Freelance Financial Writer | Investments | Markets | Personal Finance | RetirementI create written content used in various formats including articles, blogs, emails, and social media for financial advisors and investment firms in a cost-efficient way. My passion is putting a narrative to financial data. Working with teams that include senior editors, investment strategists, marketing managers, data analysts, and executives, I contribute ideas to help make content relevant, accessible, and measurable. Having ...

Generac Holdings Inc. (GNRC) delivered a softer-than-expected third quarter, with revenue of $1.11 billion, down 5% year-over-year and missing estimates by about $79 million. On the surface the numbers look ugly, but the story is far less dramatic than the headlines suggest, writes Tom Hayes, editor of HedgeFundTips. To get more articles and chart analysis from MoneyShow, subscribe to our Top Pros’ Top Picks newsletter here.) Adjusted earnings per share were $1.83, down 19% YOY and missing by $0.37. The m ...

Core Insights - Generac Holdings Inc. is a prominent player in the backup power industry, focusing on designing and manufacturing generators, energy storage systems, and digital energy management tools, with a market capitalization of $8.57 billion [1] Stock Performance - Generac's stock has experienced significant volatility, declining by 20.4% over the past 52 weeks and 23.4% over the last three months, with a notable drop of 28.2% from its 52-week high of $203.25 reached in August [2] - In comparison, the S&P 500 Index has gained 11% and 3.7% over the same periods, indicating that Generac has underperformed relative to the broader market [3] Financial Results - In the third quarter of fiscal 2025, Generac reported net sales of $1.11 billion, a 5% year-over-year decrease, falling short of the $1.20 billion expected by analysts, attributed to a lower-than-average power outage environment [4] - The adjusted EPS for the same quarter was $1.83, down 18.7% from the previous year and missing the expected $2.25 [4] Future Expectations - For fiscal year 2025, analysts project a 10.9% decline in EPS to $6.48, but anticipate a recovery with a 25.6% increase to $8.14 in fiscal 2026 [5] - Generac has a history of exceeding consensus estimates, having surpassed them in three of the last four quarters [5]

Core Viewpoint - Generac's shares have declined nearly 30% since mid-August, attributed to the overall state of the housing market, but the company anticipates growth from AI data center demand as a counterbalance [1] Company Outlook - Chairman, President, & CEO Aaron Jagdfeld discusses the impact of rising energy costs in a weakened housing market and the resilience of the US power grid [1] - The company is positioning itself to benefit from increased demand in AI data centers, which may offset the stagnation in the residential market [1]

Core Insights - Generac Holdings Inc. emphasizes the importance of cold weather preparedness and backup power plans for homeowners to mitigate risks associated with winter weather-induced power outages [1][3]. Company Overview - Generac Holdings, Inc. is a leading global designer, manufacturer, and provider of energy technology solutions, founded in 1959. The company specializes in power generation equipment, energy storage systems, and energy management devices, serving residential, light commercial, and industrial markets [5]. Industry Context - In 2024, U.S. homeowners experienced nearly 1.5 billion hours without power, a figure expected to rise due to increasing severe weather events [3]. - The NOAA's 2025-2026 Winter Outlook predicts above-average precipitation in several U.S. regions, while others may face below-average temperatures, indicating a potential increase in power outages [3]. Preparedness Recommendations - Generac's Cold Weather Preparedness Guide provides essential tips for homeowners, including the importance of having a winter storm plan and a checklist for emergency kits [4][7]. - Homeowners are advised to consider investing in backup power sources, such as portable or home standby generators, to maintain power for critical loads during outages [7].

Core Viewpoint - The company is experiencing significant growth in its data center business, driven by increasing demand for backup power solutions due to the rise of AI and power shortages [3][12][20]. Company Insights - The company has a backlog of $300 million in orders and anticipates doubling its commercial and industrial (CNI) business from $1.5 billion to $3 billion in the next 3 to 5 years [3][20]. - The company has been in the generator business for 65 years, primarily known for residential products, but is now expanding into larger industrial generators [5][6]. - The company is ramping up production at a new facility in Wisconsin to meet global demand, with shipments already occurring in Australia [8][9]. Industry Context - The demand for power is expected to increase significantly, with AI projected to add 100 gigawatts of new demand over the next five years, equivalent to the power needs of 20 New York City-sized populations [12]. - The residential generator market is growing, with 7% of U.S. households now owning a standby generator, although price increases of 20% over the last few years are impacting consumer purchasing decisions [14][15]. - The company’s products are primarily for emergency backup power, addressing the growing issue of power outages caused by insufficient supply rather than just weather-related events [10][16]. Competitive Landscape - Competitors like Caterpillar and Cummins are also performing well in the generator market, indicating strong demand and supply constraints in the industry [19].

