Generac Holdings Inc. (NYSE: GNRC) swung to a fourth-quarter loss after booking a sizable legal settlement charge, but accelerating data center demand and expectations of a normalization in outage activity underpin guidance for strong growth in 2026.
The Wisconsin-based generator and energy technology manufacturer reported fourth-quarter net sales of $1.09 billion, down 12% year-over-year. The decline was driven by a sharp pullback in residential generator shipments amid a significantly weaker power outage environment compared to a hurricane-heavy prior-year period.
Residential product sales fell 23% to $572 million in the quarter, reflecting lower home standby and portable generator shipments. In contrast, commercial and industrial (C&I) sales rose 10% to $400 million, largely due to higher revenue from data center customers.
CEO Aaron Jagdfeld said momentum in the data center segment has accelerated, with Generac deepening its role as a supplier to hyperscale operators. The company is expanding manufacturing capacity for large megawatt-scale generators, including the purchase of an additional facility in Wisconsin, as it targets a doubling of C&I product sales over the coming years.
Generac posted a net loss attributable to the company of $24 million, or $0.42 per share, compared to net income of $117 million a year earlier. The quarterly result included a $104.5 million provision tied to a settlement related to a portable generator product liability case, along with a $15.6 million inventory provision stemming from a supplier contract dispute.
Adjusted net income declined to $95 million, or $1.61 per share, from $168 million in the prior-year quarter. Adjusted EBITDA fell to $185 million, representing a 17.0% margin versus 21.5% a year ago. Gross margin narrowed to 36.3% from 40.6%, reflecting unfavorable sales mix, inventory charges, higher input costs, and lower manufacturing absorption, partially offset by price realization.
For full-year 2025, net sales slipped 2% to $4.21 billion. Residential sales declined 7% to $2.27 billion, while C&I sales increased 5% to $1.46 billion. Net income attributable to Generac fell to $160 million, or $2.69 per share, from $316 million, or $5.39 per share, in 2024. Adjusted EBITDA for the year totaled $716 million, or 17.0% of net sales.
Cash flow from operations fell to $438 million in 2025 from $741 million in 2024, while free cash flow dropped to $268 million, reflecting lower operating income and working capital dynamics. Generac repurchased roughly 1.1 million shares for $148 million during the year and has approved a new $500 million share repurchase authorization over the next 24 months.
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