An increase in power outages helped Waukesha-based Generac Holdings Inc. improve revenue during the third quarter and the company is positioning itself to take advantage of increased interest in home generators following Hurricane Matthew.
“While the duration of outages from Matthew wasn’t to the duration of a major event, it did result in a large increase in portable demand,” said Aaron Jagdfeld, Generac president and chief executive officer. “In addition, we believe Matthew should help to serve as an important awareness event and demand catalyst for home standby generators in the months ahead.”
Jagdfeld said the number of power outages has generally increased in the second half of the year and the company is ramping up its targeted marketing efforts.
Generac is also sending a team to the Carolinas and Florida to help support its network of 400 dealers in the region. Jagdfeld said many of the dealers in those regions haven’t seen a high number of outages in recent years and do not have the company’s iPad-based Power Play sales system. He said part of the team’s responsibility will be driving increased adoption of Power Play over the next 60 days.
Jagdfeld said he expects to see increased demand for Generac’s home standby generators over a two- to four-quarter period. In contrast, he said demand was increased for six to eight quarters following Hurricane Sandy.
“In our estimation, it’s not a major event,” Jagdfeld said. “It will drive increased awareness and it’s certainly helpful in an area of the country where we haven’t seen a lot of outages for a longer period of time.”
He said Generac has also seen a slight increase in demand in the Northeast following Hurricane Matthew, even though that region wasn’t hit by the storm in the same way the Southeast was. As result, he said the company plans to increase its media spending in the area as well.
Generac’s third quarter results included a 23 percent drop in net income to $26.2 million. The company’s selling and service, research and development, and general and administrative costs all increased over the same quarter last year, as did interest expenses and acquisition costs.
Earnings were down from 49 cents to 40 cents per diluted share.
The company increased its full-year guidance for revenue to an up 9 to 10 percent, largely on the strength of increased residential demand as other parts of the business exposed to oil and gas remained weak.