Market Opportunities - Generac has a home standby penetration opportunity of approximately 6.5% in the U.S. addressable market, indicating significant growth potential in the residential standby generator market [136]. - The demand for natural gas generators is increasing as they are viewed as a cleaner alternative to diesel, with a growing portion of the commercial and industrial market adopting this technology [138]. - The company anticipates that power quality issues and increased frequency of outages will drive demand for backup power solutions, particularly in the context of climate change and aging infrastructure [135]. - Generac's strategic plan, "Powering A Smarter World," aims to leverage key mega-trends such as rising electricity demand and the need for energy management solutions [132]. - The company expects significant growth in the solar, storage, and energy management markets due to rising power prices and the transition to renewable energy sources [137]. - Generac is positioned to benefit from the increasing power consumption of digital infrastructure, particularly in the telecommunications sector, where backup power is critical [139]. - The company is exploring new gaseous generator market opportunities, including microgrids and distributed energy resources, to enhance grid stability [138]. - Generac's advanced connectivity devices and software platforms are central to integrating its products into grid services programs, supporting the evolution of a decentralized energy grid [130]. Financial Performance - Net sales for the three months ended September 30, 2025, were $1,114.4 million, a decrease of 5.0% compared to $1,173.6 million in the prior year [154]. - Domestic segment total sales decreased approximately 8% to $938.1 million, primarily due to weaker home standby and portable generator sales amid a lower power outage environment [155]. - International segment total sales increased approximately 11% to $185.5 million, driven by strength in C&I product shipments to European markets and initial shipments of large-megawatt generators to data center customers [157]. - Gross profit margin decreased to 38.3% from 40.2% in the prior-year quarter, attributed to unfavorable sales mix, higher tariffs, and lower manufacturing absorption [158]. - Operating expenses increased by 6.7% to $323.8 million, with significant increases in general and administrative expenses by 21.4% [154]. - Income from operations for the three months ended September 30, 2025, was $103.1 million, a decline of 38.9% compared to $168.6 million in the prior year [154]. - Net income attributable to Generac Holdings Inc. was $66.2 million, down 41.8% from $113.7 million in the prior year [154]. - Adjusted EBITDA for the domestic segment was $446.5 million, or 17.1% of total sales, compared to $450.4 million, or 17.5% in the prior year, reflecting a decline driven by unfavorable sales mix [177]. - Adjusted EBITDA for the international segment increased to $83.9 million, or 14.8% of total sales, up from $73.4 million, or 13.6% in the prior year, driven by favorable price and cost impacts [178]. - Total net sales for the nine months ended September 30, 2025, were $3,117.6 million, an increase of 1.8% from $3,061.0 million in the prior year [168]. - Net income attributable to Generac Holdings Inc. for the nine months ended September 30, 2025, was $184.0 million, a decrease of 7.6% from $199.1 million in the prior year [176]. Tax and Legal Provisions - The effective income tax rate for the nine months ended September 30, 2025, was 18.3%, a decrease from 24.6% in the prior year, primarily due to discrete tax benefits [150]. - Provision for income taxes for the nine months ended September 30, 2025, was $41.4 million, with an effective tax rate of 18.3%, down from $65.1 million and 24.6% in the prior year [175]. - Provision for income taxes for the three months ended September 30, 2025, was $11,758 thousand, down from $33,453 thousand in the same period of 2024, indicating a decrease of 64.9% [209]. - The company incurred a provision for legal, regulatory, and other costs of $23,208 thousand for the three months ended September 30, 2025, compared to $2,382 thousand in the same period of 2024, reflecting a significant increase [221]. Cash Flow and Liquidity - Net cash provided by operating activities decreased by 38.1% to $248.7 million for the nine months ended September 30, 2025, compared to $401.8 million in the prior year [193]. - Net cash used in investing activities was $115.5 million for the nine months ended September 30, 2025, primarily for property and equipment purchases totaling $110.5 million [194]. - Net cash used in financing activities was $121.3 million for the nine months ended September 30, 2025, which included $147.9 million in share repurchases [196]. - Total liquidity as of September 30, 2025, was $1,209.3 million, consisting of $300 million in cash and cash equivalents and $909.3 million available under the New Revolving Facility [191]. - The company believes its cash flow from operations and available credit will provide sufficient capital for ongoing operations and potential expansions [192]. Debt and Share Repurchase - The company amended its Original Tranche A Term Loan Facility, reducing the interest rate to 5.78% and extending the maturity to July 1, 2030 [182]. - As of September 30, 2025, the company had $495 million outstanding under the Term Loan B Facility, $700 million under the New Tranche A Term Loan Facility, and $90 million on the New Revolving Facility, with $909.3 million of unused capacity [184]. - The interest rate for the Term Loan B Facility was 6.03% as of September 30, 2025, with a net secured leverage ratio of 1.35 to 1.00, well below the 3.75 to 1.00 threshold [185]. - The company repurchased 1,109,206 shares of common stock for $147.9 million during the nine months ended September 30, 2025, with $199.3 million remaining under the current stock repurchase authorization [186][187]. - Total dealer purchases financed accounted for approximately 13% of net sales for the nine months ended September 30, 2025, with outstanding dealer financing of $165.2 million [189].

