As Town of Genesee-based
Generac and its distribution partners continue to work down an elevated backlog of products and inventories, the company reported this week that it has seen an anticipated decline in sales in the second quarter of 2023.
The company’s second quarter results show net sales decreased 23% to $1 billion, down from $1.29 billion last year. Residential product sales declined 44% while commercial and industrial (C&I) products continued to be a strong category for Generac with a 24% increase.
The company reported Wednesday it now anticipates its full-year 2023 net sales to decline between 10% to 12% as compared to the prior year.
“As expected, overall second quarter sales declined from a strong prior year comparable period that included the significant benefit of excess backlog reduction for home standby generators,” said
Aaron Jagdfeld, Generac president and chief executive officer. “While leading indicators of end market demand remain strong and we continue to make progress in reducing field inventory levels, residential product sales were modestly lower than our expectations in the quarter as a softer consumer environment for home improvement impacted shipments of home standby generators and chore products. However, global C&I product shipments remained strong at all-time record levels and were better than expected with broad-based growth across nearly all regions and channels.”
Lower shipments of home standby generators and PWRcell energy storage systems drove the decline in residential sales. Generac has seen weaker than expected demand for residential products due in part to a shift in consumer spending and unfavorable weather trends.
A return to normal year-over-year shipment levels of home standby generator products is now expected to begin in the fourth quarter of the year.
“With close rates and activations lower than expected in the quarter, the field inventory normalization process is now expected to extend further into the second half of the year,” said Jagdfeld.
He said Wednesday that Generac still expects these issues to only persist for a short time as long-term trends continue to point to increased interest and demand for backup power solutions.
“Longer term, the trends that are driving awareness for backup (power solutions) are as compelling as ever. Homeowners and business owners are becoming increasingly sensitive to the growing frequency of power outages driven by extreme weather and grid operators are struggling to solve the growing supply and demand imbalances that are a byproduct of the accelerated energy transition that is underway,” said Jagdfeld.
Generac also says it is continuing to invest in building out its future suite of products aimed at positioning the company as a leader in “smart” home energy products for consumers.
