Strong execution drives record quarterly results; Raising
outlook for remainder of 2018
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,
2018.
Third Quarter 2018 Highlights
- Net sales increased 22.7% to $559.5 million during the third
quarter of 2018 as compared to $455.8 million in the prior-year
third quarter, including $13.4 million of contribution from the
Selmec acquisition, which closed on June 1, 2018. Core sales
growth, which excludes both the impact of acquisitions and foreign
currency, was approximately 20%.
- Gross profit margin improved 110 basis points to 35.4% as
compared to 34.3% in the third quarter of 2017.
- Net income attributable to the Company during the third quarter
was $75.8 million, or $1.11 per share, as compared to $39.4
million, or $0.63 per share, for the same period of
2017.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $89.1 million, or
$1.43 per share, as compared to $57.4 million, or $0.92 per share,
in the third quarter of 2017.
- Adjusted EBITDA before deducting for non-controlling interests,
as defined in the accompanying reconciliation schedules, improved
to $124.5 million, or 22.2% of net sales, as compared to $88.4
million, or 19.4% of net sales, in the prior year.
- Cash flow from operations was $59.3 million as compared to
$66.3 million in the prior year quarter. Free cash flow, as
defined in the accompanying reconciliation schedules, was $47.0
million as compared to $60.4 million in the third quarter of
2017.
- The Company is increasing its full-year 2018 sales growth
guidance to approximately 20% with Adjusted EBITDA margins, before
deducting for non-controlling interests, of approximately
21.0%.
“Our third quarter results were a record for Generac as we
experienced broad based growth across all of our end markets,” said
Aaron Jagdfeld, President and Chief Executive Officer.
“Shipments of residential products were again particularly strong
with demand climbing to record levels as disruptions from power
outages continued to drive awareness around the home standby
category and the need for homeowners to have back-up power.
Sales of our C&I mobile and stationary products were also
strong during the quarter with rental, telecom, and healthcare
verticals experiencing outsized growth. With a healthy
backlog entering the fourth quarter, the fundamentals of our
business have never been stronger and we remain focused on
execution as we further drive shareholder value.”
Additional Third Quarter 2018 Consolidated
Highlights
Residential product sales increased 24.2% to $311.9 million as
compared to $251.2 million in the prior year. Recall that the
prior year quarter included the impacts from hurricanes Harvey,
Irma and Maria. C&I product sales increased 18.7% to
$206.4 million as compared to $173.8 million in the prior year,
with core sales growth of approximately 15%.
Gross profit margin improved 110 basis points to 35.4% as
compared to 34.3% in the prior-year third quarter. A
significant favorable mix shift towards home standby generator
sales drove the majority of this improvement, with price / cost
factors being largely neutral to gross margins relative to the
prior year. Operating expenses increased $7.7 million, or 9.2%, as
compared to the third quarter of 2017. The increase was
primarily driven by higher variable operating expenses given the
higher sales volumes, an increase in employee & incentive
compensation costs, and recurring operating expenses from the
Selmec acquisition. These items were partially offset by
lower promotion, marketing and intangible amortization
expenses.
Provision for income taxes for the current year quarter was
$20.1 million, or an effective tax rate of 20.8%, as compared to
$20.4 million, or 33.9% effective tax rate, for the prior year.
Cash flow from operations was $59.3 million as compared to $66.3
million in the prior-year third quarter, and free cash flow was
$47.0 million as compared to $60.4 million in the same quarter last
year. Higher operating earnings were more than offset by the
timing of certain cash flows related to taxes, interest, pensions,
capital expenditures and sales of extended warranties.
The current year earnings per share calculation of $1.11
includes the impact of a $6.9 million adjustment to increase the
value of the redeemable noncontrolling interest for the Pramac
acquisition, resulting in an $0.11 reduction in earnings per share.
Under U.S. GAAP accounting rules, 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. As a result, the prior-year 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 24.9% to $453.3 million as
compared to $362.9 million in the prior-year quarter. The
current-year quarter continued to experience strong growth in
shipments of home standby generators, C&I mobile products,
C&I stationary generators, and service parts, all of which
contributed to the year-over-year growth.
