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
second quarter ended June 30, 2019.
Second Quarter 2019 Highlights
- Net sales increased 8.9% to $541.9 million during the second
quarter of 2019 as compared to $497.6 million in the prior-year
second quarter. Core sales growth, which excludes both the
impact of acquisitions and foreign currency, was approximately
7%.
- Residential product sales increased 8.9% to $268.4 million as
compared to $246.4 million last year, with core sales growth of
approximately 8%.
- Commercial & Industrial (“C&I”) product sales increased
6.9% to $230.4 million as compared to $215.6 million in the prior
year, with core sales growth of approximately 6%.
- Net income attributable to the Company during the second
quarter was $62.0 million, or $0.98 per share, as compared to $53.3
million, or $0.82 per share, for the same period of
2018.
- Adjusted net income attributable to the Company, as defined in
the accompanying reconciliation schedules, was $74.9 million, or
$1.20 per share, as compared to $68.9 million, or $1.11 per share,
in the second quarter of 2018.
- Adjusted EBITDA before deducting for noncontrolling interests,
as defined in the accompanying reconciliation schedules, was $111.9
million, or 20.6% of net sales, as compared to $102.2 million, or
20.5% of net sales, in the prior year.
“Domestic end market demand for both residential and C&I
standby generators continued to be very favorable as our strong
execution led to record sales and EBITDA in the second quarter,”
said Aaron Jagdfeld, President and Chief Executive Officer.
“As we continue to drive the company’s strategy forward, we remain
focused on a number of key macro growth themes, which include
expanding awareness around the need for backup power, improving 5G
network reliability, developing the global opportunity for natural
gas power generation, and most recently entering the rapidly
growing clean energy market. In addition, we stand ready to
execute should a major power outage event occur anywhere in North
America, be it a landed hurricane or a utility shutoff in
California.”
Additional Second Quarter 2019 Consolidated
Highlights
Gross profit margin was 36.1% compared to 35.9% in the
prior-year second quarter. Favorable sales mix and pricing
actions were partially offset by realization of higher input costs,
including regulatory tariffs, logistics costs, labor rates and
commodities. Operating expenses increased $11.9 million, or 12.8%,
as compared to the second quarter of 2018. The increase was
primarily driven by recurring operating expenses from recent
acquisitions, an increase in employee headcount related to
strategic initiatives, higher intangible amortization expenses, and
higher variable costs given the increased sales volumes.
Provision for income taxes for the current year quarter was
$18.8 million, or an effective tax rate of 23.4%, as compared to
$18.4 million, or a 25.3% effective tax rate, for the prior
year. A higher mix of domestic pre-tax income and additional
stock compensation deductions drove the year-over-year decline in
effective tax rate.
Cash flow from operations was $8.0 million as compared to $50.7
million in the prior year quarter. Free cash flow, as defined
in the accompanying reconciliation schedules, was ($9.8) million as
compared to $45.9 million in the second quarter of 2018.
Higher operating earnings in the current year quarter were more
than offset by additional working capital investments, the timing
of tax payments and higher levels of capital expenditures compared
to prior year. Business Segment Results
Domestic Segment
Domestic segment sales increased 11.0% to $425.9 million as
compared to $383.7 million in the prior-year quarter. Core
sales growth, which excludes the impact of the Neurio and Pika
acquisitions, was approximately 10.4%. The current-year
quarter experienced strong growth in shipments of home standby
generators given continued strong end market conditions. In
addition, C&I stationary generator shipments were also strong
during the quarter, primarily related to our telecom
customers. The overall Domestic segment growth was partially
offset by lower shipments of portable generators as the prior year
quarter benefitted from channel replenishment following elevated
outage activity.
Adjusted EBITDA for the segment was $104.5 million, or 24.5% of
net sales, as compared to $90.6 million in the prior year, or 23.6%
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 and recurring operating expenses from recent acquisitions.
International Segment
International segment sales increased 1.8% to $116.0 million as
compared to $113.9 million in the prior-year quarter. Core
sales, which excludes the impact of the Selmec and Captiva
acquisitions, as well as the unfavorable impact of currency,
declined by approximately 3% due to the timing of certain large
projects that shipped during the prior year quarter.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $7.4 million, or 6.3% of net sales,
as compared to $11.6 million, or 10.2% of net sales, in the prior
year. Unfavorable sales mix and decreased operating leverage
contributed to the decline.
