Al Root
Shares of standby-generator maker Generac are up. Sales growth continued in the first quarter.
That's a relief for investors.
Wednesday morning, Generac reported first-quarter adjusted earnings per share of 88 cents on sales of $889 million. Wall Street was looking for earnings per share of 76 cents on sales of $887, respectively, according to FactSet.
It's a small beat. More important, sales grew year over year for the second consecutive quarter. First-quarter sales rose 0.2% after rising 1.4% in the fourth quarter. Growth is low, but the two positive quarters follow four consecutive quarters of declines amid bloated dealer inventories that needed to be worked off. Sales had declined a brutal 22% and 23% year over year, respectively, in the first and second quarters of 2023.
"Home standby-generator shipments increased at a strong rate during the quarter from a softer prior year period, as field inventory continued to decline to more normalized levels," CEO Aaron Jagdfeld said in a news release. "Additionally, we generated significant free cash flow during the quarter."
Free cash flow was $85 million in the quarter, up from negative $42 million in the first quarter of 2023.
Generac stock was up 2.9% at $139.96 in premarket trading, while S&P 500 and Nasdaq Composite futures were down 0.4% and 0.7%, respectively.
The company maintained its full-year guidance for sales growth of 3% to 7%.
In the quarter, sales of residential products came in at $429 million, up from $419 million a year ago. Commercial- and industrial-product sales were $354 million, down from $363 million a year ago. "Other" sales were flat at about $106 million.
Management hosts a conference call at 10 a.m. Eastern time to discuss results. Investors and analysts will want to hear more about channel inventories and the outlook for growth.
Coming into Wednesday trading, Generac stock was up 5% year to date and up about 33% over the past 12 months. Shares were down, however, about 30% from levels just before inventory destocking hurt sales.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
May 01, 2024 09:00 ET (13:00 GMT)
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