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, 2021 and provided
an update on its outlook for the full year 2021.
Third Quarter 2021 Highlights
- Net sales increased
34% to a record $943 million during the third quarter of 2021 as
compared to $701 million in the prior-year third quarter. Core
sales growth, which excludes both the impact of acquisitions and
foreign currency, increased approximately 30%.
- Residential product
sales grew 33% to $609 million as compared to $459 million last
year.
- Commercial &
Industrial (“C&I”) product sales increased 47% to $258 million
as compared to $176 million in the prior year.
- Net income
attributable to the Company during the third quarter was $132
million, or $1.93 per share, as compared to $115 million, or $1.82
per share, for the same period of 2020.
- Adjusted net income
attributable to the Company, as defined in the accompanying
reconciliation schedules, was $151 million, or $2.35 per share, as
compared to $133 million, or $2.08 per share, in the third quarter
of 2020.
- Adjusted EBITDA
before deducting for noncontrolling interests, as defined in the
accompanying reconciliation schedules, was $209 million, or 22.2%
of net sales, as compared to $179 million, or 25.5% of net sales,
in the prior year.
- On July 2nd, the
Company closed on the acquisition of Chilicon Power, a designer and
provider of grid-interactive microinverter and monitoring solutions
for the solar market, based in California.
- On September 1st,
the Company closed on the acquisition of Apricity Code Corporation,
headquartered in Bend, Oregon, an advanced engineering and product
design company focused on developing energy technology
solutions.
- On September 1st,
the Company closed on the acquisition of Off Grid Energy, a
designer and manufacturer of industrial-grade energy storage
systems, headquartered in Rugby, United Kingdom.
- On October 1st, the
Company closed on the acquisition of Tank Utility, a provider of
IoT propane tank monitoring solutions that enable the optimization
of propane fuel logistics, headquartered in Boston,
Massachusetts.
- On November 1st, the
Company announced the signing of a purchase agreement to acquire
ecobee, a leader in sustainable home technology solutions including
smart thermostats that deliver significant energy savings, security
and peace of mind, headquartered in Toronto, Canada.
“We continued to experience exceptional demand during the third
quarter leading to all-time record revenue and further increases in
our backlog,” said Aaron Jagdfeld, President and Chief Executive
Officer. “We again hit record production levels in spite of the
challenging supply chain environment that deteriorated during the
third quarter. We have tremendous momentum in our business as we
head into 2022 with the continuation of robust home standby demand,
an expanding Energy Technology solutions portfolio, and strong
global demand for our C&I products. This visibility provides
support for another year of expected significant revenue growth
with improving margins as we realize the full impact of pricing and
cost-reduction actions. To support this growth over the long term,
we are planning to make further capacity investments by expanding
distribution capabilities in our new South Carolina facility and
investing in additional manufacturing automation equipment for home
standby generators and other products.”
Jagdfeld continued, “In addition, we recently announced several
strategic acquisitions that will accelerate our new ‘Powering a
Smarter World’ strategy as we continue our evolution into an energy
technology solutions company. We’re particularly excited about
yesterday’s announcement to acquire ecobee as this transaction will
allow us to create a clean, efficient, and reliable home energy
ecosystem that will not only help homeowners reduce their energy
consumption, but also help grid operators meet the challenges of an
electrical grid under enormous stress.”
Additional Third Quarter 2021 Consolidated
Highlights
Gross profit margin was 35.6% as compared to 39.4% in the
prior-year third quarter. The current quarter’s margin was
pressured by higher input costs due to rising commodity prices,
labor, logistics and plant start-up costs, which was partially
offset by the early impacts of recent pricing actions. Operating
expenses increased $41.9 million, or 34.8%, as compared to the
third quarter of 2020. The increase was primarily driven by
additional variable expenses from the significant increase in sales
volumes, higher employee and marketing costs, and the impact of
acquisitions.
Provision for income taxes for the current year quarter was
$32.6 million, or an effective tax rate of 19.7%, as compared to
$32.1 million, or a 21.8% effective tax rate, for the prior year.
The decline in effective tax rate was primarily due to a higher
stock compensation deduction during the current year.
