Generac (GNRC) Q4 2024 earnings summary

Executive summary

• Achieved record Q4 net sales of $1.23 billion, up 16% year-over-year, and full-year net sales of $4.3 billion, driven by strong residential demand and power outages.

• Residential product sales grew 28% in Q4 and 18% for the year, while C&I sales were flat in Q4 and down 7% for the year.

• Gross margin expanded to 40.6% in Q4 and 38.8% for the year, supporting record adjusted EBITDA and free cash flow.

• Free cash flow reached a record $605 million for the year, aided by working capital reduction and strong profitability.

• Strategic investments in capacity, automation, and new product innovation, along with global distribution, position the company for long-term growth.

Financial highlights

• Q4 net sales: $1.23 billion (+16% YoY); full-year net sales: $4.3 billion (+6.8% YoY); residential Q4 sales: $743 million (+28% YoY); C&I Q4 sales: $363 million (flat YoY).

• Q4 gross margin: 40.6%; Q4 adjusted EBITDA: $265 million (21.5% margin); full-year adjusted EBITDA: $789 million (18.4% margin).

• Q4 GAAP net income: $117 million; adjusted net income: $168 million ($2.80/share); full-year adjusted EPS: $7.27.

• Q4 free cash flow: $286 million; full-year free cash flow: $605 million.

• Year-end total debt: $1.28 billion; gross debt leverage ratio: 1.7x adjusted EBITDA.

Outlook and guidance

• 2025 net sales expected to grow 3%-7% YoY, with residential sales projected to rise mid to high single digits and C&I sales flat.

• Adjusted EBITDA margin guidance: 18%-19% for 2025; free cash flow conversion from adjusted net income: 80%-90%.

• Gross margin for 2025 expected to improve by ~100 bps, approaching 40%.

• CapEx projected at 3% of net sales; interest expense to decline due to lower borrowings and rates.

• GAAP effective tax rate projected between 24.0% and 24.5%.