Strong end market fundamentals drive increased 2019 outlook;
Generac Holdings Inc. (NYSE: GNRC) (“Generac” or the “Company”), a
leading global designer and manufacturer of power generation
equipment and other power products, today reported financial
results for its first quarter ended March 31, 2019.
First Quarter 2019 Highlights
- Net sales increased 17.6% to $470.4 million during the first
quarter of 2019 as compared to $400.1 million in the prior-year
first quarter. Core sales growth, which excludes both the
impact of acquisitions and foreign currency, was approximately
15%.
- Residential product sales increased 14.4% to $217.8 million as
compared to $190.5 million last year.
- Commercial & Industrial (“C&I”) product sales increased
19.4% to $209.1 million as compared to $175.1 million in the prior
year, with core sales growth of approximately 17%.
- Net income attributable to the Company during the first quarter
was $44.9 million, or $0.76 per share, as compared to $33.6
million, or $0.42 per share, for the same period of
2018.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $56.5 million, or
$0.91 per share, as compared to $46.1 million, or $0.74 per share,
in the first quarter of 2018.
- Adjusted EBITDA before deducting for noncontrolling interests,
as defined in the accompanying reconciliation schedules, was $87.1
million, or 18.5% of net sales, as compared to $71.8 million, or
17.9% of net sales, in the prior year.
- Cash flow from operations was $14.6 million as compared to
$29.0 million in the prior year quarter. Free cash flow, as
defined in the accompanying reconciliation schedules, was $(0.6)
million as compared to $23.3 million in the first quarter of
2018. Higher operating earnings in the current year quarter
were more than offset by increased incentive compensation payments
related to fiscal 2018 performance and higher levels of capital
expenditures.
- As previously announced on March 13, 2019, the Company closed
on the acquisition of Neurio Technology. Founded in 2005 and
headquartered in Vancouver, British Columbia, Neurio is a leading
energy data company focused on monitoring technology and
sophisticated analytics to optimize energy use within a home or
business. Neurio’s hardware and software solutions equip
users with the intelligence to manage and control electrical loads,
solar systems and batteries to optimize energy consumption and
increase savings.
- Also, as previously announced on April 29, 2019, the Company
closed on the acquisition of Pika Energy. Founded in 2010 and
located near Portland, Maine, Pika Energy develops and manufactures
advanced power electronics, software and controls for smart energy
storage and management. Pika’s innovative home energy storage
solutions make them one of the leaders in the rapidly growing
market for energy storage technology.
“Our outstanding first quarter results reflect continued end
market strength as we entered 2019,” said Aaron Jagdfeld, President
and Chief Executive Officer. “Both residential and C&I
generator activity remained strong during the quarter with spending
on backup power for telecom applications in particular coming in
ahead of expectations as wireless carriers continue to invest in
hardening their networks.”
Jagdfeld continued, “In addition to our impressive start to the
year, with our recent acquisitions of Neurio and Pika, we have
accelerated our entry into the global market for energy management
and storage, which we believe to be a multi-billion dollar
opportunity as this market matures. By combining Generac’s
strong distribution, brand, and market creation capabilities with
Neurio’s valuable energy monitoring technologies and Pika’s
expertise in energy storage, we believe we are well positioned to
offer a new, differentiated line of products and solutions to help
homeowners and business owners reduce their overall energy
costs.”
Additional First Quarter 2019 Consolidated
Highlights
Gross profit margin was 34.5% compared to 35.5% in the
prior-year first quarter. Favorable sales mix and pricing
actions were more than offset by realization of higher input costs,
including regulatory tariffs, logistics and labor costs, as well as
unfavorable commodity fluctuations. Operating expenses increased
$5.4 million, or 6.3%, as compared to the first quarter of
2018. The increase was primarily driven by higher variable
costs given the strong core sales volumes, an increase in employee
headcount related to strategic initiatives, and recurring operating
expenses from recent acquisitions.
Provision for income taxes for the current year quarter was
$15.0 million, or an effective tax rate of 24.7%, as compared to
$11.4 million, or a 25.3% effective tax rate, for the prior
year.
On January 1, 2019, the Company adopted Accounting Standards
Update 2016-02, Leases. As a result of this new lease
accounting standard, the Company was required to recognize
approximately $40 million of right-of-use assets and lease
liabilities related to operating leases on the condensed
consolidated balance sheet.
