WAUKESHA, Wis. - Generac Power Systems (NYSE: GNRC) announced on Wednesday the acquisition of PowerPlay Battery Energy Storage Systems, a commercial and industrial battery energy storage division of SunGrid Solutions Inc. This strategic move aims to enhance Generac's product ecosystem, focusing on resilience, efficiency, and sustainability.
The acquisition, which closed on June 26, 2024, is part of Generac's commitment to providing comprehensive energy solutions to its commercial and industrial customers. PowerPlay specializes in turnkey Battery Energy Storage Systems (BESS) for projects up to 7 MWh, catering to retail stores, restaurants, office buildings, manufacturing facilities, and healthcare facilities.
Aaron Jagdfeld, president and CEO of Generac, emphasized the acquisition's alignment with the company's mission to offer a more complete set of products and solutions that empower customers to achieve their energy objectives. Jody Snodgrass, CEO of SunGrid, expressed pride in PowerPlay and its team, noting that the acquisition by Generac is a testament to their innovative spirit and dedication.
PowerPlay will continue to operate in Cambridge, Canada, as a dedicated research and development facility for Generac's commercial and industrial BESS solutions. SunGrid Solutions will maintain its focus on energy storage EPC operations across the United States and Canada, specializing in larger scale solutions ranging from 10 MWh to 1 GWh.
Battery energy storage systems are increasingly vital for commercial and industrial businesses to build resilient, efficient, and sustainable on-site distributed energy systems. The need for such storage solutions is driven by factors like the growth of distributed solar, increased electrification of facilities, rising utility rates, and potential grid fluctuations due to weather, blackouts, or infrastructure challenges.
Generac, founded in 1959, is a prominent energy technology company that provides a range of power products and energy storage systems for home and business applications. SunGrid Solutions is a leading provider of engineering, procurement, and construction solutions specializing in battery energy storage systems for projects of any scale.
The financial terms of the deal were not disclosed. This information is based on a press release statement from Generac Power Systems, Inc.
In other recent news, Generac Holdings (NYSE:GNRC) Inc. announced several outcomes from its annual shareholders meeting, including board appointments and shareholder approvals. Shareholders elected all four director nominees for a three-year term and ratified the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024. Executive compensation and an equity incentive plan were also approved.
In earnings news, Generac reported a slight increase in net sales to $889 million in Q1 2024, driven by a 2% growth in residential product sales. However, the company saw a 2% decline in global commercial and industrial product sales. Despite these results, Generac projects sales growth between 3-7% and an improvement in gross margins by 300-350 basis points for 2024.
In terms of analyst ratings, Truist Securities raised the stock's price target for Generac to $170.00 from $160.00, maintaining a Buy rating. This decision came after discussions with Generac, focusing on the home standby market dynamics and the company's 2024 guidance and new product strategies in the Energy Technology segment.
Conversely, JPMorgan (NYSE:JPM) downgraded Generac's stock from Overweight to Neutral, reducing its price target to $149.00. Similarly, Oppenheimer downgraded Generac from an Outperform to a Perform rating, as the company's stock price surpassed the previously set target of $145. These are the recent developments regarding Generac Holdings Inc.
InvestingPro Insights
Generac Power Systems (NYSE: GNRC) recently announced its acquisition of PowerPlay Battery Energy Storage Systems, marking an important step in the company’s expansion into the commercial and industrial battery storage market. In light of this development, key financial metrics and expert analysis from InvestingPro provide a deeper understanding of Generac’s current market position and future potential.
InvestingPro Data reveals that Generac has a market capitalization of $8.16 billion and is trading with a Price-to-Earnings (P/E) ratio of 36.46, reflecting investor confidence in its earnings capacity. The company's P/E ratio has adjusted slightly in the last twelve months as of Q1 2024, standing at 35.78. This suggests a consistent valuation by the market despite fluctuations. Moreover, Generac's revenue for the last twelve months as of Q1 2024 stands at $4.024 billion, with a Gross Profit Margin of 35.02%, indicating strong profitability in its operations.
Two InvestingPro Tips highlight that Generac operates with a moderate level of debt and its liquid assets exceed short-term obligations, providing the company with financial stability and flexibility. This is particularly relevant as the company ventures into the battery energy storage sector, which requires significant investment in research and development.
Generac's strategic acquisition is further supported by the fact that analysts predict the company will be profitable this year, as per another InvestingPro Tip. This is corroborated by Generac's profitability over the last twelve months, an important consideration for investors looking at the company's track record.
For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/GNRC. These tips provide valuable insights into Generac's financial health and market position, which could be particularly useful in assessing the impact of the PowerPlay acquisition on the company's future.
Generac's forward-looking approach in enhancing its product ecosystem through strategic acquisitions like PowerPlay positions the company well in the growing energy storage market. Investors and analysts alike can stay informed on GNRC's performance and potential with real-time data and professional insights offered by InvestingPro. To gain full access to these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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