A Collection of Current Outdoor Power Equipment (OPE) Industry Related News Articles From OPEESA's (Outdoor Power Equipment and Engine Service Association) Newsletter "OPE-In-The-Know," the Business of OPE.
June
3 -- Generator maker Generac announced this morning it had completed the
refinancing of its senior secured term loan credit facility and, as it
previously promised, will use part of the proceeds to pay investors a special
dividend of $5.00 per share, payable on June 21 to stockholders of record on
June 12.
Generac
said the refinancing resulted in it incurring $1.2 billion of senior secured
term loans that replaced its prior term loan facilities. The new term loans
will mature in 2020, with interest initially accruing at LIBOR plus 2.75% with
a LIBOR floor of 0.75%. Moreover, beginning in the second quarter of 2014, the
spread to LIBOR of the new term loans can be reduced to LIBOR plus 2.50% if its
net debt leverage ratio falls below 3.0 times.
Generac
also obtained a one-year extension to the maturity date of its existing $150
million senior-secured, asset-based revolving credit facility. The extended
revolving credit facility will terminate in 2018, but will continue to accrue
interest on drawn proceeds using an "availability-based pricing grid"
starting at LIBOR plus 2%.
As
previously announced, the generator maker intends to use approximately $342
million of the proceeds from the new term loans to fund a special cash dividend
to its stockholders of $5.00 per share. The company does not pay a regular
dividend on its common stock. The remaining funds will be used for general
corporate purposes and to pay related financing fees and expenses.
As
a result of the closing on the $1.2 billion of senior secured term loans, the
Company is updating its guidance for interest expense for the full-year 2013.
Interest expense is now expected to be in the range of $55.0 to $57.0 million,
which includes $50.0 to $51.0 million of debt service costs, at current LIBOR
rates, plus $5.0 to $6.0 million for deferred financing cost and original issue
discount amortization. Interest expense during the third quarter of 2013, the
first full quarter under the new capital structure, is expected to be
approximately $13.0 million, which includes approximately $2.0 million of
deferred financing costs and original issue discount amortization.
November 7 -- Strong sales growth, helped in part by Hurricane Irene and other natural disasters, is leading generator manufacturer Generac Holdings Inc. to add over 400 new jobs at its factories in Waukesha and other Wisconsin communities.
Generac announced Monday it will add 300 to 400 jobs in Waukesha, Whitewater and Eagle, along with 50 to 60 jobs at its recently acquired Magnum Products LLC subsidiary in Berlin. Magnum makes portable light towers, portable generators and pumps used at construction sites.
Waukesha-based Generac, which now has 1,500 to 1,600 employees, plans to hire most of the new workers within 90 days, said company spokeswoman Heather Shannon Gaedtke. All of the new employees will be hired within the next year, she said.
Generac won't release pay data, but all of the jobs pay family-supporting wages and salaries, Gaedtke said.
The new positions range from entry-level to management, and include engineers, designers and technicians, a company statement said.
All of Generac's manufacturing facilities are in Wisconsin. Less than 2% of its workforce was union members as of Dec. 31, according to the company's annual report filed with the U.S. Securities and Exchange Commission.
The company isn't receiving any public financing assistance in connection with the expansion, which is fueled by increased demand for its products, said Art Aiello, a company media relations specialist.
Generac on Nov. 1 reported that its third-quarter profit increased nearly 63%, to $37.4 million, or 55 cents a share, compared with $23 million, or 34 cents a share, for the same period last year.
Sales jumped 49% to $239.3 million, compared with $160.7 million during the year-earlier period.
Generac saw record shipments of its home generators during the third quarter after major power outages occurred in the Midwest and along the East Coast, President and Chief Executive Officer Aaron Jagdfeld said in last week's earnings announcement. Home generators accounted for more than two-thirds of the company's third quarter revenue.
"Our sustained efforts over the past three years to build a leading position in the market for portable generators resulted in a sharp increase in sales due to the increased demand for these products in the third quarter," Jagdfeld said, in a statement. "We also saw increased demand for our home standby generators in the quarter and we expect that demand will grow over the next several quarters as homeowners look to protect themselves from future power outages."
The company expects its home generator sales in the fourth quarter to increase by over 30%, Jagdfeld said.
May 7 -- A weak economy and a lack of winter storms resulted in a 57% drop in first-quarter profit at Generac Holdings Inc., a generator manufacturer.
But there are encouraging "pockets of demand" for generators at hospitals, wastewater treatment plants, schools and other facilities, Aaron Jagdfeld, chief executive of the Waukesha-based company, said Friday in a conference call with analysts.