Business Segment Results
Domestic Segment
Domestic segment sales increased 18.7% to $359.2 million as
compared to $302.7 million in the prior-year quarter. The
current-year quarter experienced robust growth in shipments of home
standby generators given continued strong end market conditions as
a result of increased power outage severity in recent years.
In addition, C&I stationary generator shipments were also
strong during the quarter, particularly for telecom and healthcare
applications. The overall Domestic segment growth was
partially offset by lower shipments of portable generators as the
prior year quarter benefitted from elevated outage activity in the
Northeast.
Adjusted EBITDA for the segment was $81.0 million, or 22.5% of
net sales, as compared to $65.5 million in the prior year, or 21.6%
of net sales. Favorable sales mix, pricing initiatives and
fixed operating cost leverage were partially offset by the
aforementioned higher input costs, as well as increased employee
costs.
International Segment
International segment sales increased 14.1% to $111.1 million as
compared to $97.4 million in the prior-year quarter. Core
sales growth, which excludes the impact of the Selmec and Captiva
acquisitions, as well as the unfavorable impact of currency, was
approximately 6%. This core sales increase was primarily
driven by continued market share gains and further execution of
synergies, particularly in Europe, Middle East, China, and
Brazil.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $6.2 million, or 5.5% of net sales,
as compared to $6.3 million, or 6.5% of net sales, in the prior
year. Although unfavorable regional sales mix and higher
input costs drove this modest year over year decline, margins for
the segment have improved by 130 basis points over the last twelve
months.
Updated 2019 Outlook The Company is increasing
its prior guidance for revenue growth for full-year 2019,
reflecting the stronger demand for Residential and C&I
products, as well as the addition of the Neurio and Pika
acquisitions. Depending on the severity of power outages
during the year, full-year net sales are expected to grow by
approximately 5 to 9%, which is an increase from the 3 to 7% growth
previously expected. Core sales growth for the full year is
expected to be approximately 3 to 7%, which is an increase from the
2 to 6% core growth previously expected. Seasonally, first
half net sales are now expected to grow 12 to 13% on an as-reported
basis, with growth in the second half expected to be approximately
flat to up mid-single-digits, depending on the severity of power
outages.
Net income margins, before deducting for noncontrolling
interests, are now expected to be between 10.5 to 11.5% for the
full-year 2019. Adjusted EBITDA margins, also before
deducting for noncontrolling interests, are now expected to be
between 19.5 to 20.5% for the year, depending on the severity of
power outages during the year. This modest decline in margin
outlook is primarily driven by the Neurio and Pika acquisitions,
which include strategic investments in product development and
infrastructure to build out and penetrate the new market
opportunities around energy management and storage.
Operating and free cash flow generation is still 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 Thursday, May 2, 2019 to discuss first 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 7667828.
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 7667828. 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 power
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 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 March 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
Net sales |
$ |
470,353 |
|
|
$ |
400,091 |
|
|
Costs of goods
sold |
|
308,178 |
|
|
|
258,164 |
|
|
Gross profit |
|
162,175 |
|
|
|
141,927 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
Selling
and service |
|
47,289 |
|
|
|
44,620 |
|
|
