GNRC · Q4 2025 Earnings

Bullish

Generac

Reported February 11, 2026

30-second summary

30-second take: Q4 revenue fell 11.6% YoY to $1.09B with residential down 23% and adjusted EBITDA margin compressing to 17.0% — a weak landing for FY2025 that finished at -2% growth (below the "approximately flat" guide). But the print is forward-looking: management initiated FY2026 guidance for mid-teens revenue growth, 30% C&I growth, and 18-19% EBITDA margin, all anchored on a data center backlog now at $400M (up from $300M+ at Q3) with two hyperscaler pilots tracking to Q1/Q2 2026 master supply agreements. The C&I re-rating is materializing on schedule; the residential +10% guide is the conditional bet.

Headline numbers

EPS

Q4 FY2025

$1.61

Revenue

Q4 FY2025

$1.09B

-11.6% YoY

Gross margin

Q4 FY2025

36.3%

Free cash flow

Q4 FY2025

$0.13B

Operating margin

Q4 FY2025

-0.9%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$1.09B	-11.6%	$1.11B	-1.8%
EPS	$1.61	—	$1.83	-12.0%
Gross margin	36.3%	—	38.3%	-200bps
Operating margin	-0.9%	—	9.3%	-1015bps
Free cash flow	$0.13B	—	$0.10B	+34.0%

Guidance

Company initiated FY2026 guidance with mid-teens revenue growth, 30% C&I product growth, and 18–19% Adjusted EBITDA margin — a material expansion from FY2025's flat revenue and 17% EBITDA margin, driven by data center acceleration.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Adjusted EBITDA margin	FY2025	approximately 17.0%	17.0%	in-line	Met

New guidance

Metric	Period	Guide	YoY
Revenue YoY growth	FY2026	mid-teens percent range	—
C&I product sales YoY growth	FY2026	30% range	—
Residential product sales YoY growth	FY2026	10% range	—
Adjusted EBITDA margin	FY2026	18.0% to 19.0%	—
Net income margin	FY2026	8.0% to 9.0%	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue YoY growth	FY2025	approximately flat vs. prior year	-2% actual	-2 pts below flat guidance	Lowered

Segment KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Residential products	$0.572B	-23.0%
Commercial & Industrial (C&I) products	$0.4B	+10.0%
C&I product sales growth guidance 2026	~30% expected	—
Residential product sales growth guidance 2026	~10% expected	—

Other KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Domestic segment	$0.889B	-16.8%
International segment	$0.209B	+11.6%
Adjusted EBITDA margin	17.0%	—
Gross profit margin	36.3%	—
Operating cash flow	$189 million	—
Data center revenue growth	Strong acceleration	—

Management tone

Q2 anchor: Data center inflection thesis → Q3 anchor: Defensive on near-term, doubling down on multi-year build → Q4 anchor: Mega-trend positioning, capacity race.

The data center narrative continued its quarter-over-quarter hardening. Q2's "$150M+" became Q3's "$300M+" became Q4's $400M, with the company now sizing the diesel genset TAM at ~$15B annually and targeting 10% share — implying a doubling of the $1.5B C&I business over 3-5 years. The two hyperscaler pilots now have concrete completion timelines (Q1/Q2 2026), with master supply agreements and PO flow expected for 2027-2028. The framing has moved from "we see the opportunity" (Q2) to "we are racing capacity" (Q3) to "we are uniquely positioned at the center of numerous mega-trends" (Q4) — language that signals management believes the structural setup is locked in.

The residential framing has shifted from defensive to conditionally recovery-mode. Q3 acknowledged 2025 was lost on outage weakness; Q4 commits to +10% growth on the assumption outages normalize, with Winter Storm Fern offered as early validation. This is a sharper recovery call than Q3's language suggested management was ready to make — the conditional ("assumes return to power outage activity") is doing real work in this guide.