"We continue to believe the aging power grid is more susceptible to power outages," he said.
Generac said its quarterly profit fell to $2.47 million from $5.79 million a year ago.
The company has been publicly traded since Feb. 11.
Its recent results were hurt by weak industrial and commercial market conditions and a weaker storm season.
Residential product sales were $84 million, down 5.1% from $88.5 million a year ago.
Industrial and commercial product sales of $38.3 million were down 15% from $45.1 million in the year-ago quarter.
"We continue to be cautious about the economic environment as our end customers closely monitor big ticket capital spending," Jagdfeld said. Sales trends are expected to continue as they have because of weaker storm activity and softness in non-residential construction, he said.
"The first-quarter results were modestly below our expectations, though underlying trends were largely consistent with our expectations," analyst Michael Halloran with Robert W. Baird & Co. said in a note to clients.
"Though we are modestly disappointed in the outlook, we are not surprised that revenue trends were lowered. Further, we are more focused on the long-term growth potential of the company, which remains intact and is promising," Halloran wrote.
There have not been many big storms in recent months to trigger generator sales. But the weather-altering El Niño condition in the Pacific Ocean seems to be easing and could be over by June, government climate experts reported Thursday.
Last month, forecasters Philip J. Klotzbach and William M. Gray of Colorado State University said they foresee above-average storm activity for the Atlantic hurricane season due to a warming of tropical Atlantic "and a more confident view that the current El Niño will weaken."
The government's hurricane forecast for this summer is due out later this month.
If conditions revert to neutral, it could complicate forecasting this summer's hurricanes, since El Niño years tend to have fewer storms than normal in the Atlantic and Gulf of Mexico.
Meanwhile, the U.S. market for standby generators, which are units tied into the electric system of homes or businesses, 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.
"We are being conservative coming out of the gate," Jagdfeld said, adding that much of the product's initial success will depend on getting good placement in stores.
MILWAUKEE, April 22, 2010 -- Briggs & Stratton today announced third quarter fiscal 2010 consolidated net income of $24.1 million or $0.48 per diluted share, that when adjusted for a litigation settlement of $30.6 million ($18.7 million after-tax) would result in an adjusted consolidated net income of $42.7 million or $0.85 per diluted share on consolidated net sales of $694.6 million. The litigation settlement relates to a class action lawsuit regarding horsepower labeling that was previously disclosed in a Current Report on Form 8-K filed on March 2, 2010.
The third quarter of fiscal 2009 had consolidated net income of $25.4 million or $0.51 per diluted share on consolidated net sales of $673.8 million. Consolidated net sales increased $20.8 million or 3% from the third quarter of the prior year. The increase is primarily attributable to higher sales volumes in the Engines Segment. Third quarter adjusted consolidated net income increased $17.3 million from net income in the same period a year ago. Engines Segment operating results were the primary driver of the improved adjusted net income.
For the first nine months of fiscal 2010, consolidated net income was $18.4 million or $0.36 per diluted share, that when adjusted for the litigation settlement of $30.6 million ($18.7 million after-tax), would result in an adjusted consolidated net income of $37.1 million or $0.73 per diluted share on consolidated net sales of $1.412 billion.
For the same period a year ago, consolidated net sales were $1.609 billion, and consolidated net income was $26.6 million or $0.53 per diluted share. The majority of the $197.0 million or 12% decrease in consolidated net sales was the result of lower sales volume in the Power Products Segment. The remainder of the net sales decrease reflects lower engine volume and lower prices. The nine-month adjusted consolidated net income increased by $10.5 million from net income in the same period a year ago. Engines Segment operating results were the primary driver of the improved adjusted net income.
Engines:
Third quarter net sales for fiscal 2010 were $498.9 million versus $480.2 million for the same period a year ago, an increase of $18.7 million or 4%. The increase in net sales was primarily the result of an engine unit shipment increase of 6% from the same period a year ago. Offsetting the volume improvement were lower average prices in effect for fiscal 2010. Shipments of engines increased in the third quarter for lawn and garden applications due to the shift of OEM production to the last half of the fiscal year from the fiscal second quarter reflecting the desire of the channel participants to control their working capital commitments at the end of the calendar year.
Net sales for the first nine months of fiscal 2010 were $983.6 million versus $1.078 billion in the prior year, a decrease of $94.5 million or 9%. Unit volume decreases of 7% through nine months were the result of lower engine demand for portable generators, soft engine shipments to European lawn and garden equipment manufacturers and minor market share losses in various engine categories. The majority of the remainder of the net sales decrease was due to lower pricing implemented for fiscal 2010.
