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Generac (GNRC) Q4 Earnings Beat Estimates, Revenues Down Y/Y
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Generac Holdings Inc. (GNRC - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.78 per share, which beat the Zacks Consensus Estimate by 4.7%. However, the bottom line decreased 29.1% year over year.
Net sales decreased 2% year over year and came in at $1.05 billion, and missed the consensus mark by 1.8%. The downtick was caused by softness in residential products and continued elevated home standby field inventory levels, which unfavorably impacted orders and shipments. However, it was partly offset by robust demand for Commercial & Industrial (C&I) products.
In the quarter under review, Core sales growth (excludes the impact of acquisitions and foreign currency) decreased 7% year over year.
Generac Holdings Inc. Price, Consensus and EPS Surprise
Segment-wise, Domestic revenues decreased 3% year over year to $880.6 billion due to lower home standby and clean energy product sales, partly offset by strength across C&I products.
International revenues rose 22% to $219.2 million, driven by strong performance across all regions, especially in Europe and Latin America. The impact of acquisitions and forex contributed nearly 6.5% net headwind to revenues.
Product-wise, revenues from Residential declined 19% to $575 million. Revenues from C&I were $361 million, up 27% from the year-ago quarter’s levels. Revenues from the Other product class came in at $113 million, up 46.2% year over year.
Margins
Gross profit was $343.1 million, up from $362.5 million, with respective margins of 32.7% and 34%. The gross profit margin declined due to an unfavorable sales mix partly offset by pricing actions.
Total operating expenses were $235.9 million, up 26.1% from the prior-year quarter’s levels. The uptick was caused due to recurring operating expenses from previous acquisitions, legal and regulatory reserves, higher intangible amortization expenses and increased employee and marketing costs.
Operating income came in at $107.3 million, down 38.9%. Adjusted EBITDA was $174 million compared with $220 million in the year-ago quarter.
Cash Flow & Liquidity
In the fourth quarter, the company generated $101 million of net cash from operating activities. Free cash came in at $80 million.
As of Dec 31, 2022, the company had $132.7 million in cash and cash equivalents with $1.369 billion of long-term borrowings and finance lease obligations.
In the quarter under review, the company repurchased shares worth $222 million under existing share buyback authorization. As of Dec 31, 2022, the company has approximately $278 million remaining in the share repurchase program.
2022 Outlook
For 2023, Generac expects revenue to decline between 6% and 10% owing to lower shipments of residential products due to higher field inventory levels for home standby generators. This includes a net impact of 1% from acquisitions and foreign currency changes.
The net income margin (before deducting for non-controlling interests) is expected to be 7.5-8.5%. The adjusted EBITDA margin is estimated in the range of 17-18%.
Zacks Rank & Stocks to Consider
Generac currently has a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for Arista Networks 2023 earnings is pegged at $5.23 per share, rising 0.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.7%. Shares of ANET have increased 10.7% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 0.7% 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 all the last four quarters, the average being 8.8%. Shares of JBL have increased 39.1% in the past year.
The Zacks Consensus Estimate for Bandwidth 2022 earnings is pegged at 37 cents per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
BAND's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 301.8%. Shares of the company have declined 59.2% in the past year.
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Generac (GNRC) Q4 Earnings Beat Estimates, Revenues Down Y/Y
Generac Holdings Inc. (GNRC - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.78 per share, which beat the Zacks Consensus Estimate by 4.7%. However, the bottom line decreased 29.1% year over year.
Net sales decreased 2% year over year and came in at $1.05 billion, and missed the consensus mark by 1.8%. The downtick was caused by softness in residential products and continued elevated home standby field inventory levels, which unfavorably impacted orders and shipments. However, it was partly offset by robust demand for Commercial & Industrial (C&I) products.
In the quarter under review, Core sales growth (excludes the impact of acquisitions and foreign currency) decreased 7% year over year.
Generac Holdings Inc. Price, Consensus and EPS Surprise
Generac Holdings Inc. price-consensus-eps-surprise-chart | Generac Holdings Inc. Quote
Quarter in Details
Segment-wise, Domestic revenues decreased 3% year over year to $880.6 billion due to lower home standby and clean energy product sales, partly offset by strength across C&I products.
International revenues rose 22% to $219.2 million, driven by strong performance across all regions, especially in Europe and Latin America. The impact of acquisitions and forex contributed nearly 6.5% net headwind to revenues.
Product-wise, revenues from Residential declined 19% to $575 million. Revenues from C&I were $361 million, up 27% from the year-ago quarter’s levels. Revenues from the Other product class came in at $113 million, up 46.2% year over year.
Margins
Gross profit was $343.1 million, up from $362.5 million, with respective margins of 32.7% and 34%. The gross profit margin declined due to an unfavorable sales mix partly offset by pricing actions.
Total operating expenses were $235.9 million, up 26.1% from the prior-year quarter’s levels. The uptick was caused due to recurring operating expenses from previous acquisitions, legal and regulatory reserves, higher intangible amortization expenses and increased employee and marketing costs.
Operating income came in at $107.3 million, down 38.9%. Adjusted EBITDA was $174 million compared with $220 million in the year-ago quarter.
Cash Flow & Liquidity
In the fourth quarter, the company generated $101 million of net cash from operating activities. Free cash came in at $80 million.
As of Dec 31, 2022, the company had $132.7 million in cash and cash equivalents with $1.369 billion of long-term borrowings and finance lease obligations.
In the quarter under review, the company repurchased shares worth $222 million under existing share buyback authorization. As of Dec 31, 2022, the company has approximately $278 million remaining in the share repurchase program.
2022 Outlook
For 2023, Generac expects revenue to decline between 6% and 10% owing to lower shipments of residential products due to higher field inventory levels for home standby generators. This includes a net impact of 1% from acquisitions and foreign currency changes.
The net income margin (before deducting for non-controlling interests) is expected to be 7.5-8.5%. The adjusted EBITDA margin is estimated in the range of 17-18%.
Zacks Rank & Stocks to Consider
Generac currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Bandwidth (BAND - Free Report) , each currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Arista Networks 2023 earnings is pegged at $5.23 per share, rising 0.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.7%. Shares of ANET have increased 10.7% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 0.7% 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 all the last four quarters, the average being 8.8%. Shares of JBL have increased 39.1% in the past year.
The Zacks Consensus Estimate for Bandwidth 2022 earnings is pegged at 37 cents per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
BAND's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 301.8%. Shares of the company have declined 59.2% in the past year.