Generac Posts Record $1.29 Billion in Sales as Data Center Orders Surge
Key Facts
Generac posted record net sales of $1.29 billion in the third quarter of 2026, up 16% from $1.11 billion in the same period last year, the company said. The net effect of acquisitions, divestitures and foreign exchange contributed about one percentage point to sales growth. Results came as demand for power generation products for data centers expanded, lifting the order backlog allocated to that market to about $4.5 billion. Chief Executive Aaron Jagdfeld said additional commitments from data center customers had pushed the backlog to that level. The company's shares closed at $193.71 on Oct. 27, compared with $189.23 in the previous session.
Net income attributable to the company was $109 million, or $1.83 per share, compared with $66 million and $1.12 per share a year earlier. Adjusted net income was $151 million, or $2.54 per share, compared with $108 million and $1.83 per share in the third quarter of 2025. The figures reflect two different measures of performance, with the company presenting adjusted income separately from net income attributable to it. Gross margin also improved to 39.9% from 38.3% a year earlier. Generac attributed the improvement mainly to favorable pricing and cost impacts, including lower tariff costs, partly offset by an unfavorable sales mix.
The commercial and industrial segment drove much of the growth, with sales rising about 28% to $552 million from $432 million a year earlier. The company said the primary driver was accelerating revenue from products sold to the global data center market. It added that broad international regional growth offset lower shipments to domestic industrial and telecom distribution channels. In the residential segment, sales increased about 9% to $743 million from $682 million. The company cited a return to residential sales growth, supported by demand for portable and standby generators, after sales fell 2% to $617 million in the second quarter of 2026.
The comparison with the previous quarter shows an acceleration in overall sales growth, which rose 11% to $1.17 billion in the second quarter of 2026, from $1.06 billion a year earlier, before growth reached 16% in the third quarter. The shift was clearer in residential activity: from a 2% year-over-year decline in the second quarter to growth of about 9% in the third quarter. In the data center market, the company said in July that its order backlog stood at about $1.6 billion after receiving about $1 billion in additional orders since its previous update. That total did not include contracted volumes from its second customer, according to the second-quarter announcement. The backlog now stands at about $4.5 billion, the company said in its third-quarter results update.
Free cash flow improved to $131.7 million in the third quarter, from $96.5 million in the same period last year. The company attributed the increase mainly to higher operating earnings, partly offset by increased capital expenditures. At the same time, it raised the lower end of its 2026 adjusted earnings before interest, taxes, depreciation and amortization margin forecast to 20.5% from 20.0%, while keeping the upper end at 21.0%. The company maintained its annual sales growth outlook in the mid- to high-teens range. The margin adjustment comes after second-quarter results included a pretax impact of about $71 million from tariff refunds, reflected in adjusted net income and adjusted earnings before interest, taxes, depreciation and amortization.
The long-term supply agreement with Amazon accounts for part of the expected demand in the data center backup power market. Generac said initial combined deliveries under the agreement are expected to total $2.4 billion during 2027 and 2028. The company thus distinguishes between orders currently included in its data center products backlog and initial deliveries expected under the agreement over the next two years. The company is scheduled to hold a call to discuss its third-quarter results on Oct. 28, 2026, at 10:00 a.m. Eastern time. The call follows the results announcement and updated annual guidance, with the sales growth outlook remaining within the range the company announced.