Generac Holdings Inc. · NYSE:GNRC
Generac — Investor Presentation (March 2016)
26 slides from Generac's investor presentation, March 2016
Slide 1: Investor Presentation
Investor Presentation March 2016
Slide 2: Investor Relations Contacts
Investor Relations Contacts Aaron Jagdfeld, President & Chief Executive Officer York Ragen, Chief Financial Officer (262) 506-6064 InvestorRelations@generac.com Michael Harris, Vice President – Finance (262) 544-4811 x2675 Michael.Harris@generac.com
Slide 3: Forward Looking Statements
Forward Looking Statements Certain statements contained in this presentation, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ mater
Slide 4: About Generac
About Generac Variety of end markets include residential, light commercial, industrial, oil & gas, and construction Leading designer and Global distribution manufacturer of a wide network of independent range of power generation dealers, distributors, equipment and other retailers, wholesalers and e
Slide 5: Track Record of Innovation & Growth
Track Record of Innovation & Growth $1,600 History of Innovation $1,500 Driving Organic Growth 2005 – 2015 $1,400 Commercialized affordable home ~7% organic standby generators and light- $1,300 revenue CAGR commercial generators $1,200 Differentiated distribution model $1,100 Over 250 engineers on s
Slide 6: Consumer Power Products
Consumer Power Products Air-cooled Emergency backup – North American Penetration Opportunity(1) Home Standby small to medium homes Generators Liquid-cooled Emergency backup – Home Standby larger homes & small Generators businesses Portable & Emergency home backup, Inverter construction, recreation G
Slide 7: Engine Powered Tools (EPT)
Engine Powered Tools (EPT) Chore-Related Wide variety of Outdoor Power property maintenance Equipment applications: Acquired in August 2015 Pressure washers Larger-acreage Based in Vergennes, VT Water pumps residential Expands chore-related products line-up Field & brush Light commercial by adding a
Slide 8: C&I Stationary Products
C&I Stationary Products 20kW to 3.5MW(1) Acquired in March 2016 Larger kW & Prime and emergency Based in Siena, Italy Container backup – both regulated Leading global manufacturer of C&I stationary and Gensets and non-regulated mobile generators, and portable generators markets Products sold into ov
Slide 9: C&I Mobile Products
C&I Mobile Products Mobile Equipment - Rental vs. Buy Temporary lighting, Light Towers power, heating and de- watering Construction, energy, Mobile special events, road development, airlines Generators and other general rental markets Heaters & Rental equipment Pumps companies a key channel Source:
Slide 10: Summary of Acquisitions
Summary of Acquisitions Revenue synergies New products, customers, end markets Numerous cross-selling opportunities Geographic and international expansion Cost synergies Strategic global sourcing initiatives Innovation and cost-reduction engineering Adopt Generac’s lean cost culture Operational exce
Slide 11: Differentiated Distribution Model
Differentiated Distribution Model Residential & Light Commercial Commercial & Industrial Distribution (legacy Generac): Distribution (legacy Generac): = ~ 5,200 Res/Comm Dealers = ~ 135 Industrial Dealer and GAIN Dealer Locations Res/Comm Industrial Dealers Distributors National Retailers National A
Slide 12: Innovative Sales and Marketing Tools
Innovative Sales and Marketing Tools Finding the most “likely” prospect Driving optimized media selection A.M.P.™ targeted marketing process” “Power You Control” and “Just A Drop” Advanced data analytics national TV ad campaigns Direct mail, telemarketing, etc. Improving close rates Scheduling in-ho
Slide 13: “Powering Ahead” Strategic Plan
“Powering Ahead” Strategic Plan Grow Residential Standby Gain Industrial Market Share Generator Market • Leverage expanded diesel and • Increase awareness, availability and natural gas product offering affordability • Better optimize distribution partners • Generate more sales leads to market, sell
Slide 14: Relative Performance
Relative Performance Compared with Industrial Technology Peers Subtracts present value of tax shield from EV due to reduced add back of income taxes for EBITDA Source: Thomson One, Company Filings Note: Charts for Free Cash Flow Yield and Enterprise Value / NTM EBITDA use closing share prices as of
Slide 15: 2016 Business Outlook
2016 Business Outlook As reported on February 16, 2016 Consolidated net sales: increase between 10 to 12%; core organic sales decline between 5 to 7% Assumes no improvement in power outage severity relative to very low levels experienced during 2015 − Residential products: increase in the low-teens
Slide 16: Financial Policy
Financial Policy Priority Uses of Capital Historical Expected 1 Continue to invest ~ 11% CAGR organic revenue Support market-driven R&D in business over past 5 years (2010-2015) Invest in high-ROI capital spending projects and capacity expansion Capex consistently only ~ 2% of sales 2 Publicly-state
Slide 17: Appendix
Appendix
Slide 18: Financial Summary
Financial Summary GENERAC —— Mm Total Net Sales =="="Gross Margin % mmm Adjusted EBITDA === Adjusted EBITDA margin % 2011 2012 2013 2014 2015 $1,700 $450 $1,485.8 $1,460.9 $400 $402.6 $1,400 350 $1,176.3 $ $1,100 $300 $250 $800 $200 + $150 $500 $100 $200 $50 2011 2012 2013 2014 2015 2011 2012 2013 2
Slide 19: Generac (GNRC) Investment Highlights
Generac (GNRC) Investment Highlights Best in class organic ~ 11% CAGR in organic revenue over the last 5 years (2005-2015) revenue growth Low penetration in key markets, especially home standby market at only ~3.5% penetrated with every 1% increase representing ~ $2 billion market opportunity Key ma
Slide 20: Total Outage Hours (Severity)
Total Outage Hours (Severity) “Normal” baseline outages (excluding major events) Last 12 quarters > 50% below “normal” 2015 (record low) > 20% below last 12 quarters > 35% below 2014 20
Slide 21: Favorable Tax Attributes
Favorable Tax Attributes Tax attributes and 338(h)10 election overview $1.9 billion combined asset basis step-up created through 2006 acquisition of Generac and other acquisitions – Each amortizes over 15 years – Reduces cash tax obligation by approx. $50 million per year through 2021 ($ mm) Total 2
Slide 22: Net Sales by Product Class
Net Sales by Product Class ($ in millions) Includes ~$140mm of excess backlog related ~12% organic sales CAGR for to Superstorm Sandy Residential Products since 2010 $900 $843.7 $800 $722.2 $705.4 $700 $673.8 $652.2 $600 $569.9 $548.4 $491.0 $500 $410.3 $400 $372.8 $300 $250.3 $200 $183.6 $100 $72.1
Slide 23: Q4 2015 & 2015 Financial Overview
Q4 2015 & 2015 Financial Overview ($ in millions) 23
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in millions) 24
Slide 25: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in thousands) 25
Slide 26: Adjusted Net Income and Free Cash Flow Reconciliations
Adjusted Net Income and Free Cash Flow Reconciliations ($ in thousands) 26
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