Generac Holdings Inc. (NYSE: GNRC) (“Generac” or the “Company”), a
leading global designer and manufacturer of energy solutions and
other power products, today reported financial results for its
third quarter ended September 30, 2019.
Third Quarter 2019 Highlights
- Net sales increased 6.9% to $601.1 million during the third
quarter of 2019 as compared to $562.4 million in the prior-year
third quarter. Core sales growth, which excludes both the
impact of acquisitions and foreign currency, was also approximately
7%.
- Residential product sales increased 7.4% to $335.0 million as
compared to $311.9 million last year, with core sales growth of
approximately 7%.
- Commercial & Industrial (“C&I”) product sales increased
4.1% to $214.9 million as compared to $206.4 million in the prior
year, with core sales growth of approximately 5%.
- Net income attributable to the Company during the third quarter
was $75.6 million, or $1.18 per share, as compared to $75.8
million, or $1.11 per share, for the same period of 2018. See
accompanying reconciliation schedules for related earnings per
share calculations.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $90.0 million, or
$1.43 per share, as compared to $89.1 million, or $1.43 per share,
in the third quarter of 2018.
- Adjusted EBITDA before deducting for noncontrolling interests,
as defined in the accompanying reconciliation schedules, was $126.0
million, or 21.0% of net sales, as compared to $124.5 million, or
22.1% of net sales, in the prior year.
- Cash flow from operations was $111.2 million as compared to
$59.3 million in the prior year quarter. Free cash flow, as
defined in the accompanying reconciliation schedules, was $100.8
million as compared to $47.0 million in the third quarter of
2018.
- The Company is increasing its full-year 2019 sales growth
guidance to approximately 8 to 9% with Adjusted EBITDA margins,
before deducting for non-controlling interests, of approximately
20.5%.
“We are pleased with our results for the third quarter of 2019
as we posted all-time record net sales and adjusted EBITDA as a
result of continued strong growth across various product
categories,” said Aaron Jagdfeld, President and Chief Executive
Officer. “Our performance in 2019 demonstrates the powerful
secular growth opportunities around an aging electrical grid in the
United States that is more susceptible to power outages due to a
changing climate, the increasing penetration of natural gas power
generation globally, and the importance of reliable
telecommunication networks. In addition, with the growing
threat of utility shut-offs in California, interest in our back-up
power solutions is at all-time high. Finally, we are quickly
scaling our Clean Energy product portfolio, supply chain, and
go-to-market strategies to take advantage of the rapidly developing
markets for energy monitoring, management and storage, and intend
to launch our new product line in the fourth quarter.”
Additional Third Quarter 2019 Consolidated
Highlights
Gross profit margin was 36.2% compared to 35.6% in the
prior-year third quarter. Pricing actions and favorable sales
mix, as well as lower realized commodity and currency input costs,
were partially offset by increased regulatory tariffs. Operating
expenses increased $18.1 million, or 19.3%, as compared to the
third quarter of 2018. The increase was primarily driven by
additional employee headcount related to strategic initiatives,
higher marketing and promotional spend, recurring operating
expenses from recent acquisitions and higher intangible
amortization expenses.
Provision for income taxes for the current year quarter was
$20.1 million, or an effective tax rate of 21.1%, as compared to
$20.1 million, or a 20.8% effective tax rate, for the prior
year.
Cash flow from operations was $111.2 million as compared to
$59.3 million in the prior year quarter. Free cash flow, as
defined in the accompanying reconciliation schedules, was $100.8
million as compared to $47.0 million in the third quarter of
2018. Improved working capital efficiency in the current
year, as well as additional pension funding and interest payments
in the prior year, drove the increase.
Business Segment Results
Domestic Segment
Domestic segment sales increased 9.2% to $498.2 million as
compared to $456.1 million in the prior year quarter. Core
sales growth, which excludes the impact of the Neurio and Pika
acquisitions, was approximately 8.5%. The current year
quarter experienced strong growth in shipments of home standby
generators given continued strong end market conditions, while
portable generator shipments were approximately flat compared to
the prior year. In addition, C&I stationary generator
shipments were also strong during the quarter primarily with our
natural gas and telecom products. The overall Domestic
segment growth was partially offset by lower shipments of C&I
mobile products to national rental account customers.
