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    GNRC
    Earnings call· Mar 2026(Q1 FY26)

    GENERAC HOLDINGS Q1 FY26 earnings call GNRC

    Apr 29, 2026 Source

    Executive summary

    Generac Holdings Inc. Q1 FY26 — Strong C&I Growth and Raised Full-Year Outlook

    Generac delivered a strong Q1 FY26, driven by robust growth in its C&I segment, particularly from data center demand, and significant margin expansion across both segments. The company raised its full-year net sales and adjusted EBITDA margin outlook, reflecting continued momentum and strategic acquisitions like Enercon. Management expressed high confidence in capturing a growing share of the data center market while navigating a dynamic residential market with a focus on efficiency and long-term growth.

    Highlights

    5

    • Consolidated net sales increased 12% year-over-year to $1.06 billion.

    • Commercial and Industrial (C&I) segment sales grew 28% year-over-year to $510 million, driven by data center momentum and the Allmand acquisition.

    • Adjusted EBITDA margin expanded significantly to 18.3% from 15.9% in the prior year, exceeding expectations.

    • Residential segment adjusted EBITDA margin increased by nearly 500 basis points to 25.1%, primarily due to lower operating expenses from the Generac Home reorganization.

    • Current backlog for data center products increased to over $700 million, up $300 million since mid-February, providing visibility through 2027.

    Concerns

    2

    • International sales growth was partially offset by softness in the Middle East and Latin American regions due to geopolitical instability and trade policy uncertainty.

    • Residential solar and storage solutions sales decreased year-over-year following the completion of the DOE Puerto Rico program.

    Guidance & targets

    16
    CategoryTargetConfidence
    Consolidated Net Sales Growth
    mid- to high teens rate
    high materiality
    High
    C&I Segment Net Sales Growth
    mid- to high 20% range
    high materiality
    High
    Residential Segment Net Sales Growth
    10% range
    medium materiality
    High
    Consolidated Gross Margin
    38.5% to 39.5%
    high materiality
    High
    Consolidated Adjusted EBITDA Margin
    18.5% to 19.5%
    high materiality
    High
    Consolidated Net Sales Growth
    approximate 9% to 10% range
    medium materiality
    Medium
    Adjusted EBITDA Margin
    18% range
    medium materiality
    Medium
    Adjusted EBITDA Margin
    approximately 20%
    medium materiality
    Medium
    GAAP Effective Tax Rate
    between 24.5% to 25.0%
    low materiality
    High
    Interest Expense
    approximately $65 million
    low materiality
    High
    Capital Expenditures
    approximately 3.5% of our forecasted net sales
    medium materiality
    High
    Depreciation Expense
    approximately $108 million to $112 million
    low materiality
    High
    GAAP Intangible Amortization Expenses
    approximately $112 million to $116 million
    low materiality
    High
    Stock Compensation Expense
    between $54 million to $58 million
    low materiality
    High
    Free Cash Flow
    approximately $350 million
    high materiality
    High
    Weighted Average Diluted Share Count
    between 59.5 million and 60 million shares
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Residential
    Sales driven by higher portable generator shipments due to winter storm Fern, partially offset by decline in energy storage. Home standby sales flat due to higher pricing offsetting lower volumes compared to strong prior year. Significant margin increase driven by favorable price realization and operational efficiencies from Generac Home reorganization.
    Home standby generator sales: approximately flatPortable generator shipments: higherEnergy storage system sales: declinedActivations/installations of home standby generators: declinedDealer network: >9,500 dealers (+300 YoY)Ecobee connected home count: >5 millionEcobee adjusted EBITDA: positive
    		$552 millionapproximately 1%—25.1%
    Commercial and Industrial
    Sales growth primarily from data center customers, increased shipments to industrial distributor and rental channels, and higher sales of control solutions. Margin increase driven by improved price/cost realization, Allmand acquisition impact, and operating leverage.
    Net favorable impact from acquisitions, divestitures and foreign currency: approximate 10%Core total sales growth: primarily driven by global data center customersDomestic industrial distributor channel shipments: increasedDomestic mobile product shipments: increased at strong rateInternational shipments: increased at strong rate
    		$510 millionapproximately 28%—13.0%

    Operational metrics

    23
    Consolidated Net Sales
    $1.06 billionincreased 12% year-over-year
    Q1 FY26
    Consolidated Gross Profit Margin
    38.7%compared to 39.5% in prior year
    Q1 FY26
    Operating Expenses
    $4.6 millionincreased 2% compared to Q1 FY25
    Q1 FY26
    Operating Expenses as % of Sales (excl. intangible amortization)
    24.8%improved from 27.9% in Q1 FY25
    Q1 FY26
    Consolidated Adjusted EBITDA
    $193 millioncompared to $150 million in prior year
    Q1 FY26
    Consolidated Adjusted EBITDA Margin
    18.3%compared to 15.9% in prior year
    Q1 FY26
    Residential Segment Adjusted EBITDA
    $139 millioncompared to $112 million in prior year
    Q1 FY26
    Residential Segment Adjusted EBITDA Margin
    25.1%compared to 20.3% in prior year
    Q1 FY26
    Commercial and Industrial Segment Adjusted EBITDA
    $67 millioncompared to $45 million in prior year
    Q1 FY26
    Commercial and Industrial Segment Adjusted EBITDA Margin
    13.0%compared to 11.4% in prior year
    Q1 FY26
    GAAP Net Income
    $73 millioncompared to $44 million in Q1 FY25
    Q1 FY26
    GAAP Income Taxes
    $23.6 millioncompared to $14.2 million in prior year
    Q1 FY26
    GAAP Effective Tax Rate
    24.4%compared to 24.3% in prior year
    Q1 FY26
    Diluted Net Income per Share (GAAP)
    $1.24compared to $0.73 in prior year
    Q1 FY26
    Adjusted Net Income
    $106 millioncompared to $75 million in prior year
    Q1 FY26
    Adjusted Net Income per Share
    $1.80compared to $1.26 in prior year
    Q1 FY26
    Total Debt Outstanding
    $1.32 billion
    Q1 FY26
    Full-year Consolidated Net Sales Growth (FX/Acq/Div impact)
    approximate 2% favorable impactfavorable impact on revenue growth
    FY26
    Full-year C&I Segment Net Sales Growth (FX/Acq/Div impact)
    approximate 5% favorable impactfavorable impact versus prior year
    FY26
    Sales Seasonal Pacing
    45% weighted
    H1 FY26
    Gross Margin Improvement from Enercon
    50 basis point lift
    FY26
    C&I Segment EBITDA Margin Target (out years)
    mid- to high-teens
    2028
    Energy Technology Breakeven Timeline
    remains intact
    FY27

    Industry KPIs

    4
    MetricValueDetails
    Orders bookings growthimproved sequentially
    M a acquisition contributionapproximate 4% favorable impact%
    Backlog by segment end marketmore than $700 millionUSD
    Data center exposure pipelinenonbinding notice to proceed for approximately $600 millionUSD

    Orderbook & backlog

    1
    Current backlog for data center customersmore than $700 millionQ1 FY26

    increase of approximately $300 million since mid-February

    Provides visibility through 2027; does not include anticipated impact of $600 million nonbinding notice to proceed for 2027 deliveries.

    Product announcements

    2
    ProductTypeDetails
    Power Micromilestone
    Power Cellmilestone

    Deals & partnerships

    3
    Allmandleading designer and manufacturer of mobile products$123 million

    Closed in January 2026, funded with cash. Broadened customer base for mobile products and provided additional capacity and flexibility within domestic manufacturing footprint.

    Enerconleading designer and manufacturer of generator enclosures and switchgear$122 million

    Closed on April 1, 2026. Funded with $77 million in cash and $45 million in stock. Enercon's expertise in switchgear and packaged electronics controls also enables participation in adjacent market opportunities.

    null2 small divestitures

    Closed during Q1 FY26 as part of trending the portfolio of noncore assets.

    Capital programs

    1
    Sussex, Wisconsin facilityon track

    Benefit: increase domestic generator manufacturing and assembly capacity for large megawatt products to more than $1 billion by the fourth quarter

    Supporting the expected increase in domestic generator manufacturing and assembly capacity for large megawatt products, particularly for data center customers.

    Risks & headwinds

    4
    Softness in Middle East and Latin American regionsQ1 FY26

    partially offset sales increases across most regions

    Bumpy market for energy technology products2026 and into 2027

    softer right now

    Mitigation: Leveraging world-class team, competitive microinverter, exploring prepaid lease products, focusing on differentiated home ecosystem.

    Dynamic trade policy landscape and tariff ratesFull year 2026

    assumed that removal of EPA tariffs will be fully offset by new Section 122, 232 and 301 tariffs

    Mitigation: Conservative assumption of no net impact on run rate margins; consistency with prior guidance.

    Permitting challenges for large data center projectsOngoing

    more challenging as communities grapple with impacts

    Mitigation: Utilizing Tier 4 certified solutions and after-treatment packages to improve emissions profile; projects involved in discussing site certifications.

    What to watch in Q2 FY26

    5

    Finalizing hyperscale customer agreements

    Next quarter
    Current99 yards into a 100-yard dash with one customer; other customer close behind
    TargetSigned master supply agreements and POs for 2027 deliveries

    Why it matters

    Securing these agreements is crucial for realizing the significant growth potential in the data center market and validating the $600M nonbinding notice to proceed.

    We're like 99 yards of the way done with the race. We've got one yard left. We're in the final stages with the final agreement.

    Q&A highlights

    6

    How are product testing and pilots progressing for the $600M nonbinding notice to proceed, and are service capabilities a gating factor requiring staffing up?

    Aaron Jagdfeld stated they are 99 yards into a 100-yard dash with the hyperscale customer, passing all audits and now discussing site-specifics. He noted their industrial distribution network, including 30-35% company-owned, is well-staffed to react to service needs and they will continue to invest and hire as sites deploy.

    “if this was a 100-yard dash. We're like 99 yards of the way done with the race. We've got one yard left. We're in the final stages with the final agreement.”

    asked by Thomas Moll · answered by Aaron P. Jagdfeld

    2 min read6 chapters

    Detailed Narrative

    01

    Data Center Market Momentum

    Generac is in the final stages of vendor approval with two hyperscale data center customers, with one nonbinding notice to proceed for approximately $600 million in 2027 deliveries. The company is preparing to ramp supply chain and production, with the new Sussex, Wisconsin facility on track to begin production in H2 2026, expanding domestic capacity to over $1 billion by Q4. This positions Generac as a top-tier global supplier for large megawatt diesel backup power.

    02

    Strategic Acquisitions and Capacity Expansion

    The acquisition of Enercon, closed April 1, enhances Generac's competitive position by bringing generator enclosure and switchgear design and manufacturing in-house. This addresses an industry bottleneck, improves control over lead times, and is expected to expand margin profiles for large megawatt generators. The Allmand acquisition in January also outperformed expectations, broadening the mobile products customer base and adding manufacturing capacity.

    03

    Residential Segment Reorganization and Efficiency

    The new Generac Home organizational structure integrates home standby, portable generator, and energy technology teams, driving synergies and cost savings. This recalibration of clean energy operating expenses contributed to a nearly 500 basis point expansion in residential segment EBITDA margins year-over-year. Ecobee, part of this segment, achieved its first positive adjusted EBITDA in Q1, with connected homes growing to over 5 million.

    04

    C&I Non-Data Center Performance

    Domestic industrial distributor channel shipments increased, with solid project quoting activity. Telecom order rates improved sequentially, leading to better-than-expected growth for the year as customers invest in network hardening. Domestic mobile product shipments to rental customers also increased strongly, indicating a refleeting cycle has begun, with the Allmand acquisition providing timely capacity and market access.

    05

    Supply Chain and Pricing Strategy

    Generac has a multiyear, exclusive agreement with its large diesel engine supplier for the US and is exploring co-habitation for US production. The company is proactively addressing potential capacity constraints in alternators and cooling packages through multi-sourcing. Pricing for large megawatt gen sets has improved due to constrained supply, enhancing the business case for these products, even with hyperscale customers. Vertical integration through Enercon is expected to further improve margins.

    06

    Tariff and Trade Policy Outlook

    The company's updated guidance assumes that any potential tariff recovery from the EPA tariffs ruling will be fully offset by new Section 122, 232, and 301 tariffs. This conservative approach maintains consistency with prior guidance on overall tariff rates, acknowledging the dynamic trade policy landscape.

    AI-generated summary of the company’s earnings call. Not investment advice.