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,
2023 and initiated its outlook for the full-year 2024.
Fourth Quarter 2023 Highlights
- Net sales increased 1% to $1.06 billion during the fourth
quarter of 2023 as compared to $1.05 billion in the prior-year
fourth quarter. Core sales, which excludes both the impact of
acquisitions and foreign currency, were approximately flat from the
prior year period.
- Residential product sales increased 1% to $580 million as
compared to $575 million last year.
- Commercial & Industrial (“C&I”) product sales increased
slightly to $363 million as compared to $361 million in the prior
year.
- Net income attributable to the Company during the fourth
quarter was $97 million, or $1.57 per share, as compared to $71
million, or $0.83 per share, for the same period of 2022.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $126 million, or
$2.07 per share, as compared to $113 million, or $1.78 per share,
in the fourth quarter of 2022.
- Adjusted EBITDA before deducting for noncontrolling interests,
as defined in the accompanying reconciliation schedules, was $213
million, or 20.0% of net sales, as compared to $174 million, or
16.6% of net sales, in the prior year.
- Cash flow from operations was a record $317 million as compared
to $101 million in the prior year. Free cash flow, as defined in
the accompanying reconciliation schedules, was a record $266
million as compared to $80 million for 2022.
- The Company repurchased approximately 1.3 million shares of its
common stock during the fourth quarter for approximately $151
million. Additionally, on February 12, 2024, the Company’s Board of
Directors approved a new stock repurchase program that allows for
the repurchase of up to $500 million of the Company’s common stock
over the next 24 months, replacing the remaining balance on the
previous program.
- On December 13th, the Company completed a $30 million minority
investment in Wallbox (NYSE: WBX), a global leader in smart
electric vehicle (EV) charging and energy management
solutions.
- The Company is initiating its full-year 2024 net sales growth
guidance to be approximately 3 to 7% as compared to the prior year
on an as-reported basis, which includes a slight favorable impact
from foreign currency. Adjusted EBITDA margin, before deducting for
non-controlling interests, is expected to be approximately 16.5 to
17.5%.
Full-Year 2023 Highlights
- Net sales declined 12% to $4.02 billion during 2023 as compared
to $4.56 billion in 2022. Core sales, which excludes both the
impact of acquisitions and foreign currency, decreased
approximately 14%.
- Residential product sales declined 29% to $2.06 billion as
compared to $2.91 billion last year.
- C&I product sales grew 19% to $1.49 billion as compared to
$1.26 billion in the prior year.
- Net income attributable to the Company during 2023 was $215
million, or $3.27 per share, as compared to $400 million, or $5.42
per share for 2022.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $335 million, or
$5.40 per share, as compared to $539 million, or $8.33 per share,
in 2022.
- Adjusted EBITDA before deducting for noncontrolling interests,
as defined in the accompanying reconciliation schedules, for 2023
was $638 million, or 15.9% of net sales, as compared to $825
million, or 18.1% of net sales, last year.
- Cash flow from operations was a record $522 million as compared
to $59 million in the prior year. Free cash flow, as defined in the
accompanying reconciliation schedules, was $396 million as compared
to $(24) million for 2022.
- The Company repurchased approximately 2.2 million shares of its
common stock during 2023 for approximately $252 million.
“Our fourth quarter results demonstrate continued improvement in
operating performance resulting in strong margin expansion and cash
flow generation as we exited the year,” said Aaron Jagdfeld,
President and Chief Executive Officer. “Despite fewer power outages
in the fourth quarter, home standby generator shipments returned to
year-over-year growth, and activations reached a quarterly record.
Global C&I product sales were approximately flat as compared to
the prior year with telecom and rental markets experiencing
cyclical declines. Additionally, we generated record cash flow in
the quarter which allowed us to enhance shareholder value through
continued share repurchases and investments to accelerate our
Powering A Smarter World enterprise strategy.”
Additional Fourth Quarter 2023 Consolidated
Highlights
Gross profit margin was 36.5% as compared to 32.7% in the
prior-year fourth quarter. The increase in gross margin was
primarily driven by favorable product mix, production efficiencies,
and lower raw material and logistics costs.
