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Engine powered products manufacturer, Generac Holdings Inc. (GNRC - Snapshot Report) posted impressive results for the first quarter of 2013. Generac’s adjusted earnings per share in the quarter were $1.21, increasing 26.0% year over year. Increased sales and improved margins also helped the company beat the Zacks Consensus Estimate of 98 cents by 23.5%.

Revenue: Increased demand from households for back up power and the acquisition of Ottomotores increased revenue in the quarter by 35.7% to $399.6 million. Revenue surpassed the Zacks Consensus Estimate of $360.0 million by a comfortable margin.

Revenue from Residential products increased 45.8% year over year to $255.2 million, due to increased demand for home stand by and portable generators as well as Generac’s enhanced and improved distribution channels.

Revenue derived from Commercial & Industrial products increased 21.0% to $127.1 million, driven by the acquisition of Ottomotores as well as increased sales of natural gas generators.

Margins: Gross margins for Generac was recorded at 38.4%, increasing 70 basis points year over year, due to a mix of cost saving initiatives and better product prices. Adjusted EBITDA margin in the quarter increased 149 basis points to 27.2%.

Balance Sheet/Cash Flow: Exiting the first quarter of 2013, Generac’s cash and cash equivalents stood at $54.3 million, compared with $108.0 million in the preceding quarter. Long-term debt was recorded at $770.7 million, against $799.0 million at the end of fourth quarter 2012.

Cash generated from operating activities was recorded at $38.3 million, compared with $38.6 million in the year-ago comparable quarter. Capital expenditure for the quarter amounted to $4.3 million, against $2.1 million recorded in the first quarter of 2012.

Outlook: Based on the strong results in the first quarter of 2013, management has revised upwards its guidance for the year 2013. At the end of the previous quarter, it was expected that revenue in 2013 will grow by 10.0% over 2012, which is now increased to a low-mid teen hike. Gross margins are expected to be flat with respect to 2012, with operating expenses rising marginally. For the second quarter of 2013, sales are expected to rise by 30%-35% compared with the second quarter of 2012.

Generac currently carries a Zacks Rank #3 (Hold). Other stocks worth a look in the industry are EnerSys (ENS - Snapshot Report), Broadwind Energy, Inc. (BWEN - Snapshot Report) and Crane Co. (CR - Snapshot Report); each carrying a Zacks Rank #2 (Buy).

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