WAUKESHA, Wis. - Generac Holdings Inc. (NYSE: NYSE:GNRC) has been chosen to negotiate for a $50 million grant from the Department of Energy (DOE) under the Grid Resilience and Innovation Partnership (GRIP) program, the company announced today. This initiative, part of a larger $10.5 billion investment established by the Bipartisan Infrastructure Law, aims to enhance grid flexibility and resilience, particularly in Disadvantaged Communities (DACs) in California.
In collaboration with the California Water Association (CWA), Generac plans to deploy microgrids and battery storage solutions at about 100 water utility sites across the state. The project, which places over half of its sites in DACs, seeks to improve air and water quality, reliability, and operational savings while generating reliable load reduction during periods of grid stress.
Aaron Jagdfeld, president and CEO of Generac, emphasized the company's long history of providing backup power solutions and expressed pride in being selected to contribute to California's energy infrastructure. The project will utilize distributed energy resource management systems (DERMS) to create virtual power plants (VPPs), enhancing the state's grid reliability.
California Energy Commission Chair David Hochschild lauded the DOE's support and highlighted the project's alignment with California's clean energy goals, emphasizing its significance for grid reliability and resilience during local outages and extreme weather events.
The project's importance is underscored by California's grid challenges, which include aging infrastructure, increased electrification demands, and extreme weather effects. During a heatwave in September 2022, water utilities provided crucial backup power, demonstrating the need for sustainable energy solutions.
The initiative is expected to create approximately 200 union construction jobs and 33 direct jobs. It will also contract about $27 million with businesses owned or controlled by underrepresented groups and direct most benefits to DACs. The project will be executed in collaboration with various local unions, including the Northern California Laborers and the IBEW Local Union.
Generac, a leader in energy technology since 1959, continues to innovate in the backup power and energy storage market, furthering its mission toward resilient and sustainable energy solutions. This announcement is based on a press release statement from Generac Power Systems, Inc.
In other recent news, Generac Holdings reported steady Q2 2024 net sales of $998 million, mirroring the previous year's figure. The company saw an 8% growth in residential product sales, offset by a 10% decline in Global Commercial & Industrial product sales. Generac's gross profit margin rose to 37.6%, with the quarter's adjusted EBITDA standing at $165 million.
Generac has completed the acquisition of Ageto, a firm known for its advanced microgrid controllers, enhancing Generac's commercial and industrial sector offerings. Canaccord Genuity maintained a positive outlook on Generac, upholding a Buy rating, and Piper Sandler maintained its Overweight rating on the company. These assessments come after increased demand for Generac's products due to recent natural disasters.
Generac has also raised its full-year outlook for 2024, citing increased demand following power outage events. The company has made a $35 million minority investment in Wallbox (NYSE:WBX) to expand its EV charging solutions. These are recent developments indicating Generac's commitment to growth and adaptability in the face of market changes.
InvestingPro Insights
Generac Holdings Inc.'s selection for the $50 million DOE grant negotiation aligns with the company's strong market position and growth potential. According to InvestingPro data, Generac boasts a market capitalization of $10.06 billion, reflecting its significant presence in the energy technology sector.
The company's financial health appears robust, with InvestingPro Tips indicating that Generac operates with a moderate level of debt and its liquid assets exceed short-term obligations. This financial stability positions the company well to undertake large-scale projects like the California microgrid initiative.
Generac's revenue for the last twelve months as of Q2 2024 stands at $4.02 billion, with a gross profit margin of 36.21%. While the company has experienced a slight revenue decline of 0.1% over the same period, its EBITDA growth of 22.62% suggests improving operational efficiency.
An InvestingPro Tip highlights that 16 analysts have revised their earnings upwards for the upcoming period, indicating positive sentiment about Generac's future performance. This optimism may be partly attributed to projects like the DOE grant, which could contribute to the company's growth trajectory.
Investors should note that Generac is trading at a P/E ratio of 42.16, which an InvestingPro Tip describes as "high relative to earnings." However, another tip suggests it's trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.67, potentially indicating an undervalued stock considering its growth prospects.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Generac, providing a deeper understanding of the company's financial health and market position.
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