Operating expenses increased $1.8 million, or 0.8%, as compared
to the fourth quarter of 2022. The increase in operating expenses
was primarily driven by increased employee and marketing costs.
Provision for income taxes for the current year quarter was
$30.0 million, or an effective tax rate of 23.7%, as compared to
$13.6 million, or a 15.5% effective tax rate, for the prior year.
The increase in effective tax rate was primarily driven by discrete
tax benefits in the prior year quarter that did not repeat in the
current year.
Cash flow from operations was $316.9 million during the fourth
quarter, as compared to $100.9 million in the prior year. Free cash
flow, as defined in the accompanying reconciliation schedules, was
$266.4 million as compared to $80.3 million in the fourth quarter
of 2022. The significant improvement in free cash flow was
primarily due to a $144 million reduction in inventory during the
quarter, together with higher operating earnings. This increase was
partially offset by higher capital expenditures during the
quarter.
Business Segment Results
Domestic Segment
Domestic segment total sales (including inter-segment sales)
increased 1% to $891.0 million as compared to $880.6 million in the
prior year. The slight increase in domestic sales was driven
primarily by higher home standby generator shipments, as well as an
increase in C&I product shipments to industrial distributors
and direct customers for “beyond standby” applications. This growth
was partially offset by lower portable generator sales and a
decline in C&I product shipments to telecom and national rental
equipment customers.
Adjusted EBITDA for the segment was $192.2 million, or 21.6% of
domestic segment total sales, as compared to $144.1 million in the
prior year, or 16.4% of total sales. This margin improvement was
primarily driven by favorable sales mix and lower input costs.
International Segment
International segment total sales (including inter-segment
sales) decreased 13% to $190.1 million as compared to $219.2
million in the prior year quarter, including an approximate 7%
sales growth contribution from foreign currency and acquisitions.
The approximately 20% core total sales decline for the segment was
primarily driven by lower inter-segment sales related to softness
in the telecom market and lower portable generator shipments in
Europe.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $20.4 million, or 10.7% of
international segment total sales, as compared to $29.5 million, or
13.5% of total sales, in the prior year. This margin decline was
primarily driven by unfavorable sales mix and reduced operating
leverage on lower shipments.
2024 Outlook
The Company is initiating guidance for full-year 2024 that
anticipates a return to net sales growth as compared to the prior
year. This growth is expected to be driven primarily by residential
product sales growth in the mid-teens range, led by shipments of
home standby generators and residential energy technology products.
Partially offsetting this projected strength, C&I product sales
are expected to decline at a rate of approximately 10%, primarily
due to weakness with certain direct telecom, rental, and “beyond
standby” customers. As a result of these factors, full-year net
sales are expected to increase between 3 to 7% as compared to the
prior year, which includes a slight favorable impact from foreign
currency.
Additionally, the Company expects net income margin, before
deducting for non-controlling interests, to be approximately 6.5 to
7.5% for the full-year 2024. The corresponding adjusted EBITDA
margin is expected to be approximately 16.5 to 17.5%.
The Company expects to maintain strong levels of operating and
free cash flow generation for the full year, with free cash flow
conversion from adjusted net income expected to be approximately
100%.
Mr. Jagdfeld concluded, “In 2024, we expect to return to
consolidated sales growth and year-over-year margin expansion for
the full year period while also continuing to invest for future
growth. Importantly, the mega-trends that support these
expectations as well as our robust long-term growth outlook remain
firmly intact. As reliance on electricity continues to increase and
supply-demand imbalances remain a challenge for grid operators, we
will continue to execute our strategic plan to lead the evolution
to more resilient, efficient, and sustainable energy
solutions.”
Conference Call and Webcast
Generac management will hold a conference call at 10:00 a.m. EST
on Wednesday, February 14, 2024 to discuss fourth quarter and
full-year 2023 operating results. The conference call can be
accessed at the following link:
https://register.vevent.com/register/BIedddb843f9564021bf0d57eb7e31888f.
Individuals that wish to listen via telephone will be given dial-in
information.
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 for 12 months.
About Generac
Generac is a leading energy technology company that provides
backup and prime power products and energy storage systems for home
and commercial & industrial applications, energy monitoring
& management devices and services, and other engine &
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 has
continued to expand its energy technology offerings in its mission
to lead the evolution to more resilient, efficient, and sustainable
energy solutions.
