INVESTOR
PRESENTATION
NOVEMBER 2020
"Generac's mission is to ensure peace of mind by developing power products and solutions that make the world safer, brighter, and more productive."
1
INVESTOR
RELATIONS
Aaron Jagdfeld
PRESIDENT & CEO
York Ragen
CHIEF FINANCIAL OFFICER
Mike Harris
VICE PRESIDENT - CORPORATE DEVELOPMENT & INVESTOR RELATIONS
- 506-6064InvestorRelations@generac.com
2
FORWARD LOOKING
STATEMENTS
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;
- availability, cost and quality of raw materials and key components from our global supply chain and labor needed in producing our products;
- the impact on our results of possible fluctuations in interest rates, foreign currency exchange rates, commodities, product mix and regulatory tariffs;
- 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;
- difficulties we may encounter as our business expands globally or into new markets;
- our dependence on our distribution network;
- our ability to invest in, develop or adapt to changing technologies and manufacturing techniques;
- loss of our key management and employees;
- increase in product and other liability claims or recalls;
- failures or security breaches of our networks or information technology systems;
- changes in environmental, health and safety, or product compliance laws and regulations affecting our products or operations; and
- the duration and scope of the impacts of the COVID-19 pandemic are uncertain and may or will continue to adversely affect our operations, supply chain, distribution, and demand for certain of our products and services.
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 or will continue to be impacted by the COVID-19 pandemic, which 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 2019 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 presentation 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.
3
GENERAC
BY THE NUMBERS
2020E | ~6,500 |
NET SALES | EMPLOYEES |
$2.4-$2.5 BILLION
LTM ADJ EBITDA
$517 MILLION
22.3% MARGIN
LTM FREE CASH FLOW | OMNI CHANNEL |
DISTRIBUTION | |
~$400 MILLION | |
THOUSANDS OF DEALERS, WHOLESALERS, |
RETAILERS AND E-COMMERCE PARTNERS
4
MEGA
TRENDS
"Grid 2.0" - Evolution of the traditional electrical utility model
Technology & regulation will create Clean Energy and Grid Services opportunities
Attitudes around global warming and climate change are changing
Expectation of more severe weather driving power outages
Natural Gas will be the fuel of the future
Huge supply & increasing demand for applications beyond standby power
Legacy infrastructure needs major investment cycle
Rebuilding of transportation, water & power will take decades
Telecommunications infrastructure shifting to next generation
5G will enable new technologies requiring significant improvement in network uptime
New Emerging Trend…
Home as a Sanctuary
Millions of people working, learning, shopping, entertaining, and in general, spending more time at home
5
MACRO
INVESTMENT THEMES
$2,500
10% ORGANIC CAGR SINCE IPO IN 2010
$2,000
$1,500
$1,000
$500
$-
'92 | '94 | '96 | '98 | '00 | '02 | '04 | '06 | '08 | '10 | '12 | '14 | '16 | '18 | '20E |
Note: $ amounts in millions. Represents gross sales excluding freight revenue. Excludes "Portable Product" sales prior to the division's divestiture in 1998. Figures include results from acquisitions completed during 2011 - present; see slide titled "Summary of Acquisitions" for further details.