Adjusted EBITDA for the segment was $121.2 million, or 24.3% of
net sales, as compared to $117.1 million in the prior year, or
25.7% of net sales. Pricing initiatives and favorable sales
mix, improved commodity and currency input costs, and fixed
operating cost leverage were more than offset by the aforementioned
regulatory tariffs and higher operating expenses.
International Segment
International segment sales decreased 3.1% to $103.0 million as
compared to $106.3 million in the prior year quarter. Core
sales, which excludes the unfavorable impact of currency and the
impact of the Captiva acquisition, was approximately flat compared
to the prior year as geopolitical headwinds caused economic
softness in certain regions of the world.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $4.7 million, or 4.6% of net sales,
as compared to $7.4 million, or 6.9% of net sales, in the prior
year. Unfavorable sales mix and incremental operating expense
investment contributed to the decline.
Updated 2019 Outlook The Company is increasing
its full-year 2019 guidance for revenue growth reflecting stronger
end market demand for residential products, partially offset by
slowing commercial & industrial activity. We are now
raising our full-year net sales growth to approximately 8 to 9%,
with core sales growth now expected to be approximately 7% compared
to the prior year.
Net income margin, before deducting for noncontrolling
interests, is now expected to be approximately 11.5% for the
full-year 2019, with corresponding Adjusted EBITDA margin of
approximately 20.5%.
Despite the slower start to the year, Operating and Free Cash
Flow generation for the full year is still expected to be strong,
with the conversion of adjusted net income to free cash flow
expected to be approximately 80%. Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT
on Thursday, October 31, 2019 to discuss third quarter 2019
operating results. The conference call can be accessed by dialing
(866) 415-3113 (domestic) or +1 (678) 509-7544 (international) and
entering passcode 5737459.
The conference call will also be webcast simultaneously on
Generac's website (http://www.generac.com), accessed under the
Investor Relations link. The webcast link will be made available on
the Company’s website prior to the start of the call within the
Events section of the Investor Relations website. Following the
live webcast, a replay will be available on the Company's website.
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 5737459. The telephonic replay will be available for 7
days.
About Generac
Founded in 1959, Generac is a leading designer and manufacturer
of energy solutions and other power products. As an industry
leader serving residential, light commercial, and industrial
markets, Generac's products and solutions 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 our products;
- availability, cost and quality of
raw materials and key components and labor needed in producing our
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 we may encounter as
our business expands globally or into new markets;
- our dependence on our distribution
network;
- our ability to invest in, develop
or adapt to changing technologies and manufacturing
techniques;
- loss of our key management and
employees;
- increase in product and other
liability claims or recalls;
- failures or security breaches of
our networks or information technology systems; and
- changes in environmental, health
and safety, or product compliance laws and regulations affecting
our products or operations.
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 2018 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
noncontrolling 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 noncontrolling
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 the
accompanying Reconciliation Schedules and our SEC filings for
additional discussion of the basis for Generac's reporting of
Non-GAAP financial measures, which includes why the Company
believes these measures provide useful information to investors and
the additional purposes for which management uses the non-GAAP
financial information.
