Generac Raises Margin Outlook as Data-Center Sales Accelerate
Data-center backlog reached about $1.6 billion after roughly $1 billion of new orders.
The backup-power equipment maker Generac Holdings (GNRC) reported an 11% increase in second-quarter sales as data-center demand drove commercial and industrial growth and net income nearly doubled.
Commercial and industrial sales became the quarter’s main growth engine, while residential demand declined and tariff refunds amplified the improvement in profitability. Generac maintained its full-year sales outlook and raised its margin forecasts to incorporate the refund benefit.
Net sales rose to $1.17 billion from $1.06 billion a year earlier, with acquisitions, divestitures and currency contributing a net 2 percentage points. Net income attributable to Generac increased to $143 million, or $2.40 a diluted share, from $74 million, or $1.25 a share. Adjusted earnings rose to $2.91 a share from $1.65.
Commercial and industrial sales increased about 29% to $556 million, driven primarily by rising data-center revenue. Acquisitions, divestitures and currency contributed about 6 percentage points, while higher rental and telecom shipments were offset by lower shipments to domestic industrial distributors. Residential sales fell about 2% to $617 million as lower energy-storage and portable-generator shipments outweighed growth in home-standby generators.
Adjusted earnings before interest, taxes, depreciation and amortization increased to $291 million from $188 million, and the margin widened to 24.8% from 17.7%. The quarter included a $71 million pretax tariff-refund benefit. Gross margin rose 5.2 percentage points to 44.5%, while refunds contributed about 6 percentage points; excluding the benefit, unfavorable mix and higher input costs outweighed pricing gains.
Generac maintained its 2026 sales-growth outlook in the mid-to-high-teens percentage range and raised adjusted EBITDA-margin guidance to 20.0% to 21.0% from 18.5% to 19.5%. Tariff refunds are expected to add about 1.5 percentage points to the full-year margin. The company also raised its net-income-margin forecast to 9.0% to 10.0% and expects low-30% growth in commercial and industrial sales and high-single-digit growth in residential sales.
The company finalized terms committing nearly $700 million of 2027 volume under its first hyperscale data-center supply agreement and signed a second hyperscale customer whose 2027 and 2028 volume terms remain under negotiation. Generac also added large-megawatt generator-packaging capacity through its Enercon acquisition and the purchase of a facility in Belvidere, Illinois.