Research
and development |
|
13,609 |
|
|
|
11,853 |
|
|
General
and administrative |
|
24,762 |
|
|
|
23,475 |
|
|
Amortization of intangibles |
|
5,342 |
|
|
|
5,632 |
|
|
Total
operating expenses |
|
91,002 |
|
|
|
85,580 |
|
|
Income from
operations |
|
71,173 |
|
|
|
56,347 |
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
Interest
expense |
|
(10,272 |
) |
|
|
(10,113 |
) |
|
Investment income |
|
914 |
|
|
|
346 |
|
|
Other,
net |
|
(1,061 |
) |
|
|
(1,394 |
) |
|
Total
other expense, net |
|
(10,419 |
) |
|
|
(11,161 |
) |
|
|
|
|
|
|
Income before provision
for income taxes |
|
60,754 |
|
|
|
45,186 |
|
|
Provision for income
taxes |
|
14,985 |
|
|
|
11,416 |
|
|
Net income |
|
45,769 |
|
|
|
33,770 |
|
|
Net income attributable
to noncontrolling interests |
|
908 |
|
|
|
125 |
|
|
Net income attributable
to Generac Holdings Inc. |
$ |
44,861 |
|
|
$ |
33,645 |
|
|
|
|
|
|
|
Net
income attributable to common shareholders per common share -
basic: |
$ |
0.77 |
|
|
$ |
0.42 |
|
|
Weighted
average common shares outstanding - basic: |
|
61,762,260 |
|
|
|
61,943,495 |
|
|
|
|
|
|
|
Net
income attributable to common shareholders per common share -
diluted: |
$ |
0.76 |
|
|
$ |
0.42 |
|
|
Weighted
average common shares outstanding - diluted: |
|
62,223,638 |
|
|
|
62,474,936 |
|
|
|
|
|
|
|
Comprehensive income attributable to Generac Holdings
Inc. |
$ |
39,527 |
|
|
$ |
44,703 |
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Balance Sheets |
|
(U.S. Dollars in Thousands, Except Share and Per Share
Data) |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Assets |
(Unaudited) |
|
(Audited) |
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
161,266 |
|
|
$ |
224,482 |
|
|
Accounts
receivable, less allowance for doubtful accounts |
|
284,612 |
|
|
|
326,133 |
|
|
Inventories |
|
588,380 |
|
|
|
544,750 |
|
|
Prepaid
expenses and other assets |
|
28,537 |
|
|
|
25,404 |
|
|
Total
current assets |
|
1,062,795 |
|
|
|
1,120,769 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
289,438 |
|
|
|
278,929 |
|
|
|
|
|
|
|
Customer lists,
net |
|
59,450 |
|
|
|
61,194 |
|
|
Patents, net |
|
27,557 |
|
|
|
29,970 |
|
|
Other intangible
assets, net |
|
2,930 |
|
|
|
3,043 |
|
|
Tradenames, net |
|
151,174 |
|
|
|
152,283 |
|
|
Goodwill |
|
828,403 |
|
|
|
764,655 |
|
|
Deferred income
taxes |
|
4,385 |
|
|
|
163 |
|
|
Operating lease and
other assets |
|
47,590 |
|
|
|
15,308 |
|
|
Total assets |
$ |
2,473,722 |
|
|
$ |
2,426,314 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
$ |
45,241 |
|
|
$ |
45,583 |
|
|
Accounts
payable |
|
290,871 |
|
|
|
328,091 |
|
|
Accrued
wages and employee benefits |
|
26,659 |
|
|
|
40,819 |
|
|
Other
accrued liabilities |
|
151,005 |
|
|
|
144,236 |
|
|
Current
portion of long-term borrowings and finance lease obligations |
|
2,203 |
|
|
|
1,977 |
|
|
Total
current liabilities |
|
515,979 |
|
|
|
560,706 |
|
|
|
|
|
|
|
Long-term borrowings
and finance lease obligations |
|
882,483 |
|
|
|
876,396 |
|
|
Deferred income
taxes |
|
78,877 |
|
|
|
71,300 |
|
|
Operating lease and
other long-term liabilities |
|
129,071 |
|
|
|
95,647 |
|
|
Total liabilities |
|
1,606,410 |
|
|
|
1,604,049 |
|
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
57,357 |
|
|
|
61,004 |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Common
stock, par value $0.01, 500,000,000 shares authorized, 71,395,561
and 71,186,418 |
|
|
|
|
shares
issued at March 31, 2019 and December 31, 2018, respectively |
|
714 |
|
|
|
712 |
|
|
Additional paid-in capital |
|
481,391 |
|
|
|
476,116 |
|
|
Treasury
stock, at cost |
|
(324,115 |
) |
|
|
(321,473 |
) |
|
Excess
purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained
earnings |
|
878,416 |
|
|
|
831,123 |
|
|
Accumulated other comprehensive loss |
|
(29,870 |
) |
|
|
(23,813 |
) |
|
Stockholders’ equity attributable to Generac Holdings Inc. |
|
804,420 |
|
|
|
760,549 |
|
|
Noncontrolling interests |
|
5,535 |
