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 first quarter ended March 31, 2018.
First Quarter 2018 Highlights
- Net sales increased organically 20.3% to $397.6 million during
the first quarter of 2018 as compared to $330.5 million in the
prior-year first quarter. Core sales growth, which also
excludes the impact of foreign currency, was approximately
17%.
- Gross profit margin improved 230 basis points to 35.2% as
compared to 32.9% in the first quarter of 2017.
- Net income attributable to the Company during the first quarter
was $33.6 million, or $0.42 per share, as compared to $12.2
million, or $0.20 per share, for the same period of 2017.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $46.1 million, or
$0.74 per share, as compared to $24.7 million, or $0.39 per share,
in the first quarter of 2017.
- Adjusted EBITDA attributable to the Company, as defined in the
accompanying reconciliation schedules, was $70.2 million as
compared to $45.7 million in the first quarter last
year.
- Cash flow from operations was $29.0 million as compared to
($5.2) million in the prior year quarter. Free cash flow, as
defined in the accompanying reconciliation schedules, was $23.3
million as compared to ($8.1) million in the first quarter of
2017.
- The Company repurchased 560,000 shares of its common stock
during the first quarter for $25.7 million under its current share
repurchase program.
- As previously disclosed in a separate press release on February
13, 2018, the Company entered into a purchase agreement to acquire
the shares of Selmec Equipos Industriales, S.A. de C.V., a leading
generator manufacturer and services company headquartered in Mexico
City. The closing date of the transaction is still
undetermined pending receipt of regulatory approval, but is likely
to occur during the second quarter of 2018.
“We are excited with our start to 2018 as we continued to see
very strong year-over-year sales growth in the first quarter which
drove improvements in our margins and free cash flow,” said Aaron
Jagdfeld, President and Chief Executive Officer. “The
fundamental demand environment for home standby and portable
generators continues to be robust, benefitting from increased power
outage activity in recent quarters contributing to excellent growth
in both in-home consultations and end-user activations.
Additionally, shipments of commercial and industrial (C&I)
products also experienced strong growth during the quarter driven
by the ongoing replacement cycle for mobile products, as well as
organic growth within International which led to year-over-year
margin improvement in the segment.”
Additional First Quarter 2018 Consolidated
Highlights
Residential product sales increased 23.5% to $190.5 million as
compared to $154.2 million in the prior year. C&I product
sales increased 16.2% to $175.1 million as compared to $150.8
million in the prior year, with core sales growth was approximately
11%.
Gross profit margin improved 230 basis points to 35.2% as
compared to 32.9% in the prior-year first quarter, which was due to
a variety of factors. The improvement was most notably due to
favorable pricing and mix impacts along with improved leverage of
fixed manufacturing costs on the significant increase in sales,
which were partially offset by higher commodity prices. Operating
expenses increased $5.7 million, or 7.4%, as compared to the first
quarter of 2017. The increase was primarily driven by an
increase in employee costs including higher incentive compensation
along with a stronger Euro, partially offset by lower promotional
costs benefitting from the higher power outage environment as well
as lower intangible amortization. Cash flow from operations was
$29.0 million as compared to ($5.2) million in the prior-year first
quarter, and free cash flow was $23.3 million as compared to ($8.1)
million in the same quarter last year. The improvement in
cash flow was driven by a variety of factors including the increase
in operating earnings as compared to the prior year and lower
working capital usage during the current year, partially offset by
higher capital expenditures. The current year earnings per share
calculation of $0.42 includes the impact of a $7.7 million
adjustment to increase the value of the redeemable noncontrolling
interest for the Pramac acquisition, resulting in a $0.12 reduction
in earnings per share. Any adjustments to the redemption value are
recorded directly to retained earnings. However, the
redemption value adjustments are required to be reflected in the
earnings per share calculation as detailed in the accompanying
reconciliation schedules. On January 1, 2018, the Company adopted
Accounting Standards Update 2014-09, Revenue from Contracts with
Customers, and all related amendments, commonly known as the “new
revenue recognition standard”. The full retrospective method
was elected under this standard, which requires application to all
periods presented, and the prior-year first quarter of 2017 results
have been restated accordingly. However, the adoption of this
standard did not have a material impact on the Company’s financial
statements.
