Generac Reports Second Quarter 2024 Results

Core Insights - Generac Holdings Inc. reported net sales of $998 million for Q2 2024, a slight decrease from $1 billion in Q2 2023, with core sales remaining approximately flat year-over-year [26][25] - The company experienced an increase in residential product sales by approximately 8% to $538 million, while commercial and industrial product sales decreased by about 10% to $344 million [26] - Adjusted net income attributable to the company was $82 million, or $1.35 per share, compared to $68 million, or $1.08 per share in the same period last year [26] - The adjusted EBITDA margin improved to 16.5% of net sales, up from 13.6% in the prior year, driven by a favorable sales mix and lower input costs [26][27] Financial Performance - Operating expenses increased by $29.9 million, or 12.3%, compared to Q2 2023, primarily due to higher employee costs and increased marketing expenditures [6] - Cash flow from operations was $77.7 million, down from $83.1 million in the prior year, while free cash flow was $49.7 million compared to $53.9 million in Q2 2023 [7] - The gross profit margin improved to 37.6% from 32.8% in the prior year, attributed to a favorable sales mix and lower input costs [27] Segment Performance - Domestic segment total sales increased by 1% to $827.1 million, supported by higher home standby and portable generator shipments [29] - The international segment saw total sales decrease by 18% to $184.5 million, primarily due to lower inter-segment sales and weaker shipments in Europe [9] - Adjusted EBITDA for the domestic segment was $139.7 million, or 16.9% of total sales, compared to $103.2 million, or 12.7% of total sales in the prior year [8] Outlook - The company updated its full-year 2024 net sales growth guidance to 4% to 8%, an increase from the previous range of 3% to 7% [31] - Adjusted EBITDA margin expectations were also raised to approximately 17.0% to 18.0%, up from the previous guidance of 16.5% to 17.5% [10] - The company anticipates strong operating and free cash flow generation for the full year, with free cash flow conversion from adjusted net income expected to be well above 100% [32]