Generac Holdings Inc. (NYSE:GNRC) (“Generac” or the “Company”), a
leading global designer and manufacturer of power generation
equipment and other engine powered products, today reported
financial results for its third quarter ended September 30, 2017.
Third Quarter 2017 Highlights
- Net sales increased 22.5% to a record $457.3 million during the
third quarter of 2017 as compared to $373.1 million in the
prior-year third quarter, including $10.1 million of contribution
from the Motortech acquisition.
- Net income attributable to the Company during the third quarter
of 2017 was $39.7 million, or $0.64 per share, as compared to $26.2
million, or $0.40 per share, for the same period of 2016.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $57.8 million, or
$0.93 per share, as compared to $53.2 million, or $0.82 per share,
in the third quarter of 2016.
- Adjusted EBITDA attributable to the Company, as defined in the
accompanying reconciliation schedules, was $87.6 million as
compared to $72.1 million in the third quarter last year.
- Cash flow from operations was $67.0 million as compared to
$48.3 million in the prior year quarter. Free cash flow, as
defined in the accompanying reconciliation schedules, was $60.4
million as compared to $41.4 million in the third quarter of
2016.
- As a result of the improved demand outlook for residential
products, the Company is increasing its full-year 2017 guidance for
sales growth to 14 to 15% and Adjusted EBITDA margins to
approximately 19.0%.
“Overall third quarter results were very strong with record
quarterly sales resulting in robust organic sales growth of
approximately 20% and solid operating and free cash flow compared
to the prior year,” said Aaron Jagdfeld, President and Chief
Executive Officer. “The active hurricane season drove
significant shipments of portable generators during the quarter as
our team worked diligently with our channel partners to quickly get
these products to customers in the storm affected areas.
In-home consultations and end-user activations of home standby
generators were also strong, with broad-based growth across all
regions. Looking forward, we have ramped up production for
home standby generators to meet the current and anticipated
increased demand for these products, and we’re also early in the
process of replenishing our portable inventories back to more
normalized levels. Shipments of commercial and industrial
products also experienced solid organic growth during the third
quarter, with the continued strong recovery in domestic mobile
products and healthy end-market demand in our International segment
driving the year-over-year increase.”
Additional Third Quarter 2017 Consolidated
Highlights Residential product sales increased 30.6% to
$251.9 million as compared to $192.9 million in the prior
year. Commercial & Industrial (C&I) product sales
improved 16.6% to $174.5 million as compared to $149.7 million in
the prior year.
Gross profit margin was 34.4% compared to 36.9% in the
prior-year third quarter. The decline in gross margin as
compared to the prior year was primarily due to unfavorable sales
mix attributable to significantly higher sales of portable
generators and mobile products relative to prior year, which carry
lower gross margins relative to the consolidated corporate
average.
Operating expenses increased $3.2 million, or 3.9%, as compared
to the third quarter of 2016. The increase was primarily
driven by the addition of recurring operating expenses associated
with the Motortech acquisition and additional incentive
compensation accrued during the current-year quarter.
Cash flow from operations was $67.0 million as compared to $48.3
million in the prior year, and free cash flow was $60.4 million as
compared to $41.4 million in the same period last year. The
increases in cash flow were primarily driven by higher operating
earnings in the current-year quarter.
Business Segment Results
Domestic Segment
Domestic segment sales increased 21.8% to $364.3 million as
compared to $299.1 million in the prior-year quarter. The
current-year third quarter experienced substantial growth in
shipments of portable generators driven by increased outage
activity, along with the continuation of very strong growth for
mobile products. Also contributing to the year-over-year
sales growth were increases in home standby generators and
specialty outdoor power equipment.
Adjusted EBITDA for the segment was $83.1 million, or 22.8% of
net sales, as compared to $69.3 million in the prior year, or 23.2%
of net sales. Adjusted EBITDA margin in the current year was
impacted by unfavorable sales mix due to significantly higher sales
of portable generators and mobile products relative to prior
year. These impacts were largely offset by improved overall
leverage of fixed operating expenses on the strong organic increase
in sales.
