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Generac Q3 Earnings Beat Estimates on C&I Strength, Revenues Miss
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Key Takeaways
Generac's Q3 earnings rose 38.8% to $2.54 per share, beating estimates, while revenues missed the same.
C&I revenues jumped 28% to $553 million, fueled by data center demand, with backlog reaching $4.5 billion.
Generac secured a $2.4 billion Amazon supply deal and raised the lower end of its 2026 EBITDA margin outlook.
Generac Holdings Inc. (GNRC - Free Report) reported third-quarter 2026 adjusted earnings per share (EPS) of $2.54, beating the Zacks Consensus Estimate of $2.38 by 6.7%. Earnings increased 38.8% from $1.83 per share in the prior-year quarter.
Net sales increased 16% year over year to $1.29 billion but missed the consensus estimate of $1.31 billion. Strong Commercial & Industrial (C&I) demand, particularly from data centers, supported growth. The data center backlog increased significantly to nearly $4.5 billion, while Residential revenues rose 9% on higher home standby and portable generator shipments.
GNRC's C&I Segment Maintains Strong Momentum
C&I revenues increased approximately 28% year over year to $553 million from $432.4 million. The segment benefited from acquisitions, divestitures and foreign currency, which contributed approximately 4% to sales growth.
Core growth was primarily driven by accelerating revenues from products sold into the global data center market. However, lower shipments to the domestic industrial distributor and telecom channels offset broad-based regional growth internationally.
Adjusted EBITDA (before deducting for noncontrolling interest) for the segment increased to $69.3 million from $43.8 million. Adjusted EBITDA margin expanded to 12.5% from 10.1%, driven by higher sales volumes and a favorable impact from acquisitions and divestitures.
Generac's Data Center Agreements Boost Growth Visibility
GNRC entered into an agreement with Amazon.com, Inc. (AMZN - Free Report) during the quarter, including the execution of a long-term supply agreement for backup power generators for Amazon data centers. Initial deliveries under the agreement are expected to total a combined $2.4 billion in 2027 and 2028.
The Amazon agreement adds considerable scale and visibility to a data center business that is fast emerging as Generac’s key growth engine.
Generac Holdings Inc. Price, Consensus and EPS Surprise
Management highlighted strong momentum in C&I operations and continues with its capacity expansion plans to capture growing demand. These initiatives are intended to support the company's ability to serve large-scale data center customers.
GNRC's Residential Sales Return to Growth
Residential segment revenues increased approximately 9% to $744.1 million from $685 million in the prior-year quarter. This improvement was supported by higher home standby and portable generator shipments, partly offset by lower shipments of energy storage systems.
Adjusted EBITDA increased to $200.8 million from $160.2 million. Adjusted EBITDA margin expanded to 27% from 23.4%, supported by favorable pricing and operating leverage from higher shipment volumes. Lower operating expenses associated with energy technology solutions also contributed to profitability.
Gross profit increased to $516 million from $426.9 million. Gross margin expanded to 39.9% from 38.3%, primarily reflecting favorable price-cost impacts, including lower tariff costs. These benefits were partially offset by an unfavorable sales mix.
Operating expenses increased 10% year over year, or $31.6 million, to $355.5 million. The increase primarily reflected investments supporting C&I growth, higher marketing spending to drive product awareness, additional incentive compensation and intangible amortization expenses.
Operating income increased to $160.6 million from $103.1 million. Adjusted EBITDA before deducting noncontrolling interests reached $256 million, representing 19.8% of net sales, compared with $193 million, or 17.3%, a year earlier.
GNRC's Cash Flow and Balance Sheet Strengthen
Net cash provided by operating activities increased to $171 million from $118 million in the year-ago quarter. Free cash flow improved to approximately $132 million from $96 million, primarily driven by higher operating earnings, partially offset by higher capital expenditures.
As of Sept. 30, 2026, cash and cash equivalents totaled $393.7 million, compared with $341.4 million as of Dec. 31, 2025.