Clean energy moved further down the priority stack. Q3 added the explicit guardrail to recalibrate R&D if PowerCell 2 / PowerMicro didn't gain share in 2026. Q4 reframes the suite (Ecobee, PowerCell, PowerMicro) as collectively offsetting — not replacing — the $100M Puerto Rico DOE program loss. Ecobee growing mid-teens at record levels with positive EBITDA contribution is the bright spot; the rest is still in show-me mode.

The margin expansion narrative is new and quantified. FY26 EBITDA margin 18-19% and net income margin 8-9% imply 100-200bps and 200-300bps of expansion respectively off FY25, driven by higher-margin C&I mix and operating leverage.

Q&A highlights

Tommy Mall · Stevens

Clarification on hyperscaler progress: whether the $400M backlog includes hyperscaler orders, what pilot phase means, and timeline for progression to purchase orders and master supply agreements.

Backlog of $400M is primarily from co-locators and traditional CNI customers, not hyperscalers (only a couple of pilot units). Two hyperscalers in deep negotiations with pilot programs expected to complete end of Q1/beginning of Q2, leading to master supply agreements and purchase order flow in 2027-2028. Conversations ongoing about 2026 potential supply, not included in guidance.

$400M backlog (primarily co-locators, not hyperscalers)Pilot programs with 2 hyperscalers targeting Q1/Q2 2026 completionExpected master supply agreements and PO flow post-pilot completionMajority of backlog expected to ship in 2026

Mike Halloran · Baird

TAM sizing for data center diesel genset market over next 3-5 years and what realistic market share Generac targets within that opportunity.

Data center diesel genset TAM potentially $15B annually. Generac targets 10% market share in this segment (at low end) based on 10-15% share in broader CNI market. Goal to double $1.5B CNI business over 3-5 years (adding $1.5B) with 10% share. Additional $3-4B opportunity in traditional large megawatt products. No traditional large megawatt products currently in $400M backlog (recently launched).

Data center diesel genset TAM: ~$15B annuallyTarget market share: 10% (potentially higher)Current CNI revenue: $1.5BGoal: Double CNI to ~$3B over 3-5 years

Jeff Hammond · KeyBank Capital Markets

Residential segment breakdown: Puerto Rico DOE program headwind sizing, Power Micro demand and feedback, home standby mid-teens growth composition (price vs. volume), and energy technology cost structure improvement.

~$100M hole from DOE program ending. Mid-teens residential growth: ~50% from price realization (new product ASP + tariff increases) and ~50% from volume (return to normalized outages, weighted to H2). Winter Storm Fern drove elevated home consultations, portable generator sales. New lead distribution system showing promising close rate improvements. Energy technology products (storage, microinverters, Ecobee) collectively offset DOE decline but won't fully replace it. Still targeting 2027 breakeven EBITDA for energy technology suite.

~$100M Puerto Rico DOE program headwindMid-teens home standby growth: 50% price, 50% volumeWinter Storm Fern: double home consultations vs. baseline2026 residential growth guidance: +10% range

George Geronourkis · Canaccord

Competitive environment in large megawatt diesel genset market and whether the opportunity is attracting new entrants.

Competitive landscape unchanged; limited new entrants due to high barriers: few diesel engine manufacturers in high-horsepower ranges, significant R&D and production investment required. Supply chain complexity (alternators, cooling, structural components) also limits competition. Generac leveraging existing strength in supplier relationships and agility from residential business experience to manage supply chain scaling.

Limited number of diesel engine manufacturers in high-HP rangesHigh R&D and tooling capital requirements deter entrySupply chain dependencies: alternators, cooling packages, structural elementsGenerac's competitive advantage: supply chain agility from residential business

Brian Drab · William Blair

Margin profile for data center products relative to home standby, and how margins progress over time as capacity ramps.

2026 data center EBITDA contribution margins: mid-teens. 2027-2028 expected: high teens, approaching corporate average EBITDA margins. Upside opportunity from vertical integration (excluding engines) if Generac brings more content in-house, which could improve margin profile further.