International Segment
International segment sales increased 25.5% to $92.9 million as
compared to $74.0 million in the prior-year quarter. The
increase was primarily due to the contribution from the recent
acquisition of Motortech, which closed on January 1, 2017.
The growth was also due to increased organic shipments of both
C&I and residential products within the European and Latin
America regions, along with the favorable impact of the stronger
Euro as compared to the prior year.
Adjusted EBITDA for the segment, before deducting for
non-controlling interests, was $5.6 million, or 6.1% of net sales,
as compared to $3.5 million, or 4.8% of net sales, in the prior
year. The improvement in adjusted EBITDA margin as compared
to the prior year was primarily due to improved leverage of fixed
manufacturing and operating expenses on the organic increase in
sales. These impacts were partially offset by unfavorable
foreign currency effects.
2017 Outlook Update
The Company is increasing its prior guidance for revenue growth
and adjusted EBITDA margins for full-year 2017, which is primarily
due to an improved outlook for residential products as a result of
the higher power outage activity experienced during the third
quarter of 2017. Full year net sales are now expected to
increase between 14 to 15% over the prior year, which is an
increase from the 6 to 8% growth previously expected. Total
core organic sales growth is now anticipated to increase 9 to 10%,
which is an improvement from the previous assumption of 2 to
3%.
Net income margins, before deducting for non-controlling
interests, are now expected to be approximately 8.0%, an
improvement from 7.0 to 7.5% previously expected. Adjusted
EBITDA margins, also before deducting for non-controlling
interests, are now expected to be approximately 19.0% for the full
year 2017, an improvement from the prior guidance of approximately
18.5%.
Operating and free cash flow generation is expected to
sequentially increase during the fourth quarter, with the
conversion of adjusted net income still expected to be over 90% for
the full year.
Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT
on Wednesday, November 1, 2017 to discuss highlights of the third
quarter of 2017 operating results. The conference call can be
accessed by dialing (866) 415-3113 (domestic) or +1 (678) 509-7544
(international) and entering passcode 5689819.
The conference call will also be webcast simultaneously on
Generac's website (http://www.generac.com), 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 5689819. The telephonic replay will be available for 7
days.
About Generac
Since 1959, Generac has been a leading designer and manufacturer
of a wide range of power generation equipment and other engine
powered products. As a leader in power equipment serving
residential, light commercial, and industrial markets, Generac's
power products are available globally through a broad network of
independent dealers, distributors, retailers, 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
Generac products;
- availability, cost and quality of raw materials and key
components used in producing Generac products;
- the impact on our results of possible fluctuations in interest
rates and foreign currency exchange rates;
- the possibility that the expected synergies, efficiencies and
cost savings of our acquisitions will not be realized, or will not
be realized within the expected time period;
- the risk that our acquisitions will not be integrated
successfully;
- difficulties Generac may encounter as its business expands
globally;
- 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;
- loss of key management and employees;
- increase in product and other liability claims or recalls;
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 U.S. Securities and
Exchange Commission (“SEC”), particularly in the Risk Factors
section of the 2016 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.
