Generac Holdings Inc. · NYSE:GNRC
Generac — Investor Presentation (June 2010)
20 slides from Generac's investor presentation, June 2010
Slide 1: Investor Presentation June 2010
Investor Presentation June 2010
Slide 2: 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 3: Generac business overview
Generac business overview Business Overview – Key Stats – • Founded: 1959 ¾ Leading pure play designer and manufacturer • Distribution: over 17,000 outlets • Geographic concentration: approx 98% North America of standby and portable generators • Employees: 1,354 at 12/31/09, over 100 engineers on st
Slide 4: Broad product offering with leadership in targeted growth markets
Broad product offering with leadership in targeted growth markets End markets Light Residential Commercial/Retail Telecom Healthcare Municipal Industrial/Manufacturing Power 0.8kW 9,000kW Product type Portable Residential standby Industrial and light commercial standby Fuel Gasoline Natural gas Liqu
Slide 5: Track record of innovation and organic growth
Track record of innovation and organic growth $800 History of Generac Innovation 2000 – 2009 $700 15% revenue CAGR Developed affordable home standby All Organic Growth $600 generator products Developed cost effective natural gas $500 light-commercial generator line $400 Developed differentiate
Slide 6: Powerful macro trends drive industry demand
Powerful macro trends drive industry demand Growing number of power interruptions(1) Aging grid with favorable demographics 30–50% of T&D network in the U.S. 58 is 40–50 years old GR Undergrounding the grid would cost CA 17 % 41 up to $4.0 trillion(2) 31 Aging demographic and consumer 25 prefe
Slide 7: Residential products – Significant penetration opportunity
Residential products – Significant penetration opportunity Affordability fuels adoption N.A. penetration opportunity 70% 60% (56% ) $4,495 50% % of US Households 40% $1,989 30% 20% 10% 1998 2008 0% 1945 1950 1955 1960 1965 1970 1975 1979 1983 1987 1991 1995 1999 2003 2007 Automatic Standby Generator
Slide 8: Light commercial and industrial products – Compelling ROI
Light commercial and industrial products – Compelling ROI Cost of 4 hours outage per business(1) Current and prospective customers Grocery and Food Sales $26,234 convenience stores Restaurants $20,161 Food Service Retail stores, Mercantile $4,892 pharmacies Hospitals, Healthcare $1,593 nursi
Slide 9: Differentiated distribution model
Differentiated distribution model Residential dealers Industrial dealers Largest network of residential dealers Work with professional engineering created during the last decade firms to develop customized solutions Installation, after sale service and Install, support, and service national
Slide 10: Advantaged operating model
Advantaged operating model Generac’s intense operating focus Engineered cost advantage Engineered cost advantage Controls for key Flexible components Engines cost structure Alternator Scale Emissions Systems Low cost international Fuel Systems supplier Lean Cooling Package network manufa
Slide 11: Growth strategy: Increase penetration and awareness
Growth strategy: Increase penetration and awareness Introducing a new 7kW entry level price point home standby product in 2010 Affordability Popular Mechanics Magazine Lower cost light commercial natural gas products driving higher growth rates versus traditional diesel generators Continued ef
Slide 12: Growth strategy: Gain market share
Growth strategy: Gain market share Industrial Opportunity Portables Opportunity Competing through innovative Rapid growth in market share technologies - MPS & Bi-Fuel since market re-entry in 2008 Differentiated diesel product Leverages sourcing, offering increases market share manufacturing
Slide 13: Growth strategy: New products & new distribution
Growth strategy: New products & new distribution Demonstrated history of new product innovations Over 100 engineers on staff New Product Advanced R&D product development pipeline Pipeline Capability to rapidly launch new products Continued expansion of current distribution International
Slide 14: Sales growth and profitability
Sales growth and profitability Sales and Adjusted EBITDA Margin Adjusted EBITDA margin 11 % a nic CAGR = Org $680 $588 $574 $556 $519 $354 28% 28% 27% 24% 23% 19% 2004 2005 2006 2007 2008 2009 CONFIDENTIAL Note: amounts in $ million 14
Slide 15: Strong free cash flow
Strong free cash flow $159.1 ($4.5) ($0.3) ($7.4) 146.9 averaging 1.3% of sales over last 5 years Growth in residential sales Post IPO – • Low cost, pre- pre-payable debt at L + 250 (due Nov 2013) $122mm tax amortization shield • Estimated 2010 Interest over next 10 years + Expense = $26mm NOL creat
Slide 16: Q1 2010 Overview
Q1 2010 Overview ($mm) Q1 2010 YoY % Change Revenue $130.7 (6.9%) Gross Profit $51.4 8.2% % Margin 39.3% Adjusted EBITDA $31.8 10.2% % Margin 24.3% Cash From Operations $18.4 Capital Expenditures $1.2 Net Debt $665.1 (28.5%) Consolidated Net Debt Leverage Ratio 4.1x CONFIDENTIAL 16
Slide 17: Strong organic sales growth and profitability
Strong organic sales growth and profitability 5-Year Sales CAGR vs. Peers LTM Q1 2010 EBITDA Margin vs. Peers Generac 28.0% 25.4% 22.6% 21.7% 20.9% 20.4% 20.0% 19.4% 13.0% 12.4% Companies for which acquisitions comprise a substantial part of revenue growth Peer Group consists of AME, BMI, ESE, GGG,
Slide 18: Key Investment Highlights
Key Investment Highlights ¾ Powerful long-term industry fundamentals ¾ Low penetration of residential and light commercial standby generators ¾ Differentiated operating model creates sustainable competitive advantages ¾ Driving growth through innovation and distribution expansion ¾ Best-in-class gro
Slide 19: Appendix
Appendix CONFIDENTIAL 19
Slide 20: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation ($mm) 2004 2005 2006 2007 2008 2009 Q1 2009 Q1 2010 Reported net income $60.2 $121.3 ($3.2) ($9.7) ($556.0) $43.1 $5.8 $2.5 Interest expense 0.2 0.3 19.0 125.4 108.0 70.9 18.0 8.5 Depreciation and amortization 4.6 5.0 14.2 53.8 54.8 59.7 14.7 14.7 Income taxes provisio