Generac cuts FY23 revenue view to (12%)-(10%) vs. prior (10%)-(6%)

FY23 consensus $4.12B. As a result of the softer-than-expected consumer environment, the company now anticipates lower residential product sales during the second half relative to prior expectations. Partially offsetting this lower outlook, C&I product sales are now expected to grow at a mid-teens rate during 2023 compared to the previous guidance of a mid to high-single digit increase. Accordingly, the company now anticipates its full-year 2023 net sales to decline between -10 to -12% as compared to the prior year, which includes approximately 2% of net favorable impact from acquisitions and foreign currency. This compares to the previous guidance range of a decline between -6 to -10%. Additionally, due to the revised sales outlook, the company now expects net income margin, before deducting for non-controlling interests, to be approximately 6.0 to 7.0% for the full-year 2023 compared to the previous guidance range of 7.5 to 8.5%. The corresponding EBITDA margin is now expected to be approximately 15.5 to 16.5% compared to the previous guidance range of 17.0 to 18.0%. Operating and free cash flow generation are still expected to return to strong levels for the full year, with conversion of adjusted net income to free cash flow expected to be well over 100%.