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Generac (GNRC) Q1 Earnings & Revenues Surpass Estimates

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·4-min read
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Generac Holdings Inc. GNRC reported first-quarter 2022 adjusted earnings of $2.09 per share, which beat the Zacks Consensus Estimate by 10%. However, the bottom line declined 12.2% year over year.

Net sales increased 41% year over year and came in at $1.14 billion and beat the consensus mark by 4.9%. Robust demand for Residential and Commercial & Industrial (C&I) products and effective M&A strategies boosted Generac’s first-quarter performance.

In the quarter under review, Core sales growth (excludes the impact of acquisitions and foreign currency) increased 33% year over year.

In the past year, shares have declined 23.6% compared with industry’s decline of 26.6%.

Generac Holdings Inc. Price

Generac Holdings Inc. Price
Generac Holdings Inc. Price

Generac Holdings Inc. price | Generac Holdings Inc. Quote

Quarter in Details

Segment-wise, Domestic revenues increased 39% year over year to $964.7 million, driven by the impact of acquisitions that contributed nearly 5% to revenues. Higher demand for home standby generators and PWRcell energy storage systems and strength across C&I products were the driving factors.

International revenues rose 49% to $171.2 million, driven by strong performance across all regions. The impact of acquisitions and forex contributed nearly 22% to revenues.

Product-wise, revenues from Residential soared 43% to $777 million. Revenues from C&I were $279 million, up 38% from the year-ago quarter’s levels. Revenues from the Other product class came in at $80.2 million, up 27.5% year over year.

Margins

Gross profit was $361 million, up from $321.8 million with respective margins of 31.8% and 39.9%. The gross profit margin declined due to higher input costs related to supply chain disruptions.

Operating expenses were $206 million, up 55.3% from the prior-year quarter’s levels. This was due to higher variable expenses from an increase in sales volumes, a rise in marketing and employee costs and the impact of acquisitions.

Operating income came in at $154.7 smillion, down 18.2%. Adjusted EBITDA was $196 million compared with $214 million in the year-ago quarter, driven by significant revenue growth.

Cash Flow & Liquidity

In the first quarter, the company used $10.1 million of net cash from operating activities. Free cash out flow came in at $36.8 million.

As of Mar 31, 2022, the company had $206 million in cash and cash equivalents with $1.003 billion of long-term borrowings and finance lease obligations.

2022 Outlook Raised

For 2022, Generac expects revenue growth between 36% and 40% against the earlier guidance of 32% and 36% year over year. This includes a net impact of between 5% and 7% from acquisitions and foreign currency changes.

The net income margin (before deducting for non-controlling interests) is expected to be 13-14%. The adjusted EBITDA margin is estimated in the range of 21.5-22.5% against the earlier guidance of 22-23%.

Zacks Rank & Stocks to Consider

Generac currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader technology sector are Flex FLEX, Jabil JBL and Broadcom AVGO. Flex and Jabil sport a Zacks Rank #1 (Strong Buy), while Broadcom carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Flex’s fiscal 2022 earnings is pegged at $1.88 per share, unchanged in the past 60 days. The long-term earnings growth rate is pegged at 14.9%.

Flex earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 25.6%. Shares of FLEX have declined 2.3% in the past year.

The Zacks Consensus Estimate for Jabil fiscal 2022 earnings is pegged at $7.25 per share, up 10.2% in the past 60 days. The long-term earnings growth rate is 12%

Jabil earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 13.5%. Shares of JBL have gained 12.5% in the past year

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $35.67 per share, up 1.1% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 15.6%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 1.9%. Shares of AVGO have increased 31% in the past year.


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Generac Holdings Inc. (GNRC) : Free Stock Analysis Report

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