Generac Beats Q3 EPS as Data Center Backlog Nears $4.5B, but Record Sales Trail Estimates

GNRC reported adjusted EPS of $2.54 for the third quarter, up from $1.83 a year earlier, ahead of a pre-report consensus of about $2.43, per 24/7 Wall St. Net sales rose 16% to a record $1.29 billion but trailed the roughly $1.32 billion analysts expected, according to the company's earnings release and the same preview. Adjusted EBITDA rose to $256 million, or 19.8% of sales, from $193 million a year earlier.

Data centers are reshaping the business. External Commercial and Industrial sales rose about 28% to $552 million, and CEO Aaron Jagdfeld said the backlog for products sold to the data center market has grown to about $4.5 billion, up from about $1.6 billion a quarter earlier. That includes Generac's agreement with Amazon, disclosed in mid-September, which includes a long-term supply agreement for backup generators for Amazon data centers; initial deliveries are expected to total a combined $2.4 billion in 2027 and 2028, per the release. Generac expects 2027 data center revenue above $2 billion and plans to expand capacity.

The core home-standby business also recovered, with Residential external sales up about 9% to $743 million; Jagdfeld said the segment returned to strong year-over-year growth. Generac kept its 2026 sales growth outlook at mid-to-high teens and raised its adjusted EBITDA margin guidance to about 20.5% to 21.0% from 20.0% to 21.0%. Free cash flow was $131.7 million, up from $96.5 million.

What to watch: conversion of the data center backlog into 2027 revenue, progress on the planned capacity expansion, and customer concentration as Amazon becomes a large share of the order book. The Q3 revenue shortfall was about 2% against consensus, while margins expanded.