WAUKESHA, Wis., Oct. 26, 2016 (GLOBE NEWSWIRE) -- Generac Holdings Inc. (NYSE:GNRC) (“Generac” or the “Company”), a leading
global designer and manufacturer of power generation equipment and other engine powered products, today reported financial results
for its third quarter ended September 30, 2016.
Third Quarter 2016 Highlights
- Net sales increased 3.8% to $373.1 million during the third quarter of 2016 as compared to $359.3 million in the prior-year
third quarter, including $60.8 million of contribution from recent acquisitions.
- Domestic segment sales were $299.1 million as compared to $332.2 million in the prior-year quarter, which was
primarily due to a continued decline in shipments of mobile products given ongoing oil & gas weakness, partially offset by the
contribution from the Country Home Products acquisition.
- International segment sales increased to $74.0 million as compared to $27.1 million in the prior-year
quarter, which was due to the contribution from the Pramac acquisition.
- Net income attributable to the Company during the third quarter of 2016 was $26.2 million, or $0.40 per share, as compared to
$34.0 million, or $0.49 per share, for the same period of 2015.
- Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was $53.2 million,
or $0.82 per share, as compared to $63.4 million, or $0.92 per share, in the third quarter of 2015.
- Adjusted EBITDA attributable to the Company, as defined in the accompanying reconciliation schedules, was $72.1 million as
compared to $81.2 million in the third quarter last year.
- Cash flow from operations was $48.3 million as compared to $35.3 million in the prior year quarter. Free cash flow, as
defined in the accompanying reconciliation schedules, was $41.4 million as compared to $29.4 million in the third quarter of
2015.
- The Company repurchased 1.80 million shares of its common stock during the third quarter for $65.4 million, which completes
the total authorized amount under its previously announced share repurchase program. On October 24, 2016, the Board of
Directors of the Company approved a new share repurchase program, authorizing the repurchase of an additional $250 million of its
common stock over the next 24 months.
“An increase in power outages coupled with successful promotional campaigns led to shipments of residential products that
exceeded our expectations during the quarter,” said Aaron Jagdfeld, President and Chief Executive Officer. “This
outperformance helped to offset continued weakness for our mobile products both domestically and internationally. We also
continued to generate strong free cash flow during the quarter which allowed us to complete our share repurchase program nearly a
year ahead of the original two-year timeframe, giving us confidence to authorize a new share repurchase program.”
Additional Third Quarter 2016 Consolidated
Highlights
Net sales increased 3.8% to $373.1 million during the third quarter of 2016 as compared to $359.3 million in the prior-year third
quarter. Residential product sales increased 4.3% to $192.9 million as compared to $185.0 million in the prior year.
Commercial & Industrial (C&I) product sales increased 1.0% to $149.7 million as compared to $148.2 million in the prior
year.
Gross profit margin improved 60 basis points to 36.9% compared to 36.3% in the prior-year third quarter. Gross margin was
positively impacted by the ongoing favorable impacts from lower commodity prices seen in prior quarters and continued overseas
sourcing benefits from a stronger U.S. dollar, along with an overall favorable organic product mix. These benefits were
partially offset by the net mix impact from recent acquisitions.
Operating expenses increased $19.0 million, or 30.4%, as compared to the third quarter of 2015. The increase was primarily
driven by the addition of recurring operating expenses associated with recent acquisitions, and to a lesser extent, increased
amortization expense.
Cash flow from operations was $48.3 million as compared to $35.3 million in the prior year, and free cash flow was $41.4 million
as compared to $29.4 million in the same period last year. The increases in cash flow were primarily driven by a reduction in
working capital investment during the current-year quarter as compared to the larger investment in the prior year, partially offset
by an overall decline in operating earnings.
The Company repurchased 1.80 million shares of its common stock during the third quarter of 2016 for $65.4 million, which
completes the total authorized amount under its share repurchase program which was announced in August 2015. Under the
program, a total of 6.0 million shares of common stock were repurchased for approximately $200 million. On October 24, 2016,
the Board of Directors of the Company approved a new share repurchase program which authorizes the repurchase of an additional $250
million of its common stock over a 24 month period.
