Generac Posts Record Sales of $1.29 Billion as Revenue Misses Estimates
Key Facts
Generac posted record net sales of $1.29 billion in the third quarter ended September 30, 2026, up 16% year over year, but below the revenue estimate of $1.32 billion, according to data from Yahoo Finance and Investing.com. Adjusted earnings were $2.54 per share, beating the estimate of $2.43. The company said the net impact of acquisitions, divestitures and foreign exchange added one percentage point to sales growth. Sales in the same period last year were $1.11 billion. The results coincided with an increase in the backlog of the company's products for data centers to about $4.5 billion, signaling expanding demand in the market.
Net income attributable to the company was $109 million, or $1.83 per diluted share, while adjusted net income reached $151 million, or $2.54 per share, according to Generac's statement. Adjusted EBITDA rose to $256 million, equal to 19.8% of sales, compared with $193 million and a 17.3% margin in the third quarter of 2025. Gross margin also improved to 39.9% from 38.3% a year earlier. The company attributed the improvement mainly to a favorable impact from price and costs, including lower tariff costs. An unfavorable sales mix partly offset that effect, leaving margin trends tied to pricing, costs and the composition of products sold.
The commercial and industrial segment was the leading growth driver, with its domestic sales rising about 28% to $552 million from $432 million in the same period. The company said accelerating global revenue from products sold to the data center market was the primary driver of the increase. Broad international growth also offset lower shipments to domestic industrial and telecommunications distribution channels. In the residential segment, total sales rose about 9% to $744.1 million, compared with $685.0 million a year earlier. Generac attributed the increase to growth in sales of home standby and portable generators, partly offset by a decline in shipments of energy storage systems.
Third-quarter growth followed an 11% increase in net sales to $1.17 billion in the second quarter of 2026, compared with $1.06 billion in the same period of 2025. In the data center market, Generac said in its second-quarter results announcement that its backlog stood at about $1.6 billion, after receiving about $1 billion in additional orders since its previous update. That figure did not include committed volumes from its second hyperscale customer. The reported backlog has now risen to about $4.5 billion, according to the company's October 28 update. The chief executive said, "The backlog for products serving the data center market has now grown to about $4.5 billion," citing additional commitments from new and existing customers.
Cash flow from operations improved to $171 million in the third quarter from $118 million a year earlier, while free cash flow rose to $131.7 million from $96.5 million. The company said higher operating earnings were the primary driver of free cash flow growth, partly offset by higher capital expenditures. Generac maintained its 2026 sales growth outlook in the mid-to-high teens range. It raised the low end of its adjusted EBITDA margin outlook to 20.5%, while keeping the high end at 21.0%, compared with the previous range of 20.0% to 21.0%. The revision raises the expected margin floor while leaving the annual ceiling unchanged.
Generac expects the aggregate initial deliveries under its long-term supply agreement with Amazon for backup power generators for data centers to total $2.4 billion during 2027 and 2028. The company presents these expected deliveries over the next two years, while its data center product backlog stands at about $4.5 billion in its current update. In August, the company outlined a plan to increase manufacturing capacity for large generators to more than $1.25 billion by the fourth quarter of 2026, with a path to reach three times that capacity by the end of the third quarter of 2027. Before the third-quarter results announcement, the stock closed at $189.23 on October 26 and then at $193.71 on October 27. In September, the stock rose as much as 32% during trading on the day the Amazon deal was announced, its biggest intraday gain in more than 14 years, according to Bloomberg.