Core Insights - Generac Holdings Inc. has faced significant stock price decline following a disappointing quarterly report, leading to a reduction in its forecast due to insufficient natural disasters impacting its core generator business [1] Company Overview - Generac Holdings Inc. specializes in manufacturing and distributing energy technology products, which include residential and industrial generators, battery storage systems, smart home solutions, and outdoor power equipment [2] Investment Perspective - While Generac is recognized as a potential investment, there are other AI stocks that are perceived to offer greater upside potential and lower downside risk, suggesting a competitive investment landscape [3]

Core Insights - Generac Holdings Inc. reported third-quarter earnings of $1.1 billion in revenue and $1.82 in earnings per share, both of which fell short of FactSet estimates of $1.2 billion and $2.18 respectively [2] - The company attributed its poor performance to fewer hurricanes, but there are concerns about other underlying issues, including high borrowing costs [3] Company Performance - Generac's revenue for the third quarter was $1.1 billion, missing estimates by $100 million [2] - Earnings per share were reported at $1.82, which was $0.36 below the expected $2.18 [2] Market Commentary - Jim Cramer expressed skepticism about Generac's explanation for its performance, suggesting that reliance on borrowing in a high-interest-rate environment could be problematic [3] - Cramer indicated that while Generac has potential, other AI stocks may offer better investment opportunities with higher returns and lower risks [3]

Core Insights - Generac Holdings Inc. (GNRC) reported Q3 2025 adjusted earnings per share (EPS) of $1.83, missing the Zacks Consensus Estimate of $2.25 and down from $2.25 in the prior-year quarter [1][9] - Net sales were $1.11 billion, a decrease of 5% compared to $1.17 billion in the prior-year quarter, also missing the consensus estimate of $1.2 billion [2][9] - The company has revised its 2025 revenue expectations to flat growth, down from an earlier guidance of 2-5% increase [3] Financial Performance - Net income margin is now expected to be 6%, reduced from the previous guidance of 7.5-8.5% [4] - Adjusted EBITDA margin is estimated to be 17%, down from the previous range of 18-19% [4] - Free cash flow conversion from adjusted net income is now expected to be 80%, compared to the earlier guidance of 90-100% [4] Segment Performance - Domestic revenues fell 8% year over year to $938.1 million, with acquisitions contributing a 1% benefit [7] - International revenues increased by 11% year over year to $185.5 million, aided by a 3% favorable impact from foreign currency fluctuations [8] - Residential product revenues decreased by 13% year over year to $627 million, while C&I revenues rose by 9% to $358 million [10] Margin and Operating Metrics - Gross profit was $426.9 million, down from $472.3 million in the prior-year quarter, with respective margins of 38.3% and 40.2% [11] - Operating income decreased by 38.9% year over year to $103.1 million, and adjusted EBITDA fell to $193 million from $232 million a year ago [12] Cash Flow and Liquidity - The company generated $118.4 million of net cash from operating activities in Q3, with free cash flow totaling $96.5 million [13] - As of September 30, 2025, GNRC had $300 million in cash and cash equivalents, with long-term borrowings and finance-lease obligations totaling nearly $1.36 billion [13] - GNRC has a new share buyback authorization of up to $500 million for the next 24 months [14]