Generac Holdings Inc. (NYSE: GNRC) (“Generac” or the “Company”), a
leading global designer and manufacturer of energy technology
solutions and other power products, today reported financial
results for its fourth quarter and full-year ended December 31,
2019.
Fourth Quarter 2019 Highlights
- Net sales increased 4.9% to $590.9 million during the fourth
quarter of 2019 as compared to $563.4 million in the prior-year
fourth quarter. Core sales growth, which excludes both the
impact of acquisitions and foreign currency, was approximately
4%.
- Residential product sales increased 9.7% to $322.5 million as
compared to $293.9 million last year, with core sales growth of
approximately 7%.
- Commercial & Industrial (“C&I”) product sales decreased
2.7% to $217.1 million as compared to $223.2 million in the prior
year, with core sales also declining approximately 3%.
- Net income attributable to the Company during the fourth
quarter was $69.6 million, or $1.12 per share, as compared to $75.6
million, or $1.20 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 $96.5 million, or
$1.53 per share, as compared to $88.1 million, or $1.42 per share,
in the fourth quarter of 2018.
- Adjusted EBITDA before deducting for noncontrolling interests,
as defined in the accompanying reconciliation schedules, was $129.1
million, or 21.9% of net sales, as compared to $126.1 million, or
22.4% of net sales, in the prior year.
- Cash flow from operations was $175.1 million as compared to
$108.2 million in the prior year. Free cash flow, as defined
in the accompanying reconciliation schedules, was $160.3 million as
compared to $87.3 million in 2018. The increase was primarily
driven by the monetization of previous working capital investments,
together with lower capital expenditures compared to the prior year
quarter.
- As previously announced, on December 13, 2019, the Company
amended its Term Loan credit agreement, which among other things
extended the maturity of the term loan from May 2023 to December
2026. In conjunction with the amendment, the Company paid
down $49 million of debt on the term loan.
Full-Year 2019 Highlights
- Net sales increased 8.9% to $2.20 billion during 2019 as
compared to $2.02 billion in 2018, including $41.2 million of
contribution from acquisitions. Total core sales growth for
the year was approximately 8%.
- Residential product sales increased 9.7% to $1.14 billion as
compared to $1.04 billion last year, with core sales growth of
approximately 9%.
- C&I product sales increased 6.3% to $871.6 million as
compared to $820.3 million in the prior year, with core sales also
increasing approximately 6%.
- Net income attributable to the Company during 2019 was $252.0
million, or $4.03 per share, as compared to $238.3 million, or
$3.54 per share for 2018.
- Adjusted net income attributable to the Company was $317.8
million, or $5.06 per share, as compared to $292.2 million, or
$4.70 per share, in 2018.
- Adjusted EBITDA before deducting for non-controlling interests
for 2019 was $454.1 million, or 20.6% of net sales, as compared to
$424.6 million, or 21.0% of net sales, last year.
- Cash flow from operations was $308.9 million as compared to
$247.2 million in the prior year. Free cash flow was $250.7
million as compared to $203.6 million in 2018.
“The fourth quarter was a great finish to a very strong 2019
with record performance for both the quarter and the full-year for
net sales, adjusted EBITDA and free cash flow,” said Aaron
Jagdfeld, President and Chief Executive Officer. “Home
standby demand was again robust during the quarter driven by
California as public utility shut-offs drove a dramatic increase in
interest for these products. We also made the first shipments
of our new PWRcell™ energy storage system during the quarter,
and the outlook for our clean energy products continues to exceed
our expectations. Our full-year results for residential
products were also exceptionally strong and broad-based, and we
experienced similar trends with domestic C&I product shipments
through our industrial distributors as the penetration of natural
gas generators continues to accelerate. Additionally, shipments to
our telecom national account customers for the full year increased
significantly as they continue to expand and harden their networks
in preparation for the impending rollout of 5G technology. We
believe our 2019 performance is further evidence of the tremendous
growth opportunities for Generac, and as we enter 2020 we are
incredibly excited about the long-term prospects for our
business.”
