Core Viewpoint - Generac Holdings Inc. reported fourth-quarter earnings that fell short of analyst expectations due to reduced power outage activity impacting residential generator demand, although shares rose over 17% intra-day following a positive outlook [1] Financial Performance - Adjusted earnings for the quarter were $1.61 per share, missing the analyst consensus of $1.77 [1] - Revenue declined 12% year over year to $1.09 billion, below expectations of $1.16 billion [1] - For full-year 2025, net sales were reported at $4.21 billion, down 2% from $4.30 billion in 2024 [4] Segment Performance - Residential product sales, the largest segment, dropped 23% to $572 million from $743 million in the prior-year period, attributed to continued weakness in power outage activity [2] - Commercial and Industrial (C&I) product sales increased 10% to $400 million, driven by stronger demand from data center customers [3] Future Outlook - Generac initiated fiscal 2026 guidance, projecting net sales growth in the mid-teens percentage range compared to 2025 [3] - The company expects adjusted EBITDA margins of approximately 18.0% to 19.0% [3] Shareholder Actions - The board approved a new $500 million share repurchase authorization to be executed over the next 24 months, replacing the remaining balance of its prior program [4]

Generac Stock Rises After Earnings Miss Estimates. A Better Outlook Is Helping. - Barron'sSkip to Main ContentThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.# Generac Missed Earnings Estimates. A Better Outlook Is Boosting the Stock.By [Al Root]ShareResize---ReprintsIn t ...

Fourth-quarter gross margin was 36.3% , down from 40.6% a year earlier. Ragen attributed the decline mainly to unfavorable sales mix and a $15.6 million net inventory provision related to the settlement of a supplier contract dispute for a discontinued product, along with higher input costs and lower manufacturing absorption that were mostly offset by price realization.CFO York Ragen reported fourth-quarter net sales decreased 12% year over year to $1.1 billion . Residential product sales fell 23% to $572 m ...

Group 1 - Generac (GNRC) reported disappointing Q4 financial results, yet its stock price surged to multi-year highs, indicating that market reactions can overshadow actual performance metrics [1] - The demand from data centers is highlighted as a crucial factor for Generac's business, suggesting a potential growth area despite the lackluster quarterly results [1]

Core Insights - Generac Holdings Inc. (GNRC) reported fourth-quarter 2025 adjusted earnings per share (EPS) of $1.61, missing the Zacks Consensus Estimate of $1.81, and down from $2.80 in the prior-year quarter [1] - Net sales were $1.09 billion, a 12% decline from $1.23 billion in the prior-year quarter, also missing the consensus estimate of $1.17 billion [1] Demand and Sales Performance - Weaker demand for home standby and portable generators amid a softer outage environment offset increases in sales to data center customers and higher shipments of residential energy technology products [2] - Domestic revenues fell 17% year over year to $889 million, impacted by lower home standby and portable generator sales [9] - International revenues increased 12% year over year to $209.2 million, aided by a 6% favorable impact from foreign currency fluctuations [9] Product Segment Analysis - Revenues from Residential products decreased 23% year over year to $572 million, while C&I revenues totaled $400 million, up 10% year over year [10] - Revenues from the Other product class totaled $120.1 million, down 6.2% year over year [10] Margin and Operating Performance - Gross profit was $396.1 million, down from $501.4 million in the prior-year quarter, with respective margins of 36.3% and 40.6% [11] - Total operating expenses rose 34% year over year to $405.4 million, driven by a provision for the settlement of a legal matter [11] - The operating loss was $9.3 million compared to an operating income of $198 million in the prior-year quarter [12] Future Outlook - For 2026, GNRC expects revenues to grow in the mid-teens percent range, with C&I product sales anticipated to grow in the 30% range due to data center momentum and the Allmand acquisition [4] - Residential product sales are expected to increase in the 10% range for 2026, assuming a return to power outage activity [5] Cash Flow and Share Repurchase - In the fourth quarter, GNRC generated $189 million of net cash from operating activities, with free cash flow totaling $130 million [13] - The company repurchased 1.1 million shares for $148 million in 2025 and announced a new share repurchase authorization of up to $500 million over the next 24 months [14]

