Why Generac Shares Are Getting Obliterated Today

Generac Holdings Inc. GNRC shares are trading lower by 19.98% to $118.12 Wednesday morning after the company reported preliminary third-quarter EPS results are lower year over year. The company also lowered its FY22 net sales growth guidance and net income margin.

What Happened?

Generac reported preliminary quarterly earnings of $1.75 per share and $1.09 billion in sales. This sales figure represents a 15.63% increase over sales of $942.70 million in the same period last year.

Generac says preliminary adjusted EBITDA before deducting for noncontrolling interests, as defined in the accompanying reconciliation schedules, was approximately $184 million, or approximately 17% of net sales, during the third quarter as compared to $209 million, or 22% of net sales, for the same period of 2021.

"Despite reporting mid-teens net sales growth, third quarter results fell short of our prior expectations," said Aaron Jagdfeld, President and Chief Executive Officer. "While shipments of Commercial & Industrial products performed as expected, Residential product sales were pressured during the quarter. As discussed on our second quarter earnings call, installation capacity for home standby generators continued to grow but still lagged our production output during the third quarter."

"This has resulted in higher field inventory levels and lower home standby generator orders from our channel partners than previously expected even as end customer demand continues to be strong driven by elevated power outages, most notably from Hurricane Ian. Additionally in the quarter, clean energy product shipments were negatively impacted by a large customer which ceased operations and has since filed for bankruptcy protection," Jagdfeld stated.

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According to data from Benzinga Pro, Generac has a 52-week high of $524.31 and a 52-week low of $115.50.