Generac’s Data Center Order Backlog Reaches $4.5 Billion After Amazon Deal
Key Facts
Generac said in its third-quarter results that its backlog of products for the data center market reached about $4.5 billion, following a long-term supply agreement with Amazon and orders from other new and existing customers. The company said the agreement was signed during the quarter, after it had previously disclosed it. It added that expected initial deliveries under the agreement total $2.4 billion in 2027 and 2028. That puts part of current demand on a delivery schedule extending into the next two years. The backlog value shows the scale of business tied to the market, while revenue remains contingent on product delivery.
Orders grew faster than in the company’s previous update in the second quarter, when it said its data center product backlog had reached about $1.6 billion after receiving about $1 billion in additional orders from new and existing customers. The second-quarter figure did not include volumes committed by its second hyperscale customer. In the third quarter, Generac said the backlog reached about $4.5 billion after the Amazon agreement and other orders. Investor materials released in November indicated that orders extend into 2028. The comparison provides a picture of the expansion in the order base between the two updates.
Demand in the data center market was reflected in the performance of the Commercial and Industrial segment, whose total third-quarter sales rose about 28% to $553.0 million, from $432.4 million a year earlier. The company attributed growth in the core segment primarily to higher revenue from products sold to the global data center market. Generac’s total net sales rose 16% to a record $1.29 billion, compared with $1.11 billion in the same quarter a year earlier. Generac said gross margin was 39.9%, up from 38.3%, attributing the increase mainly to favorable pricing and cost effects, including lower tariff costs. The Commercial and Industrial segment results show the link between sales growth and the expansion of data center products within the company’s total sales.
Residential segment sales rose about 9% to $743 million in the third quarter, compared with $682 million a year earlier. Net income attributable to Generac was $109 million, or $1.83 per share, compared with $66 million, or $1.12 per share, in the third quarter of 2025. Cash flow from operations was $171.0 million, compared with $118.4 million a year earlier. Free cash flow, as defined by the company, was $131.7 million, compared with $96.5 million in the third quarter of 2025. These figures accompany growth in the Commercial and Industrial business, while the quarterly results point to year-over-year gains in sales, income and cash flow.
Generac said in its second-quarter update that it had finalized product terms under its first supply agreement with a hyperscale customer, committing to about $700 million in volumes in 2027. In a filing with the U.S. Securities and Exchange Commission, the company said Amazon received the right to buy up to 1,693,745 shares of Generac stock at an exercise price of $200.9266 per share. A total of 307,954 of the shares covered by the right vested immediately. The remainder vest in tranches tied to aggregate payments by Amazon and its affiliates for backup power generators for its data centers, up to total payments of $8 billion during the term of the right. The structure ties part of the vesting to the volume of payments associated with the generators, according to the filing.
The company left unchanged its 2026 net sales growth forecast, keeping it in the mid- to high-teens range. But it raised the low end of its adjusted EBITDA margin forecast to about 20.5%, while leaving the high end at 21.0%, compared with the previous range of 20.0% to 21.0%. In its investor presentation, Generac said its manufacturing capacity for large power generators exceeded $1.25 billion as of the fourth quarter of 2026. The company outlined a path to triple that capacity by the end of the third quarter of 2027. The manufacturing expansion target puts production capacity among the metrics the company is tracking as data center orders extend into 2028.