Business Segment Results
Domestic Segment
Domestic segment sales were $299.1 million as compared to $332.2 million in the prior-year quarter. The vast majority of
the decline was due to the ongoing significant declines in shipments of mobile products into oil & gas and general rental
markets. In addition, shipments of home standby generators declined modestly over the prior year, but exceeded
expectations. Partially offsetting these impacts was the contribution from the Country Home Products acquisition, which
closed on August 1, 2015.
Adjusted EBITDA for the segment was $69.3 million, or 23.2% of net sales, as compared to $77.1 million in the prior year, also
23.2% of net sales. Adjusted EBITDA margin in the current year benefitted from overall favorable product mix as well as lower
commodity costs and overseas sourcing benefits from a stronger U.S. dollar, offset by increased promotional activities and reduced
overall leverage of fixed operating expenses.
International Segment
International segment sales, primarily consisting of C&I products, increased to $74.0 million as compared to $27.1 million
in the prior-year quarter. The increase was primarily due to the contribution from the Pramac acquisition, which closed on
March 1, 2016.
Adjusted EBITDA for the segment, before deducting for non-controlling interests, declined to $3.5 million, or 4.8% of net sales,
as compared to $4.1 million, or 15.0% of net sales, in the prior year. The decline in adjusted EBITDA margin as compared to
the prior year was primarily due to the Pramac acquisition, unfavorable sales mix and foreign currency impacts, and reduced
operating leverage on lower organic sales volume.
2016 Outlook Update
The Company is revising upward its guidance for revenue growth for the full year 2016, which is primarily due to an increased
outlook for residential products as a result of the higher power outage activity experienced thus far during the second half of
2016. Full-year net sales are now expected to increase between 9 to 10% over the prior year, which is an increase from the 6
to 8% growth previously expected. Total organic sales on a constant currency basis are now anticipated to decline between 8
to 9%, which is an improvement from the previous assumption of down between 10 and 13%.
Net income margins, before deducting for non-controlling interests, are still expected to be approximately 7% and adjusted
EBITDA margins, also before deducting for non-controlling interests, are also still expected to be approximately 19.5% for the
full-year 2016. Operating and free cash flow generation is expected to increase significantly over the prior year,
benefitting from the strong conversion of adjusted net income.
“Despite a challenging power outage environment over the last few years, our market position for residential products remains
strong, retail placement is currently at all-time highs, and the number of active dealers has returned back to peak levels,”
continued Mr. Jagdfeld. “The moderate improvement in power outage activity we have experienced recently should provide an
opportunity for us to better leverage the innovative sales and marketing programs for home standby generators that we have
implemented over the last several years. Although business conditions in several of our other end markets remain soft, we
continue to make strategic investments in new products, technologies and infrastructure across the business to support the next leg
of growth that we believe will occur as these end markets eventually recover.”
Conference Call and Webcast
Generac management will hold a conference call at 9:00 a.m. EDT on Wednesday, October 26, 2016 to discuss highlights of the
third quarter of 2016 operating results. The conference call can be accessed by dialing (866) 415-3113 (domestic) or +1 (678)
509-7544 (international) and entering passcode 1156253.
The conference call will also be webcast simultaneously on Generac's website (http://www.generac.com), 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 1156253. The telephonic replay will be available for 30 days.
About Generac
Since 1959, Generac has been a leading designer and manufacturer of a wide range of power generation equipment and other engine
powered products. As a leader in power equipment serving residential, light commercial, and industrial markets, Generac's
power products are available globally through a broad network of independent dealers, distributors, retailers, wholesalers and
equipment rental companies, as well as sold direct to certain end user customers.
Forward-looking Information
Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings
Inc. or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results
to differ materially from those in the forward looking statements. Forward-looking statements give Generac's current expectations
and projections relating to the Company's financial condition, results of operations, plans, objectives, future performance and
business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts.
