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, 2023 and provided an
update on its outlook for the full year 2023.
First Quarter 2023 Highlights
- Net sales decreased
22% to $888 million during the first quarter of 2023 as compared to
$1.14 billion in the prior-year first quarter. Core sales, which
excludes both the impact of acquisitions and foreign currency,
decreased approximately 24%.
- Residential product
sales declined 46% to $419 million as compared to $777 million last
year.
- Commercial &
Industrial (“C&I”) product sales increased 30% to $363 million
as compared to $279 million in the prior year.
- Net income
attributable to the Company during the first quarter was $12
million, or $0.05 per share, as compared to $114 million, or $1.57
per share, for the same period of 2022.
- Adjusted net income
attributable to the Company, as defined in the accompanying
reconciliation schedules, was $39 million, or $0.63 per share, as
compared to $128 million, or $1.98 per share, in the first quarter
of 2022.
- Adjusted EBITDA
before deducting for noncontrolling interests, as defined in the
accompanying reconciliation schedules, was $100 million, or 11.3%
of net sales, as compared to $196 million, or 17.3% of net sales,
in the prior year.
- On February 1st, the
Company closed on the acquisition of REFU Storage Systems, a
developer and supplier of battery storage hardware products,
advanced software, and platform services for commercial and
industrial applications, headquartered in Pfullingen, Germany.
- On March 8th, the
Company purchased the remaining 20% minority ownership interest in
Pramac, bringing the Company’s total ownership to 100%.
Headquartered in Italy, Pramac is a designer and manufacturer of
stationary, mobile and portable generators along with energy
storage solutions sold through a broad distribution network across
the world. The Company’s initial majority ownership position
was acquired in 2016.
“As expected, first quarter sales were down year-over-year due
to a challenging prior year comparison related to the significant
excess backlog for home standby products as we entered 2022,” said
Aaron Jagdfeld, President and Chief Executive Officer. “In
addition, residential product sales in the current year quarter
were impacted by elevated levels of field inventory for home
standby generators and a decline in clean energy products as we
continue to expand our distribution network. However, power outage
activity in the quarter was well above the long-term average,
helping drive significant year-over-year growth for home standby
in-home consultations and a meaningful reduction in field inventory
levels for these products. Our global C&I product sales were at
all-time highs in the quarter and exceeded our expectations with
strength across all channels domestically and most regions
internationally. As a result of these factors, we are maintaining
our full-year 2023 net sales and adjusted EBITDA margin
guidance.”
Additional First Quarter 2023 Consolidated
Highlights
Gross profit margin was 30.7% as compared to 31.8% in the
prior-year first quarter. This margin performance was primarily due
to the significant impact of unfavorable sales mix, partially
offset by the realization of previously implemented pricing actions
and lower input costs.
Operating expenses increased $22.0 million, or 10.7%, as
compared to the first quarter of 2022 primarily driven by increased
marketing, promotion, and employee costs, certain legal and
regulatory expenses, and the impact of recurring operating expenses
from recent acquisitions.
Provision for income taxes for the current year quarter was $7.9
million, or an effective tax rate of 35.7%, as compared to $28.6
million, or a 19.7% effective tax rate, for the prior year. The
increase in the effective tax rate was primarily due to a lower
benefit from equity compensation on a low pre-tax earnings base in
the current year quarter as compared to the prior year.
Cash flow used in operations was $(18.6) million during the
first quarter, as compared to $(10.1) million in the prior year.
Free cash flow, as defined in the accompanying reconciliation
schedules, was $(41.7) million as compared to $(36.8) million in
the first quarter of 2022. The modest decline in free cash flow in
the current year quarter was primarily due to lower operating
earnings and a $36 million one-time cash tax payment for tax
planning related to a recent acquisition, mostly offset by lower
investment in working capital as compared to the prior year.
Business Segment Results
Domestic Segment
Domestic segment total sales (including inter-segment sales, as
disclosed in the accompanying schedule) decreased 26% to $720.0
million as compared to $974.9 million in the prior year quarter,
with the impact of acquisitions contributing approximately 3%
revenue growth for the quarter. The decline in core sales was
driven primarily by lower home standby and clean energy product
shipments. This decline was partially offset by strong growth in
C&I product sales across all channels, highlighted by national
rental equipment, industrial distributors, telecom, and other
direct customers for “beyond standby” applications.
