Delaware
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001-34627
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20-5654756
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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S45 W29290 Hwy. 59
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Waukesha, Wisconsin
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53189
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(Address of principal executive offices)
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(Zip Code)
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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·
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for planning purposes, including the preparation of our annual operating budget and developing and refining our internal projections for future periods;
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·
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to evaluate the effectiveness of our business strategies and as a supplemental tool in evaluating our performance against our budget for each period;
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in communications with our board of directors and investors concerning our financial performance; and
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to evaluate prior acquisitions in relation to the existing business.
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·
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Adjusted EBITDA, Adjusted Net Income and Free Cash Flow and similar non-GAAP measures are widely used by investors to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, tax jurisdictions, capital structures and the methods by which assets were acquired; and
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·
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by comparing our Adjusted EBITDA, Adjusted Net Income and Free Cash Flow in different historical periods, our investors can evaluate our operating performance excluding the impact of certain items.
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Exhibit No.
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Description
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99.1
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Press Release, dated October 24, 2013.
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GENERAC HOLDINGS INC.
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/s/ York Ragen
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Name:
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York Ragen
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Date: October 24, 2013
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Title:
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Chief Financial Officer
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Press Release, dated October 24, 2013.
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·
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Net sales increased year-over-year by 20.9% to $363.3 million as compared to $300.6 million in the third quarter of 2012.
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·
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Net income during the third quarter of 2013 was $47.1 million, or $0.67 per share, as compared to $25.5 million or $0.37 per share for the same period of 2012.
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·
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Adjusted net income, as defined in the accompanying reconciliation schedules, increased to $73.7 million from $54.1 million in the third quarter of 2012. Adjusted diluted net income per share was $1.06 as compared to $0.78 per share in the third quarter of 2012.
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·
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Adjusted EBITDA increased 31.2% to $100.1 million as compared to $76.3 million in the third quarter last year. Adjusted EBITDA margin during the third quarter improved to 27.5% as compared to 25.4% in the prior year primarily due to warranty rate improvements resulting in a favorable adjustment to warranty reserves.
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·
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Cash flow from operations in the third quarter of 2013 was $80.9 million as compared to $69.5 million in the prior year quarter. Free cash flow was $76.7 million as compared to $61.6 million in the third quarter of 2012.
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·
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For the trailing four quarters, including the third quarter of 2013, net sales were $1.452 billion; net income was $154.3 million; adjusted EBITDA was $382.1 million; cash flow from operations was $261.6 million; and free cash flow was $238.4 million.
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·
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On August 1, 2013, the Company closed on the previously announced acquisition of Tower Light Srl, a leading developer and supplier of mobile light towers throughout Europe, the Middle East and Africa.
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·
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Subsequent to the end of the quarter, the Company entered into a purchase agreement on October 7, 2013 to acquire substantially all of the assets of Baldor Electric Company’s generator division (“Baldor Generators”). Baldor Generators offers a complete line of generators ranging from 3kW to 2.5MW throughout North America.
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·
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demand for Generac products;
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·
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frequency and duration of major power outages;
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·
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availability, cost and quality of raw materials and key components used in producing Generac products;
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·
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the impact on our results of the substantial increases in our outstanding indebtedness and related interest expense due to the dividend recapitalization transactions completed in May 2012 and 2013;
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·
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the possibility that the expected synergies, efficiencies and cost savings of our acquisitions will not be realized, or will not be realized within the expected time period;
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·
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the risk that our acquisitions will not be integrated successfully;
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·
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difficulties Generac may encounter as its business expands globally;
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·
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competitive factors in the industry in which Generac operates;
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·
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Generac's dependence on its distribution network;
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·
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Generac's ability to invest in, develop or adapt to changing technologies and manufacturing techniques;
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·
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loss of key management and employees;
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·
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increase in product and other liability claims; and
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·
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changes in environmental, health and safety laws and regulations.
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Generac Holdings Inc.