Adjusted EBITDA for the segment was $117.1 million, or 25.8% of
net sales, as compared to $82.8 million in the prior year, or 22.8%
of net sales. Adjusted EBITDA margin in the current year
benefitted from favorable mix, improved operating leverage, a
favorable pricing environment, and focused margin improvement
initiatives. These benefits were partially offset by an
increase in employee costs and general inflationary pressures.
International Segment
International segment sales increased 14.3% to $106.3 million as
compared to $92.9 million in the prior-year quarter. Core
sales growth was approximately 3%, with the Selmec acquisition
contributing an additional $13.4 million.
Adjusted EBITDA for the segment, before deducting for
non-controlling interests, improved to $7.4 million, or 6.9% of net
sales, as compared to $5.6 million, or 6.1% of net sales, in the
prior year. The improvement was primarily due to increased
leverage of fixed operating costs on the higher organic sales
volumes and favorable mix.
Updated 2018 Outlook The Company is increasing
its prior guidance for revenue growth for full-year 2018,
reflecting the favorable end market conditions primarily
driven by higher than expected power outage activity experienced
during the second half of 2018. Full year net sales are now
expected to grow by approximately 19 to 20% over the prior year,
which is an increase from the 13 to 14% growth previously
expected. Core sales growth is expected to be approximately
16 to 17%, which is an increase from the approximate 10% core
growth previously expected.
Given the increase in net sales guidance, net income margins,
before deducting for non-controlling interests, are now expected to
be approximately 12% for the full-year 2018, which is an increase
from the 10.5% guidance previously expected. Adjusted EBITDA
margins, also before deducting for non-controlling interests, are
now expected to be approximately 21% for the year, up from the
prior 20.0% guidance.
Operating and free cash flow generation is expected to remain
strong, with the conversion of adjusted net income to free cash
flow forecasted to be approximately 80 to 85%.
Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT
on Thursday, November 1, 2018 to discuss third quarter 2018
operating results. The conference call can be accessed by dialing
(866) 415-3113 (domestic) or +1 (678) 509-7544 (international) and
entering passcode 5499586.
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 5499586. 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 and labor needed in producing Generac products;
- the impact on our results of possible fluctuations in interest
rates, foreign currency exchange rates, commodities, product mix,
and regulatory tariffs;
- 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.
Non-GAAP Financial Metrics
Core Sales
The Company references core sales to further supplement
Generac's condensed consolidated financial statements presented in
accordance with U.S. GAAP. Core sales excludes the impact of
acquisitions and fluctuations in foreign currency translation.
Management believes that core sales facilitates easier and
more meaningful comparison of net sales performance with prior and
future periods.
Adjusted EBITDA
The computation of adjusted EBITDA attributable to the Company
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.
