Executive Summary

Record Q4: Net sales $1.23B (+16% YoY), gross margin 40.6% (+410 bps YoY), adjusted EBITDA $265M (21.5% margin), adjusted EPS $2.80; free cash flow a quarterly record $286M .
Residential strength offset flat C&I: Residential +28% to $743M; C&I ~flat at $363M; margin expansion driven by mix and lower input costs .
FY25 outlook introduced: net sales +3–7% with residential mid-to-high-single-digit growth, C&I ~flat; adjusted EBITDA margin 18–19%; free cash flow conversion 80–90% .
Setup/catalysts: Management highlighted sustained outage-driven demand, new next‑gen home standby platform (shipping 2H25), and initial entry into large data center gensets; tariff impacts expected to be offset via cost actions and pricing .

What Went Well and What Went Wrong

What Went Well
- Residential outperformance: Home standby and portable generator shipments drove residential sales +28% YoY; gross margin expanded to 40.6% on mix and lower input costs .
- Cash generation: Q4 operating cash flow $339M; free cash flow $286M (all‑time quarterly record), aided by ~$170M working capital reduction .
- Strategic positioning: Announced larger diesel gensets up to 3.25MW for data centers; initial quoting 2Q25, first shipments late 2025; management views AI‑driven power demand as a long‑term tailwind .
What Went Wrong
- C&I softness: Global C&I sales ~flat YoY with continued rental and “beyond standby” headwinds; international sales −1% with European softness; 2025 C&I expected ~flat .
- Higher OpEx: Operating expenses +27.6% YoY in Q4 on growth investments, marketing, and incentive comp, partially offsetting gross margin gains .
- Policy/program risk: FY25 energy tech outlook ($300–$400M sales) carries policy/DOE program risk (Puerto Rico) amid shifting landscape, though no formal cancellation notice received .

Financial Results

Quarterly progression (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$998.2	$1,173.6	$1,234.8
Diluted EPS (GAAP)	$0.97	$1.89	$2.15
Adjusted EPS (Non‑GAAP)	$1.35	$2.25	$2.80
Gross Margin %	37.6%	40.2%	40.6%
Adjusted EBITDA ($M)	$165	$232	$265
Adjusted EBITDA Margin %	16.5%	19.8%	21.5%
Cash from Operations ($M)	$77.7	$212.3	$339.5
Free Cash Flow ($M)	$49.7	$183.7	$286.1

Q4 YoY and estimates comparison

Metric	Q4 2023	Q4 2024	Consensus (S&P Global)
Revenue ($USD Millions)	$1,063.7	$1,234.8	— (unavailable; S&P Global retrieval limit)
Diluted EPS (GAAP)	$1.57	$2.15	— (unavailable; S&P Global retrieval limit)
Adjusted EPS (Non‑GAAP)	$2.07	$2.80	— (unavailable; S&P Global retrieval limit)
Gross Margin %	36.5%	40.6%	— (unavailable; S&P Global retrieval limit)
Adjusted EBITDA ($M)	$212.6	$265.3	— (unavailable; S&P Global retrieval limit)
Adjusted EBITDA Margin %	20.0%	21.5%	— (unavailable; S&P Global retrieval limit)
Effective Tax Rate %	23.7%	18.9%	— (unavailable; S&P Global retrieval limit)

Note: Wall Street consensus (S&P Global) figures could not be retrieved due to a request limit error; therefore, beat/miss vs estimates cannot be assessed this quarter.

Segment/product mix (Q4 2024 vs Q4 2023)

Category	Q4 2023 ($M)	Q4 2024 ($M)
Residential Products	$580.4	$743.3
Commercial & Industrial Products	$362.9	$363.4
Other	$120.4	$128.1
Total Net Sales	$1,063.7	$1,234.8

Business segment performance (Q4 2024 vs Q4 2023)

Segment	Total Sales ($M) Q4’23	Total Sales ($M) Q4’24	Adj. EBITDA ($M) Q4’23	Adj. EBITDA ($M) Q4’24	Adj. EBITDA Margin Q4’23	Adj. EBITDA Margin Q4’24
Domestic	$891.0	$1,067.3	$192.2	$242.8	21.6%	22.7%
International	$190.1	$187.5	$20.4	$22.5	10.7%	12.0%

Key KPIs (Q4 2024)

KPI	Q4 2024	Reference
Gross Margin %	40.6%
Effective Tax Rate %	18.9%
Cash from Operations ($M)	$339.5
Free Cash Flow ($M)	$286.1
Total Debt Outstanding ($B)	~$1.33
Residential Dealer Count	~9,200 (record)

Non‑GAAP adjustments (Q4): Included a ~$35.1M non‑cash loss from mark‑to‑market of Wallbox investment, legal/regulatory provisions, and standard amortization addbacks in reconciling to adjusted metrics .

Guidance Changes

FY2025 outlook (initiated this quarter)

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth	FY2025	N/A	+3% to +7% YoY	Initiated
Adjusted EBITDA Margin	FY2025	N/A	~18% to 19%	Initiated
Net Income Margin (pre‑NCI)	FY2025	N/A	~8% to 9%	Initiated
Gross Margin	FY2025	N/A	~+100 bps YoY; approaching 40%	Initiated
Residential Net Sales	FY2025	N/A	Mid‑to‑high single‑digit growth	Initiated
C&I Net Sales	FY2025	N/A	~Flat YoY	Initiated
Free Cash Flow Conversion	FY2025	N/A	80–90% of adjusted net income	Initiated
CapEx	FY2025	N/A	~3% of net sales	Initiated
Interest Expense	FY2025	N/A	$74–$78M	Initiated
GAAP Effective Tax Rate	FY2025	N/A	24.0–24.5%	Initiated
Seasonality (Adj. EBITDA)	FY2025	N/A	Q1 ~14%; Q4 ~21%; 2H > 1H by >500 bps	Initiated
Q1 Net Sales Growth	Q1 2025	N/A	Low single‑digit total; Resi strong double‑digit; C&I down high single‑digit	Initiated
Diluted Shares	FY2025	N/A	~60.5M avg	Initiated