Business Segment Results
Domestic Segment
Domestic segment sales increased 21.5% to $300.2 million as
compared to $247.2 million in the prior-year quarter. The
current-year first quarter experienced strong growth in shipments
of home standby and portable generators driven by increased outage
activity, along with the continuation of significant growth for
C&I mobile products. Also contributing to the
year-over-year sales growth were increases in service parts.
Adjusted EBITDA for the segment was $65.5 million, or 21.8% of
net sales, as compared to $41.9 million in the prior year, or 16.9%
of net sales. Adjusted EBITDA margin in the current year
benefitted from a favorable pricing environment including lower
promotional costs, favorable mix and improved overall leverage of
fixed operating costs on the higher organic sales volumes.
These impacts were partially offset by higher commodity prices and
an increase in employee costs including higher incentive
compensation.
International Segment
International segment sales increased 16.9% to $97.4 million as
compared to $83.3 million in the prior-year quarter, with core
sales growth of approximately 5%. The overall growth compared
to the prior year was primarily due to the favorable impact of the
stronger Euro along with some broad organic growth from the Pramac,
Ottomotores and Motortech businesses.
Adjusted EBITDA for the segment, before deducting for
non-controlling interests, improved to $6.3 million, or 6.5% of net
sales, as compared to $4.8 million, or 5.8% of net sales, in the
prior year. The improvement in adjusted EBITDA margin as
compared to the prior year was primarily due to favorable sales mix
and increased leverage of fixed operating costs on the increase in
organic sales. These favorable impacts were partially offset
by higher commodity prices along with the expansion of certain
branch operations.
2018 Outlook The Company is increasing its
prior guidance for revenue growth for full-year 2018, which is due
to improving end-market conditions for both residential and C&I
products. Full year net sales are now expected to improve
between 6 to 8% over the prior year, which is an increase from the
3 to 5% growth previously expected. Core sales growth is
expected to be between 5 to 6%, which is an increase from the 2 to
3% growth previously expected. Importantly, this guidance
does not yet include any impact from the Selmec acquisition, as the
specific timing of closing is undetermined pending regulatory
approvals. Also, this top-line guidance assumes no “major”
outage events and a baseline power outage severity level similar to
the longer-term average for the remainder of the year. Should the
baseline power outage environment in 2018 continue to be higher, or
if there is “major” event during the year, the Company could exceed
these expectations.
Net income margins, before deducting for non-controlling
interests, are still expected to be between 9.5 to 10.0% for the
full-year 2018, with adjusted EBITDA margins, also before deducting
for non-controlling interests, still expected to be between 19.0 to
19.5% for the year. This updated guidance assumes that
additional inflationary pressures from higher commodity prices,
tariffs, the weaker U.S. dollar and certain wage pressures will be
largely offset by the benefit from additional leverage of fixed
operating costs on the expected higher core sales growth.
Operating and free cash flow generation is expected to be
strong, with the conversion of adjusted net income to free cash
flow expected to be over 90%.
Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT
on Wednesday, May 2, 2018 to discuss highlights of the first
quarter of 2018 operating results. The conference call can be
accessed by dialing (866) 415-3113 (domestic) or +1 (678) 509-7544
(international) and entering passcode 1957709.
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 1957709. The telephonic replay will be available for 7
days.
