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Generac Holdings (GNRC) Beats Q4 Earnings on Solid Sales
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Generac Holdings Inc. (GNRC - Free Report) reported impressive fourth-quarter 2016 results. Its adjusted earnings came in at $1.12 per share, surpassing the Zacks Consensus Estimate of $1.03 by 8.7%. Also, the bottom line grew 15.5% from the year-ago tally of 97 cents.
For 2016, the company’s adjusted earnings were $3.03 per share, surpassing the Zacks Consensus Estimate of $2.95 and the year-ago tally of $2.87.
In the quarter, Generac Holdings generated net sales of $417.4 million, up 16.7% year over year. However, the top line marginally surpassed the Zacks Consensus Estimate of $417.1 million.
On a segmental basis, the company’s Domestic segment’s sales grew 4% year over year to $339.7 million while that from International segment surged 149.2% to $77.7 million.
Based on product classes, the company’s Residential product sales grew 20.3% year over year to $238.9 million; Commercial & Industrial product sales increased 12.3% to $148.1 million; and Other sales totaled $30.4 million, increasing 10.7% year over year.
For 2016, Generac Holdings’ net sales were $1,444.5 million, up 9.7% year over year but in line with the Zacks Consensus Estimate.
Costs & Margins
In the quarter, Generac Holdings’ costs of goods sold increased 16.1% year over year, representing 63.1% of total revenue versus 63.4% a year ago. Gross margin increased 30 basis points (bps) to 36.9%. Selling & service, research & development, and general & administrative expenses totaled $69.5 million and accounted for 16.6% of net sales.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $91.8 million, up from $80.1 million in the year-ago quarter. EBITDA margin decreased 40 bps to 22%.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Generac Holdings had cash and cash equivalents of $67.3 million, up from $54.2 million in the previous quarter. Long-term borrowings decreased 0.7% sequentially to $1,006.8 million.
In the fourth quarter, the company generated net cash of $123.9 million from its operating activities, up 10.9% year over year. Capital spent on purchase of property and equipment totaled $9.6 million, down 8.8% year over year. Free cash flow improved 12.9% to $114.3 million.
During the year, the company distributed dividends amounting to $0.08 million, while repurchasing shares worth $149.9 million.
Outlook
For 2017, Generac Holdings anticipates sales to increase 5−7% year over year. Organic revenues are predicted to increase 1−3%. Adjusted EBITDA margin is predicted to be roughly 19−19.5%, while free cash flow conversion is expected to be over 90% of net income.
With a market capitalization of $5 billion, Generac Holdings currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Applied Optoelectronics, Inc. (AAOI - Free Report) , Axcelis Technologies, Inc. (ACLS - Free Report) and Babcock & Wilcox Enterprises, Inc. (BW - Free Report) . While both Applied Optoelectronics and Axcelis Technologies sport a Zacks Rank #1 (Strong Buy), Babcock & Wilcox Enterprises carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Optoelectronics, Inc.’s earnings estimates for 2017 improved over the last 60 days. Average earnings surprise for the last four quarters is a positive 106.74%.
Axcelis Technologies, Inc. has an average positive earnings surprise of 151.25% for the last four quarters. Also, its earnings estimates for 2017 and 2018 improved over the last 60 days.
Babcock & Wilcox Enterprises, Inc.’s earnings estimates for 2017 have been revised upward, over the last 60 days.
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Generac Holdings (GNRC) Beats Q4 Earnings on Solid Sales
Generac Holdings Inc. (GNRC - Free Report) reported impressive fourth-quarter 2016 results. Its adjusted earnings came in at $1.12 per share, surpassing the Zacks Consensus Estimate of $1.03 by 8.7%. Also, the bottom line grew 15.5% from the year-ago tally of 97 cents.
For 2016, the company’s adjusted earnings were $3.03 per share, surpassing the Zacks Consensus Estimate of $2.95 and the year-ago tally of $2.87.
Revenues
In the quarter, Generac Holdings generated net sales of $417.4 million, up 16.7% year over year. However, the top line marginally surpassed the Zacks Consensus Estimate of $417.1 million.
On a segmental basis, the company’s Domestic segment’s sales grew 4% year over year to $339.7 million while that from International segment surged 149.2% to $77.7 million.
Based on product classes, the company’s Residential product sales grew 20.3% year over year to $238.9 million; Commercial & Industrial product sales increased 12.3% to $148.1 million; and Other sales totaled $30.4 million, increasing 10.7% year over year.
For 2016, Generac Holdings’ net sales were $1,444.5 million, up 9.7% year over year but in line with the Zacks Consensus Estimate.
Costs & Margins
In the quarter, Generac Holdings’ costs of goods sold increased 16.1% year over year, representing 63.1% of total revenue versus 63.4% a year ago. Gross margin increased 30 basis points (bps) to 36.9%. Selling & service, research & development, and general & administrative expenses totaled $69.5 million and accounted for 16.6% of net sales.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $91.8 million, up from $80.1 million in the year-ago quarter. EBITDA margin decreased 40 bps to 22%.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Generac Holdings had cash and cash equivalents of $67.3 million, up from $54.2 million in the previous quarter. Long-term borrowings decreased 0.7% sequentially to $1,006.8 million.
In the fourth quarter, the company generated net cash of $123.9 million from its operating activities, up 10.9% year over year. Capital spent on purchase of property and equipment totaled $9.6 million, down 8.8% year over year. Free cash flow improved 12.9% to $114.3 million.
During the year, the company distributed dividends amounting to $0.08 million, while repurchasing shares worth $149.9 million.
Outlook
For 2017, Generac Holdings anticipates sales to increase 5−7% year over year. Organic revenues are predicted to increase 1−3%. Adjusted EBITDA margin is predicted to be roughly 19−19.5%, while free cash flow conversion is expected to be over 90% of net income.
Generac Holdlings Inc. Price and Consensus
Generac Holdlings Inc. Price and Consensus | Generac Holdlings Inc. Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $5 billion, Generac Holdings currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Applied Optoelectronics, Inc. (AAOI - Free Report) , Axcelis Technologies, Inc. (ACLS - Free Report) and Babcock & Wilcox Enterprises, Inc. (BW - Free Report) . While both Applied Optoelectronics and Axcelis Technologies sport a Zacks Rank #1 (Strong Buy), Babcock & Wilcox Enterprises carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Optoelectronics, Inc.’s earnings estimates for 2017 improved over the last 60 days. Average earnings surprise for the last four quarters is a positive 106.74%.
Axcelis Technologies, Inc. has an average positive earnings surprise of 151.25% for the last four quarters. Also, its earnings estimates for 2017 and 2018 improved over the last 60 days.
Babcock & Wilcox Enterprises, Inc.’s earnings estimates for 2017 have been revised upward, over the last 60 days.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>