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 first quarter ended March 31, 2020 and provided an
update on its outlook for the full year 2020.
First Quarter 2020 Highlights
- Net sales increased 1.2% to $475.9 million during the first
quarter of 2020 as compared to $470.4 million in the prior-year
first quarter. Core sales growth, which excludes both the
impact of acquisitions and foreign currency, declined approximately
3%.
- Residential product sales increased 18.3% to $257.6 million as
compared to $217.8 million last year, with core sales growth of
approximately 9% when excluding the impact of the Neurio and Pika
acquisitions.
- Commercial & Industrial (“C&I”) product sales decreased
17.7% to $172.1 million as compared to $209.1 million in the prior
year, with core sales declining approximately 17%.
- Net income attributable to the Company during the first quarter
was $44.5 million, or $0.68 per share, as compared to $44.9
million, or $0.76 per share, for the same period of 2019. 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 $55.1 million, or
$0.87 per share, as compared to $56.5 million, or $0.91 per share,
in the first quarter of 2019.
- Adjusted EBITDA before deducting for noncontrolling interests,
as defined in the accompanying reconciliation schedules, was $86.0
million, or 18.1% of net sales, as compared to $87.1 million, or
18.5% of net sales, in the prior year.
- As of March 31, 2020, the Company had $573 million of liquidity
between $307 million of cash and equivalents and $266 million
available under its ABL revolving credit facility, which matures in
June 2023. Also, the Company has no financial covenants and
no maturities on its term loan until December 2026.
“First quarter revenue met our expectations and EBITDA margins
exceeded despite the challenges faced by the initial impact of the
COVID-19 pandemic,” said Aaron Jagdfeld, President and Chief
Executive Officer. “Home standby shipments continued the
strength seen over the past several quarters, including robust
demand in California. Shipments of the PWRcell energy storage
system met our expectations in the first full quarter after its
commercial launch in December, and were well received in the
marketplace. This strong performance was mostly offset by
lower domestic C&I product shipments to telecom and rental
equipment customers, and continued weakness in international
markets that accelerated following the onset of the COVID-19
pandemic. More importantly in this uncertain environment,
Generac is in the fortunate position of having a strong balance
sheet and liquidity position, giving us the flexibility to remain
focused on providing innovative products and services that are
essential to the safety and security of residential homes,
businesses and critical infrastructure across the globe.”
Additional First Quarter 2020 Consolidated
Highlights
Gross profit margin improved 170 basis points to 36.2% compared
to 34.5% in the prior-year first quarter as favorable sales mix was
partially offset by the unfavorable mix impact from acquisitions.
Operating expenses increased $18.5 million, or 20.3%, as compared
to the first quarter of 2019. The increase was primarily
driven by recurring operating expenses from recent acquisitions,
greater marketing and promotional spend, higher employee costs and
additional intangible amortization.
Provision for income taxes for the current year quarter was $9.4
million, or an effective tax rate of 17.9%, as compared to $15.0
million, or a 24.7% effective tax rate, for the prior year.
The lower effective tax rate in the current year is driven by
higher share-based compensation deductions and favorable
geographical mix of earnings. Cash flow from operations was $11.3
million as compared to $14.6 million in the prior year. Free
cash flow, as defined in the accompanying reconciliation schedules,
was $(0.9) million as compared to $(0.6) million in 2019.
Over the last twelve months ended March 31, 2020, cash flow from
operations was $305.7 million and free cash flow was $250.4
million.
Business Segment Results
Domestic Segment
Domestic segment sales increased 5.5% to $376.0 million as
compared to $356.5 million in the prior year quarter. Core
sales growth, which excludes the impact of the Neurio and Pika
acquisitions, was approximately flat. The current year
quarter continued to experience strong growth in shipments of home
standby generators. This core growth was offset by lower
shipments of C&I products to national telecom customers as
compared to a strong prior-year comparison, as well as a decline in
sales of mobile products primarily due to weakness caused from the
onset of the COVID-19 pandemic and collapse in oil prices.
Adjusted EBITDA for the segment was $82.8 million, or 22.0% of
net sales, as compared to $81.2 million in the prior year, or 22.8%
of net sales. Favorable sales mix was more than offset by the
aforementioned impact from acquisitions and higher core operating
expense investments.