Reconciliations to GAAP Financial Metrics
Adjusted EBITDA
The computation of adjusted EBITDA attributable to the Company
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
non-controlling 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 non-controlling
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 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 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 – Finance (262) 544-4811
x2675Michael.Harris@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, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
457,253 |
|
|
$ |
373,121 |
|
|
$ |
1,184,443 |
|
|
$ |
1,027,032 |
|
|
Costs of goods
sold |
|
299,784 |
|
|
|
235,349 |
|
|
|
782,028 |
|
|
|
667,053 |
|
|
Gross profit |
|
157,469 |
|
|
|
137,772 |
|
|
|
402,415 |
|
|
|
359,979 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling
and service |
|
44,402 |
|
|
|
44,429 |
|
|
|
127,702 |
|
|
|
124,064 |
|
|
Research
and development |
|
10,864 |
|
|
|
9,426 |
|
|
|
31,732 |
|
|
|
27,512 |
|
|
General
and administrative |
|
22,102 |
|
|
|
18,066 |
|
|
|
64,436 |
|
|
|
55,492 |
|
|
Amortization of intangibles |
|
7,242 |
|
|
|
9,511 |
|
|
|
21,554 |
|
|
|
25,525 |
|
|
Total
operating expenses |
|
84,610 |
|
|
|
81,432 |
|
|
|
245,424 |
|
|
|
232,593 |
|
|
Income from
operations |
|
72,859 |
|
|
|
56,340 |
|
|
|
156,991 |
|
|
|
127,386 |
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
Interest
expense |
|
(10,672 |
) |
|
|
(11,299 |
) |
|
|
(32,353 |
) |
|
|
(33,714 |
) |
|
Investment income |
|
14 |
|
|
|
– |
|
|
|
57 |
|
|
|
36 |
|
|
Loss on
change in contractual interest rate |
|
– |
|
|
|
(2,957 |
) |
|
|
– |
|
|
|
(2,957 |
) |
|
Costs
related to acquisition |
|
(51 |
) |
|
|
(577 |
) |
|
|
(372 |
) |
|
|
(994 |
) |
|
Other,
net |
|
(1,519 |
) |
|
|
19 |
|
|
|
(2,733 |
) |
|
|
564 |
|
|
Total
other expense, net |
|
(12,228 |
) |
|
|
(14,814 |
) |
|
|
(35,401 |
) |
|
|
(37,065 |
) |
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes |
|
60,631 |
|
|
|
41,526 |
|
|
|
121,590 |
|
|
|
90,321 |
|
|
Provision for income
taxes |
|
20,581 |
|
|
|
15,514 |
|
|
|
42,946 |
|
|
|
33,154 |
|
|
Net income |
|
40,050 |
|
|
|
26,012 |
|
|
|
78,644 |
|
|
|
57,167 |
|
|
Net income (loss)
attributable to noncontrolling interests |
|
341 |
|
|
|
(171 |
) |
|
|
433 |
|
|
|
(112 |
) |
|
Net income attributable
to Generac Holdings Inc. |
$ |
39,709 |
|
|
$ |
26,183 |
|
|
$ |
78,211 |
|
|
$ |
57,279 |
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to common shareholders per common share -
basic: |
$ |
0.64 |
|
|
$ |
0.41 |
|
|
$ |
1.27 |
|
|
$ |
0.87 |
|
|
Weighted
average common shares outstanding - basic: |
|
61,758,190 |
|
|
|
64,615,935 |
|
|
|
62,094,807 |
|
|
|
65,505,469 |
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to common shareholders per common share -
diluted: |
$ |
0.64 |
|
|
$ |
0.40 |
|
|
$ |
1.26 |
|
|
$ |
0.87 |
|
|
Weighted
average common shares outstanding - diluted: |
|
62,316,788 |
|
|
|
65,126,117 |
|
|
|
62,703,269 |
|
|
|
65,992,127 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
43,213 |
|
|
$ |
26,647 |
|
|
$ |
92,177 |
|
|
$ |
45,723 |
|
|
|
|
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Balance Sheets |
