Generac, a backup generator manufacturer and energy company based in Waukesha, Wisc., provides portable, residential, commercial and industrial products. Operating in 150 companies, Generac has manufacturing plants in the U.S., Mexico, Europe, Asia and South America.

Key highlights shared by the company on Q3 earnings in its Oct. 31 earnings report include:Net sales were $1.17 billion during the third quarter of 2024 as compared to $1.07 billion in the prior-year third quarter, an increase of approximately 10%. Core sales, which excludes both the impact of acquisitions and foreign currency, increased approximately 9% from the prior year period. Residential product sales increased approximately 28% to $723 million as compared to $565 million last year. Its Commercial & Industrial (“C&I”) product sales decreased approximately 15% to $328 million as compared to $385 million in the prior year.

In addition, the company reported that net income attributable to the Company during the third quarter was $114 million, or $1.89 per share, as compared to $60 million, or $0.97 per share, for the same period of 2023. Further, adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was $136 million, or $2.25 per share, as compared to $102 million, or $1.64 per share, in the third quarter of 2023.

“Our third quarter results outperformed our expectations as elevated power outage activity drove increased shipments of our residential products and strong execution helped to deliver significant margin expansion,” said Aaron Jagdfeld, President and Chief Executive Officer. “Shipments of home standby and portable generators increased at a very strong rate from the prior year period, more than offsetting expected softness in C&I product sales. As a result, we are updating our full year 2024 guidance to include higher residential product sales with further improvements in adjusted EBITDA margins.”

Generac’s earnings report noted thatgross profit margin was 40.2% as compared to 35.1% in the prior-year third quarter, offering that the increase in gross margin was primarily driven by favorable sales mix and lower input costs. The company’s operating expenses increased $32.6 million, or 12.0%, as compared to the third quarter of 2023.

In a CNBC Exclusive “The Exchange” interview held on Oct. 31 after the company’s earnings call, Generac CEO Aaron Jagdfeld offered additional insights on the third quarter results.

In addressing residential sales driven by power outages across the East Coast, CNBC asked how storm preparation just ahead of disasters impacts the business.

Jagdfeld shared the company’s outlook as consumers look to rebuild, saying:  “Normally what we see is people run out to buy portable generators. So you run to your retailer of choice and that’s the product you can pull out of a box. You’ve got some extension cords and a can of gasoline and that can help you out in the middle of an emergency. With our home standby generators, the permanently installed ones, that’s a home improvement project. So we would look for demand to grow over the next two to four quarters as people... as obviously you see some of the images there, the rebuilding that’s going to have to take place, but also the homeowners who are without power, they come to realize that nothing in your home works without power and you really are quite vulnerable. Your family, your home, everything else. So that is something we’re going to see grow here over the next couple of quarters.”

Asked whether and how changes in the real estate market, including lower interest rates, are having an impact, Generac’s CEO offered this: Well, that should be a tailwind going forward I think for any company with products that would be considered in the home improvement space. As rates start to step down, I think you’re going to start to see some turnover in housing. And as people move into new homes in particular, we see a very high attachment rate. If you’ve lived in a home that has a generator on it, you’re highly likely to put a product like that on your next home because of the peace of mind that tends to follow that product. So we’re looking forward to seeing housing get back to a more normal trade.

CNBC’s anchor asked what happens with the movement toward clean energy and battery-powered equipment.

To that, Jagdfeld said: “That’s an important part of our story. We’ve made some big investments there over the last several years. We’re investing very heavily. Obviously higher interest rates were also impacting investments in renewables. So as those markets get back to better health, we anticipate that we’re going to see an inflection point there. Hopefully into next year.” He noted that Generac has won several large projects, including supporting the Department of Energy in Puerto Rico and California. He continued, “Some of those projects have been helpful, but the technologies are changing. Batteries and battery storage continue to improve, both in performance as well as cost. And we look to the future there. We think that’s going to be an important part of what we do down the road.”

2024 Forecast

As a result of higher than previously expected power outage activity, including the impact of Hurricane Helene and Hurricane Milton, the Company is increasing its full-year 2024 net sales guidance. The Company now expects full-year 2024 net sales growth between 5 to 9% as compared to the prior year, an increase from the previous outlook of 4 to 8%. By product class, this updated net sales guidance considers an outsized increase in Residential product sales, partially offset by softer market conditions for C&I and Other product sales in certain end markets and geographies. The company has reported that its 2023 sales were $4.02B.

Additionally, the Company now expects net income margin, before deducting for non-controlling interests, to be approximately 7.0 to 8.0% for the full-year 2024 as compared to the prior expectation of 6.5 to 7.5%. The corresponding adjusted EBITDA margin is now expected to be approximately 17.5 to 18.5% as compared to the previous guidance range of 17.0 to 18.0%.

To view the full Q3 results, click here.

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