Generac Holdings Inc. (NYSE:GNRC) reported stronger-than-expected second-quarter earnings on Wednesday, with robust profitability driven by surging demand from data center customers, although revenue came in slightly below Wall Street expectations.
Shares of the backup power equipment manufacturer rose more than 4% in pre-market trading following the results.
The company reported adjusted earnings of $2.91 per share, comfortably exceeding analysts’ consensus estimate of $2.00.
Revenue increased 11% year over year to $1.17 billion, narrowly missing the market forecast of $1.18 billion but improving from $1.06 billion in the same period last year.
Tariff Refunds Boost Profitability
Generac’s earnings were supported by approximately $71 million in pre-tax tariff refunds recorded during the quarter.
The refunds contributed roughly 6% to the company’s gross margin, helping lift profitability well above expectations.
Adjusted EBITDA margin expanded to 24.8%, compared with 17.7% a year earlier, with tariff refunds accounting for approximately 6 percentage points of the improvement.
Commercial Business Continues to Accelerate
The company’s Commercial & Industrial segment remained the primary growth driver, with sales rising 29% year over year to $556 million.
By contrast, Residential segment revenue declined 2% to $617 million as demand softened in that market.
President and Chief Executive Officer Aaron Jagdfeld said: “Second quarter results reflect continued momentum in our C&I segment driven by strong data center market revenue as we continue to ramp production for large megawatt backup generators.”
Data Center Backlog Continues to Grow
Generac strengthened its position in the rapidly expanding data center market by securing a global supply agreement with a second hyperscale customer during the quarter.
The company’s data center backlog has now reached approximately $1.6 billion, including nearly $700 million of committed business for 2027 from its first hyperscale customer.
The growing order book provides increased visibility into future revenue as demand for backup power systems continues to rise.
Full-Year Margin Outlook Raised
Generac maintained its full-year 2026 forecast for net sales growth in the mid-to-high teens percentage range.
However, the company increased its adjusted EBITDA margin guidance to between 20.0% and 21.0%, up from its previous outlook of 18.5% to 19.5%.
The revised profitability forecast reflects an estimated 1.5 percentage point benefit from tariff refunds.
Generac Holdings stock price