About Generac
Founded in 1959, Generac is 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, foreign currency exchange rates, commodities and product
mix;
- 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;
- 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 2017 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, 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 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.
|
Generac Holdings Inc. |
Condensed Consolidated Statements of Comprehensive
Income |
(U.S. Dollars in Thousands, Except Share and Per Share
Data) |
(Unaudited) |
|
|
|
|
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
|
|
|
|
Net sales |
$ |
397,634 |
|
|
$ |
330,485 |
|
Costs of goods
sold |
|
257,645 |
|
|
|
221,685 |
|
Gross profit |
|
139,989 |
|
|
|
108,800 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Selling
and service |
|
42,682 |
|
|
|
39,467 |
|
Research
and development |
|
11,853 |
|
|
|
10,287 |
|
General
and administrative |
|
23,475 |
|
|
|
20,973 |
|
Amortization of intangibles |
|
5,632 |
|
|
|
7,183 |
|
Total
operating expenses |
|
83,642 |
|
|
|
77,910 |
|
Income from
operations |
|
56,347 |
|
|
|
30,890 |
|
|
|
|
|
Other (expense)
income: |
|
|
|
Interest
expense |
|
(10,113 |
) |
|
|
(10,788 |
) |
Investment income |
|
346 |
|
|
|
5 |
|
Costs
related to acquisition |
|
(11 |
) |
|
|
(185 |
) |
Other,
net |
|
(1,383 |
) |
|
|
83 |
|
Total
other expense, net |
|
(11,161 |
) |
|
|
(10,885 |
) |
|
|
|
|
Income before provision
for income taxes |
|
45,186 |
|
|
|
20,005 |
|
Provision for income
taxes |
|
11,416 |
|
|
|
7,823 |
|
Net income |
|
33,770 |
|
|
|
12,182 |
|
Net income attributable
to noncontrolling interests |
|
125 |
|
|
|
7 |
|
Net income attributable
to Generac Holdings Inc. |
$ |
33,645 |
|
|
$ |
12,175 |
|
|
|
|
|
|
|
|
|
Net
income attributable to Generac Holdings Inc. per common share -
basic: |
$ |
0.42 |
|
|
$ |
0.21 |
|
Weighted
average common shares outstanding - basic: |
|
61,943,495 |
|
|
|
62,366,263 |
|
|
|
|
|
Net
income attributable to Generac Holdings Inc. per common share -
diluted: |
$ |
0.42 |
|
|
$ |
0.20 |
|
Weighted
average common shares outstanding - diluted: |
|
62,474,936 |
|
|
|
62,936,126 |
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
44,703 |
|
|
$ |
15,720 |
|
|
|
|
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Balance Sheets |
|
(U.S. Dollars in Thousands, Except Share and Per Share
Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
146,162 |
|
|
$ |
138,472 |
|
|
Accounts
receivable, less allowance for doubtful accounts |
|
262,170 |
|
|
|
279,294 |
|
|
Inventories |
|
439,745 |
|
|
|
387,049 |
|
|
Prepaid
expenses and other assets |
|
18,768 |
|
|
|
19,741 |
|
|
Total
current assets |
|
866,845 |
|
|
|
824,556 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
232,023 |
|
|
|
230,380 |
|
|
|
|
|
|
|
Customer lists,
net |
|
39,516 |
|
|
|
41,064 |
|
|
Patents, net |
|
37,310 |
|
|
|
39,617 |
|
|
Other intangible
assets, net |
|
2,302 |
|
|
|
2,401 |
|
|
Tradenames, net |
|
151,972 |
|
|
|
152,683 |
|
|
Goodwill |
|
724,206 |
|
|
|
721,523 |
|
|
Deferred income
taxes |
|
3,466 |
|
|
|
3,238 |
|
|
Other assets |
|
19,828 |
|
|
|
10,502 |
|
|
Total assets |
$ |
2,077,468 |
|
|
