Second Quarter 2026
Filed Jul 29, 2026Generac Reports Second Quarter 2026 Results; Further C&I segment acceleration drives robust sales increase and operating leverage during the quarter; Rapidly increasing data center backlog provides visibility to significant 2027 growth
Net sales increased 11%, C&I total sales increased approximately 29%, adjusted EBITDA margin expanded to 24.8%, and full-year adjusted EBITDA margin guidance increased to approximately 20.0 to 21.0%.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $1.17 billion | – | increased 11% |
| Net sales growth impact from acquisitions, divestitures and foreign currencyother | 2% | – | net favorable impact of 2% to sales growth |
| Gross profit marginGAAP | 44.5% | – | – |
| Operating expensesGAAP | increased by $6.4 million | – | 2% |
| Net income attributable to the CompanyGAAP | $143 million | – | – |
| Net income attributable to the Company per shareGAAP | $2.40 per share | – | – |
| Adjusted net income attributable to the Companynon-GAAP | $174 million | – | – |
| Adjusted net income attributable to the Company per sharenon-GAAP | $2.91 per share | – | – |
| Adjusted EBITDA before deducting for noncontrolling interestsnon-GAAP | $291 million | – | – |
| Adjusted EBITDA margin before deducting for noncontrolling interestsnon-GAAP | 24.8% of net sales | – | – |
| Provision for income taxesGAAP | $46.7 million | – | – |
| Effective tax rateGAAP | 24.6% | – | – |
| Cash flow from operationsGAAP | $121.2 million | – | – |
| Free cash flownon-GAAP | $62.9 million | – | – |
| C&I segment external net salesGAAP | $556 million | – | increased approximately 29% |
| Residential segment external net salesGAAP | $617 million | – | decreased approximately 2% |
| Pre-tax impact from tariff refundsother | approximately $71 million | – | – |
| Data center market backlogother | approximately $1.6 billion | – | increased to approximately $1.6 billion as of today |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Commercial & IndustrialCore total sales growth was primarily driven by ramping revenue from products sold into the global data center market. Increased shipments to rental and telecom channel customers were more than offset by a decrease in shipments to the domestic industrial distributor channel. | $556.5 million | – | increased approximately 29% |
| ResidentialThe sales decrease was primarily driven by lower energy storage system and portable generator shipments compared to the prior year, mostly offset by growth in home standby generator sales. | $621.3 million | – | decreased approximately 2% |
| Commercial & Industrial adjusted EBITDAMargin expansion was driven by an impact from tariff refunds of approximately 2%, the favorable impact of acquisitions/divestitures and improved operating leverage, offset by an unfavorable sales mix shift and strategic operating expense investments. | $81.5 million, or 14.6% of C&I total sales | – | – |
| Residential adjusted EBITDAThe increase was driven by tariff refunds which impacted margins by approximately 9%, as well as favorable sales mix and operational efficiencies resulting in lower operating expenses. | $215.4 million, or 34.7% of Residential segment total sales | – | – |
full-year 2026 outlook
- RevenueTotal net sales growth is still expected to be in the mid-to-high teens percent range as compared to the prior year
- Noteincludes an approximate 2% favorable impact from the net effect of foreign currency, acquisitions, and divestitures
- NoteC&I segment sales are now expected to grow in the low 30% range during the year
- NoteResidential segment sales are now projected to increase in the high-single digit range from the prior year
- Notenet income margin, before deducting for non-controlling interests, is expected to be approximately 9.0 to 10.0%
- Noteadjusted EBITDA margin is expected to be approximately 20.0 to 21.0%
- Notetariff refund is expected to have an approximate 1.5% impact for the full year 2026
What drove it
- Ramping revenue from products sold into the global data center market drove C&I core total sales growth.
- The Company finalized product specific terms committing nearly $700 million of volume for 2027 under a global supply agreement with a leading hyperscale data center operator.
- The Company secured a global supply agreement with a second hyperscale customer on June 24 and was negotiating final product specific terms for 2027 and 2028 volumes.
- The Company received approximately $1 billion in additional orders from new and existing data center customers since its prior update.
- The Company completed the acquisition of Enercon and acquired an additional facility in Belvidere, Illinois, expanding capacity for large megawatt generator packaging.
- Tariff refunds contributed approximately 6% to gross margin during the quarter.
Concerns
- Residential segment total sales decreased approximately 2%, driven by lower energy storage system and portable generator shipments.