Adjusted EBITDA for the segment was $67.7 million, or 9.4% of
total sales, as compared to $170.4 million in the prior year, or
17.5% of total sales. This margin performance was primarily driven
by unfavorable sales mix and reduced operating leverage on lower
shipments. Additionally, the impact of acquisitions and continued
energy technology growth investments negatively affected margins
during the quarter. These impacts were partially offset by
previously implemented pricing actions and lower input costs.
International Segment
International segment total sales (including inter-segment
sales, as disclosed in the accompanying schedule) increased 17% to
$216.5 million as compared to $185.4 million in the prior year
quarter, with the net impact of acquisitions and foreign currency
contributing approximately 2% net headwind to revenue growth for
the quarter. The core sales growth for the segment was driven
primarily by strength in our European operations.
Adjusted EBITDA for the segment, before deducting for
noncontrolling interests, was $32.4 million, or 15.0% of total
sales, as compared to $26.0 million, or 14.0% of total sales, in
the prior year. This strong margin performance was primarily driven
by favorable price/cost dynamics and improved operating leverage on
higher sales volumes.
Updated 2023 Outlook
Due to ongoing strength in leading indicators of demand for home
standby generators and significant backlog for C&I products,
the Company is maintaining its full-year 2023 net sales guidance.
Consistent with the prior outlook, shipments of residential
products are still expected to remain soft during the second
quarter as home standby field inventory levels continue to
normalize, with a return to year-over-year sales growth in the
second half of the year partially offsetting the expected first
half decline. In addition, our outlook for C&I product sales to
grow at a mid to high-single digit rate during the year remains
unchanged. Accordingly, the Company continues to expect full-year
net sales to decline between -6 to -10% as compared to the prior
year, which includes approximately 1 to 2% of net favorable impact
from acquisitions and foreign currency.
Additionally, the Company continues to expect net income margin,
before deducting for non-controlling interests, to be approximately
7.5 to 8.5% for the full-year 2023. The corresponding adjusted
EBITDA margin is still expected to be approximately 17.0 to 18.0%
and disproportionately weighted towards the second half of the
year.
Operating and free cash flow generation is expected to return to
strong levels for the full year, with conversion of adjusted net
income to free cash flow expected to be well over 100%.
Conference Call and Webcast
Generac management will hold a conference call at 10:00 a.m. EDT
on Wednesday, May 3, 2023 to discuss first quarter 2023 operating
results. The conference call can be accessed at the following link:
https://register.vevent.com/register/BIff9bb98e6aa7405b94d6f836a70bd366.
Individuals that wish to listen via telephone will be given dial-in
information.
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 for 12 months.
About Generac
Generac is a leading energy technology company that provides
backup and prime power systems for home and industrial
applications, solar + battery storage solutions, smart home energy
management devices and energy services, advanced power grid
software platforms and engine- & battery-powered tools and
equipment. Founded in 1959, Generac introduced the first affordable
backup generator and later created the category of automatic home
standby generator. The company is committed to sustainable, cleaner
energy products poised to revolutionize the 21st century electrical
grid.
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;
-
fluctuations in cost and quality of raw materials required to
manufacture our products;
-
availability of both labor and key components from our
manufacturing operations and global supply chain, including
single-sourced components and contract manufacturers, needed in
producing our products;
-
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;
-
the impact on our results of possible fluctuations in interest
rates, foreign currency exchange rates, commodities, product mix,
logistics costs and regulatory tariffs;
-
difficulties we may encounter as our business expands globally or
into new markets;
-
our dependence on our distribution network;
-
our ability to remain competitive by investing in, developing or
adapting to changing technologies and manufacturing techniques, as
well as protecting our intellectual property rights;
-
loss of our key management and employees;
-
increase in product and other liability claims or recalls;
-
failures or security breaches of our networks, information
technology systems, or connected products;
-
changes in laws and regulations regarding environmental, health and
safety, product compliance, or international trade that affect our
products, operations, or customer demand;
-
significant legal proceedings, claims, lawsuits or government
investigations; and
-
changes in durable goods spending by consumers and businesses or
other macroeconomic conditions, impacting demand for our
products.
