Generac Holdings Inc. · NYSE:GNRC
Generac — Generac Holdlings — Q3 2024 Earnings Presentation
37 slides from Generac's earnings presentation, Oct 31, 2024
Slide 1: Investor Presentation
INVESTOR PRESENTATION November 2024 OUR PURPOSE: Lead the evolution to more resilient, efficient, and sustainable energy solutions.
Slide 2: Investor Relations
INVESTOR RELATIONS Aaron Jagdfeld PRESIDENT & CEO York Ragen CHIEF FINANCIAL OFFICER Kris Rosemann DIRECTOR CORPORATE DEVELOPMENT & INVESTOR RELATIONS (262) 506-6064 InvestorRelations@generac.com 2
Slide 3: Forward Looking Statements
Forward Looking Statements Certain statements contained in this presentation, as well as • our ability to protect our intellectual property rights or • compliance with environmental, health and safety laws and other information provided from time to time by Generac successfully defend against third
Slide 4: Generac Overview
Generac Overview GENERAC EEE
Slide 5: Generac Overview
Generac Overview Founded in LTM Net Sales: 8,600 1959 $4.1 $4.1 Billion billion Employees Worldwide (as of 12/31/2023) LTM ADJ Omni-Channel EBITDA: Distribution $736 Million Thousands of Dealers, 1,000+ Wholesalers, Retailers Engineers and E-Commerce Worldwide $736 million (as of 12/31/2023) Partner
Slide 6: Investment Highlights
Investment Highlights • Global Growth Opportunity Driven by Mega-Trends • Lower Power Quality • Higher Power Prices • Strong Competitive Advantages • Global footprint, product breadth & omni-channel distribution in backup power and energy technology solutions • Residential Solutions – Mega-Trends Su
Slide 7: Product Overview
Product Overview Residential – $2.3B Net Sales* C&I – $1.4B Net Sales* Other – $0.5B Net Sales* Grid Services Mobile Generator Home Standby Generator Residential Energy Stationary Generator Telecom Generator Storage Residential & C&I Connectivity Residential Load Manager Generator Controls Mobile BE
Slide 8: Generac Global Footprint
GENERAC — EE Generac Global Footprint fy Global Headquarters ‘Woukesha, Wisconsin, Key Locations Office, Warehouse, Sales, e Research & Davalopment, and Other Manufacturing Operations Inclusive of other key operstions, manufacturing is conducted across eighteen facilities globally, including five lo
Slide 9: Unmatched Omni-Channel Distribution
Unmatched Omni-Channel Distribution ~9,100 Residential Dealers – Provides Direct Sales, Install & Service Domestic ~1,600 Wholesale Branches – Serves Contractors Across North America Residential ~8,000 Retail Outlets – Creates Product Awareness & Availability Distributors – Engages Specifying Engine
Slide 10: Track Record of Growth
$5,000 Track Record of Growth $4,500 15% REVENUE CAGR $4,000 2010 IPO Through 2024F $3,500 $3,000 $2,500 Each growth cycle creates new & higher $2,000 baseline $1,500 $1,000 $500 $- '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24F Note: $ amounts in millions. Represents net sales. Figures incl
Slide 11: Mega-Trends Review
Mega-Trends Review Lower power quality • More frequent severe and volatile weather impacting aging grid, causing increased power outage activity • Increasing intermittent generation sources and accelerating electrification trends drive supply/demand imbalances Higher power prices • Investment requir
Slide 12: Powering a Smarter World
Powering a Smarter World Improve energy Increase power reliability through onsite generation and storage solutions that resilience and provide resiliency for homes, businesses independence. and communities. Optimize energy Enable sustainable and more efficient Powering a efficiency and consumption.