International Segment
International segment sales decreased 12.3% to $99.9 million as
compared to $113.9 million in the prior year quarter. Core
sales, which excludes the unfavorable impact of currency and the
impact of the Captiva acquisition, declined approximately 10%
compared to the prior year. The decline was primarily driven
by a sharp drop in demand caused by the COVID-19 pandemic and its
impact on certain key regions of the world, which magnified the
slower economic growth and geopolitical headwinds already being
experienced.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $3.3 million, or 3.3% of net sales,
as compared to $5.9 million, or 5.2% of net sales, in the prior
year. Decreased operating leverage on the lower sales volumes
was the primary contributor to the margin decline.
Updated 2020 Outlook
As a result of the COVID-19 pandemic, the remainder of the year
is expected to be impacted by a significant decline in economic
activity across the globe with a more pronounced decline expected
in the second quarter. This downturn is expected to be
particularly severe within C&I products, both domestically and
internationally. However, demand for residential products has
historically proven to be more resilient and tends to decouple from
the broader economic environment as demand is more driven by power
outages. More recently, there are also considerable
opportunities to grow the backup power market specifically in
California as well as the attachment rates of energy storage
overall. In addition, with more people working and learning
from home, backup power for residential applications has now become
more important than ever. These residential demand drivers
are expected to mostly offset the potentially lower consumer
spending environment due to COVID-19.
As a result of these factors, the Company is revising its
outlook for the full-year 2020, and now expects net sales to
decline between approximately 5 to 10%. 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
revenue growth in addition to the baseline guidance, resulting in
an upside case as-reported sales growth of approximately flat to
down 7%.
Net income margin, before deducting for non-controlling
interests and excluding any potential restructuring, is now
expected to be between 9.5% to 10.5% for the full-year 2020, with
corresponding adjusted EBITDA margin now expected to be between
19.0% to 20.0%. Should there be a more active outage
environment during 2020, margins could increase by approximately 50
basis points above this baseline guidance.
Mr. Jagdfeld concluded, “As the events from the COVID-19
situation continue to evolve, we are focused first and foremost on
preventative measures to address the health, safety and well-being
of our employees, customers, suppliers and the communities across
the world where we operate and do business. I’m extremely
proud of our team’s efforts in responding to this crisis as we are
focused on maintaining our operations to the extent possible, which
is especially important considering that our products and services
are both essential and critical. Generac is built for moments
like this with our long history in supporting customers through
difficult times. Using our strong balance sheet and
liquidity, we remain well positioned to execute on our strategic
plan, and following this pandemic, we believe our future growth
prospects will be as compelling as ever driven by the overall mega
trends and powerful macro secular drivers for our
business.”
Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT
on Thursday, April 30, 2020 to discuss first quarter 2020 operating
results. The conference call can be accessed by dialing (866)
415-3113 (domestic) or +1 (678) 509-7544 (international) and
entering passcode 6576609.
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 6576609. 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;
- changes in environmental, health
and safety, or product compliance laws and regulations affecting
our products or operations; and
- the duration and scope of the
impacts of the COVID-19 pandemic are uncertain and will continue to