CREATING A LEADING "ENERGY TECHNOLOGY SOLUTIONS" COMPANY
Power Quality Issues Continue To Increase
- Power outage severity increasing significantly over LT baseline average during 2017-2020
- Aging and under-invested electrical grid more vulnerable to unpredictable and severe weather
- Aging population and overall consumers are more dependent on power
Home Standby Market Growth Opportunity is Massive
- ~5.0% of US HH's have a HSB today (TAM=53M HH's)
- Every 1.0% of penetration is approximately $2.5 billion market opportunity (at retail)
- Generac's 75%+ share due to unique go to market strategy
California market for backup power increasing significantly
- Local utilities triggering numerous and significant power shutoff events
- Shutoff events impacting millions of customers in an attempt to mitigate risk of wildfires
- Events projected to continue for several years with HSB penetration only ~1%
Energy Storage & Monitoring Markets Developing Quickly
- New markets focused on energy cost reduction
- Battery cost and performance continue to improve
- Generac uniquely positioned with distribution, marketing & brand
Natural Gas Generators Driving Superior Growth Rates
- Cleaner, greener & more cost effective for on-site power
- US is ~40% gas gen sales annually and growing 2x diesel
- Global opportunity is nascent - less than 1% of market
Rollout of 5G Will Require Improved Network Reliability
- 5G will enable many new technologies - uptime critical
- ~400K cell towers in U.S., ~40% penetration, Generac #1 market share
- Technology to rollout globally - Generac footprint can serve
6
GENERAC WORLDWIDE
LOCATIONS
Vermont, USA | ||||
Country Home Products | ||||
Wisconsin, USA | Maine, USA | |||
Generac | ||||
Pika Energy | ||||
Eagle | ||||
Vancouver, BC | ||||
Janesville | United Kingdom | |||
Jefferson | Neurio | |||
Pramac UK | ||||
Oshkosh | Enbala | |||
Waukesha (HQ) | France | |||
Whitewater | ||||
Generac Mobile Products | Pramac France | |||
Berlin | Spain | |||
Ohio, USA Pramac Iberica | ||||
Mean Green | ||||
California, USA | Colorado, USA | Italy | ||
Energy Systems | ||||
Enbala | ||||
Generac Mobile Products | ||||
Dominican Republic | ||||
Mexico | Pramac Caribbean | |||
Ottomotores | ||||
Selmec |
Brasil
Generac Pramac Brasil
Germany | Vertically Integrated Manufacturing | ||
Pramac GMBH | |||
Motortech | CapacityServing a Globally Diverse | ||
Pramac SP. ZOO | |||
Poland | Commercial Footprint | ||
Motortech | |||
Russia | |||
Pramac Russia | |||
Romania | |||
Italy | Pramac Generators | ||
Pramac Industrial | |||
Kolkata, India China | |||
Captiva | Pramac Fu Lee Foshan | ||
Power Equipment |
United Arab Emirates
Pramac Middle East
Singapore
Pramac Asia
Australia
Pramac Australia
7
LEGACY POWER
PLATFORMS
Consumer Power Products
Outdoor Chore Products
Air-cooled
Home Standby
Generators
Liquid-cooled
Home Standby
Generators
Portable & Inverter Generators
Prime and emergency backup for:
- Residential
- Light Commercial
Construction
Recreation
Pressure washers Water pumps
Field & brush mowers
Trimmer mowers Chippers & shredders Log splitters Lawn & leaf vacuums Stump grinders
Wide variety of property maintenance applications for:
- Residential
- Larger-acreageproperties
- Light commercial
- Municipal
- Farm
C&I Stationary Products
Mobile Power Products
Larger kW & Container Gensets
Industrial Stationary Generators
Commercial
Stationary
Generators
Complete lines of diesel & natural gas generators
Prime and emergency backup for:
- Healthcare
- Telecom/Data Centers
- Municipal
- Manufacturing
- Distribution
- Hospitality
- Restaurants
- Retail
Light Towers | Support equipment for: |
Mobile Generators | - Construction |
- Oil and Gas | |
Heaters & Pumps | - Mining |
- Special Events | |
- Road Development | |
- General Rental needs |
8
LEGACY GROWTH
DRIVERS
Consumer Power Products
Key drivers: Aging and under-invested grid, favorable demographics, heightened power outages
Low penetration of emerging HSB category: ~4.75% of addressable households within the U.S.