Slide 13: Residential Solutions
13 Residential Solutions Mega-Trends Support Parallel Growth Markets
Slide 14: Home Standby Penetration Opportunity
Home Standby Penetration Opportunity Widespread Growth Potential • US penetration rate ~6.25% * • 1% of penetration = ~$3.5B opportunity* Mega-Trends Lower Power Quality Home As A AI Adoption Sanctuary Accelerating * Penetration rate as of 2023; 1% of incremental penetration represents ~$3.5B of mar
Slide 15: Competitive Advantages to Capture HSB Penetration Opportunity
Competitive Advantages to Capture HSB Penetration Opportunity Proven Market Creation Capabilities • Directly engaging with a growing number of consumers • Driving awareness through advertising & targeted marketing • Distribution Expansion – product availability where & when consumers want Building &
Slide 16: Large & Growing Energy Technology Markets
Large & Growing Energy Technology Markets 2027 SAM1 ~$3.0B → Solar inverter – unlocks on-site solar power generation ✓ Next-generation inverter launch 2025 ~$3.5B → Energy storage – rate arbitrage, improve solar ROI & VPP participation ✓ Industry leading storage capacity – greater resilience and lif
Slide 17: Differentiated Home Energy Ecosystem of the Future
Differentiated Home Energy Ecosystem of the Future Multiple hardware devices connected to a single interface to optimize home energy generation & consumption. Prioritize energy resilience & 1 independence Deliver savings by optimizing 2 for energy efficiency Balance comfort and 3 conservation Power
Slide 18: Leveraging HSB Success & Unique Capabilities To Win In Energy Technology
Leveraging HSB Success & Unique Capabilities To Win In Energy Technology Generac HSB Competencies Energy Technology Investment - Building & Developing Distribution - Differentiated Ecosystem - Direct to Consumer Marketing - Leading Energy Storage Capacity - Market Creation - ecobee Home Energy Hub -
Slide 19: Roadmap to Energy Technology Success
2026 → Drive scale & market share gains Roadmap to → Exit with breakeven EBITDA on path to company-average Adj EBITDA margins Energy Technology → Ongoing innovation & expansion of the ecosystem – 2026 and beyond Success 2025 → Inverter product launch → Expand channels, leverage brand & lead generati
Slide 20: Commercial & Industrial Solutions
20 Commercial & Industrial Solutions Growing Global Scale & Developing Energy Solutions
Slide 21: Global C&I Gaining Share & Scale
Global C&I Gaining Share & Scale GLOBAL C&I NET SALES $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- 2016 2017 2018 2019 2020 2021 2022 2023 LTM Q3 2024 Domestic International • End market growth driven by mega-trends • Market share gains via competitive strengths • M&A expands product & distrib
Slide 22: C&I Mega-Trends & Competitive Strengths
C&I Mega-Trends & Competitive Strengths Lower Power Higher Power Quality Prices Infrastructure AI Adoption Cleaner Investment Accelerating Alternative Fuels DOMESTIC INTERNATIONAL Leadership in natural Leadership in telecom Broad power generation Growing portfolio of gas backup power and rental mark
Slide 23: Building Multi-Asset C&I Microgrids
Building Multi-Asset C&I Microgrids Microgrid Controller Power Generation & Storage Energy Management Devices Monitoring & Controls Wallbox Partnership Grid Services Turnkey solutions managed through a single interface integrating multiple assets to optimize power generation and consumption. 23
Slide 24: Developing Optimized Solutions for C&I Energy Evolution
Developing Optimized Solutions for C&I Energy Evolution Low High Complexity of Solution Advanced Basic Backup Power Plus Energy Services Energy Services Optimized Power Power + Service Power (Simple) (Complex) Solutions Customer Maturity • Simple demand response programs • Advanced monitoring • Comp
