GENERAC
REPORTS RECORD FOURTH QUARTER AND FULL-YEAR 2012 RESULTS
Fourth quarter
results significantly exceed expectations - Strong broad based organic revenue
growth and operational execution lead to record levels of revenue, adjusted
EBITDA and cash flow in the quarter
WAUKESHA,
Wis.-- Feb. 14, 2013-- Generac Holdings Inc., a leading designer and
manufacturer of generators and other engine powered products, today reported
financial results for its fourth quarter and year ended December 31, 2012. Additionally, the Company provided its current outlook for 2013.
Fourth
Quarter 2012 Highlights
Net
sales increased year-over-year by 28.0% to $342.0 million as compared to $267.3
million in the fourth quarter of 2011.
Residential
product sales increased 28.9% compared to the fourth quarter of 2011.
Commercial
& Industrial (C&I) product sales increased 29.4% compared to the prior
year fourth quarter.
The
Ottomotores acquisition closed on December 8, 2012, building a more balanced,
globally focused business. The entire $44.8 million net purchase price was
funded using cash on hand.
Net
income during the fourth quarter of 2012 was $28.3 million, or $0.41 per
diluted share.
Adjusted
net income, as defined in the accompanying reconciliation schedules, increased
17.1% over the prior year quarter to $60.7 million. Adjusted diluted net income
per common share increased 15.3% to $0.87 per share.
Adjusted
EBITDA increased 34.5% over the prior year fourth quarter to $83.1 million.
Cash
flow from operations in the fourth quarter of 2012 was $106.4 million as
compared to $80.7 million in the prior year quarter. Free cash flow was $97.4
million as compared to $73.1 million in the fourth quarter of 2011.
As
a result of this strong free cash flow conversion, on February 11, 2013, the
Company prepaid $80.0 million of principal on its existing term loan,
contributing to significantly improved leverage ratios since refinancing the
Company’s credit facilities in the second quarter of 2012.
Full-Year
2012 Highlights
Net
sales increased year-over-year by 48.5% to $1.176 billion as compared to $792.0
million in 2011.
Residential
product sales during 2012 increased 43.7% as compared to a strong 2011, which
grew at a 31.7% rate over 2010.
C&I
product sales increased 64.0% as compared to 2011. Excluding the impact of
Magnum Products and the modest impact from the recent Ottomotores acquisition,
C&I product sales increased 14.0% versus 2011 on an organic basis.
Net
income during 2012 was $93.2 million, or $1.35 per diluted share.
Adjusted
net income increased 50.0% over the prior year to $220.8 million. Adjusted
diluted net income per common share increased 47.0% to $3.19.
Adjusted
EBITDA increased 53.8% over the prior year to $289.8 million.
Cash
flow from operations during 2012 was $235.6 million as compared to $169.7
million in the prior year. Free cash flow was $213.2 million as compared to
$157.7 million in 2011, which represents 97% and 107% of the adjusted net
income reported during the respective years.
“2012
was a tremendous year for Generac as we achieved record financial results with
significant growth across all product categories and regions of the United
States,” said Aaron Jagdfeld, President and Chief Executive Officer.
“With
49% growth in 2012 following 34% growth in 2011, we have nearly doubled the
size of our business in the past two years and have used our positive momentum
to reinvest heavily in our future over that time using our Powering Ahead
strategy as our roadmap. Specifically, in the fourth quarter, we launched our
AMP™ marketing tool which combines data from existing owners, third party
demographic data and power outage tracking to identify and direct market to
potential sales prospects more effectively. This tool, coupled with our new
PowerPlay™ tablet based in-home selling solution which also launched in the
fourth quarter, should improve sales lead flow and closure rates for home
standby opportunities through our distribution partners.
In
2012, we also accelerated our re-entry into the market for power washers and
have recently launched our OneWash™ product, the industry’s first and only
variable speed washer, which has helped us to gain valuable shelf space for the
upcoming 2013 season.”
“In
addition to investments in our core markets in the U.S., our efforts to become
a more global player took a major step forward with the acquisition of the
Ottomotores businesses late in the fourth quarter of 2012,” continued Mr.
Jagdfeld. “With over 500 employees and locations in Mexico and Brazil,
Ottomotores is a leading market share player in the growing Latin American
standby power market.
