GNRC · 10-Q · 2026Q2 · Full report

Tariff Refund and Gross Margin

GENERAC HOLDINGS INC. · 2026-08-04 · Importance 50 · Surprise 58 · In source text

Second-quarter gross margin increased to 44.5% from 39.3%, while first-half gross margin rose to 41.7% from 39.4%. Generac received approximately $61 million of tariff refunds during the three and six months ended June 30, 2026 and recorded a further $28 million tariff refund receivable. Approximately $71 million of the recovery reduced second-quarter cost of goods sold, with the remainder recorded in inventory. Tariff refunds contributed approximately 6 percentage points to second-quarter gross-margin growth and approximately 3 percentage points to first-half growth, while unfavorable mix and higher input costs were partly offset by pricing.

Key facts

• Adjusted EBITDA for the Commercial & Industrial segment for six months ended June 30, 2026: $148.0 million, or 13.9% of C&I total sales, versus $98.7 million, or 11.9% in prior year; tariff refunds contributed approximately 1% to gross margin growth for the period. source
• Adjusted EBITDA for the Residential segment for six months ended June 30, 2026: $353,974 thousand, or 30.2% of Residential segment total sales, versus $258,013 thousand, or 21.8% in prior year; tariff refunds impacted margins by approximately 5%. source
• Tariff refunds contributed approximately 6% to gross margin growth during the second quarter of 2026. source
• The increase in operating cash flows for the six months ended June 30, 2026 was driven by higher operating earnings, cash receipts from tariff refunds totaling $61 million, and lower cash tax payments in the current year period. source
• Gross profit margin for the six months ended June 30, 2026: 41.7% compared to 39.4% in the prior-year period; tariff refunds contributed approximately 3% to gross margin growth during the period. source
• Gross profit margin for the three months ended June 30, 2026: 44.5% compared to 39.3% in the prior year second quarter. source

Impact estimates