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;
- fluctuations in cost and quality of
raw materials required to manufacture our products;
- availability of both labor and key
components from our manufacturing operations and global supply
chain, including single-sourced components and contract
manufacturers, needed in producing our products;
- 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 impact on our results of
possible fluctuations in interest rates, foreign currency exchange
rates, commodities, product mix, logistics costs and regulatory
tariffs;
- difficulties we may encounter as
our business expands globally or into new markets;
- our dependence on our distribution
network;
- our ability to remain competitive
by investing in, developing or adapting to changing technologies
and manufacturing techniques, as well as protecting our
intellectual property rights;
- 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 laws and regulations
regarding environmental, health and safety, product compliance, or
international trade that affect our products, operations, or
customer demand;
- significant legal proceedings,
claims, lawsuits or government investigations; and
- changes in durable goods spending
by consumers and businesses or other macroeconomic conditions,
impacting demand for our products.
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
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 2022 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
To supplement our condensed consolidated financial statements
presented in accordance with U.S. GAAP, the Company provides the
computation of Adjusted EBITDA attributable to the Company, which
is defined as net income before noncontrolling interest adjusted
for the following items: interest expense, depreciation expense,
amortization of intangible assets, income tax expense, certain
non-cash gains and losses including purchase accounting and
contingent consideration adjustments, share-based compensation
expense, losses on extinguishment of debt, certain transaction
costs and credit facility fees, business optimization expenses,
certain specific provisions, and adjusted EBITDA attributable to
noncontrolling interests, as set forth in the reconciliation table
below.
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 adjusted for the following items: 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 and other charges, certain specific provisions,
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: Kris RosemannSenior Manager – 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, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
1,063,670 |
|
|
$ |
1,049,232 |
|
|
$ |
4,022,667 |
|
|
$ |
4,564,737 |
|
|
Costs of
goods sold |
|
674,946 |
|
|
|
706,065 |
|
|
|
2,657,236 |
|
|
|
3,042,733 |
|
|
Gross
profit |
|
388,724 |
|
|
|
343,167 |
|
|
|
1,365,431 |
|
|
|
1,522,004 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling and service |
|
113,839 |
|
|
|
107,570 |
|
|
|
448,199 |
|
|
|
496,260 |
|
|
Research and development |
|
44,369 |
|
|
|
38,446 |
|
|
|
173,443 |
|
|
|
159,774 |
|
|
General and administrative |
|
54,288 |
|
|
|
64,284 |
|
|
|
253,396 |
|
|
|
196,320 |
|
|
Amortization of intangibles |
|
25,260 |
|
|
|
25,639 |
|
|
|
104,194 |
|
|
|
103,320 |
|
|
Total
operating expenses |
|
237,756 |
|
|
|
235,939 |
|
|
|
979,232 |
|
|
|
955,674 |
|
|
Income from