adversely affect our operations, supply chain, distribution, and
demand for certain of our products and services.
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. In the current
environment, some of the above factors have materialized and may or
will continue to be impacted by the COVID-19 pandemic, which may
cause actual results to vary from these 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 2019 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. |
Condensed
Consolidated Statements of Comprehensive Income |
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
(Unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
Net
sales |
$ |
475,915 |
|
|
$ |
470,353 |
|
Costs of
goods sold |
|
303,595 |
|
|
|
308,178 |
|
Gross
profit |
|
172,320 |
|
|
|
162,175 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Selling and service |
|
55,139 |
|
|
|
47,289 |
|
Research and development |
|
18,649 |
|
|
|
13,609 |
|
General and administrative |
|
27,889 |
|
|
|
24,762 |
|
Amortization of intangibles |
|
7,781 |
|
|
|
5,342 |
|
Total
operating expenses |
|
109,458 |
|
|
|
91,002 |
|
Income from
operations |
|
62,862 |
|
|
|
71,173 |
|
|
|
|
|
Other
(expense) income: |
|
|
|
Interest expense |
|
(9,053 |
) |
|
|
(10,272 |
) |
Investment income |
|
960 |
|
|
|
914 |
|
Other, net |
|
(1,914 |
) |
|
|
(1,061 |
) |
Total other
expense, net |
|
(10,007 |
) |
|
|
(10,419 |
) |
|
|
|
|
Income
before provision for income taxes |
|
52,855 |
|
|
|
60,754 |
|
Provision
for income taxes |
|
9,444 |
|
|
|
14,985 |
|
Net
income |
|
43,411 |
|
|
|
45,769 |
|
Net income
attributable to noncontrolling interests |
|
(1,049 |
) |
|
|
908 |
|
Net income
attributable to Generac Holdings Inc. |
$ |
44,460 |
|
|
$ |
44,861 |
|
|
|
|
|
Net income attributable to common shareholders per common share -
basic: |
$ |
0.69 |
|
|
$ |
0.77 |
|
Weighted average common shares outstanding - basic: |
|
62,126,481 |
|
|
|
61,762,260 |
|
|
|
|
|
Net income attributable to common shareholders per common share -
diluted: |
$ |
0.68 |
|
|
$ |
0.76 |
|
Weighted average common shares outstanding - diluted: |
|
63,283,737 |
|
|
|
62,223,638 |
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
(3,098 |
) |
|
$ |
39,527 |
|
|
|
|
|
Generac Holdings
Inc. |
Condensed
Consolidated Balance Sheets |
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
March
31, |
|
December
31, |
|
|
2020 |
|
|
|
2019 |
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
307,456 |
|
|
$ |
322,883 |
|
Accounts receivable, less allowance for credit losses |
|
312,013 |
|
|
|
319,538 |
|
Inventories |
|
559,695 |
|
|
|
522,024 |
|
Prepaid expenses and other assets |
|
29,557 |
|
|
|
31,384 |
|
Total
current assets |
|
1,208,721 |
|
|
|
1,195,829 |
|
|
|
|
|
Property and
equipment, net |
|
315,828 |
|
|
|
316,976 |
|
|
|
|
|
Customer
lists, net |
|
48,197 |
|
|
|
55,552 |
|
Patents and
technology, net |
|
81,174 |
|
|
|
85,546 |
|
Other
intangible assets, net |
|
7,495 |
|
|
|
8,259 |
|
Tradenames,
net |
|
146,638 |
|
|
|
148,377 |
|
Goodwill |
|
793,576 |
|
|
|
805,284 |
|
Deferred
income taxes |
|
4,074 |
|
|
|
2,933 |
|
Operating
lease and other assets |
|
48,374 |
|
|
|
46,913 |
|
Total
assets |
$ |
2,654,077 |
|
|
$ |
2,665,669 |
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Short-term borrowings |
$ |
49,878 |
|
|
$ |
58,714 |
|
Accounts payable |
|
266,917 |
|
|
|
261,977 |
|
Accrued wages and employee benefits |
|
22,256 |
|
|
|
41,361 |
|
Other accrued liabilities |
|
139,704 |
|
|
|
132,629 |
|
Current portion of long-term borrowings and finance lease
obligations |
|
4,261 |
|
|
|
2,383 |
|
Total
current liabilities |
|
483,016 |
|
|
|
497,064 |
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
839,380 |
|
|
|
837,767 |
|
Deferred
income taxes |
|
93,430 |
|
|
|
96,328 |
|
Operating
lease and other long-term liabilities |
|
154,660 |
|
|
|
140,432 |
|
Total
liabilities |
|
1,570,486 |
|
|
|
1,571,591 |
|
|
|
|
|
Redeemable
noncontrolling interest |
|
59,904 |
|
|
|
61,227 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
71,844,675 and 71,667,726 shares issued at March 31, 2020 and
