Power product supplier Generac’s net sales rose to a record US$2.5 billion in 2020 thanks to soaring demand for home generators and fast growth in the US’ residential solar-plus-storage sector which kept gross margins buoyant.
Sales rebounded significantly in the fourth quarter, rising 29% year-on-year to US$761 million. Excluding the company’s recent acquisitions, sales rose 28%.
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The company made US$300 million more last year compared with 2019, according to its full-year results, despite a US$170 million downturn in its commercial and industrial (C&I) business and international sales. C&I product sales fell 19% to US$702 million, it said, from US$872 million in 2019.
Gross profit for the fourth quarter rose 35% year-on-year, and edged close to the US$1 billion mark in the full year to 31 December, rising 20% to reach US$957.7 million. The gross margin also improved by 1.8% in the three months to December, due to the rise in residential product sales and “negative impact” to Generac’s C&I business, which was hit by COVID-19 supply-chain disruption and project delays.
Generac’s international sales also decreased slightly at the end of last year despite rebounds in the domestic segment, which saw sales rise by more than a third year-on-year. The group’s international sales fell 4.1% to US$116 million in the fourth quarter compared with the same period in 2019.
Nevertheless, Generac’s adjusted EBITDA was a “record” $196 million in the last three months of the year, representing more than a quarter (25.1%) of net sales, compared to around 22% in Q4 the year prior. The company expects net sales to increase again by between 25% and 30% for the whole of 2021, with EBITDA rising between 0.5% and 1.5% by the end of the year.
The company has benefitted from building a stronger presence in energy storage ovet the past year. Aaron Jagdfeld, Generac’s president and chief executive officer, said the company benefitted from “incredible demand” for home generators as well as a ramp up in sales of its PWRcell battery systems. Domestic market sales in Q4 rose 37.2% year-on-year to US$645.1 million. This growth, the company said, was “primarily driven by a significant increase in shipments of home standby generators, followed by the continued ramp of PWRcell energy storage systems.” Generac released a new EX lithium-ion battery module in October, and in the same month, announced it would also acquire Enabla Power, which specialises in distributed energy resources.
Generac formed a new energy storage business arm this year by uniting a number of recently-acquired companies, Pika Energy, Enbala Power Technologies and Neurio Technology, with its existing connectivity business, and is now set to open a new manufacturing and distribution facility in South Carolina later this year. The company predicts that the rising solar-plus-storage segment will provide “substantial growth” in its PWRcell energy storage systems in the year ahead, and that C&I shipments will return to growth across key markets as the effects of COVID-19 supply chain disruption subsides.
“In the face of a global pandemic, our record performance during the year was even more impressive as we made important progress with our evolution into an energy technology solutions company,” Jagdfeld said, adding that the company expects “very strong” growth next year.
“We expect 2021 to be another very strong year given the significant momentum for our residential products and an expected return to growth for our C&I products.”