SOURCE: Generac Holdings Inc. CONTACT: York RagenChief Financial
Officer (262) 506-6064 InvestorRelations@generac.com
Generac Holdings Inc. |
Condensed Consolidated Balance Sheets |
(U.S. Dollars in Thousands, Except Share and Per Share
Data) |
(Unaudited) |
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2018 |
|
|
|
2017 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
174,001 |
|
|
$ |
138,472 |
|
Accounts
receivable, less allowance for doubtful accounts |
|
341,758 |
|
|
|
279,294 |
|
Inventories |
|
496,088 |
|
|
|
387,049 |
|
Prepaid
expenses and other assets |
|
28,110 |
|
|
|
19,741 |
|
Total current
assets |
|
1,039,957 |
|
|
|
824,556 |
|
|
|
|
|
Property and equipment,
net |
|
243,362 |
|
|
|
230,380 |
|
|
|
|
|
Customer lists,
net |
|
64,585 |
|
|
|
41,064 |
|
Patents, net |
|
32,375 |
|
|
|
39,617 |
|
Other intangible
assets, net |
|
3,228 |
|
|
|
2,401 |
|
Tradenames, net |
|
153,585 |
|
|
|
152,683 |
|
Goodwill |
|
769,168 |
|
|
|
721,523 |
|
Deferred income
taxes |
|
1,207 |
|
|
|
3,238 |
|
Other assets |
|
25,206 |
|
|
|
10,502 |
|
Total assets |
$ |
2,332,673 |
|
|
$ |
2,025,964 |
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Short-term borrowings |
$ |
35,758 |
|
|
$ |
20,602 |
|
Accounts
payable |
|
287,718 |
|
|
|
233,639 |
|
Accrued
wages and employee benefits |
|
41,335 |
|
|
|
27,992 |
|
Other
accrued liabilities |
|
136,416 |
|
|
|
112,618 |
|
Current
portion of long-term borrowings and capital lease obligations |
|
51,886 |
|
|
|
1,572 |
|
Total current
liabilities |
|
553,113 |
|
|
|
396,423 |
|
|
|
|
|
Long-term borrowings
and capital lease obligations |
|
859,625 |
|
|
|
906,548 |
|
Deferred income
taxes |
|
68,380 |
|
|
|
41,852 |
|
Other long-term
liabilities |
|
93,023 |
|
|
|
82,893 |
|
Total liabilities |
|
1,574,141 |
|
|
|
1,427,716 |
|
|
|
|
|
Redeemable
noncontrolling interests |
|
59,897 |
|
|
|
43,929 |
|
|
|
|
|
Stockholders’
equity: |
|
|
|
Common
stock, par value $0.01, 500,000,000 shares authorized, 71,105,573
and 70,820,173 |
|
|
|
shares
issued at September 30, 2018 and December 31, 2017,
respectively |
|
711 |
|
|
|
708 |
|
Additional paid-in capital |
|
473,886 |
|
|
|
459,816 |
|
Treasury
stock, at cost |
|
(321,397 |
) |
|
|
(294,005 |
) |
Excess
purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
Retained
earnings |
|
756,636 |
|
|
|
610,835 |
|
Accumulated other comprehensive loss |
|
(9,557 |
) |
|
|
(21,198 |
) |
Stockholders’ equity
attributable to Generac Holdings, Inc. |
|
698,163 |
|
|
|
554,040 |
|
Noncontrolling interests |
|
472 |
|
|
|
279 |
|
Total stockholders'
equity |
|
698,635 |
|
|
|
554,319 |
|
Total liabilities and
stockholders’ equity |
$ |
2,332,673 |
|
|
$ |
2,025,964 |
|
|
|
|
|
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, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
559,515 |
|
|
$ |
455,839 |
|
|
$ |
1,452,098 |
|
|
$ |
1,181,199 |
|
Costs of goods
sold |
|
361,630 |
|
|
|
299,608 |
|
|
|
937,968 |
|
|
|
783,247 |
|
Gross profit |
|
197,885 |
|
|
|
156,231 |
|
|
|
514,130 |
|
|
|
397,952 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling
and service |
|
46,536 |
|
|
|
43,463 |
|
|
|
135,270 |
|
|
|
124,940 |
|
Research
and development |
|
13,653 |
|
|
|
10,850 |
|
|
|
38,122 |
|
|
|
31,690 |
|
General
and administrative |
|
25,499 |
|
|
|
22,128 |
|
|
|
75,613 |
|
|
|
64,508 |
|
Amortization of intangibles |
|
5,678 |
|
|
|
7,242 |
|
|
|
16,792 |
|
|
|
21,554 |
|
Total operating
expenses |
|
91,366 |
|
|
|
83,683 |
|
|
|
265,797 |
|
|
|
242,692 |
|
Income from
operations |
|
106,519 |
|
|
|
72,548 |
|
|
|
248,333 |
|
|
|
155,260 |
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
Interest
expense |
|
(9,824 |
) |
|
|
(10,672 |
) |
|
|
(30,939 |
) |
|
|
(32,353 |
) |
Investment income |
|
382 |
|
|
|
14 |
|
|
|
1,095 |
|
|
|
57 |
|
Loss on
extinguishment of debt |
|
– |
|
|
|
– |
|
|
|
(1,332 |
) |
|
|
– |
|
Other,
net |
|
(483 |
) |
|
|
(1,710 |
) |
|
|
(2,764 |
) |
|
|
(3,525 |
) |
Total other expense,
net |
|
(9,925 |
) |
|
|
(12,368 |
) |
|
|
(33,940 |
) |
|
|
(35,821 |
) |
|
|
|
|
|
|
|
|
Income before provision
for income taxes |
|
96,594 |
|
|
|
60,180 |
|
|
|
214,393 |
|
|
|
119,439 |
|
Provision for income
taxes |
|
20,072 |
|
|
|
20,404 |
|
|
|
49,870 |
|
|
|
42,105 |
|
Net income |
|
76,522 |
|
|
|
39,776 |
|
|
|
164,523 |
|
|
|
77,334 |
|
Net income attributable
to noncontrolling interests |
|
746 |
|
|
|
341 |
|
|
|
1,841 |
|
|
|
433 |
|
Net income attributable
to Generac Holdings Inc. |
$ |
75,776 |
|
|
$ |
39,435 |
|
|
$ |
162,682 |
|
|
$ |
76,901 |
|
|
|
|
|
|
|
|
|
Net
income attributable to common shareholders per |
|
|
|
|
|
|
|
common share - basic: |
$ |
1.12 |
|
|
$ |
0.64 |
|
|
$ |
2.36 |
|
|
$ |
1.25 |
|
Weighted
average common shares outstanding - basic: |
|
61,579,564 |
|
|
|
61,758,190 |
|
|
|
61,659,817 |
|
|
|
62,094,807 |
|
|
|
|
|
|
|
|
|
Net
income attributable to common shareholders per |
|
|
|
|
|
|
|
common share - diluted: |
$ |
1.11 |
|
|
$ |
0.63 |
|
|
$ |
2.34 |
|
|
$ |
1.24 |
|
Weighted
average common shares outstanding - diluted: |
|
62,220,298 |
|
|
|
62,316,788 |
|
|
|
62,266,140 |
|
|
|
62,703,269 |
|
|
|
|
|
|
|
|
|
Comprehensive income
attributable to Generac Holdings Inc. |
$ |
80,768 |
|
|
$ |
42,939 |
|
|
$ |
173,355 |
|
|
$ |
90,867 |
|
|
|
|
|
|
|
|
|
Generac Holdings Inc. |
Condensed Consolidated Statements of Cash Flows |
(U.S. Dollars in Thousands) |
(Unaudited) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2018 |
|
|
|
2017 |
|
Operating
activities |
|
|
|
Net income |
$ |
164,523 |
|
|
$ |
77,334 |
|
Adjustment to reconcile
net income to net cash provided by operating activities: |
|
|
|
Depreciation |
|
18,332 |
|
|
|
17,137 |
|
Amortization of intangible assets |
|
16,792 |
|
|
|
21,554 |
|
Amortization of original issue discount and deferred financing
costs |
|
3,554 |
|
|
|
2,400 |
|
Loss on
extinguishment of debt |
|
1,332 |
|
|
|
– |
|
Deferred
income taxes |
|
17,218 |
|
|
|
25,336 |
|
Share-based compensation expense |
|
9,910 |
|
|
|
8,402 |
|
Other |
|
1,249 |
|
|
|
361 |
|
Net
changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts
receivable |
|
(55,649 |
) |
|
|
(68,003 |
) |
Inventories |
|