December 31, 2019, respectively |
|
719 |
|
|
|
717 |
|
Additional paid-in capital |
|
504,195 |
|
|
|
498,866 |
|
Treasury stock, at cost |
|
(331,386 |
) |
|
|
(324,551 |
) |
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
Retained earnings |
|
1,126,174 |
|
|
|
1,084,383 |
|
Accumulated other comprehensive loss |
|
(73,944 |
) |
|
|
(24,917 |
) |
Stockholders’ equity attributable to Generac Holdings Inc. |
|
1,023,642 |
|
|
|
1,032,382 |
|
Noncontrolling interests |
|
45 |
|
|
|
469 |
|
Total
stockholders’ equity |
|
1,023,687 |
|
|
|
1,032,851 |
|
Total
liabilities and stockholders’ equity |
$ |
2,654,077 |
|
|
$ |
2,665,669 |
|
|
|
|
|
Generac Holdings
Inc. |
Condensed
Consolidated Statements of Cash Flows |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Operating activities |
|
|
|
Net income |
$ |
43,411 |
|
|
$ |
45,769 |
|
Adjustment
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation |
|
8,335 |
|
|
|
7,265 |
|
Amortization of intangible assets |
|
7,781 |
|
|
|
5,342 |
|
Amortization of original issue discount and deferred financing
costs |
|
642 |
|
|
|
1,177 |
|
Deferred income taxes |
|
1,571 |
|
|
|
5,151 |
|
Share-based compensation expense |
|
4,574 |
|
|
|
3,594 |
|
Other |
|
416 |
|
|
|
66 |
|
Net changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(5,687 |
) |
|
|
46,970 |
|
Inventories |
|
(48,145 |
) |
|
|
(41,644 |
) |
Other assets |
|
(6,017 |
) |
|
|
(1,293 |
) |
Accounts payable |
|
12,817 |
|
|
|
(37,176 |
) |
Accrued wages and employee benefits |
|
(18,125 |
) |
|
|
(14,148 |
) |
Other accrued liabilities |
|
12,976 |
|
|
|
(5,762 |
) |
Excess tax benefits from equity awards |
|
(3,203 |
) |
|
|
(740 |
) |
Net cash
provided by operating activities |
|
11,346 |
|
|
|
14,571 |
|
|
|
|
|
Investing activities |
|
|
|
Proceeds
from sale of property and equipment |
|
– |
|
|
|
23 |
|
Proceeds
from beneficial interests in securitization transactions |
|
618 |
|
|
|
743 |
|
Expenditures
for property and equipment |
|
(12,894 |
) |
|
|
(15,902 |
) |
Acquisition
of business, net of cash acquired |
|
– |
|
|
|
(61,549 |
) |
Net cash
used in investing activities |
|
(12,276 |
) |
|
|
(76,685 |
) |
|
|
|
|
Financing activities |
|
|
|
Proceeds
from short-term borrowings |
|
20,694 |
|
|
|
13,531 |
|
Repayments
of short-term borrowings |
|
(25,526 |
) |
|
|
(13,282 |
) |
Repayments
of long-term borrowings and finance lease obligations |
|
(1,176 |
) |
|
|
(908 |
) |
Payment of
contingent acquisition consideration |
|
(4,000 |
) |
|
|
– |
|
Taxes paid
related to equity awards |
|
(7,666 |
) |
|
|
(3,156 |
) |
Proceeds
from the exercise of stock options |
|
1,590 |
|
|
|
2,193 |
|
Net cash
used in financing activities |
|
(16,084 |
) |
|
|
(1,622 |
) |
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
1,587 |
|
|
|
520 |
|
|
|
|
|
Net decrease
in cash and cash equivalents |
|
(15,427 |
) |
|
|
(63,216 |
) |
Cash and
cash equivalents at beginning of period |
|
322,883 |
|
|
|
224,482 |
|
Cash and
cash equivalents at end of period |
$ |
307,456 |
|
|
$ |
161,266 |
|
|
|
|
|
Generac Holdings
Inc. |
Segment Reporting
and Product Class Information |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Net Sales |
|
Three Months Ended March 31, |
Reportable Segments |
2020 |
|
2019 |
Domestic (1) |
$ |
376,030 |
|
$ |
356,498 |
International (1) |
|
99,885 |
|
|
113,855 |
Total net
sales |
$ |
475,915 |
|
$ |
470,353 |
|
|
|
|
Product Classes |
|
|
|
Residential
products |
$ |
257,619 |
|
$ |
217,830 |
Commercial
& industrial products |
|
172,066 |
|
|
209,124 |
Other |
|
46,230 |
|
|
43,399 |
Total net
sales |
$ |
475,915 |
|
$ |
470,353 |
|
|
|
|
|
Adjusted EBITDA |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Domestic
(1) |
$ |
82,775 |
|
$ |
81,228 |
International (1) |
|
3,250 |
|
|
5,900 |
Total
adjusted EBITDA (2) |
$ |
86,025 |
|
$ |
87,128 |
|
|
|
|
(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 quarter ended
in 2019, net sales of $2,750, and adjusted EBITDA of $(253), 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 March 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