FY2024 guidance updates previously (for context)

Metric	Period	Previous Guidance	Updated Guidance	Source
Net Sales Growth	FY2024	+4% to +8% YoY	+5% to +9% YoY
Adjusted EBITDA Margin	FY2024	17.0% to 18.0%	17.5% to 18.5%

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Residential demand/outages	Q2: Home standby shipments increased; updated FY24 outlook on Hurricane Beryl . Q3: Elevated outages drove resi demand; FY24 guidance raised .	Record Q4 residential sales; home consultations at record levels; expect close rates to recover through 2025 .	Strengthening baseline; outage awareness sustained .
Gross margins/costs	Q2 gross margin 37.6% (+480 bps YoY) on mix/lower input costs . Q3 40.2% .	Q4 40.6%; FY25 gross margin +~100 bps YoY, approaching 40% .	Continued expansion with prudent OpEx .
C&I end markets	Q2/Q3: Telecom/rental soft; industrial distributors firmer; International softer (Europe) .	Telecom improving; rental still down; C&I BESS/microgrids pipeline strong; 2025 C&I ~flat .	Mixed; selective growth pockets .
Energy tech/ecobee	Q2: DOE Puerto Rico award finalized . Q3: Ongoing clean energy policy uncertainty .	Ecobee profitable in Q4; FY25 expected full‑year profitability; energy tech dilution improving (to ~3–3.5% on EBITDA margin) .	Improving profitability trajectory .
Data centers/AI	Limited prior specificity.	Launching up to 3.25MW diesel gensets certified for U.S.; initial quoting 2Q25; minimal FY25 revenue .	New long‑term vector; early innings .
Tariffs/supply chain	Prior: cost tailwinds supported margins .	FY25 guide excludes new tariffs; plan to offset with pricing/cost out; diversified sourcing reduces exposure .	Manageable headwind; offset strategy .
Regional dynamics	Q3: International softness, esp. Europe .	Strength in Latin America; Europe soft; U.S. South/West activations stronger post‑storms .	Mixed; North America stronger .

Management Commentary

“Fourth quarter results highlight our ability to rapidly increase production and execute on the strong demand for home standby and portable generators… Gross margins were very strong again… driving adjusted EBITDA ahead of our prior expectations.”
“It was the most active year for power outages since we began tracking this data in 2010… The rapid adoption of artificial intelligence and the resulting data center build‑out is projected to drive significant incremental demand.”
“Our residential dealer network… ended the year at an all‑time high of approximately 9,200 dealers… increasing overall category awareness and support for a new and higher baseline level of demand.”
“We recently introduced a larger diesel generator product lineup… up to 3.25 megawatts… specifically designed for… data centers.”

Q&A Highlights

Data center expansion: New larger diesel gensets target both hyperscale and edge data centers; U.S. certified versions begin shipping late 2025, with orders opening 2Q25; initial interest “encouraging” .
Energy tech profitability: Ecobee delivered Q4 profitability; FY25 expected to be profitable; overall energy tech EBITDA dilution improving from ~3.5–4% in 2024 to ~3–3.5% in 2025 .
Residential pacing/capacity: Lead times remained normalized due to capacity and automation investments; expect typical seasonal ramp through 2025; Q1 residential growth strong double‑digit .
Tariffs: Management evaluating new tariff actions (China 10%, potential MX/CA 25%, metals 25%); plan to offset via supplier negotiations, cost reductions, and selective pricing while maintaining competitiveness .
Portable generators and comps: Q4 portable sales more than doubled YoY; FY25 guide assumes no major outage events, creating tough 2H25 portable comp .
DOE Puerto Rico program: No formal cancellation notice; FY25 energy tech sales guided to $300–$400M (vs $280M in 2024) with range reflecting policy risk .

Estimates Context

S&P Global consensus (EPS, revenue, EBITDA, target price) was not retrievable due to a request limit error on the S&P Global feed during this session. As a result, we cannot quantify beat/miss vs consensus for Q4 2024 at this time. The company did indicate adjusted EBITDA exceeded prior internal expectations on stronger gross margins .

Key Takeaways for Investors

Residential momentum and margin expansion continued into Q4; FY25 guide embeds a higher baseline for home standby, with further gross margin improvement and stable high‑teens EBITDA margins—constructive for multi‑quarter earnings quality .
C&I is mixed near term (rental/beyond standby pressure), but telecom demand is firming and BESS/microgrid pipeline is building; data center gensets open a meaningful long‑term TAM vector from late 2025 .
Tariff risk appears manageable with offset levers (pricing/cost out/diversified sourcing); watch for any updates as policy evolves—limited direct impact assumed in FY25 guide .
Exceptional cash generation and disciplined capital allocation (net debt reduction, buybacks) provide flexibility for growth investments and support valuation resilience through cycles .
Near‑term trading setup: Q1 seasonally lighter with ~flat EBITDA margins YoY, but sequential improvement through FY25 culminating in ~21% Q4 EBITDA margin could be a positive catalyst as execution de‑risks the trajectory .
Monitor: DOE Puerto Rico program execution (and policy risk), next‑gen home standby pricing/COGS as tariffs crystalize, and order flow for large data center gensets starting 2Q25 .

GENERAC HOLDINGS INC. (GNRC)·Q4 2024 Earnings Summary