Additional Fourth Quarter 2019 Consolidated
Highlights
Gross profit margin improved 130 basis points to 37.6% compared
to 36.3% in the prior-year fourth quarter. Pricing actions
and favorable sales mix, as well as lower realized commodity and
foreign currency input costs, were partially offset by increased
regulatory tariffs, and the unfavorable mix impact from
acquisitions. Operating expenses increased $22.3 million, or 23.3%,
as compared to the fourth quarter of 2018. The increase was
primarily driven by higher employee costs, recurring operating
expenses from recent acquisitions, additional intangible
amortization and depreciation expense, as well as greater marketing
and promotional spend as we continue to invest in a number of
initiatives to capitalize on future growth opportunities.
Provision for income taxes for the current year quarter was
$13.4 million, or an effective tax rate of 16.1%, as compared to
$20.0 million, or a 20.7% effective tax rate, for the prior
year. The current year quarter was favorably impacted by a
year-end revaluation adjustment related to a reduction in the state
income tax rate. For the full year, the effective tax rate
for 2019 was 21.1% compared to 22.5% in the prior year.
During the fourth quarter of 2019, the Company completed the
termination of its domestic pension plan, which did not result in a
reduction of benefits to plan participants. This resulted in
pre-tax settlement charges of $10.9 million during the quarter, or
$0.17 per share.
Business Segment Results
Domestic Segment
Domestic segment sales increased 7.7% to $470.1 million as
compared to $436.3 million in the prior year quarter. Core
sales growth, which excludes the impact of the Neurio and Pika
acquisitions, was approximately 6%. The current year quarter
experienced strong growth in shipments of home standby generators
due to increased outage activity across the U.S. and Canada, which
included public safety power shut-offs in California. In
addition, C&I stationary generator shipments were also strong
during the quarter and broad-based through the Company’s North
American distributor channel. The overall Domestic segment
growth was partially offset by lower shipments of C&I products
to national telecom and rental account customers.
Adjusted EBITDA for the segment was $122.9 million, or 26.1% of
net sales, as compared to $116.3 million in the prior year, or
26.7% of net sales. Pricing initiatives, favorable sales mix,
and improved commodity and currency input costs were more than
offset by the aforementioned regulatory tariffs and higher
operating expense investments.
International Segment
International segment sales decreased 4.9% to $120.9 million as
compared to $127.1 million in the prior year quarter. Core
sales, which excludes the unfavorable impact of currency and the
impact of the Captiva acquisition, declined approximately 4%
compared to the prior year as slower economic growth and
geopolitical headwinds caused softness in certain key regions of
the world in which we operate.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $6.2 million, or 5.2% of net sales,
as compared to $9.7 million, or 7.7% of net sales, in the prior
year. Decreased operating leverage on the lower sales volumes
was the primary contributor to the margin decline.
2020 Outlook The Company is initiating guidance
for 2020 with net sales expected to increase between 6 to 8% as
compared to the prior year on an as-reported basis, and 5 to 7% on
a core basis. This guidance assumes a level of power outages
in line with the longer-term baseline average, but includes the
benefit of one significant power shut-off event in California.
Should there be a major event, such as a landed hurricane, along
with additional public safety power shut-offs in California, we
could expect approximately 3 to 5% of incremental revenue growth on
top of the baseline guidance, resulting in an upside case
as-reported sales growth of 9 to 13%.
Net income margin, before deducting for non-controlling
interests, is expected to be approximately 11% for the full-year
2020, with corresponding adjusted EBITDA margin expected to be
approximately 20.0%. Should there be a more active outage
environment during 2020, we would expect margins to increase by
approximately 50 basis points above this baseline guidance,
resulting in an upside case adjusted EBITDA margin of approximately
20.5%.
Operating and free cash flow generation is expected to be
strong, with the conversion of adjusted net income to free cash
flow expected to be approximately 90%.
Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EST
on Thursday, February 13, 2020 to discuss fourth quarter and full
year 2019 operating results. The conference call can be accessed by
dialing (866) 415-3113 (domestic) or +1 (678) 509-7544
(international) and entering passcode 9159339.
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 9159339. The telephonic replay will be available for 7
days.
About Generac
Founded in 1959, Generac is a leading global designer and
manufacturer of a wide range of energy technology 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, e-commerce
partners, 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 from our global supply chain 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: Michael W. HarrisVice
President – Corporate Development & Investor Relations (262)
506-6064 InvestorRelations@generac.com
Generac Holdings
Inc. |
|
Consolidated
Statements of Comprehensive Income |
|
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
590,932 |
|
|
$ |
563,404 |
|
|
$ |
2,204,336 |
|
|
$ |
2,023,464 |
|
|
Costs of
goods sold |
|
368,710 |
|
|
|
359,098 |
|
|
|
1,406,584 |
|
|
|
1,298,424 |
|
|
Gross
profit |
|
222,222 |
|
|
|
204,306 |
|
|
|
797,752 |
|
|
|
725,040 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling and service |
|
58,729 |
|
|
|
50,013 |
|
|
|
217,683 |
|
|
|
191,887 |
|
|
Research and development |
|
19,488 |
|
|
|
11,897 |
|
|
|
68,394 |
|
|
|
50,019 |
|
|
General and administrative |
|
30,852 |
|
|
|
28,228 |
|
|
|
110,868 |
|
|
|
103,841 |
|
|
Amortization of intangibles |
|
8,645 |
|
|
|
5,320 |
|
|
|
28,644 |
|
|
|
22,112 |
|
|
Total
operating expenses |
|
117,714 |
|
|
|
95,458 |
|
|
|
425,589 |
|
|
|
367,859 |
|
|
Income from
operations |
|
104,508 |
|
|
|
108,848 |
|
|
|
372,163 |
|
|
|
357,181 |
|
|
|
|
|
|
|
|
|
|
|
Other
(expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
(10,116 |
) |
|
|
(10,017 |
) |
|
|
(41,544 |
) |
|
|
(40,956 |
) |
|
Investment income |
|
878 |
|
|
|
798 |
|
|
|
2,767 |
|
|
|
1,893 |
|
|
Loss on extinguishment of debt |
|
(926 |
) |
|
|
– |
|
|
|
(926 |
) |
|
|
(1,332 |
) |
|
Loss on pension settlement |
|
(10,920 |
) |
|
|
– |
|
|
|
(10,920 |
) |
|
|
– |
|
|
Other, net |
|
(65 |
) |
|
|
(2,946 |
) |
|
|
(1,933 |
) |
|
|
(5,710 |
) |
|
Total other
expense, net |
|
(21,149 |
) |
|
|
(12,165 |
) |
|
|
(52,556 |
) |
|
|
(46,105 |
) |
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
83,359 |
|
|
|
96,683 |
|
|
|
319,607 |
|
|
|
311,076 |
|
|
Provision
for income taxes |
|
13,423 |
|
|
|
19,986 |
|
|
|
67,299 |
|
|
|
69,856 |
|
|
Net
income |
|
69,936 |
|
|
|
76,697 |
|
|
|
252,308 |
|
|
|
241,220 |
|
|
Net income
attributable to noncontrolling interests |
|
322 |
|
|
|
1,122 |
|
|
|
301 |
|
|
|
2,963 |
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
69,614 |
|
|
$ |
75,575 |
|
|
$ |