Updated 2019 Outlook The Company is increasing
its prior guidance for revenue growth for full-year 2019 reflecting
stronger domestic end market demand. Assuming no “major”
outage events and a baseline power outage severity level similar to
the longer-term average, we are raising our full-year as reported
net sales growth to approximately 6 to 7%, with core sales growth
now expected to be approximately 4 to 5%. In addition, should
the outage environment in the second half of 2019 be higher due to
an active hurricane season and widespread utility shut-offs in
California, we could expect approximately 5% of incremental revenue
growth.
Net income margin, before deducting for noncontrolling
interests, is now expected to be approximately 11.0% for the
full-year 2019, with corresponding Adjusted EBITDA margin of
approximately 20.0% for the year assuming baseline power outage
levels. Should the outage environment in the second half of
2019 be higher as noted above, net income margin, before deducting
for noncontrolling interests, could be approximately 12.0%, with
corresponding Adjusted EBITDA margin of approximately 21.0% for the
full-year 2019.
Despite the slower start to the year, 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
approximately 80 to 90%. Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT
on Thursday, August 1, 2019 to discuss second 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 6898073.
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 6898073. 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 Balance Sheets |
|
(U.S. Dollars in Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
110,367 |
|
|
$ |
224,482 |
|
|
Accounts receivable, less allowance for doubtful accounts |
|
341,535 |
|
|
|
326,133 |
|
|
Inventories |
|
570,327 |
|
|
|
544,750 |
|
|
Prepaid expenses and other assets |
|
29,481 |
|
|
|
25,404 |
|
|
Total current assets |
|
1,051,710 |
|
|
|
1,120,769 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
300,795 |
|
|
|
278,929 |
|
|
|
|
|
|
|
Customer lists, net |
|
58,935 |
|
|
|
61,194 |
|
|
Patents, net |
|
79,690 |
|
|
|
29,970 |
|
|
Other intangible assets,
net |
|
12,622 |
|
|
|
3,043 |
|
|
Tradenames, net |
|
150,527 |
|
|
|
152,283 |
|
|
Goodwill |
|
817,392 |
|
|
|
764,655 |
|
|
Deferred income taxes |
|
3,391 |
|
|
|
163 |
|
|
Operating lease and other
assets |
|
48,047 |
|
|
|
15,308 |
|
|
Total assets |
$ |
2,523,109 |
|
|
$ |
2,426,314 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Short-term borrowings |
$ |
57,031 |
|
|
$ |
45,583 |
|
|
Accounts payable |
|
259,696 |
|
|
|
328,091 |
|
|
Accrued wages and employee benefits |
|
30,289 |
|
|
|
40,819 |
|
|
Other accrued liabilities |
|
130,891 |
|
|
|
144,236 |
|
|
Current portion of long-term borrowings and finance lease
obligations |
|
2,456 |
|
|
|
1,977 |
|
|
Total current liabilities |
|
480,363 |
|
|
|
560,706 |
|
|
|
|
|
|
|
Long-term borrowings and
finance lease obligations |
|
883,476 |
|
|
|
876,396 |
|
|
Deferred income taxes |
|
85,192 |
|
|
|
71,300 |
|
|
Operating lease and other
long-term liabilities |
|
143,950 |
|
|
|
95,647 |
|
|
Total liabilities |
|
1,592,981 |
|
|
|
1,604,049 |
|
|
|
|
|
|
|
Redeemable noncontrolling
interest |
|
59,117 |
|
|
|