Long-term borrowings and finance lease obligations stood at $1.24 billion, compared with $1.26 billion at the end of 2025.
Generac Reaffirms 2026 Sales Outlook
Generac maintained its full-year 2026 net sales growth guidance in the mid-to-high teens percentage range compared with the prior year. The outlook includes approximately 2% net favorable contribution from foreign currency, acquisitions and divestitures.
The company reiterated its net income margin guidance of 9-10%, before deducting noncontrolling interests. Generac raised the lower end of its 2026 adjusted EBITDA margin guidance to 20.5-21% from the previous range of 20-21%.
Recent Performances of Other Companies in the Same Space
Dover Corporation (DOV - Free Report) reported third-quarter 2026 adjusted earnings of $2.88 per share, rising 10% year over year and beating the Zacks Consensus Estimate of $2.83 by 1.77%. The improvement reflected broad-based demand for Dover, higher revenues and operational execution. Revenues increased 7.5% year over year to $2.23 billion, beating the Zacks Consensus Estimate of $2.20 billion by 1.47%. Organic revenues grew 7.1%. Dover's bookings totaled $2.31 billion compared with $2 billion in the year-ago quarter. Orders increased across all five segments, resulting in a book-to-bill ratio of 1.03.
Illinois Tool Works Inc. (ITW - Free Report) reported third-quarter 2026 earnings of $3 per share, which surpassed the Zacks Consensus Estimate of $2.99. Earnings increased 6.8% year over year.
Illinois Tool’s revenues of $4.24 billion missed the consensus estimate of $4.26 billion. The top line increased 4.4% year over year, driven by organic sales growth of 3.8%. Favorable foreign currency translation and acquisitions each had a positive impact of 0.3% in the quarter. Illinois Tool raised its full-year 2026 financial guidance. ITW now expects earnings to be in the range of $11.45-$11.55 per share compared with $11.35-$11.55 expected earlier. Revenues are expected to increase 4.5-5.5% while organic revenues are anticipated to rise 3-4%.
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Generac Q3 Earnings Beat Estimates on C&I Strength, Revenues Miss
Key Takeaways
Generac Holdings Inc. (GNRC - Free Report) reported third-quarter 2026 adjusted earnings per share (EPS) of $2.54, beating the Zacks Consensus Estimate of $2.38 by 6.7%. Earnings increased 38.8% from $1.83 per share in the prior-year quarter.
Net sales increased 16% year over year to $1.29 billion but missed the consensus estimate of $1.31 billion. Strong Commercial & Industrial (C&I) demand, particularly from data centers, supported growth. The data center backlog increased significantly to nearly $4.5 billion, while Residential revenues rose 9% on higher home standby and portable generator shipments.
GNRC's C&I Segment Maintains Strong Momentum
C&I revenues increased approximately 28% year over year to $553 million from $432.4 million. The segment benefited from acquisitions, divestitures and foreign currency, which contributed approximately 4% to sales growth.
Core growth was primarily driven by accelerating revenues from products sold into the global data center market. However, lower shipments to the domestic industrial distributor and telecom channels offset broad-based regional growth internationally.
Adjusted EBITDA (before deducting for noncontrolling interest) for the segment increased to $69.3 million from $43.8 million. Adjusted EBITDA margin expanded to 12.5% from 10.1%, driven by higher sales volumes and a favorable impact from acquisitions and divestitures.
Generac's Data Center Agreements Boost Growth Visibility
GNRC entered into an agreement with Amazon.com, Inc. (AMZN - Free Report) during the quarter, including the execution of a long-term supply agreement for backup power generators for Amazon data centers. Initial deliveries under the agreement are expected to total a combined $2.4 billion in 2027 and 2028.
The Amazon agreement adds considerable scale and visibility to a data center business that is fast emerging as Generac’s key growth engine.
