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Generac Holdings (GNRC) Up 16.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Generac Holdings (GNRC - Free Report) . Shares have added about 16.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Generac Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Generac's Q1 Earnings Surpass Estimates
Generac reported first-quarter 2024 adjusted earnings per share (EPS) of 88 cents, which beat the Zacks Consensus Estimate of 72 cents.Generac It reported adjusted EPS of 63 cents in the prior-year period.
Net sales came in at $889.3 million compared with $887.9 million in the prior-year quarter. The figure also topped the consensus estimate of $885.5 million. An increase in Residential product sales cushioned the top-line performance.
In the quarter under review, core sales growth (excluding the impact of acquisitions and foreign currency) fell 1% year over year.
Generac reiterated its sales expectations for 2024.
For 2024, management expects revenues to increase in the range of 3-7%, including a slight net favorable impact from foreign currency changes.
Net income margin (before deducting for non-controlling interests) is now anticipated in the 6-7% band compared with the earlier guided range of 6.5-7.5%.
Adjusted EBITDA margin is estimated in the 16.5-17.5% band.
Quarter in Details
Segment-wise, Domestic revenues totaled $720.5 million compared with $720 million in the prior-year quarter. Results were aided by increased shipments of home standby generators and higher C&I product sales to industrial distributors. This was mostly offset by reduced portable generator sales and lower C&I product shipments to telecom and national rental equipment clients.
International revenues fell 14% year over year to $186.7 million. However, acquisitions and favorable foreign currency movement provided a positive impact of 4%. Core revenues were down 18% due to weak inter-segment sales (owing to softness in the telecom market) and reduced portable generator shipments in Europe.
Product-wise, revenues from Residential inched up 2% to $429 million. C&I revenues totaled $354 million, down 2% year over year. Revenues from the Other product class totaled $106.4 million, up 0.3% year over year.
The Zacks Consensus Estimate for Residential and C&I products’ first-quarter revenues was pegged at $460 million and $311 million, respectively.
Margins
Gross profit was $316.4 million, up from $272.5 million in the prior-year quarter, with respective margins of 35.6% and 30.7%. Gross profit margin performance gained from favorable sales mix, production efficiencies and lower input expenses.
Total operating expenses were $249.5 million, up 9.4% year over year mainly due to higher employee costs and marketing spend.
Operating income came in at $66.9 million, up 50.3% year over year. Adjusted EBITDA, before deducting for non-controlling interests, was $127 million compared with $100 million a year ago.
Cash Flow & Liquidity
In the first quarter, the company generated $111.9 million of net cash from operating activities. Free cash flow totaled $85.1 million.
As of Mar 31, 2024, GNRC had $249.4 million of cash and cash equivalents, with nearly $1.440 billion of long-term borrowings and finance lease obligations.
During the reported quarter, the company did not repurchase any shares. It bought back 2.2 million shares for $252 million in 2023.
In February 2024, GNRC approved a new share buyback authorization that allows the repurchase of up to $500 million over the next 24 months. It replaced the remaining balance on the earlier program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Generac Holdings has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Generac Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Generac Holdings (GNRC) Up 16.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Generac Holdings (GNRC - Free Report) . Shares have added about 16.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Generac Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Generac's Q1 Earnings Surpass Estimates
Generac reported first-quarter 2024 adjusted earnings per share (EPS) of 88 cents, which beat the Zacks Consensus Estimate of 72 cents.Generac It reported adjusted EPS of 63 cents in the prior-year period.
Net sales came in at $889.3 million compared with $887.9 million in the prior-year quarter. The figure also topped the consensus estimate of $885.5 million. An increase in Residential product sales cushioned the top-line performance.
In the quarter under review, core sales growth (excluding the impact of acquisitions and foreign currency) fell 1% year over year.
Generac reiterated its sales expectations for 2024.
For 2024, management expects revenues to increase in the range of 3-7%, including a slight net favorable impact from foreign currency changes.
Net income margin (before deducting for non-controlling interests) is now anticipated in the 6-7% band compared with the earlier guided range of 6.5-7.5%.
Adjusted EBITDA margin is estimated in the 16.5-17.5% band.
Quarter in Details
Segment-wise, Domestic revenues totaled $720.5 million compared with $720 million in the prior-year quarter. Results were aided by increased shipments of home standby generators and higher C&I product sales to industrial distributors. This was mostly offset by reduced portable generator sales and lower C&I product shipments to telecom and national rental equipment clients.
International revenues fell 14% year over year to $186.7 million. However, acquisitions and favorable foreign currency movement provided a positive impact of 4%. Core revenues were down 18% due to weak inter-segment sales (owing to softness in the telecom market) and reduced portable generator shipments in Europe.
Product-wise, revenues from Residential inched up 2% to $429 million. C&I revenues totaled $354 million, down 2% year over year. Revenues from the Other product class totaled $106.4 million, up 0.3% year over year.
The Zacks Consensus Estimate for Residential and C&I products’ first-quarter revenues was pegged at $460 million and $311 million, respectively.
Margins
Gross profit was $316.4 million, up from $272.5 million in the prior-year quarter, with respective margins of 35.6% and 30.7%. Gross profit margin performance gained from favorable sales mix, production efficiencies and lower input expenses.
Total operating expenses were $249.5 million, up 9.4% year over year mainly due to higher employee costs and marketing spend.
Operating income came in at $66.9 million, up 50.3% year over year. Adjusted EBITDA, before deducting for non-controlling interests, was $127 million compared with $100 million a year ago.
Cash Flow & Liquidity
In the first quarter, the company generated $111.9 million of net cash from operating activities. Free cash flow totaled $85.1 million.
As of Mar 31, 2024, GNRC had $249.4 million of cash and cash equivalents, with nearly $1.440 billion of long-term borrowings and finance lease obligations.
During the reported quarter, the company did not repurchase any shares. It bought back 2.2 million shares for $252 million in 2023.
In February 2024, GNRC approved a new share buyback authorization that allows the repurchase of up to $500 million over the next 24 months. It replaced the remaining balance on the earlier program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Generac Holdings has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Generac Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.