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Generac
🇺🇸 NYSE:GNRC
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•
Sep 30, 2023

Generac Q3 2023 Earnings Report

Generac's Q3 2023 earnings reflected a decrease in net sales, but an increase in net income and adjusted EBITDA. The company experienced growth in C&I product sales and margin expansion, along with substantial free cash flow generation.

Key Takeaways

Generac's Q3 2023 saw a slight decrease in net sales by 2% to $1.07 billion, but net income increased to $60 million, or $0.97 per share. Adjusted EBITDA rose to $189 million, representing 17.6% of net sales, and the company generated $117 million in free cash flow.

Net sales decreased 2% to $1.07 billion compared to the prior-year third quarter.

Net income attributable to the company increased to $60 million, or $0.97 per share.

Adjusted EBITDA increased to $189 million, or 17.6% of net sales.

Free cash flow was $117 million, a significant increase compared to $(73) million in the prior year.

Total Revenue
$1.07B
Previous year: $1.09B
-1.6%
EPS
$1.64
Previous year: $1.75
-6.3%
Gross Margin
35.1%
Previous year: 33.2%
+5.7%
Adjusted EBITDA Margin
17.6%
Previous year: 16.9%
+4.1%
Cash Flow from Operations
$140M
Gross Profit
$376M
0
Cash and Equivalents
$162M
0
Free Cash Flow
$117M
Previous year: -$73.5M
-259.2%
Total Assets
$5.17B
0

Generac

Generac

Generac Revenue by Segment

Generac Revenue by Geographic Location

Forward Guidance

The Company is maintaining its overall full-year 2023 net sales guidance for a decline of approximately -10 to -12% as compared to the prior year, which includes approximately 2% of net favorable impact from acquisitions and foreign currency. Additionally, the Company now expects net income margin, before deducting for non-controlling interests, to be approximately 5.0 to 6.0% for the full-year 2023 compared to the prior guidance range of 6.0 to 7.0%. The corresponding adjusted EBITDA margin is still expected to be approximately 15.5% to 16.5%, in line with the previous guidance. Operating and free cash flow generation are expected to return to strong levels for the full year, with conversion of adjusted net income to free cash flow expected to be well over 100%.

Positive Outlook

  • Maintaining full-year net sales guidance.
  • Expect approximately 2% of net favorable impact from acquisitions and foreign currency.
  • Adjusted EBITDA margin is still expected to be approximately 15.5% to 16.5%.
  • Operating and free cash flow generation are expected to return to strong levels for the full year.
  • Conversion of adjusted net income to free cash flow expected to be well over 100%.

Challenges Ahead

  • Net sales are expected to decline approximately -10 to -12% compared to the prior year.
  • Net income margin is expected to be approximately 5.0 to 6.0% for the full-year 2023 compared to the prior guidance range of 6.0 to 7.0%.
  • Decline in residential product sales.
  • Unfavorable sales mix impacted gross margin.
  • Increased employee and marketing costs.

Revenue & Expenses

Visualization of income flow from segment revenue to net income

Company Overview

Full financial data and analysis

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