Generac Holdings Inc. · NYSE:GNRC
Generac — Generac Holdlings — Q3 2023 Earnings Presentation
30 slides from Generac's earnings presentation, Nov 1, 2023
Slide 1: Investor Presentation November 2023
GENERAC INVESTOR PRESENTATION November 2023 OUR PURPOSE: Lead the evolution to more resilient, efficient, and sustainable energy solutions.
Slide 2: Investor Relations
GENERAC 2 INVESTOR RELATIONS Aaron Jagdfeld PRESIDENT & CEO York Ragen CHIEF FINANCIAL OFFICER Mike Harris SENIOR VICE PRESIDENT – CORPORATE DEVELOPMENT & INVESTOR RELATIONS Kris Rosemann SENIOR MANAGER – CORPORATE DEVELOPMENT & INVESTOR RELATIONS (262) 506-6064 InvestorRelations@generac.com
Slide 3: Forward Looking Statements
GENERAC 3 Forward Looking Statements Certain statements contained in this presentation, as well as • frequency and duration of power outages impacting demand • changes in laws and regulations regarding environmental, other information provided from time to time by Generac for our products; health an
Slide 4: Generac Overview
Generac NET SALES $4.0 BILLION $599 MILLION 51% LTM NET SALES MIX: 79% DOMESTIC 21% INTERNATIONAL ~8,800 EMPLOYEES WORLDWIDE AS OF 6/30/2023 COMMERICAL & INDUSTRIAL 37% ~1,000 ENGINEERS WORLDWIDE AS OF 6/30/2023 OTHER 11% OMNI CHANNEL DISTRIBUTION THOUSANDS OF DEALERS, WHOLESALERS, RETAILERS AND E-C
Slide 5: Generac Global Footprint
GENERAC 5 Generac Global Footprint Global Headquarters Waukesha, Wisconsin Key Locations Office, Warehouse, Sales, Research & Development, and Other Manufacturing Operations Includes five locations within Wisconsin, USA
Slide 6: Track Record of Growth
GENERAC 6 16% REVENUE CAGR $5,000 Track Record 2010 IPO Through 2023F of Growth $4,500 $4,000 $3,500 Each growth cycle creates new $3,000 & higher baseline $2,500 $2,000 $1,500 $1,000 $500 $- '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23F Note: $ amounts in millions. Represents net sales. Figure
Slide 7: Mega-Trends Review
GENERAC 7 Mega-Trends Review "Grid 2.0” - Evolution of the traditional electrical Emergence of cleaner alternative fuels utility model • Natural gas and other alternative fuels are • Increasing intermittent generation sources and vital to the energy transition electrification of everything • Cleaner
Slide 8: A Growing Problem – Supply/Demand Imbalance
GENERAC 8 A Growing Problem – Supply/Demand Imbalance • SUPPLY RELIABILITY • DEMAND GROWTH DETERIORATING ACCELERATING • Climate change & severe weather • Electrification of everything • One-way system prone to outage • Transportation, HVAC, appliances • Infrastructure underinvestment • Next-generati
Slide 9: Powering a Smarter World
GENERAC 9 Powering a Smarter World OUR PURPOSE: Lead the evolution to more resilient, efficient, and sustainable energy solutions.
Slide 10: Strategy Evolution Unlocks Massive & Growing SAM
GENERAC 10 Strategy Evolution Unlocks Massive & Growing SAM 2026 Key drivers of increase in SAM… ✓ Clean Energy – Residential and C&I storage, rooftop MLPEs, EV chargers 2018 ✓ Connected Devices – Smart thermostats, monitoring & Projected ~5X Expansion management devices of Served Addressable ✓ Ener
Slide 11: Broad Product and Solutions Offerings Address Strategic Opportunities
GENERAC 11 Broad Product and Solutions Offerings Address Strategic Opportunities Home Standby Residential Energy C&I Natural Gas C&I BESS Generator Storage Generator Propane Tank Monitor Generator Controls EV Charger Smart Thermostat Residential Load Manager C&I Connectivity Telecom Generator Mobile
Slide 12: Building a Residential Energy Ecosystem
GENERAC 12 Building a Residential Energy Ecosystem Power Generation & Storage + Monitoring & Management Devices + Platform & Controls + Grid Services Global Resi SAM $50 $40 $36.6B $30 $22.4B $20 $10 $- Multiple hardware devices connected to a single interface to optimize 2022 2026F the consumption
Slide 13: Massive HSB Penetration Opportunity
GENERAC 13 Massive HSB Penetration Opportunity Widespread growth potential: • Total US penetration rate ~5.75% as of 2022 • Highest penetrated markets are 15-20%+ and growing Mega-trends and competitive advantages expected to drive robust growth: • Targeted Marketing drives growing demand for long d
Slide 14: Residential Energy Technology Market Opportunity
GENERAC 14 Residential Energy Technology Market Opportunity Rebuilding Clean Energy Portfolio Expanding ecobee Portfolio To With Quality First Develop The Home Energy Hub • Major investments in talent and • Leveraging award-winning Large and growing markets: infrastructure necessary to win technolog
Slide 15: Building a Commercial & Industrial Energy Ecosystem
GENERAC 15 Building a Commercial & Industrial Energy Ecosystem Power Generation & Storage + Monitoring & Management Devices + Platform & Controls & Monitor Connect + Grid Services Global C&I SAM $35 $30 $29.8B $25 $20 $16.0B $15 $10 Turnkey solutions managed through a single $5 interface integrating
Slide 16: Generac's Solution To Address The Industrial Customer Energy Journey
GENERAC PRESENTATION TITLE 16 Generac’s Solution To Address The Industrial Customer Energy Journey CUSTOMER ENTRY POINT Infrastructure & Equipment Energy Programs & Solutions Energy Efficiency and Sustainability - Backup Power - Grid Services and VPP - Battery Energy Storage - Facility Expansion - D
Slide 17: Financial Summary
GENERAC 17 Financial Summary Adjusted EBITDA Adjusted EBITDA margin % Total Net Sales Gross Margin % $1,000 50.0% $5,000 65.0% $4,564.7 $861.4 $825.4 $4,008.2 $800 40.0% $4,000 $3,737.2 55.0% $598.9 $600 $583.8 30.0% $3,000 45.0% $2,204.3 $2,485.2 $454.1 $2,000 38.5% 35.0% $400 23.5% 23.1% 20.0% 36.
