,088,709 |
|
|
|
63,364,253 |
|
|
|
64,097,378 |
|
|
|
63,363,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) Represents gains
and losses attributable to the disposition of a business or assets
occurring in other than ordinary course, as defined in our credit
agreement. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) Amount for the
three and six months ended June 30, 2021 is based on an anticipated
cash income tax rate of approximately 21.0% to 21.5% for the full
year ending 2021. Amount for the three and six months ended June
30, 2020 is based on an anticipated cash income tax rate at the
time of approximately 17% for the full year ended 2020. Cash income
tax expense for the respective periods is based on the projected
taxable income and corresponding cash tax rate for the full year
after considering the effects of current and deferred income tax
items, and is calculated for each respective period by applying the
derived cash tax rate to the period’s pretax income. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
122,450 |
|
|
$ |
101,768 |
|
|
$ |
274,993 |
|
|
$ |
113,114 |
|
|
Proceeds from beneficial interests in securitization
transactions |
|
651 |
|
|
|
706 |
|
|
|
1,363 |
|
|
|
1,324 |
|
|
Expenditures for property and equipment |
|
(26,753 |
) |
|
|
(13,438 |
) |
|
|
(54,222 |
) |
|
|
(26,332 |
) |
|
Free cash flow |
|
|
$ |
96,348 |
|
|
$ |
89,036 |
|
|
$ |
222,134 |
|
|
$ |
88,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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