252,007 |
|
|
$ |
238,257 |
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss): |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
$ |
9,862 |
|
|
$ |
(7,214 |
) |
|
$ |
2,210 |
|
|
$ |
(5,976 |
) |
|
Net unrealized gain (loss) on derivatives |
|
1,043 |
|
|
|
(7,479 |
) |
|
|
(13,855 |
) |
|
|
2,924 |
|
|
Pension liability adjustment |
|
10,541 |
|
|
|
437 |
|
|
|
10,541 |
|
|
|
437 |
|
|
Other comprehensive income (loss) |
|
21,446 |
|
|
|
(14,256 |
) |
|
|
(1,104 |
) |
|
|
(2,615 |
) |
|
Total
comprehensive income |
|
91,382 |
|
|
|
62,441 |
|
|
|
251,204 |
|
|
|
238,605 |
|
|
Comprehensive income attributable to noncontrolling interests |
|
1,371 |
|
|
|
679 |
|
|
|
(635 |
) |
|
|
1,647 |
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
90,011 |
|
|
$ |
61,762 |
|
|
$ |
251,839 |
|
|
$ |
236,958 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per |
|
|
|
|
|
|
|
|
common share - basic: |
$ |
1.14 |
|
|
$ |
1.21 |
|
|
$ |
4.09 |
|
|
$ |
3.57 |
|
|
Weighted average common shares outstanding - basic: |
|
62,056,624 |
|
|
|
61,669,467 |
|
|
|
61,926,986 |
|
|
|
61,662,031 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per |
|
|
|
|
|
|
|
|
common share - diluted: |
$ |
1.12 |
|
|
$ |
1.20 |
|
|
$ |
4.03 |
|
|
$ |
3.54 |
|
|
Weighted average common shares outstanding - diluted: |
|
63,219,078 |
|
|
|
62,201,066 |
|
|
|
62,865,446 |
|
|
|
62,233,225 |
|
|
|
|
|
|
|
|
|
|
|
Generac Holdings
Inc. |
|
Consolidated Balance
Sheets |
|
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
|
(Unaudited) |
|
|
|
|
|
|
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
322,883 |
|
|
$ |
224,482 |
|
|
Accounts receivable, less allowance for doubtful accounts of $6,968
and |
|
319,538 |
|
|
|
326,133 |
|
|
$4,873 at December 31, 2019 and 2018, respectively |
|
|
Inventories |
|
522,024 |
|
|
|
544,750 |
|
|
Prepaid expenses and other assets |
|
31,384 |
|
|
|
25,404 |
|
|
Total
current assets |
|
1,195,829 |
|
|
|
1,120,769 |
|
|
|
|
|
|
|
Property and
equipment, net |
|
316,976 |
|
|
|
278,929 |
|
|
|
|
|
|
|
Customer
lists, net |
|
55,552 |
|
|
|
61,194 |
|
|
Patents and
technology, net |
|
85,546 |
|
|
|
29,970 |
|
|
Other
intangible assets, net |
|
8,259 |
|
|
|
3,043 |
|
|
Tradenames,
net |
|
148,377 |
|
|
|
152,283 |
|
|
Goodwill |
|
805,284 |
|
|
|
764,655 |
|
|
Deferred
income taxes |
|
2,933 |
|
|
|
163 |
|
|
Operating
lease and other assets |
|
46,913 |
|
|
|
15,308 |
|
|
Total
assets |
$ |
2,665,669 |
|
|
$ |
2,426,314 |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Short-term borrowings |
$ |
58,714 |
|
|
$ |
45,583 |
|
|
Accounts payable |
|
261,977 |
|
|
|
328,091 |
|
|
Accrued wages and employee benefits |
|
41,361 |
|
|
|
40,819 |
|
|
Other accrued liabilities |
|
132,629 |
|
|
|
144,236 |
|
|
Current portion of long-term borrowings and finance lease
obligations |
|
