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Generac (GNRC) Q3 Earnings Beat Estimates, Revenues Up Y/Y
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Generac Holdings Inc. (GNRC - Free Report) reported third-quarter 2022 adjusted earnings of $1.75 per share, which beat the Zacks Consensus Estimate by 8%. However, the bottom line decreased 25.5% year over year.
Net sales increased 15% year over year and came in at $1.09 billion but missed the consensus mark by 0.1%. Robust demand for Commercial & Industrial (C&I) products boosted Generac’s third-quarter performance.
In the quarter under review, Core sales growth (excludes the impact of acquisitions and foreign currency) increased 10% year over year.
Generac Holdings Inc. Price, Consensus and EPS Surprise
In the past year, shares have lost 76.3% compared with the industry’s decline of 80.8%.
Image Source: Zacks Investment Research
Quarter in Details
Segment-wise, Domestic revenues increased 18% year over year to $946.6 billion, driven by the impact of acquisitions that contributed nearly 8% to revenues. Higher demand for home standby generators and strength across C&I products were the driving factors.
International revenues rose 14% to $182.5 million, driven by strong performance across all regions, especially in Europe. The impact of acquisitions and forex contributed nearly 8% net headwind to revenues.
Product-wise, revenues from Residential soared 9% to $664 million. Revenues from C&I were $311 million, up 20% from the year-ago quarter’s levels. Revenues from the Other product class came in at $113 million, up 49.5% year over year.
Residential Products business was affected despite increasing year over year. This was due to installation capacity constraints in the company’s distribution network which led to greater field inventory levels and lower home standby generator orders from the company’s channel partners than anticipated.
Also, the shipments of clean energy products were highly impacted during the quarter by a leading customer who has stopped its operations and filed for bankruptcy protection.
In the third quarter, the company closed the acquisition of an industrial IoT software platform — Blue Pillar — for an undisclosed amount. The acquisition will aid Generac in providing monitoring and control capability as a “built-in feature” through the integration of the Blue Pillar platform with its suite of power-generation products and Generac Grid Services’ projects.
Margins
Gross profit was $361.1 million, up from $336 million, with respective margins of 33.2% and 35.6%. The gross profit margin declined due to higher input costs, unfavorable sales mix and the impact of a recent acquisition partly offset by pricing actions.
Operating expenses were $273.5 million, up 68.4% from the prior-year quarter’s levels. The uptick was caused due to $37.3 million in warranty-related costs for clean energy products along with $17.9 million in bad debt expense associated with a customer that filed for bankruptcy. However, higher marketing expenses on home standby generators, a rise in employee costs and the impact of acquisitions were other expenditures.
Operating income came in at $87.5 million, down 49.6%. Adjusted EBITDA was $184 million compared with $209 million in the year-ago quarter.
Cash Flow & Liquidity
In the third quarter, the company used $56 million of net cash from operating activities. Free cash outflow came in at $73.5 million.
As of Sep 30, 2022, the company had $229.9 million in cash and cash equivalents with $1.283 billion of long-term borrowings and finance lease obligations.
In the quarter under review, the company repurchased shares worth $123.9 million, thereby exhausting its earlier existing share buyback authorization.
In July 2022, the company announced a new stock repurchase program for $500 million, expanding over a 24-month period.
2022 Outlook
For 2022, Generac expects revenue growth between 22% and 24% compared with the previous guidance of 36-40%. This includes a net impact between 5% and 7% from acquisitions and foreign currency changes.
The net income margin (before deducting for non-controlling interests) is expected to be 9-10%. The adjusted EBITDA margin is estimated in the range of 18-19%.
Zacks Rank & Stocks to Consider
Generac currently has a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.45 per share, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 81.9%. Shares of IDCC have decreased 29.2% in the past year.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 16.9% in the past year.
The Zacks Consensus Estimate for Jabil’s fiscal 2023 earnings is pegged at $8.18 per share, rising 3.8 in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.3%. Shares of JBL have increased 5.8% in the past year.
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Generac (GNRC) Q3 Earnings Beat Estimates, Revenues Up Y/Y
Generac Holdings Inc. (GNRC - Free Report) reported third-quarter 2022 adjusted earnings of $1.75 per share, which beat the Zacks Consensus Estimate by 8%. However, the bottom line decreased 25.5% year over year.