61,004 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
71,471,341 and 71,186,418 |
|
|
|
|
shares issued at June 30, 2019 and December 31, 2018,
respectively |
|
715 |
|
|
|
712 |
|
|
Additional paid-in capital |
|
485,703 |
|
|
|
476,116 |
|
|
Treasury stock, at cost |
|
(324,149 |
) |
|
|
(321,473 |
) |
|
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained earnings |
|
939,618 |
|
|
|
831,123 |
|
|
Accumulated other comprehensive loss |
|
(33,831 |
) |
|
|
(23,813 |
) |
|
Stockholders’ equity attributable to Generac Holdings Inc. |
|
865,940 |
|
|
|
760,549 |
|
|
Noncontrolling interests |
|
5,071 |
|
|
|
712 |
|
|
Total stockholders’ equity |
|
871,011 |
|
|
|
761,261 |
|
|
Total liabilities and
stockholders’ equity |
$ |
2,523,109 |
|
|
$ |
2,426,314 |
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Statements of Comprehensive Income |
|
(U.S. Dollars in Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
541,916 |
|
|
$ |
497,581 |
|
|
$ |
1,012,269 |
|
|
$ |
897,672 |
|
|
Costs of goods sold |
|
346,078 |
|
|
|
319,108 |
|
|
|
654,256 |
|
|
|
577,272 |
|
|
Gross profit |
|
195,838 |
|
|
|
178,473 |
|
|
|
358,013 |
|
|
|
320,400 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling and service |
|
52,309 |
|
|
|
48,269 |
|
|
|
99,598 |
|
|
|
92,889 |
|
|
Research and development |
|
17,694 |
|
|
|
12,616 |
|
|
|
31,303 |
|
|
|
24,469 |
|
|
General and administrative |
|
27,658 |
|
|
|
26,639 |
|
|
|
52,420 |
|
|
|
50,114 |
|
|
Amortization of intangibles |
|
7,251 |
|
|
|
5,482 |
|
|
|
12,593 |
|
|
|
11,114 |
|
|
Total operating expenses |
|
104,912 |
|
|
|
93,006 |
|
|
|
195,914 |
|
|
|
178,586 |
|
|
Income from operations |
|
90,926 |
|
|
|
85,467 |
|
|
|
162,099 |
|
|
|
141,814 |
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
(10,452 |
) |
|
|
(11,002 |
) |
|
|
(20,724 |
) |
|
|
(21,115 |
) |
|
Investment income |
|
452 |
|
|
|
367 |
|
|
|
1,366 |
|
|
|
713 |
|
|
Loss on extinguishment of debt |
|
– |
|
|
|
(1,332 |
) |
|
|
– |
|
|
|
(1,332 |
) |
|
Other, net |
|
(393 |
) |
|
|
(887 |
) |
|
|
(1,454 |
) |
|
|
(2,281 |
) |
|
Total other expense, net |
|
(10,393 |
) |
|
|
(12,854 |
) |
|
|
(20,812 |
) |
|
|
(24,015 |
) |
|
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes |
|
80,533 |
|
|
|
72,613 |
|
|
|
141,287 |
|
|
|
117,799 |
|
|
Provision for income
taxes |
|
18,827 |
|
|
|
18,382 |
|
|
|
33,812 |
|
|
|
29,798 |
|
|
Net income |
|
61,706 |
|
|
|
54,231 |
|
|
|
107,475 |
|
|
|
88,001 |
|
|
Net (loss) income attributable
to noncontrolling interests |
|
(252 |
) |
|
|
970 |
|
|
|
656 |
|
|
|
1,095 |
|
|
Net income attributable to
Generac Holdings Inc. |
$ |
61,958 |
|
|
$ |
53,261 |
|
|
$ |
106,819 |
|
|
$ |
86,906 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
basic: |
$ |
0.99 |
|
|
$ |
0.83 |
|
|
$ |
1.75 |
|
|
$ |
1.25 |
|
|
Weighted average common shares outstanding - basic: |
|
61,921,711 |
|
|
|
61,534,423 |
|
|
|
61,841,823 |
|
|
|
61,696,014 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
diluted: |
$ |
0.98 |
|
|
$ |
0.82 |
|
|
$ |
1.74 |
|
|
$ |
1.24 |
|
|
Weighted average common shares outstanding - diluted: |
|
62,405,863 |
|
|
|
62,054,447 |
|
|
|
62,349,030 |
|
|
|
62,259,712 |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to Generac Holdings