These statements may include words such as "anticipate," "estimate," "expect," "forecast," "project," "plan," "intend," "believe,"
"confident," "may," "should," "can have," "likely," "future," “optimistic” and other words and terms of similar meaning in
connection with any discussion of the timing or nature of future operating or financial performance or other events.
Any such forward looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of
which are beyond the Company's control) and assumptions. Although Generac believes any forward-looking statements are based on
reasonable assumptions, you should be aware that many factors could affect Generac's actual financial results and cause them to
differ materially from those anticipated in any forward-looking statements, including:
- frequency and duration of power outages impacting demand for Generac products;
- availability, cost and quality of raw materials and key components used in producing Generac products;
- the impact on our results of possible fluctuations in interest rates and foreign currency exchange rates;
- 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 Generac may encounter as its business expands globally;
- competitive factors in the industry in which Generac operates;
- Generac's dependence on its distribution network;
- Generac's ability to invest in, develop or adapt to changing technologies and manufacturing techniques;
- loss of key management and employees;
- increase in product and other liability claims or recalls; and
- changes in environmental, health and safety laws and regulations.
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 2015 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.
Reconciliations to GAAP Financial Metrics
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 non-controlling 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 non-controlling 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 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 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.
| Generac Holdings Inc. |
| Condensed Consolidated Statements of Comprehensive
Income |
| (U.S. Dollars in Thousands, Except Share and Per
Share Data) |
| (Unaudited) |
| |
|
|
|
|
|
| |
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
| |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| |
|
|
|
|
|
|
|
| Net sales |
$ |
373,121 |
|
|
$ |
359,291 |
|
|
$ |
1,027,032 |
|
|
$ |
959,469 |
|
| Costs of goods sold |
|
235,349 |
|
|
|
228,965 |
|
|
|
667,053 |
|
|
|
630,643 |
|
| Gross profit |
|
137,772 |
|
|
|
130,326 |
|
|
|
359,979 |
|
|
|
328,826 |
|
| |
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
| Selling and service |
|
44,429 |
|
|
|
34,715 |
|
|
|
124,064 |
|
|
|
93,317 |
|
| Research and development |
|
9,426 |
|
|
|
8,332 |
|
|
|
27,512 |
|
|
|
24,907 |
|
| General and administrative |
|
18,066 |
|
|
|
13,127 |
|
|
|
55,492 |
|
|
|
40,897 |
|
| Amortization of intangibles |
|
9,511 |
|
|
|
6,285 |
|
|
|
25,525 |
|
|
|
17,460 |
|
| Total operating expenses |
|
81,432 |
|
|
|
62,459 |
|
|
|
232,593 |
|
|
|
176,581 |
|
| Income from operations |
|
56,340 |
|
|
|
67,867 |