operations |
|
150,968 |
|
|
|
107,228 |
|
|
|
386,199 |
|
|
|
566,330 |
|
|
|
|
|
|
|
|
|
|
|
Other
(expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
(24,765 |
) |
|
|
(19,523 |
) |
|
|
(97,627 |
) |
|
|
(54,826 |
) |
|
Investment income |
|
1,483 |
|
|
|
509 |
|
|
|
4,272 |
|
|
|
1,129 |
|
|
Loss on extinguishment of debt |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(3,743 |
) |
|
Other, net |
|
(880 |
) |
|
|
(755 |
) |
|
|
(2,544 |
) |
|
|
(424 |
) |
|
Total other
expense, net |
|
(24,162 |
) |
|
|
(19,769 |
) |
|
|
(95,899 |
) |
|
|
(57,864 |
) |
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
126,806 |
|
|
|
87,459 |
|
|
|
290,300 |
|
|
|
508,466 |
|
|
Provision
for income taxes |
|
29,996 |
|
|
|
13,568 |
|
|
|
73,180 |
|
|
|
99,596 |
|
|
Net
income |
|
96,810 |
|
|
|
73,891 |
|
|
|
217,120 |
|
|
|
408,870 |
|
|
Net income
attributable to noncontrolling interests |
|
209 |
|
|
|
2,876 |
|
|
|
2,514 |
|
|
|
9,368 |
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
96,601 |
|
|
$ |
71,015 |
|
|
$ |
214,606 |
|
|
$ |
399,502 |
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss): |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
36,784 |
|
|
|
56,424 |
|
|
|
57,963 |
|
|
|
(48,841 |
) |
|
Net unrealized (loss) gain on derivatives |
|
(10,313 |
) |
|
|
(1,120 |
) |
|
|
(8,004 |
) |
|
|
38,494 |
|
|
Other comprehensive income (loss) |
|
26,471 |
|
|
|
55,304 |
|
|
|
49,959 |
|
|
|
(10,347 |
) |
|
Total
comprehensive income |
|
123,281 |
|
|
|
129,195 |
|
|
|
267,079 |
|
|
|
398,523 |
|
|
Comprehensive income attributable to noncontrolling interests |
|
246 |
|
|
|
6,764 |
|
|
|
2,581 |
|
|
|
11,179 |
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
123,035 |
|
|
$ |
122,431 |
|
|
$ |
264,498 |
|
|
$ |
387,344 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
basic: |
$ |
1.59 |
|
|
$ |
0.84 |
|
|
$ |
3.31 |
|
|
$ |
5.55 |
|
|
Weighted average common shares outstanding - basic: |
|
60,391,678 |
|
|
|
62,370,769 |
|
|
|
61,265,060 |
|
|
|
63,117,007 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
diluted: |
$ |
1.57 |
|
|
$ |
0.83 |
|
|
$ |
3.27 |
|
|
$ |
5.42 |
|
|
Weighted average common shares outstanding - diluted: |
|
61,038,694 |
|
|
|
63,583,384 |
|
|
|
62,058,387 |
|
|
|
64,681,357 |
|
|
|
|
|
|
|
|
|
|
|
Generac Holdings
Inc. |
|
Consolidated Balance
Sheets |
|
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
December
31, |
|
December
31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
200,994 |
|
|
$ |
132,723 |
|
|
Accounts receivable, less allowance for credit losses of $33,925
and $27,664 at December 31, 2023 and 2022, respectively |
|
537,316 |
|
|
|
522,458 |
|
|
Inventories |
|
1,167,484 |
|
|
|
1,405,384 |
|
|
Prepaid expenses and other assets |
|
91,898 |
|
|
|
121,783 |
|
|
Total
current assets |
|
1,997,692 |
|
|
|
2,182,348 |
|
|
|
|
|
|
|
Property and
equipment, net |
|
598,577 |
|
|
|
467,604 |
|
|
|
|
|
|
|
Customer
lists, net |
|
184,513 |
|
|
|
206,987 |
|
|
Patents and
technology, net |
|
417,441 |
|
|
|
454,757 |
|
|
Other
intangible assets, net |
|
27,127 |
|
|
|
41,719 |
|
|
Tradenames,
net |
|
216,995 |
|
|
|
227,251 |
|
|
Goodwill |
|
1,432,384 |
|
|
|
1,400,880 |
|
|
Deferred
income taxes |
|
15,532 |
|
|
|
12,746 |
|
|
Operating
lease and other assets |
|
203,051 |
|
|
|
175,170 |
|
|
Total
assets |
$ |
5,093,312 |
|
|
$ |
