Generac Holdings Inc. · NYSE:GNRC
Generac — Investor Presentation (March 2015)
26 slides from Generac's investor presentation, March 2015
Slide 1: Investor Presentation March 2015
Investor Presentation March 2015
Slide 2: Investor Relations Contacts
Aaron Jagdfeld, President & Chief Executive Officer York Ragen, Chief Financial Officer (262) 506-6064 [email protected] Michael Harris, Vice President – Finance and Investor Relations (262) 544-4811 x2675 [email protected] 2
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: Generac Business Overview
Generac Business Overview About Generac Founded in 1959 A leading designer and manufacturer of a wide range of power generation equipment and other engine powered products serving 12/31/14 LTM Sales: residential, light commercial, industrial, oil & gas, $1.461 billion and construction markets.
Slide 5: Major Long-Term Growth Themes
Major Long-Term Growth Themes Residential Backup Power Key drivers: aging and underinvested grid, favorable demographics, increasing power outages Low penetration (~3.5%) within emerging product category of home standby (HSB) generators ~ 75% share of domestic HSB market with significant barri
Slide 6: Track Record of Innovation & Growth
Track Record of Innovation & Growth $1,600 History of Innovation $1,500 Driving Organic Growth 2004 – 2014 $1,400 Commercialized affordable home ~12% organic standby generators and light- $1,300 revenue CAGR commercial generators $1,200 Differentiated distribution model $1,100 Over 250 enginee
Slide 7: Broad Product Offering
Broad Product Offering Residential Products Industrial Products Product End Markets Product End Markets Served Served Power Light to medium Light Towers, Temporary lighting, power Washers duty use - mainly by Mobile and heating for consumers Generators & construction, energy and Heaters other – rent
Slide 8: 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 Op
Slide 9: Powerful Macro Trends Drive Home Standby Penetration Opportunity
Powerful Macro Trends Drive Home Standby Penetration Opportunity Aging Grid Driving Power Interruptions(1) North American Penetration Opportunity(4) ~10% CAGR for home standby generators from 2004-2014 Generac has ~ 75% share 30–50% of T&D network in the U.S. is 40–50 years old Undergroundin
Slide 10: Secular Penetration Opportunities
Secular Penetration Opportunities Commercial and Industrial Natural Gas vs. Diesel Market Growth Light Commercial/Retail Opportunity North American Generator Market Share by Fuel Type 60kW to 300kW output power range “Optional” Standby Customers Diesel revenue Gas revenue 70.0% 63.0% 60.0% 52.0% 50.
Slide 11: Secular Penetration Opportunities (cont'd)
Secular Penetration Opportunities Commercial and Industrial (cont’d) Oil & Gas Infrastructure New access to the oil & gas market through acquisitions in recent years Potential long term up-cycle driven by increase in “shale” oil and gas production Regulatory environment regarding flaring of na
Slide 12: Differentiated Distribution Model
Differentiated Distribution Model Residential & Light Commercial Commercial & Industrial Distribution: Distribution (legacy Generac): = ~ 5,200 Res/Comm Dealers = ~ 135 Industrial Dealer and GAIN Dealer Locations Res/Comm Industrial Dealers Dealers National National Retailers Accounts Catalog and Eq
Slide 13: 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 Scheduli
Slide 14: "Powering Ahead" Strategic Plan
“Powering Ahead” Strategic Plan Grow Residential Standby Gain Industrial Market Share Generator Market • Leverage expanded diesel product • Increase awareness, availability and offering affordability • Specialized expertise in natural gas • Further optimize innovative sales engines and generators an
Slide 15: Financial Summary
Financial Summary Note: Unlevered free cash flow = free cash flow plus cash interest expense. 15
Slide 16: 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 17: 2015 Business Outlook
2015 Business Outlook As reported on February 11, 2015 Net sales: increase low-to-mid-single digit range vs. 2014 Organic sales growth: approximately flat despite strong headwinds from oil & gas, telecom and foreign currency Acquisition growth: adds ~ 3% growth Holding new and higher baseline
Slide 18: Financial Policy
Financial Policy Priority Uses of Capital Historical Expected 1 Continue to invest ~ 12% CAGR organic revenue Support market-driven R&D in business over past 3 years Invest in high-ROI capital spending projects and capacity expansion Capex consistently only ~ 2% of sales 2 Publicly-stated net
Slide 19: Investment Highlights
Generac (GNRC) Investment Highlights Best in class organic ~ 12% CAGR in organic revenue over the last 10 years 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 macro d
Slide 20: Appendix
Appendix 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. $49 million per year through 2020 ($ mm) Total
Slide 22: Net Sales by Product Class
Net Sales by Product Class ($ in millions) Figures include results from acquisitions completed during 2011 – 2014; see slide titled “Summary of Acquisitions” for further details. 22
Slide 23: Q4 2014 & 2014 Financial Overview
Q4 2014 & 2014 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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