(99,957 |
) |
|
|
9,379 |
|
Other
assets |
|
(16,488 |
) |
|
|
(3,852 |
) |
Accounts
payable |
|
47,559 |
|
|
|
(206 |
) |
Accrued
wages and employee benefits |
|
13,044 |
|
|
|
6,288 |
|
Other
accrued liabilities |
|
18,011 |
|
|
|
25,148 |
|
Excess
tax benefits from equity awards |
|
(432 |
) |
|
|
(661 |
) |
Net cash provided by
operating activities |
|
138,998 |
|
|
|
120,617 |
|
|
|
|
|
Investing
activities |
|
|
|
Proceeds from sale of
property and equipment |
|
213 |
|
|
|
77 |
|
Proceeds from
beneficial interests in securitization transactions |
|
2,825 |
|
|
|
2,102 |
|
Expenditures for
property and equipment |
|
(25,577 |
) |
|
|
(16,658 |
) |
Acquisition of
business, net of cash acquired |
|
(71,926 |
) |
|
|
1,257 |
|
Net cash used in
investing activities |
|
(94,465 |
) |
|
|
(13,222 |
) |
|
|
|
|
Financing
activities |
|
|
|
Proceeds from
short-term borrowings |
|
28,332 |
|
|
|
74,443 |
|
Proceeds from long-term
borrowings |
|
51,425 |
|
|
|
3,069 |
|
Repayments of
short-term borrowings |
|
(12,478 |
) |
|
|
(80,952 |
) |
Repayments of long-term
borrowings and capital lease obligations |
|
(51,164 |
) |
|
|
(13,051 |
) |
Stock repurchases |
|
(25,656 |
) |
|
|
(30,012 |
) |
Cash dividends paid to
noncontrolling interests of subsidiary |
|
(314 |
) |
|
|
– |
|
Payment of debt
issuance costs |
|
(1,702 |
) |
|
|
(1,517 |
) |
Taxes paid related to
equity awards |
|
(2,777 |
) |
|
|
(2,479 |
) |
Proceeds from exercise
of stock options |
|
5,191 |
|
|
|
1,717 |
|
Net cash used in
financing activities |
|
(9,143 |
) |
|
|
(48,782 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
139 |
|
|
|
2,895 |
|
|
|
|
|
Net increase in cash
and cash equivalents |
|
35,529 |
|
|
|
61,508 |
|
Cash and cash
equivalents at beginning of period |
|
138,472 |
|
|
|
67,272 |
|
Cash and cash
equivalents at end of period |
$ |
174,001 |
|
|
$ |
128,780 |
|
|
|
|
|
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 |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
Domestic |
$ |
453,259 |
|
$ |
362,909 |
|
$ |
1,134,525 |
|
$ |
915,483 |
International |
|
106,256 |
|
|
92,930 |
|
|
317,573 |
|
|
265,716 |
Total net
sales |
$ |
559,515 |
|
$ |
455,839 |
|
$ |
1,452,098 |
|
$ |
1,181,199 |
|
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
Residential
products |
$ |
311,918 |
|
$ |
251,203 |
|
$ |
748,790 |
|
$ |
603,888 |
Commercial
& industrial products |
|
206,366 |
|
|
173,842 |
|
|
597,119 |
|
|
494,498 |
Other |
|
41,231 |
|
|
30,794 |
|
|
106,189 |
|
|
82,813 |
Total net
sales |
$ |
559,515 |
|
$ |
455,839 |
|
$ |
1,452,098 |
|
$ |
1,181,199 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Reportable Segments |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
Domestic |
$ |
117,108 |
|
$ |
82,817 |
|
$ |
273,185 |
|
$ |
188,400 |
International |
|
7,366 |
|
|
5,625 |
|
|
25,300 |
|
|
16,471 |
Total
adjusted EBITDA (1) |
$ |
124,474 |
|
$ |
88,442 |
|
$ |
298,485 |
|
$ |
204,871 |
|
|
|
|
|
|
|
|
|
(1) See
reconcilation of Adjusted EBITDA to Net income attributable to
Generac Holdings Inc. on the following reconciliation
schedule. |