SOURCE: Generac Holdings Inc. CONTACT: York RagenChief Financial
Officer (262) 506-6064 InvestorRelations@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, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
601,135 |
|
|
$ |
562,388 |
|
|
$ |
1,613,404 |
|
|
$ |
1,460,060 |
|
Costs of
goods sold |
|
383,618 |
|
|
|
362,054 |
|
|
|
1,037,874 |
|
|
|
939,326 |
|
Gross
profit |
|
217,517 |
|
|
|
200,334 |
|
|
|
575,530 |
|
|
|
520,734 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling and service |
|
59,356 |
|
|
|
48,985 |
|
|
|
158,954 |
|
|
|
141,874 |
|
Research and development |
|
17,603 |
|
|
|
13,653 |
|
|
|
48,906 |
|
|
|
38,122 |
|
General and administrative |
|
27,596 |
|
|
|
25,499 |
|
|
|
80,016 |
|
|
|
75,613 |
|
Amortization of intangibles |
|
7,406 |
|
|
|
5,678 |
|
|
|
19,999 |
|
|
|
16,792 |
|
Total
operating expenses |
|
111,961 |
|
|
|
93,815 |
|
|
|
307,875 |
|
|
|
272,401 |
|
Income from
operations |
|
105,556 |
|
|
|
106,519 |
|
|
|
267,655 |
|
|
|
248,333 |
|
|
|
|
|
|
|
|
|
Other
(expense) income: |
|
|
|
|
|
|
|
Interest expense |
|
(10,704 |
) |
|
|
(9,824 |
) |
|
|
(31,428 |
) |
|
|
(30,939 |
) |
Investment income |
|
523 |
|
|
|
382 |
|
|
|
1,889 |
|
|
|
1,095 |
|
Loss on extinguishment of debt |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(1,332 |
) |
Other, net |
|
(414 |
) |
|
|
(483 |
) |
|
|
(1,868 |
) |
|
|
(2,764 |
) |
Total other
expense, net |
|
(10,595 |
) |
|
|
(9,925 |
) |
|
|
(31,407 |
) |
|
|
(33,940 |
) |
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
94,961 |
|
|
|
96,594 |
|
|
|
236,248 |
|
|
|
214,393 |
|
Provision
for income taxes |
|
20,064 |
|
|
|
20,072 |
|
|
|
53,876 |
|
|
|
49,870 |
|
Net
income |
|
74,897 |
|
|
|
76,522 |
|
|
|
182,372 |
|
|
|
164,523 |
|
Net (loss)
income attributable to noncontrolling interests |
|
(677 |
) |
|
|
746 |
|
|
|
(21 |
) |
|
|
1,841 |
|
Net income
attributable to Generac Holdings Inc. |
$ |
75,574 |
|
|
$ |
75,776 |
|
|
$ |
182,393 |
|
|
$ |
162,682 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
basic: |
$ |
1.20 |
|
|
$ |
1.12 |
|
|
$ |
2.95 |
|
|
$ |
2.36 |
|
Weighted average common shares outstanding - basic: |
|
61,973,447 |
|
|
|
61,579,564 |
|
|
|
61,878,500 |
|
|
|
61,659,817 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
diluted: |
$ |
1.18 |
|
|
$ |
1.11 |
|
|
$ |
2.92 |
|
|
$ |
2.34 |
|
Weighted average common shares outstanding - diluted: |
|
62,770,592 |
|
|
|
62,220,298 |
|
|
|
62,519,205 |
|
|
|
62,266,140 |
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
64,904 |
|
|
$ |
80,768 |
|
|
$ |
161,828 |
|
|
$ |
173,355 |
|
|
|
|
|
|
|
|
|
Generac Holdings
Inc. |
|
Condensed
Consolidated Balance Sheets |
|
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
September
30, |
|
December
31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
216,038 |
|
|
$ |
224,482 |
|
|
Accounts receivable, less allowance for doubtful accounts |
|
373,591 |
|
|
|
326,133 |
|
|
Inventories |
|
517,232 |
|
|
|
544,750 |
|
|
Prepaid expenses and other assets |
|
30,570 |
|
|
|
25,404 |
|
|
Total
current assets |
|
1,137,431 |
|
|
|
1,120,769 |
|
|
|
|
|
|
|
Property and
equipment, net |
|
303,288 |
|
|
|