Financial Data and Key Metrics Changes - Fourth quarter overall net sales decreased 12% year-over-year to $1.1 billion, down from $1.2 billion in the prior year [25] - Adjusted EBITDA margins for the fourth quarter were 17%, consistent with expectations despite a weaker outage environment [4] - Gross profit margin decreased to 36.3% from 40.6% in the prior year, primarily due to unfavorable sales mix and a $15.6 million net inventory provision [28] Business Line Data and Key Metrics Changes - Residential product sales decreased 23% to $572 million compared to $743 million in the prior year, driven by lower shipments of home standby and portable generators [26] - Commercial and industrial (CNI) product sales increased 10% to $400 million, primarily due to revenue from products sold to data center customers [26] - International core total sales increased 5% during the fourth quarter, with significant Adjusted EBITDA margin expansion to 16.1%, an all-time record for the international segment [16] Market Data and Key Metrics Changes - The backlog for data center products grew to approximately $400 million, indicating strong future demand [6] - Home standby shipments decreased 25% year-over-year, attributed to the lowest level of total outage hours in a decade [17] - The average power prices in the U.S. have increased nearly 40% over the last five years, with expectations to double again in the next decade [10] Company Strategy and Development Direction - The company is focusing on expanding its manufacturing capacity for large megawatt generators to become a key supplier for the growing data center market [7] - Significant investments have been made in manufacturing facilities to support future growth, including the acquisition of a new facility in Wisconsin [7] - The company aims to double its CNI product sales in the coming years, capitalizing on the generational growth opportunity presented by data center investments [24] Management's Comments on Operating Environment and Future Outlook - Management expects 2026 to be an inflection point for the company, with strong growth anticipated in CNI product sales driven by data center customers [17] - The company believes it is well-positioned to address the energy challenges posed by increasing power outages and rising energy costs [11] - Management anticipates a return to more normalized power outage levels in 2026, which will support growth in residential products [23] Other Important Information - The company reported a GAAP net loss of $24 million for the fourth quarter, compared to net income of $117 million in the prior year [32] - Cash flow from operations was $189 million in the current quarter, down from $339 million in the prior year [33] - The company has initiated 2026 net sales guidance projecting strong year-over-year growth, expecting consolidated net sales to increase at a mid-teens rate [37] Q&A Session Summary Question: Progress with hyperscalers - Management confirmed that while there are no significant orders yet, they are in pilot phases with two hyperscale customers and expect to sign long-term supply agreements soon [50][52] Question: Competitive environment in the data center market - Management indicated that the competitive landscape for large megawatt diesel generators remains stable, with limited new entrants due to high investment requirements [58][60] Question: Growth profile for the data center market - Management estimates the total addressable market for large megawatt diesel backup generators could be as much as $15 billion annually, with a target market share of 10%-15% [64][66] Question: Residential market dynamics - Management highlighted a projected mid-teens growth rate for residential products, with half of the growth expected from price realization and the other half from volume increases as outages normalize [75][77]

Financial Data and Key Metrics Changes - Fourth quarter overall net sales decreased 12% year-over-year to $1.1 billion, down from $1.2 billion in the prior year [26] - Adjusted EBITDA margins for the fourth quarter were 17%, consistent with expectations despite a weaker outage environment [4] - Gross profit margin decreased to 36.3% from 40.6% in the prior year, primarily due to unfavorable sales mix and a $15.6 million net inventory provision [30] - GAAP net loss for the quarter was $24 million, compared to net income of $117 million in the fourth quarter of 2024 [33] - Adjusted net income for the quarter was $95 million, or $1.61 per share, down from $168 million, or $2.80 per share in the prior year [34] Business Line Data and Key Metrics Changes - Residential product sales decreased 23% to $572 million, impacted by lower shipments of home standby and portable generators due to weak power outage activity [27] - Commercial and industrial (C&I) product sales increased 10% to $400 million, driven by revenue from data center customers [28] - International core total sales increased 5% during the fourth quarter, primarily due to revenue from data center customers [16] Market Data and Key Metrics Changes - The backlog for data center products has grown to approximately $400 million, indicating strong future demand [6] - Home standby shipments decreased 25% year-over-year, reflecting the lowest level of total outage hours in a decade [17] - The average power prices in the U.S. have increased nearly 40% over the last five years, with expectations to double again in the next decade [10] Company Strategy and Development Direction - The company is focusing on expanding its manufacturing capacity for large megawatt generators to meet the growing demand in the data center market [7] - Significant investments have been made in partnerships with hyperscalers, with expectations of substantial order volumes in 2027 and 2028 [5] - The company aims to double its C&I product sales in the coming years, capitalizing on the generational growth opportunity presented by data center investments [25] Management's Comments on Operating Environment and Future Outlook - Management noted that the power outage environment has been soft, impacting home standby and portable generator shipments, but expects a return to more normal levels in 2026 [18] - The company anticipates strong growth in C&I product sales, projecting an increase of over 30% in 2026, primarily driven by data center customers [38] - Management expressed confidence in the progress made in the data center market and expects 2026 to be an inflection point for growth [25] Other Important Information - The company has initiated 2026 net sales guidance projecting mid-teens growth compared to the prior year [37] - Capital expenditures for the full year are projected to be approximately 3.5% of forecasted net sales, focusing on incremental capacity investments [44] - The company has approved a new share repurchase authorization allowing for the repurchase of up to $500 million of shares over the next 24 months [36] Q&A Session Summary Question: Progress with hyperscalers - Management confirmed that while there are no significant orders yet, they are in pilot phases with two hyperscale customers and expect to sign longer-term supply agreements soon [49][52] Question: Competitive environment in the data center market - Management indicated that the market for large megawatt diesel generators has not changed significantly in terms of participants, with limited new entrants due to high investment requirements [58] Question: Growth profile for the data center market - Management estimates the total addressable market for data center backup generators could be as much as $15 billion annually, with a target market share of 10-15% [66] Question: Residential product demand and cost structure - Management highlighted a projected mid-teens growth rate for residential products, with half of the growth expected from price realization and the other half from volume increases as outages normalize [79]

