Generac reports fourth quarter and full year 2014 results

Special to The Freeman

Feb. 11, 2015

WAUKESHA – Generac Holdings Inc. (NYSE: GNRC) a leading designer and manufacturer of power generation equipment and other engine powered products, is reporting financial results for its fourth quarter and full-year for 2014.

Fourth quarter net sales increased by 7.4 percent to $404.0 million as compared to $376.2 million in the prior year fourth quarter.

Net income during the fourth quarter of 2014 was $49.4 million, or $0.70 per share, as compared to $48.5 million, or $0.69 per share, for the same period of 2013. Adjusted net income, as defined in the accompanying reconciliation schedules, was $68.4 million, or $0.98 per share, as compared to $77.5 million, or $1.11 per share, in the fourth quarter of 2013.

Adjusted EBITDA, as defined in the accompanying reconciliation schedules, was $92.2 million as compared to $103.6 million in the fourth quarter last year.

Cash flow from operations in the fourth quarter of 2014 was $110.5 million as compared to $104.7 million in the prior year quarter. Free cash flow, as defined in the accompanying reconciliation schedules, was a quarterly record of $98.5 million as compared to $88.2 million in the fourth quarter of 2013.

Total liquidity at December 31, 2014 was strong with cash and cash equivalents of$189.8 million and approximately $150 million available on the Company’s ABL revolving credit facility. Total net debt to adjusted EBITDA, as defined in the accompanying reconciliation schedules, at the end of the fourth quarter was 2.7 times.

Yearly net sales were $1.461 billion during 2014 as compared to $1.486 billion in 2013.

Net income during 2014 was $174.6 million, or $2.49 per share, as compared to$174.5 million or $2.51 per share for 2013. Adjusted net income was $234.2 million, or $3.34 per share, as compared to $301.7 million, or $4.33 per share, in 2013.

Adjusted EBITDA for 2014 was $337.3 million as compared to $402.6 million last year.

Cash flow from operations during 2014 was $253.0 million as compared to $259.9 million in the prior year. Free cash flow was $218.3 million as compared to $229.2 million in 2013.

The company acquired Pramac America, LLC in early September, resulting in the ownership of the Powermate trade name and the right to license the DeWalt brand name for certain residential engine powered tools.

In addition, the Company acquired MAC, Inc. and its related entities in early October, a leading manufacturer of premium-grade commercial and industrial mobile heaters within the U.S. and Canada.

Uses of cash during 2014 included $34.7 million for capital expenditures, $61.2 million related to acquisitions and $87.0 million for the pre-payment of term loan debt, including a $25.0 million payment made during the fourth quarter.

“Home standby generator sales exceeded our expectations during the fourth quarter, with activation rates proving to be resilient as we leveraged our innovative sales and marketing techniques to help create awareness for the product category in a below-normal power outage environment,” said Aaron Jagdfeld, president and chief executive officer. “For full-year 2014, organic sales improved over 2013 when excluding the approximately $140 million sales headwind in the prior year from Superstorm Sandy, allowing us to hold a new and higher baseline of demand despite certain of our end markets performing below our expectations during the year. In addition, the revenue base for our C&I products continued to increase in scale during 2014, and now represents nearly half of our total sales. We also once again generated a strong level of free cash flow, generating over $200 million for the third consecutive year.”

The company is initiating guidance for 2015 with net sales expected to increase in the low-to-mid-single digit range as compared to the year prior.

“We enter 2015 as a more diversified company, with a strong balance sheet and free cash flow generation capability that provide us the flexibility to drive our Powering Ahead strategic plan forward,” Jagdfeld said.

For more information about Generac, visit www.generac.com.