|
|
|
127,386 |
|
|
|
152,245 |
|
| |
|
|
|
|
|
|
|
| Other (expense) income: |
|
|
|
|
|
|
|
| Interest expense |
|
(11,299 |
) |
|
|
(10,210 |
) |
|
|
(33,714 |
) |
|
|
(32,241 |
) |
| Investment income |
|
– |
|
|
|
39 |
|
|
|
36 |
|
|
|
111 |
|
| Loss on extinguishment of debt |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(4,795 |
) |
| Loss on change in contractual interest rate |
|
(2,957 |
) |
|
|
(2,381 |
) |
|
|
(2,957 |
) |
|
|
(2,381 |
) |
| Costs related to acquisition |
|
(577 |
) |
|
|
(153 |
) |
|
|
(994 |
) |
|
|
(153 |
) |
| Other, net |
|
19 |
|
|
|
(1,908 |
) |
|
|
564 |
|
|
|
(5,357 |
) |
| Total other expense, net |
|
(14,814 |
) |
|
|
(14,613 |
) |
|
|
(37,065 |
) |
|
|
(44,816 |
) |
| |
|
|
|
|
|
|
|
| Income before provision for income taxes |
|
41,526 |
|
|
|
53,254 |
|
|
|
90,321 |
|
|
|
107,429 |
|
| Provision for income taxes |
|
15,514 |
|
|
|
19,218 |
|
|
|
33,154 |
|
|
|
38,864 |
|
| Net income |
|
26,012 |
|
|
|
34,036 |
|
|
|
57,167 |
|
|
|
68,565 |
|
| Net loss attributable to noncontrolling interests |
|
(171 |
) |
|
|
– |
|
|
|
(112 |
) |
|
|
– |
|
| Net income attributable to Generac Holdings Inc. |
$ |
26,183 |
|
|
$ |
34,036 |
|
|
$ |
57,279 |
|
|
$ |
68,565 |
|
| |
|
|
|
|
|
|
|
| Net income attributable to Generac Holdings Inc. per common share -
basic: |
$ |
0.41 |
|
|
$ |
0.50 |
|
|
$ |
0.87 |
|
|
$ |
1.00 |
|
| Weighted average common shares outstanding - basic: |
|
64,615,935 |
|
|
|
68,175,466 |
|
|
|
65,506,469 |
|
|
|
68,642,479 |
|
| |
|
|
|
|
|
|
|
| Net income attributable to Generac Holdings Inc. per common share -
diluted: |
$ |
0.40 |
|
|
$ |
0.49 |
|
|
$ |
0.87 |
|
|
$ |
0.98 |
|
| Weighted average common shares outstanding - diluted: |
|
65,126,117 |
|
|
|
69,182,465 |
|
|
|
65,992,127 |
|
|
|
69,781,300 |
|
| |
|
|
|
|
|
|
|
| Comprehensive income |
$ |
26,647 |
|
|
$ |
31,899 |
|
|
$ |
45,723 |
|
|
$ |
59,939 |
|
| Generac Holdings Inc. |
| Condensed Consolidated Balance Sheets |
| (U.S. Dollars in Thousands, Except Share and Per
Share Data) |
| |
|
|
|
| |
September
30, |
|
December
31, |
| |
|
2016 |
|
|
|
2015 |
|
| |
(Unaudited) |
|
(Audited) |
| Assets |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ |
54,163 |
|
|
$ |
115,857 |
|
| Accounts receivable, less allowance for doubtful accounts |
|
244,722 |
|
|
|
182,185 |
|
| Inventories |
|
359,363 |
|
|
|
325,375 |
|
| Prepaid expenses and other assets |
|
13,185 |
|
|
|
8,600 |
|
| Total current assets |
|
671,433 |
|
|
|
632,017 |
|
| |
|
|
|
| Property and equipment, net |
|
207,504 |
|
|
|
184,213 |
|
| |
|
|
|
| Customer lists, net |
|
49,776 |
|
|
|
39,313 |
|
| Patents, net |
|
50,640 |
|
|
|
53,772 |
|
| Other intangible assets, net |
|
3,111 |
|
|
|
2,768 |
|
| Tradenames, net |
|
161,451 |
|
|
|
161,057 |
|
| Goodwill |
|
711,794 |
|
|
|
669,719 |
|
| Deferred income taxes |
|
7,693 |
|
|
|
34,812 |
|
| Other assets |
|
3,506 |
|
|
|
964 |
|
| Total assets |
$ |
1,866,908 |
|
|
$ |
1,778,635 |
|
| |
|
|
|
| Liabilities and stockholders’ equity |
|
|
|
| Current liabilities: |
|
|
|
| Short-term borrowings |
$ |
35,517 |
|
|
$ |
8,594 |
|
| Accounts payable |
|