Market leader: Leading share of domestic HSB market; With significant competitive advantages high-20% share of portable generator market
Key strategic initiatives: Further improve lead generation, close rates and reduce total system cost
Connectivity: Driving deeper engagement with customers and distribution partners
C&I Stationary Products
Natural gas generators: Gaining share vs. diesel
Market share gains: Larger-kW product offering, distribution optimization, sales process excellence
International Expansion: Acquisitions accelerate expansion into other regions of the world
New Market Opportunities: Expansion of gaseous-fueled products into prime, continuous and CHP applications
Low penetration: Within the light commercial/retail market
Telecom: Growing importance of backup power for critical telecommunications infrastructure
Outdoor Chore Products
Housing drives market growth: Need for outdoor power equipment grows alongside housing starts
Trend toward pro market: Capitalize on growing trend in lawn and garden industry of "do it for me" with products for the pro market
Leverage current D2C customer base: Introducing new products to capture more share of wallet
Expand distribution: Products for outdoor power equipment dealers and other B2B partners
Supply Chain and Operational Synergies: Leverage air-cooled engine volumes and consolidated manufacturing footprint to improve cost position.
Mobile Power Products
Secular shift toward renting: Mobile products platform benefiting from shift toward renting in lieu of buying
Diversification into new products: Entry into adjacent "engine- powered" rental equipment categories, both organically and through acquisitions
Long-termincreased infrastructure spending: Macro opportunity of increased spending stimulus to improve aging domestic infrastructure
Long-termdomestic energy production: Multi-decade upcycle for mobile support equipment that is essential to oil & gas drilling and production sites
9
ENERGY TECHNOLOGY -
GENERAC'S ENERGY STORAGE SOLUTION
MORE POWER
- 9/11 kW Max. Continuous
- 50A Motor Starting Current
MORE CAPACITY
- 3.0 kWh Battery Modules
- 9 - 18 kWh per Cabinet
LOAD MANAGEMENT
- 50A and 100A Automatic Smart Management Modules
OUTDOOR RATED
- Type 3R Battery Cabinet
-10 to 50°C Operating Temperature Range
WHOLE HOME BACKUP
- 200 A and 100A
Whole Home Transfer Switches
PWRcell Whole Home Backup…
CLEAN & SIMPLE
10
WHOLE HOME
POWER COMPARISON
PEAK CURRENT | USEABLE ENERGY | CONTINUOUS POWER | ||||||
20 | 50 | |||||||
40 | ||||||||
/ kWh) | 15 | |||||||
+33% | ||||||||
+56% | 30 | |||||||
Power/Energy (kW | Peak Current | |||||||
10 | ||||||||
20 | ||||||||
5 | +80% | |||||||
10 | ||||||||
0 | 0 | |||||||
PWRcell | Tesla | LG Chem | Enphase | |||||
PWRcell | Tesla | LG Chem | Enphase | |||||
Peak Current | 50A | 32 | 31 | 25 | Note: Shaded lines represent market leading | |||
Useable Energy | 18kWh | 13.5kWh | 9.3kWh | 10.1kWh | advantage in terms of power capability, with | |||
specific percentages as compared to Tesla | ||||||||
Continuous Power | 9kW | 5kW | 5kW | 3.8kW | ||||
11
ENERGY TECHNOLOGY
GENERAC'S "GRID 2.0" OPPORTUNITY
EVOLUTION OF TRADITIONAL ELECTRICAL UTILITY MODEL: migration toward DERs to respond to real-time energy balancing needs
UTILITIES/ENERGY RETAILERS EXPERIENCING HIGHER SUPPLY VARIABILITY AND NEED MORE RESILIENCY: due to increasing use of renewables and higher power outages
ISO/Utility
Avoided cost of buying power on the
spot market and/or upgrading generation, transmission and distribution systems.
Enables Grid Operators To Run
A Cleaner, Less Expensive And
More Resilient Electrical Grid
ENBALA'S CONCERTO™ CLOUD-BASEDSOFTWARE - OPEN PLATFORM, BOTH BRAND AND EQUIPMENT AGNOSTIC: capability to connect to wide range of DERs
Software Platform
Enables the connection of DERs to register and then participate in Energy Aggregator & Utility programs.
