Generac Beats Profit and Sales Forecasts on Rising Demand for Home Generators

Generac (GNRC) shares skyrocketed after the backup power and services company reported better-than-expected results on higher demand for its generators and reduced inventory backlog.

Generac posted third quarter fiscal 2023 profit of $1.64 per share, with revenue falling 1.6% year-over-year to $1.07 billion. Both beat estimates. Cash flow from operations was $146 million, bouncing back from a negative $56 million a year ago. In addition, free cash flow came in at $117 million after last year’s negative $76 million. Gross profit margin increased to 35.1% from 33.2% in 2022.

CEO Aaron Jagdfeld noted the company had “a strong sequential increase in shipments of home standby generators during the quarter as higher activations are driving field inventories towards more sustainable levels.” He added that home consultations for those products “also remained strong,” with category awareness continuing to increase because of “well-publicized grid stability concerns.”

Generac said its full-year operating and free cash flow generation “are expected to return to strong levels.” It anticipates the conversion of adjusted net income to free cash flow will be “well over 100%.”

Generac Holdings shares surged over 10% in intraday trading Wednesday, extending their rally over the past three days after hitting a 4-year low at the end of last week.