Sales rose 16.2% to a record, led by C&I data center shipments, and operating income grew 55.8% 26. Full-year sales guidance holds at mid-to-high teens growth, and adjusted EBITDA margin guidance now has a higher floor.
Generac Holdlings Inc · Q3 2026 · Reported 28 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Revenue | 1,294.78 | 1,114.35 | +16.2 % |
Gross profit | 516.04 | 426.92 | +20.9 % |
Operating income | 160.58 | 103.08 | +55.8 % |
Net income | 109.22 | 66.16 | +65.1 % |
Diluted EPS | 1.83 USD/share | 1.12 USD/share | +63.4 % |
Operating cash flow | 170.99 | 118.38 | +44.4 % |
Gross margin | 39.9 % | 38.3 % | +1.5 pp |
Operating margin | 12.4 % | 9.3 % | +3.2 pp |
Net margin | 8.4 % | 5.9 % | +2.5 pp |
Figures in USD, as reported. Margins are computed from the reported lines. Operating cash flow for the quarter are derived by subtracting year-to-date periods.
C&I data center shipments drove the record quarter, with Residential recovering
Revenue rose 16.2% to $1.29 billion, which management called a record 26. C&I external net sales rose about 28% to $552 million, and Residential rose about 9% to $743 million 8-K. Management attributes the C&I growth mainly to ramping data center revenue, with lower domestic industrial distributor and telecom shipments as an offset 8-K.
Acquisitions, divestitures and currency added about 4% to C&I growth, so part of that 28% is not organic 8-K. Residential growth came from home standby and portable generators, partly offset by lower energy storage shipments 8-K.
Operating income grew far faster than sales as gross margin widened and expenses lagged
Gross margin was 39.9% against 38.3% a year earlier, and operating margin was 12.4% against 9.3% 8-K32. Operating income rose 55.8% 26. Management credits favorable price/cost, including lower tariff costs, partly offset by unfavorable mix 8-K.
Operating expenses rose 9.8% against 16.2% sales growth, which is the operating leverage behind the margin gain 26. Management says the increase reflects investment to support future C&I growth, marketing and incentive compensation 8-K26.
Tariff refunds flatter the comparison. The company received $29.7 million of IEEPA refunds in the quarter, and $9.5 million of that reduced cost of goods sold 21. Over nine months the refunds added about 2 points to gross margin, which was 41.0% against 39.0% a year earlier 35.
Net income rose 65.1% despite a higher tax rate, helped by lower other expense
Net income attributable to Generac was $109.2 million, or $1.83 per share, against $66.2 million, or $1.12, a year earlier 30. The effective tax rate rose to 23.9% from 15.0%, because the prior year had favorable discrete items 29. Other expense, net fell to $17.4 million from $24.7 million, mainly on lower interest expense and higher investment income 26.
The company-defined adjusted EBITDA was $256 million, or 19.8% of net sales, against $193 million, or 17.3% 8-K. That measure sits apart from the reported figures above.
Cash flow grew, but cash conversion eased as earnings outpaced it
Operating cash flow was $171.0 million against $118.4 million a year earlier, and free cash flow was $131.7 million against $96.5 million 8-K. Operating cash flow was 157% of net income, against 179% a year earlier. Management attributes the free cash flow increase to higher operating earnings, partly offset by higher capital expenditures 8-K.
Accounts receivable were $846.0 million at September 30, 2026, against $602.7 million at December 31, 2025 8-K. That comparison is to year-end, not a year earlier. It suggests receivables absorbed some cash as sales ramped.
What to watch next
Management maintains full-year 2026 net sales growth of mid-to-high teens and net income margin of about 9.0 to 10.0% 8-K. It now guides adjusted EBITDA margin to about 20.5 to 21.0%, from 20.0 to 21.0% 8-K.
The data center backlog is about $4.5 billion, and the Amazon agreement covers initial deliveries totaling $2.4 billion in 2027 and 2028 8-K. The risk factors flag cancellation rights, delivery requirements and liability exposure in certain data center contracts 8-K.
Tariff refunds helped reported margins, and $10.5 million of recovery remains in inventory 21. Gross margin without refunds will show how much of the 39.9% is durable 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.