Slide 18: Capital Deployment Priorities
GENERAC 18 Capital Deployment Priorities 1 | Asset lite with capex only 2.5% to 3.0% of sales Organic Growth | Investment in technology, innovation, and R&D capabilities Asset Lite | Capacity expansion, global systems, high ROI automation 2 | Robust M&A pipeline | Demonstrated ability to execute; 28
Slide 19: Business Outlook
GENERAC 19 Business Outlook 2023F Guidance As Reported On November 1, 20231 Consolidated net sales • Consolidated revenue: decrease between 10% to 12% • 2% net impact from acquisitions and foreign currency Adjusted EBITDA margins • Between 15.5% to 16.5% GAAP effective tax rate • Approximately 25.0%
Slide 20: Key Investment Highlights
GENERAC 20 Key Investment Highlights ✓ Powering A Smarter World – powerful mega-trends support the enterprise strategy; building residential and C&I energy ecosystems to support the next-generation grid; Energy Technology sales expected to grow to 21% of overall sales mix ✓ Unique HSB Opportunity –
Slide 21: Appendix
APPENDIX GENERAC EEE
Slide 22: HSB: A Penetration Story
GENERAC 22 HSB: A Penetration Story North American Penetration Opportunity(1) 90% 88.1% Aging Population Fits Demographic 80% 70% • ~65% of buyers age 60 and older % of US Addressable Market 60% • ~Median home value of approximately $525k 50% • ~80-85% retro-fit application 40% • ~$145K median house
Slide 23: HSBs are the Solution for Extended Power Outages
GENERAC 23 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 solut
Slide 24: Expanding Power Outage Severity
GENERAC 24 Expanding Power Outage Severity1 Total Outage Hours (Severity) Legacy Residential Organic Sales - LTM 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 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (1) Represents po
Slide 25: Beyond Standby Resiliency + Economic Benefit
GENERAC 25 Beyond Standby Beyond Standby Cost vs Benefit1 Resiliency + Economic Benefit Traditional Back-Up Power • • Code driven requirements • • Prevent loss of use or material spoilage • • Keep operations running Natural Gas Generator Advantages • • Cleaner burning fuels allow use when power is p
Slide 26: Telecom & Data Centers – Powering Next Generation Infrastructure
GENERAC 26 Telecom & Data Centers – 1,000,000 United States Cell Sites Forecast1 Powering Next Generation 900,000 800,000 Infrastructure 700,000 600,000 TELECOM 500,000 • Wireless networks increasingly considered critical 400,000 infrastructure 300,000 • Carriers are targeting 99.5% network reliabil
Slide 27: Q3 2023 & LTM Financial Overview
GENERAC 27 Q3 2023 & LTM Financial Overview Actual Y/Y % Actual Y/Y % Q3 2023 Change LTM Change (unaudited) (unaudited) Residential $ 565.1 (14.9%) 2,057.3 (32.4%) Commercial & Industrial 384.5 23.6% 1,493.3 26.2% Other 121.0 7.2% 457.5 28.4% Net Sales $ 1,070.7 (1.6%) $ 4,008.2 (12.5%) Gross Profit
Slide 28: Adjusted EBITDA Reconciliation
GENERAC 28 Adjusted EBITDA Reconciliation 2019 2020 2021 2022 LTM Net income $ 252.3 $ 347.2 $ 556.6 $ 408.9 $ 194.2 Interest expense 41.5 33.0 33.0 54.8 92.4 Depreciation and amortization 60.8 68.8 92.0 156.1 163.6 Income taxes provision 67.3 99.0 135.0 99.6 56.8 Non-cash write-down and other charg
Slide 29: Adjusted EBITDA Reconciliation
GENERAC 29 Adjusted EBITDA Reconciliation Three months ended Net income to Adjusted EBITDA reconciliation September 30, LTM Ended September 30, 2023 2022 2023 2022 (unaudited) (unaudited) Net income attributable to Generac Holdings. Inc. $ 60,377 $ 58,270 $ 189,020 $ 471,382 Net income attributable
Slide 30: Adjusted Net Income Reconciliation
GENERAC 30 Adjusted Net Income Reconciliation Net income to Adjusted net income reconciliation Three months ended September 30, LTM Ended September 30, 2023 2022 2023 2022 (unaudited) (unaudited) Net income attributable to Generac Holdings. Inc. $ 60,377 $ 58,270 $ 189,020 $ 471,382 Net income attri