$ |
2,025,964 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
$ |
31,414 |
|
|
$ |
20,602 |
|
|
Accounts
payable |
|
228,070 |
|
|
|
233,639 |
|
|
Accrued
wages and employee benefits |
|
29,014 |
|
|
|
27,992 |
|
|
Other
accrued liabilities |
|
122,546 |
|
|
|
112,618 |
|
|
Current
portion of long-term borrowings and capital lease obligations |
|
1,593 |
|
|
|
1,572 |
|
|
Total
current liabilities |
|
412,637 |
|
|
|
396,423 |
|
|
|
|
|
|
|
Long-term borrowings
and capital lease obligations |
|
907,459 |
|
|
|
906,548 |
|
|
Deferred income
taxes |
|
49,140 |
|
|
|
41,852 |
|
|
Other long-term
liabilities |
|
83,634 |
|
|
|
82,893 |
|
|
Total liabilities |
|
1,452,870 |
|
|
|
1,427,716 |
|
|
|
|
|
|
|
Redeemable
noncontrolling interests |
|
54,404 |
|
|
|
43,929 |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Common
stock, par value $0.01, 500,000,000 shares authorized, 70,989,164
and 70,820,173 |
|
|
|
|
shares
issued at March 31, 2018 and December 31, 2017, respectively |
|
707 |
|
|
|
708 |
|
|
Additional paid-in capital |
|
464,060 |
|
|
|
459,816 |
|
|
Treasury
stock, at cost |
|
(321,025 |
) |
|
|
(294,005 |
) |
|
Excess
purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained
earnings |
|
636,814 |
|
|
|
610,835 |
|
|
Accumulated other comprehensive loss |
|
(8,372 |
) |
|
|
(21,198 |
) |
|
Stockholders’ equity attributable to Generac Holdings,
Inc. |
|
570,068 |
|
|
|
554,040 |
|
|
Noncontrolling interests |
|
126 |
|
|
|
279 |
|
|
Total
stockholders' equity |
|
570,194 |
|
|
|
554,319 |
|
|
Total liabilities and
stockholders’ equity |
$ |
2,077,468 |
|
|
$ |
2,025,964 |
|
|
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Statements of Cash Flows |
|
(U.S. Dollars in Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
Operating
activities |
|
|
|
|
Net
income |
$ |
33,770 |
|
|
$ |
12,182 |
|
|
Adjustment to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
6,051 |
|
|
|
5,414 |
|
|
Amortization of intangible assets |
|
5,632 |
|
|
|
7,183 |
|
|
Amortization of original issue discount and deferred financing
costs |
|
1,177 |
|
|
|
490 |
|
|
Deferred
income taxes |
|
4,283 |
|
|
|
6,530 |
|
|
Share-based compensation expense |
|
3,106 |
|
|
|
2,632 |
|
|
Other |
|
102 |
|
|
|
120 |
|
|
Net
changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
|
Accounts receivable |
|
18,744 |
|
|
|
20,368 |
|
|
Inventories |
|
(48,798 |
) |
|
|
(35,675 |
) |
|
Other assets |
|
2,658 |
|
|
|
192 |
|
|
Accounts payable |
|
(9,439 |
) |
|
|
(24,975 |
) |
|
Accrued wages and employee benefits |
|
813 |
|
|
|
697 |
|
|
Other accrued liabilities |
|
11,065 |
|
|
|
103 |
|
|
Excess tax benefits from equity awards |
|
(196 |
) |
|
|
(436 |
) |
|
Net cash
provided by (used in) operating activities |
|
28,968 |
|
|
|
(5,175 |
) |
|
|
|
|
|
|
Investing
activities |
|
|
|
|
Proceeds
from sale of property and equipment |
|
1 |
|
|
|
35 |
|
|
Proceeds
from beneficial interests in securitization transactions |
|
867 |
|
|
|
629 |
|
|
Expenditures for property and equipment |
|
(6,496 |
) |
|
|
(3,548 |
) |
|
Acquisition of business, net of cash acquired |
|
(369 |
) |
|
|
1,610 |
|
|
Net cash
used in investing activities |
|
(5,997 |
) |
|
|
(1,274 |
) |
|
|
|
|
|
|
Financing
activities |
|
|
|
|