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||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income
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||||||||||||||||
(Dollars in Thousands, Except Share and Per Share Data)
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||||||||||||||||
(Unaudited)
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||||||||||||||||
Three Months Ended September 30,
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Nine Months Ended September 30,
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|||||||||||||||
2013
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2012
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2013
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2012
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|||||||||||||
Net sales
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$ | 363,269 | $ | 300,586 | $ | 1,109,529 | $ | 834,284 | ||||||||
Costs of goods sold
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223,806 | 184,773 | 685,651 | 520,037 | ||||||||||||
Gross profit
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139,463 | 115,813 | 423,878 | 314,247 | ||||||||||||
Operating expenses:
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||||||||||||||||
Selling and service
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24,295 | 26,409 | 83,048 | 73,657 | ||||||||||||
Research and development
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7,183 | 6,456 | 20,892 | 17,214 | ||||||||||||
General and administrative
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13,693 | 11,435 | 40,158 | 30,699 | ||||||||||||
Amortization of intangibles
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7,003 | 12,389 | 19,533 | 36,902 | ||||||||||||
Total operating expenses
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52,174 | 56,689 | 163,631 | 158,472 | ||||||||||||
Income from operations
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87,289 | 59,124 | 260,247 | 155,775 | ||||||||||||
Other (expense) income:
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||||||||||||||||
Interest expense
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(12,494 | ) | (16,933 | ) | (42,432 | ) | (32,501 | ) | ||||||||
Investment income
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23 | 6 | 65 | 54 | ||||||||||||
Loss on extinguishment of debt
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– | – | (15,336 | ) | (14,308 | ) | ||||||||||
Costs related to acquisition
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(656 | ) | – | (1,059 | ) | – | ||||||||||
Other, net
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(117 | ) | (330 | ) | (1,227 | ) | (2,350 | ) | ||||||||
Total other expense, net
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(13,244 | ) | (17,257 | ) | (59,989 | ) | (49,105 | ) | ||||||||
Income before provision for income taxes
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74,045 | 41,867 | 200,258 | 106,670 | ||||||||||||
Provision for income taxes
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26,952 | 16,326 | 74,237 | 41,734 | ||||||||||||
Net income
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$ | 47,093 | $ | 25,541 | $ | 126,021 | $ | 64,936 | ||||||||
Net income per common share - basic:
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$ | 0.69 | $ | 0.38 | $ | 1.85 | $ | 0.96 | ||||||||
Weighted average common shares outstanding - basic:
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68,198,006 | 67,415,363 | 68,026,705 | 67,308,758 | ||||||||||||
Net income per common share - diluted:
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$ | 0.67 | $ | 0.37 | $ | 1.81 | $ | 0.94 | ||||||||
Weighted average common shares outstanding - diluted:
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69,887,025 | 69,166,501 | 69,627,215 | 68,980,970 | ||||||||||||
Dividends declared per share
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$ | – | $ | – | $ | 5.00 | $ | 6.00 | ||||||||
Comprehensive income
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$ | 48,336 | $ | 26,350 | $ | 129,288 | $ | 66,380 |
Generac Holdings Inc.
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||||||||
Condensed Consolidated Balance Sheets
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||||||||
(Dollars in Thousands, Except Share and Per Share Data)
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||||||||
September 30,
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December 31,
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|||||||
2013
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2012
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|||||||
(Unaudited)
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(Audited)
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|||||||
Assets
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||||||||
Current assets:
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|||||||
Cash and cash equivalents
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$ | 116,521 | $ | 108,023 | ||||
Restricted cash
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6,645 | – | ||||||
Accounts receivable, less allowance for doubtful accounts
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164,698 | 134,978 | ||||||
Inventories
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296,048 | 225,817 | ||||||
Deferred income taxes
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27,333 | 48,687 | ||||||
Prepaid expenses and other assets
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4,715 | 5,048 | ||||||
Total current assets
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615,960 | 522,553 | ||||||
Property and equipment, net
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120,812 | 104,718 | ||||||
Customer lists, net
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42,705 | 37,823 | ||||||
Patents, net
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64,405 | 70,302 | ||||||
Other intangible assets, net
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4,694 | 5,783 | ||||||
Deferred financing costs, net
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20,817 | 13,987 | ||||||
Trade names, net
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173,191 | 158,831 | ||||||
Goodwill
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589,599 | 552,943 | ||||||
Deferred income taxes
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100,804 | 136,754 | ||||||
Other assets
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68 | 153 | ||||||
Total assets
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$ | 1,733,055 | $ | 1,603,847 | ||||
Liabilities and stockholders’ equity
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Current liabilities:
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||||||||
Short-term borrowings
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$ | 18,013 | $ | 12,550 | ||||
Accounts payable
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101,707 | 94,543 | ||||||
Accrued wages and employee benefits
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25,826 | 19,435 | ||||||
Other accrued liabilities
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83,170 | 86,081 | ||||||
Current portion of long-term borrowings and capital lease obligations
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12,180 | 82,250 | ||||||
Total current liabilities
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240,896 | 294,859 | ||||||
Long-term borrowings and capital lease obligations
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1,177,671 | 799,018 | ||||||
Other long-term liabilities
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57,148 | 46,342 | ||||||
Total liabilities
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1,475,715 | 1,140,219 | ||||||
Stockholders’ equity:
|
||||||||
Common stock, par value $0.01, 500,000,000 shares authorized, 68,683,126 and 68,295,960 shares issued at September 30, 2013 and December 31, 2012, respectively
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687 | 683 | ||||||
Additional paid-in capital
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419,255 | 743,349 | ||||||
Treasury stock, at cost
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(6,552 | ) | – | |||||
Excess purchase price over predecessor basis
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(202,116 | ) | (202,116 | ) | ||||
Retained earnings (accumulated deficit)
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57,295 | (63,792 | ) | |||||
Accumulated other comprehensive loss
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(11,229 | ) | (14,496 | ) | ||||
Total stockholders’ equity
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257,340 | 463,628 | ||||||
Total liabilities and stockholders’ equity
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$ | 1,733,055 | $ | 1,603,847 |
Generac Holdings Inc.
