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What: Shares of power generation equipment maker Generac Holdings (NYSE: GNRC ) are looking dim today, falling as much as 8.6% following release of its fiscal-first-quarter results.
So what: Generac Holdings reported that net sales declined 14.4% to $342 million. Adjusted net income dropped 37.2% to $50.7 million, or $0.72 per share. Sales missed analyst expectations of $355.6 million by about 3.8%, though adjusted earnings per share did beat analyst expectations of $0.71 by a hair.
The company blamed heavy snow and colder temperatures for causing delays in installations of residential standby units. The weather "magnified" the seasonality that Generac Holdings tends to see during the first quarter. Despite market disappointment, the company said that the results met its internal expectations.
Now what: Going forward, assuming no macro changes or power outages occur, Generac Holdings expects to grow sales in the "mid-single digit range" for the year. Using 5% growth, that would put sales at around $1.564 billion this year, which is in-line with analyst estimates. Given the first quarter shortfall, expect analysts to actually raise their estimates for the remaining quarters of the year in order to catch up with the guidance.
President and CEO Aaron Jagdfeld said, "We expect to continue to benefit from the long-term secular growth drivers for our business." He believes there is still a very low penetration rate for standby generators in the residential and light-commercial markets.
Jagdfeld added, "We are also optimistic about the increasing need for our products used in certain end-market verticals such as telecommunications and oil & gas, as well as the overall ongoing secular shifts in the market toward natural gas generators and the rental of mobile power equipment."
In addition to organic growth, Generac Holdings is looking to grow through potential acquisitions.
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