Income from operations for the third quarter of fiscal 2010 was $43.8 million. Income from operations, after adjusting for the $30.6 million litigation settlement, was $74.4 million, a $27.8 million improvement from the $46.6 million reported for the same period in the prior year.
The $27.8 million improvement was primarily the result of lower manufacturing costs for materials, labor and fixed overhead. Improvement in the adjusted income from operations from sales and manufacturing volume increases was offset by the previously discussed lower prices.
Income from operations for the first nine months of fiscal 2010 was $56.0 million. Income from operations after adjusting for the litigation settlement was $86.6 million, a $23.5 million improvement from the $63.1 million reported for the same period a year ago. The $23.5 million improvement for the first nine months was the result of similar lower manufacturing costs as mentioned for the third fiscal quarter, offset by lower sales volume, production volume and pricing.
Power Products:
Fiscal 2010 third quarter net sales were $245.3 million versus $250.2 million for the same period a year ago, a decrease of $4.9 million. The net sales decrease was primarily the result of lower portable generator sales in the quarter, as the current year's quarter did not have hurricane replenishment shipments that were experienced in last year's third quarter. The portable generator sales decrease was partially offset by stronger pressure washer volume and a small improvement in shipments of lawn and garden equipment.
Net sales for the first nine months of fiscal 2010 were $565.5 million versus $697.7 million in the prior year, a $132.2 million decrease. Lower portable generator sales for this nine-month period accounted for almost all of the net sales decrease primarily due to the absence of any hurricane activity in fiscal 2010.
There was a loss from operations of $7.1 million in the third quarter of fiscal 2010, a $4.2 million greater loss than experienced in the prior year. The increase in the loss from operations resulted from lower plant utilization, primarily production of portable generators that decreased over 90% in the current third quarter compared to the same period a year ago.
The loss from operations for the first nine months of fiscal 2010 was $8.0 million, a small improvement from the $8.9 million operating loss generated for the same period a year ago. The improvement in the loss from operations for the quarter was the result of lower manufacturing costs, primarily related to lower commodity costs and planned cost saving initiatives. The improvements were offset by lower sales and production volumes primarily related to the significantly lower portable generator shipments and production in fiscal 2010.
General:
Other income for the third quarter and first nine months of fiscal 2010 was greater than the same periods last year primarily because of improved earnings in our joint ventures. Interest expense for the third quarter of fiscal 2010 was less than the prior year because of lower borrowings offset by a premium expense of $1.4 million to repurchase a portion of outstanding senior notes during the quarter. Interest expense for the first nine months of fiscal 2010 was also lower due to lower borrowings offset by a premium expense of $2.4 million to repurchase a portion of outstanding senior notes during fiscal 2010.
The effective tax rate was 27.1% for the third quarter and 22.3% for the first nine months of fiscal 2010 versus 31.4% and 23.4% for the same periods last year, respectively. The variation reflected between years was due to the required recognition of the tax effect of certain events as discrete items in the quarter in which they occurred rather than in the overall expected annual tax rate.
The 8.875% Senior Notes that are due in March 2011 have been classified as a Current Maturity on Long-term Debt in the consolidated balance sheet as of the end of fiscal March 2010. The company believes it will be able to replace these borrowings with new financing.
Outlook:
The company, after recognizing the litigation settlement in the third quarter, now projects that fiscal 2010 net income will be in the range of $24 to $31 million or $0.48 to $0.62 per diluted share. This current forecast range is the same as the forecast provided in January 2010, except it now incorporates the litigation settlement and the bottom end of the forecast has been increased.
Consolidated net sales are projected to be approximately 6% lower between years primarily due to the absence of hurricane related sales of portable generators and their related engines, the continued impact of year over year pricing changes and lower engine shipments to Europe for lawn and garden applications.
While the lawn and garden season has started, there remains uncertainty that the market growth built in to our projections should be changed at this time. Production levels for substantially all products are planned to be lower in fiscal 2010 to decrease our investment in working capital.
Operating income margins are projected to be in the range of 2.8% to 3.1% after recognition of the litigation expense but still in the previously disclosed 4% to 5% range if the litigation expense is removed. Interest expense and other income are forecasted for the full year at $26 million and $5 million, respectively. The effective tax rate for the full year is projected to be in a range of 27% to 30%.