Net sales increased 15% year over year and came in at $1.09 billion but missed the consensus mark by 0.1%. Robust demand for Commercial & Industrial (C&I) products boosted Generac’s third-quarter performance.
In the quarter under review, Core sales growth (excludes the impact of acquisitions and foreign currency) increased 10% year over year.
Generac Holdings Inc. Price, Consensus and EPS Surprise
Generac Holdings Inc. price-consensus-eps-surprise-chart | Generac Holdings Inc. Quote
In the past year, shares have lost 76.3% compared with the industry’s decline of 80.8%.
Image Source: Zacks Investment Research
Quarter in Details
Segment-wise, Domestic revenues increased 18% year over year to $946.6 billion, driven by the impact of acquisitions that contributed nearly 8% to revenues. Higher demand for home standby generators and strength across C&I products were the driving factors.
International revenues rose 14% to $182.5 million, driven by strong performance across all regions, especially in Europe. The impact of acquisitions and forex contributed nearly 8% net headwind to revenues.
Product-wise, revenues from Residential soared 9% to $664 million. Revenues from C&I were $311 million, up 20% from the year-ago quarter’s levels. Revenues from the Other product class came in at $113 million, up 49.5% year over year.
Residential Products business was affected despite increasing year over year. This was due to installation capacity constraints in the company’s distribution network which led to greater field inventory levels and lower home standby generator orders from the company’s channel partners than anticipated.
Also, the shipments of clean energy products were highly impacted during the quarter by a leading customer who has stopped its operations and filed for bankruptcy protection.
In the third quarter, the company closed the acquisition of an industrial IoT software platform — Blue Pillar — for an undisclosed amount. The acquisition will aid Generac in providing monitoring and control capability as a “built-in feature” through the integration of the Blue Pillar platform with its suite of power-generation products and Generac Grid Services’ projects.
Margins
Gross profit was $361.1 million, up from $336 million, with respective margins of 33.2% and 35.6%. The gross profit margin declined due to higher input costs, unfavorable sales mix and the impact of a recent acquisition partly offset by pricing actions.
Operating expenses were $273.5 million, up 68.4% from the prior-year quarter’s levels. The uptick was caused due to $37.3 million in warranty-related costs for clean energy products along with $17.9 million in bad debt expense associated with a customer that filed for bankruptcy. However, higher marketing expenses on home standby generators, a rise in employee costs and the impact of acquisitions were other expenditures.
Operating income came in at $87.5 million, down 49.6%. Adjusted EBITDA was $184 million compared with $209 million in the year-ago quarter.
Cash Flow & Liquidity
In the third quarter, the company used $56 million of net cash from operating activities. Free cash outflow came in at $73.5 million.
As of Sep 30, 2022, the company had $229.9 million in cash and cash equivalents with $1.283 billion of long-term borrowings and finance lease obligations.
In the quarter under review, the company repurchased shares worth $123.9 million, thereby exhausting its earlier existing share buyback authorization.
In July 2022, the company announced a new stock repurchase program for $500 million, expanding over a 24-month period.
2022 Outlook
For 2022, Generac expects revenue growth between 22% and 24% compared with the previous guidance of 36-40%. This includes a net impact between 5% and 7% from acquisitions and foreign currency changes.
The net income margin (before deducting for non-controlling interests) is expected to be 9-10%. The adjusted EBITDA margin is estimated in the range of 18-19%.
Zacks Rank & Stocks to Consider
Generac currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the broader technology space are InterDigital (IDCC - Free Report) , Pure Storage (PSTG - Free Report) and Jabil (JBL - Free Report) . InterDigital and Jabil currently sport a Zacks Rank #1 (Strong Buy) whereas Pure Storage currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.45 per share, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 81.9%. Shares of IDCC have decreased 29.2% in the past year.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 16.9% in the past year.
The Zacks Consensus Estimate for Jabil’s fiscal 2023 earnings is pegged at $8.18 per share, rising 3.8 in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.3%. Shares of JBL have increased 5.8% in the past year.