Generac (NYSE:GNRC) reported second-quarter 2026 net sales growth of 11% as rising demand from data center customers drove a 29% increase in commercial and industrial revenue, while home standby generator sales returned to growth.
Net sales totaled $1.17 billion for the quarter, compared with $1.06 billion a year earlier. Commercial and industrial, or C&I, sales rose to $556 million from $431 million, while residential sales declined 2% to $621 million. Chief Executive Officer Aaron Jagdfeld said data center-related products were the principal driver of C&I growth, with Generac recognizing more than $100 million of related revenue during the quarter.
Data Center Backlog Reaches $1.6 Billion
Jagdfeld said the second hyperscale agreement was not yet included in the company’s $1.6 billion data center backlog because product-specific terms had not been finalized. He said the agreement is expected to be at least as large as the first hyperscale arrangement and includes discussions around deliveries in both 2027 and 2028.
The data center backlog represented about $1 billion in new orders over the prior 90 days. Generac now expects nearly $450 million in data center-related revenue during 2026, raising its prior expectation. Of the existing backlog, the company expects roughly $250 million to ship in the second half of 2026, with the remaining approximately $1.35 billion scheduled for 2027 delivery.
“The visibility to our multi-year growth outlook is clearly exceeding our previous expectations,” Jagdfeld said, describing the opportunity as a “generational” one for the company.
Capacity Expansion Accelerates
To support demand for large megawatt generators, Generac is expanding generator assembly and packaging capacity across its domestic and international facilities. The company expects to begin production at its recently acquired Sussex, Wisconsin, facility by the end of the third quarter, earlier than its prior year-end target. Jagdfeld said the first products are expected to run through a line at the facility in August, followed by a production ramp by the end of the quarter.
The company also plans to add a second line at Sussex and has identified opportunities to expand output at facilities in Oshkosh, Wisconsin; Asia; Europe; and India. Generac is also establishing production capabilities in Brazil and Mexico.
Generac completed the acquisition of generator enclosure and specialty-package provider Enercon on April 1. It also acquired a second facility in Belvidere, Illinois, expected to become operational in the first quarter of 2027. The company said the investments give it a path over the next 12 months to triple large-megawatt generator assembly and packaging capacity from its original year-end 2026 target of $1.25 billion.
Jagdfeld said the capacity target applies only to Generac’s assembly and packaging operations and does not include engine or other upstream-component capacity. He said the company has also developed a supply-chain roadmap intended to support the expansion, including second and third sources for key components.
Margins Benefit From Tariff Refunds
Generac’s second-quarter results included approximately $71 million in pretax tariff refunds, which boosted gross margin, net income and adjusted earnings measures. Consolidated gross margin rose to 44.5% from 39.3% a year earlier, with tariff refunds contributing about 6 percentage points of the improvement, according to Chief Financial Officer York Ragen.
Adjusted EBITDA increased to $291 million, or 24.8% of net sales, from $188 million, or 17.7% of sales, in the prior-year period. Excluding tariff refunds, adjusted EBITDA margin increased by about 1 percentage point, driven by operating leverage on higher sales volume, partly offset by a less favorable sales mix tied to higher C&I sales.
- GAAP net income was $143 million, compared with $74 million a year earlier.
- GAAP diluted earnings per share were $2.40, compared with $1.25.
- Adjusted net income was $174 million, or $2.91 per share, compared with $97 million, or $1.65 per share.
- Free cash flow was $63 million, up from $14 million in the prior-year quarter.
Total debt stood at approximately $1.33 billion at quarter-end, resulting in a gross debt leverage ratio of 1.5 times adjusted EBITDA, within Generac’s stated target range of one to two times.
Residential Outlook Moderates
Residential sales declined as lower portable generator shipments and reduced residential energy storage sales outweighed growth in home standby generators. The energy storage comparison was affected by a U.S. Department of Energy program in Puerto Rico that ended in 2025, while portable generator demand was affected by power outages that remained below the company’s long-term baseline.
Still, Jagdfeld said home standby generator sales returned to solid growth, supported by increased price realization and slightly higher volumes. The company’s dealer network grew to approximately 9,700 dealers, an increase of nearly 400 from a year earlier. Generac also said adoption of its next-generation home standby products introduced in late 2025 has been strong, including demand for its 28-kilowatt air-cooled generator.
For the full year, Generac maintained its outlook for consolidated net sales growth in the mid- to high-teens percentage range. The company raised its C&I sales growth forecast to the low-30% range from a previous mid- to high-20% range, citing data center demand and rental-channel strength.
However, Generac lowered its residential sales outlook to high-single-digit percentage growth from a prior expectation of approximately 10% growth, reflecting lower outage activity, affordability concerns and a small divestiture. The company expects full-year adjusted EBITDA margin of 20% to 21% including tariff refunds, or 18.5% to 19.5% excluding their 150-basis-point effect.
About Generac (NYSE:GNRC)
Generac Holdings Inc (NYSE: GNRC) is a leading manufacturer of backup power generation products for residential, commercial and industrial applications. The company offers a comprehensive portfolio of standby and portable generators, transfer switches and power management systems designed to provide reliable electricity during power outages and other critical situations. With an emphasis on innovation, Generac has expanded its offerings to include clean energy technologies such as battery storage and integrated solar-plus-storage systems.
Generac’s product lineup addresses a broad range of customer needs.