145,894 |
|
|
|
108,332 |
|
| Accrued wages and employee benefits |
|
21,041 |
|
|
|
13,101 |
|
| Other accrued liabilities |
|
92,415 |
|
|
|
82,540 |
|
| Current portion of long-term borrowings and capital lease
obligations |
|
38,712 |
|
|
|
657 |
|
| Total current liabilities |
|
333,579 |
|
|
|
213,224 |
|
| |
|
|
|
| Long-term borrowings and capital lease obligations |
|
1,013,671 |
|
|
|
1,037,132 |
|
| Deferred income taxes |
|
7,201 |
|
|
|
4,950 |
|
| Other long-term liabilities |
|
62,330 |
|
|
|
57,458 |
|
| Total liabilities |
|
1,416,781 |
|
|
|
1,312,764 |
|
| |
|
|
|
| Redeemable noncontrolling interests |
|
36,269 |
|
|
|
– |
|
| |
|
|
|
| Stockholders’ equity: |
|
|
|
| Common stock, par value $0.01, 500,000,000 shares authorized,
70,144,760 and 69,582,669 shares issued at September 30, 2016 and December 31, 2015, respectively |
|
701 |
|
|
|
696 |
|
| Additional paid-in capital |
|
446,267 |
|
|
|
443,109 |
|
| Treasury stock, at cost |
|
(212,358 |
) |
|
|
(111,516 |
) |
| Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
| Retained earnings |
|
415,452 |
|
|
|
358,173 |
|
| Accumulated other comprehensive loss |
|
(34,031 |
) |
|
|
(22,475 |
) |
| Stockholders’ equity attributable to Generac Holdings,
Inc. |
|
413,915 |
|
|
|
465,871 |
|
| Noncontrolling interests |
|
(57 |
) |
|
|
– |
|
| Total stockholders' equity |
|
413,858 |
|
|
|
465,871 |
|
| Total liabilities and stockholders’ equity |
$ |
1,866,908 |
|
|
$ |
1,778,635 |
|
| Generac Holdings Inc. |
| Condensed Consolidated Statements of Cash Flows |
| (U.S. Dollars in Thousands) |
| (Unaudited) |
| |
|
|
|
| |
Nine Months Ended June
30, |
| |
|
2016 |
|
|
|
2015 |
|
| |
|
|
|
| Operating activities |
|
|
|
| Net income |
$ |
57,167 |
|
|
$ |
68,565 |
|
| Adjustment to reconcile net income to net cash provided by operating
activities: |
|
|
|
| Depreciation |
|
15,818 |
|
|
|
12,300 |
|
| Amortization of intangible assets |
|
25,525 |
|
|
|
17,460 |
|
| Amortization of original issue discount and deferred financing
costs |
|
3,229 |
|
|
|
4,368 |
|
| Loss on extinguishment of debt |
|
– |
|
|
|
4,795 |
|
| Loss on change in contractual interest rate |
|
2,957 |
|
|
|
2,381 |
|
| Deferred income taxes |
|
22,909 |
|
|
|
27,319 |
|
| Share-based compensation expense |
|
7,805 |
|
|
|
6,889 |
|
| Other |
|
(45 |
) |
|
|
377 |
|
| Net changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
| Accounts receivable |
|
(11,642 |
) |
|
|
(14,838 |
) |
| Inventories |
|
6,177 |
|
|
|
(28,319 |
) |
| Other assets |
|
2,663 |
|
|
|
572 |
|
| Accounts payable |
|
(2,618 |
) |
|
|
(12,226 |
) |
| Accrued wages and employee benefits |
|
4,981 |
|
|
|
(1,167 |
) |
| Other accrued liabilities |
|
1,341 |
|
|
|
(2,644 |
) |
| Excess tax benefits from equity awards |
|
(6,754 |
) |
|
|
(8,973 |
) |
| Net cash provided by operating activities |
|
129,513 |
|
|
|
76,859 |
|
| |
|
|
|
| Investing activities |
|
|
|
| Proceeds from sale of property and equipment |
|
1,349 |
|
|
|
105 |
|
| Expenditures for property and equipment |
|
(20,847 |
) |
|
|
(20,108 |
) |
| Acquisition of business, net of cash acquired |
|
(61,386 |
) |
|
|
(74,477 |
