Generac (GNRC) Q3 2026 earnings summary

Executive summary

• Q3 net sales rose 16.2% YoY to a record $1.295B; adjusted EBITDA increased 32.6% to $256.2M, with margin expanding to 19.8%.

• Growth reflected accelerating data center demand and a return to residential growth; the $4.5B data center backlog and Amazon agreement support a major 2027 ramp.

Financial highlights

• Q3 gross profit rose 20.9% to $516.0M; gross margin increased to 39.9% from 38.3%, supported by favorable price/cost and lower tariff costs, partly offset by unfavorable mix.

• Operating income rose 55.8% to $160.6M; net income attributable to shareholders increased 65.1% to $109.2M, or $1.83 diluted EPS. Adjusted net income was $151.1M, or $2.54 per diluted share.

• Adjusted EBITDA was $256.2M, or 19.8% of sales, versus $193.2M, or 17.3%, YoY.

• Operating cash flow was $171.0M versus $118.4M; free cash flow was $131.7M versus $96.5M, with higher earnings partly offset by increased CapEx.

• 9M sales rose 13.2% to $3.528B; operating income increased 63.6% to $488.3M, and net income attributable to shareholders rose 77.0% to $325.7M.

Outlook and guidance

• FY26 net sales growth guidance remains mid-to-high teens, including an estimated ~2% favorable net impact from FX, acquisitions and divestitures; C&I growth is guided to the low 30s and residential growth to the high single digits.

• FY26 data center revenue is expected near $500M; 2027 data center revenue is expected to well exceed $2B, with a potential path to doubling C&I net sales in 2027.

• FY26 gross margin remains guided near 40%, including Q2 tariff refunds worth ~150 bps; Q4 gross margin is expected at 37%-38% due to mix and inflationary pressures.

• FY26 adjusted EBITDA margin guidance increased to 20.5%-21.0% from 20.0%-21.0%; free cash flow is expected near $450M.

• Capacity plans target ~$4B of annual data center sales capacity by 2H27; backlog is weighted toward 2H shipments, and orders received after Q1 2027 may be difficult to fulfill during 2027.