Attached files
| file | filename |
|---|---|
| 8-K - GENERAC HOLDINGS INC 8-K 10-3-2011 - GENERAC HOLDINGS INC. | form8k.htm |
| EX-99.1 - EXHIBIT 99.1 - GENERAC HOLDINGS INC. | ex99_1.htm |
1
Acquisition of Magnum Products
Conference Call
Aaron Jagdfeld
President & Chief Executive Officer
York Ragen
Chief Financial Officer
October 4, 2011
2
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 materially from those in the forward-looking statements.
Holdings Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements give Generac’s current expectations and projections relating to the Company’s financial
condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to historical or current facts. These statements may include words
such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,”
“likely,” “future” and other words and terms of similar meaning in connection with any discussion of the timing or nature
of future operating or financial performance or other events.
condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking
statements by the fact that they do not relate strictly to historical or current facts. These statements may include words
such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,”
“likely,” “future” and other words and terms of similar meaning in connection with any discussion of the timing or nature
of future operating or financial performance or other events.
Any such forward-looking statements are not guarantees of performance or results, and involve risks, uncertainties
(some of which are beyond the Company’s control) and assumptions. Although Generac believes any forward-looking
statements are based on reasonable assumptions, you should be aware that many factors could affect Generac’s
actual financial results and cause them to differ materially from those anticipated in any forward-looking statements,
including: demand for Generac products; frequency of major power outages; availability of raw materials and key
components used in producing Generac products; the possibility that the expected synergies, efficiencies and cost
savings of the acquisition of the Magnum Products business will not be realized, or will not be realized within the
expected time period; the risk that the Magnum Products business will not be integrated successfully; competitive
factors in the industry in which Generac operates; Generac’s dependence on the Company’s distribution network;
Generac’s ability to invest in, develop or adapt to changing technologies and manufacturing techniques; Generac’s
ability to adjust to operating as a public company; loss of key management and employees; increase in liability claims;
and changes in environmental, health and safety laws and regulations.
(some of which are beyond the Company’s control) and assumptions. Although Generac believes any forward-looking
statements are based on reasonable assumptions, you should be aware that many factors could affect Generac’s
actual financial results and cause them to differ materially from those anticipated in any forward-looking statements,
including: demand for Generac products; frequency of major power outages; availability of raw materials and key
components used in producing Generac products; the possibility that the expected synergies, efficiencies and cost
savings of the acquisition of the Magnum Products business will not be realized, or will not be realized within the
expected time period; the risk that the Magnum Products business will not be integrated successfully; competitive
factors in the industry in which Generac operates; Generac’s dependence on the Company’s distribution network;
Generac’s ability to invest in, develop or adapt to changing technologies and manufacturing techniques; Generac’s
ability to adjust to operating as a public company; loss of key management and employees; increase in liability claims;
and changes in environmental, health and safety laws and regulations.
Should one or more of these risks or uncertainties materialize, Generac’s actual results may vary in material respects
from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect
future results is contained in Generac’s filings with the Securities and Exchange Commission. Any forward-looking
statement made by Generac in this presentation speaks only as of the date on which it is made. Generac undertakes
no obligation to update any forward-looking statement, whether as a result of new information, future developments or
otherwise, except as may be required by law.
from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect
future results is contained in Generac’s filings with the Securities and Exchange Commission. Any forward-looking
statement made by Generac in this presentation speaks only as of the date on which it is made. Generac undertakes
no obligation to update any forward-looking statement, whether as a result of new information, future developments or
otherwise, except as may be required by law.
