Mixed results for Generac in Q1
03 May 2023
Generac, the Wisconsin-based global manufacturer of energy technology solutions and other power products, reported its financial results for its first quarter ended March 31, a period that saw both challenges and bright spots.
Net sales decreased 22% to $888 million as compared to $1.14 billion in the prior-year first quarter. Core sales, which excluded both the impact of acquisitions and foreign currency, decreased approximately 24%.
Residential product sales were most affected, declining 46% to $419 million as compared to $777 million last year. Commercial & Industrial (C&I) product sales increased 30% to $363 million as compared to $279 million in 2022.
Domestic segment total sales decreased 26% to $720 million as compared to $974.9 million in the prior year quarter, with the impact of acquisitions contributing approximately 3% revenue growth for the period. In early February, the company closed on the acquisition of REFU Storage Systems, a developer and supplier of battery storage hardware products, advanced software, and platform services for commercial and industrial applications and in March, it purchased the remaining 20% minority ownership interest in Pramac, an Italian manufacturer of generator sets and energy storage systems.
The decline in core sales was driven primarily by lower home standby and clean energy product shipments. This decline was partially offset by strong growth in C&I product sales across all channels, highlighted by national rental equipment, industrial distributors, telecom, and other direct customers for “beyond standby” applications.
“As expected, first quarter sales were down year-over-year due to a challenging prior year comparison related to the significant excess backlog for home standby products as we entered 2022,” said Aaron Jagdfeld, Generac president and chief executive officer. “In addition, residential product sales in the current year quarter were impacted by elevated levels of field inventory for home standby generators and a decline in clean energy products as we continue to expand our distribution network.
“However, power outage activity in the quarter was well above the long-term average, helping drive significant year-over-year growth for home standby in-home consultations and a meaningful reduction in field inventory levels for these products. Our global C&I product sales were at all-time highs in the quarter and exceeded our expectations with strength across all channels domestically and most regions internationally. As a result of these factors, we are maintaining our full-year 2023 net sales and adjusted EBITDA margin guidance.”
For the year, Generac is forecasting a 6 to 10% decline in sales versus 2022.