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Generac Posts Strong Q4 Earnings on Upbeat Residential Product Sales
GNRCGenerac (GNRC) ZACKS·2025-02-14 14:57

Core Insights - Generac Holdings Inc. (GNRC) reported better-than-expected fourth-quarter 2024 results, with adjusted EPS of 2.80andnetsalesof2.80 and net sales of 1.23 billion, surpassing Zacks Consensus Estimates by 12% and 0.1% respectively [1][2] - Year-over-year, net sales increased by 16% and adjusted EPS surged by 35.3%, driven primarily by strong Residential product sales [2][3] Financial Performance - Residential product revenues surged 28% year-over-year to 743million,althoughitfellshortoftheZacksConsensusEstimateof743 million, although it fell short of the Zacks Consensus Estimate of 771 million [3][4] - Gross profit reached 501.4million,upfrom501.4 million, up from 388.7 million in the prior-year quarter, with gross profit margins improving to 40.6% from 36.5% [10] - Operating income increased by 31.2% year-over-year to 198million,whileadjustedEBITDAroseto198 million, while adjusted EBITDA rose to 265 million from 213millionayearago[10]MarketDynamics−Thecompanyisfocusingonexpandingitsresidentialdealernetwork,whichgrewto9,200dealersbytheendof2024,anincreaseof500fromtheendof2023[5]−Newproductlaunchesandsignificantinvestmentsinmanufacturingcapacityareexpectedtodrivefuturerevenues[6]FutureOutlook−For2025,ResidentialProductsalesareprojectedtogrowinthemid−to−highsingle−digitrange,withrevenuesfromresidentialenergytechnologysolutionsexpectedtobebetween213 million a year ago [10] Market Dynamics - The company is focusing on expanding its residential dealer network, which grew to 9,200 dealers by the end of 2024, an increase of 500 from the end of 2023 [5] - New product launches and significant investments in manufacturing capacity are expected to drive future revenues [6] Future Outlook - For 2025, Residential Product sales are projected to grow in the mid-to-high single-digit range, with revenues from residential energy technology solutions expected to be between 300 million to 400 million [7] - Generac anticipates maintaining margin expansion, projecting a 100-basis-point increase in gross margins due to lower input costs [11] Segment Performance - The Commercial & Industrial (C&I) segment showed weakness, with revenues remaining flat at 363 million year-over-year, and expectations for flat sales in 2025 [12] - Management noted that growth in telecom C&I BESS and data center opportunities may be offset by declines in other C&I markets [12] Cash Flow and Share Buyback - In the fourth quarter, the company generated 339millioninnetcashfromoperatingactivities,withfreecashflowtotaling339 million in net cash from operating activities, with free cash flow totaling 286 million [13] - Generac approved a new share buyback authorization of up to $500 million over the next 24 months, replacing the previous program [14]