2,383 |
|
|
|
1,977 |
|
|
Total
current liabilities |
|
497,064 |
|
|
|
560,706 |
|
|
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
837,767 |
|
|
|
876,396 |
|
|
Deferred
income taxes |
|
96,328 |
|
|
|
71,300 |
|
|
Operating
lease and other long-term liabilities |
|
140,432 |
|
|
|
95,647 |
|
|
Total
liabilities |
|
1,571,591 |
|
|
|
1,604,049 |
|
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
61,227 |
|
|
|
61,004 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
71,667,726 |
|
|
|
|
and 71,186,418 shares issued at December 31, 2019 and 2018,
respectively |
|
717 |
|
|
|
712 |
|
|
Additional paid-in capital |
|
498,866 |
|
|
|
476,116 |
|
|
Treasury stock, at cost, 9,103,013 and 9,047,060 shares at December
31, |
|
|
|
|
2019 and 2018, respectively |
|
(324,551 |
) |
|
|
(321,473 |
) |
|
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
|
Retained earnings |
|
1,084,383 |
|
|
|
831,123 |
|
|
Accumulated other comprehensive loss |
|
(24,917 |
) |
|
|
(23,813 |
) |
|
Stockholders’ equity attributable to Generac Holdings Inc. |
|
1,032,382 |
|
|
|
760,549 |
|
|
Noncontrolling interests |
|
469 |
|
|
|
712 |
|
|
Total
stockholders’ equity |
|
1,032,851 |
|
|
|
761,261 |
|
|
Total
liabilities and stockholders’ equity |
$ |
2,665,669 |
|
|
$ |
2,426,314 |
|
|
|
|
|
|
|
Generac Holdings
Inc. |
Consolidated
Statements of Cash Flows |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Year Ended December 31, |
|
|
2019 |
|
|
|
2018 |
|
Operating activities |
|
|
|
Net
income |
$ |
252,308 |
|
|
$ |
241,220 |
|
Adjustment
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation |
|
32,265 |
|
|
|
25,296 |
|
Amortization of intangible assets |
|
28,644 |
|
|
|
22,112 |
|
Amortization of original issue discount and deferred financing
costs |
|
4,712 |
|
|
|
4,749 |
|
Loss on extinguishment of debt |
|
926 |
|
|
|
1,332 |
|
Loss on pension settlement |
|
10,920 |
|
|
|
– |
|
Deferred income taxes |
|
18,733 |
|
|
|
23,600 |
|
Share-based compensation expense |
|
16,694 |
|
|
|
14,563 |
|
Other |
|
1,086 |
|
|
|
2,474 |
|
Net changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
8,231 |
|
|
|
(43,243 |
) |
Inventories |
|
26,369 |
|
|
|
(152,594 |
) |
Other assets |
|
(358 |
) |
|
|
(6,362 |
) |
Accounts payable |
|
(69,404 |
) |
|
|
86,359 |
|
Accrued wages and employee benefits |
|
(3,724 |
) |
|
|
12,626 |
|
Other accrued liabilities |
|
(16,252 |
) |
|
|
16,972 |
|
Excess tax benefits from equity awards |
|
(2,263 |
) |
|
|
(1,877 |
) |
Net cash
provided by operating activities |
|
308,887 |
|
|
|
247,227 |
|
|
|
|
|
Investing activities |
|
|
|
Proceeds
from sale of property and equipment |
|
95 |
|
|
|
214 |
|
Proceeds
from beneficial interest in securitization transactions |
|
2,630 |
|
|
|
3,933 |
|
Expenditures
for property and equipment |
|
(60,802 |
) |
|
|
(47,601 |
) |
Acquisition
