Generac CEO Aaron Jagdfeld joins Yahoo Finance’s Zack Guzman to discuss how the generator demand is changing after Tropical Storm Isaias, along with the outlook on the generator giant's home solar-storage system.
ZACK GUZMAN: Of course, I don't need to remind you how long this year has felt here in 2020. A bit of a apocalypse scenario here. Just to lay out, I mean, it's felt like five years in one. We're seeing a pandemic sweep the globe. We had murder hornets make landfall here. Sports on the verge of shutting down. And if that weren't enough, two storms as well moved across the US, knocked power out for millions here in Isaias and derecho now moving across the Midwest.
And if you feel like it's a rough year, you're not alone, which could explain why the generator business here has seen a bit of a boost, especially when you look at one of those leading companies on that front in Generac. Shares year to date up more than 60%, and now the company just introduced a new whole-home solar solution.
Here to chat that is Generac CEO Aaron Jagdfeld. And, Aaron, welcome back to "The Ticker." Good to see you again, my friend. And when we talk about the progress you guys have seen this year, I mean, there aren't a lot of companies we can point to that's enjoyed that rally here in 2020. So what do you attribute it to right now? Obviously you guys do a lot.
AARON JAGDFELD: Yeah, thanks for having me on, Zack, and good to see you guys again. Yeah, this has been just a-- you know, it really-- this actually started last year. You know, we started seeing with the California wildfires the power safety shutoffs that PG&E was undertaking really brought a level of awareness to the product category-- backup power that is-- to, you know, something that we had not seen before.
And so it's really-- it's been extremely busy here since last fall. And then obviously with the pandemic, we weren't sure how that would impact our business. But in effect what it's done is it's taken-- and, you know, I've been watching your program, guest after guest come on and talk about all this kind of seismic shift around these major trends, whether it's working from home or educating from home, shopping from home, entertaining from home, all of these things that really rely on a continuous source of power in your own home. And so the awareness around making sure you've got that that supply of power and really the anxiety level around not having it, right?
So as you mentioned, last week there were over 4 million homes and businesses-- you know, New York, New Jersey, Connecticut, New England-- that lost power. And then just yesterday across Iowa, Illinois, here in parts of Wisconsin, where we're located, also more than a million and a half people. So just major disruption in the electrical grid. And I think when you're home doing all these things, you really become aware-- keenly aware of just how important that power is.
ZACK GUZMAN: Yeah, that's the interesting piece of this too because there's a lot of this pandemic that I don't think people realize, especially if you look at your power bill now if you're doing that as well, how much more you're spending on that.
But I guess it seems that this momentum is not letting up because you guys reported earnings two weeks ago, and you upped your prior guidance for revenue growth for full year 2020 from a decline of 5% to 10% previously to an increase of approximately 5% to 8% compared to the prior year. So, I mean, jokes aside about the apocalypse, more people staying home, I mean, what are you seeing now provide that boost as we get further and further along here in 2020?
AARON JAGDFELD: Yeah, I mean, clearly the shift in guidance was, for us, a big change, obviously. And again, I think, you know, we would attribute it to some of these trends that are going on that we just talked about and the outages, of course.
But I think the overarching concern around-- you know, we're just now entering hurricane season, right? It's just starting. So, you know, we've got a long way to go, and here we are. We're already looking at, you know, potentially the earliest J-named storm in the record books, which is pretty amazing. And then you've got the California wildfire season coming up again this fall, so we'll see what that brings in terms of outages there.
But, you know, aside from that, you mentioned the cost the power. And when you look at your power bill, I think people are probably looking more at those bills as they spend more time at home and are consuming more power at home.
We've recently introduced-- you mentioned at the top of the segment here we recently introduced a new product that is a storage device that would connect to a solar system. So if you're trying to reduce your power costs and you're trying to do your part to help climate change and you're generating your own power on site, we now offer a battery-storage system that we would combine with that solar system that really helps you to create a level of independence in your own power, both in the cost of that power as well as kind of resiliency should the utility go down in your local area.
We think that that's kind of the future here is the grid 2.0. The grid is going to change dramatically in the next decade.
ZACK GUZMAN: Well, that was going to be my question too because we've seen a lot of companies make an emphasis on solar. Obviously Tesla one of those companies as well with its Powerwall system. So how does that-- how does that maybe differ from what you guys are looking to offer, and how is the overall solar solution not cannibalistic to your business when you think about other energy sources for generators, whether it be natural gas or different energy types there as well?
AARON JAGDFELD: Right. Yeah, so our legacy products really are all about long-term backup, right? So if you were one of the unfortunate ones here who's has been without power in Connecticut or New York for six or seven days now, you know, even if you had a solar system and a storage system, it would be really difficult to provide enough power throughout that entire outage. The cost of those products is just still too high.
It's coming down, and so it's encouraging. You know, longer term, the trends are good. But our legacy products-- natural-gas-powered, propane-powered generators are going to be around a long time for that type of application.
But where the new products come into play is really all about, you know, again, as the technology shifts and as those costs come into, I would say, more affordable types of curves, you're going to see a decentralization of the grid. You're going to see a lot more people producing their own power, whether it be with solar or geothermal, maybe even a gas generator but storing that power on site and then actually using that power smartly during a point in the day where maybe your local utility would be charging you much, much higher rates. You know, at peak times of the day, you can use your battery-- your battery system to reduce those costs.
ZACK GUZMAN: Well, if ever there was a year to start thinking about a plan B, I think we found it here in 2020. But Aaron Jagdfeld, appreciate you being the one there to help people out. Keep the lights on. And again, appreciate you coming on the show to chat about it. Aaron Jagdfeld, Generac CEO, thanks again.
AARON JAGDFELD: Thanks, Zack.