Generac Holdings (NYSE:GNRC) shares dropped more than 5% in premarket trading Wednesday after the power equipment manufacturer missed third-quarter estimates and cut its full-year guidance, blaming unusually mild weather and fewer power outages for weaker-than-expected generator sales.
The Wisconsin-based company reported net sales of $1.11 billion, down 5% year-over-year and below the $1.19 billion Bloomberg consensus. Adjusted EPS fell to $1.83, compared with $2.25 in the same quarter last year, also missing expectations.
“Home standby and portable generator shipments grew sequentially in the quarter but were below expectations as a result of a power outage environment that was significantly below baseline average and the lowest third quarter of total outage hours since 2015,” said CEO Aaron Jagdfeld in a statement.
Residential product sales, which make up the bulk of Generac’s business, declined 13% to $627 million, though this was partly offset by a 9% increase in commercial and industrial sales.
Reflecting the softer demand, Generac lowered its full-year net sales growth forecast to be roughly flat year-over-year, compared with its previous outlook of 2% to 5% growth. The company also revised its 2025 net income margin guidance to about 6%, down from an earlier range of 7.5% to 8.5%.
Despite the near-term challenges, Jagdfeld emphasized that the company’s long-term growth drivers remain strong. “The mega-trends that support Generac’s future growth remain intact as lower power quality and higher power prices will be an ongoing challenge given the more frequent and severe weather patterns and broader electrification trends,” he said.
Generac’s shares, which have risen more than 21% year-to-date, were down in early trading as investors reacted to the guidance cut and seasonal weakness in generator demand.