Generac Holdings Inc.

What they do

Founded in 1959, Generac provides power generation equipment, energy storage systems, energy management devices and solutions, and other power products and services. It serves the residential, commercial, data center, telecom, rental, and industrial markets. The company operates in two primary segments: Residential and Commercial & Industrial (C&I).

Revenue drivers

• Residential segment — External net sales were $617 million in Q2 2026, a 2% decrease year-over-year. Includes home standby and portable generators, solar and energy storage systems, and energy management devices.
• Commercial & Industrial (C&I) segment — External net sales were $556 million in Q2 2026, a 29% increase year-over-year. Serves data centers, light commercial, retail, office, telecom, rental, industrial, healthcare, construction, oil & gas and municipal infrastructure.
• Data center market backlog — Backlog for products serving the data center market increased to approximately $1.6 billion as of July 29, 2026, excluding committed volumes from a second hyperscale customer. Includes a global supply agreement with a leading hyperscale data center operator committing nearly $700 million of volume for 2027.

Recent performance

Second quarter 2026 net sales increased 11% to $1.17 billion compared to $1.06 billion in the prior year, with acquisitions, divestitures, and foreign currency contributing a net favorable impact of 2%. C&I external net sales rose approximately 29% to $556 million, while Residential external net sales decreased approximately 2% to $617 million. Net income attributable to the company was $143 million, or $2.40 per share, compared to $74 million, or $1.25 per share, in the prior year quarter. Adjusted EBITDA before noncontrolling interests was $291 million, or 24.8% of net sales, compared to $188 million, or 17.7%, in the prior year. Results included a pre-tax benefit of approximately $71 million related to tariff refunds.

Strategy

Generac is investing aggressively in incremental production and packaging capacity for large megawatt generators to address accelerating data center demand. During Q2 2026, it completed the acquisition of Enercon and acquired an additional facility in Belvidere, Illinois, significantly expanding capacity for large megawatt generator packaging. The company signed a global supply agreement with a second hyperscale customer on June 24, 2026, and is negotiating final product-specific terms for 2027 and 2028 volumes. Management expects data center backlog to provide visibility to significant 2027 growth.

Risks

• Power outage unpredictability — Demand for the majority of products is significantly affected by unpredictable power outage activity, which can lead to substantial variations in financial results from period to period.
• Residential investment cycle — The residential market is affected by consumer confidence, residential housing starts, interest rates, and changes in renewable energy mandates and investment tax credits, including the accelerated phase-out under the OBBBA enacted in July 2025.
• Commodity and tariff exposure — The business is exposed to price fluctuations in steel, copper, aluminum, advanced electronic components, and battery cells, as well as new or increased tariffs on imported goods starting in Q1 2025.
• Data center customer concentration and contract risk — The company faces uncertainty regarding the growth of the data center market and increased contract risk with certain data center customers, including cancellation rights, delivery requirements, and potential liability exposure.

Outlook

Management maintains full-year 2026 net sales growth guidance of mid-to-high teens percent compared to the prior year. Adjusted EBITDA margin before noncontrolling interests is now expected to be approximately 20.0% to 21.0%, an increase from the previous range of 18.5% to 19.5%, reflecting an approximate 1.5% impact from tariff refunds. The company expects rapidly increasing data center backlog to provide visibility to significant 2027 growth.