March 29 - Generac Holdings Inc., a Town of Genesee, WI maker of back-up power generators, said Monday it turned a profit in the fourth quarter of 2009.
The company, which went public in February with the sale of 18.75 million shares in an initial offering, reported net income of $11.9 million, turning around a loss of $515.8 million a year earlier. Expenses in the year-ago quarter included a goodwill impairment charge of $503.2 million.
Sales decreased 10.8%, to $154 million from $173 million.
Results were hurt by weak industrial and commercial market conditions and a weaker summer storm season compared with 2008, the company said.
For the full year, Generac reported net income of $43.1 million, compared with a loss of $556 million in 2008.
Sales increased 2.4%, to $588 million from $574 million.
Residential sales of $370.7 million increased 11.5% from a year ago, driven by Generac's introduction of new home standby and portable generator products, the company said.
Strength in the residential market offset a 9.9% decline in industrial and commercial sales to $187.3 million. Generac attributed the slump to lower capital spending and the decline in non-residential construction.
"We are pleased with our top and bottom-line growth in 2009 given the difficult economic environment," said Aaron Jagdfeld, Generac's CEO.
Jagdfeld said Generac is well positioned to profit in 2010, although the economy is still worrisome.
"If the recovery takes longer, it will present a more challenging environment for us," he said on a conference call with analysts.
Generators range in size from small, portable units that can run one or two appliances to the largest, which can power a hospital if wired into the electrical system.
Generac, Briggs & Stratton Corp. and Kohler Co., all based in Wisconsin, are three of the largest generator manufacturers.
Thousands of Wisconsin-built generators of all sizes are typically in staging areas waiting for bad weather and power failures that will follow.
The U.S. market for standby generators, which are units tied into the electric system of a home or a business, has barely been tapped, with only about 1% or 2% of homes having standby power units.
This summer, Generac plans to begin selling a standby generator with a suggested retail price of $1,699 - not including installation costs which could exceed $1,000.
More than 70% of home standby generators are purchased by consumers over 50 years of age, according to Generac's warranty registration data.
Generac received $224 million in proceeds from its initial public offering. Earlier this month, Generac received an additional $23.8 million as the underwriters of its initial stock offering exercised their option to buy an additional 1.95 million shares.
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