5,169,462 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
$ |
81,769 |
|
|
$ |
48,990 |
|
|
Accounts payable |
|
340,719 |
|
|
|
446,050 |
|
|
Accrued wages and employee benefits |
|
54,970 |
|
|
|
45,741 |
|
|
Accrued product warranty |
|
65,298 |
|
|
|
89,141 |
|
|
Other accrued liabilities |
|
292,120 |
|
|
|
349,389 |
|
|
Current portion of long-term borrowings and finance lease
obligations |
|
45,895 |
|
|
|
12,733 |
|
|
Total
current liabilities |
|
880,771 |
|
|
|
992,044 |
|
|
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
1,447,553 |
|
|
|
1,369,085 |
|
|
Deferred
income taxes |
|
90,012 |
|
|
|
125,691 |
|
|
Deferred
revenue |
|
167,008 |
|
|
|
143,726 |
|
|
Operating
lease and other long-term liabilities |
|
158,349 |
|
|
|
169,190 |
|
|
Total
liabilities |
|
2,743,693 |
|
|
|
2,799,736 |
|
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
6,549 |
|
|
|
110,471 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
73,195,055 and 72,701,257 shares issued at December 31, 2023 and
2022, respectively |
|
733 |
|
|
|
728 |
|
|
Additional paid-in capital |
|
1,070,386 |
|
|
|
1,016,138 |
|
|
Treasury stock, at cost, 13,057,298 and 11,284,350 shares at
December 31, 2023 and 2022, respectively |
|
(1,032,921 |
) |
|
|
(808,491 |
) |
|
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained earnings |
|
2,519,313 |
|
|
|
2,316,224 |
|
|
Accumulated other comprehensive loss |
|
(15,143 |
) |
|
|
(65,102 |
) |
|
Stockholders’ equity attributable to Generac Holdings Inc. |
|
2,340,252 |
|
|
|
2,257,381 |
|
|
Noncontrolling interests |
|
2,818 |
|
|
|
1,874 |
|
|
Total
stockholders’ equity |
|
2,343,070 |
|
|
|
2,259,255 |
|
|
Total
liabilities and stockholders’ equity |
$ |
5,093,312 |
|
|
$ |
5,169,462 |
|
|
|
|
|
|
|
Generac Holdings
Inc. |
|
Consolidated
Statements of Cash Flows |
|
(U.S. Dollars in
Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Operating activities |
|
|
|
|
Net
income |
$ |
217,120 |
|
|
$ |
408,870 |
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation |
|
62,408 |
|
|
|
52,821 |
|
|
Amortization of intangible assets |
|
104,194 |
|
|
|
103,320 |
|
|
Amortization of original issue discount and deferred financing
costs |
|
3,885 |
|
|
|
3,234 |
|
|
Loss on extinguishment of debt |
|
- |
|
|
|
3,743 |
|
|
Deferred income taxes |
|
(34,478 |
) |
|
|
(95,465 |
) |
|
Share-based compensation expense |
|
35,492 |
|
|
|
29,481 |
|
|
Gain on disposal of assets |
|
(285 |
) |
|
|
(592 |
) |
|
Other noncash charges |
|
5,922 |
|
|
|
18,339 |
|
|
Net changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
|
Accounts receivable |
|
(18,272 |
) |
|
|
6,547 |
|
|
Inventories |
|
262,670 |
|
|
|
(319,274 |
) |
|
Other assets |
|
24,266 |
|
|
|
4,766 |
|
|
Accounts payable |
|
(120,900 |
) |
|
|
(223,031 |
) |
|
Accrued wages and employee benefits |
|
7,962 |
|
|
|
(27,369 |
) |
|
Other accrued liabilities |
|
(27,337 |
) |
|
|
110,036 |
|
|
Excess tax benefits from equity awards |
|
(977 |
) |
|
|
(16,910 |
) |
|
Net cash
provided by operating activities |
|
521,670 |
|
|
|
58,516 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
Proceeds
from sale of property and equipment |
|
2,896 |
|
|
|
2,077 |
|
|
Proceeds
from sale of investment |
|
- |
|
|
|
1,308 |
|
|
Proceeds
from beneficial interest in securitization transactions |
|
3,294 |
|
|
|
3,566 |
|
|
Contribution
to equity method investment |
|
(6,627 |
) |
|
|