Proceeds
from short-term borrowings |
|
14,315 |
|
|
|
31,004 |
|
|
Proceeds
from long-term borrowings |
|
– |
|
|
|
1,278 |
|
|
Repayments of short-term borrowings |
|
(3,911 |
) |
|
|
(35,194 |
) |
|
Repayments of long-term borrowings and capital lease
obligations |
|
(408 |
) |
|
|
(1,056 |
) |
|
Stock
repurchases |
|
(25,656 |
) |
|
|
– |
|
|
Cash
dividends paid to noncontrolling interest of subsidiary |
|
(314 |
) |
|
|
– |
|
|
Payment
of debt issuance costs |
|
– |
|
|
|
– |
|
|
Taxes
paid related to equity awards |
|
(1,626 |
) |
|
|
(1,903 |
) |
|
Proceeds
from exercise of stock options |
|
1,400 |
|
|
|
1,107 |
|
|
Net cash
used in financing activities |
|
(16,200 |
) |
|
|
(4,764 |
) |
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
919 |
|
|
|
1,435 |
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents |
|
7,690 |
|
|
|
(9,778 |
) |
|
Cash and
cash equivalents at beginning of period |
|
138,472 |
|
|
|
67,272 |
|
|
Cash and
cash equivalents at end of period |
$ |
146,162 |
|
|
$ |
57,494 |
|
|
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Segment Reporting and Product Class Information |
|
(U.S. Dollars in Thousands) |
|
|
|
|
Net Sales |
|
|
|
Three Months Ended March 31, |
|
Reportable Segments |
2018 |
|
2017 |
|
Domestic |
$ |
300,219 |
|
$ |
247,168 |
|
International |
|
97,415 |
|
|
83,317 |
|
Total net
sales |
$ |
397,634 |
|
$ |
330,485 |
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
Residential products |
$ |
190,474 |
|
$ |
154,217 |
|
Commercial & industrial products |
|
175,125 |
|
|
150,753 |
|
Other |
|
32,035 |
|
|
25,515 |
|
Total net
sales |
$ |
397,634 |
|
$ |
330,485 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
2017 |
|
Domestic |
$ |
65,475 |
|
$ |
41,891 |
|
International |
|
6,306 |
|
|
4,812 |
|
Total
adjusted EBITDA (1) |
$ |
71,781 |
|
$ |
46,703 |
|
|
|
|
|
|
|
(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 March 31, |
|
|
|
|
2018 |
|
2017 |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
33,645 |
|
|
$ |
12,175 |
|
Net income
attributable to noncontrolling interests |
|
125 |
|
|
|
7 |
|
Net
income |
|
|
|
33,770 |
|
|
|
12,182 |
|
Interest
expense |
|
|
|
10,113 |
|
|
|
10,788 |
|
Depreciation and amortization |
|
|
11,683 |
|
|
|
12,597 |
|
Income
taxes provision |
|
|
|
11,416 |
|
|
|
7,823 |
|
Non-cash
write-down and other adjustments (1) |
|
1,306 |
|
|
|
166 |
|
Non-cash
share-based compensation expense (2) |
|
3,106 |
|
|
|
2,632 |
|
Transaction
costs and credit facility fees (3) |
|
262 |
|
|
|
316 |
|
Business
optimization expenses (4) |
|
|
138 |
|
|
|
100 |
|
Other |
|
|
|
|
(13 |
) |
|
|
99 |
|
Adjusted
EBITDA |
|
|
|
71,781 |
|
|
|
46,703 |
|
Adjusted
EBITDA attributable to noncontrolling interests |
|
1,549 |
|
|
|
956 |
|
Adjusted
EBITDA attributable to Generac Holdings Inc. |
$ |
70,232 |
|
|
$ |
45,747 |
|
|
|
|
|
|
|
|
(1) 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. |
|
|
|
|
|
|
|
(2) Represents share-based compensation expense to account for
stock options, restricted stock and other stock awards over their
respective vesting periods. |
|
|
|
|
|
|
|
(3) 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. |
|
|
|
|
|
|
|
(4) Represents severance and other non-recurring restructuring
