Storms and related power outages in the US last year have increased demand for backup generators, leading to bottlenecks for providers like Generac.
As millions of Texas residents across the state continue to struggle through days of massive power disruption in response to unprecedented snowfall, Generac CEO Aaron Jagdfeld said requests for alternative home power sources have increased.
“We can’t make them fast enough and are doing everything we can to bring more products to market,” he said at CNBC’s Power Lunch on Wednesday.
Given the extreme heat demand, utilities in Texas, an energy-independent state, have reduced electricity to millions to ease the burden on power grids. The rolling barriers have spurred consumers to look for automatic backup generators, much like what happened with high heat and fire risks in California last year, Jagdfeld said.
The weather emergency has sparked discussions about the reliability of power grids in the US. When California faced power outages last year, Jagdfeld expects extensive changes to power grids and infrastructure to be made in due course.
Generac, which makes backup generators for home and commercial use, operates a Wisconsin facility that has manufactured most of its products at full capacity since the coronavirus pandemic and homebound Americans began taking on home improvement projects. Hurricane seasons have also affected order volumes.
Given the backlog of the company, local approval processes and the contractors involved, it could take residents 20 weeks to install a generator in their home, he said. Generac has roughly 7,000 dealers in its network, but the company needs more, he said. Services that perform inspections, gas meter upgrades, and other parts of the installation process have also reportedly faced long queues.
“There’s just a backlog of everything,” he added.
The company announced earlier this month that it will be opening a 421,000 square foot facility in South Carolina to improve the manufacturing capabilities of home standby generators and related energy technologies for the Southeast. Generac said the project will create around 450 new jobs over two years.
Generac’s shares have more than tripled since 2020. The share price is up 253% since the beginning of last year. Last week, the stock rose 29% to $ 355.32 at the close of trading on Wednesday.
Generac had sales of nearly $ 2.49 billion in 2020, up 12.7% from $ 2.2 billion in 2019. Double-digit growth was driven by the business community in the second half of the year as sales increased by more than 22% compared to the growth of 1% in 2019. the first half of the year.
The U.S. economy saw significant business shutdowns in the first and second quarters of 2020 after the first cases of Covid-19 transmission were reported in the country.
This week’s blizzard hit several southern states with freezing temperatures – in some cases single-digit numbers – that their residents are unaccustomed to. Dozens of dead and more than 3 million customers without power in the past three days. The storm affected approximately 100 million people in Texas, Arkansas and the Lower Mississippi Valley, according to the National Weather Service.
“I know that a lot of people are suffering down there,” said Jagdfeld. “We’re doing our best to bring as much product as possible to this market.”