of business, net of cash acquired |
|
(112,001 |
) |
|
|
(65,440 |
) |
Net cash
used in investing activities |
|
(170,078 |
) |
|
|
(108,894 |
) |
|
|
|
|
Financing activities |
|
|
|
Proceeds
from short-term borrowings |
|
73,340 |
|
|
|
53,965 |
|
Proceeds
from long-term borrowings |
|
1,660 |
|
|
|
51,425 |
|
Repayments
of short-term borrowings |
|
(59,518 |
) |
|
|
(27,880 |
) |
Repayments
of long-term borrowings and finance lease obligations |
|
(53,049 |
) |
|
|
(101,827 |
) |
Stock
repurchases |
|
– |
|
|
|
(25,656 |
) |
Payment of
contingent consideration |
|
(5,550 |
) |
|
|
– |
|
Cash
dividends paid to noncontrolling interest of subsidiary |
|
(285 |
) |
|
|
(314 |
) |
Payment of
debt issuance costs |
|
(1,473 |
) |
|
|
(1,702 |
) |
Taxes paid
related to equity awards |
|
(6,438 |
) |
|
|
(5,659 |
) |
Proceeds
from the exercise of stock options |
|
9,395 |
|
|
|
5,614 |
|
Net cash
used in financing activities |
|
(41,918 |
) |
|
|
(52,034 |
) |
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
1,510 |
|
|
|
(289 |
) |
|
|
|
|
Net increase
in cash and cash equivalents |
|
98,401 |
|
|
|
86,010 |
|
Cash and
cash equivalents at beginning of period |
|
224,482 |
|
|
|
138,472 |
|
Cash and
cash equivalents at end of period |
$ |
322,883 |
|
|
$ |
224,482 |
|
|
|
|
|
Supplemental disclosure of cash flow
information |
|
|
|
Cash
paid during the period |
|
|
|
Interest |
$ |
35,465 |
|
|
$ |
41,007 |
|
Income
taxes |
|
61,767 |
|
|
|
41,044 |
|
|
|
|
|
Generac Holdings
Inc. |
|
Segment Reporting
and Product Class Information |
|
(U.S. Dollars in
Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
Reportable Segments |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Domestic (1) |
$ |
470,058 |
|
$ |
436,339 |
|
$ |
1,742,898 |
|
$ |
1,566,520 |
|
International (1) |
|
120,874 |
|
|
127,065 |
|
|
461,438 |
|
|
456,944 |
|
Total net sales |
$ |
590,932 |
|
$ |
563,404 |
|
$ |
2,204,336 |
|
$ |
2,023,464 |
|
|
|
|
|
|
|
|
|
|
|
Product Classes |
|
|
|
|
|
|
|
|
Residential products |
$ |
322,490 |
|
$ |
293,949 |
|
$ |
1,143,723 |
|
$ |
1,042,739 |
|
Commercial & industrial products |
|
217,137 |
|
|
223,151 |
|
|
871,595 |
|
|
820,270 |
|
Other |
|
51,305 |
|
|
46,304 |
|
|
189,018 |
|
|
160,455 |
|
Total net sales |
$ |
590,932 |
|
$ |
563,404 |
|
$ |
2,204,336 |
|
$ |
2,023,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Domestic (1) |
$ |
122,920 |
|
$ |
116,343 |
|
$ |
428,667 |
|
$ |
388,495 |
|
International (1) |
|
6,228 |
|
|
9,724 |
|
|
25,448 |
|
|
36,057 |
|
Total adjusted EBITDA (2) |
$ |
129,148 |
|
$ |
126,067 |
|
$ |
454,115 |
|
$ |
424,552 |
|
|
|
|
|
|
|
|
|
|
|
(1) In the fourth
quarter of 2019, management determined that the Latin American
export operations of the legacy Generac business (GPS LATAM) should
have been included in the International reportable segment.
