Generac (GNRC) Q4 Earnings & Revenues Top Estimates, Shares Up
Generac Holdings Inc. GNRC reported fourth-quarter 2021 adjusted earnings of $2.51 per share, up 18.4% year over year and beating the Zacks Consensus Estimate of $2.38 per share.
Net sales increased 40% year over year and came in at $1.07 billion and beat the consensus mark by 4.5%. Robust demand for Residential and Commercial & Industrial (C&I) products, continued capacity-expansion efforts and effective M&A strategies boosted Generac’s fourth-quarter performance.
In the quarter under review, Core sales growth (excludes the impact of acquisitions and foreign currency) increased 35% year over year.
For the full year, the company reported net sales of $3.74 billion, up 50% on a year-over-year basis. Adjusted earnings came in at $9.63 per share compared with $6.47 reported in the prior year.
Following the announcement, shares of Generac are up 7.7% in the premarket trading on Feb 16. In the past year, shares have declined 22.1% compared with industry’s decline of 39.5%.
Generac Holdings Inc. Price
Generac Holdings Inc. price | Generac Holdings Inc. Quote
Quarter in Details
Segment-wise, Domestic revenues increased 39% year over year to $896.4 million, driven by the impact of acquisitions that contributed nearly 2% to revenues. Higher demand for home standby generators and PWRcell energy storage systems coupled with strength across C&I products acted as key drivers for core sales growth.
International revenues rose 47% to $170.7 million, driven by a rebound in end-market activity across all regions compared with COVID-19 lows last year. The impact of acquisitions and forex contributed nearly 21% to revenues.
Product-wise, revenues from Residential soared 42% to $706 million. Revenues from C&I were $284 million, up 43% from the year-ago quarter’s levels. Revenues from the Other product class came in at $77.3 million, up 21% year over year.
Margins
Gross profit was $362 million, up from $300.2 million with respective margins of 34% and 39.4%. The gross profit margin declined as a result of higher input costs related to supply chain disruptions.
Operating expenses were $187.1 million, up 44.8% from the prior-year quarter’s levels. This was due to higher variable expenses from an increase in sales volumes, a rise in marketing and employee costs and the impact of acquisitions.
Operating income came in at $175.5 million, up 2.6%. Adjusted EBITDA was $220 million compared with $196 million in the year-ago quarter, driven by significant revenue growth.
Cash Flow & Liquidity
In 2021, the company generated $411 million of net cash from operating activities compared with $487 million in the prior year. Free cash flow in 2021 came in at $306 million compared with $427 million in 2020.
As of Dec 31, 2021, the company had $147.4 million in cash and cash equivalents with $902.1 million of long-term borrowings and finance lease obligations.
Generac repurchased 350,000 shares for $126 million in the quarter under review. As of Dec 31, 2021, the company has $124 million shares remaining under existing share repurchase program.
2022 Outlook
For 2022, Generac expects revenue growth (on a reported basis) between 32% and 36% year over year, which includes net impact between 5% and 7% from acquisitions and foreign currency changes.
The company continues to experience a robust demand environment, especially in clean energy markets and for C&I products. Ramping of home standby generators’ production capacity and synergies from acquisitions is also expected to drive the top line.
Net income margin (before deducting for non-controlling interests) is expected to be 13-14%. The adjusted EBITDA margin is estimated in the range of 22-23%.
Zacks Rank & Stocks to Consider
Generac currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks worth considering from the broader technology sector include Broadcom AVGO, Apple AAPL and Cadence Design Systems CDNS. All carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $33.15 per share. The long-term earnings growth rate of the company is pegged at 14.5%.
Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 1.41%. Shares of Broadcom have increased 28.6% in the past year.
The Zacks Consensus Estimate for Apple’s fiscal 2022 earnings is pegged at $6.15 per share. The long-term earnings growth rate of the company is pegged at 12.5%.
Apple’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 20.3%. Shares of AAPL have rallied 32.8% in the past year.
The Zacks Consensus Estimate for Cadence 2021 earnings is pegged at $3.25 per share. The long-term earnings growth rate of the company is pegged at 18.2%.
Cadence’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11%. Shares of CDNS have returned 3% in the past year.
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