Generac (GNRC) Q4 2025 earnings summary

Executive summary

• Fourth quarter net sales decreased 12% year-over-year to $1.09 billion, driven by weak residential generator demand and offset by strong C&I product sales, especially to data center customers.

• Adjusted EBITDA margin for the quarter was 17%, in line with expectations despite unfavorable sales mix and one-time charges.

• Significant investments were made in manufacturing capacity, including a new Wisconsin facility, to support anticipated growth in the data center market.

• The company is progressing with pilot programs for two hyperscaler customers, with potential for significant orders in 2027-2028 and possible upside in 2026.

• Completed acquisition of Allmand in January 2026 to strengthen C&I portfolio.

Financial highlights

• Residential product sales fell 23% year-over-year to $572 million, while C&I product sales rose 10% to $400 million.

• Gross profit margin declined to 36.3% from 40.6% due to unfavorable mix and a $15.6 million inventory provision related to a supplier dispute.

• Operating expenses increased 34% to $405 million, including a $104.5 million provision for a portable generator product liability settlement.

• GAAP net loss for the quarter was $24 million (vs. $117 million net income prior year), with adjusted net income at $95 million ($1.61/share).

• Free cash flow for the quarter was $130 million, down from $286 million a year ago; full-year free cash flow was $268 million, down from $605 million.

Outlook and guidance

• 2026 consolidated net sales are expected to grow at a mid-teens rate year-over-year, with residential sales up ~10% and C&I sales up ~30%, including a 1% favorable impact from FX and acquisitions.

• Gross margins are projected to be flat year-over-year at 38%-39%, with Adjusted EBITDA margins improving to 18%-19%.

• Free cash flow for 2026 is projected at $350 million.

• Guidance assumes a return to baseline power outage activity and does not include major outage events.