Generac raises 2026 margin outlook as data center sales lift Q3

Generac Holdings Inc. (GNRC) said on Oct. 28 that third-quarter net sales rose 16% to $1.29 billion, and that adjusted earnings topped the $2.48 consensus estimate compiled by Finnhub.

Revenue fell short of the $1.35 billion estimate from the same source. The company said its C&I segment drove the quarter, with data center demand ramping.

The company designs and manufactures energy technology solutions and other power products for residential, commercial, data center, telecom, rental and industrial markets.

Here's how the company did:

• Adjusted EPS: $2.54 vs. $1.83 a year earlier, topping the $2.48 estimate, according to Finnhub
• Revenue: $1.29 billion vs. $1.11 billion a year earlier, below the $1.35 billion estimate, according to Finnhub
• Net income per diluted share: $1.83 vs. $1.12 a year earlier
• Adjusted EBITDA: $256 million, or 19.8% of net sales, vs. $193 million, or 17.3%, a year earlier

Net income swung from a loss of $24.5 million in the fourth quarter of 2025 to a profit of $73.3 million in the first quarter of 2026, according to its SEC filings.

Segment results

Commercial & Industrial external net sales rose about 28% to $552 million from $432 million a year earlier. The company said the growth came mainly from products sold into the global data center market.

Residential external net sales rose about 9% to $743 million from $682 million. The company said home standby and portable generator sales grew, partly offset by lower shipments of energy storage systems.

In December, the company had agreed with Amazon.com, Inc. on a long-term supply agreement for backup power generators for Amazon data centers. The company said initial deliveries are expected to total $2.4 billion in 2027 and 2028.

CEO Aaron Jagdfeld said the company is continuing to expand capacity to "capture this generational growth opportunity."

2026 guidance

The company maintained its full-year net sales growth forecast in the mid-to-high teens percent range compared with 2025. It said that includes an approximate 2% favorable impact from foreign currency, acquisitions and divestitures.

The company now expects adjusted EBITDA margin, before deducting for noncontrolling interests, of 20.5% to 21.0%. That replaces the 20.0% to 21.0% range it gave on July 29.

It kept its net income margin forecast at 9.0% to 10.0% for the full year.

Costs and cash flow

Gross profit margin was 39.9%, up from 38.3% a year earlier, which the company attributed mainly to price and cost gains, including lower tariff costs. Operating expenses rose $31.6 million, or 10%.

Operating cash flow was $171 million, compared with $118 million a year earlier. Free cash flow, which the company defines as operating cash flow less capital expenditures, was $132 million, compared with $96 million.