278,929 |
|
|
|
|
|
|
|
Customer
lists, net |
|
55,649 |
|
|
|
61,194 |
|
|
Patents,
net |
|
75,781 |
|
|
|
29,970 |
|
|
Other
intangible assets, net |
|
11,809 |
|
|
|
3,043 |
|
|
Tradenames,
net |
|
149,155 |
|
|
|
152,283 |
|
|
Goodwill |
|
811,914 |
|
|
|
764,655 |
|
|
Deferred
income taxes |
|
3,217 |
|
|
|
163 |
|
|
Operating
lease and other assets |
|
45,877 |
|
|
|
15,308 |
|
|
Total
assets |
$ |
2,594,121 |
|
|
$ |
2,426,314 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
$ |
66,985 |
|
|
$ |
45,583 |
|
|
Accounts payable |
|
241,290 |
|
|
|
328,091 |
|
|
Accrued wages and employee benefits |
|
37,401 |
|
|
|
40,819 |
|
|
Other accrued liabilities |
|
127,786 |
|
|
|
144,236 |
|
|
Current portion of long-term borrowings and finance lease
obligations |
|
2,554 |
|
|
|
1,977 |
|
|
Total
current liabilities |
|
476,016 |
|
|
|
560,706 |
|
|
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
884,315 |
|
|
|
876,396 |
|
|
Deferred
income taxes |
|
92,520 |
|
|
|
71,300 |
|
|
Operating
lease and other long-term liabilities |
|
145,491 |
|
|
|
95,647 |
|
|
Total
liabilities |
|
1,598,342 |
|
|
|
1,604,049 |
|
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
56,564 |
|
|
|
61,004 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
71,640,792 and 71,186,418 |
|
|
|
|
shares issued at September 30, 2019 and December 31, 2018,
respectively |
|
716 |
|
|
|
712 |
|
|
Additional paid-in capital |
|
492,671 |
|
|
|
476,116 |
|
|
Treasury stock, at cost |
|
(324,351 |
) |
|
|
(321,473 |
) |
|
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained earnings |
|
1,013,707 |
|
|
|
831,123 |
|
|
Accumulated other comprehensive loss |
|
(46,363 |
) |
|
|
(23,813 |
) |
|
Stockholders’ equity attributable to Generac Holdings Inc. |
|
934,264 |
|
|
|
760,549 |
|
|
Noncontrolling interests |
|
4,951 |
|
|
|
712 |
|
|
Total
stockholders’ equity |
|
939,215 |
|
|
|
761,261 |
|
|
Total
liabilities and stockholders’ equity |
$ |
2,594,121 |
|
|
$ |
2,426,314 |
|
|
Generac Holdings
Inc. |
Condensed
Consolidated Statements of Cash Flows |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
Operating activities |
|
|
|
Net income |
$ |
182,372 |
|
|
$ |
164,523 |
|
Adjustment
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation |
|
22,842 |
|
|
|
18,332 |
|
Amortization of intangible assets |
|
19,999 |
|
|
|
16,792 |
|
Amortization of original issue discount and deferred financing
costs |
|
3,597 |
|
|
|
3,554 |
|
Loss on extinguishment of debt |
|
– |
|
|
|
1,332 |
|
Deferred income taxes |
|
19,514 |
|
|
|
17,218 |
|
Share-based compensation expense |
|
11,477 |
|
|
|
9,910 |
|
Other |
|
557 |
|
|
|
1,249 |
|
Net changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(45,543 |
) |
|
|
(55,649 |
) |
Inventories |
|
27,190 |
|
|
|
(99,957 |
) |
Other assets |
|
1,488 |
|
|
|
(16,488 |
) |
Accounts payable |
|
(83,174 |
) |
|
|
47,559 |
|
Accrued wages and employee benefits |
|
(7,517 |
) |
|
|
13,044 |
|
Other accrued liabilities |
|
(17,092 |
) |
|
|
18,011 |
|
Excess tax benefits from equity awards |
|
(1,908 |
) |
|
|
(432 |
) |
Net cash
provided by operating activities |
|
133,802 |
|
|
|
138,998 |
|
|
|
|
|