Generac Holdings Inc. Price, Consensus and EPS Surprise
Generac Holdings Inc. price-consensus-eps-surprise-chart | Generac Holdings Inc. Quote
Management highlighted strong momentum in C&I operations and continues with its capacity expansion plans to capture growing demand. These initiatives are intended to support the company's ability to serve large-scale data center customers.
GNRC's Residential Sales Return to Growth
Residential segment revenues increased approximately 9% to $744.1 million from $685 million in the prior-year quarter. This improvement was supported by higher home standby and portable generator shipments, partly offset by lower shipments of energy storage systems.
Adjusted EBITDA increased to $200.8 million from $160.2 million. Adjusted EBITDA margin expanded to 27% from 23.4%, supported by favorable pricing and operating leverage from higher shipment volumes. Lower operating expenses associated with energy technology solutions also contributed to profitability.
Generac's Profitability Improves Despite Higher Expenses
Gross profit increased to $516 million from $426.9 million. Gross margin expanded to 39.9% from 38.3%, primarily reflecting favorable price-cost impacts, including lower tariff costs. These benefits were partially offset by an unfavorable sales mix.
Operating expenses increased 10% year over year, or $31.6 million, to $355.5 million. The increase primarily reflected investments supporting C&I growth, higher marketing spending to drive product awareness, additional incentive compensation and intangible amortization expenses.
Operating income increased to $160.6 million from $103.1 million. Adjusted EBITDA before deducting noncontrolling interests reached $256 million, representing 19.8% of net sales, compared with $193 million, or 17.3%, a year earlier.
GNRC's Cash Flow and Balance Sheet Strengthen
Net cash provided by operating activities increased to $171 million from $118 million in the year-ago quarter. Free cash flow improved to approximately $132 million from $96 million, primarily driven by higher operating earnings, partially offset by higher capital expenditures.
As of Sept. 30, 2026, cash and cash equivalents totaled $393.7 million, compared with $341.4 million as of Dec. 31, 2025.
Long-term borrowings and finance lease obligations stood at $1.24 billion, compared with $1.26 billion at the end of 2025.
Generac Reaffirms 2026 Sales Outlook
Generac maintained its full-year 2026 net sales growth guidance in the mid-to-high teens percentage range compared with the prior year. The outlook includes approximately 2% net favorable contribution from foreign currency, acquisitions and divestitures.
The company reiterated its net income margin guidance of 9-10%, before deducting noncontrolling interests. Generac raised the lower end of its 2026 adjusted EBITDA margin guidance to 20.5-21% from the previous range of 20-21%.
GNRC’s Zacks Rank
Generac currently has a Zacks Rank #3 (Hold). 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
Dover Corporation (DOV - Free Report) reported third-quarter 2026 adjusted earnings of $2.88 per share, rising 10% year over year and beating the Zacks Consensus Estimate of $2.83 by 1.77%. The improvement reflected broad-based demand for Dover, higher revenues and operational execution.
Revenues increased 7.5% year over year to $2.23 billion, beating the Zacks Consensus Estimate of $2.20 billion by 1.47%. Organic revenues grew 7.1%. Dover's bookings totaled $2.31 billion compared with $2 billion in the year-ago quarter. Orders increased across all five segments, resulting in a book-to-bill ratio of 1.03.
Illinois Tool Works Inc. (ITW - Free Report) reported third-quarter 2026 earnings of $3 per share, which surpassed the Zacks Consensus Estimate of $2.99. Earnings increased 6.8% year over year.
Illinois Tool’s revenues of $4.24 billion missed the consensus estimate of $4.26 billion. The top line increased 4.4% year over year, driven by organic sales growth of 3.8%. Favorable foreign currency translation and acquisitions each had a positive impact of 0.3% in the quarter.
Illinois Tool raised its full-year 2026 financial guidance. ITW now expects earnings to be in the range of $11.45-$11.55 per share compared with $11.35-$11.55 expected earlier. Revenues are expected to increase 4.5-5.5% while organic revenues are anticipated to rise 3-4%.