Q3 2023 Earnings Summary
Reported on Nov 1, 2023 (Before Market Open)
Pre-Earnings Price$84.07Last close (Oct 31, 2023)
Post-Earnings Price$95.99Open (Nov 1, 2023)
Price Change
$11.92(+14.18%)
- Generac's field inventory levels are returning to normal, allowing the company to focus on improving production efficiency and ship in line with end market demand, which is expected to enhance gross margins and EBITDA margins.
- The company is experiencing strong sales leads, with the third quarter being the second best ever for sales leads, indicating robust end market demand, particularly in underpenetrated markets like California, which has a penetration rate of only 2% compared to the national average of 5.75%, suggesting significant growth potential.
- Ecobee products are posting record quarters, and new product offerings expected next year are anticipated to set Generac apart from the competition, indicating strong potential for growth in the Residential Energy Technology segment.
- Bear Case for Generac Holdings Inc. ($GNRC):*
- Slowdown in Key U.S. Commercial & Industrial Verticals: Generac is experiencing reduced demand in significant U.S. C&I market segments, notably in telecom and national rental accounts, which have cooled off due to broader slowdowns in C&I markets and higher interest rates affecting new construction. CapEx spending by large telcos has been reined in, leading to near-term softness in these verticals.
- Close Rates for Home Standby Generators Remain Below Pre-Pandemic Levels: Despite efforts to improve, close rates have not recovered to historical highs, partly due to expanding into younger demographics that require more education and have longer sales cycles. This could delay return to previous sales levels for home standby generators.
Research analysts covering GENERAC HOLDINGS.