Generac Gains On Q4 Bottom-Line Beat; Expects Strong Cash Flow Generation In 2023 – Generac Hldgs (NYSE:GNRC)

  • Generac Holdings Inc GNRC reported a fourth-quarter FY22 sales decline of 2% year-on-year to $1.05 billion, missing the consensus of $1.07 billion.
  • Residential product sales grew 19% to $575 million, and Commercial & Industrial (C&I) product sales increased 27% to $361 million.
  • Domestic segment sales decreased 3% to $880.6 million, and International segment sales rose 22% to $219.2 million.
  • Adjusted EPS of $1.78 beat the analyst consensus of $1.76.
  • Gross profit decreased 5.3% to $343.2 million, and the margin contracted by 130 basis points Y/Y to 32.7%.
  • Operating expenses increased by 26.1% Y/Y to $235.9 million. The operating margin was 10.2%, and operating income for the quarter declined 38.9% to $107.2 million. Adjusted EBITDA was $174 million.
  • The company held $132.72 million in cash and equivalents as of Dec. 31, 2022. Cash flow from operations for the quarter totaled $100.9 million.
  • “Fourth quarter and full year 2022 results came in at the low end of our prior expectations due to continued softness in residential products,” said CEO Aaron Jagdfeld.
  • Outlook: Generac expects FY23 net sales to decline 6% – 10%.
  • Adjusted EBITDA margin, before deducting for non-controlling interests, is expected to be approximately 17.0% to 18.0%.
  • The company expects operating and free cash flow generation to return to strong levels for the full year.
  • Price Action: GNRC shares are trading higher by 7.80% at $134.98 on the last check Wednesday.

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