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Investing.com - Generac Holdings reported third-quarter profit and sales that fell short of Wall Street expectations and lowered its annual financial guidance, citing a "significantly weaker power outage environment" that has dented demand for its backup generators.
Sales of the Wisconsin-based group’s generators have tended to move higher in conjunction with power outages linked to extreme weather events like winter storms and hurricanes.
"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, Generac’s biggest segment, decreased by roughly 13% to $627 million, although the downturn was somewhat offset by a 9% uptick in sales at its commercial and industrial division.
Net sales for the period ended in September subsequently fell by 5% versus a year earlier to $1.11 billion, compared to Bloomberg consensus estimates of $1.19 billion. Adjusted per-share earnings came in at $1.83, down from $2.25 a year ago and also below forecasts.
Jagdfeld added that fewer power outages have hit sales of its home standby and portable generators, leading the firm to slash its full-year net sales growth guidance to be approximately flat year-over-year. It had previously seen the figure expanding by between 2% to 5%.
Net income margin, before accounting for "non-controlling interests," is also now projected to be around 6% in its 2025 fiscal year, down from a prior predicted range of 7.5% to 8.5%.
Still, Jagdfeld said the "mega-trends that support" the company’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."
Shares of the group, which have jumped by more than 21% so far this year, were lower by more than 5% in premarket U.S. trading on Wednesday.
(This is a developing story. Please check back later for updates.)