Trends I'm Watching

Generac (GNRC) Leads the Market in Power Generators for Residences and Small Businesses

Trend: The list of home and office equipment that needs continuous electric power (computers, routers, refrigeration, etc.) continues to grow. 

Benefiting from this trend, Generac sells more home standby generators than all of their competitors combined.

Here's a one year chart for Generac.

 

Generac Reports Third Quarter 2011 Results

Strong demand for back-up power drives substantial increase in sales, profit and cash flow during the quarter WAUKESHA, Wis., Nov 01, 2011 (BUSINESS WIRE) -- Generac Holdings Inc. (NYSE: GNRC), a leading designer and manufacturer of generators and other engine powered products, today reported financial results for its third quarter ended September 30, 2011.   Highlights -   Total net sales increased year-over-year by 49.0% to $239.3 million as compared to $160.7 million in the third quarter of 2010. 60.5% year-over-year growth in Residential product sales. Commercial & Industrial (C&I) product sales up 27.4% compared to prior year. Net income increased year-over-year to $37.4 million as compared to $23.0 million for the third quarter of 2010; Adjusted net income increased 37.8% to $50.6 million from $36.7 million in the third quarter of 2010. Diluted net income per common share was $0.55 per share as compared to $0.34 per share in the third quarter of 2010; Adjusted diluted net income per common share was $0.75 per share as compared to $0.55 per share in the third quarter of 2010. Cash flow from operations in the third quarter 2011 increased 67.3% to $61.0 million as compared to $36.5 million in the prior year quarter. On October 3, 2011, the Company acquired substantially all the assets and certain liabilities of Magnum Products, LLC, funded solely by cash on the balance sheet. (Link: http://investors.generac.com/phoenix.zhtml?c=232690&p=irol-newsArticle&ID=1624088&highlight=)   Note: We may own GNRC at any time.

 

 

Generac (GNRC) Rides Weather and Power Grid Trends

Trend: Generac (GNRC) profits from volatile weather and power outages. Many homes and businesses are buying electric generators to avoid being without electricity.

When I was in Highlands, NC, on the Friday after Thanksgiving, I noticed that a bank building had a Generac generator located beside air conditioning units. Highlands, at 4100 feet elevation, often gets winter storms with snow and high winds.

In late August 2011, hurricane Irene made landfall in the United States. Irene was also the first hurricane to make landfall anywhere along the U. S. East Coast from Florida to Maine since 2005. It was the first truly significant hurricane threat to the northeastern U.S. in two decades and, despite making final landfall there as a strong tropical storm, it was large in size and its impacts were severe in many highly-populated locations at the coast and inland from North Carolina to New England. High winds toppled trees onto power lines — electric power outages for up to a week were common from Virginia to Maine.