) |
| Net cash used in investing activities |
|
(80,884 |
) |
|
|
(94,480 |
) |
| |
|
|
|
| Financing activities |
|
|
|
| Proceeds from short-term borrowings |
|
14,117 |
|
|
|
14,320 |
|
| Proceeds from long-term borrowings |
|
– |
|
|
|
100,000 |
|
| Repayments of short-term borrowings |
|
(8,244 |
) |
|
|
(15,198 |
) |
| Repayments of long-term borrowings and capital lease
obligations |
|
(10,976 |
) |
|
|
(150,595 |
) |
| Stock repurchases |
|
(99,934 |
) |
|
|
(64,378 |
) |
| Payment of debt issuance costs |
|
– |
|
|
|
(2,067 |
) |
| Cash dividends paid |
|
(76 |
) |
|
|
(1,429 |
) |
| Taxes paid related to the net share settlement of equity awards |
|
(12,308 |
) |
|
|
(12,380 |
) |
| Excess tax benefits from equity awards |
|
6,754 |
|
|
|
8,973 |
|
| Net cash used in financing activities |
|
(110,667 |
) |
|
|
(122,754 |
) |
| |
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
|
344 |
|
|
|
(2,932 |
) |
| |
|
|
|
| Net decrease in cash and cash equivalents |
|
(61,694 |
) |
|
|
(143,307 |
) |
| Cash and cash equivalents at beginning of period |
|
115,857 |
|
|
|
189,761 |
|
| Cash and cash equivalents at end of period |
$ |
54,163 |
|
|
$ |
46,454 |
|
| Generac Holdings Inc. |
| Segment Reporting and Product Class Information |
| (U.S. Dollars in Thousands) |
| (Unaudited) |
| |
| |
|
Net
Sales |
| |
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
| Reportable Segments |
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| Domestic |
$ |
299,095 |
|
|
$ |
332,213 |
|
|
$ |
833,831 |
|
|
$ |
877,942 |
|
| International |
|
74,026 |
|
|
|
27,078 |
|
|
|
193,201 |
|
|
|
81,527 |
|
| Total net sales |
$ |
373,121 |
|
|
$ |
359,291 |
|
|
$ |
1,027,032 |
|
|
$ |
959,469 |
|
| |
|
|
|
|
|
|
|
|
| Product Classes |
|
|
|
|
|
|
|
| Residential products |
$ |
192,856 |
|
|
$ |
184,968 |
|
|
$ |
533,572 |
|
|
$ |
475,268 |
|
| Commercial & industrial products |
|
149,676 |
|
|
|
148,234 |
|
|
|
409,396 |
|
|
|
416,577 |
|
| Other |
|
30,589 |
|
|
|
26,089 |
|
|
|
84,064 |
|
|
|
67,624 |
|
| Total net sales |
$ |
373,121 |
|
|
$ |
359,291 |
|
|
$ |
1,027,032 |
|
|
$ |
959,469 |
|
| |
|
|
|
|
|
|
|
|
| |
|
Adjusted
EBITDA |
| |
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
| |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| Domestic |
$ |
69,309 |
|
|
$ |
77,117 |
|
|
$ |
173,521 |
|
|
$ |
180,018 |
|
| International |
|
3,527 |
|
|
|
4,055 |
|
|
|
13,050 |
|
|
|
10,714 |
|
| Total adjusted EBITDA (1) |
$ |
72,836 |
|
|
$ |
81,172 |
|
|
$ |
186,571 |
|
|
$ |
190,732 |
|
| |
|
|
|
|
|
|
|
|
| (1) 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) |
| |
|
|
|
|
|
|
|
|
|
|
| Net income to Adjusted EBITDA reconciliation |
|
|
|
|
|
|
|
| |
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
| |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Generac Holdings Inc. |
$ |
26,183 |
|
|
$ |
34,036 |
|
|
$ |
57,279 |
|
|
$ |
68,565 |
|
| Net loss attributable to noncontrolling interests (1) |
|
(171 |
) |
|
|
– |
|
|
|
(112 |
) |
|
|
– |
|
| Net income |
|
|
|
26,012 |
|
|
|
34,036 |
|
|
|
57,167 |
|
|
|
68,565 |
|
| Interest expense |
|
|
|
11,299 |
|
|
|
10,210 |
|
|
|