|
|
|
712 |
|
|
Total
stockholders’ equity |
|
809,955 |
|
|
|
761,261 |
|
|
Total liabilities and
stockholders’ equity |
$ |
2,473,722 |
|
|
$ |
2,426,314 |
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Statements of Cash Flows |
|
(U.S. Dollars in Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Operating
activities |
|
|
|
|
Net
income |
$ |
45,769 |
|
|
$ |
33,770 |
|
|
Adjustment to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
7,265 |
|
|
|
6,051 |
|
|
Amortization of intangible assets |
|
5,342 |
|
|
|
5,632 |
|
|
Amortization of original issue discount and deferred financing
costs |
|
1,177 |
|
|
|
1,177 |
|
|
Deferred
income taxes |
|
5,151 |
|
|
|
4,283 |
|
|
Share-based compensation expense |
|
3,594 |
|
|
|
3,106 |
|
|
Other |
|
66 |
|
|
|
102 |
|
|
Net
changes in operating assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
46,970 |
|
|
|
18,744 |
|
|
Inventories |
|
(41,644 |
) |
|
|
(48,798 |
) |
|
Other
assets |
|
(1,293 |
) |
|
|
2,658 |
|
|
Accounts
payable |
|
(37,176 |
) |
|
|
(9,439 |
) |
|
Accrued
wages and employee benefits |
|
(14,148 |
) |
|
|
813 |
|
|
Other
accrued liabilities |
|
(5,762 |
) |
|
|
11,065 |
|
|
Excess
tax benefits from equity awards |
|
(740 |
) |
|
|
(196 |
) |
|
Net cash
provided by operating activities |
|
14,571 |
|
|
|
28,968 |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
Proceeds
from sale of property and equipment |
|
23 |
|
|
|
1 |
|
|
Proceeds
from beneficial interests in securitization transactions |
|
743 |
|
|
|
867 |
|
|
Expenditures for property and equipment |
|
(15,902 |
) |
|
|
(6,496 |
) |
|
Acquisition of business, net of cash acquired |
|
(61,549 |
) |
|
|
(369 |
) |
|
Net cash
used in investing activities |
|
(76,685 |
) |
|
|
(5,997 |
) |
|
|
|
|
|
|
Financing
activities |
|
|
|
|
Proceeds
from short-term borrowings |
|
13,531 |
|
|
|
14,315 |
|
|
Repayments of short-term borrowings |
|
(13,282 |
) |
|
|
(3,911 |
) |
|
Repayments of long-term borrowings and finance lease
obligations |
|
(908 |
) |
|
|
(408 |
) |
|
Stock
repurchases |
|
– |
|
|
|
(25,656 |
) |
|
Cash
dividends paid to noncontrolling interest of subsidiary |
|
– |
|
|
|
(314 |
) |
|
Taxes
paid related to equity awards |
|
(3,156 |
) |
|
|
(1,626 |
) |
|
Proceeds
from the exercise of stock options |
|
2,193 |
|
|
|
1,400 |
|
|
Net cash
used in financing activities |
|
(1,622 |
) |
|
|
(16,200 |
) |
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
520 |
|
|
|
919 |
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents |
|
(63,216 |
) |
|
|
7,690 |
|
|
Cash and
cash equivalents at beginning of period |
|
224,482 |
|
|
|
138,472 |
|
|
Cash and
cash equivalents at end of period |
$ |
161,266 |
|
|
$ |
146,162 |
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
|
Segment Reporting and Product Class Information |
|
(U.S. Dollars in Thousands) |
|
(Unaudited) |
|
|
|
|
Net Sales |
|
|
|
|
Three Months Ended March 31, |
|
|
Reportable Segments |
|
2019 |
|
|
2018 |
|
|
Domestic (1) |
$ |
359,248 |
|
$ |
302,676 |
|
|
International |
|
111,105 |
|
|
97,415 |
|
|
Total net
sales |
$ |
470,353 |
|
$ |
400,091 |
|
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
Residential products |
$ |
217,830 |
|
$ |
190,474 |
|
|
Commercial & industrial products |
|
209,124 |
|
|
175,125 |
|
|
Other (1) |
|
43,399 |
|
|
34,492 |
|
|
Total net
sales |
$ |
470,353 |
|
$ |
400,091 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Domestic |
$ |
80,975 |
|
$ |
65,475 |
|
|
International |
|
6,153 |
|
|
6,306 |
|
|
Total
adjusted EBITDA (2) |
$ |
87,128 |
|
$ |
71,781 |
|
|
|
|
|
|
|
|
|
(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 first quarter of 2018 have been
revised by $2,457 and $1,938, respectively, from the amounts
previously reported in the Company’s first quarter 2018 Form 10-Q,
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 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 March 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
