Waukesha-based Generac Holdings Inc. is expecting sales to increase by an additional $100 million for the full year following three major hurricanes during the company’s third quarter.
Generac increased its guidance for the full year, projecting a 14 to 15 percent increase to net sales. That increase represented a roughly $87 million to $116 million increase from the previous guidance.
Sales during the third quarter were up $83 million or 22.5 percent to $457.3 million as the company saw increased demand for its portable generators. The demand was primarily focused in Florida, which was hit by Hurricane Irma. Executives said Hurricane Harvey primarily generated flooding and didn’t result in the same level of outages.
Net income was up 51.7 percent to $37.7 million. Earnings improved from 40 to 64 cents per diluted share.
Aaron Jagdfeld, Generac president and chief executive officer, said the company’s fourth quarter could rival the first quarter of 2013 when Generac was dealing with increased demand from Superstorm Sandy. The company estimates the power outage severity from Irma was about 80 percent of what the northeast experienced after Sandy.
Jagdfeld said the timing of Irma, about six weeks earlier than Sandy, means the company will be able to fill more of the increased demand for standby generators during the fourth quarter than it could during Sandy.
Generac has also taken a number of steps over the last five years to better prepare for increased demand from major power outage events. Those include a targeted marketing process and an in-home selling application called Power Play.
“We’ve never had a chance to pressure test them,” Jagdfeld said.
He said the new changes should give the company better visibility into how leads are handled, but there have also been some cases where the company had to distribute leads manually to dealers to avoid overwhelming others.
“We also put a lot of time and effort after Sandy into our production capabilities, our ability to expand capacity, both at the supply chain level and at our factories here in Wisconsin,” Jagdfeld said.
He said the lack of available labor has presented a challenge, but the company has overcome that with overtime and weekend work.