Investing activities |
|
|
|
Proceeds
from sale of property and equipment |
|
83 |
|
|
|
213 |
|
Proceeds
from beneficial interests in securitization transactions |
|
2,036 |
|
|
|
2,825 |
|
Expenditures
for property and equipment |
|
(45,447 |
) |
|
|
(25,577 |
) |
Acquisition
of business, net of cash acquired |
|
(120,863 |
) |
|
|
(71,926 |
) |
Net cash
used in investing activities |
|
(164,191 |
) |
|
|
(94,465 |
) |
|
|
|
|
Financing activities |
|
|
|
Proceeds
from short-term borrowings |
|
68,802 |
|
|
|
28,332 |
|
Proceeds
from long-term borrowings |
|
– |
|
|
|
51,425 |
|
Repayments
of short-term borrowings |
|
(45,437 |
) |
|
|
(12,478 |
) |
Repayments
of long-term borrowings and finance lease obligations |
|
(3,110 |
) |
|
|
(51,164 |
) |
Stock
repurchases |
|
– |
|
|
|
(25,656 |
) |
Cash
dividends paid to noncontrolling interest of subsidiary |
|
(285 |
) |
|
|
(314 |
) |
Payment of
debt issuance costs |
|
– |
|
|
|
(1,702 |
) |
Taxes paid
related to equity awards |
|
(5,749 |
) |
|
|
(2,777 |
) |
Proceeds
from the exercise of stock options |
|
7,957 |
|
|
|
5,191 |
|
Net cash
provided by (used in) financing activities |
|
22,178 |
|
|
|
(9,143 |
) |
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(233 |
) |
|
|
139 |
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents |
|
(8,444 |
) |
|
|
35,529 |
|
Cash and
cash equivalents at beginning of period |
|
224,482 |
|
|
|
138,472 |
|
Cash and
cash equivalents at end of period |
$ |
216,038 |
|
|
$ |
174,001 |
|
|
|
|
|
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 |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Domestic (1) |
$ |
498,163 |
|
$ |
456,132 |
|
$ |
1,283,348 |
|
$ |
1,142,487 |
|
International |
|
102,972 |
|
|
106,256 |
|
|
330,056 |
|
|
317,573 |
|
Total net sales |
$ |
601,135 |
|
$ |
562,388 |
|
$ |
1,613,404 |
|
$ |
1,460,060 |
|
|
|
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
|
Residential products |
$ |
335,029 |
|
$ |
311,918 |
|
$ |
821,233 |
|
$ |
748,790 |
|
Commercial & industrial products |
|
214,905 |
|
|
206,366 |
|
|
654,458 |
|
|
597,119 |
|
Other (1) |
|
51,201 |
|
|
44,104 |
|
|
137,713 |
|
|
114,151 |
|
Total net sales |
$ |
601,135 |
|
$ |
562,388 |
|
$ |
1,613,404 |
|
$ |
1,460,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Domestic |
$ |
121,217 |
|
$ |
117,108 |
|
$ |
306,723 |
|
$ |
273,185 |
|
International |
|
4,736 |
|
|
7,366 |
|
|
18,244 |
|
|
25,300 |
|
Total adjusted EBITDA (2) |
$ |
125,953 |
|
$ |
124,474 |
|
$ |
324,967 |
|
$ |
298,485 |
|
|
|
|
|
|
|
|
|
|
|
(1) In accordance with
ASU 2014-09, Revenue from Contracts with Customers, extended
warranty revenues are reported within net sales in the condensed
consolidated statements of comprehensive income. Previously, these
amounts were reported net within selling and service expense on the
condensed consolidated statements of comprehensive income, in
amounts that were not material. To report extended warranty in
accordance with ASU 2014-09, the net sales and gross profit amounts
for the three months ended September 30, 2018 have been revised by
$2,873 and $2,449, respectively, and the net sales and gross profit
