Generac sees FY18 net sales up 3%-5% vs last year
Last year net sales include a favorable foreign currency impact of between 1%-2%. Excluding the benefit of elevated portable generator shipments during 2017 related to major outage events from the active hurricane season, net sales are expected to increase between 7% to 9% as compared to the prior year. This top-line guidance assumes no major outage events and a baseline power outage severity level similar to the longer-term average. FY18 net income margins, before deducting for non-controlling interests, are expected to be between 9.5%-10.0%, with adjusted EBITDA margins, also before deducting for non-controlling interests, 19.0%-19.5%. Sees FY18 operating and free cash flow generation to be strong, with the conversion of adjusted net income to free cash flow expected to be over 90%. As a result of the Tax Reform Act, the Company recognized a one-time, non-cash gain of $28.4M in Q4 primarily from the impact of the revaluation of net deferred tax liabilities. Specifically for FY18, the effective tax rate is expected to decline to between 25%-26%, resulting in a corresponding benefit to cash flow of between $10M-$12M based on the outlook being provided.