Hot Stock in Focus: Generac Holdings Inc. (NYSE: GNRC)

WAUKESHA, Wis, May 16, 2020 – Shares of Generac Holdings Inc. (NYSE: GNRC) inclined 4.00% to $104.70. The stock traded total volume of 672.935K shares lower than the average volume of 814.95K shares.

Generac Holdings Inc. (NYSE: GNRC) reported net sales increased 6.9% to $601.10M during the third quarter of 2019 as contrast to $562.40M in the prior-year third quarter.  Core sales growth, which excludes both the impact of acquisitions and foreign currency, was also about 7%.

Residential product sales increased 7.4% to $335.00M as contrast to $311.90M last year, with core sales growth of about 7%.

Commercial & Industrial (“C&I”) product sales increased 4.1% to $214.90M as contrast to $206.40M in the prior year, with core sales growth of about 5%.

Net income attributable to the Company during the third quarter was $75.60M, or $1.18 per share, as contrast to $75.80M, or $1.11 per share, for the same period of 2018.  See accompanying reconciliation plans for related earnings per share calculations.

Adjusted net income attributable to the Company, as defined in the accompanying reconciliation plans, was $90.00M, or $1.43 per share, as contrast to $89.10M, or $1.43 per share, in the third quarter of 2018.

Adjusted EBITDA before deducting for non-controlling interests, as defined in the accompanying reconciliation plans, was $126.00M, or 21.0% of net sales, as contrast to $124.50M, or 22.1% of net sales, in the prior year.

Cash flow from operations was $111.20M as contrast to $59.30M in the prior year quarter.  Free cash flow, as defined in the accompanying reconciliation plans, was $100.80M as contrast to $47.00M in the third quarter of 2018.

The Company is increasing its full-year 2019 sales growth guidance to about 8 to 9% with Adjusted EBITDA margins, before deducting for non-controlling interests, of about 20.5%.

Operating expenses increased $18.10M, or 19.3%, as contrast to the third quarter of 2018.  The increase was mainly driven by additional employee headcount related to planned programs, higher marketing and promotional spend, recurring operating expenses from recent acquisitions and higher intangible amortization expenses.

Provision for income taxes for the current year quarter was $20.10M, or an effective tax rate of 21.1%, as contrast to $20.10M, or a 20.8% effective tax rate, for the prior year.

Cash flow from operations was $111.20M as contrast to $59.30M in the prior year quarter.  Free cash flow, as defined in the accompanying reconciliation plans, was $100.80M as contrast to $47.00M in the third quarter of 2018.  Improved working capital efficiency in the current year, as well as additional pension funding and interest payments in the prior year, drove the increase.

Business Segment Results:

Domestic Segment

Domestic segment sales increased 9.2% to $498.20M as contrast to $456.10M in the prior year quarter.  Core sales growth, which excludes the impact of the Neurio and Pika acquisitions, was about 8.5%.  The current year quarter practiced strong growth in shipments of home standby generators given continued strong end market conditions, while portable generator shipments were about flat contrast to the prior year. In addition, C&I stationary generator shipments were also strong during the quarter mainly with our natural gas and telecom products.  The overall Domestic segment growth was partially offset by lower shipments of C&I mobile products to national rental account customers.

Adjusted EBITDA for the segment was $121.20M, or 24.3% of net sales, as contrast to $117.10M in the prior year, or 25.7% of net sales. Pricing programs and favorable sales mix, improved commodity and currency input costs, and fixed operating cost leverage were more than offset by the aforementioned regulatory tariffs and higher operating expenses.

International Segment:

International segment sales reduced 3.1% to $103.00M as contrast to $106.30M in the prior year quarter. Core sales, which excludes the unfavorable impact of currency and the impact of the Captiva acquisition, was about flat contrast to the prior year as geopolitical headwinds caused economic softness in certain regions of the world.

Adjusted EBITDA for the segment, before deducting for non-controlling interests, was $4.70M, or 4.6% of net sales, as contrast to $7.40M, or 6.9% of net sales, in the prior year.  Unfavorable sales mix and incremental operating expense investment contributed to the decline.

GNRC has the market capitalization of $6.50B and its EPS growth ratio for the past five years was 10.00%. The return on assets ratio of the Company was 9.60% while its return on investment ratio stands at 15.70%. Price to sales ratio was 2.94.

Dorothy Mack

I am Dorothy Mack and I give “Liberty Headquarters” an insight into the most recent conservative news. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full-time role. I perform analysis of events and legislation and publicize valuable information for the shareholder community. Address: 436 Stone Lane, Pottstown, PA 19464, USA Phone: (+1) 610-327-8521 Email: dorothymack@libertyheadquarters.com

Dorothy Mack

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