amounts for the nine months ended September 30, 2018 have been
revised by $7,962 and $6,604, respectively, from the amounts
previously reported for the third quarter of 2018, with an equal
offset to selling and service expenses. The revisions impacted the
Domestic segment and the Other product class. There was no impact
to income from operations, net income or comprehensive income,
earnings per share, the condensed consolidated balance sheets, the
condensed consolidated statements of stockholders’ equity, or the
condensed consolidated statements of cash flows. |
|
|
|
|
|
|
|
|
|
|
|
(2) See reconciliation
of Adjusted EBITDA to Net income attributable to Generac Holdings
Inc. on the following reconciliation schedule. |
|
Generac Holdings
Inc. |
|
Reconciliation
Schedules |
|
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income to Adjusted EBITDA reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
75,574 |
|
|
$ |
75,776 |
|
|
$ |
182,393 |
|
|
$ |
162,682 |
|
|
Net (loss) income attributable to noncontrolling interests |
|
(677 |
) |
|
|
746 |
|
|
|
(21 |
) |
|
|
1,841 |
|
|
Net income |
|
|
|
|
74,897 |
|
|
|
76,522 |
|
|
|
182,372 |
|
|
|
164,523 |
|
|
Interest expense |
|
|
|
10,704 |
|
|
|
9,824 |
|
|
|
31,428 |
|
|
|
30,939 |
|
|
Depreciation and amortization |
|
|
15,494 |
|
|
|
11,841 |
|
|
|
42,841 |
|
|
|
35,124 |
|
|
Provision for income taxes |
|
|
20,064 |
|
|
|
20,072 |
|
|
|
53,876 |
|
|
|
49,870 |
|
|
Non-cash write-down and other adjustments (1) |
|
347 |
|
|
|
900 |
|
|
|
673 |
|
|
|
3,522 |
|
|
Non-cash share-based compensation expense (2) |
|
3,549 |
|
|
|
2,919 |
|
|
|
11,477 |
|
|
|
9,910 |
|
|
Loss on extinguishment of debt |
|
– |
|
|
|
– |
|
|
|
- |
|
|
|
1,332 |
|
|
Transaction costs and credit facility fees (3) |
|
358 |
|
|
|
1,767 |
|
|
|
2,047 |
|
|
|
2,470 |
|
|
Business optimization expenses (4) |
|
|
567 |
|
|
|
583 |
|
|
|
809 |
|
|
|
750 |
|
|
Other |
|
|
|
|
(27 |
) |
|
|
46 |
|
|
|
(556 |
) |
|
|
45 |
|
|
Adjusted EBITDA |
|
|
|
125,953 |
|
|
|
124,474 |
|
|
|
324,967 |
|
|
|
298,485 |
|
|
Adjusted EBITDA attributable to noncontrolling interests |
|
909 |
|
|
|
1,454 |
|
|
|
3,722 |
|
|
|
5,633 |
|
|
Adjusted EBITDA attributable to Generac Holdings Inc. |
$ |
125,044 |
|
|
$ |
123,020 |
|
|
$ |
321,245 |
|
|
$ |
292,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes certain
foreign currency and purchase accounting related adjustments,
gains/losses on disposals of assets and unrealized mark-to-market
adjustments on commodity contracts. 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 September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
75,574 |
|
|
$ |
75,776 |
|
|
$ |
182,393 |
|
|
$ |
162,682 |
|
|
Net (loss) income attributable to noncontrolling interests |
|
(677 |
) |
|
|
746 |
|
|
|
(21 |
) |
|
|
1,841 |
|
|
Net
income |
|
|
|
|
74,897 |
|
|
|
76,522 |
|
|
|
182,372 |
|
|
|
164,523 |
|
|
Provision for income taxes |
|
|
20,064 |
|
|
|
20,072 |
|
|
|
53,876 |
|
|
|
49,870 |
|
|
Income before provision for income taxes |
|
94,961 |
|
|
|
96,594 |
|
|
|
236,248 |
|
|
|
214,393 |
|
|
Amortization of intangible assets |
|
|
7,406 |
|
|
|
5,678 |
|
|
|
19,999 |
|
|
|
16,792 |
|
|
