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Research Alert: Generac: Pivot To Data Centers Enables Strong Q1 Beat

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-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

GNRC delivered strong Q1 results, with net sales growing 12% Y/Y to $1.06B and adjusted EPS of $1.80 significantly beating consensus of $1.33. C&I segment growth of 28% fueled top-line expansion, primarily from accelerating data center market penetration, while residential sales grew just 1%. We see the standout C&I performance as validating GNRC's successful entry into data centers, with the company noting final-stage vendor approval with multiple hyperscale customers. Management raised full-year guidance to mid- to high-teens sales growth from mid-teens and lifted adjusted EBITDA margin guidance to 18.5%-19.5% from 18.0%-19.0%. Profitability improved significantly, with adjusted EBITDA margin expanding 240 bps to 18.3% due to operational efficiencies and favorable price realization. The Allmand and Enercon acquisitions further build out the nonresidential portfolio. Notably, guidance excludes the potential incremental impact from multi-year hyperscale agreements, suggesting upside potential, in our view.

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