Previously, GPS LATAM was reported in the Domestic segment, in
amounts that were not material. To reflect this change, management
has chosen to correct the net sales and adjusted EBITDA by segment
as follows: For the first, second and third quarters ended in 2019,
net sales of $2,705, $4,406, and $3,353, respectively, and adjusted
EBITDA of $(253), $845, and $384, respectively, were moved from the
Domestic segment to the International segment. For the first,
second, third, and fourth quarters ended in 2018, net sales of
$3,822, $5,907, $2,577, and $1,499, respectively, and adjusted
EBITDA of $312, $815, $(94), and $(843), respectively, were moved
from the Domestic segment to the International segment. |
|
|
|
|
|
|
|
|
|
|
|
(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 December 31, |
|
Year Ended December 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
69,614 |
|
|
$ |
75,575 |
|
|
$ |
252,007 |
|
|
$ |
238,257 |
|
|
Net income attributable to noncontrolling interests |
|
322 |
|
|
|
1,122 |
|
|
|
301 |
|
|
|
2,963 |
|
|
Net
income |
|
|
|
|
69,936 |
|
|
|
76,697 |
|
|
|
252,308 |
|
|
|
241,220 |
|
|
Interest expense |
|
|
|
10,116 |
|
|
|
10,017 |
|
|
|
41,544 |
|
|
|
40,956 |
|
|
Depreciation and amortization |
|
|
17,926 |
|
|
|
12,284 |
|
|
|
60,767 |
|
|
|
47,408 |
|
|
Provision for income taxes |
|
|
13,423 |
|
|
|
19,986 |
|
|
|
67,299 |
|
|
|
69,856 |
|
|
Non-cash write-down and other adjustments (1) |
|
(433 |
) |
|
|
10 |
|
|
|
240 |
|
|
|
3,532 |
|
|
Non-cash share-based compensation expense (2) |
|
5,217 |
|
|
|
4,653 |
|
|
|
16,694 |
|
|
|
14,563 |
|
|
Loss on extinguishment of debt (3) |
|
926 |
|
|
|
– |
|
|
|
926 |
|
|
|
1,332 |
|
|
Loss on pension settlement (4) |
|
|
10,920 |
|
|
|
– |
|
|
|
10,920 |
|
|
|
- |
|
|
Transaction costs and credit facility fees (5) |
|
677 |
|
|
|
1,413 |
|
|
|
2,724 |
|
|
|
3,883 |
|
|
Business optimization expenses (6) |
|
|
763 |
|
|
|
202 |
|
|
|
1,572 |
|
|
|
952 |
|
|
Other |
|
|
|
|
(323 |
) |
|
|
805 |
|
|
|
(879 |
) |
|
|
850 |
|
|
Adjusted EBITDA |
|
|
|
129,148 |
|
|
|
126,067 |
|
|
|
454,115 |
|
|
|
424,552 |
|
|
Adjusted EBITDA attributable to noncontrolling interests |
|
1,243 |
|
|
|
2,126 |
|
|
|
4,965 |
|
|
|
7,759 |
|
|
Adjusted EBITDA attributable to Generac Holdings Inc. |
$ |
127,905 |
|
|
$ |
123,941 |
|
|
$ |
449,150 |
|
|
$ |
416,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
gains/losses on disposals of assets, unrealized mark-to-market
adjustments on commodity contracts, and certain foreign currency
and purchase accounting related adjustments. A full description of
these and the other reconciliation adjustments contained in these
schedules is included in Generac's SEC filings. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Represents
share-based compensation expense to account for stock options,
restricted stock and other stock awards over their respective
vesting periods. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Represents the
write-off of original issue discount and capitalized debt issuance
costs due to voluntary debt prepayments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Represents pre-tax
settlement charges related to the termination of the Company’s
domestic pension plan in the fourth quarter of 2019. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) 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 December 31, |
|
Year Ended December 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
69,614 |
|
|
$ |
75,575 |
|
|
$ |
252,007 |
|
|
$ |
238,257 |
|
|
Net income attributable to noncontrolling interests |
|
322 |
|
|
|
1,122 |
|
|
|
301 |
|
|
|
2,963 |
|
|
Net
income |
|
|
|
|
69,936 |