(14,930 |
) |
|
Expenditures
for property and equipment |
|
(129,060 |
) |
|
|
(86,188 |
) |
|
Purchase of
long-term investment |
|
(32,592 |
) |
|
|
(15,000 |
) |
|
Acquisition
of businesses, net of cash acquired |
|
(15,974 |
) |
|
|
(25,065 |
) |
|
Net cash
used in investing activities |
|
(178,063 |
) |
|
|
(134,232 |
) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Proceeds
from short-term borrowings |
|
64,257 |
|
|
|
248,209 |
|
|
Proceeds
from long-term borrowings |
|
348,827 |
|
|
|
1,026,284 |
|
|
Repayments
of short-term borrowings |
|
(37,104 |
) |
|
|
(268,133 |
) |
|
Repayments
of long-term borrowings and finance lease obligations |
|
(288,699 |
) |
|
|
(542,191 |
) |
|
Stock
repurchases |
|
(251,513 |
) |
|
|
(345,840 |
) |
|
Payment of
contingent acquisition consideration |
|
(4,979 |
) |
|
|
(16,135 |
) |
|
Payment of
debt issuance costs |
|
- |
|
|
|
(10,330 |
) |
|
Purchase of
additional ownership interest |
|
(104,844 |
) |
|
|
(375 |
) |
|
Cash
dividends paid to noncontrolling interest of subsidiary |
|
- |
|
|
|
(309 |
) |
|
Taxes paid
related to equity awards |
|
(10,897 |
) |
|
|
(40,923 |
) |
|
Proceeds
from the exercise of stock options |
|
7,815 |
|
|
|
13,786 |
|
|
Net cash
(used in) provided by financing activities |
|
(277,137 |
) |
|
|
64,043 |
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
1,801 |
|
|
|
(2,943 |
) |
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
68,271 |
|
|
|
(14,616 |
) |
|
Cash and
cash equivalents at beginning of period |
|
132,723 |
|
|
|
147,339 |
|
|
Cash and
cash equivalents at end of period |
$ |
200,994 |
|
|
$ |
132,723 |
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information |
|
|
|
|
Cash
paid during the period |
|
|
|
|
Interest |
$ |
77,989 |
|
|
$ |
48,912 |
|
|
Income
taxes |
|
100,082 |
|
|
|
150,893 |
|
|
|
|
|
|
|
Generac Holdings
Inc. |
|
Segment Reporting
and Product Class Information |
|
(U.S. Dollars in
Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sales
by Reportable Segment |
|
|
Three Months Ended December 31, 2023 |
|
Three Months Ended December 31, 2022 |
|
|
External Net Sales |
|
Intersegment Sales |
|
Total Sales |
|
External Net Sales |
|
Intersegment Sales |
|
Total Sales |
|
Domestic |
$ |
881,033 |
|
$ |
9,977 |
|
|
$ |
891,010 |
|
|
$ |
864,629 |
|
$ |
15,989 |
|
|
$ |
880,618 |
|
|
International |
|
182,637 |
|
|
7,474 |
|
|
|
190,111 |
|
|
|
184,603 |
|
|
34,624 |
|
|
|
219,227 |
|
|
Intercompany elimination |
|
- |
|
|
(17,451 |
) |
|
|
(17,451 |
) |
|
|
- |
|
|
(50,613 |
) |
|
|
(50,613 |
) |
|
Total net sales |
$ |
1,063,670 |
|
$ |
- |
|
|
$ |
1,063,670 |
|
|
$ |
1,049,232 |
|
$ |
- |
|
|
$ |
1,049,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sales
by Reportable Segment |
|
|
Year Ended December 31, 2023 |
|
Year Ended December 31, 2022 |
|
|
External Net Sales |
|
Intersegment Sales |
|
Total Sales |
|
External Net Sales |
|
Intersegment Sales |
|
Total Sales |
|
Domestic |
$ |
3,276,324 |
|
$ |
43,937 |
|
|
$ |
3,320,261 |
|
|
$ |
3,867,866 |
|
$ |
60,731 |
|
|
$ |
3,928,597 |
|
|
International |
|
746,343 |
|
|
91,552 |
|
|
|
837,895 |
|
|
|
696,871 |
|
|
93,699 |
|
|
|
790,570 |
|
|
Intercompany elimination |
|
- |
|
|
(135,489 |
) |
|
|
(135,489 |
) |
|
|
- |
|
|
(154,430 |
) |
|
|
(154,430 |
) |
|
Total net sales |
$ |
4,022,667 |
|
$ |
- |
|
|
$ |
4,022,667 |
|
|
$ |
4,564,737 |
|
$ |
- |
|
|
$ |