|
(U.S. Dollars in Thousands, Except Share and Per Share
Data) |
|
|
|
|
|
|
|
September
30, |
|
December
31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(Unaudited) |
|
(Audited) |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
128,780 |
|
|
$ |
67,272 |
|
|
Accounts
receivable, less allowance for doubtful accounts |
|
320,626 |
|
|
|
241,857 |
|
|
Inventories |
|
349,023 |
|
|
|
349,731 |
|
|
Prepaid
expenses and other assets |
|
11,720 |
|
|
|
24,649 |
|
|
Total
current assets |
|
810,149 |
|
|
|
683,509 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
218,658 |
|
|
|
212,793 |
|
|
|
|
|
|
|
Customer lists,
net |
|
43,404 |
|
|
|
45,312 |
|
|
Patents, net |
|
41,955 |
|
|
|
48,061 |
|
|
Other intangible
assets, net |
|
2,571 |
|
|
|
2,925 |
|
|
Tradenames, net |
|
154,643 |
|
|
|
158,874 |
|
|
Goodwill |
|
720,059 |
|
|
|
704,640 |
|
|
Deferred income
taxes |
|
4,310 |
|
|
|
3,337 |
|
|
Other assets |
|
5,225 |
|
|
|
2,233 |
|
|
Total assets |
$ |
2,000,974 |
|
|
$ |
1,861,684 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
$ |
26,226 |
|
|
$ |
31,198 |
|
|
Accounts
payable |
|
190,207 |
|
|
|
181,519 |
|
|
Accrued
wages and employee benefits |
|
28,266 |
|
|
|
21,189 |
|
|
Other
accrued liabilities |
|
109,362 |
|
|
|
93,068 |
|
|
Current
portion of long-term borrowings and capital lease obligations |
|
104,682 |
|
|
|
14,965 |
|
|
Total
current liabilities |
|
458,743 |
|
|
|
341,939 |
|
|
|
|
|
|
|
Long-term borrowings
and capital lease obligations |
|
908,101 |
|
|
|
1,006,758 |
|
|
Deferred income
taxes |
|
49,528 |
|
|
|
17,278 |
|
|
Other long-term
liabilities |
|
69,556 |
|
|
|
61,459 |
|
|
Total liabilities |
|
1,485,928 |
|
|
|
1,427,434 |
|
|
|
|
|
|
|
Redeemable
noncontrolling interests |
|
41,797 |
|
|
|
33,138 |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Common
stock, par value $0.01, 500,000,000 shares authorized, 70,611,513
and 70,261,481 |
|
|
|
|
shares issued at September 30, 2017 and December 31, 2016,
respectively |
|
706 |
|
|
|
702 |
|
|
Additional paid-in capital |
|
456,156 |
|
|
|
449,049 |
|
|
Treasury
stock, at cost |
|
(293,969 |
) |
|
|
(262,402 |
) |
|
Excess
purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained
earnings |
|
535,172 |
|
|
|
456,052 |
|
|
Accumulated other comprehensive loss |
|
(22,802 |
) |
|
|
(40,163 |
) |
|
Stockholders' equity attributable to Generac Holdings, Inc. |
|
473,147 |
|
|
|
401,122 |
|
|
Noncontrolling interests |
|
102 |
|
|
|
(10 |
) |
|
Total
stockholders’ equity |
|
473,249 |
|
|
|
401,112 |
|
|
Total liabilities and
stockholders’ equity |
$ |
2,000,974 |
|
|
$ |
1,861,684 |
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Statements of Cash Flows |
|
(U.S. Dollars in Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2017 |
|
|
2016 |
|
|
Operating
activities |
|
|
|
|
Net
income |
$ |
78,644 |
|
|
$ |
57,167 |
|
|
Adjustment to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
17,137 |
|
|
|
15,818 |
|
|
Amortization of intangible assets |
|
21,554 |
|
|
|
25,525 |
|
|
Amortization of original issue discount and deferred financing
costs |
|
2,400 |
|
|
|
3,229 |
|
|
Loss on
change in contractual interest rate |
|
– |
|
|
|
2,957 |
|
|
Deferred
