Slower Q4, but record sales year for Generac

Generac, the Wisconsin-based manufacturer of power generation systems and other power products, had a slow end to 2022, but still managed to reach a sales record of $4.56 billion for the year.

Net sales in the fourth quarter decreased 2% to $1.05 billion during the fourth quarter of 2022 versus the previous year. Residential product sales fell 19% to $575 million but commercial and industrial (C&I) sales increased 27% to $361 million in 2021. Net income was $71 million, from $143 million the previous year.

For all of 2022, net sales increased 22% to a record $4.56 billion as compared to $3.74 billion in 2021. Core sales, which excludes both the impact of acquisitions and foreign currency, increased approximately 16%.

For all of 2022 residential product sales increased 19% to $2.91 billion as compared to $2.46 billion last year. C&I product sales grew 26% to $1.26 billion as compared to $1 billion in the prior year. At the same time, net income declined from $550 million in 2021 to $400 million last year.

“Fourth quarter and full year 2022 results came in at the low end of our prior expectations due to continued softness in residential products,” said Aaron Jagdfeld, Generac’s president and chief executive officer. “Robust momentum continued in the C&I product category as sales exceeded our prior expectations, and we exited 2022 with record backlog for these products.

“Favorable end market demand metrics continued in the home standby category during the quarter, and installation bandwidth improved significantly with our dealer count and activations increasing sequentially from the third quarter. However, higher home standby field inventory levels continued to unfavorably impact orders and shipments during the fourth quarter. In addition, clean energy product shipments were lower during the quarter as we work to further improve the reliability of these products and expand our distribution capabilities.”

2023 Outlook

In 2023, Generac said that shipments of residential products in the first half of the year are expected to be weaker due to higher field inventory levels for home standby generators and the build-out of clean energy product and distribution capabilities, with a return to year-over-year growth for residential products in the second half partially offsetting the expected first half decline. In addition, C&I product core sales are expected to grow again at a solid rate during the year. As a result of these factors, Generac said full-year net sales are expected to decrease between -6 to -10% as compared to the prior year, which includes approximately 1% of net favorable impact from acquisitions and foreign currency.

“While we are experiencing temporary headwinds for home standby generators and clean energy products, the underlying secular growth themes and mega-trends that support our ‘Powering a Smarter World’ enterprise strategy remain firmly intact,” Jagdfeld said. “We believe these growth drivers will support strong demand for backup power solutions for both homes and businesses well into the future. Additionally, we will continue to develop innovative energy technology solutions to participate in the significant growth opportunities that are presented by the evolution to the next generation grid.”