Generac Reports Second Quarter 2026 Results
WAUKESHA, Wis., July 29, 2026 (GLOBE NEWSWIRE) -- Generac Holdings Inc. (NYSE: GNRC) (“Generac” or the “Company”), a leading global designer and manufacturer of energy technology solutions and other power products, today reported financial results for its second quarter ended June 30, 2026, and provided an update on its outlook for the full year 2026.
Second Quarter 2026 Highlights
“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,” said Aaron Jagdfeld, President and Chief Executive Officer. “We continued to solidify our position as a leading provider to the data center market by securing a global supply agreement with a second hyperscale customer during the quarter. In addition, we increased our backlog for both hyperscale and non-hyperscale customers as we have received approximately $1 billion in additional orders from both new and existing customers since our prior update. 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. To address this accelerating demand, we are investing aggressively in incremental production and packaging capacity for large megawatt generators and are planning to add further capacity as our pipeline of opportunities materializes.”
Additional Second Quarter 2026 Consolidated Highlights
Gross profit margin was 44.5% as compared to 39.3% in the prior year second quarter. The increase was primarily driven by tariff refunds which contributed approximately 6% to gross margin during the quarter. Additionally, unfavorable sales mix and higher input costs were partially offset by favorable price realization.
Operating expenses increased by $6.4 million, or 2%, as compared to the second quarter of 2025. The increase was primarily driven by increased operating expense investments to support future C&I growth and higher intangible amortization, partially offset by lower legal expenses in the current year.
Provision for income taxes for the current year quarter was $46.7 million, or an effective tax rate of 24.6%, as compared to $15.4 million, or a 17.2% effective tax rate, for the prior year. The increase in the effective tax rate was primarily related to a non-recurring favorable discrete item in the prior year period that did not repeat in the current year.
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, as defined in the accompanying reconciliation schedules, was $62.9 million as compared to $14.5 million in the second quarter of 2025. This strong increase in free cash flow during the quarter was primarily driven by higher operating earnings, including cash receipts from tariff refunds.
Second Quarter Business Segment Results
Commercial & Industrial Segment
Commercial & Industrial segment total sales increased approximately 29% to $556.5 million from $430.6 million in the prior year quarter, including an approximate 6% net favorable impact to sales growth from the combination of acquisitions, divestitures, and foreign currency. The core total sales growth for the segment was primarily driven by ramping revenue from products sold into the global data center market. In addition, increased shipments to rental and telecom channel customers were more than offset by a decrease in shipments to the domestic industrial distributor channel.
Adjusted EBITDA for the segment, before deducting for noncontrolling interests, was $81.5 million, or 14.6% of C&I total sales, as compared to $53.3 million, or 12.4% of total sales, in the prior year. This margin increase was primarily driven by an impact from tariff refunds of approximately 2%, as well as the favorable impact of acquisitions/divestitures and improved operating leverage, offset by an unfavorable sales mix shift and strategic operating expense investments to support future growth.
Residential Segment
Residential segment total sales decreased approximately 2% to $621.3 million as compared to $634.7 million in the prior year quarter. This modest 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.
Adjusted EBITDA for the segment was $215.4 million, or 34.7% of Residential segment total sales, as compared to $146.4 million, or 23.1% of Residential sales, in the prior year. This increase was primarily driven by tariff refunds which impacted margins by approximately 9%, as well as favorable sales mix and operational efficiencies resulting in lower operating expenses.
2026 Outlook
Total net sales growth is still expected to be in the mid-to-high teens percent range as compared to the prior year, which includes an approximate 2% favorable impact from the net effect of foreign currency, acquisitions, and divestitures. C&I segment sales are now expected to grow in the low 30% range during the year as a result of continued significant momentum in the data center market, and Residential segment sales are now projected to increase in the high-single digit range from the prior year.
Additionally, the Company now expects net income margin, before deducting for non-controlling interests, to be approximately 9.0 to 10.0% for the full-year 2026, as compared to the previous guidance of 8.0 to 9.0%. The corresponding adjusted EBITDA margin is now expected to be approximately 20.0 to 21.0%, as compared to the previous guidance of 18.5 to 19.5%. This increased outlook is primarily due to the tariff refund included in the second quarter, which is expected to have an approximate 1.5% impact for the full year 2026.
Conference Call and Webcast
Generac management will hold a conference call at 10:00 a.m. EDT on Wednesday, July 29, 2026 to discuss second quarter 2026 operating results. A webcast of the conference call can be accessed at the following link: https://edge.media-server.com/mmc/p/zrzjabf4
The webcast of the conference call is also available on Generac's website ( http://www.generac.com), accessed under the Investor Relations link. The webcast link will be made available on the Company’s website prior to the start of the call within the Events section of the Investor Relations website.
