GNRC · Generac Holdings Inc.

Generac's first quarter 2026 results reflect strong execution in the Commercial & Industrial (C&I) segment, particularly in the data center end market, which drove a 28% increase in C&I external net sales to $510 million. This growth was supported by acquisitions (Allmand and Enercon) and favorable foreign exchange, contributing a net 10% impact. Residential segment sales grew only 1% to $549 million, as home standby generator sales were flat due to a strong prior-year comparison from hurricane-related demand, partially offset by higher portable generator shipments and pricing. Consolidated gross margin declined to 38.7% from 39.5%, primarily due to mix shift toward lower-margin C&I sales, partially offset by favorable price/cost. Operating expenses increased modestly by 2% due to higher intangible amortization. Adjusted EBITDA margin expanded significantly to 18.3% from 15.9%, driven by operational efficiencies, price/cost realization, and operating leverage in C&I. Net income rose to $73 million ($1.24 per share) from $44 million ($0.73 per share), while adjusted net income increased to $106 million ($1.80 per share) from $75 million ($1.26 per share). Cash flow from operations more than doubled to $119 million, and free cash flow surged to $90 million from $27 million, reflecting higher earnings and improved working capital. Management highlighted growing backlog for data center products and the completion of the Enercon acquisition, which is expected to enhance vertical integration and margins. As a result, the company raised its full-year 2026 guidance: net sales growth now expected in the mid-to-high teens percent range (previously mid-teens), C&I segment growth in the mid-to-high 20% range (previously low-to-mid 20%), and adjusted EBITDA margin of 18.5%-19.5% (previously 18.0%-19.0%). The guidance does not include potential tariff recovery or incremental impact from a multi-year hyperscale agreement. The filing also includes recast segment financials for fiscal 2025 to reflect the new Residential and C&I segment structure, effective March 31, 2026.