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
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 2022 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
To supplement our condensed consolidated financial statements
presented in accordance with U.S. GAAP, the Company provides the
computation of Adjusted EBITDA attributable to the Company, which
is defined as net income before noncontrolling interest adjusted
for the following items: interest expense, depreciation expense,
amortization of intangible assets, income tax expense, certain
non-cash gains and losses including purchase accounting and
contingent consideration adjustments, share-based compensation
expense, losses on extinguishment of debt, certain transaction
costs and credit facility fees, business optimization expenses,
certain specific provisions, and adjusted EBITDA attributable to
noncontrolling interests, as set forth in the reconciliation table
below.
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 adjusted for the following items: 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 and other charges, certain specific provisions,
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. HarrisSenior Vice President – Corporate
Development & Investor Relations (262)
506-6064InvestorRelations@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, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Net
sales |
$ |
887,910 |
|
|
$ |
1,135,856 |
|
Costs of
goods sold |
|
615,411 |
|
|
|
775,108 |
|
Gross
profit |
|
272,499 |
|
|
|
360,748 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Selling and service |
|
100,688 |
|
|
|
98,243 |
|
Research and development |
|
41,820 |
|
|
|
39,744 |
|
General and administrative |
|
59,685 |
|
|
|
41,972 |
|
Amortization of intangibles |
|
25,823 |
|
|
|
26,054 |
|
Total
operating expenses |
|
228,016 |
|
|
|
206,013 |
|
Income from
operations |
|
44,483 |
|
|
|
154,735 |
|
|
|
|
|
Other
(expense) income: |
|
|
|
Interest expense |
|
(22,995 |
) |
|
|
(9,554 |
) |
Investment income |
|
688 |
|
|
|
77 |
|
Other, net |
|
(166 |
) |
|
|
246 |
|
Total other
expense, net |
|
(22,473 |
) |
|
|
(9,231 |
) |
|
|
|
|
Income
before provision for income taxes |
|
22,010 |
|
|
|
145,504 |
|
Provision
for income taxes |
|
7,849 |
|
|
|
28,608 |
|
Net
income |
|
14,161 |
|
|
|
116,896 |
|
Net income
attributable to noncontrolling interests |
|
1,731 |
|
|
|
3,038 |
|
Net income
attributable to Generac Holdings Inc. |
$ |
12,430 |
|
|
$ |
113,858 |
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders per common share -
basic: |
$ |
0.06 |
|
|
$ |
1.61 |
|
Weighted average common shares outstanding - basic: |
|
61,556,044 |
|
|
|
63,449,380 |
|
|
|
|
|
Net income attributable to common shareholders per common share -
diluted: |
$ |
0.05 |
|
|
$ |
1.57 |
|
Weighted average common shares outstanding - diluted: |
|
62,294,447 |
|
|
|
64,828,819 |
|
|
|
|
|
Comprehensive income attributable to Generac Holdings Inc. |
$ |
35,362 |
|
|
$ |
122,365 |
|
|
|
|
|
Generac Holdings
Inc. |
Condensed
Consolidated Balance Sheets |
(U.S. Dollars in
Thousands, Except Share and Per Share Data) |
(Unaudited) |
|
|
|
|
|
March
31, |
|
December
31, |
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
137,365 |
|
|
$ |
132,723 |
|
Accounts receivable, less allowance for credit losses of $28,660
and $27,664 at March 31, 2023 and December 31, 2022,
respectively |
|
490,384 |
|
|
|
522,458 |
|
Inventories |
|
1,438,296 |
|
|
|
1,405,384 |
|
Prepaid expenses and other assets |
|
119,729 |
|
|
|
121,783 |
|
Total
current assets |
|
2,185,774 |
|
|
|
2,182,348 |
|
|
|
|
|
Property and
equipment, net |
|
490,143 |
|
|
|
467,604 |
|
|
|
|