charges related to the consolidation of certain of our
facilities. |
|
|
|
|
|
|
|
Net
income to Adjusted net income reconciliation |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2018 |
|
2017 |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
33,645 |
|
|
$ |
12,175 |
|
Net income
attributable to noncontrolling interests |
|
125 |
|
|
|
7 |
|
Net
income |
|
|
|
33,770 |
|
|
|
12,182 |
|
Provision
for income taxes |
|
|
11,416 |
|
|
|
7,823 |
|
Income
before provision for income taxes |
|
45,186 |
|
|
|
20,005 |
|
Amortization of intangible assets |
|
|
5,632 |
|
|
|
7,183 |
|
Amortization of deferred finance costs and original issue
discount |
|
1,177 |
|
|
|
490 |
|
Transaction
costs and other purchase accounting adjustments (5) |
|
20 |
|
|
|
585 |
|
Business
optimization expenses (4) |
|
|
138 |
|
|
|
100 |
|
Adjusted
net income before provision for income taxes |
|
52,153 |
|
|
|
28,363 |
|
Cash income
tax expense (6) |
|
|
(5,410 |
) |
|
|
(3,087 |
) |
Adjusted
net income |
|
|
|
46,743 |
|
|
|
25,276 |
|
Adjusted
net income attributable to noncontrolling interests |
|
661 |
|
|
|
582 |
|
Adjusted
net income attributable to Generac Holdings Inc. |
$ |
46,082 |
|
|
$ |
24,694 |
|
|
|
|
|
|
|
|
Adjusted
net income attributable to Generac Holdings Inc. per common share -
diluted: |
$ |
0.74 |
|
|
$ |
0.39 |
|
Weighted
average common shares outstanding - diluted: |
|
62,474,936 |
|
|
|
62,936,126 |
|
|
|
|
|
|
|
|
(5)
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. |
|
|
|
|
|
|
|
(6) Amount for the three months ended March 31, 2018 is based
on an anticipated cash income tax rate at that time of
approximately 13% for the full year ended 2018. Amount for the
three months ended March 31, 2017 is based on an anticipated cash
income tax rate at that time of approximately 15% for the full year
ended 2017. 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 March 31, |
|
|
|
|
2018 |
|
2017 |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
28,968 |
|
|
$ |
(5,175 |
) |
Proceeds from beneficial interests in securitization
transactions |
|
867 |
|
|
|
629 |
|
Expenditures for property and equipment |
|
(6,496 |
) |
|
|
(3,548 |
) |
Free cash
flow |
|
|
$ |
23,339 |
|
|
$ |
(8,094 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings Per Share Calculation |
Three Months Ended March 31, |
|
|
|
|
2018 |
|
2017 |
Numerator |
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
33,645 |
|
|
$ |
12,175 |
|
Redeemable noncontrolling interest redemption value
adjustment |
|
(7,665 |
) |
|
|
614 |
|
Net income attributable to common shareholders |
$ |
25,980 |
|
|
$ |
12,789 |
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
Weighted average shares, basic |
|
|
61,943,495 |
|
|
|
62,366,263 |
|
Dilutive effect of stock compensation awards |
|
531,441 |
|
|
|
569,863 |
|
Diluted shares |
|
|
|
62,474,936 |
|
|
|
62,936,126 |
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per share |
|
|
|
Basic |
|
|
|
$ |
0.42 |
|
|
$ |
0.21 |
|
Diluted |
|
|
$ |
0.42 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
SOURCE: Generac Holdings Inc.
CONTACT: Michael W. HarrisVice President – Finance (262)
544-4811 x2675Michael.Harris@Generac.com
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