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||||||||
Condensed Consolidated Statements of Cash Flows
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||||||||
(Dollars in Thousands)
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||||||||
(Unaudited)
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||||||||
Nine Months Ended September 30,
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||||||||
2013
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2012
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|||||||
Operating activities
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||||||
Net income
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$ | 126,021 | $ | 64,936 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
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||||||||
Depreciation
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7,969 | 6,116 | ||||||
Amortization of intangible assets
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19,533 | 36,902 | ||||||
Amortization of original issue discount
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1,615 | 945 | ||||||
Amortization of deferred finance costs
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1,932 | 1,570 | ||||||
Amortization of unrealized loss on interest rate swaps
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2,381 | 1,079 | ||||||
Loss on extinguishment of debt
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15,336 | 14,308 | ||||||
Provision for losses on accounts receivable
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880 | 16 | ||||||
Deferred income taxes
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57,363 | 39,526 | ||||||
Loss on disposal of property and equipment
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369 | 106 | ||||||
Share-based compensation expense
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9,471 | 8,021 | ||||||
Net changes in operating assets and liabilities:
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||||||||
Accounts receivable
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(16,268 | ) | (18,284 | ) | ||||
Inventories
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(61,310 | ) | (24,685 | ) | ||||
Other assets
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(5 | ) | (2,059 | ) | ||||
Accounts payable
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(6,605 | ) | (23,438 | ) | ||||
Accrued wages and employee benefits
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5,527 | 1,682 | ||||||
Other accrued liabilities
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495 | 24,343 | ||||||
Excess tax benefits from equity awards
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(9,491 | ) | (1,860 | ) | ||||
Net cash provided by operating activities
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155,213 | 129,224 | ||||||
Investing activities
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||||||||
Proceeds from sale of property and equipment
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75 | 19 | ||||||
Expenditures for property and equipment
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(14,257 | ) | (13,425 | ) | ||||
Proceeds from sale of business, net
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2,254 | – | ||||||
Acquisition of business, net of cash acquired
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(73,961 | ) | (2,275 | ) | ||||
Net cash used in investing activities
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(85,889 | ) | (15,681 | ) | ||||
Financing activities
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||||||||
Proceeds from short-term borrowings
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16,007 | 23,000 | ||||||
Proceeds from long-term borrowings
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1,200,000 | 1,455,614 | ||||||
Repayments of short-term borrowings
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(10,544 | ) | (23,000 | ) | ||||
Repayments of long-term borrowings and capital lease obligations
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(897,932 | ) | (1,172,874 | ) | ||||
Payment of debt issuance costs
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(21,935 | ) | (25,691 | ) | ||||
Cash dividends paid
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(343,424 | ) | (404,332 | ) | ||||
Taxes paid related to the net share settlement of equity awards
|
(12,468 | ) | (3,280 | ) | ||||
Excess tax benefits from equity awards
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9,491 | 1,860 | ||||||
Proceeds from exercise of stock options
|
32 | – | ||||||
Net cash used in financing activities
|
(60,773 | ) | (148,703 | ) | ||||
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||||||||
Effect of exchange rate changes on cash and cash equivalents
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(53 | ) | – | |||||
Net increase (decrease) in cash and cash equivalents
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8,498 | (35,160 | ) | |||||
Cash and cash equivalents at beginning of period
|
108,023 | 93,126 | ||||||
Cash and cash equivalents at end of period
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$ | 116,521 | $ | 57,966 |
Generac Holdings Inc.
|
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Reconciliation Schedules
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(Dollars in Thousands, Except Share and Per Share Data)
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||||||||||||||||
Net income to Adjusted EBITDA reconciliation
|
||||||||||||||||
Three Months Ended September 30,
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Nine Months Ended September 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Net income
|
$ | 47,093 | $ | 25,541 | $ | 126,021 | $ | 64,936 | ||||||||
Interest expense
|
12,494 | 16,933 | 42,432 | 32,501 | ||||||||||||
Depreciation and amortization
|
9,846 | 14,510 | 27,502 | 43,018 | ||||||||||||
Income taxes provision
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26,952 | 16,326 | 74,237 | 41,734 | ||||||||||||
Non-cash write-down and other charges (1)
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(782 | ) | (391 | ) | 35 | (141 | ) | |||||||||
Non-cash share-based compensation expense (2)
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3,279 | 2,764 | 9,471 | 8,021 | ||||||||||||
Loss on extinguishment of debt
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- | - | 15,336 | 14,308 | ||||||||||||
Transaction costs and credit facility fees (3)
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1,125 | 391 | 3,028 | 1,810 | ||||||||||||
Other
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61 | 214 | 904 | 494 | ||||||||||||
Adjusted EBITDA
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$ | 100,068 | $ | 76,288 | $ | 298,966 | $ | 206,681 | ||||||||
(1) Includes losses on disposals of assets and unrealized mark-to-market adjustments on commodity contracts. A full description of these and the other reconciliation adjustments contained in these schedules is included in Generac's SEC filings.