2026 data center EBITDA margins: mid-teens2027-2028 data center EBITDA margins: high teensCorporate average EBITDA: ~18-19%Vertical integration opportunity for margin upside

Answers to last quarter's watch list

FY2025 landing relative to the new ~17% EBITDA margin and ~6% net income margin — FY25 adjusted EBITDA margin landed at 17.0%, matching guidance exactly. Revenue at -2% modestly missed the "approximately flat" guide, driven by the Q4 residential collapse (-23%). EBITDA margin holding the line despite the residential air pocket is the constructive read.

Resolved positively

Data center backlog at Q4 — Backlog grew from $300M+ at Q3 to $400M at Q4, a slower cadence than the Q2→Q3 doubling but still meaningful sequential growth. Critically, no hyperscaler orders are yet in the backlog — but two pilot programs are tracking to Q1/Q2 2026 completion with master supply agreements expected for 2027-2028. The first hyperscaler PO is now framed as a 2027 event.

Resolved positively

2026 sales guide framing — Management initiated FY26 net sales growth in the mid-teens range — well above the +mid-single-digits bar set in the Q3 watch list, and the strongest possible signal that the data center ramp does more than offset residential and clean energy contraction. C&I +30% does the heavy lifting.

Resolved positively

Home standby Q4 demand vs. outage activity — Q4 residential dropped 23%, the worst print of the year, confirming the outage drought caught up with shipments. However, Winter Storm Fern drove YoY growth in home consultations across every region ex-West, validating that the demand engine responds when outages return. Management used this as the basis for the +10% FY26 residential guide (mid-teens for home standby specifically). The recovery thesis depends on Fern-type activity being repeatable.

Continue monitoring

Clean energy 2026 share-gain checkpoint — Ecobee delivered mid-teens growth at record levels in FY25 and reached positive EBITDA contribution — the clear win in the suite. PowerCell 2 and PowerMicro commentary on early acceptance was light. The ~$100M DOE headwind is now confirmed and the energy tech suite only partially offsets.

Continue monitoring

What to watch into next quarter

First hyperscaler PO or master supply agreement announcement — Two pilots target Q1/Q2 2026 completion. Confirmation of either pilot moving to a master supply agreement is the next major de-risking event for the 2027-2028 ramp. Slippage past mid-year would push the upside into 2028+.

C&I sequential growth cadence vs. the +30% FY26 guide — Q4 C&I came in at +10% YoY against a +30% FY guide, implying significant acceleration through the year. Watch for Q1 C&I growth re-accelerating into the high teens or above; anything tracking +10-15% by Q2 would put the FY guide at risk.

Residential outage activity vs. the +10% recovery assumption — The guide explicitly conditions on a return to normalized outages. Watch storm activity, dealer count growth (now over 9,400, +300 YoY), and home consultation trends. Persistent benign weather through H1 would force a residential guide-down.

EBITDA margin progression toward the 18-19% FY26 range — Q1 is guided to ~15% (the low point) with sequential improvement to ~20% in H2. Watch whether Q1 holds the 15% line and whether Q2 shows the expected step-up as data center mix builds.

Domestic capacity ramp toward the $1B run-rate by Q4 2026 — Beaverdam plus other facility expansions (including the new Sussex, Wisconsin plant coming online H2) need to track on schedule to deliver the $400M backlog and create room for the hyperscaler ramp. Any capex slippage or supply chain delay (alternators, cooling components flagged in Q&A) would constrain 2027 upside.

Sources

Generac Q4 FY2025 press release (SEC Form 8-K exhibit): https://www.sec.gov/Archives/edgar/data/1474735/000143774926003700/ex_919348.htm
Q4 FY2025 earnings call prepared remarks and Q&A (exchanges with Stevens, Canaccord, Baird)
Generac Q3 FY2025 brief (prior-quarter context for guidance and watch list)
Generac Q2 FY2025 brief (multi-quarter tone trajectory)

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