How Generac Keeps the Lights on During a Storm

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Feb. 13 (Bloomberg) –- Generac Holdings President & CEO Aaron Jagdfeld discusses his product line and the rising demand for generators with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

We're very busy as we have been the last couple weeks.

The winter weather in the u.s. has been pretty dreadful if you've lived through it and been causing a lot of power outages.

Pennsylvania last week with the ice storm, the southeast this week moving up the coast here as well, so getting all the product out there in the market place so that people can get access to the generators they need if their power is out tell us a little bit about the product line.

How much does it cost and what will these generators do?

Sure.

The product line starts with what we call a portable generator.

It's got a smaller type of outputt and will cover you in a pinch.

You can buy it at a d.y.i. retailer.

Typical price points, $700 to $1,000 and it will cover a refrigerator, some lights, some of the other bare essentials of a home.

Then you can step up and what we are finding say lot of people are finding this, they're stepping up to a permanent instalmed solution on their home.

Gas or propane.

Fully automatic and it sits outside the home and so it's quite a bit shave -- safer.

You don't have to refuel it like you would a portable.

You are going to be really into somewhere in that $3,000 to $5,000 range, more than that sometimes for a bigger home but definitely still a fairly affordable product for people and beyond that you get into systems for become -- backing up much larger commercial systems, grocery stores, hospitals shall and those are tens of thousands if not hundreds of thousands of dollars for those systems.

Is there a moment, based on your experience with customers, that they open the door and realize they're throwing out yet another refrigrator of course food and the 13e7bs of -- spevens a generator starts to look different?

It's hitting people hard with the amount of food spoilage.

But also this time of year your home becomes cold and becomes basically un -- uninhabitable.

The hotel bills and dislocation and disruption in your life.

Maybe you have to take a couple days or weeks off work, for homeowners we call it the tipping point.

It might not be a one or two-hour outage that does in -- did in terms of having to buy a generator but power quality in the u.s. is remarkably poor for a country of our advanced state and wealth.

You know, i've been able to travel around the world and frankly the u.s. has, you know, a third world grid in a first world country and it's really a shame but power outages are on the rise and to your point, people are finding that that is more than just an inconvenience in a lot of cases.

Aaron, there are $ -- 75 million households in the united states.

How many of them, by your estimates, have backup power?

The estimate for people who have portable generators, 10 to 12% of them would have the portable type and only about 3% have the home standby type.

The market in particular, it's relatively new.

It's a market that we created really through asking customers what they wanted and people wanted this, -- they like the portable generators and also something that would run off the home's fuel supply.

Every penetration in that market, if we go from 3% to 4%, it's -- it's a $2 billion market and we have 70% market share so it's a tremendous market to grow.

You -- i believing analysts estimates were 90 cents.

Why right.

Can you talk to us now gee gravely?

Winter storms in the united states in the south, are people prepared for those kind of cold spells?

Certainly not.

You can take a cue from what happened in atlanta a couple weeks ago.

They're not used to that kind of weather certainly from a roadway standpoint.

But then they start talk about power generation and we haven't had any significant disruptions in power quality in the southeast like that for years.

So although we'll sell some portable generators here in the first quarter as a result of what's going on in michigan and the southeast, what we'll really look for is over the next 12 months an increase in those permanent installed standby generators as people really get ready for the next time this happens.

What about businesses?

Small businesses for example?

Yeah, that's a really ripe space because that's not just about the spoilage of your food in the refrigerator like the homeowner or the emotional toll of an outage.

It's a business loss.

You lose your revenue stream.

Certainly if you have perishable inventory you have spoilage there as well and we're seeing convenience stores, gas stations, retail bank ben bernankes and others starting to really wake up to the fact that they need a backup plan.

With the grid aging and the reliability of power becoming a bigger question in everybody's minds, businesses are reaching the conclusion that there is a considerable return of investment in a generator and that represents a very ripe space for us going forward.

Aaron, what have you done to increase the efficiency of your generators?

Every year that goes by we continue to advance the technology that -- so that the product becomes more efficient, more affordable.

More green.

It's a very green fuel that way and from an efficiency standpoint those products have improved considerably over the last 20 years and i'm sure over the next 20 years they will continue to improve.

I wonder if you have any story or anecdote maybe even yourself using the generac products?

I actually do.

I wouldn't be a good c.e.o. of a generator company if i didn't own one.

We get pretty severe weather here in the upper midwest where we're located.

From time to time which do lose power and i have three young children and as we got bad weather rolling through the area, they're always asking me, are we on the generator yet?

It's pretty cool to make your own power and have the safety and security that a product like that can 3r0eu789 i want to thank you for joining me.

This text has been automatically generated. It may not be 100% accurate.

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