While Town of Genesee-based generator manufacturer
Generac has started the year off strong, reporting a net sales increase of 6% in the first quarter of 2025 as compared to 2024, the company’s CEO says recent tariff policies have introduced a wider range of outcomes for its various end markets.
First quarter sales growth is attributed to an increase in orders for the manufacturer’s home standby generators, said
Aaron Jagdfeld, CEO of Generac, during the company’s earnings call on Wednesday.
Despite this increase, Generac widened its guidance to address the numerous ways tariffs could impact the business.
The company reported that tariffs could cost the company $125 million in the second half of the year. This figure doesn’t account for any money saved through mitigating efforts, including price increases or supply chain adjustments.
“While near-term visibility has been impacted by trade policy and macroeconomic uncertainty, we remain confident in our enterprise strategy and believe the secular trends of lower power quality and higher power prices will continue well into the future," said Jagdfeld. "As we attempt to mitigate the significant impact of tariffs in the immediate term, we are taking specific actions across the organization through higher pricing, various supply chain initiatives, and other cost reduction efforts over the coming quarters.”
Generac now expects full-year 2025 net sales growth to be between 0% and 7% compared to the prior year. This compares to the company's previous guidance range of 3% to 7%.
The company is assuming that current tariff polices remain in place for the remainder of the year and that current government polices surrounding clean energy remain “materially intact."
“We are updating our outlook to reflect a broader range of potential business outcomes for our business resulting from higher tariff levels, uncertain government policy actions, and their impact on the markets we serve,” said
York Ragen, chief financial officer at Generac.
Generac expects the impact of tariffs to be fully offset by price increases and other supply chain initiatives, Ragen explained.
On March 30, Generac introduced price increases of between 7% and 8% to mitigate the rising cost of goods caused by tariffs.
A potential tailwind for Generac in 2025 is the expansion of its product lineup to include large megawatt diesel generators, which are attracting interest from customers in the data center market. Those customers are seeking companies that offer “more competitive lead times” for emergency backup power generators, Jagdfeld explained.
While data centers are the company’s main target for its larger diesel generators, Generac is also looking to sell the products to municipalities, manufacturers, health care, organizations and more. These businesses all require large blocks of backup power.
“We are also executing on a growing pipeline of data center opportunities internationally, with initial shipments of our new large megawatt generators expected in the second half of this year,” said Jagdfeld.
In this period of economic uncertainty, Jagdfeld said Generac hasn’t seen consumer spending change too much yet. The company is eventually expecting a softer consumer environment in the second half of 2025.
“There’s a tremendous amount of uncertainty right now around the overall economic environment, with consumers in particular, but what we’ve seen on the ground, and what we’re hearing from others, is the consumer is hanging in there,” said Jagdfeld.
Generac is watching to see if any other major tariff announcements come in the next 60 to 90 days. In the short term, it isn’t feasible for the company to largely re-imagine its supply chain.
“There’s whole industries that aren’t here in the U.S.,” said Jagdfeld.” We can’t buy everything here in the U.S. Maybe over time that (network) could be developed, bit definitely not in 30 days.”
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