Generac Holdings CEO: Our Business Has Been Diversified

Generator manufacturer Generac Holdings Inc. GNRC came out with upbeat fourth-quarter earnings on Wednesday. The company posted an EPS of $0.70 for the quarter ending December 31, compared to an EPS of $0.69 it posted for the same quarter previous year.

Generac Holdings CEO Aaron Jagdfeld was on CNBC after the results to discuss the company’s numbers and its efforts to diversify beyond generators.

Shifting Focus Away From Weather

When discussing outage causes, Jagdfeld replied, “Obviously we sell generators, so at some degree you got to have the power, concerns about power outages, or actual power outages.

“Our business has been diversified quite a bit over the last several years. We have gotten much deeper into commercial and industrial applications. About 10 percent of our revenues now are exposed to oil and gas, which is not necessarily a great thing, obviously, given where energy prices are at.”

He continued: “But we serve the telecommunications market; we serve backup power for bigger installations, hospitals, waste water treatment plants and the likes.

“So, it’s not as focused on weather, but certainly outages are driven primarily by weather and outages do drive the underlying demand for generators.”

Related Link: Lower Gas, Better Weather Boost Retailers' January Sales

How Will Less Frequent Power Interruptions Impact GNRC?

“Well, from our perspective, they [electrical companies] are not doing much,” Jagdfeld replied.

“When you have an outage and a tree falls down on a power line, typically you see the electrical company come out there and re-strings the exact same wire, right? And everybody loves trees so there’s somebody behind them replanting the trees. So, it’s a cycle that keeps repeating.

“Bringing the grid underground is really the only true, safe way to transmit power. The problem is it’s a tremendously costly proposition.”