DER ASSETS AGGREGATED INTO A DECENTRALIZED/ VIRTUAL POWER NETWORK: provide flexible capacity to address peaks in electricity supply/demand
FERC 2222 RULING EXPECTED TO ACCELERATE CONNECTION OF NEW AND EXISTING INSTALLED BASE OF DERS: providing increased ROI value proposition
Generac DER Assets | ||||
Customer receives incentive to allow use | ||||
of onsite asset - incentive improves ROI | Load | Residential | C&I | |
value proposition to acquire asset. | PV+Storage | |||
Control | Generator | Generator | ||
12
ENBALA'S
REVENUE MODEL
Current SaaS Model - $/MW Assets Connected/year
- Fundamentally a Software-as-a-Service business
- Enbala is paid as assets/devices are connected to the platform on a recurring basis
UTILITY/ENERGY RETAILERS
... | |||||
CUSTOMER 1 | CUSTOMER 2 | CUSTOMER X | |||
Current Performance Model - $/MW Delivered/year
- Fundamentally a pay-for-performance business
- Enbala is paid by utilities for the energy performance delivered
UTILITY/ENERGY RETAILERS
... | ||||||
CUSTOMER 1 | CUSTOMER 2 | CUSTOMER X | ||||
Enbala Opportunities:
- Energy imbalance markets
- Real time capacity markets
- Emerging wholesale markets from FERC Order 2222
- Predictive energy management for customers
- Ancillary Service, Frequency Control and other aggregation markets
13
GLOBAL DISTRIBUTION
CHANNELS
Residential and C&I Dealer Network
- International network of over 7,000 dealers
- Installation and after sale service support
- Work with professional engineering firms to develop customized solutions
- Over 5,000 technicians trained every year
- Support for global large account sales
Significant Omni-Channel Distribution
Other Key Channels
Electrical Wholesalers | Mass Retailers | |
Catalog and E-Commerce | Licensing Partners |
Direct to Consumer
Direct to Global Accounts
Clean Energy
14
ENTERPRISE
STRATEGY
Grow:
Further expand market penetration for standby and clean energy solutions in North America while establishing traction for these products globally.
Lead:
Capitalize on the global growth of natural gas fuel as an available and affordable energy source. Leverage Generac's expertise in gaseous engines to expand applications beyond standby power.
Residential
Power
Solutions
Monitor & Manage
Gain:
We gain share by innovating and we expand our opportunity for growth by doing the hard work of pioneering new products and markets.
Connect:
By being connected to the devices we manufacture we will drive additional value to our customers and our partners over the product life-cycle.
15
FINANCIAL | |||||||||||||
SUMMARY | |||||||||||||
Total Net Sales | Gross Margin % | Adjusted EBITDA | Adjusted EBITDA margin % | ||||||||||
60.0% | |||||||||||||
$2,204.3 | $2,315.0 | $500 | $517.1 | ||||||||||
$2,200 | $2,023.5 | $454.1 | 47.5% | ||||||||||
50.0% | $424.6 | ||||||||||||
$1,679.4 | $400 | ||||||||||||
37.5% | |||||||||||||
$1,600 | $1,447.7 | $317.3 | |||||||||||
40.0% | $300 | $278.4 | 27.5% | ||||||||||
38.0% | |||||||||||||
$1,000 | 35.8% | 35.8% | 36.2% | ||||||||||
34.8% | 30.0% | $200 | 21.0% | 20.6% | 22.3% | 17.5% | |||||||
19.3% | 19.0% | ||||||||||||
$400 | 2016 | 2017 | 2018 | 2019 | LTM | 20.0% | $100 | 2016 | 2017 | 2018 | 2019 | LTM | 7.5% |
Free Cash Flow | Consolidated Gross Debt | Consolidated Gross Debt Leverage Ratio | |||||||||||
$400 | $396.7 | $1,200 | 5.0x | ||||||||||
$1,052.9 | |||||||||||||
$350 | $1,000 | ||||||||||||
$928.7 | $924.0 | $898.9 | $889.6 | ||||||||||
$300 | $250.7 | 4.0x | |||||||||||
$222.9 | $227.9 | $800 | |||||||||||
$250 | $203.6 | ||||||||||||
$200 | $600 | ||||||||||||
3.3x | 3.0x | ||||||||||||
$150 | |||||||||||||
$400 | |||||||||||||
$100 | 2.0x | ||||||||||||
$200 | 2.2x | 2.2x | |||||||||||
$50 | 2.0x | 1.7x | |||||||||||
$0 | $0 | 1.0x | |||||||||||
2016 | 2017 | 2018 | 2019 | LTM | 2016 | 2017 | 2018 | 2019 | LTM | ||||
Note: Adjusted EBITDA margin calculated using adjusted EBITDA before deducting for non-controlling interest.