Generac Holdings, Inc. |
Reconciliation Schedules |
(U.S. Dollars in Thousands, Except Share and Per Share
Data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Net
income to Adjusted EBITDA reconciliation |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
75,776 |
|
|
$ |
39,435 |
|
|
$ |
162,682 |
|
|
$ |
76,901 |
|
Net income
attributable to noncontrolling interests |
|
746 |
|
|
|
341 |
|
|
|
1,841 |
|
|
|
433 |
|
Net
income |
|
|
|
76,522 |
|
|
|
39,776 |
|
|
|
164,523 |
|
|
|
77,334 |
|
Interest
expense |
|
|
|
9,824 |
|
|
|
10,672 |
|
|
|
30,939 |
|
|
|
32,353 |
|
Depreciation and amortization |
|
|
11,841 |
|
|
|
13,108 |
|
|
|
35,124 |
|
|
|
38,691 |
|
Income
taxes provision |
|
|
|
20,072 |
|
|
|
20,404 |
|
|
|
49,870 |
|
|
|
42,105 |
|
Non-cash
write-down and other adjustments (1) |
|
900 |
|
|
|
756 |
|
|
|
3,522 |
|
|
|
2,632 |
|
Non-cash
share-based compensation expense (2) |
|
2,919 |
|
|
|
2,584 |
|
|
|
9,910 |
|
|
|
8,402 |
|
Loss on
extinguishment of debt (3) |
|
|
- |
|
|
|
- |
|
|
|
1,332 |
|
|
|
- |
|
Transaction
costs and credit facility fees (4) |
|
1,767 |
|
|
|
234 |
|
|
|
2,470 |
|
|
|
970 |
|
Business
optimization expenses (5) |
|
|
583 |
|
|
|
487 |
|
|
|
750 |
|
|
|
1,933 |
|
Other |
|
|
|
|
46 |
|
|
|
421 |
|
|
|
45 |
|
|
|
451 |
|
Adjusted
EBITDA |
|
|
|
124,474 |
|
|
|
88,442 |
|
|
|
298,485 |
|
|
|
204,871 |
|
Adjusted
EBITDA attributable to noncontrolling interests |
|
1,454 |
|
|
|
1,178 |
|
|
|
5,633 |
|
|
|
3,589 |
|
Adjusted
EBITDA attributable to Generac Holdings Inc. |
$ |
123,020 |
|
|
$ |
87,264 |
|
|
$ |
292,852 |
|
|
$ |
201,282 |
|
|
|
|
|
|
|
|
|
|
|
|
(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 the non-cash write-off of original issue discount and
deferred financing costs due to a voluntary prepayment of Term Loan
debt. |
|
|
|
|
|
|
|
|
|
|
|
(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 non-recurring restructuring charges
related to the consolidation of certain of our facilities. |
|
|
|
|
|
|
|
|
|
|
|
Net
income to Adjusted net income reconciliation |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
75,776 |
|
|
$ |
39,435 |
|
|
$ |
162,682 |
|
|
$ |
76,901 |
|
Net income
attributable to noncontrolling interests |
|
746 |
|
|
|
341 |
|
|
|
1,841 |
|
|
|
433 |
|
Net
income |
|
|
|
76,522 |
|
|
|
39,776 |
|
|
|
164,523 |
|
|
|
77,334 |
|
Provision
for income taxes |
|
|
20,072 |
|
|
|
20,404 |
|
|
|
49,870 |
|
|
|
42,105 |
|
Income
before provision for income taxes |
|
96,594 |
|
|
|
60,180 |
|
|
|
214,393 |
|
|
|
119,439 |
|
Amortization of intangible assets |
|
|
5,678 |
|
|
|
7,242 |
|
|
|
16,792 |
|
|
|
21,554 |
|
Amortization of deferred finance costs and original issue
discount |
|
1,187 |
|
|
|
1,092 |
|
|
|
3,554 |
|
|
|
2,400 |
|
Loss on
extinguishment of debt (3) |
|
- |
|
|
|
- |
|
|
|
1,332 |
|
|
|
- |
|
Transaction
costs and other purchase accounting adjustments (6) |
|
702 |
|
|
|
(35 |
) |
|
|
1,516 |
|
|
|
979 |
|
Business
optimization expenses (5) |
|
|
583 |
|
|
|
487 |
|
|
|
750 |
|
|
|
1,933 |
|
Adjusted
net income before provision for income taxes |
|
