Weak Oil & Gas Market Hurts Generac Second Quarter Revenue
Generac Holdings posted net sales of $288.4 million during the second quarter of 2015, compared to $362.6 million in the second quarter of 2014, a 20.5-percent decrease. Commercial and industrial sales were $134.6 million compared to $163.5 million a year ago, a 17.7-percent slide, primarily because of a decline in shipments to oil and gas markets, and, to a lesser extent, reduced shipments to telecom national account customers.
Residential product sales dropped 25.7 percent to $133.5 million, primarily because of lower demand of home standby generators as a result of a challenging power outage severity environment.
Net income during the second quarter was $14.8 million, compared to $54 million in the year-ago quarter. Adjusted EBITDA was $52.4 million compared to $84.5 million a year ago.
“The power outage environment continued to remain challenging during the second quarter with overall outage severity during the first half being down significantly compared to prior year,” said Aaron Jagfeld, president and CEO. “The record-low outage environment coupled with excess field inventory levels exiting the first quarter dampened demand for home standby generators more than expected during the second quarter. In addition, the rapid decline in oil and gas-related investment together with ongoing softness in capital spending in the telecom sector continued to have a negative impact on year-over-year growth for our C&I products during the quarter.
“On the acquisition front, the Country Home Products transaction that we announced earlier this week broadens our residential engine-powered tools platform, while also further diversifying our business.”
Generac is based in Waukesha, Wis.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.