|
Customer
lists, net |
|
202,556 |
|
|
|
206,987 |
|
Patents and
technology, net |
|
445,333 |
|
|
|
454,757 |
|
Other
intangible assets, net |
|
37,633 |
|
|
|
41,719 |
|
Tradenames,
net |
|
225,198 |
|
|
|
227,251 |
|
Goodwill |
|
1,426,332 |
|
|
|
1,400,880 |
|
Deferred
income taxes |
|
8,320 |
|
|
|
12,746 |
|
Operating
lease and other assets |
|
189,843 |
|
|
|
175,170 |
|
Total
assets |
$ |
5,211,132 |
|
|
$ |
5,169,462 |
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Short-term borrowings |
$ |
64,093 |
|
|
$ |
48,990 |
|
Accounts payable |
|
426,191 |
|
|
|
446,050 |
|
Accrued wages and employee benefits |
|
48,088 |
|
|
|
45,741 |
|
Accrued product warranty |
|
80,902 |
|
|
|
89,141 |
|
Other accrued liabilities |
|
273,039 |
|
|
|
349,389 |
|
Current portion of long-term borrowings and finance lease
obligations |
|
18,029 |
|
|
|
12,733 |
|
Total
current liabilities |
|
910,342 |
|
|
|
992,044 |
|
|
|
|
|
Long-term
borrowings and finance lease obligations |
|
1,527,355 |
|
|
|
1,369,085 |
|
Deferred
income taxes |
|
110,447 |
|
|
|
125,691 |
|
Operating
lease and other long-term liabilities |
|
317,795 |
|
|
|
312,916 |
|
Total
liabilities |
|
2,865,939 |
|
|
|
2,799,736 |
|
|
|
|
|
Redeemable
noncontrolling interest |
|
3,814 |
|
|
|
110,471 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, par value $0.01, 500,000,000 shares authorized,
73,052,760 and 72,701,275 shares issued at March 31, 2023 and
December 31, 2022, respectively |
|
731 |
|
|
|
728 |
|
Additional paid-in capital |
|
1,042,786 |
|
|
|
1,016,138 |
|
Treasury stock, at cost, 10,855,203 and 11,284,350 shares at March
31, 2023 and December 31, 2022, respectively |
|
(779,533 |
) |
|
|
(808,491 |
) |
Excess purchase price over predecessor basis |
|
(202,116 |
) |
|
|
(202,116 |
) |
Retained earnings |
|
2,319,638 |
|
|
|
2,316,224 |
|
Accumulated other comprehensive loss |
|
(42,343 |
) |
|
|
(65,102 |
) |
Stockholders’ equity attributable to Generac Holdings Inc. |
|
2,339,163 |
|
|
|
2,257,381 |
|
Noncontrolling interests |
|
2,216 |
|
|
|
1,874 |
|
Total
stockholders’ equity |
|
2,341,379 |
|
|
|
2,259,255 |
|
Total
liabilities and stockholders’ equity |
$ |
5,211,132 |
|
|
$ |
5,169,462 |
|
|
|
|
|
Generac Holdings
Inc. |
|
Condensed
Consolidated Statements of Cash Flows |
|
(U.S. Dollars in
Thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Operating activities |
|
|
|
|
Net
income |
$ |
14,161 |
|
|
$ |
116,896 |
|
|
Adjustment
to reconcile net income to net cash used in operating
activities: |
|
|
|
|
Depreciation |
|
14,128 |
|
|
|
12,407 |
|
|
Amortization of intangible assets |
|
25,823 |
|
|
|
26,054 |
|
|
Amortization of original issue discount and deferred financing
costs |
|
954 |
|
|
|
637 |
|
|
Deferred income taxes |
|
(10,712 |
) |
|
|
(49,156 |
) |
|
Share-based compensation expense |
|
10,334 |
|
|
|
8,827 |
|
|
Loss (gain) on disposal of assets |
|
30 |
|
|
|
(571 |
) |
|
Other noncash charges |
|
(160 |
) |
|
|
(6,446 |
) |
|
Net changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
|
Accounts receivable |
|
33,925 |
|
|
|
(66,510 |
) |
|
Inventories |
|
(23,820 |
) |
|
|
(147,250 |
) |
|
Other assets |
|
(5,576 |
) |
|
|
2,253 |
|
|
Accounts payable |
|
(24,488 |
) |
|
|
26,363 |
|
|
Accrued wages and employee benefits |
|
1,630 |
|
|
|
(21,558 |
) |
|
Other accrued liabilities |
|
(53,790 |
) |
|
|
102,015 |
|
|
Excess tax benefits from equity awards |
|
(998 |
) |
|
|
(14,103 |
) |
|
Net cash
used in operating activities |
|
(18,559 |
) |
|
|
(10,142 |
) |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Proceeds
from sale of property and equipment |
|
84 |
|
|
|
1,864 |
|
|
Proceeds
from sale of investment |
