Generac Updates Business Outlook for Second Half of 2011
September 26 2011 - 7:30AM
Business Wire
Generac Holdings Inc. (NYSE: GNRC), a leading designer and
manufacturer of backup power generation products, reported today
that it has updated its business outlook for the second half of
fiscal 2011 in response to current market conditions. During the
third quarter of 2011, as a result of wide-scale power outages in
the Midwest and along the East Coast, the Company experienced a
surge in demand for its residential products.
Commenting on recent business conditions, Aaron Jagdfeld,
President and Chief Executive Officer of Generac, stated, “The
duration and wide spread impact of the most recent outage events
around the nation was significant. For Generac, the impact of such
severe conditions not only increases the immediate demand for our
portable generators, but our experience has been that prolonged
outages can drive additional awareness for our home standby
generators for a period of 12 to 18 months after an event. As a
result, while we expect a significant positive impact on our third
quarter financial results, it is also our expectation that we will
see elevated demand for our home standby generators in the fourth
quarter and into 2012.”
Generac’s previous business outlook for residential products was
for shipments to be flat year-over-year in the second half of 2011,
assuming no major outage events. As a result of the recent events,
the Company now expects that residential product sales in the third
quarter of 2011 will increase year-over-year by over 50% driven
primarily by portable generator shipments. Additionally, the
Company now expects that residential product sales in the fourth
quarter of 2011 will increase year-over-year by approximately
15-20% as a result of increased shipments of home standby
generators, with demand for these products expected to remain
strong into fiscal 2012 in the regions impacted by major
outages.
The Company is also reaffirming its guidance of solid
double-digit full year growth for commercial and industrial
(C&I) products. As previously stated, the second half of
2011 is expected to present more difficult year-over-year
comparisons for C&I products, with growth rates decreasing from
those experienced in the first half of 2011.
Given the sales mix in the revised outlook, the Company now
expects gross margins in the third quarter 2011 to be roughly
in-line with gross margin levels in the second quarter 2011, as a
heavier mix of portable generator shipments in the third quarter is
likely to offset expected gross margin improvements. Fourth quarter
2011 gross margins are expected to sequentially improve from the
third quarter due to a sales mix shift towards more home standby
generator shipments and the realization of price increases, cost
reductions, commodity price moderation and improved overhead
absorption.
Operating expenses in the third and fourth quarters of 2011 are
expected to increase sequentially as compared to the second quarter
of 2011, primarily as a result of additional variable expenses on
higher sales volumes together with additional expenses related to
incentive compensation. As a percentage of net sales, the Company
expects operating expenses in the second half of 2011 to be similar
to the second half of 2010 with more operating leverage expected in
the third quarter as compared to the fourth quarter.
Overall, the Company expects to see a meaningful increase in
earnings for the third quarter of 2011 compared to its previous
outlook as a result of these recent events.
Generac company news is available24
hours a day, on-line at:
http://www.generac.com.
About Generac
Since 1959, Generac has been a leading designer and manufacturer
of a wide range of backup power generation products serving
residential, light commercial and industrial markets. Generac's
power systems range in output from 800 watts to 9 megawatts and are
available through a broad network of independent dealers, retailers
and wholesalers.
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," "project," "plan," "intend," "believe," "confident,"
"may," "should," "can have," "likely," "future" 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:
- demand for Generac products;
- frequency of major power outages;
- availability and cost of quality raw
materials and key components used in producing Generac
products;
- competitive factors in the industry in
which Generac operates;
- Generac's dependence on its
distribution network;
- Generac's ability to invest in, develop
or adapt to changing technologies and manufacturing
techniques;
- Generac's ability to adjust to
operating as a public company;
- loss of key management and
employees;
- increase in liability claims; and
- changes in environmental, health and
safety laws and regulations.
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. A detailed discussion
of these and other factors that may affect future results is
contained in Generac's filings with the Securities and Exchange
Commission, or SEC.
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.
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