Acquisitions power growth for Generac

Guidance revised down on continued industrial weakness

Generac's headquarters in Waukesha.

Waukesha-based Generac Holdings Inc. received a boost from its recent acquisitions, helping fuel a 27.4 percent increase in revenue, even as some end markets struggled with continuing weakness.

Generac-Waukesha-051216-Contributed-2

The designer and manufacturer of generators and other engine powered products reported net income of $20.9 million, a 41.1 percent increase. Earnings were up from 21 cents to 31 cents per diluted share.

The company’s revenue was $367.4 million. Excluding the benefit of $88.1 million from recent acquisitions, revenue was down 3.2 percent to $279.3 million.

Aaron Jagdfeld, Generac president and chief executive officer, said residential product organic sales also grew compared to last year, helping to offset weaker sales of mobile products in domestic and international markets.

“As we head into the second half of 2016, we’ve seen some additional weakening of end market demand primarily as a result of the ongoing very low power outage environment, continued weakness in oil & gas markets and Brexit-related uncertainty within Europe,” Jagdfeld said. “As a result, we remain focused on executing expense-reduction actions, including those announced last quarter, while also continuing to drive initiatives to advance our strategic plan forward.”

The company also announced a change to its segment reporting, dividing the business into domestic and international segments. The change is the result of Generac’s acquisition of Pramac and plans to expand the business internationally.

The domestic segment includes the legacy Generac business and the impact of acquisitions that are based in the United States, all of which have revenues that are substantially derived from the U.S. and Canada. The international segment includes the Ottomotores, Tower Light and Pramac acquisitions, all of which have revenues that are substantially derived from outside the U.S. and Canada.

The domestic segment saw revenue increase 11.1 percent to $286.7 million. The acquisition was largely due to the acquisition of Country Home Products and an increase in shipments of home standby generators. The company also saw significant declines in shipments of mobile products into oil and gas and general rental markets.

Organic shipments to the United Kingdom and Latin American markets were down, but the international segment increased revenue to $80.7 million, compared to $30.2 million last year. The Pramac acquisition was primarily responsible for the increase.

Generac also revised its guidance for the year down, projecting an increase in revenue of 6 to 8 percent, with organic revenue down 10 to 13 percent.

Get our email updates

Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

No posts to display