income taxes |
|
28,703 |
|
|
|
22,909 |
|
|
Share-based compensation expense |
|
8,402 |
|
|
|
7,805 |
|
|
Other |
|
361 |
|
|
|
(45 |
) |
|
Net
changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
|
Accounts
receivable |
|
(70,108 |
) |
|
|
(11,642 |
) |
|
Inventories |
|
16,738 |
|
|
|
6,177 |
|
|
Other
assets |
|
(3,852 |
) |
|
|
2,663 |
|
|
Accounts
payable |
|
(206 |
) |
|
|
(2,618 |
) |
|
Accrued
wages and employee benefits |
|
6,288 |
|
|
|
4,981 |
|
|
Other
accrued liabilities |
|
17,319 |
|
|
|
1,341 |
|
|
Excess
tax benefits from equity awards |
|
(661 |
) |
|
|
(6,754 |
) |
|
Net cash
provided by operating activities |
|
122,719 |
|
|
|
129,513 |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
Proceeds
from sale of property and equipment |
|
77 |
|
|
|
1,349 |
|
|
Expenditures for property and equipment |
|
(16,658 |
) |
|
|
(20,847 |
) |
|
Acquisition of business, net of cash acquired |
|
1,257 |
|
|
|
(61,386 |
) |
|
Net cash
used in investing activities |
|
(15,324 |
) |
|
|
(80,884 |
) |
|
|
|
|
|
|
Financing
activities |
|
|
|
|
Proceeds
from short-term borrowings |
|
74,443 |
|
|
|
14,117 |
|
|
Proceeds
from long-term borrowings |
|
3,069 |
|
|
|
– |
|
|
Repayments of short-term borrowings |
|
(80,952 |
) |
|
|
(8,244 |
) |
|
Repayments of long-term borrowings and capital lease
obligations |
|
(13,051 |
) |
|
|
(10,976 |
) |
|
Stock
repurchases |
|
(30,012 |
) |
|
|
(99,934 |
) |
|
Payment
of debt issuance costs |
|
(1,517 |
) |
|
|
– |
|
|
Cash
dividends paid |
|
– |
|
|
|
(76 |
) |
|
Taxes
paid related to the net share settlement of equity awards |
|
(2,479 |
) |
|
|
(12,308 |
) |
|
Proceeds
from exercise of stock options |
|
1,717 |
|
|
|
– |
|
|
Excess
tax benefits from equity awards |
|
– |
|
|
|
6,754 |
|
|
Net cash
used in financing activities |
|
(48,782 |
) |
|
|
(110,667 |
) |
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
2,895 |
|
|
|
344 |
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents |
|
61,508 |
|
|
|
(61,694 |
) |
|
Cash and
cash equivalents at beginning of period |
|
67,272 |
|
|
|
115,857 |
|
|
Cash and
cash equivalents at end of period |
$ |
128,780 |
|
|
$ |
54,163 |
|
|
|
|
|
|
|
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 |
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
Domestic |
$ |
364,323 |
|
|
$ |
299,095 |
|
|
$ |
918,727 |
|
|
$ |
833,831 |
International |
|
92,930 |
|
|
|
74,026 |
|
|
|
265,716 |
|
|
|
193,201 |
Total net
sales |
$ |
457,253 |
|
|
$ |
373,121 |
|
|
$ |
1,184,443 |
|
|
$ |
1,027,032 |
|
|
|
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
|
|
|
Residential products |
$ |
251,921 |
|
|
$ |
192,856 |
|
|
$ |
604,894 |
|
|
$ |
533,572 |
Commercial & industrial products |
|
174,538 |
|
|
|
149,676 |
|
|
|
496,736 |
|
|
|
409,396 |
Other |
|
30,794 |
|
|
|
30,589 |
|
|
|
82,813 |
|
|
|
84,064 |
Total net
sales |
$ |
457,253 |
|
|
$ |
373,121 |
|
|
$ |
1,184,443 |
|
|
$ |
1,027,032 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Domestic |
$ |
83,128 |
|
|
$ |
69,309 |
|
|
$ |
190,131 |
|
|
$ |
173,521 |
International |
|
5,625 |
|
|
|
3,527 |
|
|
|
16,471 |
|
|
|
13,050 |
Total
adjusted EBITDA (1) |
$ |
88,753 |
|
|
$ |
72,836 |
|
|
$ |
206,602 |
|
|
$ |