Financial Data and Key Metrics Changes - Overall net sales for Q4 2025 decreased by 12% year-over-year to $1.1 billion, down from $1.2 billion in Q4 2024 [24][25] - Adjusted EBITDA margins for Q4 2025 were 17%, consistent with expectations despite a weaker power outage environment [4][28] - Gross profit margin decreased to 36.3% from 40.6% in the prior year, primarily due to unfavorable sales mix and a $15.6 million inventory provision [26][27] - GAAP net loss for Q4 2025 was $24 million, compared to net income of $117 million in Q4 2024 [31][32] - Adjusted net income for Q4 2025 was $95 million, or $1.61 per share, down from $168 million, or $2.80 per share in the prior year [32] Business Line Data and Key Metrics Changes - Residential product sales decreased by 23% to $572 million in Q4 2025, impacted by lower shipments of home standby and portable generators due to reduced power outage activity [25][27] - Commercial and industrial (CNI) product sales increased by 10% to $400 million, driven by revenue from data center customers [25][26] - International core total sales increased by 5% in Q4 2025, primarily due to data center customer sales [16] Market Data and Key Metrics Changes - The backlog for data center products grew to approximately $400 million, indicating strong future demand [5][16] - The North American Electric Reliability Corporation (NERC) predicts that nearly half of the U.S. population will face power supply shortfalls in the next five years due to increasing demand and grid instability [9][10] - Average power prices in the U.S. have increased nearly 40% over the last five years, with expectations to double again in the next decade [10] Company Strategy and Development Direction - The company is focusing on expanding its manufacturing capacity for large megawatt generators to meet the growing demand in the data center market [6][17] - Significant investments have been made in new manufacturing facilities and product innovations, including the launch of next-generation home standby generators and energy storage systems [7][11] - The company aims to double its CNI product sales in the coming years, capitalizing on the growth opportunities presented by the data center investment cycle [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the home standby generator market as power outages are expected to return to normal levels [18][21] - The company anticipates strong growth in CNI product sales, projecting a growth rate of over 30% for 2026, primarily driven by data center customers [36] - Management highlighted the importance of addressing the challenges posed by rising energy costs and the need for backup power solutions [11][12] Other Important Information - The company has initiated a new share repurchase authorization allowing for the repurchase of up to $500 million of shares over the next 24 months [34] - Capital expenditures for 2025 totaled $170 million, or 4% of net sales, focused on supporting future CNI growth [34] Q&A Session Summary Question: Progress with hyperscalers - Management confirmed that while there are no significant orders yet, they are in pilot phases with two hyperscale customers and expect to sign long-term supply agreements soon [47][48] Question: Competitive environment in the data center market - Management noted that the market for large megawatt diesel generators remains stable with limited new entrants due to high barriers to entry [56][58] Question: Growth profile for the data center market - Management estimates the total addressable market for data center backup generators could reach $15 billion annually, with a target market share of 10-15% [62][64] Question: Home standby generator business trends - Management indicated that mid-teens growth in home standby sales is expected, driven by price realization and a return to normal outage levels [72][75]

Core Viewpoint - Generac (GNRC), a component of the S&P 500, experienced a significant stock market surge despite missing fourth-quarter earnings estimates, driven by accelerating demand for data center solutions [1] Group 1: Company Performance - Generac's stock broke out from a buy zone, indicating strong market interest and potential for growth [1] - The company reported an increase in data center demand as it positions itself as a key supplier to multiple hyperscale customers [1] Group 2: Market Context - The overall S&P 500 stocks saw upgrades, particularly in sectors related to AI data center backup power and heavy truck manufacturing [1] - Generac Holdings received a relative strength rating upgrade, reflecting its improved market performance and leadership [1]

分组1 - Generac Holdings reported quarterly earnings of $1.61 per share, missing the Zacks Consensus Estimate of $1.81 per share, and down from $2.8 per share a year ago, representing an earnings surprise of -11.17% [1] - The company posted revenues of $1.09 billion for the quarter, missing the Zacks Consensus Estimate by 6.81%, and down from $1.23 billion year-over-year [2] - Generac Holdings has surpassed consensus EPS estimates two times over the last four quarters, while it has topped consensus revenue estimates two times as well [2] 分组2 - The stock has gained approximately 33.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.4% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.30 on revenues of $996.85 million, and for the current fiscal year, it is $8.19 on revenues of $4.72 billion [7] 分组3 - The Zacks Industry Rank for Manufacturing - General Industrial is currently in the top 28% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5] - Generac Holdings currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6]