Generac Reports Fourth-Quarter Earnings

Growth is back at backup generator maker Generac, although not as much as anticipated. The company's shares saw a decline on Wednesday following the release of its fourth-quarter earnings report.

Generac announced a quarterly earnings per share of $2.07 from $1.1 billion in sales. According to FactSet, Wall Street had expected a profit of $2.09 per share on sales of $1.1 billion. In the same quarter a year ago, Generac reported earnings of $1.78 per share from $1 billion in sales.

For the full year, sales amounted to approximately $4 billion, down from $4.5 billion generated in the previous year.

CEO Aaron Jagdfeld expressed satisfaction with the fourth-quarter results, stating, "Our fourth-quarter results demonstrate continued improvement in operating performance resulting in strong margin expansion and cash flow generation as we exited the year. Despite fewer power outages in the fourth quarter, home standby generator shipments returned to year-over-year growth."

In terms of residential sales, there was a slight increase in the fourth quarter of 2023, amounting to $580 million compared to $575 million in the same period the year before. However, on a yearly basis, residential sales decreased from $2.9 billion in 2022 to $2.1 billion.

On the other hand, full-year sales to commercial customers rose to $1.5 billion, up from $1.3 billion in 2022.

The reported results were in line with analysts' expectations. However, the outlook for 2024 fell short.

Looking ahead, Generac anticipates sales growth in 2024 driven primarily by higher residential sales. Conversely, commercial sales are projected to decline by approximately 10% compared to the previous year due to weakness in the telecom and rental markets. Overall, sales are projected to reach around $4.2 billion, approximately $200 million lower than current Wall Street projections.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to amount to approximately $710 million, which is lower than the current Wall Street projection of $800 million.

In premarket trading, shares of Generac were down 7.2%, while S&P 500 and Nasdaq Composite futures were up 0.3% and 0.5%, respectively.

Over the past year, Generac stock has experienced a 1% decrease.

Matters related to demand in the new year are expected to be discussed further during the conference call scheduled at 10 a.m. Eastern time.