Generac (US:GNRC)2025-10-29 11:00Financial Performance - Net sales decreased 5% to $1.11 billion in Q3 2025, down from $1.17 billion in Q3 2024, with core sales down approximately 6%[5] - Adjusted EBITDA was $193 million, or 17.3% of net sales, compared to $232 million, or 19.8% of net sales, in the prior year[5] - Net income for the nine months ended September 30, 2025, was $185,288, down from $199,309 in 2024, a decrease of 7.0%[34] - Net income attributable to Generac Holdings Inc. for the three months ended September 30, 2025, was $66,161, a decrease of 41.8% from $113,742 in 2024[40] - Total adjusted EBITDA for the nine months ended September 30, 2025, was $530,390, slightly up from $523,787 in 2024[39] Sales Breakdown - Residential product sales fell approximately 13% to $627 million, while Commercial & Industrial (C&I) product sales increased approximately 9% to $358 million[5] - International segment sales increased approximately 11% to $185.5 million, driven by strength in C&I product shipments to European markets[11] - Domestic net sales for the nine months ended September 30, 2025, increased to $2,604,937, up 2.1% from $2,567,813 in 2024[37] - Residential products net sales for the three months ended September 30, 2025, were $626,706, a decrease of 13.3% from $722,787 in 2024[37] - International net sales for the nine months ended September 30, 2025, were $568,237, an increase of 9.0% from $537,918 in 2024[37] Profitability Metrics - Gross profit margin was 38.3%, down from 40.2% in the prior-year quarter, primarily due to unfavorable sales mix and higher tariffs[4] - Adjusted EBITDA margin is now expected to be approximately 17.0%, down from the previous guidance of 18.0% to 19.0%[14] - Adjusted EBITDA for the international segment was $27.4 million, or 14.8% of total sales, up from $20.3 million, or 12.2% of total sales, in the prior year[12] Cash Flow and Liquidity - Cash flow from operations was $118 million, down from $212 million in the prior year, with free cash flow at $96 million compared to $184 million in Q3 2024[5][8] - The company reported a net cash provided by operating activities of $248,719 for the nine months ended September 30, 2025, down from $401,847 in 2024, a decrease of 38.1%[34] - Free cash flow for the three months ended September 30, 2025, was $96,497, down 47.5% from $183,658 in 2024[46] Guidance and Future Outlook - The company updated its full-year 2025 net sales guidance to be approximately flat compared to the prior year, down from a previous forecast of 2% to 5% growth[13] - The backlog for large-megawatt generators in the data center market has doubled over the last 90 days, indicating strong future demand[3] Expenses - Operating expenses increased to $917,151 for the nine months ended September 30, 2025, compared to $825,481 in 2024, representing an increase of 11.1%[32] - Research and development expenses for Q3 2025 were $60,059, up from $56,936 in Q3 2024, indicating a growth of 3.9%[32] - The company incurred legal expenses related to patent lawsuits amounting to $2.7 million for the three months ended September 30, 2025[47] - The company reported a provision for a $15.0 million multi-district class action settlement related to clean energy products, totaling $17.8 million for the three months ended September 30, 2025[47] Balance Sheet Highlights - Cash and cash equivalents increased to $300,009 as of September 30, 2025, compared to $281,277 at the end of 2024, an increase of 6.1%[34] - Total assets grew to $5,598,102 as of September 30, 2025, up from $5,109,331 at the end of 2024, an increase of 9.6%[30] - Total liabilities increased to $2,948,274 as of September 30, 2025, compared to $2,611,888 at the end of 2024, an increase of 12.9%[30] - Stockholders' equity attributable to Generac Holdings Inc. increased to $2,643,748 as of September 30, 2025, compared to $2,494,278 at the end of 2024, an increase of 6.0%[30]