Forgent Power Solutions — Fiscal 2026 Earnings Summary

Financial Performance

• Fiscal Q4 2026 revenues reached $462 million, a 94% year-over-year increase; full-year 2026 revenues were $1,420 million, up 89% year-over-year.
• Fiscal Q4 2026 net income was $66 million, a $71 million increase year-over-year; full-year 2026 net income was $106 million, up 508% year-over-year.
• Fiscal Q4 2026 net income margin was 14.3%, an increase of approximately 800 basis points quarter-over-quarter; full-year 2026 net income margin was 7.5%.
• Fiscal Q4 2026 Adjusted EBITDA was $113 million, a 163% year-over-year increase; full-year 2026 Adjusted EBITDA was $323 million, up 91% year-over-year.
• Fiscal Q4 2026 Adjusted EBITDA margin was 24.4%, an increase of approximately 200 basis points quarter-over-quarter; full-year 2026 Adjusted EBITDA margin was 22.7%.
• Fiscal Q4 2026 cash flow from operations was $74 million, an $81 million increase year-over-year; full-year 2026 operating cash flow was $109 million.
• Fiscal Q4 2026 deferred revenue was $263.9 million, up from $110.9 million in the prior year; full-year 2026 deferred revenue increased by $153 million.
• Fiscal Q4 2026 long-term debt was $582.2 million ($6.0 million current portion, $576.2 million long-term), compared to $502.1 million ($5.2 million current, $496.9 million long-term) in the prior year.
• Fiscal Q4 2026 capital expenditures were $31 million; full-year 2026 capital expenditures were $115.9 million.
• Fiscal Q4 2026 Adjusted Net Income was $77 million, a 275% year-over-year increase; full-year 2026 Adjusted Net Income was $208 million, up 136% year-over-year.

Guidance and Future Outlook

• Fiscal 2027 revenue guidance is $2,400 to $2,600 million, representing 76% year-over-year growth at the midpoint.
• Fiscal 2027 Adjusted EBITDA guidance is $575 to $625 million, representing 86% year-over-year growth at the midpoint.
• Fiscal 2027 Adjusted EPS guidance is $1.26 to $1.40, representing 95% year-over-year growth at the midpoint.
• The company expects quarterly revenue and Adjusted EBITDA to increase consecutively throughout fiscal 2027.
• Fiscal 2027 capital expenditures are expected to total approximately $87 million, including maintenance capital expenditures of approximately 1% of revenues.
• Fiscal 2027 operating cash flow is expected to increase compared to fiscal 2026, driven by higher earnings.

Business Segments and Product Lines

• Powertrain Solutions revenue grew 259% in fiscal 2026 and accounted for nearly one-third of fourth quarter revenue.
• Bookings in fiscal Q4 2026 were $1,503 million, a 375% year-over-year increase, establishing a new company record.
• The book-to-bill ratio increased to 3.3x in the fourth quarter from 2.3x in the third quarter.
• Backlog reached an all-time high of $3.0 billion as of June 30, 2026, a 256% increase year-over-year.
• The company announced a $35 million investment to expand Powertrain Solutions manufacturing capacity at its Tijuana, Mexico campus (2027 PTS Capacity Expansion).
• The 2027 PTS Capacity Expansion is expected to come online in the fourth quarter of fiscal 2027 and increase total revenue capacity to approximately $5.8 billion.
• The expansion is expected to increase Powertrain Solutions capacity by more than 50%.

Market and Competitive Landscape

• Momentum in electrical distribution equipment remains robust, with accelerating demand for the company's products.
• The company is gaining market share and significantly outpacing the broader market.
• The company specializes in "engineered-to-order" custom products for data centers, the power grid, and energy-intensive industrial facilities.
• Forgent claims to be one of a small number of companies capable of manufacturing all electrical distribution equipment required for a data center or large facility's powertrain with high customization and short lead times.

Risks and Challenges

• Potential decline in demand or increase in supply for electrical distribution equipment could impact revenue growth and profit margins.
• Increases in raw material prices (electrical steel, carbon steel, aluminum, copper) or labor costs could impact margins if not passed to customers.
• Supply chain disruptions, including unavailability of raw materials or components, could materially adversely affect the business.
• Growth depends on continued investment in new data centers and interest in developing artificial intelligence.
• Demand depends on new construction activity, which has declined significantly during past recessions.
• Long sales cycles and unpredictable placing or canceling of customer orders may cause significant quarter-to-quarter revenue variation.
• Concentration of sales with fewer customers due to the strategy to increase Powertrain Solutions sales could adversely impact the business if orders from one customer are reduced.
• Risks associated with the Tax Receivable Agreement, including potential accelerated payments or conflicts of interest with Neos Partners, LP.

Management Commentary and Tone

• CEO Gary Niederpruem stated that momentum remains robust and products are gaining traction with customers.
• Management highlighted that Q4 bookings of over $1.5 billion exceeded total revenue for the full fiscal year, demonstrating the strength of offerings.
• Management noted that performance demonstrates the company is benefiting from industry growth while gaining share and outpacing the broader market.
• CEO emphasized that the company delivered results exceeding IPO expectations and guidance while growing faster than the market and peers.
• Management expressed confidence that record backlog, strong customer relationships, and continued capacity investments position the company to deliver greater value in fiscal 2027.

Other Key Points

• Revenues, Adjusted EBITDA, and Adjusted Net Income for the fiscal fourth quarter and full year 2026 all exceeded the high-end of May guidance.
• The 2025-2026 Capacity Expansion, which began before the IPO, is now substantially complete.
• The company will host a conference call on September 15, 2026, at 11:00 a.m. Eastern Time to discuss results.
• The 2027 Annual Meeting of Shareholders is scheduled for January 28, 2027.
• Cash and cash equivalents were $97.5 million as of June 30, 2026, down from $111.3 million in the prior year.
• Accounts receivable increased to $329.6 million from $159.9 million in the prior year.
• Inventory increased to $249.8 million from $117.6 million in the prior year.
• The company recorded a $338.9 million payable pursuant to the Tax Receivable Agreement as of June 30, 2026.