33,714 |
|
|
|
32,241 |
|
| Depreciation and amortization |
|
|
14,900 |
|
|
|
10,597 |
|
|
|
41,343 |
|
|
|
29,760 |
|
| Provision for income taxes |
|
|
15,514 |
|
|
|
19,218 |
|
|
|
33,154 |
|
|
|
38,864 |
|
| Non-cash write-down and other adjustments (2) |
|
(1,093 |
) |
|
|
2,115 |
|
|
|
1,689 |
|
|
|
4,091 |
|
| Non-cash share-based compensation expense (3) |
|
2,419 |
|
|
|
1,799 |
|
|
|
7,805 |
|
|
|
6,889 |
|
| Loss on extinguishment of debt (4) |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
4,795 |
|
| Loss on change in contractual interest rate (5) |
|
2,957 |
|
|
|
2,381 |
|
|
|
2,957 |
|
|
|
2,381 |
|
| Transaction costs and credit facility fees (6) |
|
739 |
|
|
|
317 |
|
|
|
1,499 |
|
|
|
999 |
|
| Business optimization expenses (7) |
|
|
58 |
|
|
|
5 |
|
|
|
7,164 |
|
|
|
1,743 |
|
| Other |
|
|
|
|
31 |
|
|
|
494 |
|
|
|
79 |
|
|
|
404 |
|
| Adjusted EBITDA |
|
|
|
72,836 |
|
|
|
81,172 |
|
|
|
186,571 |
|
|
|
190,732 |
|
| Adjusted EBITDA attributable to noncontrolling interests |
|
708 |
|
|
|
– |
|
|
|
3,015 |
|
|
|
– |
|
| Adjusted EBITDA attributable to Generac Holdings Inc. |
$ |
72,128 |
|
|
$ |
81,172 |
|
|
$ |
183,556 |
|
|
$ |
190,732 |
|
| |
|
|
|
|
|
|
|
|
|
|
| (1) Includes the noncontrolling interests' share of
expenses related to Pramac purchase accounting, including the step-up in value of inventories and intangible amortization, of
$1.3 million and $6.9 million for the three and nine months ended September 30, 2016, respectively. |
| |
|
|
|
|
|
|
|
|
|
|
| (2) 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. |
| |
|
|
|
|
|
|
|
|
|
|
| (3) Represents share-based compensation expense to account
for stock options, restricted stock and other stock awards over their respective vesting periods. |
| |
|
|
|
|
|
|
|
|
|
|
| (4) Represents the write-off of original issue discount
and capitalized debt issuance costs due to voluntary debt prepayments. |
| |
|
|
|
|
|
|
|
|
|
|
| (5) For the three and nine months ended September 30,
2016, represents a non-cash loss relating to the continued 25 basis point increase in borrowing costs as a result of the credit
agreement leverage ratio remaining above 3.0 times based on current projections. For the three and nine months ended September
30, 2015, represents a non-cash loss relating to a 25 basis point increase in borrowing costs as a result of the credit
agreement leverage ratio rising above 3.0 times effective third quarter 2015 and remaining above 3.0 times based on projections
at the time. |
| |
|
|
|
|
|
|
|
|
|
|
| (6) 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. |
| |
|
|
|
|
|
|
|
|
|
|
| (7) For the nine months ended September 30, 2016,
represents charges relating to business optimization and restructuring costs to address the significant and extended downturn
for capital spending within the oil & gas industry, consisting of $2.7 million classified within cost of goods sold and $4.4
million classified within operating expenses. For the three and nine months ended September 30, 2015, represents severance and
other non-recurring restructuring charges. |
| |
|
|
|
|
|
|
|
|
|
|