|
– |
|
|
|
1,308 |
|
|
Proceeds
from beneficial interests in securitization transactions |
|
795 |
|
|
|
1,573 |
|
|
Contribution
to equity method investment |
|
– |
|
|
|
(2,921 |
) |
|
Expenditures
for property and equipment |
|
(23,977 |
) |
|
|
(28,200 |
) |
|
Purchase of
long-term investment |
|
(2,000 |
) |
|
|
– |
|
|
Acquisition
of business, net of cash acquired |
|
(16,188 |
) |
|
|
(999 |
) |
|
Net cash
used in investing activities |
|
(41,286 |
) |
|
|
(27,375 |
) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Proceeds
from short-term borrowings |
|
19,515 |
|
|
|
136,664 |
|
|
Proceeds
from long-term borrowings |
|
267,869 |
|
|
|
110,000 |
|
|
Repayments
of short-term borrowings |
|
(5,080 |
) |
|
|
(124,609 |
) |
|
Repayments
of long-term borrowings and finance lease obligations |
|
(113,573 |
) |
|
|
(1,737 |
) |
|
Payment of
contingent consideration |
|
(479 |
) |
|
|
– |
|
|
Purchase of
additional ownership interest |
|
(104,844 |
) |
|
|
– |
|
|
Taxes paid
related to equity awards |
|
(4,710 |
) |
|
|
(34,620 |
) |
|
Proceeds
from the exercise of stock options |
|
4,975 |
|
|
|
9,903 |
|
|
Net cash
provided by financing activities |
|
63,673 |
|
|
|
95,601 |
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
814 |
|
|
|
600 |
|
|
|
|
|
|
|
Net increase
in cash and cash equivalents |
|
4,642 |
|
|
|
58,684 |
|
|
Cash and
cash equivalents at beginning of period |
|
132,723 |
|
|
|
147,339 |
|
|
Cash and
cash equivalents at end of period |
$ |
137,365 |
|
|
$ |
206,023 |
|
|
|
|
|
|
|
Generac Holdings
Inc. |
Segment Reporting
and Product Class Information |
(U.S. Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sales
by Reportable Segment |
|
Three Months Ended March 31, 2023 |
|
Three Months Ended March 31, 2022 |
|
External Net Sales |
|
Intersegment Sales |
|
Total Sales |
|
External Net Sales |
|
Intersegment Sales |
|
Total Sales |
Domestic |
$ |
704,386 |
|
$ |
15,607 |
|
|
$ |
719,993 |
|
|
$ |
964,674 |
|
$ |
10,270 |
|
|
$ |
974,944 |
|
International |
|
183,524 |
|
|
32,942 |
|
|
|
216,466 |
|
|
|
171,182 |
|
|
14,250 |
|
|
|
185,432 |
|
Intercompany elimination |
|
- |
|
|
(48,549 |
) |
|
|
(48,549 |
) |
|
|
|
|
(24,520 |
) |
|
|
(24,520 |
) |
Total net sales |
$ |
887,910 |
|
$ |
- |
|
|
$ |
887,910 |
|
|
$ |
1,135,856 |
|
$ |
- |
|
|
$ |
1,135,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External Net Sales by Product Class |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Residential products |
$ |
418,863 |
|
$ |
776,944 |
|
|
|
|
|
|
|
|
|
Commercial & industrial products |
|
362,990 |
|
|
278,728 |
|
|
|
|
|
|
|
|
|
Other |
|
106,057 |
|
|
80,184 |
|
|
|
|
|
|
|
|
|
Total net sales |
$ |
887,910 |
|
$ |
1,135,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Domestic |
$ |
67,662 |
|
$ |
170,421 |
|
|
|
|
|
|
|
|
|
International |
|
32,413 |
|
|
25,992 |
|
|
|
|
|
|
|
|
|
Total adjusted EBITDA (1) |
$ |
100,075 |
|
$ |
196,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) |
(Unaudited) |
|
|
|
|
Net income to Adjusted EBITDA reconciliation |
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
12,430 |
|
|
$ |
113,858 |
|
Net income attributable to noncontrolling interests |
|
1,731 |
|
|
|
3,038 |
|
Net
income |
|
14,161 |
|
|
|
116,896 |
|
Interest expense |
|
22,995 |
|
|
|
9,554 |
|
Depreciation and amortization |
|
39,951 |
|
|
|
38,461 |
|
Provision for income taxes |
|
7,849 |
|
|
|
28,608 |
|
Non-cash write-down and other adjustments (1) |
|
(3,160 |
) |
|
|
(7,792 |
) |
Non-cash share-based compensation expense (2) |
|
10,334 |
|
|
|
8,827 |
|
Transaction costs and credit facility fees (3) |
|
1,091 |
|
|
|
989 |
|
Business optimization and other charges (4) |