16
CAPITAL DEPLOYMENT
PRIORITIES
1 | Organic | | Invest in technology, innovation, and R&D capabilities | Asset Lite |
Growth | | Capacity expansion; Global systems; High ROI automation | ||
2 | | Target 2-3x leverage | ||
Pay Down | Deleveraging | ||
| Term Loan matures 2026, ABL matures 2023 | |||
Debt | Story | ||
3 | | $500mm notional swapped fixed | ||
| Demonstrated ability to execute; 17 deals since 2011 | |||
Accelerate the | |||
M&A | | Accelerates "Powering Our Future" strategic plan | ||
strategy | |||
| Seek high synergy opportunities with above WACC returns | |||
4 | |||
Return of | | As future cash flow permits, will evaluate options opportunistically | Opportunistic | |
Capital | | $250mm remaining on current share repurchase authorization | ||
TOTAL |
Strong balance sheet and cash flow generation enables disciplined and balanced approach toward capital deployment that creates value for shareholders
2017-2019 $
~150m
~200m
~200m
~50m
~600m
17
APPENDIX
18
2020 BUSINESS OUTLOOK
(AS REPORTED ON OCTOBER 28, 2020)
Consolidated net sales
- Consolidated revenue: increase between 10% to 12%
- Residential products: significant year-over-year growth
- C&I products: down significantly vs. prior year
- Core revenue growth over 10%
Adjusted EBITDA margins
- Between 22.5% to 23.0%
Cash income tax rate
- Approximately 16.0%
Free cash flow
- Conversion of adjusted net income of approximately 90%
Expect to Utilize Strong Free Cash Flow Generation to Increase Shareholder Value
19
EXPANDING POWER
OUTAGE SEVERITY(1) | ||||||||||||||||||||||||||||||||||||||||||
Total Outage Hours (Severity) | 1,400,000 | |||||||||||||||||||||||||||||||||||||||||
Legacy Residential Organic Sales - LTM | ||||||||||||||||||||||||||||||||||||||||||
1,200,000 | ||||||||||||||||||||||||||||||||||||||||||
1,000,000 | ||||||||||||||||||||||||||||||||||||||||||
800,000 | ||||||||||||||||||||||||||||||||||||||||||
600,000 | ||||||||||||||||||||||||||||||||||||||||||
400,000 | ||||||||||||||||||||||||||||||||||||||||||
200,000 | ||||||||||||||||||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
(1) Represents power outage hours for mainland U.S. only
Elevated Baseline Outages + Major Event = Catalysts for Growth
20
SUMMARY OF
ACQUISITIONS
OCT. | AUG. | MAR. | ||||
2011 | 2015 | 2019 | ||||
Magnum Products is a leading manufacturer of | Expands chore-related products line-up and | The leading energy data company focused on | ||||
high-quality light towers, and mobile generators. | provides additional scale to the residential engine- | metering technology and sophisticated analytics | ||||
Berlin, WI | powered tools platform | Vergennes, VT | to optimize energy use | Vancouver, BC |
Acquisitions used to accelerate Powering Our Future strategy
DEC.
2012
Leading manufacturer of industrial power generation equipment in Mexico and other parts
of Latin America. Mexico City, Mexico
MAR.
