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Mar 31, 2020
Generac Q1 2020 Earnings Report
Generac's financial performance was mixed, with residential growth offset by C&I declines and international weakness due to COVID-19.
Key Takeaways
Generac's first quarter results showed slight net sales growth, driven by residential product strength, but impacted by declines in commercial & industrial products and international sales due to the COVID-19 pandemic. The company's earnings per share decreased slightly, but adjusted EBITDA margin remained strong. They have updated their 2020 outlook to reflect the estimated impact from COVID-19.
Net sales increased 1.2% to $475.9 million, while core sales declined approximately 3%.
Residential product sales increased 18.3%, driven by home standby generators and PWRcell energy storage systems.
Commercial & Industrial product sales decreased 17.7% due to lower domestic shipments and international weakness.
Adjusted EBITDA was $86.0 million, representing 18.1% of net sales.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
The company expects net sales to decline between approximately 5 to 10%. Net income margin is expected to be between 9.5% to 10.5%, with adjusted EBITDA margin between 19.0% to 20.0%.
Positive Outlook
- Demand for residential products has historically proven to be more resilient
- Considerable opportunities to grow the backup power market specifically in California
- Opportunities to grow attachment rates of energy storage overall
- Backup power for residential applications has now become more important than ever with more people working and learning from home
- Active outage environment during 2020, margins could increase by approximately 50 basis points above baseline guidance.
Challenges Ahead
- The remainder of the year is expected to be impacted by a significant decline in economic activity across the globe
- A more pronounced decline expected in the second quarter
- This downturn is expected to be particularly severe within C&I products, both domestically and internationally
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
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