4,564,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External Net Sales by Product Class |
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Residential products |
$ |
580,391 |
|
$ |
574,799 |
|
|
$ |
2,062,929 |
|
|
$ |
2,911,871 |
|
|
|
|
|
Commercial & industrial products |
|
362,923 |
|
|
361,473 |
|
|
|
1,494,799 |
|
|
|
1,260,737 |
|
|
|
|
|
Other |
|
120,356 |
|
|
112,960 |
|
|
|
464,939 |
|
|
|
392,129 |
|
|
|
|
|
Total net sales |
$ |
1,063,670 |
|
$ |
1,049,232 |
|
|
$ |
4,022,667 |
|
|
$ |
4,564,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA by Reportable Segment |
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Domestic |
$ |
192,203 |
|
$ |
144,143 |
|
|
$ |
523,337 |
|
|
$ |
716,302 |
|
|
|
|
|
International |
|
20,434 |
|
|
29,533 |
|
|
|
114,522 |
|
|
|
109,065 |
|
|
|
|
|
Total adjusted EBITDA (1) |
$ |
212,637 |
|
$ |
173,676 |
|
|
$ |
637,859 |
|
|
$ |
825,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
96,601 |
|
|
$ |
71,015 |
|
|
$ |
214,606 |
|
|
$ |
399,502 |
|
|
Net income attributable to noncontrolling interests |
|
209 |
|
|
|
2,876 |
|
|
|
2,514 |
|
|
|
9,368 |
|
|
Net
income |
|
96,810 |
|
|
|
73,891 |
|
|
|
217,120 |
|
|
|
408,870 |
|
|
Interest expense |
|
24,765 |
|
|
|
19,523 |
|
|
|
97,627 |
|
|
|
54,826 |
|
|
Depreciation and amortization |
|
42,453 |
|
|
|
39,417 |
|
|
|
166,602 |
|
|
|
156,141 |
|
|
Provision for income taxes |
|
29,996 |
|
|
|
13,568 |
|
|
|
73,180 |
|
|
|
99,596 |
|
|
Non-cash write-down and other adjustments (1) |
|
(696 |
) |
|
|
7,934 |
|
|
|
(5,953 |
) |
|
|
(2,091 |
) |
|
Non-cash share-based compensation expense (2) |
|
5,186 |
|
|
|
6,058 |
|
|
|
35,492 |
|
|
|
29,481 |
|
|
Loss on extinguishment of debt (3) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,743 |
|
|
Transaction costs and credit facility fees (4) |
|
893 |
|
|
|
1,195 |
|
|
|
4,054 |
|
|
|
5,026 |
|
|
Business optimization and other charges (5) |
|
2,400 |
|
|
|
1,000 |
|
|
|
10,551 |
|
|
|
4,371 |
|
|
Provision for legal, regulatory, and clean energy product charges
(6) |
|
10,577 |
|
|
|
10,000 |
|
|
|
38,490 |
|
|
|
65,265 |
|
|
Other |
|
253 |
|
|
|
1,090 |
|
|
|
696 |
|
|
|
139 |
|
|
Adjusted EBITDA |
|
212,637 |
|
|
|
173,676 |
|
|
|
637,859 |
|
|
|
825,367 |
|
|
Adjusted EBITDA attributable to noncontrolling interests |
|
541 |
|
|
|
4,288 |
|
|
|
4,687 |
|
|
|
15,087 |
|
|
Adjusted EBITDA attributable to Generac Holdings Inc. |
$ |
212,096 |
|
|
$ |
169,388 |
|
|
$ |
633,172 |
|
|
$ |
810,280 |
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
gains/losses on the disposition of assets other than in the
ordinary course of business, gains/losses on sales of certain
investments, unrealized mark-to-market adjustments on commodity
contracts, certain foreign currency related adjustments, and
certain purchase accounting and contingent consideration
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 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) Represents
severance and other restructuring charges related to the
consolidation of certain operating facilities and organizational
functions. |
|
|
|
|
|
|
|
|
|
|
(6) Represents the
following significant and unusual charges not indicative of our
ongoing operations: • a provision for judgements and legal expenses
related to certain patent and securities lawsuits - $6.2 million in
the fourth quarter of 2023; $28.3 million in the full year 2023. •