2016
Stationary, mobile and portable generators sold into over 150 countries worldwide Siena, Italy
APR.
2019
Leading manufacturer of smart storage solutions
and smart batteries | Portland, MN |
Revenue synergies
• New products, customers, end | |
markets | |
• | Numerous cross-selling opportunities |
• | Geographic and international |
AUG. | |
2013 | |
Mobile light towers for EMEA and other | |
international markets | Milan, Italy |
JAN.
2017
Gaseous-engine control systems and accessories sold to engine OEMs and aftermarket customers
Celle, Germany
SEP.
2020
Leading manufacturer of an innovative commercial line of battery powered turf care products
Ross, OH
expansion |
Cost synergies
• | Strategic global sourcing initiatives |
• | Innovation and cost-reduction |
NOV.
2013
Expands domestic offering of standby and prime-
duty gensets up to 2.5 MW Oshkosh, WI
OCT.
2014
MAC is a leading manufacturer of premium-grade commercial and industrial mobile heaters within
the U.S. and Canada. | Bismarck, ND |
JUN.
2018
Larger kW and container gensets; service and remote monitoring platform for Latin America
market | Mexico City, Mexico |
FEB.
2019
Captiva Energy Solutions, founded in 2010 and headquartered in Kolkata, India specializes in customized industrial generators. Kolkata, India
OCT.
2020
Leading provider of distributed energy optimization and control software for the electrical grid
Denver, CO
engineering | |
• | Adopt Generac's lean cost culture |
• | Operational excellence focus |
Smaller acquisitions of Gen-Tran completed in February 2012 (manual transfer switches for portable generators -Alpharetta, GA); Pramac America in September 2017 (portable generators - Marietta, GA); Energy Systems in July 2020 (industrial distributor - Stockton, CA)
21
FAVORABLE TAX
ATTRIBUTES
Tax attributes and 338(h)10 election overview
- $1.9 billion combined asset basis step-up created through 2006 acquisition of Generac and other acquisitions
- Each amortizes over 15 years
- Reduces cash tax obligation on average by ~$33 million per year through 2021
(($ MM) | TOTAL | 2020 | 2021 | 2022+ |
Annual tax amortization | $264 | $130 | $107 | $27 |
Cash tax savings(1) | $67 | $33 | $27 | $7 |
- Assuming continued profitability and no limitations at an assumed 25.5% federal and state tax rate.
- Based on annual discount rate of between 5 and 10%
Results in present value tax savings of ~$60 million(2) or $.90-$1.00 per share
22
NET SALES BY
PRODUCT CLASS
$1,144 | $1,380 | |||||
$1,000 | ||||||
$1,043 | ||||||
$900 | ||||||
$870 | $872 | |||||
$800 | $820 | |||||
$769 | $720 | |||||
$700 | ||||||
$684 | ||||||
$600 | ||||||
$500 | $558 | |||||
$400 | ||||||
$300 | ||||||
$200 | $189 | $214 | ||||
$160 | ||||||
$100 | $120 | $125 | ||||
$0 | ||||||
2016 | 2017 | 2018 | 2019 | LTM | ||
] |
RESIDENTIAL | COMMERCIAL & INDUSTRIAL | OTHER | Figures include results from acquisitions completed during 2011 - | ||
2020; see slide titled "Summary of Acquisitions" for further details. |
23
HSB:
A PENETRATION STORY
North American Penetration Opportunity(1)
90% | |
86.1% | |
80% | |
70% | |
Market | 60% |
US Addressable | 50% |
40% | |
% of | |
30% | |
25.0% | |
20% | |
15.0% | |
10% | |
4.7% | |
0% |
Aging Population Fits Demographic
- ~70% of buyers age 50 and older
- ~Median home value of approximately $400k
- ~80% retro-fit application
- ~$120K median household income
- ~8% replacement units
Every 1% of increased penetration equals ~$2.5 billion of market opportunity
- Source: Company estimates; based on addressable market for HSB generators consisting of all single-family detached, owner-occupied homes valued > $125K; portables and central A/C use all single-family homes regardless of value; penetration rate for home security alarms was estimated from a variety of industry sources and focuses on the professionally monitored market.