104,744 |
|
|
|
68,966 |
|
|
|
238,337 |
|
|
|
146,305 |
|
Cash income
tax expense (7) |
|
|
(15,185 |
) |
|
|
(10,878 |
) |
|
|
(31,709 |
) |
|
|
(19,607 |
) |
Adjusted
net income |
|
|
|
89,559 |
|
|
|
58,088 |
|
|
|
206,628 |
|
|
|
126,698 |
|
Adjusted
net income attributable to noncontrolling interests |
|
447 |
|
|
|
697 |
|
|
|
2,491 |
|
|
|
1,912 |
|
Adjusted
net income attributable to Generac Holdings Inc. |
$ |
89,112 |
|
|
$ |
57,391 |
|
|
$ |
204,137 |
|
|
$ |
124,786 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
net income attributable to Generac Holdings Inc. per |
|
|
|
|
|
|
|
common share - diluted: |
|
$ |
1.43 |
|
|
$ |
0.92 |
|
|
$ |
3.28 |
|
|
$ |
1.99 |
|
Weighted
average common shares outstanding - diluted: |
|
62,220,298 |
|
|
|
62,316,788 |
|
|
|
62,266,140 |
|
|
|
62,703,269 |
|
|
|
|
|
|
|
|
|
|
|
|
(6)
Represents transaction costs incurred directly in connection with
any investment, as defined in our credit agreement, equity issuance
or debt issuance or refinancing, and certain purchase accounting
adjustments. |
|
|
|
|
|
|
|
|
|
|
|
(7)
Amounts for the three and nine months ended September 30, 2018 are
now based on an anticipated cash income tax rate of approximately
15% for the full year ended 2018. Amounts for the three and nine
months ended September 30, 2017 were based on an anticipated cash
income tax rate at that time of approximately 17% 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 full year cash tax rate to the
period’s pretax income. |
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
59,341 |
|
|
$ |
66,341 |
|
|
$ |
138,998 |
|
|
$ |
120,617 |
|
Proceeds
from beneficial interests in securitization transactions |
|
896 |
|
|
|
704 |
|
|
|
2,825 |
|
|
|
2,102 |
|
Expenditures for property and equipment |
|
(13,251 |
) |
|
|
(6,628 |
) |
|
|
(25,577 |
) |
|
|
(16,658 |
) |
Free cash
flow |
|
|
$ |
46,986 |
|
|
$ |
60,417 |
|
|
$ |
116,246 |
|
|
$ |
106,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings Per Share |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Numerator |
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
75,776 |
|
|
$ |
39,435 |
|
|
$ |
162,682 |
|
|
$ |
76,901 |
|
Redeemable
noncontrolling interest redemption value adjustment |
|
(6,912 |
) |
|
|
- |
|
|
|
(16,882 |
) |
|
|
909 |
|
Net income
attributable to common shareholders |
$ |
68,864 |
|
|
$ |
39,435 |
|
|
$ |
145,800 |
|
|
$ |
77,810 |
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
Weighted
average shares, basic |
|
|
61,579,564 |
|
|
|
61,758,190 |
|
|
|
61,659,817 |
|
|
|
62,094,807 |
|
Dilutive
effect of stock compensation awards |
|
640,734 |
|
|
|
558,598 |
|
|
|
606,323 |
|
|
|
608,462 |
|
Diluted
shares |
|
|
|
62,220,298 |
|
|
|
62,316,788 |
|
|
|
62,266,140 |
|
|
|
62,703,269 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common shareholders per share |
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
1.12 |
|
|
$ |
0.64 |
|
|
$ |
2.36 |
|
|
$ |
1.25 |
|
Diluted |
|
|
$ |
1.11 |
|
|
$ |
0.63 |
|
|
$ |
2.34 |
|
|
$ |
1.24 |
|
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