Cash flow from operations was $74 million during the third
quarter, as compared to $155 million in the prior year. Free cash
flow, as defined in the accompanying reconciliation schedules, was
$42 million as compared to $148 million for 2020. The decline in
free cash flow was due to higher working capital investment and
capital expenditures in the current year quarter, partially offset
by an increase in operating earnings. Business Segment
Results
Domestic Segment
Domestic segment sales increased 30% to $790.8 million as
compared to $606.9 million in the prior year quarter, with the
impact of acquisitions contributing approximately 1% of the revenue
growth for the quarter. The core sales growth was driven by
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 $187.7 million, or 23.7% of
net sales, as compared to $171.4 million in the prior year, or
28.2% of net sales. This margin performance was impacted by higher
input costs, partially offset by the early impacts of improved
pricing during the quarter.
International Segment
International segment sales increased 61% to $151.9 million as
compared to $94.5 million in the prior year quarter, with the
impact of acquisitions and foreign currency contributing
approximately 29% of the revenue growth for the quarter. The core
sales growth for the segment was driven by strength across all
regions, primarily Europe and Latin America, that continued to
experience a sharp increase in demand off the prior-year COVID lows
and have recovered well above 2019 levels.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $21.5 million, or 14.1% of net sales,
as compared to $7.4 million, or 7.9% of net sales, in the prior
year. The increase in margin was primarily due to the positive
impact of recent acquisitions and improved operating leverage on
higher sales volumes.
Updated 2021 OutlookThe Company is maintaining
its full-year 2021 net sales growth guidance range of approximately
47 to 50% compared to the prior year, which includes approximately
5% of favorable impact from acquisitions and foreign currency.
While the Company continues to experience an exceptional demand
environment, additional supply chain constraints, escalating
logistics challenges, and rising input costs are increasingly
impacting the business leading to further margin pressures. As a
result of these factors and the impact of recent acquisitions, net
income margin, before deducting for non-controlling interests, is
now expected to be approximately 15.0% for the full-year 2021 as
compared to the prior expectation of between 15.5 to 16.0%. The
corresponding adjusted EBITDA margin is now expected to be
approximately 23.5%, as compared to the previous guidance range of
approximately 24.5 to 25.0%.
Conference Call and Webcast
Generac management will hold a conference call at 10:00 a.m. EDT
on Tuesday, November 2, 2021 to discuss third 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 2488472.
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 2488472. The telephonic replay will be available for 7
days.
About Generac
Generac is a leading energy technology company that provides
backup and prime power systems for home and industrial
applications, solar + battery storage solutions, advanced power
grid software platforms and engine- and battery-powered tools and
equipment. Founded in 1959, Generac introduced the first affordable
backup generator and later created the category of automatic home
standby generator. The company is committed to sustainable, cleaner