24
WHOLE HOME POWER
SCALABLE MODULAR APPROACH
# of Modules | 6 | 5 | 4 | 3 |
Old Capacity (kWh) | 17.1 | 14.3 | 11.4 | 8.6 |
New Capacity (kWh) | 18 | 15 | 12 | 9 |
25
RAPIDLY BUILDING
CLEAN ENERGY DISTRIBUTION
NATIONAL | REGIONAL | LONG TAIL | ||
26
Q3 2020 & LTM
FINANCIAL OVERVIEW
Actual | Y/Y % | Actual | Y/Y % | |
Q3 2020 | Change | LTM | Change | |
(unaudited) | (unaudited) | |||
Residential | $458.9 | 37.0% | $1,380.3 | 23.8% |
Industrial | 176.2 | (18.0%) | 720.3 | (17.9%) |
Other | 66.3 | 29.4% | 214.4 | 16.5% |
Net Sales | $701.4 | 16.7% | $2,315.0 | 6.4% |
Gross Profit | $276.1 | 27.0% | 879.7 | 12.8% |
% Margin | 39.4% | 38.0% | ||
Adjusted EBITDA | $178.8 | 41.9% | $517.1 | 14.6% |
% Margin (1) | 25.5% | 22.3% | ||
Net Income - GHI (2) | $115.0 | 52.1% | $295.2 | 14.4% |
Adjusted Net Income - GHI | $132.9 | 47.7% | $372.9 | 20.5% |
Adjusted EPS - GHI | $2.08 | 45.4% | $5.88 | 19.0% |
Free Cash Flow | $148.3 | 47.1% | $396.7 | 123.2% |
Consolidated Gross Debt | $889.6 | |||
Consolidated Gross Debt Leverage Ratio | 1.7x |
- Adjusted EBITDA (margin) calculated using adjusted EBITDA before deducting for non-controlling interest.
- LTM includes $11.5 million of pre-tax charges relating to restructuring costs and asset write-downs to address the impact of COVID-19 pandemic; LTM also includes a $10.9 million pre-tax charge related to the settlement of the Company's domestic pension plan.
27
ADJUSTED EBITDA
RECONCILIATION
2016 | 2017 | 2018 | 2019 | LTM | |
Net income | $97.2 | $159.6 | $241.2 | $252.3 | $292.2 |
Interest expense | 44.6 | 42.7 | 41.0 | 41.5 | 35.2 |
Depreciation and amortization | 54.4 | 52.0 | 47.4 | 60.8 | 68.0 |
Income taxes provision | 56.5 | 44.1 | 69.9 | 67.3 | 73.4 |
Non-cashwrite-down and other charges | 7.5 | 5.8 | 3.5 | 0.8 | 1.4 |
Non-cashshare-based compensation expense | 9.5 | 10.2 | 14.6 | 16.7 | 19.5 |
Loss on extinguishment of debt | 0.6 | - | 1.3 | 0.9 | 0.9 |
(Gain) loss on change in contractual interest rate | 3.0 | - | - | - | - |
Transaction costs and credit facility fees | 2.4 | 2.1 | 3.9 | 2.7 | 1.8 |
Loss on pension settlement, restructuring and other | 0.9 | 0.8 | 1.8 | 11.0 | 24.6 |
Adjusted EBITDA | $276.5 | $317.3 | $424.6 | $454.1 | $517.1 |
Adjusted EBITDA attributable to noncontrolling interests | (3.8) | (6.1) | (7.8) | (5.0) | (2.2) |
Adjusted EBITDA attributable to Generac Holdings, Inc. | $272.7 | $311.2 | $416.8 | $449.1 | $514.9 |
28
ADJUSTED EBITDA
RECONCILIATION
Net income to Adjusted EBITDA reconciliation | Three months ended | |||||||
September 30, | LTM Ended September 30, | |||||||
2020 | 2019 | 2020 | 2019 | |||||
(unaudited) | (unaudited) | |||||||
Net income attributable to Generac Holdings. Inc. | $114,970 | $75,574 | $295,189 | $257,968 | ||||
Net income attributable to noncontrolling interests | 265 | (677) | (3,015) | 1,101 | ||||
Net income | 115,235 | 74,897 | 292,174 | 259,069 | ||||
