Why Energy Technology Company Generac's Shares Are Surging Today

Generac Holdings Inc. GNRC shares are trading higher after Q3 adjusted EPS of $1.64 beats the analyst consensus of $1.51.

The company, however, reported a sales decline of 2% year-on-year to $1.071 billion, beating the consensus of $1.040 billion.

Residential product sales declined 15% to $565 million as compared to $664 million last year. Commercial & Industrial product sales increased 24% to $385 million.

Domestic segment total sales (including inter-segment sales) decreased by 6% to $894.0 million, primarily due to lower home standby and portable generator shipments.

International segment total sales (including inter-segment sales) increased 14% to $207.6 million.

Gross profit margin was 35.1% compared to 33.2% in the prior-year third quarter. The increase in gross margin was primarily driven by lower raw material and logistics costs and production efficiencies. 

The impact of an unfavorable sales mix partially offsets these margin benefits.

Operating expenses decreased by $2.6 million, or 0.9%, as compared to the third quarter of 2022. 

Adjusted EBITDA before deducting for noncontrolling interests was $189 million, or 17.6% of net sales, as compared to $184 million, or 16.9% of net sales, in the prior year.

"We experienced a strong sequential increase in shipments of home standby generators during the quarter as higher activations are driving field inventories towards more sustainable levels," said Aaron Jagdfeld, President and Chief Executive Officer.  

Outlook: Generac reiterated its full-year 2023 net sales guidance, which is expected to decline 10% to 12% compared to the prior year, including approximately 2% of net favorable impact from acquisitions and foreign currency. 

The EBITDA margin is expected to be approximately 15.5 to 16.5%, in line with the previous guidance range.

Price Action: GNRC shares are trading higher by 8.24% at $91.00 premarket on the last check Wednesday.