energy products poised to revolutionize the 21st century electrical
grid.
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 ability to satisfy the closing
conditions for the acquisition of ecobee on the timeline expected
or at all;
- 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 September 30, |
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
942,698 |
|
|
$ |
701,355 |
|
|
$ |
2,670,113 |
|
|
$ |
1,724,118 |
|
Costs of
goods sold |
|
606,704 |
|
|
|
425,206 |
|
|
|
1,672,570 |
|
|
|
1,066,666 |
|
Gross
profit |
|
335,994 |
|
|
|
276,149 |
|
|
|
997,543 |
|
|
|
657,452 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling and service |
|
82,242 |
|
|
|
60,901 |
|
|
|
229,443 |
|
|
|
178,566 |
|
Research and development |
|
27,165 |
|
|
|
20,658 |
|
|
|
74,897 |
|
|
|
58,762 |
|
General and administrative |
|
40,802 |
|
|
|
31,061 |
|
|
|
115,311 |
|
|
|
88,732 |
|
Amortization of intangibles |
|
12,206 |
|
|
|
7,892 |
|
|
|
32,237 |
|
|
|
23,340 |
|
Total
operating expenses |
|
162,415 |
|
|
|
120,512 |
|
|
|
451,888 |
|
|
|
349,400 |
|
Income from
operations |
|
173,579 |
|
|
|
155,637 |
|
|
|
545,655 |
|
|
|
308,052 |
|
|
|
|
|
|
|
|
|
Other
(expense) income: |
|
|
|
|
|
|
|
Interest expense |
|
(7,980 |
) |
|
|
(8,096 |
) |
|
|
(23,424 |
) |
|
|
(25,081 |
) |
Investment income |
|
165 |
|
|
|
301 |
|
|
|
1,012 |
|
|
|
1,921 |
|
Loss on extinguishment of debt |
|
– |
|
|
|
– |
|
|
|
(831 |
) |
|
|
– |
|
Other, net |
|
(400 |
) |
|
|
(557 |
) |
|
|
2,536 |
|
|
|
(2,687 |
) |
Total other
expense, net |
|
(8,215 |
) |
|
|
(8,352 |
) |
|
|
(20,707 |
) |
|
|
(25,847 |
) |
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
165,364 |
|
|
|
147,285 |
|
|
|
524,948 |
|
|
|
282,205 |
|
Provision
for income taxes |
|
32,611 |
|
|
|
32,050 |
|
|
|
114,341 |
|
|
|
59,967 |
|
Net
income |
|
132,753 |
|
|
|
115,235 |
|
|
|
410,607 |
|
|
|
222,238 |
|
Net income
(loss) attributable to noncontrolling interests |
|
1,183 |
|
|
|
265 |
|
|
|
3,008 |
|
|
|
(3,337 |
) |
Net income
attributable to Generac Holdings Inc. |
$ |
131,570 |
|
|
$ |
114,970 |
|
|
$ |
407,599 |
|
|
$ |
225,575 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
basic: |
$ |
1.98 |
|
|
$ |
1.86 |
|
|
$ |
6.42 |
|
|
$ |
3.59 |
|
Weighted average common shares outstanding - basic: |
|
62,690,437 |
|
|
|
62,353,473 |
|
|
|
62,583,957 |
|
|
|
62,244,872 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
diluted: |
$ |
1.93 |
|
|
$ |
1.82 |
|
|
$ |
6.27 |
|
|
$ |
3.51 |
|
Weighted average common shares outstanding - diluted: |
|
64,208,116 |
|
|
|
63,761,380 |
|
|
|
64,146,281 |
|
|
|
63,546,132 |
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
113,727 |
|
|
$ |
123,887 |
|
|
$ |
386,789 |
|
|
$ |
187,548 |
|
|
|
|
|
|
|
|
|
Generac Holdings
Inc. |
Condensed
Consolidated Balance Sheets |
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
(Unaudited) |
|
|
|
|
|
September
30, |
|
December
31, |
|
|
2021 |
|
|
|
2020 |
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
423,726 |
|
|
$ |
655,128 |
|
Accounts receivable, less allowance for credit losses |
|
510,670 |
|
|
|
374,906 |
|
Inventories |
|
934,948 |
|
|
|
603,317 |
|
Prepaid expenses and other assets |
|
54,228 |
|
|
|
36,382 |
|
Total
current assets |
|
1,923,572 |
|
|
|
1,669,733 |
|
|
|
|
|
Property and
equipment, net |
|
412,706 |
|
|
|
343,936 |
|
|
|
|
|
Customer
lists, net |
|
154,152 |
|
|
|
49,205 |
|
Patents and
technology, net |
|
141,952 |
|
|
|
86,727 |
|
Other
intangible assets, net |