Inc. |
$ |
57,398 |
|
|
$ |
47,884 |
|
|
$ |
96,925 |
|
|
$ |
92,587 |
|
|
|
|
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
Condensed Consolidated Statements of Cash Flows |
|
(U.S. Dollars in Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Operating activities |
|
|
|
|
Net income |
$ |
107,475 |
|
|
$ |
88,001 |
|
|
Adjustment to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation |
|
14,754 |
|
|
|
12,169 |
|
|
Amortization of intangible assets |
|
12,593 |
|
|
|
11,114 |
|
|
Amortization of original issue discount and deferred financing
costs |
|
2,376 |
|
|
|
2,367 |
|
|
Loss on extinguishment of debt |
|
– |
|
|
|
1,332 |
|
|
Deferred income taxes |
|
11,108 |
|
|
|
6,257 |
|
|
Share-based compensation expense |
|
7,928 |
|
|
|
6,991 |
|
|
Other |
|
400 |
|
|
|
599 |
|
|
Net changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
(8,794 |
) |
|
|
(24,876 |
) |
|
Inventories |
|
(21,157 |
) |
|
|
(85,592 |
) |
|
Other assets |
|
(3,086 |
) |
|
|
(13,047 |
) |
|
Accounts payable |
|
(68,539 |
) |
|
|
33,442 |
|
|
Accrued wages and employee benefits |
|
(14,912 |
) |
|
|
4,510 |
|
|
Other accrued liabilities |
|
(16,077 |
) |
|
|
36,578 |
|
|
Excess tax benefits from equity awards |
|
(1,455 |
) |
|
|
(188 |
) |
|
Net cash provided by operating activities |
|
22,614 |
|
|
|
79,657 |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
Proceeds from sale of property and equipment |
|
49 |
|
|
|
196 |
|
|
Proceeds from beneficial interests in securitization
transactions |
|
1,396 |
|
|
|
1,929 |
|
|
Expenditures for property and equipment |
|
(34,376 |
) |
|
|
(12,326 |
) |
|
Acquisition of business, net of cash acquired |
|
(112,941 |
) |
|
|
(71,926 |
) |
|
Net cash used in investing activities |
|
(145,872 |
) |
|
|
(82,127 |
) |
|
|
|
|
|
|
Financing
activities |
|
|
|
|
Proceeds from short-term borrowings |
|
35,790 |
|
|
|
12,133 |
|
|
Proceeds from long-term borrowings |
|
– |
|
|
|
50,000 |
|
|
Repayments of short-term borrowings |
|
(24,325 |
) |
|
|
(8,172 |
) |
|
Repayments of long-term borrowings and finance lease
obligations |
|
(2,000 |
) |
|
|
(50,797 |
) |
|
Stock repurchases |
|
– |
|
|
|
(25,656 |
) |
|
Payment of debt issuance costs |
|
– |
|
|
|
(1,473 |
) |
|
Cash dividends paid to noncontrolling interest of subsidiary |
|
(285 |
) |
|
|
(314 |
) |
|
Taxes paid related to equity awards |
|
(4,441 |
) |
|
|
(1,725 |
) |
|
Proceeds from the exercise of stock options |
|
3,419 |
|
|
|
2,124 |
|
|
Net cash provided by (used in) financing activities |
|
8,158 |
|
|
|
(23,880 |
) |
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
985 |
|
|
|
(408 |
) |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(114,115 |
) |
|
|
(26,758 |
) |
|
Cash and cash equivalents at beginning of period |
|
224,482 |
|
|
|
138,472 |
|
|
Cash and cash equivalents at end of period |
$ |
110,367 |
|
|
$ |
111,714 |
|
|
|
|
|
|
|
Generac Holdings Inc. |
|
|
|
|
|
Segment Reporting and Product Class Information |
|
|
|
|
(U.S. Dollars in Thousands) |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
Net Sales |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
Reportable Segments |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Domestic (1) |
