Generac (GNRC) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales rose 5.9%-6% year-over-year to $942-$942.1 million, driven by strong home standby generator and residential energy technology sales, with domestic growth offsetting international softness.

• Net income increased to $44 million ($0.73/share), up from $26 million ($0.39/share) in Q1 2024; adjusted net income was $75-$75.4 million ($1.26/share), up from $53 million ($0.88/share).

• Adjusted EBITDA reached $149.5-$150 million (15.9% margin), up from $127 million (14.3%) last year.

• Gross margin expanded to 39.5% (up from 35.6%), the highest Q1 level since 2021, reflecting favorable sales mix and lower input costs.

• Operating expenses increased 15.6% due to higher employee costs, marketing, and acquisition-related expenses.

Financial highlights

• Residential product sales grew 15%-15.2% to $494-$494.2 million; C&I product sales declined 4.7%-5% to $337-$337.4 million.

• Domestic segment sales rose 8.7%-9% to $774.6-$782 million; international segment sales were flat to down 5.3% at $167.5-$186 million.

• Free cash flow declined to $27 million from $85 million, mainly due to higher working capital and inventory replenishment.

• Cash and cash equivalents were $187-$187.5 million as of March 31, 2025; $1.25 billion available under the revolving credit facility.

• Share repurchases totaled $97-$97.5 million in Q1 2025; $249.8-$250 million remains authorized.

Outlook and guidance

• 2025 net sales expected to increase 0%-7% year-over-year, with 1% favorable impact from FX and acquisitions.

• Adjusted EBITDA margin guidance widened to 17%-19% (was 18%-19%) due to potential lower shipment volumes and operating leverage.

• Free cash flow conversion from adjusted net income projected at 70%-90% for 2025.

• Guidance assumes current tariff levels persist, no major power outage events, and no recession.

• Net income margin projected at 6.5%-8.5% for 2025.