Severe weather and associated power outages across the United States in the past year have elevated demand for backup generators, bottlenecking suppliers such as Generac.
As millions of Texas residents continue to battle through a dayslong massive power shut-off in response to unprecedented snowfall across the state, Generac CEO Aaron Jagdfeld said requests for alternative home powering sources have surged.
“We can’t make them fast enough, and we’re doing everything we can to supply more product in the market,” he said Wednesday on CNBC’s “Power Lunch.”
With demand for heat at extreme levels, utilities in Texas, an energy-independent state, cut off power to millions to reduce stress on power grids. The rolling shut-offs have led consumers to seek out automatic home backup generators, much like power shut-offs did during high heat and fire risks in California last year, Jagdfeld said.
The weather emergency has led to discussions about the reliability of power grids in the U.S. As California dealt with power outages last year, Jagdfeld said he expects large-scale changes to come to electric grids and infrastructure in due time.
Generac, which produces backup generators for residential and commercial usage, has been running a Wisconsin plant, where most of its products are made, at full capacity since the coronavirus pandemic hit and homebound Americans began taking on home improvement projects. Hurricane seasons have also affected order volumes.
Given the company’s backlog, local permitting processes and the contractors involved, it can take 20 weeks for residents to get a generator installed in their home, he said. Generac has about 7,000 dealers in its network, but the company needs more, he said. Services that handle inspections, gas meter upgrades and other parts of the installation process are also reportedly dealing with long queues.
“There’s just a backlog of everything,” he added.
The company announced earlier this month that it will open a 421,000-square-foot facility in South Carolina to boost manufacturing capabilities of home standby generators and associated energy technologies, serving the Southeast. Generac said the project would supply about 450 new jobs within two years.
Shares of Generac have more than tripled from 2020. The stock price is up 253% since the beginning of last year. In the past week, the stock has rallied 29% to $355.32 as of Wednesday’s close.
Generac reported revenues of nearly $2.49 billion in 2020, up 12.7% from $2.2 billion in 2019. The double-digit growth was powered by business in the second half of the year when revenues surged more than 22% compared with the 1% growth recorded in the first half of the year.
The U.S. economy experienced major business shutdowns in the first and second quarters of 2020 after the first cases of Covid-19 transmissions were reported in the country.
This week’s snowstorm hit multiple Southern states with frigid temperatures — single digits in some instances — that their residents are not accustomed to, leaving dozens dead and more than 3 million customers without power in the past three days. The storm has affected about 100 million people living in Texas, Arkansas and the Lower Mississippi Valley, according to the National Weather Service.
“I know there’s a lot of people suffering down there right now,” Jagdfeld said. “We’re doing our best to get as much product as we can into that market.”