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Dec 31, 2022
Generac Q4 2022 Earnings Report
Generac's Q4 2022 results were impacted by continued softness in residential products, while C&I product sales exceeded expectations and the company exited 2022 with record backlog for these products.
Key Takeaways
Generac's Q4 2022 net sales decreased by 2% to $1.05 billion compared to the prior year, with a decline in residential product sales partially offset by growth in commercial and industrial product sales. Net income attributable to the company was $71 million, or $0.83 per share, while adjusted EBITDA was $174 million, representing 16.6% of net sales. The company repurchased 2.2 million shares of its common stock for $222 million during the quarter.
Net sales decreased 2% to $1.05 billion, with core sales declining approximately 7%.
Residential product sales decreased 19% to $575 million, while Commercial & Industrial (C&I) product sales increased 27% to $361 million.
Net income attributable to the company was $71 million, or $0.83 per share, compared to $143 million, or $2.04 per share, in the same period of 2021.
Adjusted EBITDA was $174 million, or 16.6% of net sales, as compared to $220 million, or 20.7% of net sales, in the prior year.
Generac
Generac
Generac Revenue by Segment
Generac Revenue by Geographic Location
Revenue by Segment
Residential Products Revenue
CapyFin.comCommercial & Industrial Products Revenue
CapyFin.comRevenue by Geographic Location
Domestic Revenue
CapyFin.comInternational Revenue
CapyFin.com Forward Guidance
The Company is initiating guidance for full-year 2023 consistent with comments provided on its third quarter earnings call on November 2nd. Specifically, shipments of residential products in the first half of the year are expected to be weaker due to higher field inventory levels for home standby generators and the build out of clean energy product and distribution capabilities, with a return to year-over-year growth for residential products in the second half partially offsetting the expected first half decline. In addition, C&I product core sales are expected to grow again at a solid rate during the year.
Positive Outlook
- Residential products are expected to return to year-over-year growth in the second half of the year.
- C&I product core sales are expected to grow again at a solid rate during the year.
- Operating and free cash flow generation is 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%.
- Adjusted EBITDA margin is expected to be approximately 17.0 to 18.0% and be disproportionately weighted toward the second half of the year.
Challenges Ahead
- Full-year net sales are expected to decrease between -6 to -10% as compared to the prior year.
- Shipments of residential products in the first half of the year are expected to be weaker due to higher field inventory levels for home standby generators.
- Shipments of residential products in the first half of the year are expected to be weaker due to the build out of clean energy product and distribution capabilities.
- Net income margin, before deducting for non-controlling interests, to be approximately 7.5 to 8.5% for the full-year 2023.
- Higher home standby field inventory levels continued to unfavorably impact orders and shipments during the fourth quarter.
Revenue & Expenses
Visualization of income flow from segment revenue to net income