|
1,100 |
|
|
|
1,159 |
|
Provision for regulatory charges (5) |
|
5,800 |
|
|
|
- |
|
Other |
|
(46 |
) |
|
|
(289 |
) |
Adjusted EBITDA |
|
100,075 |
|
|
|
196,413 |
|
Adjusted EBITDA attributable to noncontrolling interests |
|
3,133 |
|
|
|
3,425 |
|
Adjusted EBITDA attributable to Generac Holdings Inc. |
$ |
96,942 |
|
|
$ |
192,988 |
|
|
|
|
|
(1) Includes gains/losses on disposals of assets and sales of
certain investments, unrealized mark-to-market adjustments on
commodity contracts, certain foreign currency related adjustments,
and certain purchase accounting and contingent consideration
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. |
|
|
|
|
(5) The amount recorded in the first quarter 2023 represents a
provision of $5.8 million for a pending matter with the Consumer
Product Safety Commission concerning the imposition of penalty
fines for allegedly failing to timely submit a report under the
Consumer Product Safety Act in relation to certain portable
generators that were subject to a voluntary recall previously
announced on July 29, 2021. |
|
|
|
|
Net income to Adjusted net income
reconciliation |
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
|
|
|
Net income attributable to Generac Holdings Inc. |
$ |
12,430 |
|
|
$ |
113,858 |
|
Net income attributable to noncontrolling interests |
|
1,731 |
|
|
|
3,038 |
|
Net
income |
|
14,161 |
|
|
|
116,896 |
|
Amortization of intangible assets |
|
25,823 |
|
|
|
26,054 |
|
Amortization of deferred finance costs and original issue
discount |
|
954 |
|
|
|
637 |
|
Transaction costs and other purchase accounting adjustments
(6) |
|
718 |
|
|
|
(5,756 |
) |
(Gain)/loss attributable to business or asset dispositions (7) |
|
(119 |
) |
|
|
(229 |
) |
Business optimization and other charges (4) |
|
1,100 |
|
|
|
1,159 |
|
Provision for regulatory charges (5) |
|
5,800 |
|
|
|
– |
|
Tax effect of add backs (8) |
|
(7,131 |
) |
|
|
(9,256 |
) |
Adjusted net income |
|
41,306 |
|
|
|
129,505 |
|
Adjusted net income (loss) attributable to noncontrolling
interests |
|
1,861 |
|
|
|
1,355 |
|
Adjusted net income attributable to Generac Holdings Inc. |
$ |
39,445 |
|
|
$ |
128,150 |
|
|
|
|
|
Adjusted net income attributable to Generac Holdings Inc. per |
|
|
|
common share - diluted: |
$ |
0.63 |
|
|
$ |
1.98 |
|
Weighted average common shares outstanding - diluted: |
|
62,294,447 |
|
|
|
64,828,819 |
|
|
|
|
|
(6) 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 and contingent consideration adjustments. |
|
|
|
|
(7) Represents gains and losses attributable to the disposition of
a business or assets occurring in other than ordinary course, as
defined in our credit agreement. |
|
|
|
|
(8) In the third quarter of 2022, management determined that
certain add-backs in 2022 should be reported net of tax. Add-backs
in the first quarter of 2022 were not reported net of tax, and we
reported adjusted net income attributable to Generac Holdings Inc.
for the first quarter ended 2022 of $135,271 or $2.09. Taking into
account the tax effect on certain add-backs, the revised reported
adjusted net income attributable to Generac Holdings Inc. for the
first quarter ended 2022 is $128,150 or $1.98. |
|
|
|
|
Free Cash Flow Reconciliation |
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
|
|
|
Net cash used in operating activities |
$ |
(18,559 |
) |
|
$ |
(10,142 |
) |
Proceeds from beneficial interests in securitization
transactions |
|
795 |
|
|
|
1,573 |
|
Expenditures for property and equipment |
|
(23,977 |
) |
|
|
(28,200 |
) |
Free cash flow |
$ |
(41,741 |
) |
|
$ |
(36,769 |
) |
|
|
|
|
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