WAUKESHA, Wis.-- May 1, 2014 -- Generac Holdings Inc., a leading
designer and manufacturer of power generation equipment and other engine
powered products, today reported financial results for its first quarter ended
March 31, 2014.
First Quarter 2014 Highlights
Net sales were $342.0 million as compared to $399.6 million in
the first quarter of 2013.
Commercial & Industrial (C&I) product sales increased
23.8% to $157.4 million as compared $127.1 million in the prior-year first
quarter, due to a combination of acquisitions and continued organic growth.
Residential product sales were $164.0 million during the first
quarter of 2014 as compared to $255.2 million in the prior year quarter. The
prior year first quarter benefitted from elevated demand due to Superstorm
Sandy, while the first quarter of 2014 was negatively impacted by colder
temperatures and snow cover which delayed installations and slowed demand for
home standby generators.
Net income during the first quarter of 2014 was $34.7 million,
or $0.50 per share, as compared to $50.7 million or $0.73 per share for the
same period of 2013.
Adjusted net income, as defined in the accompanying
reconciliation schedules, was $50.7 million as compared to $83.9 million in the
first quarter of 2013. Adjusted diluted net income per share was $0.72 as
compared to $1.21 per share in the first quarter of 2013.
Adjusted EBITDA, as defined in the accompanying reconciliation
schedules, was $77.5 million as compared to $108.8 million in the first quarter
last year.
Cash flow from operations in the first quarter of 2014 was $36.4
million as compared to $38.3 million in the prior year quarter. Free cash flow,
as defined in the accompanying reconciliation schedules, was $31.4 million as
compared to $33.9 million in the first quarter of 2013.
For the trailing four quarters, including the first quarter of
2014, net sales were $1.428 billion; net income was $158.6 million; adjusted
EBITDA was $371.3 million; cash flow from operations was $258.0 million; and
free cash flow was $226.7 million.
“We are pleased with our overall financial results for the
quarter as they were in line with our expectations. Shipments of residential
products during the first quarter were more typical of the seasonality we
historically see in winter months, which was magnified in the current season
with heavy snow and colder temperatures delaying installs of residential
standby units, ” said Aaron Jagdfeld, President and Chief Executive Officer.
“Shipments of C&I products were again strong during the quarter as a result
of continued organic growth and the contribution from recent acquisitions.
Through a combination of our internal growth initiatives and M&A activity,
we remain focused on driving a new and higher baseline of demand for our
products, while also becoming a more diversified company with improved global
scale.”
Additional First Quarter 2014 Highlights
Residential product sales for the first quarter of 2014 were
$164.0 million as compared to $255.2 million for the comparable period in 2013.
Sales of residential products during the prior-year first quarter of 2013 were
positively impacted by approximately $100 million in incremental shipments as a
result of satisfying the extended lead times that resulted from Superstorm
Sandy, which did not repeat during the first quarter of 2014. Excluding this
benefit in the prior year quarter, residential product revenue increased during
the first quarter of 2014, driven by higher shipments of portable generators.
C&I product sales for the first quarter of 2014 increased
23.8% to $157.4 million from $127.1 million for the comparable period in 2013.
The increase was driven by recent acquisitions along with solid organic growth
for stationary generators and light towers. The strength in organic revenues
was primarily driven by an increase in shipments to national account customers.
Gross profit margin for the first quarter of 2014 was 34.9%
compared to 38.4% in the prior-year first quarter. Gross margin was impacted
over the prior year primarily due to a notably higher mix of organic C&I
product shipments and lower mix of home standby generators, together with the
impact of recent acquisitions.
Operating expenses for the first quarter of 2014 declined $2.7
million, or 4.8%, as compared to the first quarter of 2013. The expense
reduction was driven primarily by a decline in warranty expense driven by
warranty rate improvements in recent quarters, partially offset by the addition
of operating expenses associated with recent acquisitions.
Interest expense in the first quarter of 2014 declined to $11.7
million compared to $15.7 million in the same period last year, the result of a
reduction in interest rate from the credit agreement refinancing completed in
May 2013.
2014 Outlook
The Company is reaffirming its prior guidance for 2014 in terms
of revenue growth, EBITDA margins and cash flows. For the full-year 2014, the
Company still expects net sales to increase in the mid-single digit range as
compared to the prior year. This top-line guidance assumes no material changes
in the current macroeconomic environment, no major power outage events for the
remainder of 2014, and no benefit from additional acquisitions.
Adjusted EBITDA margins are expected to remain in the mid-20%
range as previously guided, as a higher mix of C&I product shipments
relative to prior expectations is projected to be offset by reduced operating
expenses. These attractive margins are consistent with the average levels seen
during the past four years.
“We expect to continue to benefit from the long-term secular
growth drivers for our business,” continued Mr. Jagdfeld. “Given the relatively
low penetration for both residential and light-commercial standby generators,
we believe there is a substantial opportunity for long-term growth as the
leader in these emerging product categories.
We are also optimistic about the increasing need for our
products used in certain end-market verticals such as telecommunications and
oil & gas, as well as the overall ongoing secular shifts in the market
toward natural gas generators and the rental of mobile power equipment. As we
continue to execute on our Powering Ahead strategic plan, we are confident in
our ability to continue to invest in the future growth of the business, both
organically and through acquisitions.”
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,
industrial and construction markets, Generac's power products are available
globally through a broad network of independent dealers, retailers, wholesalers
and equipment rental companies, as well as sold direct to certain end user customers.
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