a provision for a matter with the Consumer Product Safety
Commission ("CPSC") concerning the imposition of civil fines for
allegedly failing to timely submit a report under the Consumer
Product Safety Act ("CPSA") in relation to certain portable
generators that were subject to a voluntary recall previously
announced on July 29, 2021 - $5.8 million in the first quarter of
2023; $10.0 million in the fourth quarter of 2022. • a bad debt
provision and additional customer support costs related to a clean
energy product customer that filed for bankruptcy in 2022 – $4.4
million additional customer support costs in the fourth quarter of
2023; $17.9 million bad debt provision in the third quarter of
2022. • a warranty provision to address certain clean energy
product warranty-related matters - $37.3 million in the third
quarter of 2022. |
|
|
|
|
|
|
|
|
|
|
Net income to Adjusted net income
reconciliation |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
96,601 |
|
|
$ |
71,015 |
|
|
$ |
214,606 |
|
|
$ |
399,502 |
|
|
Net income attributable to noncontrolling interests |
|
209 |
|
|
|
2,876 |
|
|
|
2,514 |
|
|
|
9,368 |
|
|
Net
income |
|
96,810 |
|
|
|
73,891 |
|
|
|
217,120 |
|
|
|
408,870 |
|
|
Amortization of intangible assets |
|
25,260 |
|
|
|
25,639 |
|
|
|
104,194 |
|
|
|
103,320 |
|
|
Amortization of deferred finance costs and original issue
discount |
|
983 |
|
|
|
973 |
|
|
|
3,885 |
|
|
|
3,234 |
|
|
Loss on extinguishment of debt (3) |
|
- |
|
|
|
– |
|
|
|
- |
|
|
|
3,743 |
|
|
Transaction costs and other purchase accounting adjustments
(7) |
|
346 |
|
|
|
11,239 |
|
|
|
2,089 |
|
|
|
3,588 |
|
|
(Gain)/loss attributable to business or asset dispositions (8) |
|
- |
|
|
|
– |
|
|
|
(119 |
) |
|
|
(229 |
) |
|
Business optimization and other charges (5) |
|
2,400 |
|
|
|
1,000 |
|
|
|
10,551 |
|
|
|
4,371 |
|
|
Provision for legal, regulatory, and clean energy product charges
(6) |
|
10,577 |
|
|
|
10,000 |
|
|
|
38,490 |
|
|
|
65,265 |
|
|
Tax effect of add backs |
|
(9,908 |
) |
|
|
(7,038 |
) |
|
|
(38,384 |
) |
|
|
(43,638 |
) |
|
Adjusted net income |
|
126,468 |
|
|
|
115,704 |
|
|
|
337,826 |
|
|
|
548,524 |
|
|
Adjusted net income (loss) attributable to noncontrolling
interests |
|
209 |
|
|
|
2,476 |
|
|
|
2,514 |
|
|
|
9,675 |
|
|
Adjusted net income attributable to Generac Holdings Inc. |
$ |
126,259 |
|
|
$ |
113,228 |
|
|
$ |
335,312 |
|
|
$ |
538,849 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to Generac Holdings Inc. per |
|
|
|
|
|
|
|
|
common share - diluted: |
$ |
2.07 |
|
|
$ |
1.78 |
|
|
$ |
5.40 |
|
|
$ |
8.33 |
|
|
Weighted average common shares outstanding - diluted: |
|
61,038,694 |
|
|
|
63,583,384 |
|
|
|
62,058,387 |
|
|
|
64,681,357 |
|
|
|
|
|
|
|
|
|
|
|
(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 and
contingent consideration adjustments. |
|
|
|
|
|
|
|
|
|
|
(8) 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
316,946 |
|
|
$ |
100,868 |
|
|
$ |
521,670 |
|
|
$ |
58,516 |
|
|
Proceeds from beneficial interests in securitization
transactions |
|
761 |
|
|
|
821 |
|
|
|
3,294 |
|
|
|
3,566 |
|
|
Expenditures for property and equipment |
|
(51,342 |
) |
|
|
(21,355 |
) |
|
|
(129,060 |
) |
|
|
(86,188 |
) |
|
Free cash flow |
$ |
266,365 |
|
|
$ |
80,334 |
|
|
$ |
395,904 |
|
|
$ |
(24,106 |
) |
|
|
|
|
|
|
|
|
|
|
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