186,571 |
|
|
|
|
|
|
|
|
|
|
|
(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) |
|
|
|
|
|
|
|
|
Net
income to Adjusted EBITDA reconciliation |
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
39,709 |
|
|
$ |
26,183 |
|
|
$ |
78,211 |
|
|
$ |
57,279 |
|
Net income
(loss) attributable to noncontrolling interests (1) |
|
341 |
|
|
|
(171 |
) |
|
|
433 |
|
|
|
(112 |
) |
Net
income |
|
40,050 |
|
|
|
26,012 |
|
|
|
78,644 |
|
|
|
57,167 |
|
Interest
expense |
|
10,672 |
|
|
|
11,299 |
|
|
|
32,353 |
|
|
|
33,714 |
|
Depreciation and amortization |
|
13,108 |
|
|
|
14,900 |
|
|
|
38,691 |
|
|
|
41,343 |
|
Provision
for income taxes |
|
20,581 |
|
|
|
15,514 |
|
|
|
42,946 |
|
|
|
33,154 |
|
Non-cash
write-down and other adjustments (2) |
|
756 |
|
|
|
(1,093 |
) |
|
|
2,632 |
|
|
|
1,689 |
|
Non-cash
share-based compensation expense (3) |
|
2,584 |
|
|
|
2,419 |
|
|
|
8,402 |
|
|
|
7,805 |
|
Loss on
change in contractual interest rate (4) |
|
- |
|
|
|
2,957 |
|
|
|
- |
|
|
|
2,957 |
|
Transaction
costs and credit facility fees (5) |
|
234 |
|
|
|
739 |
|
|
|
970 |
|
|
|
1,499 |
|
Business
optimization expenses (6) |
|
487 |
|
|
|
58 |
|
|
|
1,933 |
|
|
|
7,164 |
|
Other |
|
281 |
|
|
|
31 |
|
|
|
31 |
|
|
|
79 |
|
Adjusted
EBITDA |
|
88,753 |
|
|
|
72,836 |
|
|
|
206,602 |
|
|
|
186,571 |
|
Adjusted
EBITDA attributable to noncontrolling interests |
|
1,178 |
|
|
|
708 |
|
|
|
3,589 |
|
|
|
3,015 |
|
Adjusted
EBITDA attributable to Generac Holdings Inc. |
$ |
87,575 |
|
|
$ |
72,128 |
|
|
$ |
203,013 |
|
|
$ |
183,556 |
|
|
|
|
|
|
|
|
|
(1) Includes the noncontrolling interests' share of
expenses related to Pramac purchase accounting, including the
step-up in value of inventories and intangible amortization, of
$1.2 million and $3.4 million for the three and nine months ended
September 30, 2017, respectively, and $1.3 million and $6.9 million
for the three and nine months ended September 30, 2016,
respectively. |
|
|
|
|
|
|
|
|
(2) Includes gains/losses on disposals of assets,
unrealized mark-to-market adjustments on commodity contracts, and
certain foreign currency and purchase accounting related
adjustments. A full description of these and the other
reconciliation adjustments contained in these schedules is included
in Generac's SEC filings. |
|
|
|
|
|
|
|
|
(3) Represents share-based compensation expense to account for
stock options, restricted stock and other stock awards over their
respective vesting periods. |
|
|
|
|
|
|
|
|
(4) For the three and nine months ended September 30, 2016,
represents a non-cash loss relating to the continued 25 basis point
increase in borrowing costs as a result of the credit agreement
leverage ratio remaining above 3.0 times based on projections at
that time. |
|
|
|
|
|
|
|
|
(5) Represents transaction costs incurred directly in
connection with any investment, as defined in our credit agreement,
equity issuance or debt issuance or refinancing, together with
certain fees relating to our senior secured credit facilities. |
|
|
|
|
|
|
|
|
(6) For the three and nine months ended September 30, 2017,
represents severance and other non-recurring plant consolidation
costs. For the three and nine months ended September 30, 2016,
