Why Generac Holdings Shares Are Falling Today

Generac Holdings Inc. GNRC shares are trading lower premarket on Wednesday.

The company reported fourth-quarter adjusted earnings per share of $2.07, missing the analyst consensus of $2.08.

Revenue of $1.064 billion missed the street view of $1.094 billion.

Net sales increased 1% year over year. Residential product sales increased 1% to $580 million, while Commercial & Industrial product sales increased slightly to $363 million.

The gross profit margin was 36.5% compared to 32.7% in the fourth quarter of the prior year, driven by a favorable product mix, production efficiencies, and lower raw material and logistics costs.

Adjusted net income attributable to the company was $126 million, as compared to $113 million a year ago.

Adjusted EBITDA was $213 million, or 20.0% of net sales, as compared to $174 million, or 16.6% of net sales, in the prior year.

Cash flow from operations was $317 million compared to $101 million in the prior year. 

Stock Buyback: The company repurchased approximately 1.3 million shares of its common stock during the fourth quarter for approximately $151 million.

On February 12, 2024, the company approved a new stock repurchase program that allows for the repurchase of up to $500 million of the company’s common stock over the next 24 months, replacing the remaining balance on the previous program.

Outlook: The company has initiated a full-year 2024 net sales growth guidance of approximately 3% to 7% compared to the prior year on an as-reported basis (representing $4.143 billion-$4.304 billion vs. consensus $4.37 billion), including a slight favorable impact from foreign currency.

The company expects residential product sales growth in the mid-teens range, led by shipments of home standby generators and residential energy technology products.

Adjusted EBITDA margin is expected to be approximately 16.5% to 17.5%.

Price Action: GNRC shares are trading lower by 6.78% to $115.40 premarket on the last check Wednesday.