While most manufacturers and rental companies have struggled with reduced volumes, Generac posted $701 million during the third quarter of 2020 compared to $601 million in the third quarter of 2019, a 16.6-percent increase. Core sales growth, excluding the impact of acquisitions and foreign currency, increase about 16 percent.
Residential product sales leaped 37 percent to $459 million compared to $335 million a year ago. Meanwhile, Commercial & Industrial product sales decreased 18.1 percent from $215 million in the third quarter of 2019 to $176 million in the third quarter of 2020.
Net income attributable to the company during the third quarter was $115 million, or $1.82 per share, compared to $76 million, or $1.18 per share for the same period in 2019.
Cash flow from operations was $155 million compared to $111 million a year ago. Generac is increasing its full year 2020 sales growth guidance to now be about 10 to 12 percent of year-over-year grow, an increase from the baseline growth guidance of 5 to 8 percent previously expected. Adjusted EBITDA margin, before deducting for non-controlling interests, is now expected to be approximately 22.5 to 23.0 percent, which is an increase from the 21.5 to 22.0 percent previously expected.
The third quarter was also eventful for Generac, closing on the acquisition of Enegry Systems, the company’s industrial distributor in Northern California. Also, Generac acquired the assets of Mean Green Products LLC, base in Ross, Ohio. Mean Green is a leading manufacturer of an innovative commercial line of battery-powered turf care products. Also, on Oct. 7, Generac closed on the acquisition of Denver-based Enbala Power Networks, a provider of distributed energy optimization and control software and control software needed to ensure the operational stability of the world’s power grids.
“Third quarter revenue and adjusted EBITDA far exceeded all-time records led by dramatic growth in sales of home standby and portable generators,” said Aaron Jagdfeld, president and CEO. “Power outage activity was much higher during the quarter driven by more extreme and severe weather. When combined with the ‘Home as a Sanctuary’ trend that we began seeing at the onset of the COVID-19 pandemic, demand for home standby generators reached unprecedented levels during the quarter. Shipments of our PWRcell energy storage systems recovered during the third quarter and increased significantly from lower levels in the second quarter, which were impacted by a slowdown in solar installations due to the pandemic. As expected, our C&I products were also negatively impacted, however, we realized some meaningful benefits from our recent cost-reduction efforts that were initiated in the second quarter.
“We announced several strategic acquisitions in recent months that enable us to enter exciting new markets. In July, we closed on the acquisition of our industrial distributor in Northern California, Energy Systems, to enhance our ability to serve this very large, rapidly growing power generation market. In September, we entered the battery-powered commercial mower market with Mean Green Products, which will help accelerate the electrification of our core products. In October, we entered the emerging market for ‘grid services’ through the acquisition of Enbala Power Networks, which plays into another secular trend involving the evolution of the traditional electric utility model and further advances our capabilities as an energy technology solutions company.”
Domestic segment sales increased 22.6 percent to $606.9 million as compared to $494.8 million in the prior year quarter. As a result of the heightened awareness of the need for backup power, shipments of home standby generators experienced very strong growth during the quarter. In addition, significant power outage activity also drove elevated shipments of portable generators and aftermarket service parts. Shipments of the recently launched PWRcell energy storage system also had a strong impact on growth following the expected recovery in the solar market during the third quarter. This residential products growth was partially offset by continued weakness in sales of C&I mobile products following the onset of the COVID-19 pandemic and lower oil prices.
Adjusted EBITDA for the segment was $171.4 million, or 28.2 percent of net sales, as compared to $120.8 million in the prior year, or 24.4 percent of net sales. This margin increase was driven by favorable sales mix and higher operating leverage from the significant revenue growth.
International segment sales decreased 11.1 percent to $94.5 million as compared to $106.3 million in the prior year quarter. The decline was driven by continued broad-based weakness in global C&I product demand caused by the COVID-19 pandemic.
Adjusted EBITDA for the segment, before deducting for noncontrolling interests, was $7.4 million, or 7.9 percent of net sales, as compared to $5.1 million, or 4.8 percent of net sales, in the prior year. Decreased operating leverage on the lower sales volumes was more than offset by lower operating expenses as a result of the restructuring activities initiated in the second quarter of 2020.
Generac is headquartered in Waukesha, Wis.