44,460 |
|
|
$ |
44,861 |
|
Net income
attributable to noncontrolling interests |
|
(1,049 |
) |
|
|
908 |
|
Net
income |
|
43,411 |
|
|
|
45,769 |
|
Interest
expense |
|
9,053 |
|
|
|
10,272 |
|
Depreciation
and amortization |
|
16,116 |
|
|
|
12,607 |
|
Provision
for income taxes |
|
9,444 |
|
|
|
14,985 |
|
Non-cash
write-down and other adjustments (1) |
|
2,284 |
|
|
|
(1,400 |
) |
Non-cash
share-based compensation expense (2) |
|
4,574 |
|
|
|
3,594 |
|
Transaction
costs and credit facility fees (3) |
|
234 |
|
|
|
1,286 |
|
Business
optimization expenses (4) |
|
512 |
|
|
|
169 |
|
Other |
|
397 |
|
|
|
(154 |
) |
Adjusted
EBITDA |
|
86,025 |
|
|
|
87,128 |
|
Adjusted
EBITDA attributable to noncontrolling interests |
|
(102 |
) |
|
|
2,050 |
|
Adjusted
EBITDA attributable to Generac Holdings Inc. |
$ |
86,127 |
|
|
$ |
85,078 |
|
|
|
|
|
(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, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
Net income
attributable to Generac Holdings Inc. |
$ |
44,460 |
|
|
$ |
44,861 |
|
Net income
attributable to noncontrolling interests |
|
(1,049 |
) |
|
|
908 |
|
Net
income |
|
43,411 |
|
|
|
45,769 |
|
Provision
for income taxes |
|
9,444 |
|
|
|
14,985 |
|
Income
before provision for income taxes |
|
52,855 |
|
|
|
60,754 |
|
Amortization
of intangible assets |
|
7,781 |
|
|
|
5,342 |
|
Amortization
of deferred finance costs and original issue discount |
|
642 |
|
|
|
1,177 |
|
Transaction
costs and other purchase accounting adjustments (5) |
|
40 |
|
|
|
1,035 |
|
Business
optimization expenses (4) |
|
512 |
|
|
|
169 |
|
Adjusted net
income before provision for income taxes |
|
61,830 |
|
|
|
68,477 |
|
Cash income
tax expense (6) |
|
(7,345 |
) |
|
|
(10,510 |
) |
Adjusted net
income |
|
54,485 |
|
|
|
57,967 |
|
Adjusted net
income attributable to noncontrolling interests |
|
(581 |
) |
|
|
1,474 |
|
Adjusted net
income attributable to Generac Holdings Inc. |
$ |
55,066 |
|
|
$ |
56,493 |
|
|
|
|
|
Adjusted net
income attributable to Generac Holdings Inc. per common share -
diluted: |
$ |
0.87 |
|
|
$ |
0.91 |
|
Weighted
average common shares outstanding - diluted: |
|
63,283,737 |
|
|
|
62,223,638 |
|
|
|
|
|
(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, 2020 is based on an
anticipated cash income tax rate of approximately 14% for the year
ending December 31, 2020. Amount for the three months ended March
31, 2019 was based on an anticipated cash income tax rate of
approximately 17% for the year ended December 31, 2019. 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, |
|
Twelve Month Ended |
|
Last Twelve Months |
|
|
2020 |
|
|
|
2019 |
|
|
December 31, 2019 |
|
Ended March 31, 2020 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
11,346 |
|
|
$ |
14,571 |
|
|
$ |
308,887 |
|
|
$ |
305,662 |
|
Proceeds from beneficial
interests in securitization transactions |
|
618 |
|
|
|
743 |
|
|
|
2,630 |
|
|
$ |
2,505 |
|
Expenditures for property and
equipment |
|
(12,894 |
) |
|
|
(15,902 |
) |
|
|
(60,802 |
) |
|
$ |
(57,794 |
) |
Free cash flow |
$ |
(930 |
) |
|
$ |
(588 |
) |
|
$ |
250,715 |
|
|
$ |
250,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings Per
Share |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
Numerator |
|
|
|
|
|
|
|
Net income attributable to
Generac Holdings Inc. |
$ |
44,460 |
|
|
$ |
44,861 |
|
|
|
|
|
Redeemable noncontrolling
interest redemption value adjustment |
|
(1,522 |
) |
|
|
2,432 |
|
|
|
|
|
Net income attributable to
common shareholders |
$ |
42,938 |
|
|
$ |
47,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
Weighted average shares,
basic |
|
62,126,481 |
|
|
|
61,762,260 |
|
|
|
|
|
Dilutive effect of stock
compensation awards |
|
1,157,256 |
|
|
|
461,378 |
|
|
|
|
|
Diluted shares |
|
63,283,737 |
|
|
|
62,223,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common shareholders per share |
|
|
|
|
|
|
|
Basic |
$ |
0.69 |
|
|
$ |
0.77 |
|
|
|
|
|
Diluted |
$ |
0.68 |
|
|
$ |
0.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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