Generac Tops Q2 Earnings Estimates, Reaffirms 2026 Revenue Outlook

Strength in the Commercial & Industrial (C&I) segment, particularly the data center market, remained the key catalyst, along with a $71 million pre-tax benefit from tariff refunds. 

GNRC still expects full-year 2026 net sales growth in the mid-to-high teens, including an approximately 2% favorable contribution from foreign currency, acquisitions and divestitures. C&I sales are projected to grow in the low-30% range, while Residential sales are forecasted to increase in the high-single-digit range.

However, the net income margin before noncontrolling interests is now forecasted at 9-10%, above the previous 8-9% range. Adjusted EBITDA margin is now expected at 20-21%, up from the prior range of 18.5-19.5%. The tariff refund recorded in the second quarter should add about 1.5% to the full-year margin.

Price Performance

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GNRC is up 10% in pre-market trading today. The stock has gained 8% compared with the Manufacturing-General Industrial industry’s growth of 7.5% in the past year.

GNRC’s C&I Momentum Accelerates

Beginning in the first quarter of 2026, Generac has reorganized its segments to align with changes announced at its Investor Day held earlier this year. The company’s two reportable segments are now Residential and C&I. 

The Residential segment consists of the former Domestic segment without the domestic C&I operations. The C&I segment consists of the former International segment, plus the domestic C&I operations. 

C&I revenues totaled $556.5 million, up 29% year over year, while the data center backlog reached about $1.6 billion. This included a 6% net favorable impact from the combination of acquisitions, divestitures and foreign currency. Core growth came from the data center market, while higher rental and telecom shipments more than offset weaker domestic industrial distributor shipments.

Generac also highlighted a global supply agreement with a hyperscale data center client that it signed during the quarter and added that, with the recent finalization of product-specific terms, the commitment is nearly $700 million of volume for 2027. GNRC has also secured a global supply agreement with a second hyperscale customer and is currently holding negotiations for final product-specific terms for 2027 and 2028 volumes. Notably, the data center backlog excludes committed volumes from the second hyperscale customer.

During the quarter, Generac completed the Enercon acquisition. It purchased an additional facility in Belvidere, IL, to support large-megawatt generator packaging.

Revenues from Residential were down 2% year over year to $621.3 million. Lower energy storage system and portable generator shipments drove the decline, largely offset by higher home standby generator sales.

GNRC’s Tariff Refund Lifts Profitability

Gross profit increased to $521.8 million from $416.7 million, and gross margin widened to 44.5% from 39.3%. Tariff refunds added roughly 6% to gross margin. Favorable pricing partly offset unfavorable sales mix and higher input costs.

Operating expenses increased 2% to $311.4 million, reflecting investments to support C&I growth and higher intangible amortization, partly offset by lower legal expenses. Operating income advanced 88.2% to $210.4 million. Adjusted EBITDA reached $290.7 million, or 24.8% of sales, compared with $187.6 million, or 17.7%, a year earlier.

Generac’s Cash Flow and Balance Sheet

Net cash provided by operating activities increased to $121.2 million from $72.2 million in the year-ago quarter. Free cash flow rose to $62.9 million from $14.5 million in the year-ago quarter, supported by higher operating earnings, particularly cash receipts from tariff refunds.

At June 30, 2026, cash and cash equivalents totaled $264.9 million, down from $265.5 million as of March 31. Long-term borrowings and finance lease obligations were $1.25 billion.

GNRC’s Zacks Rank

Generac currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performances of Other Companies in the Same Space

Otis Worldwide Corporation OTIS reported second-quarter 2026 results wherein EPS of $1.01 beat the Zacks Consensus Estimate by 1%. In the year-ago quarter, it reported an adjusted EPS of $1.05. OTIS’ net sales of $3.9 billion surpassed the consensus mark by 3.7% and increased 7.3% on a year-over-year basis. Organically, net sales were up 6% year over year. 

Shares of OTIS have declined 14.9% in the past year.

Dover Corporation DOV posted second-quarter fiscal 2026 adjusted earnings of $2.74 per share, up 12% year over year. The figure topped the Zacks Consensus Estimate of $2.72. Dover Corporation’s quarterly revenues increased 7% year over year to $2.19 billion, but missed the consensus estimate of $2.21 billion. 

Shares of DOV have gained 11.4% in the past year.

Graco Inc.’s GGG second-quarter 2026 adjusted earnings of 91 cents per share rose 17% from the year-ago quarter. The bottom line topped the Zacks Consensus Estimate by 12.4%. Graco’s net sales inched up 3% year over year to $590.6 million but lagged the consensus estimate by 3%. 

Shares of GGG have declined 1.4% in the past year.

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