WAUKESHA, Wis. - Generac Holdings Inc. (NYSE: NYSE:GNRC), a global leader in energy technology solutions, reported a modest increase in revenue to $889 million for the first quarter ended March 31, 2024, up from $888 million in the same quarter last year, with core sales slightly down by approximately 1%. The company's adjusted earnings per share (EPS) rose to $0.88, surpassing analyst expectations of $0.76.
GNRC shares were up 3% in premarket trading Wednesday morning.
The company's residential product sales saw a 2% increase to $429 million compared to the previous year, while commercial and industrial product sales experienced a slight decrease. Generac's adjusted net income also showed significant improvement, reaching $53 million compared to $39 million in the first quarter of 2023.
President and CEO Aaron Jagdfeld attributed the strong quarter to robust operating margins and execution, citing increased shipments of home standby generators and a considerable generation of free cash flow, which reinforces confidence in the company's 'Powering A Smarter World' strategy. Jagdfeld also highlighted the growing demand for Generac's products amidst the energy transition and the pressure on an aging electrical grid.
The company's gross profit margin improved to 35.6% from 30.7% in the prior year's first quarter, mainly due to favorable sales mix, production efficiencies, and lower input costs. Operating expenses rose by 9.4%, primarily due to increased employee costs and marketing spend.
Looking ahead, Generac is maintaining its full-year 2024 net sales guidance with an expected growth of 3 to 7%, including slight benefits from foreign currency and acquisitions. The company forecasts a net income margin of approximately 6.0 to 7.0% and an adjusted EBITDA margin of 16.5 to 17.5% for the full year. Generac also anticipates strong operating and free cash flow generation, with a free cash flow conversion from adjusted net income of around 100%.
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