$ |
425,938 |
|
$ |
383,679 |
|
$ |
785,186 |
|
$ |
686,355 |
|
International |
|
115,978 |
|
|
113,902 |
|
|
227,083 |
|
|
211,317 |
|
Total net
sales |
$ |
541,916 |
|
$ |
497,581 |
|
$ |
1,012,269 |
|
$ |
897,672 |
|
|
|
|
|
|
|
|
|
|
|
Product
Classes |
|
|
|
|
|
|
|
|
Residential products |
$ |
268,374 |
|
$ |
246,398 |
|
$ |
486,204 |
|
$ |
436,872 |
|
Commercial & industrial products |
|
230,428 |
|
|
215,628 |
|
|
439,552 |
|
|
390,753 |
|
Other (1) |
|
43,114 |
|
|
35,555 |
|
|
86,513 |
|
|
70,047 |
|
Total net
sales |
$ |
541,916 |
|
$ |
497,581 |
|
$ |
1,012,269 |
|
$ |
897,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Domestic |
$ |
104,531 |
|
$ |
90,602 |
|
$ |
185,506 |
|
$ |
156,077 |
|
International |
|
7,355 |
|
|
11,628 |
|
|
13,508 |
|
|
17,934 |
|
Total adjusted
EBITDA (2) |
$ |
111,886 |
|
$ |
102,230 |
|
$ |
199,014 |
|
$ |
174,011 |
|
|
|
|
|
|
|
|
|
|
|
(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 June 30, 2018 have
been revised by $2,632 and $2,217, respectively, and the net sales
and gross profit amounts for the six months ended June 30, 2018
have been revised by $5,089 and $4,155, respectively, from the
amounts previously reported for the second 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 June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
61,958 |
|
|
$ |
53,261 |
|
|
$ |
106,819 |
|
|
$ |
86,906 |
|
|
Net (loss) income
attributable to noncontrolling interests |
|
(252 |
) |
|
|
970 |
|
|
|
656 |
|
|
|
1,095 |
|
|
Net income |
|
|
|
61,706 |
|
|
|
54,231 |
|
|
|
107,475 |
|
|
|
88,001 |
|
|
Interest
expense |
|
|
|
10,452 |
|
|
|
11,002 |
|
|
|
20,724 |
|
|
|
21,115 |
|
|
Depreciation and
amortization |
|
|
14,740 |
|
|
|
11,600 |
|
|
|
27,347 |
|
|
|
23,283 |
|
|
Provision for
income taxes |
|
|
18,827 |
|
|
|
18,382 |
|
|
|
33,812 |
|
|
|
29,798 |
|
|
Non-cash
write-down and other adjustments (1) |
|
1,726 |
|
|
|
1,316 |
|
|
|
326 |
|
|
|
2,622 |
|
|
Non-cash
share-based compensation expense (2) |
|
4,334 |
|
|
|
3,885 |
|
|
|
7,928 |
|
|
|
6,991 |
|
|
Loss on
extinguishment of debt |
|
– |
|
|
|
1,332 |
|
|
|
- |
|
|
|
1,332 |
|
|
Transaction costs
and credit facility fees (3) |
|
413 |
|
|
|
441 |
|
|
|
1,699 |
|
|
|
703 |
|
|
Business
optimization expenses (4) |
|
|
73 |
|
|
|
29 |
|
|
|
242 |
|
|
|
167 |
|
|
Other |
|
|
|
|
(385 |
) |
|
|
12 |
|
|
|
(539 |
) |
|
|
(1 |
) |
|
Adjusted
EBITDA |
|
|
|
111,886 |
|
|
|
102,230 |
|
|
|
199,014 |
|
|
|
174,011 |
|
|
Adjusted EBITDA
attributable to noncontrolling interests |
|
763 |
|
|
|
2,630 |
|
|
|
2,813 |
|
|
|
4,179 |
|
|
Adjusted EBITDA
attributable to Generac Holdings Inc. |
$ |
111,123 |
|
|
$ |
99,600 |
|
|
$ |
196,201 |
|
|
$ |
169,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
61,958 |
|
|
$ |
53,261 |
|
|
$ |
106,819 |
|
|
$ |
86,906 |
|
|
Net (loss) income
attributable to noncontrolling interests |
|
(252 |
) |
|
|
970 |
|
|
|
656 |
|
|
|
1,095 |
|
|
Net
income |
|
|
|
61,706 |
|
|
|
54,231 |
|
|
|
107,475 |
|
|
|
88,001 |
|
|
Provision for
income taxes |
|
|
18,827 |
|
|
|
18,382 |
|
|
|
33,812 |
|
|
|
29,798 |
|
|
Income before
provision for income taxes |
|
80,533 |
|
|
|
72,613 |
|
|
|
141,287 |
|
|
|
117,799 |
|
|
Amortization of
