Generac’s net sales increased 8.9 percent during the second quarter of 2019 totaling $541.9 million compared to $497.6 million in the second quarter of 2018. Core sales growth, excluding the impact of acquisitions and foreign currency, was approximately 7 percent.
The Commercial & Industrial division product sales increased 6.9 percent to $230.4 million, compared to $215.6 million in Q218, with core sales growth of about 6 percent.
Residential product sales increased 8.9 percent to $268.4 million compared to $246.4 million last year, with core sales growth of approximately 8 percent.
Net income in the second quarter was $62 million, or $0.98 per share, compared to $53.3 million or $0.82 per share in the same period of 2018.
“Domestic end market demand for both residential and C&I standby generators continued to be very favorable as our strong execution led to record sales and EBITDA in the second quarter,” said Aaron Jagdfeld, president and CEO of Generac. “As we continue to drive the company’s strategy forward, we remain focused on a number of key macro growth themes, which include expanding awareness around the need for backup power, improving 5G network reliability, developing the global opportunity for natural gas power generation, and, most recently entering the rapidly growing clean energy market. In addition, we stand ready to execute should a major power outage event occur anywhere in North America, be it a landed hurricane or a utility shutoff in California.”
Gross profit margin was 36.1 percent in the second quarter, compared to 35.9 percent in the second quarter of 2018. Favorable sales mix and pricing actions were partially offset by realization of higher input costs, including regulatory tariffs, logistics costs, labor rates and commodities.
Operating expenses increased $11.9 million, or 12.8 percent, year over year, primarily driven by recurring operating expenses from recent acquisitions, an increase in employee headcount related to strategic initiatives, higher intangible amortization expenses, and higher variable costs given the increased sales volumes.
Domestic segment sales increased 11 percent to $425.9 million, compared to $383.7 million a year ago. Core sales growth, which excludes the impact of the Neurio and Pika acquisitions, was about 10.4 percent. The current-year quarter experienced strong growth in shipments of home standby generators given continued strong end market conditions. C&I stationary generator shipments were strong during the quarter as well, primariy related to telecom customers.
International segment sales increased 1.8 percent to $116.0 million. Core sales declined by about 3 percent because of the timing of certain large projects that shipped during the prior-year quarter.
Generac is increasing its prior guidance for revenue growth for full-year 2019 reflecting stronger domestic end market demand. The company is expecting net sales growth for the year of 6 to 7 percent, assuming no major outage events and a baseline power outage severity.