|
14,703 |
|
|
|
9,932 |
|
Tradenames,
net |
|
172,398 |
|
|
|
146,159 |
|
Goodwill |
|
1,174,315 |
|
|
|
855,228 |
|
Deferred
income taxes |
|
3,813 |
|
|
|
1,497 |
|
Operating
lease and other assets |
|
102,819 |
|
|
|
73,006 |
|
Total
assets |
$ |
4,100,430 |
|
|
$ |
3,235,423 |
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Short-term borrowings |
$ |
61,470 |
|
|
$ |
39,282 |
|
Accounts payable |
|
611,181 |
|
|
|
330,247 |
|
Accrued wages and employee benefits |
|
69,882 |
|
|
|
63,036 |
|
Other accrued liabilities |
|
270,536 |
|
|
|
204,812 |
|
Current portion of long-term borrowings and finance lease
obligations |
|
4,945 |
|
|
|
4,147 |
|
Total
current liabilities |
|
1,018,014 |
|
|
|
641,524 |
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
843,426 |
|
|
|
841,764 |
|
Deferred
income taxes |
|
175,665 |
|
|
|
115,769 |
|
Operating
lease and other long-term liabilities |
|
236,344 |
|
|
|
179,955 |
|
Total
liabilities |
|
2,273,449 |
|
|
|
1,779,012 |
|
|
|
|
|
Redeemable
noncontrolling interest |
|
44,704 |
|
|
|
66,207 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
72,335,705 and 72,024,329 |
|
|
|
shares issued at September 30, 2021 and December 31, 2020,
respectively |
|
724 |
|
|
|
721 |
|
Additional paid-in capital |
|
563,162 |
|
|
|
525,541 |
|
Treasury stock, at cost |
|
(358,634 |
) |
|
|
(332,164 |
) |
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
Retained earnings |
|
1,834,477 |
|
|
|
1,432,565 |
|
Accumulated other comprehensive loss |
|
(55,541 |
) |
|
|
(34,254 |
) |
Stockholders’ equity attributable to Generac Holdings Inc. |
|
1,782,072 |
|
|
|
1,390,293 |
|
Noncontrolling interests |
|
205 |
|
|
|
(89 |
) |
Total
stockholders’ equity |
|
1,782,277 |
|
|
|
1,390,204 |
|
Total
liabilities and stockholders’ equity |
$ |
4,100,430 |
|
|
$ |
3,235,423 |
|
Generac Holdings
Inc. |
Condensed
Consolidated Statements of Cash Flows |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
Operating activities |
|
|
|
Net
income |
$ |
410,607 |
|
|
$ |
222,238 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation |
|
30,445 |
|
|
|
26,747 |
|
Amortization of intangible assets |
|
32,237 |
|
|
|
23,340 |
|
Amortization of original issue discount and deferred financing
costs |
|
1,941 |
|
|
|
1,940 |
|
Loss on extinguishment of debt |
|
831 |
|
|
|
– |
|
Deferred income taxes |
|
8,210 |
|
|
|
15,433 |
|
Share-based compensation expense |
|
18,204 |
|
|
|
14,327 |
|
Loss (gain) on disposal of assets |
|
(4,018 |
) |
|
|
– |
|
Other, net |
|
(12 |
) |
|
|
6,414 |
|
Net changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts receivable |
|
(116,768 |
) |
|
|
(85,474 |
) |
Inventories |
|
(322,954 |
) |
|
|
(14,604 |
) |
Other assets |
|
(6,874 |
) |
|
|
2,543 |
|
Accounts payable |
|
269,951 |
|
|
|
11,624 |
|
Accrued wages and employee benefits |
|
4,497 |
|
|
|
11,793 |
|
Other accrued liabilities |
|
49,987 |
|
|
|
38,211 |
|
Excess tax benefits from equity awards |
|
(26,880 |
) |
|
|
(6,222 |
) |
Net cash
provided by operating activities |
|
349,404 |
|
|
|
268,310 |
|
|
|
|
|
Investing activities |
|
|
|
Proceeds
from sale of property and equipment |
|
182 |
|
|
|
26 |
|
Proceeds
from sale of investment |
|
4,968 |
|
|
|
– |
|
Proceeds
from beneficial interests in securitization transactions |
|
2,240 |
|
|
|
1,998 |
|
Contribution
to equity method investment |
|
(781 |
) |
|
|
– |
|
Expenditures
for property and equipment |
|
(87,456 |
) |
|
|
(33,940 |
) |
Acquisition
of business, net of cash acquired |
