Generac Holdings Inc. (GNRC), a manufacturer of generators and other engine powered products, reported Thursday a sharp decline in fourth-quarter profit on the absence of last year's hefty tax benefit. Adjusted earnings increased from last year on strong revenue growth. Looking ahead, the company projects higher revenues in fiscal 2013.
Fourth-quarter results significantly exceeded expectations, the company said.
In its fourth quarter net income plunged to $28.29 million or $0.41 per share from last year's $267.13 million or $3.91 per share.
The latest quarter results reflected a provision for income taxes of $21.40 million, while prior year's benefit was $237.98 million consisted primarily of the reversal of the full valuation allowance on the company's net deferred tax assets.
Adjusted net income, which excluded certain items, increased 17.1 percent over the prior year quarter to $60.7 million, and adjusted net income per share increased 15.3 percent to $0.87.
On average, ten analysts polled by Thomson Reuters expected earnings of $0.69 per share for the quarter. Analysts' estimates typically exclude special items.
Income before provision for income taxes grew to $49.68 million from $29.15 million last year.
Net sales increased 28 percent to $342.02 million from $267.31 million in the fourth quarter of 2011. Analysts estimates revenues of $309.39 million.
Gross profit margin was 36.9 percent, compared to 36.8 percent in 2011. The positive impact from improved pricing and a moderation in commodity costs was largely offset by changes in product mix.
Aaron Jagdfeld, President and Chief Executive Officer, said, "2012 was a tremendous year for Generac as we achieved record financial results with significant growth across all product categories and regions of the United States."
Looking ahead for 2013, the company expects solid revenue growth, with net sales increasing approximately 10 percent. Meanwhile, gross margins are expected to decline by approximately 80 to 100 basis points primarily as a result of the addition of Ottomotores partially offset by the expected favorable impact from cost reduction initiatives.
Adjusted EBITDA for the full year is expected to increase in the mid single-digit percentage range.
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