Amortization of deferred finance costs and original issue
discount |
|
1,221 |
|
|
|
1,187 |
|
|
|
3,597 |
|
|
|
3,554 |
|
|
Loss on extinguishment of debt |
|
– |
|
|
|
– |
|
|
|
- |
|
|
|
1,332 |
|
|
Transaction costs and other purchase accounting adjustments
(5) |
|
165 |
|
|
|
702 |
|
|
|
1,373 |
|
|
|
1,516 |
|
|
Business optimization expenses (4) |
|
|
567 |
|
|
|
583 |
|
|
|
809 |
|
|
|
750 |
|
|
Adjusted net income before provision for income taxes |
|
104,320 |
|
|
|
104,744 |
|
|
|
262,026 |
|
|
|
238,337 |
|
|
Cash income tax expense (6) |
|
|
(15,083 |
) |
|
|
(15,185 |
) |
|
|
(39,698 |
) |
|
|
(31,709 |
) |
|
Adjusted net income |
|
|
|
89,237 |
|
|
|
89,559 |
|
|
|
222,328 |
|
|
|
206,628 |
|
|
Adjusted net income attributable to noncontrolling interests |
|
(738 |
) |
|
|
447 |
|
|
|
958 |
|
|
|
2,491 |
|
|
Adjusted net income attributable to Generac Holdings Inc. |
$ |
89,975 |
|
|
$ |
89,112 |
|
|
$ |
221,370 |
|
|
$ |
204,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to Generac Holdings Inc. per |
|
|
|
|
|
|
|
|
common share - diluted: |
|
$ |
1.43 |
|
|
$ |
1.43 |
|
|
$ |
3.54 |
|
|
$ |
3.28 |
|
|
Weighted average common shares outstanding - diluted: |
|
62,770,592 |
|
|
|
62,220,298 |
|
|
|
62,519,205 |
|
|
|
62,266,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) Amounts for the
three and nine months ended September 30, 2019 are now based on an
anticipated cash income tax rate of approximately 17% respectively
for the full year ended 2019. Amounts for the three and nine months
ended September 30, 2018 are based on an anticipated cash income
tax rate of approximately 15% for the full year ended 2018. 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, |
|
|
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
111,188 |
|
|
$ |
59,341 |
|
|
$ |
133,802 |
|
|
$ |
138,998 |
|
|
Proceeds from beneficial interests in securitization
transactions |
|
640 |
|
|
|
896 |
|
|
|
2,036 |
|
|
|
2,825 |
|
|
Expenditures for property and equipment |
|
(11,071 |
) |
|
|
(13,251 |
) |
|
|
(45,447 |
) |
|
|
(25,577 |
) |
|
Free cash flow |
|
|
$ |
100,757 |
|
|
$ |
46,986 |
|
|
$ |
90,391 |
|
|
$ |
116,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
75,574 |
|
|
$ |
75,776 |
|
|
$ |
182,393 |
|
|
$ |
162,682 |
|
|
Redeemable noncontrolling interest redemption value adjustment |
|
(1,485 |
) |
|
|
(6,912 |
) |
|
|
191 |
|
|
|
(16,882 |
) |
|
Net income attributable to common shareholders |
$ |
74,089 |
|
|
$ |
68,864 |
|
|
$ |
182,584 |
|
|
$ |
145,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
Weighted average shares, basic |
|
|
61,973,447 |
|
|
|
61,579,564 |
|
|
|
61,878,500 |
|
|
|
61,659,817 |
|
|
Dilutive effect of stock compensation awards |
|
797,145 |
|
|
|
640,734 |
|
|
|
640,705 |
|
|
|
606,323 |
|
|
Diluted shares |
|
|
|
62,770,592 |
|
|
|
62,220,298 |
|
|
|
62,519,205 |
|
|
|
62,266,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per share |
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
1.20 |
|
|
$ |
1.12 |
|
|
$ |
2.95 |
|
|
$ |
2.36 |
|
|
Diluted |
|
|
|
$ |
1.18 |
|
|
$ |
1.11 |
|
|
$ |
2.92 |
|
|
$ |
2.34 |
|
|
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