Acquisitions Help Generac Jump 3.8 Percent in Third Quarter
Generac posted $373.1 million in net sales in the third quarter, compared to $359.3 million in the third quarter of 2015, a 3.8-percent increase. The revenue included $60.8 million of contribution from recent Generac acquisitions.
Domestic segment sales were $299.1 million compared to $332.2 million in the same quarter of 2015, primarily because of a continued decline in shipments of mobile products caused by ongoing weakness in oil and gas markets. The decline was partially offset by the contribution from the Country Home Products acquisition.
International segment sales increased to $74 million compared to $27.1 million in the year-ago quarter. The company nearly tripled its international revenue because of the contributions from the Pramac acquisition.
Net income attributable to Generac during the third quarter was $26.2 million, or $0.40 per share, compared to $34 million or $0.49 per share for the same period of 2015.
Adjustable net income was $53.2 million, compared to $63.4 million a year ago. Adjusted EBITDA was $72.1 million compared to $81.2 million in Q315.
“An increase in power outages coupled with successful promotional campaigns led to shipments of residential products that exceeded our expectations during the quarter,” said Aaron Jagdfeld, president and CEO. “This outperformance helped to offset continued weakness for our mobile products both domestically and internationally. We also continued to generate strong free cash flow during the quarter which allowed us to complete our share repurchase program nearly a year ahead of the original two-year timeframe, giving us confidence to authorize a new share repurchase program.”
In the third quarter residential product sales increased 4.3 percent to $192.9 million, compared to $185 million in the year-ago frame. Commercial & Industrial sales increased 1 percent to $149.7 million compared to $148.2 million in Q315.
Generac is reviving its guidance upward for revenue growth for the full year as a result of higher power outage activity experienced so far during the second half of 2016. Full-year net sales are now expected to increase between 9 to 10 percent.
“Despite a challenging power outage environment over the last few years, our market position for residential products remains strong, retail placement is currently at all-time highs, and the number of active dealers has returned back to peak levels,” added Jagdfeld. “The moderate improvement in power outage activity we have experienced recently should provide an opportunity for us to better leverage the innovative sales and marketing programs for home standby generators that we have implemented over the last several years. Although business conditions in several of our other end markets remain soft, we continue to make strategic investments in new products, technologies and infrastructure across the business to support the next leg of growth that we believe will occur as these end markets eventually recover.”
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.