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(2) Includes share-based compensation expense to account for stock options, restricted stock and other stock awards over their respective vesting periods.
|
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(3) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing, together with certain fees relating to our senior secured credit facilities.
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Net income to Adjusted net income reconciliation
|
||||||||||||||||
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Net income
|
$ | 47,093 | $ | 25,541 | $ | 126,021 | $ | 64,936 | ||||||||
Provision for income taxes
|
26,952 | 16,326 | 74,237 | 41,734 | ||||||||||||
Income before provision for income taxes
|
74,045 | 41,867 | 200,258 | 106,670 | ||||||||||||
Amortization of intangible assets
|
7,003 | 12,389 | 19,533 | 36,902 | ||||||||||||
Amortization of deferred finance costs and original issue discount
|
1,220 | 1,156 | 3,547 | 2,515 | ||||||||||||
Loss on extinguishment of debt
|
- | - | 15,336 | 14,308 | ||||||||||||
Transaction costs and other purchase accounting adjustments (4)
|
977 | (111 | ) | 2,154 | 1,181 | |||||||||||
Adjusted net income before provision for income taxes
|
83,245 | 55,301 | 240,828 | 161,576 | ||||||||||||
Cash income tax expense (5)
|
(9,510 | ) | (1,156 | ) | (16,680 | ) | (1,483 | ) | ||||||||
Adjusted net income
|
$ | 73,735 | $ | 54,145 | $ | 224,148 | $ | 160,093 | ||||||||
Adjusted net income per common share - diluted:
|
$ | 1.06 | $ | 0.78 | $ | 3.22 | $ | 2.32 | ||||||||
Weighted average common shares outstanding - diluted:
|
69,887,025 | 69,166,501 | 69,627,215 | 68,980,970 | ||||||||||||
(4) Represents transaction costs incurred directly in connection with any investment, as defined in our credit agreement, equity issuance or debt issuance or refinancing. Also includes certain purchase accounting adjustments.
|
||||||||||||||||
(5) Amount for the three and nine months ended September 30, 2013 is based on an anticipated cash income tax rate of approximately 9% for the full year-ended 2013.
|
Free cash flow reconciliation
|
||||||||||||||||
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Net cash provided by operating activities
|
$ | 80,895 | $ | 69,517 | $ | 155,213 | $ | 129,224 | ||||||||
Expenditures for property and equipment
|
(4,206 | ) | (7,921 | ) | (14,257 | ) | (13,425 | ) | ||||||||
Free cash flow
|
$ | 76,689 | $ | 61,596 | $ | 140,956 | $ | 115,799 | ||||||||
LTM free cash flow reconciliation
|
LTM September 30,
|
|||||||||||||||
2013 | ||||||||||||||||
(unaudited)
|
||||||||||||||||
2012 net cash provided by operating activities, as reported
|
$ | 235,594 | ||||||||||||||
Add: September 2013 net cash provided by operating activities, as reported
|
155,213 | |||||||||||||||
Less: September 2012 net cash provided by operating activities, as reported
|
(129,224 | ) | ||||||||||||||
LTM net cash provided by operating activities
|
261,583 | |||||||||||||||
2012 expenditures for property and equipment, as reported
|
(22,392 | ) | ||||||||||||||
Include: September 2013 expenditures for property and equipment, as reported
|
(14,257 | ) | ||||||||||||||
Exclude: September 2012 expenditures for property and equipment, as reported
|
13,425 | |||||||||||||||
LTM expenditures for property and equipment
|
(23,224 | ) | ||||||||||||||
Free cash flow
|
$ | 238,359 | ||||||||||||||
LTM Adjusted EBITDA reconciliation
|
LTM September 30,
|
|||||||||||||||
2013 | ||||||||||||||||
(unaudited)
|
||||||||||||||||
2012 Adjusted EBITDA, as reported
|
$ | 289,809 | ||||||||||||||
Add: September 2013 Adjusted EBITDA, as reported
|
298,966 | |||||||||||||||
Less: September 2012 Adjusted EBITDA, as reported
|
(206,681 | ) | ||||||||||||||
Adjusted EBITDA
|
$ | 382,094 |