intangible assets |
|
|
7,251 |
|
|
|
5,482 |
|
|
|
12,593 |
|
|
|
11,114 |
|
|
Amortization of deferred finance costs and original issue
discount |
|
1,199 |
|
|
|
1,190 |
|
|
|
2,376 |
|
|
|
2,367 |
|
|
Loss on
extinguishment of debt |
|
– |
|
|
|
1,332 |
|
|
|
- |
|
|
|
1,332 |
|
|
Transaction costs
and other purchase accounting adjustments (5) |
|
173 |
|
|
|
794 |
|
|
|
1,208 |
|
|
|
814 |
|
|
Business
optimization expenses (4) |
|
|
73 |
|
|
|
29 |
|
|
|
242 |
|
|
|
167 |
|
|
Adjusted net
income before provision for income taxes |
|
89,229 |
|
|
|
81,440 |
|
|
|
157,706 |
|
|
|
133,593 |
|
|
Cash income tax
expense (6) |
|
|
(14,105 |
) |
|
|
(11,114 |
) |
|
|
(24,615 |
) |
|
|
(16,524 |
) |
|
Adjusted net
income |
|
|
|
75,124 |
|
|
|
70,326 |
|
|
|
133,091 |
|
|
|
117,069 |
|
|
Adjusted net
income attributable to noncontrolling interests |
|
222 |
|
|
|
1,383 |
|
|
|
1,696 |
|
|
|
2,044 |
|
|
Adjusted net
income attributable to Generac Holdings Inc. |
$ |
74,902 |
|
|
$ |
68,943 |
|
|
$ |
131,395 |
|
|
$ |
115,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income attributable to Generac Holdings Inc. per |
|
|
|
|
|
|
|
|
common
share - diluted: |
|
$ |
1.20 |
|
|
$ |
1.11 |
|
|
$ |
2.11 |
|
|
$ |
1.85 |
|
|
Weighted average
common shares outstanding - diluted: |
|
62,405,863 |
|
|
|
62,054,447 |
|
|
|
62,349,030 |
|
|
|
62,259,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 six months ended June 30, 2019 are
now based on an anticipated cash income tax rate of approximately
17% to 18% for the full year ended 2019. Amounts for the three and
six months ended June 30, 2018 are based on an anticipated cash
income tax rate of approximately 14% 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 June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided
by operating activities |
$ |
8,043 |
|
|
$ |
50,689 |
|
|
$ |
22,614 |
|
|
$ |
79,657 |
|
|
Proceeds from
beneficial interests in securitization transactions |
|
653 |
|
|
|
1,062 |
|
|
|
1,396 |
|
|
|
1,929 |
|
|
Expenditures for
property and equipment |
|
(18,474 |
) |
|
|
(5,830 |
) |
|
|
(34,376 |
) |
|
|
(12,326 |
) |
|
Free cash
flow |
|
|
$ |
(9,778 |
) |
|
$ |
45,921 |
|
|
$ |
(10,366 |
) |
|
$ |
69,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
61,958 |
|
|
$ |
53,261 |
|
|
$ |
106,819 |
|
|
$ |
86,906 |
|
|
Redeemable noncontrolling interest redemption value adjustment |
|
(756 |
) |
|
|
(2,305 |
) |
|
|
1,676 |
|
|
|
(9,970 |
) |
|
Net income attributable to common shareholders |
$ |
61,202 |
|
|
$ |
50,956 |
|
|
$ |
108,495 |
|
|
$ |
76,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
Weighted average shares, basic |
|
|
61,921,711 |
|
|
|
61,534,423 |
|
|
|
61,841,823 |
|
|
|
61,696,014 |
|
|
Dilutive effect of stock compensation awards |
|
484,152 |
|
|
|
520,024 |
|
|
|
507,207 |
|
|
|
563,698 |
|
|
Diluted shares |
|
|
|
62,405,863 |
|
|
|
62,054,447 |
|
|
|
62,349,030 |
|
|
|
62,259,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per share |
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
0.99 |
|
|
$ |
0.83 |
|
|
$ |
1.75 |
|
|
$ |
1.25 |
|
|
Diluted |
|
|
$ |
0.98 |
|
|
$ |
0.82 |
|
|
$ |
1.74 |
|
|
$ |
1.24 |
|
|
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