Generac Holdings (GNRC) Tops Q3 EPS by 5c, Beats on Revenues; Boosts FY17 Revenue Growth & EBITDA Margin Outlook

Generac Holdings (NYSE: GNRC) reported Q3 EPS of $0.93, $0.05 better than the analyst estimate of $0.88. Revenue for the quarter came in at $457.3 million versus the consensus estimate of $420.42 million.

2017 Outlook Update

The Company is increasing its prior guidance for revenue growth and adjusted EBITDA margins for full-year 2017, which is primarily due to an improved outlook for residential products as a result of the higher power outage activity experienced during the third quarter of 2017. Full year net sales are now expected to increase between 14 to 15% over the prior year, which is an increase from the 6 to 8% growth previously expected. Total core organic sales growth is now anticipated to increase 9 to 10%, which is an improvement from the previous assumption of 2 to 3%.

Net income margins, before deducting for non-controlling interests, are now expected to be approximately 8.0%, an improvement from 7.0 to 7.5% previously expected. Adjusted EBITDA margins, also before deducting for non-controlling interests, are now expected to be approximately 19.0% for the full year 2017, an improvement from the prior guidance of approximately 18.5%.

Operating and free cash flow generation is expected to sequentially increase during the fourth quarter, with the conversion of adjusted net income still expected to be over 90% for the full year.

Third Quarter 2017 Highlights

• Net sales increased 22.5% to a record $457.3 million during the third quarter of 2017 as compared to $373.1 million in the prior-year third quarter, including $10.1 million of contribution from the Motortech acquisition.
• Net income attributable to the Company during the third quarter of 2017 was $39.7 million, or $0.64 per share, as compared to $26.2 million, or $0.40 per share, for the same period of 2016.
• Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was $57.8 million, or $0.93 per share, as compared to $53.2 million, or $0.82 per share, in the third quarter of 2016.
• Adjusted EBITDA attributable to the Company, as defined in the accompanying reconciliation schedules, was $87.6 million as compared to $72.1 million in the third quarter last year.
• Cash flow from operations was $67.0 million as compared to $48.3 million in the prior year quarter. Free cash flow, as defined in the accompanying reconciliation schedules, was $60.4 million as compared to $41.4 million in the third quarter of 2016.
• As a result of the improved demand outlook for residential products, the Company is increasing its full-year 2017 guidance for sales growth to 14 to 15% and Adjusted EBITDA margins to approximately 19.0%.

For earnings history and earnings-related data on Generac Holdings (GNRC) click here.

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