|
(465,926 |
) |
|
|
(22,815 |
) |
Net cash
used in investing activities |
|
(546,773 |
) |
|
|
(54,731 |
) |
|
|
|
|
Financing activities |
|
|
|
Proceeds
from short-term borrowings |
|
127,816 |
|
|
|
198,087 |
|
Proceeds
from long-term borrowings |
|
50,000 |
|
|
|
297 |
|
Repayments
of short-term borrowings |
|
(105,206 |
) |
|
|
(210,854 |
) |
Repayments
of long-term borrowings and finance lease obligations |
|
(54,889 |
) |
|
|
(3,584 |
) |
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 |
|
(49,569 |
) |
|
|
(13,533 |
) |
Proceeds
from the exercise of stock options |
|
30,502 |
|
|
|
11,991 |
|
Net cash
used in financing activities |
|
(33,445 |
) |
|
|
(21,596 |
) |
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(588 |
) |
|
|
(922 |
) |
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
(231,402 |
) |
|
|
191,061 |
|
Cash and
cash equivalents at beginning of period |
|
655,128 |
|
|
|
322,883 |
|
Cash and
cash equivalents at end of period |
$ |
423,726 |
|
|
$ |
513,944 |
|
|
|
|
|
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 |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
Domestic |
$ |
790,764 |
|
$ |
606,875 |
|
$ |
2,267,648 |
|
$ |
1,443,680 |
International |
|
151,934 |
|
|
94,480 |
|
|
402,465 |
|
|
280,438 |
Total net
sales |
$ |
942,698 |
|
$ |
701,355 |
|
$ |
2,670,113 |
|
$ |
1,724,118 |
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
Residential
products |
$ |
608,816 |
|
$ |
458,877 |
|
$ |
1,750,956 |
|
$ |
1,057,848 |
Commercial
& industrial products |
|
258,309 |
|
|
176,200 |
|
|
714,995 |
|
|
503,156 |
Other |
|
75,573 |
|
|
66,278 |
|
|
204,162 |
|
|
163,114 |
Total net
sales |
$ |
942,698 |
|
$ |
701,355 |
|
$ |
2,670,113 |
|
$ |
1,724,118 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
Domestic |
$ |
187,726 |
|
$ |
171,359 |
|
$ |
598,730 |
|
$ |
374,065 |
International |
|
21,475 |
|
|
7,419 |
|
|
42,344 |
|
|
13,877 |
Total
adjusted EBITDA (1) |
$ |
209,201 |
|
$ |
178,778 |
|
$ |
641,074 |
|
$ |
387,942 |
|
|
|
|
|
|
|
|
(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 September 30, |
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
131,570 |
|
|
$ |
114,970 |
|
|
$ |
407,599 |
|
|
$ |
225,575 |
|
Net income
(loss) attributable to noncontrolling interests |
|
1,183 |
|
|
|
265 |
|
|
|
3,008 |
|
|
|
(3,337 |
) |
Net
income |
|
132,753 |
|
|
|
115,235 |
|
|
|
410,607 |
|
|
|
222,238 |
|
Interest
expense |
|
7,980 |
|
|
|
8,096 |
|
|
|
23,424 |
|
|
|
25,081 |
|
Depreciation
and amortization |
|
23,216 |
|
|
|
17,168 |
|
|
|
62,682 |
|
|
|
50,087 |
|
Provision
for income taxes |
|
32,611 |
|
|
|
32,050 |
|
|
|
114,341 |
|
|
|
59,967 |
|
Non-cash
write-down and other adjustments (1) |
|
3,333 |
|
|
|
477 |
|
|
|
638 |
|
|
|
1,868 |
|
Non-cash
share-based compensation expense (2) |
|
5,783 |
|
|
|
4,353 |
|
|
|
18,204 |
|
|
|
14,327 |
|
Loss on
extinguishment of debt (3) |
|
- |
|
|
|
- |
|
|
|
831 |
|
|
|
- |
|
Transaction
costs and credit facility fees (4) |
|
3,385 |
|
|
|
568 |
|
|
|
9,471 |
|
|
|
1,160 |
|
Business
optimization and other charges (5) |
|
- |
|
|
|
531 |
|
|
|
159 |
|
|
|
12,503 |
|
Other |
|
140 |
|
|
|
300 |
|
|
|
717 |
|
|
|
711 |
|
Adjusted
EBITDA |
|
209,201 |
|
|
|
178,778 |
|
|
|
641,074 |
|
|
|
387,942 |
|
Adjusted
EBITDA attributable to noncontrolling interests |
|
2,247 |
|
|
|
920 |
|
|
|
6,454 |
|
|
|
950 |
|
Adjusted
EBITDA attributable to Generac Holdings Inc. |
$ |
206,954 |
|
|
$ |
177,858 |
|
|
$ |
634,620 |
|
|
$ |
