GNRC - Generac Holdings Inc. (GNRC) Q1 2024 Earnings Call Transcript

2024-05-01 14:13:07 ET

Generac Holdings Inc. (GNRC)

Q1 2024 Earnings Conference Call

May 01, 2024 10:00 AM ET

Company Participants

Kris Rosemann - Senior Manager-Corporate Development and Investor Relations

Aaron Jagdfeld - President and Chief Executive Officer

York Ragen - Chief Financial Officer

Conference Call Participants

Tommy Moll - Stephens Inc.

George Gianarikas - Canaccord Genuity

Michael Halloran - Robert W. Baird & Co.

Jeffrey Hammond - KeyBanc Capital Markets Inc.

Brian Drab - William Blair & Co.

Jerry Revich - Goldman Sachs

Stephen Gengaro - Stifel Nicolaus and Company, Inc.

Donovan Schafer - Northland Capital Markets

Kashy Harrison - Piper Sandler

Jon Windham - UBS

Jordan Levy - Truist Securities

Vikram Bagri - Citigroup Inc.

Presentation

Operator

Thank you for standing by and welcome to the Generac Holdings First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded.

And now I would like to introduce your host for today's program, Kris Rosemann, Senior Manager, Corporate Development and Investor Relations. Please go ahead.

Kris Rosemann

Good morning, and welcome to our first quarter 2024 earnings call. I'd like to thank everyone for joining us this morning. With me today is Aaron Jagdfeld, President and Chief Executive Officer; and York Ragen, Chief Financial Officer. We will begin our call today by commenting on forward-looking statements.

Certain statements made during this presentation as well as other information provided from time to time by Generac or its employees may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements. Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we will make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our earnings release and SEC filings.

I will now turn the call over to Aaron.

Aaron Jagdfeld

Thanks, Kris. Good morning, everyone, and thank you for joining us today. Our first quarter results were ahead of our prior expectations due to higher-than-expected C&I shipments, favorable input costs, and strong operational execution. We are reiterating our overall 2024 outlook this morning for net sales, adjusted EBITDA margin and free cash flow conversion, which York will discuss more in detail later in the call.

Year-over-year overall net sales increased slightly to $889 million. Residential product sales increased 2% as compared to the prior year quarter, as strong growth in home standby generator shipments was partially offset by a decline in certain other residential product sales. Global C&I product sales decreased 2% from a strong prior year period as a robust increase in shipments to our industrial distributor customers mostly offset weakness in the domestic rental and telecom markets.

Significant year-over-year margin expansion and disciplined working capital management helped drive a substantial improvement in free cash flow generation from the prior year, while we continue to invest in our strategic initiatives. Home standby shipments were in line with our prior expectations during the quarter, increasing at a mid-teens rate from the softer prior year period that included a meaningful headwind from excess field inventory levels....

For further details see: