Generac Holdings Inc.

Second quarter 2026 net sales increased 11% to $1.17 billion from $1.06 billion a year ago. Commercial & Industrial sales increased approximately 29% to $556 million from $431 million, while Residential sales declined approximately 2% to $621 million from $635 million. Consolidated gross profit margin was 44.5% versus 39.3% last year, and adjusted EBITDA was $291 million, or 24.8% of sales, versus $188 million, or 17.7%, with about a $71 million pretax tariff-refund benefit reflected in gross margin, net income, adjusted net income and adjusted EBITDA. GAAP net income was $143 million, or $2.40 per diluted share, versus $74 million, or $1.25, and adjusted net income was $174 million, or $2.91 per share, versus $97 million, or $1.65. Cash flow from operations was $121 million and free cash flow was $63 million. For 2026, management maintained consolidated sales growth outlook in the mid- to high teens range, raised C&I sales growth to the low 30s percent range, and lowered Residential sales growth to high single digits. Full-year gross margin is expected to be in the 40% range including tariff refunds, adjusted EBITDA margin is now guided to 20% to 21% including tariff refunds (18.5% to 19.5% excluding them), and free cash flow is still expected to be about $350 million. Capex is now expected to be about 4.5% of sales, interest expense about $65 million to $69 million, and GAAP tax rate 24.5% to 25%.

Aaron Jagdfeld struck an aggressively optimistic tone, saying the company is seeing a “generational growth opportunity” in data centers and that the business has a path to triple large-megawatt production capacity over the next 12 months from the original year-end 2026 target of $1.25 billion. He emphasized that the new hyperscale agreement and growing non-hyperscale funnel support accelerating demand into 2027 and beyond. On Residential, he was more measured but still upbeat, pointing to resilience in home standby generators, continued dealer expansion, and strong uptake of the new 28-kW product line.

York Ragen emphasized the hard numbers behind the quarter: 11% net sales growth to $1.17 billion, gross margin of 44.5%, adjusted EBITDA margin of 24.8%, GAAP EPS of $2.40, and free cash flow of $63 million. He said tariff refunds contributed about $71 million pretax in Q2 and that operating expenses rose only 2% year over year despite growth investments. On the outlook, he kept full-year sales growth in the mid- to high teens, increased C&I growth expectations to the low 30s percent range, lowered Residential to high single digits, and raised capex to about 4.5% of sales to support packaging and large-megawatt capacity; debt was about $1.33 billion and leverage was 1.5x gross debt to adjusted EBITDA.

Analysts focused heavily on the implications of the two hyperscale agreements, including capacity, supply chain, lead times, and how much visibility management now has into 2027 and 2028. Aaron said the first hyperscale deal includes about $700 million for 2027 deliveries, the second is at least as large, and backlog currently excludes the second deal and any 2028 orders. He also said lead times remain about 40 to 45 weeks versus competitors’ longer timelines, and that supply-chain second and third sources are being developed for 2027. On Residential, management said softer outage activity and affordability pressure are holding back growth, but in-home consultations, dealer count, and home standby demand remain resilient.