WAUKESHA, Wis. — Generac Holdings Inc. (NYSE: GNRC) (“Generac” or the “Company”), a leading global designer and manufacturer of energy technology solutions and other power products, today reported financial results for its first quarter ended March 31, 2021 and provided an update on its outlook for the full year 2021.

First Quarter 2021 Highlights

• Net sales increased 70% to a record $807 million during the first quarter of 2021 as compared to $476 million in the prior-year first quarter. Core sales growth, which excludes both the impact of acquisitions and foreign currency, increased approximately 67%.
• Residential product sales more than doubled to $542 million as compared to $258 million last year, representing a 110% increase.
• Commercial & Industrial (“C&I”) product sales increased 18% to $202 million as compared to $172 million in the prior year.
• Net income attributable to the Company during the first quarter was $149 million, or $2.33 per share, as compared to $44 million, or $0.68 per share, for the same period of 2020.
• Adjusted net income attributable to the Company, as defined in the accompanying reconciliation schedules, was a record
• $153 million, or $2.38 per share, as compared to $55 million, or $0.87 per share, in the first quarter of 2020.
• Adjusted EBITDA before deducting for noncontrolling interests, as defined in the accompanying reconciliation schedules, was a record $214 million, or 26.5% of net sales, as compared to $86 million, or 18.1% of net sales, in the prior year.
• Cashflow from operations was $153 million, a record for the first quarter of a year, as compared to $11 million in the prior year. Free cash flow, as defined in the accompanying reconciliation schedules, was a record for a first quarter of $126 million as compared to ($1 million) for 2020. The substantially higher cash flow was primarily due to higher net income and a lower level of working capital investment in the current year quarter, which was partially offset by higher capital expenditures relative to the prior year quarter.
• The Company is increasing its full-year 2021 net sales guidance to now be approximately 40 to 45% growth compared to the prior year, which is an increase from the 25 to 30% previously expected. Adjusted EBITDA margin, before deducting for non-controlling interests, is now expected to be approximately 24.5 to 25.5%, which is an increase from the 24.0 to 25.0% previously expected.

“Our first quarter results continue to demonstrate the power of Generac’s business model and the fantastic execution by our team as our revenue grew at a tremendous 70% rate to over $800 million, driving a significant increase in adjusted EBITDA margins. The revenue performance represents an all-time record despite the seasonally lower first-quarter time period,” said Aaron Jagdfeld, President and Chief Executive Officer. “Growth was broad

based led by a dramatic increase for home standby generators that more than doubled compared to prior year given the powerful mega trends that are driving incredible demand for these products.”

Jagdfeld continued, “Shipments of our PWRcell energy storage systems also grew at a significant rate as compared to the prior year, and with the considerable momentum we have in the marketplace, we are increasing our outlook for these products for the remainder of the year. Shipments of C&I products returned to growth in the quarter, increasing at a strong rate as demand is recovering at a faster pace than previously expected across a number of markets and geographies. With the impact from the major outages in Texas along with further capacity expansion actions for home standby, and with demand strengthening broadly across the rest of the business, we are substantially increasing our full year revenue and earnings outlook for 2021.”

Additional First Quarter 2021 Consolidated Highlights

Gross profit margin improved 370 basis points to 39.9% compared to 36.2% in the prior-year first quarter. The increase was primarily driven by favorable sales mix from significantly higher shipments of residential products, along with improved pricing and overhead absorption from higher sales volumes. These favorable impacts were partially offset by the onset of higher input costs primarily relating to raw materials, labor, freight and logistics costs.

Operating expenses increased $23.2 million, or 21.2%, as compared to the first quarter of 2020. The increase was primarily driven by higher variable expenses from the significant increase in sales volumes, higher employee costs and incentive compensation, and the impact of acquisitions. These increases were partially offset by a reduction in controllable operating expenses.