Interest expense | 8,096 | 10,704 | 35,197 | 41,445 | ||||
Depreciation and amortization | 17,168 | 15,494 | 68,013 | 55,125 | ||||
Income taxes provision | 32,050 | 20,064 | 73,390 | 73,862 | ||||
Non-cashwrite-down and other charges | 477 | 914 | 1,435 | 1,452 | ||||
Non-cashshare-based compensation expense | 4,353 | 3,549 | 19,544 | 16,130 | ||||
Loss on extinguishment of debt | - | - | 926 | - | ||||
Transaction costs and credit facility fees | 568 | 358 | 1,837 | 3,470 | ||||
Loss on pension settlement, restructuring and other | 831 | (27) | 24,575 | 481 | ||||
Adjusted EBITDA | 178,778 | 125,953 | 517,091 | 451,034 | ||||
Adjusted EBITDA attributable to noncontrolling interests | (920) | (909) | (2,193) | (5,848) | ||||
Adjusted EBITDA attributable to Generac Holdings, Inc. | $177,858 | $125,044 | $514,898 | $445,186 |
29
ADJUSTED NET INCOME
AND FREE CASH FLOW RECONCILIATIONS
Net income to Adjusted net income reconciliation | Three months ended | |||||||
September 30, | LTM Ended September 30, | |||||||
2020 | 2019 | 2020 | 2019 | |||||
(unaudited) | (unaudited) | |||||||
Net income attributable to Generac Holdings. Inc. | $114,970 | $75,574 | $295,189 | $257,968 | ||||
Net income attributable to noncontrolling interests | 265 | (677) | (3,015) | 1,101 | ||||
Net income | 115,235 | 74,897 | 292,174 | 259,069 | ||||
Provision for income taxes | 32,050 | 20,064 | 73,390 | 73,862 | ||||
Income before provision for income taxes | 147,285 | 94,961 | 365,564 | 332,931 | ||||
Amortization of intangible assets | 7,892 | 7,406 | 31,985 | 25,319 | ||||
Amortization of deferred financing costs and OID | 654 | 1,221 | 3,055 | 4,792 | ||||
Loss on extinguishment of debt | - | - | 926 | - | ||||
Transaction costs and credit facility fees | 381 | 165 | 113 | 2,435 | ||||
Loss on pension settlement, restructuring and other | 531 | 567 | 24,186 | 1,011 | ||||
Adjusted net income before provision for income taxes | 156,743 | 104,320 | 425,829 | 366,488 | ||||
Cash income tax expense | (23,620) | (15,083) | (53,089) | (55,053) | ||||
Adjusted net income | $133,123 | $89,237 | $372,740 | $311,435 | ||||
Adjusted net income attributable to noncontrolling interests | (198) | 738 | 195 | (1,989) | ||||
Adjusted net income attributable to Generac Holdings. Inc. | $132,925 | $89,975 | $372,935 | $309,446 | ||||
Free Cash Flow Reconciliation | ||||||||
Net cash provided by operating activities | $155,196 | $111,188 | $443,395 | $242,031 | ||||
"Proceeds from beneficial interests in | ||||||||
securitization transactions" | 674 | 640 | 2,592 | 3,144 | ||||
Expenditures for property and equipment | (7,608) | (11,071) | (49,295) | (67,471) | ||||
Free cash flow | $148,262 | $100,757 | $396,692 | $177,704 |
30
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Generac Holdings Inc. published this content on 10 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 November 2020 20:10:04 UTC