This
acquisition provides us with the essential elements of a local manufacturing
presence, added distribution and access to higher-power products that we
believe are critical for us to begin building a foundation to successfully
compete in the global market for backup power generation.”
Additional
Fourth Quarter 2012 Highlights
Residential
product sales for the fourth quarter of 2012 increased 28.9% to $216.0 million
from $167.5 million for the comparable period in 2011. The growth was primarily
driven by increased demand for portable and home standby generators, and to a
lesser extent power washers. The strength in shipments was driven by a
combination of the significant awareness and demand created by major power
outages in recent years, expanded distribution, and overall strong operational
execution.
Commercial
& Industrial product sales for the fourth quarter of 2012 increased 29.4%
to $110.6 million from $85.5 million for the comparable period in 2011. The
increase in net sales was primarily driven by an increase in shipments to
national account customers for both stationary standby and mobile power
equipment. C&I net sales in the fourth quarter of 2012 includes a modest
contribution of revenue from the Ottomotores acquisition that closed in
December 2012. The Magnum Products acquisition became fully annualized as of
the fourth quarter of 2012, and accordingly, the full impact of its financial
results are reflected in both the current and prior year quarterly periods.
Gross
profit margin for the fourth quarter of 2012 was 36.9% compared to 36.8% in the
fourth quarter of 2011. The positive impact from improved pricing and a
moderation in commodity costs was largely offset by changes in product mix
during the current year quarter.
Operating
expenses for the fourth quarter of 2012 declined by $4.2 million or 6.8% as
compared to the fourth quarter of 2011. Additional operating expenses to
support the strategic growth initiatives and higher baseline sales levels of
the Company were more than offset by a non-recurring, non-cash impairment
charge that was recorded in the prior year totaling $9.4 million. Operating
expenses during the current-year quarter were also modestly impacted by the
acquisition of Ottomotores in December 2012.
Interest
expense in the fourth quarter of 2012 increased to $16.6 million compared to
$5.9 million in the same period last year. The increase was a result of the
higher debt levels from the refinancing of the Company’s senior secured credit
facilities in May 2012.
Net
income in the current year quarter includes an income tax provision of $21.4
million as compared to a $238.0 million income tax benefit in the fourth
quarter of 2011. The large income tax benefit in the prior-year fourth quarter
consisted primarily of the reversal of the full valuation allowance on the
Company’s net deferred tax assets.
2013
Outlook
The
Company is initiating guidance for 2013 with solid revenue growth expected off
a very strong 2012. For the full-year 2013, the Company currently expects net
sales to increase approximately 10% as compared to the prior year. This
top-line guidance assumes no material changes in the current macroeconomic
environment and no major power outage events for the remainder of 2013.
Gross
margins are expected to decline by approximately 80 to 100 basis points during
2013 as compared to the prior year primarily as a result of the addition of
Ottomotores partially offset by the expected favorable impact from cost
reduction initiatives.
Operating
expenses as a percentage of net sales, excluding amortization of intangibles,
are expected to be slightly up compared to 2012, as the Company continues to
invest in its infrastructure to support strategic growth initiatives and an
overall higher level of baseline sales.
As
a result, Adjusted EBITDA for the full-year 2013 is expected to increase in the
mid single-digit percentage range as compared to 2012.
Cash
flow conversion is expected to remain strong during 2013 and be consistent with
the cumulative average during the past four years of free cash flow
representing between 90-95% of adjusted net income.
Mr.
Jagdfeld concluded, “Over the course of the past two years, we have
significantly increased our product development efforts by doubling the size of
the Company’s engineering functions and investing heavily in our capabilities.
We expect to bring more new products to market in 2013 than at any other time
in the history of Generac which we believe will both add to our leadership
positions in the markets for portable and home standby generators and
significantly broaden our commercial and industrial product lines.
As
we focus on driving the adoption of back-up power generation for homes and
businesses and diversifying our product offerings, our distribution channels
and the geographies we serve, we are transforming Generac into a larger, more
balanced company with improved global focus. Through innovation and solid
execution in 2013, we expect to accelerate the penetration rate for home
standby generators, increase our share of the commercial and industrial
markets, and further diversify our business through new products and geographies.
As a recognized leader in the market for back-up power, we believe Generac is
incredibly well positioned to capitalize on the macro opportunities that are in
front of us.”
About
Generac
No comments:
Post a Comment