Slide 25: Financial Summary
Financial Summary GENERAC EEE
Slide 26: Financial Summary
Financial Summary Total Net Sales Gross Margin % Adjusted EBITDA Adjusted EBITDA Margin % $5,000 55.0% $1,000 32.0% $4,000 50.0% $800 27.0% $3,000 45.0% $600 $400 22.0% $2,000 40.0% $1,000 35.0% $200 17.0% $0 30.0% $0 12.0% 2019 2020 2021 2022 2023 2024F* 2019 2020 2021 2022 2023 2024F* Adjusted EPS
Slide 27: Business Outlook
GENERAC Business Outlook 2024F Guidance As Of October 31, 2024** Consolidated net sales • Consolidated revenue: increase between 5% to 9% • Residential products: increase at a high-teens rate • C&I products: decrease at a high single-digit rate Adjusted EBITDA margins • Between 17.5% to 18.5% GAAP e
Slide 28: Disciplined & Balanced Capital Allocation
Disciplined & Balanced Capital Allocation 1. Organic CapEx CapEx as % of Net Sales 2. Strategic M&A Growth $150 10.0% $129 $129 $120 $110 8.0% Investment in technology, $86 Accelerating “Powering A in Millions innovation, R&D $90 6.0% capabilities, capacity $61 $62 Smarter World” Strategy expansion,
Slide 29: Appendix
Appendix GENERAC EEE
Slide 30: Increasingly Imbalanced Electrical Grid
Increasingly Imbalanced Electrical Grid • SUPPLY RELIABILITY • DEMAND GROWTH DETERIORATING ACCELERATING • Climate change & severe weather • Electrification of everything • One-way system prone to outage • Transportation, HVAC, appliances • Infrastructure underinvestment • Data centers & artificial i
Slide 31: HSB: Underpenetrated with Demographic Tailwinds
HSB: Underpenetrated with Demographic Tailwinds North American Penetration Opportunity(1) 90% 88.3% 80% 70% Aging Population Fits Demographic % of US Addressable Market 60% • ~75% of buyers age 50 and older 50% • ~$500k median home value 40% • ~80-85% retro-fit application 30% 29.0% • ~$135K median
Slide 32: Expanding Power Outage Severity
Expanding Power Outage Severity1 Total Outage Hours (Severity) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (1) Represents power outage hours for mainland U.S. only 32
Slide 33: HSBs are the Solution for Extended Power Outages
HSBs are the Solution for Extended Power Outages The only worry-free, Outage Backup (Hrs) whole-home solution Standalone 18kWh Storage* for long outages Solar + 18kWhStorage* Ford F150 Lightning Lariat** Home Standby 24kw 0 20 40 60 80 100 120 The most cost- Installed Cost effective solution Standal
Slide 34: Q3 2024 & LTM Financial Overview
Q3 2024 & LTM Financial Overview Actual Y/Y % Actual Y/Y % Q3 2024 Change LTM Change (unaudited) (unaudited) Residential $ 722.8 27.9% 2,270.5 10.4% Commercial & Industrial 328.0 (14.7%) 1,389.0 (7.0%) Other 122.8 1.5% 465.2 1.7% Net Sales $ 1,173.6 9.6% $ 4,124.7 2.9% Gross Profit $ 472.3 25.7% $ 1
Slide 35: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 2020 2021 2022 2023 LTM Net income $ 347.2 $ 556.6 $ 408.9 $ 217.1 $ 296.1 Interest expense 33.0 33.0 54.8 97.6 94.6 Depreciation and amortization 68.8 92.0 156.1 166.6 170.4 Income taxes provision 99.0 135.0 99.6 73.2 95.1 Non-cash write-down and other charges (0.3) (
Slide 36: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three months ended Net Income to Adjusted EBITDA Reconciliation Sep 30, LTM Ended Sep 30, 2024 2023 2024 2023 (unaudited) (unaudited) Net income attributable to Generac Holdings. Inc. $ 113,742 $ 60,377 $ 295,690 $ 189,020 Net income (loss) attributable to noncontrolli
Slide 37: Adjusted Net Income & Free Cash Flow Reconciliation
Adjusted Net Income & Free Cash Flow Reconciliation Three months ended Sep 30, LTM Ended Sep 30, Net Income to Adjusted Net Income Reconciliation 2024 2023 2024 2023 (unaudited) (unaudited) Net income attributable to Generac Holdings. Inc. $ 113,742 $ 60,377 $ 295,690 $ 189,020 Net income attributab