3
Magnum Business Overview
Magnum MMG55FH Flip Hood 52 kW
Mobile Diesel Generator
Mobile Diesel Generator
Magnum MMG55 49 kW Mobile
Diesel Generator
Diesel Generator
Magnum MLG20 Diesel Generator
MTP 4000D Dry Prime Pump
Magnum Family of Light Towers
4
Access to Incremental Distribution and End Markets
5
Supporting the “Powering Ahead” Strategy
Acquisition of Magnum Products supports three of the four key objectives
from our “Powering Ahead” strategic plan
from our “Powering Ahead” strategic plan
6
Strategic Rationale for Acquiring Magnum
§ Broadens Generac’s Industrial product offering and strengthens
position in power equipment markets
position in power equipment markets
– Incremental product offering for Generac’s distribution
§ Adds new sales channels and end markets including industrial
rental yards, road and commercial construction, energy, and
government / military end markets (GSA)
rental yards, road and commercial construction, energy, and
government / military end markets (GSA)
§ Leverages Generac’s global sourcing & vertical manufacturing
capabilities
capabilities
§ Adds “prime” equipment expertise - design, manufacture & service
– Supports potential domestic & international growth in non-standby
applications
applications
§ Attractive ROI and strong utilization of current cash position
7
Balances Sales Mix between Residential and C&I
Generac Sales by Product Class
Generac (Stand Alone) LTM 6/30/11
Pro Forma LTM 6/30/11
8
Integration & Key Opportunities
§ Magnum will continue to operate its existing manufacturing facility in Berlin, Wisconsin
§ Will maintain Magnum’s brands and sales force given company’s strong reputation in its markets
§ Experienced integration team consisting of members of both companies created and focused on
execution of detailed integration plan for first twelve months
execution of detailed integration plan for first twelve months
INTEGRATION
OPPORTUNITIES
§ Revenue synergies as a result of significant opportunities to leverage each companies’ respective
sales channels and cross-sell products
sales channels and cross-sell products
§ Cost synergies will be phased in beginning in fiscal 2012 with future cost synergies expected to be
approximately $2 million annually on a run-rate basis, starting 2013
approximately $2 million annually on a run-rate basis, starting 2013
– Primarily based on material synergies from leveraging Generac’s global supply chain and vertical
manufacturing capabilities
manufacturing capabilities
– Overlap of major cost components between Magnum and Generac industrial products
9
Transaction Overview
§ Approximately $80 million; subject to customary, post-close working capital
adjustment
adjustment
§ Modest earn-out based on future performance of a certain product line
currently in development
currently in development
TRANSACTION VALUE
FINANCING
STRUCTURE
§ Cash on hand
§ Transaction structured as an asset purchase
§ Expected to create additional tax shield
10
Financial Impact
11
Non-GAAP Financial Measures
Adjusted EBITDA
The computation of Adjusted EBITDA is based on the definition of EBITDA contained in Generac's credit
agreement, dated as of November 10, 2006. Included in Generac’s earnings releases, to supplement the
Company's financial results presented in accordance with US GAAP, Generac provides a reconciliation
to show the computation of Adjusted EBITDA, taking into account certain charges and gains that were
taken during the periods presented. Transaction costs, amortization of definite-lived intangible assets
and the write-up of inventory basis all related to the Magnum Products transaction will be included in the
Adjusted EBITDA reconciliation and added back for Adjusted EBITDA purposes.
agreement, dated as of November 10, 2006. Included in Generac’s earnings releases, to supplement the
Company's financial results presented in accordance with US GAAP, Generac provides a reconciliation
to show the computation of Adjusted EBITDA, taking into account certain charges and gains that were
taken during the periods presented. Transaction costs, amortization of definite-lived intangible assets
and the write-up of inventory basis all related to the Magnum Products transaction will be included in the
Adjusted EBITDA reconciliation and added back for Adjusted EBITDA purposes.
Adjusted Earnings Per Share
To further supplement Generac's financial results presented in accordance with US GAAP, the Company
provides a reconciliation to show the computation of Adjusted Net Income and Adjusted Earnings Per
Share in its earnings releases. Adjusted net income is defined as Net income before provision (benefit)
for income taxes adjusted for the following items: cash income tax (expense) benefit, amortization of
intangible assets, amortization of deferred loan costs related to the Company's debt, intangible
impairment charges, and certain non-cash gains. Transaction costs, amortization of definite-lived
intangible assets and the write-up of inventory basis all related to the Magnum Products transaction will
be included in the Adjusted Net Income reconciliation and added back for Adjusted Net Income purposes.
provides a reconciliation to show the computation of Adjusted Net Income and Adjusted Earnings Per
Share in its earnings releases. Adjusted net income is defined as Net income before provision (benefit)
for income taxes adjusted for the following items: cash income tax (expense) benefit, amortization of
intangible assets, amortization of deferred loan costs related to the Company's debt, intangible
impairment charges, and certain non-cash gains. Transaction costs, amortization of definite-lived
intangible assets and the write-up of inventory basis all related to the Magnum Products transaction will
be included in the Adjusted Net Income reconciliation and added back for Adjusted Net Income purposes.