Storms and related power outages in the US last year have increased the demand for backup generators, which has led to bottlenecks at suppliers like Generac.
As millions of Texas residents continue to struggle through days of massive blackouts in response to unprecedented snowfall across the state, 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 cut electricity to millions in order to reduce the load on the power grids. The rolling barriers have spurred consumers to look for automatic backup power 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 started 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 can 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 performing 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 enhance 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. The double-digit growth was driven by the business community in the second half of the year when sales increased by more than 22% compared to the growth of 1% in 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 in the country were reported.
This week’s blizzard hit several southern states with freezing temperatures – in some cases single-digit numbers – that their residents are not used 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.”