386,992 |
|
|
|
|
|
|
|
|
|
(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 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
non-cash write-off of original issue discount and deferred
financing costs due to voluntary debt prepayment. |
|
|
|
|
|
|
|
|
(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 three
and nine months ended September 30, 2021, represents severance and
other charges related to the consolidation of certain of our
facilities. 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. |
|
|
|
|
|
|
|
|
Net
income to Adjusted net income reconciliation |
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
131,570 |
|
|
$ |
114,970 |
|
|
$ |
407,599 |
|
|
$ |
225,575 |
|
Net income
(loss) attributable to noncontrolling interests |
|
1,183 |
|
|
|
265 |
|
|
|
3,008 |
|
|
|
(3,337 |
) |
Net
income |
|
132,753 |
|
|
|
115,235 |
|
|
|
410,607 |
|
|
|
222,238 |
|
Provision
for income taxes |
|
32,611 |
|
|
|
32,050 |
|
|
|
114,341 |
|
|
|
59,967 |
|
Income
before provision for income taxes |
|
165,364 |
|
|
|
147,285 |
|
|
|
524,948 |
|
|
|
282,205 |
|
Amortization
of intangible assets |
|
12,206 |
|
|
|
7,892 |
|
|
|
32,237 |
|
|
|
23,340 |
|
Amortization
of deferred finance costs and original issue discount |
|
646 |
|
|
|
654 |
|
|
|
1,941 |
|
|
|
1,940 |
|
Loss on
extinguishment of debt (3) |
|
- |
|
|
|
– |
|
|
|
831 |
|
|
|
– |
|
Transaction
costs and other purchase accounting adjustments (6) |
|
5,487 |
|
|
|
381 |
|
|
|
11,130 |
|
|
|
612 |
|
(Gain)/loss
attributable to business or asset dispositions (7) |
|
- |
|
|
|
– |
|
|
|
(3,991 |
) |
|
|
– |
|
Business
optimization and other charges (5) |
|
- |
|
|
|
531 |
|
|
|
159 |
|
|
|
12,503 |
|
Adjusted net
income before provision for income taxes |
|
183,703 |
|
|
|
156,743 |
|
|
|
567,255 |
|
|
|
320,600 |
|
Cash income
tax expense (8) |
|
(31,290 |
) |
|
|
(23,620 |
) |
|
|
(106,564 |
) |
|
|
(44,842 |
) |
Adjusted net
income |
|
152,413 |
|
|
|
133,123 |
|
|
|
460,691 |
|
|
|
275,758 |
|
Adjusted net
income (loss) attributable to noncontrolling interests |
|
1,272 |
|
|
|
198 |
|
|
|
3,616 |
|
|
|
(725 |
) |
Adjusted net
income attributable to Generac Holdings Inc. |
$ |
151,141 |
|
|
$ |
132,925 |
|
|
$ |
457,075 |
|
|
$ |
276,483 |
|
|
|
|
|
|
|
|
|
Adjusted net
income attributable to Generac Holdings Inc. per |
|
|
|
|
|
|
|
common share - diluted: |
$ |
2.35 |
|
|
$ |
2.08 |
|
|
$ |
7.13 |
|
|
$ |
4.35 |
|
Weighted
average common shares outstanding - diluted: |
|
64,208,116 |
|
|
|
63,761,380 |
|
|
|
64,146,281 |
|
|
|
63,546,132 |
|
|
|
|
|
|
|
|
|
(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 nine months ended September 30, 2021 is based on an
anticipated cash income tax rate of approximately 20.0% to 20.5%
for the full year ending 2021. Amount for the three and nine months
ended September 30, 2020 is based on an anticipated cash income tax
rate at the time of approximately 16% 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 September 30, |
|
Nine Months Ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
74,411 |
|
|
$ |
155,196 |
|
|
$ |
349,404 |
|
|
$ |
268,310 |
|
Proceeds
from beneficial interests in securitization transactions |
|
877 |
|
|
|
674 |
|
|
|
2,240 |
|
|
|
1,998 |
|
Expenditures
for property and equipment |
|
(33,234 |
) |
|
|
(7,608 |
) |
|
|
(87,456 |
) |
|
|
(33,940 |
) |
Free cash
flow |
$ |
42,054 |
|
|
$ |
148,262 |
|
|
$ |
264,188 |
|
|
$ |
236,368 |
|
|
|
|
|
|
|
|
|
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