Generac (GNRC) Q4 2025 earnings summary

Executive summary

• Fourth quarter 2025 net sales declined 12% year-over-year to $1.1 billion, driven by weak residential demand and partially offset by 10% growth in global C&I product sales, especially to data center customers.

• Full-year 2025 net sales decreased 2% to $4.21 billion, with residential sales down 7% and C&I sales up 5%.

• Significant progress in the data center market, with partnerships advancing to pilot phases with two hyperscalers and a $400 million backlog, positioning for potential doubling of C&I sales in coming years.

• Residential product sales declined 23% due to low outage activity, but energy storage and ecobee products saw strong growth; home standby generator sales expected to rebound in 2026.

• Completed acquisition of Allmand in January 2026 to strengthen C&I portfolio and support future growth.

Financial highlights

• Q4 2025 net sales: $1.1 billion (down 12% YoY); residential sales: $572 million (down 23% YoY); C&I sales: $400 million (up 10% YoY).

• Adjusted EBITDA: $185 million (17% of net sales), down from $265 million (21.5%) YoY; full-year Adjusted EBITDA: $716 million (17% of net sales).

• GAAP net loss: $24 million in Q4 2025, driven by $104.5 million product liability and $15.6 million supplier contract settlements; adjusted net income was $95 million.

• Free cash flow: $130 million in Q4 (down from $286 million YoY); full-year free cash flow: $268 million (down from $605 million YoY).

• Gross margin: 36.3% (down from 40.6% YoY), impacted by unfavorable mix and inventory provision.

Outlook and guidance

• 2026 consolidated net sales expected to grow at a mid-teens rate YoY, with residential up ~10% and C&I up ~30%, driven by data center demand and Allmand acquisition.

• Gross margins projected flat at 38%-39%; Adjusted EBITDA margin expected to improve to 18%-19% (from 17% in 2025).

• Free cash flow for 2026 projected at ~$350 million; capital expenditures at ~3.5% of net sales.

• Guidance assumes normalized power outage activity and does not include major outage events.

• 2026 net income margin forecasted at 8%-9%; 1% favorable impact from FX and acquisitions included.