| Net income to Adjusted net income reconciliation |
|
|
|
|
|
|
|
| |
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
| |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Generac Holdings Inc. |
$ |
26,183 |
|
|
$ |
34,036 |
|
|
$ |
57,279 |
|
|
$ |
68,565 |
|
| Net loss attributable to noncontrolling interests (1) |
|
(171 |
) |
|
|
– |
|
|
|
(112 |
) |
|
|
– |
|
| Net income |
|
|
|
26,012 |
|
|
|
34,036 |
|
|
|
57,167 |
|
|
|
68,565 |
|
| Provision for income taxes |
|
|
15,514 |
|
|
|
19,218 |
|
|
|
33,154 |
|
|
|
38,864 |
|
| Income before provision for income taxes |
|
41,526 |
|
|
|
53,254 |
|
|
|
90,321 |
|
|
|
107,429 |
|
| Amortization of intangible assets |
|
|
9,511 |
|
|
|
6,285 |
|
|
|
25,525 |
|
|
|
17,460 |
|
| Amortization of deferred finance costs and original issue
discount |
|
1,107 |
|
|
|
1,024 |
|
|
|
3,229 |
|
|
|
4,368 |
|
| Loss on extinguishment of debt (4) |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
4,795 |
|
| Loss on change in contractual interest rate (5) |
|
2,957 |
|
|
|
2,381 |
|
|
|
2,957 |
|
|
|
2,381 |
|
| Transaction costs and other purchase accounting adjustments (8) |
|
469 |
|
|
|
979 |
|
|
|
5,159 |
|
|
|
1,482 |
|
| Business optimization expenses (7) |
|
|
58 |
|
|
|
5 |
|
|
|
7,164 |
|
|
|
1,743 |
|
| Adjusted net income before provision for income taxes |
|
55,628 |
|
|
|
63,928 |
|
|
|
134,355 |
|
|
|
139,658 |
|
| Cash income tax expense (9) |
|
|
(2,325 |
) |
|
|
(500 |
) |
|
|
(5,595 |
) |
|
|
(6,535 |
) |
| Adjusted net income |
|
|
|
53,303 |
|
|
|
63,428 |
|
|
|
128,760 |
|
|
|
133,123 |
|
| Adjusted net income attributable to noncontrolling interests |
|
58 |
|
|
|
– |
|
|
|
1,939 |
|
|
|
– |
|
| Adjusted net income attributable to Generac Holdings Inc. |
$ |
53,245 |
|
|
$ |
63,428 |
|
|
$ |
126,821 |
|
|
$ |
133,123 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Adjusted net income attributable to Generac Holdings
Inc. per common share - diluted: |
$ |
0.82 |
|
|
$ |
0.92 |
|
|
$ |
1.92 |
|
|
$ |
1.91 |
|
| Weighted average common shares outstanding - diluted: |
|
65,126,117 |
|
|
|
69,182,465 |
|
|
|
65,992,127 |
|
|
|
69,781,300 |
|
| |
|
|
|
|
|
|
|
|
|
|
| (8) 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. |
| |
|
|
|
|
|
|
|
|
|
|
| (9) Amount for the three and nine months ended September
30, 2016 is based on an anticipated cash income tax rate at that time of approximately 6% for the full year ended 2016 . Amount
for the three and nine months ended September 30, 2015 is based on an anticipated cash income tax rate of approximately 6% for
the full year ended 2015. 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
September 30, |
|
Nine Months Ended
September 30, |
| |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
| Net cash provided by operating activities |
$ |
48,278 |
|
|
$ |
35,280 |
|
|
$ |
129,513 |
|
|
$ |
76,859 |
|
| Expenditures for property and equipment |
|
(6,843 |
) |
|
|
(5,850 |
) |
|
|
(20,847 |
) |
|
|
(20,108 |
) |
| Free cash flow |
|
|
$ |
41,435 |
|
|
$ |
29,430 |
|
|
$ |
108,666 |
|
|
$ |
56,751 |
|
CONTACT: Michael W. Harris Vice President – Finance (262) 544-4811 x2675 Michael.Harris@Generac.com