44,861 |
|
|
$ |
33,645 |
|
|
Net income
attributable to noncontrolling interests |
|
908 |
|
|
|
125 |
|
|
Net
income |
|
|
|
45,769 |
|
|
|
33,770 |
|
|
Interest
expense |
|
|
|
10,272 |
|
|
|
10,113 |
|
|
Depreciation and amortization |
|
|
12,607 |
|
|
|
11,683 |
|
|
Provision
for income taxes |
|
|
14,985 |
|
|
|
11,416 |
|
|
Non-cash
write-down and other adjustments (1) |
|
(1,400 |
) |
|
|
1,306 |
|
|
Non-cash
share-based compensation expense (2) |
|
3,594 |
|
|
|
3,106 |
|
|
Transaction
costs and credit facility fees (3) |
|
1,286 |
|
|
|
262 |
|
|
Business
optimization expenses (4) |
|
|
169 |
|
|
|
138 |
|
|
Other |
|
|
|
|
(154 |
) |
|
|
(13 |
) |
|
Adjusted
EBITDA |
|
|
|
87,128 |
|
|
|
71,781 |
|
|
Adjusted
EBITDA attributable to noncontrolling interests |
|
2,050 |
|
|
|
1,549 |
|
|
Adjusted
EBITDA attributable to Generac Holdings Inc. |
$ |
85,078 |
|
|
$ |
70,232 |
|
|
|
|
|
|
|
|
|
|
(1) Includes gains/losses on disposals of assets, unrealized
mark-to-market adjustments on commodity contracts, and certain
foreign currency 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, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
44,861 |
|
|
$ |
33,645 |
|
|
Net income
attributable to noncontrolling interests |
|
908 |
|
|
|
125 |
|
|
Net
income |
|
|
|
45,769 |
|
|
|
33,770 |
|
|
Provision
for income taxes |
|
|
14,985 |
|
|
|
11,416 |
|
|
Income
before provision for income taxes |
|
60,754 |
|
|
|
45,186 |
|
|
Amortization of intangible assets |
|
|
5,342 |
|
|
|
5,632 |
|
|
Amortization of deferred finance costs and original issue
discount |
|
1,177 |
|
|
|
1,177 |
|
|
Transaction
costs and other purchase accounting adjustments (5) |
|
1,035 |
|
|
|
20 |
|
|
Business
optimization expenses (4) |
|
|
169 |
|
|
|
138 |
|
|
Adjusted
net income before provision for income taxes |
|
68,477 |
|
|
|
52,153 |
|
|
Cash income
tax expense (6) |
|
|
(10,510 |
) |
|
|
(5,410 |
) |
|
Adjusted
net income |
|
|
|
57,967 |
|
|
|
46,743 |
|
|
Adjusted
net income attributable to noncontrolling interests |
|
1,474 |
|
|
|
661 |
|
|
Adjusted
net income attributable to Generac Holdings Inc. |
$ |
56,493 |
|
|
$ |
46,082 |
|
|
|
|
|
|
|
|
|
|
Adjusted
net income attributable to Generac Holdings Inc. per |
|
|
|
|
common share - diluted: |
|
$ |
0.91 |
|
|
$ |
0.74 |
|
|
Weighted
average common shares outstanding - diluted: |
|
62,223,638 |
|
|
|
62,474,936 |
|
|
|
|
|
|
|
|
|
|
(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, 2019 is based
on an anticipated cash income tax rate of 17% for the full year
ended 2019. Amount for the three months ended March 31, 2018 is
based on an anticipated cash income tax rate of 13% 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 cash tax rate to the period’s pretax
income. |
|
|
|
|
|
|
|
|
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
$ |
14,571 |
|
|
$ |
28,968 |
|
|
Proceeds
from beneficial interests in securitization transactions |
|
743 |
|
|
|
867 |
|
|
Expenditures for property and equipment |
|
(15,902 |
) |
|
|
(6,496 |
) |
|
Free cash
flow |
|
|
$ |
(588 |
) |
|
$ |
23,339 |
|
|
|
|
|
|
|
|
|
|
GAAP Earnings Per Share |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Numerator |
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
44,861 |
|
|
$ |
33,645 |
|
|
Redeemable noncontrolling interest redemption value
adjustment |
|
2,432 |
|
|
|
(7,665 |
) |
|
Net income attributable to common shareholders |
$ |
47,293 |
|
|
$ |
25,980 |
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
Weighted average shares, basic |
|
|
61,762,260 |
|
|
|
61,943,495 |
|
|
Dilutive effect of stock compensation awards |
|
461,378 |
|
|
|
531,441 |
|
|
Diluted shares |
|
|
|
62,223,638 |
|
|
|
62,474,936 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per share |
|
|
|
|
Basic |
|
|
|
$ |
0.77 |
|
|
$ |
0.42 |
|
|
Diluted |
|
|
$ |
0.76 |
|
|
$ |
0.42 |
|
|
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