|
|
|
76,697 |
|
|
|
252,308 |
|
|
|
241,220 |
|
|
Provision for income taxes |
|
|
13,423 |
|
|
|
19,986 |
|
|
|
67,299 |
|
|
|
69,856 |
|
|
Income before provision for income taxes |
|
83,359 |
|
|
|
96,683 |
|
|
|
319,607 |
|
|
|
311,076 |
|
|
Amortization of intangible assets |
|
|
8,645 |
|
|
|
5,320 |
|
|
|
28,644 |
|
|
|
22,112 |
|
|
Amortization of deferred finance costs and original issue
discount |
|
1,115 |
|
|
|
1,195 |
|
|
|
4,712 |
|
|
|
4,749 |
|
|
Loss on extinguishment of debt (3) |
|
926 |
|
|
|
– |
|
|
|
926 |
|
|
|
1,332 |
|
|
Loss on pension settlement (4) |
|
|
10,920 |
|
|
|
– |
|
|
|
10,920 |
|
|
|
- |
|
|
Transaction costs and other purchase accounting adjustments
(7) |
|
(499 |
) |
|
|
1,062 |
|
|
|
874 |
|
|
|
2,578 |
|
|
Business optimization expenses (6) |
|
|
763 |
|
|
|
202 |
|
|
|
1,572 |
|
|
|
952 |
|
|
Adjusted net income before provision for income taxes |
|
105,229 |
|
|
|
104,462 |
|
|
|
367,255 |
|
|
|
342,799 |
|
|
Cash income tax expense (8) |
|
|
(8,247 |
) |
|
|
(15,355 |
) |
|
|
(47,945 |
) |
|
|
(47,064 |
) |
|
Adjusted net income |
|
|
|
96,982 |
|
|
|
89,107 |
|
|
|
319,310 |
|
|
|
295,735 |
|
|
Adjusted net income attributable to noncontrolling interests |
|
530 |
|
|
|
1,031 |
|
|
|
1,488 |
|
|
|
3,522 |
|
|
Adjusted net income attributable to Generac Holdings Inc. |
$ |
96,452 |
|
|
$ |
88,076 |
|
|
$ |
317,822 |
|
|
$ |
292,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributable to Generac Holdings Inc. per |
|
|
|
|
|
|
|
|
common share - diluted: |
|
$ |
1.53 |
|
|
$ |
1.42 |
|
|
$ |
5.06 |
|
|
$ |
4.70 |
|
|
Weighted average common shares outstanding - diluted: |
|
63,219,078 |
|
|
|
62,201,066 |
|
|
|
62,865,446 |
|
|
|
62,233,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) Amount for the
three months and year ended December 31, 2019 is based on an
anticipated cash income tax rate of 15% for the full year ended
2019. Amount for the three months and year ended December 31, 2018
is based on an anticipated cash income tax rate of 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 cash tax rate to the period’s pretax
income. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
175,085 |
|
|
$ |
108,229 |
|
|
$ |
308,887 |
|
|
$ |
247,227 |
|
|
Proceeds from beneficial interests in securitization
transactions |
|
594 |
|
|
|
1,108 |
|
|
|
2,630 |
|
|
|
3,933 |
|
|
Expenditures for property and equipment |
|
(15,355 |
) |
|
|
(22,024 |
) |
|
|
(60,802 |
) |
|
|
(47,601 |
) |
|
Free cash flow |
|
|
$ |
160,324 |
|
|
$ |
87,313 |
|
|
$ |
250,715 |
|
|
$ |
203,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
69,614 |
|
|
$ |
75,575 |
|
|
$ |
252,007 |
|
|
$ |
238,257 |
|
|
Redeemable noncontrolling interest redemption value adjustment |
|
1,054 |
|
|
|
(1,088 |
) |
|
|
1,253 |
|
|
|
(17,970 |
) |
|
Net income attributable to common shareholders |
$ |
70,668 |
|
|
$ |
74,487 |
|
|
$ |
253,260 |
|
|
$ |
220,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
Weighted average shares, basic |
|
|
62,056,624 |
|
|
|
61,669,467 |
|
|
|
61,926,986 |
|
|
|
61,662,031 |
|
|
Dilutive effect of stock compensation awards |
|
1,162,454 |
|
|
|
531,599 |
|
|
|
938,460 |
|
|
|
571,194 |
|
|
Diluted shares |
|
|
|
63,219,078 |
|
|
|
62,201,066 |
|
|
|
62,865,446 |
|
|
|
62,233,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per share |
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
1.14 |
|
|
$ |
1.21 |
|
|
$ |
4.09 |
|
|
$ |
3.57 |
|
|
Diluted |
|
|
|
$ |
1.12 |
|
|
$ |
1.20 |
|
|
$ |
4.03 |
|
|
$ |
3.54 |
|
|
Generac (NYSE:GNRC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Generac (NYSE:GNRC)
Historical Stock Chart
From Apr 2023 to Apr 2024