- C&I shipments to the domestic industrial distributor channel decreased.
- Unfavorable sales mix and higher input costs partially offset favorable price realization in consolidated gross margin.
- C&I adjusted EBITDA margin faced an unfavorable sales mix shift and strategic operating expense investments to support future growth.
- The effective tax rate increased to 24.6% from 17.2% because a non-recurring favorable discrete item in the prior-year period did not repeat.
What to watch
- Execution on ramping production for large megawatt backup generators and investments in incremental production and packaging capacity.
- Finalization of product specific terms for the second hyperscale customer's 2027 and 2028 volumes.
- Conversion of approximately $1.6 billion of data center market backlog, which excludes committed volumes from the second hyperscale customer.
- The effect of tariff refunds, which management expects to have an approximate 1.5% impact on full-year 2026 results.
- Residential demand trends for energy storage systems, portable generators and home standby generators.
Balance sheet and cash flow
- Cash flow from operations was $121.2 million during the second quarter, as compared to $72.2 million in the prior year.
- Free cash flow was $62.9 million as compared to $14.5 million in the second quarter of 2025.
- The increase in free cash flow was primarily driven by higher operating earnings, including cash receipts from tariff refunds.
Analysis
Generac reported a strong second quarter, with net sales increasing 11% to $1.17 billion. The consolidated result was driven by C&I, where total sales increased approximately 29% to $556.5 million as global data center revenue ramped. Residential total sales decreased approximately 2% to $621.3 million, reflecting lower energy storage system and portable generator shipments that were mostly offset by home standby generator growth.
Profitability expanded sharply. Gross profit margin increased to 44.5% from 39.3%, with tariff refunds contributing approximately 6% to gross margin. Adjusted EBITDA before deducting for noncontrolling interests increased to $291 million, or 24.8% of net sales, from $188 million, or 17.7% of net sales. Net income attributable to the Company increased to $143 million, or $2.40 per share, while adjusted net income attributable to the Company rose to $174 million, or $2.91 per share. The quarter included a pre-tax impact of approximately $71 million related to tariff refunds.
Segment mix remained uneven. C&I adjusted EBITDA rose to $81.5 million, or 14.6% of segment total sales, supported by tariff refunds, acquisitions/divestitures and improved operating leverage. Residential adjusted EBITDA reached $215.4 million, or 34.7% of segment total sales, with tariff refunds impacting margins by approximately 9%, alongside favorable mix and lower operating expenses. Consolidated operating expenses increased by $6.4 million, or 2%, as the Company invested to support future C&I growth and absorbed higher intangible amortization.
Cash generation improved, with cash flow from operations of $121.2 million and free cash flow of $62.9 million, supported by higher operating earnings and tariff-refund cash receipts. The Company also expanded large-megawatt-generator capacity through the Enercon acquisition and an additional Belvidere facility. Management cited approximately $1.6 billion of data center market backlog, excluding committed volumes from the second hyperscale customer, and nearly $700 million of 2027 volume committed under the first hyperscale supply agreement.
For full-year 2026, Generac maintained total net sales growth guidance in the mid-to-high teens percent range while raising expected C&I sales growth to the low 30% range and projecting Residential sales growth in the high-single digit range. Net income margin guidance increased to approximately 9.0 to 10.0%, and adjusted EBITDA margin guidance increased to approximately 20.0 to 21.0% from the previous guidance range of 18.5 to 19.5%. Management attributed the increased profitability outlook primarily to the tariff refund, expected to have an approximate 1.5% full-year impact.
Management, verbatim
Second quarter results reflect continued momentum in our C&I segment driven by strong data center market revenue as we continue to ramp production for large megawatt backup generators.
Aaron Jagdfeld, President and Chief Executive Officer
In total, our backlog for products serving the data center market has now increased to approximately $1.6 billion as of today, which does not include any committed volumes from the second hyperscale customer.
Aaron Jagdfeld, President and Chief Executive Officer
Not in the filing
stated, not guessed- GAAP operating income
- GAAP operating margin
- Gross profit in dollars
- Cash balance
- Debt balance
- Share repurchases
- Dividends
- Capital expenditures
- Prior-quarter comparisons for reported metrics
- Full-year 2026 gross margin guidance
- Full-year 2026 operating expense guidance
- Full-year 2026 tax-rate guidance
- Previous-release outlook for comparison with actual reported results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.