primarily represents charges relating to business optimization and
restructuring costs to address the significant and extended
downturn for capital spending within the oil & gas industry,
consisting of $2.7 million classified within cost of goods sold and
$4.4 million classified within operating expenses. |
|
|
|
|
|
|
|
|
Net
income to Adjusted net income reconciliation |
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
39,709 |
|
|
$ |
26,183 |
|
|
$ |
78,211 |
|
|
$ |
57,279 |
|
Net income
(loss) attributable to noncontrolling interests (1) |
|
341 |
|
|
|
(171 |
) |
|
|
433 |
|
|
|
(112 |
) |
Net
income |
|
40,050 |
|
|
|
26,012 |
|
|
|
78,644 |
|
|
|
57,167 |
|
Provision
for income taxes |
|
20,581 |
|
|
|
15,514 |
|
|
|
42,946 |
|
|
|
33,154 |
|
Income
before provision for income taxes |
|
60,631 |
|
|
|
41,526 |
|
|
|
121,590 |
|
|
|
90,321 |
|
Amortization of intangible assets |
|
7,242 |
|
|
|
9,511 |
|
|
|
21,554 |
|
|
|
25,525 |
|
Amortization of deferred finance costs and original issue
discount |
|
1,092 |
|
|
|
1,107 |
|
|
|
2,400 |
|
|
|
3,229 |
|
Loss on
change in contractual interest rate (4) |
|
- |
|
|
|
2,957 |
|
|
|
- |
|
|
|
2,957 |
|
Transaction
costs and other purchase accounting adjustments (7) |
|
(35 |
) |
|
|
469 |
|
|
|
979 |
|
|
|
5,159 |
|
Business
optimization expenses (6) |
|
487 |
|
|
|
58 |
|
|
|
1,933 |
|
|
|
7,164 |
|
Adjusted
net income before provision for income taxes |
|
69,417 |
|
|
|
55,628 |
|
|
|
148,456 |
|
|
|
134,355 |
|
Cash income
tax expense (8) |
|
(10,878 |
) |
|
|
(2,325 |
) |
|
|
(19,607 |
) |
|
|
(5,595 |
) |
Adjusted
net income |
|
58,539 |
|
|
|
53,303 |
|
|
|
128,849 |
|
|
|
128,760 |
|
Adjusted
net income attributable to noncontrolling interests |
|
697 |
|
|
|
58 |
|
|
|
1,912 |
|
|
|
1,939 |
|
Adjusted
net income attributable to Generac Holdings Inc. |
$ |
57,842 |
|
|
$ |
53,245 |
|
|
$ |
126,937 |
|
|
$ |
126,821 |
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to Generac Holdings Inc. per
common share - diluted: |
$ |
0.93 |
|
|
$ |
0.82 |
|
|
$ |
2.02 |
|
|
$ |
1.92 |
|
Weighted
average common shares outstanding - diluted: |
|
62,316,788 |
|
|
|
65,126,117 |
|
|
|
62,703,269 |
|
|
|
65,992,127 |
|
|
|
|
|
|
|
|
|
(7) Represents transaction costs incurred directly in
connection with any investment, as defined in our credit agreement,
equity issuance or debt issuance or refinancing, and certain
purchase accounting adjustments. |
|
|
|
|
|
|
|
|
(8) Amount for the three and nine months ended September 30,
2017 is based on an anticipated cash income tax rate of
approximately 17% for the full year ended 2017. Amount for the
three and nine months ended September 30, 2016 is based on an
anticipated cash income tax rate of approximately 6% for the full
year ended 2016. 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, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
67,045 |
|
|
$ |
48,278 |
|
|
$ |
122,719 |
|
|
$ |
129,513 |
|
Expenditures for property and equipment |
|
(6,628 |
) |
|
|
(6,843 |
) |
|
|
(16,658 |
) |
|
|
(20,847 |
) |
Free cash
flow |
$ |
60,417 |
|
|
$ |
41,435 |
|
|
$ |
106,061 |
|
|
$ |
108,666 |
|
|
|
|
|
|
|
|
|
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