Following the live webcast, a replay will be available on the Company’s website for 12 months.
About Generac
Generac is a total energy solutions company that empowers people to use energy on their own terms. Founded in 1959, Generac is a leading global designer, manufacturer, and provider of a wide range of energy technology solutions. The Company provides power generation equipment, energy storage systems, energy management devices & solutions, and other power products and services serving the residential, commercial, data center, telecom, rental, and industrial markets. The Company’s broad portfolio of energy technology offerings for homes and businesses enables its mission to Power a Smarter World and lead the evolution to more resilient, efficient, and innovative energy solutions.
Forward-looking Information
Certain statements contained in this news release, as well as other information provided from time to time by Generac Holdings Inc. or its employees, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements give Generac's current expectations and projections relating to the Company's financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "forecast," "project," "plan," "intend," "believe," "confident," "may," "should," "can have," "likely," "future," "optimistic" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.
Any such forward-looking statements are not guarantees of performance or results, and involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Although Generac believes any forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Generac's actual financial results and cause them to differ materially from those anticipated in any forward- looking statements, including:
Should one or more of these risks or uncertainties materialize, Generac's actual results may vary in material respects from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in Generac's filings with the U.S. Securities and Exchange Commission ("SEC"), particularly in the Risk Factors section of the Annual Report on Form 10-K and in its periodic reports on Form 10-Q. Stockholders, potential investors and other readers should consider these factors carefully in evaluating the forward-looking statements.
Any forward-looking statement made by Generac in this press release speaks only as of the date on which it is made. Generac undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Non-GAAP Financial Metrics
Core Sales
The Company references core sales to further supplement Generac's consolidated financial statements presented in accordance with U.S. GAAP. Core sales excludes the impact of acquisitions and fluctuations in foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparison of net sales performance with prior and future periods.
Adjusted EBITDA
To supplement Generac’s consolidated financial statements presented in accordance with U.S. GAAP, the Company provides the computation of Adjusted EBITDA attributable to the Company, which is defined as net income (loss) before noncontrolling interests adjusted for the following items: interest expense, depreciation expense, amortization of intangible assets, income tax expense (benefit), certain non-cash gains and losses including certain purchase accounting adjustments and contingent consideration adjustments, share-based compensation expense, certain transaction costs and credit facility fees, business optimization expenses, provision for certain legal and regulatory charges, certain specific provisions, mark-to-market gains and losses on a minority investment, and Adjusted EBITDA attributable to noncontrolling interests. The provision for legal and regulatory charges adjusts for matters that are significant and not part of the ordinary routine litigation or regulatory matters incidental to the Company’s business, such as large suits and settlements, class action lawsuits, government inquiries and certain intellectual property litigation. The adjustments to net income (loss) in computing Adjusted EBITDA are set forth in the reconciliation table below. The computation of Adjusted EBITDA is based primarily on the definition included in our Credit Agreement.
Adjusted Net Income
To further supplement Generac's consolidated financial statements presented in accordance with U.S. GAAP, the Company provides a summary to show the computation of adjusted net income attributable to the Company. Adjusted net income attributable to the Company is defined as net income (loss) before noncontrolling interests adjusted for the following items: amortization of intangible assets, amortization of deferred financing costs and original issue discount related to the Company's debt, intangible impairment charges, certain transaction costs and other purchase accounting adjustments, business optimization expenses, provision for certain legal and regulatory charges, certain specific provisions, mark-to-market gains and losses on a minority investment, other non-cash gains and losses, and adjusted net income attributable to non-controlling interests.
Free Cash Flow
In addition, the Company references free cash flow to further supplement Generac's consolidated financial statements presented in accordance with U.S. GAAP. Free cash flow is defined as net cash provided by operating activities, less expenditures for property and equipment, and is intended to be a measure of operational cash flow taking into account additional capital expenditure investment into the business.
The presentation of this additional information is not meant to be considered in isolation of, or as a substitute for, results prepared in accordance with U.S. GAAP. Please see the accompanying Reconciliation Schedules and our SEC filings for additional discussion of the basis for Generac's reporting of Non-GAAP financial measures, which includes why the Company believes these measures provide useful information to investors and the additional purposes for which management uses the non-GAAP financial information.
SOURCE: Generac Holdings Inc.
CONTACT:
Kris Rosemann
Director – Corporate Finance & Investor Relations
(262) 506-6064
InvestorRelations@generac.com