10-Q · May 14, 2026
Forgent Power Solutions reported exceptional performance for Q1 2026, with revenues soaring to $378.7 million, a significant 103% increase year-over-year. Net income reached $24.5 million, an increase of 190% compared…
Earnings analysis · 10-K
FPS earnings analysis
Filed September 15, 2026 · Our reading of the company's report
The latest report
Forgent delivered very strong fiscal 2026 growth, with revenue up 89% to $1.420 billion, backlog up 256% to approximately $3.0 billion, and operating margin expanding to approximately 12.9%. The strategy is concentrated…
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Forgent delivered very strong fiscal 2026 growth, with revenue up 89% to $1.420 billion, backlog up 256% to approximately $3.0 billion, and operating margin expanding to approximately 12.9%. The strategy is concentrated on engineered-to-order electrical distribution equipment for data centers and grid applications, supported by vertical integration and significant capacity investment. The outlook is favorable, but the investment case is increasingly exposed to data-center demand, commodity inflation, execution of campus ramp-up, variable-rate debt, and the $338.9 million Tax Receivable Agreement liability.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.3
- Segment
- One reportable operating segment; revenue by offering: Custom Products $990.5 million, Powertrain Solutions $357.4 million, Standard Products $42.5 million, and Services $29.7 million in fiscal 2026.
- Segment
- Revenue was substantially North America-based; all long-lived tangible assets and operating lease right-of-use assets were located in North America.
What stood out
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Exceptional revenue and earnings growth
Fiscal 2026 revenue increased 89% to $1.420 billion from $753.2 million, while net income rose 508% to $106.0 million from $17.4 million. Income from operations increased 153% to $182.5 million.
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Custom and Powertrain mix accelerating
The company focuses on engineered-to-order Custom Products and integrated Powertrain Solutions for data centers, the power grid, and energy-intensive industry. Custom Products generated $990.5 million and Powertrain Solutions $357.4 million in fiscal 2026, versus $590.6 million and $99.5 million, respectively, in fiscal 2025.
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Vertical integration supports differentiation
Management cites vertical integration as a competitive advantage, particularly for medium-voltage switchgear and transformers that competitors often purchase externally. It also emphasizes reliability, safety, customization, lead time, and engineered solutions in technically demanding applications.
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Backlog provides strong visibility
Backlog reached approximately $3.0 billion as of June 30, 2026, up 256% year over year, compared with fiscal 2026 revenue of $1.420 billion. Deferred revenue also increased to $263.9 million from $110.9 million, supporting future revenue visibility.
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Operating leverage despite launch costs
Adjusted EBITDA increased 91% to $322.9 million from $169.2 million, and operating margin improved to approximately 12.9% from 9.6%. However, gross margin declined to approximately 35.0% from 36.9% because of under-absorbed labor and overhead and startup costs at new campuses.
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Capacity investment nearing completion
The company invested $115.9 million in property and equipment in fiscal 2026, primarily for manufacturing-capacity expansion, versus $84.1 million in fiscal 2025. It also refinanced its term loan at a lower interest rate, with $598.5 million outstanding at June 30, 2026.
What to watch
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Heavy data-center concentration
Approximately 59% of fiscal 2026 revenue came from Data Center products, making growth materially dependent on continued data-center construction and AI investment. A slowdown caused by reduced AI interest, regulation, financing constraints, or changes in data-center electrical architecture could significantly reduce demand.
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Commodity and tariff exposure
The company uses significant electrical steel, carbon steel, aluminum, and copper, does not hedge commodity exposure, and states that copper prices rose significantly in fiscal 2026 and continued rising in the first quarter of fiscal 2027. A large portion of contracts lacks price-escalation mechanisms, creating direct margin risk.
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Large TRA liquidity obligation
The Tax Receivable Agreement liability was $338.9 million at June 30, 2026, equal to 85% of certain realized or deemed tax benefits, and the company had not made its first payment. Payments may continue for more than fifteen years and can accelerate upon a change of control, reducing liquidity available for reinvestment or shareholder returns.
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Variable-rate leverage burden
The company had $598.5 million of variable-rate debt at June 30, 2026; management estimates that a 100-basis-point rate increase would raise annual interest expense by approximately $6.0 million. Interest expense was already $57.1 million in fiscal 2026.
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Ramp-up and execution risk
Capacity expansion is substantially complete but campuses are still ramping production; fiscal 2026 cost of revenues included under-absorbed labor and fixed overhead and one-time startup costs. The company operates ten manufacturing campuses across five locations, so delays, labor shortages, or disruptions at any campus could impair backlog conversion.
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Warranty costs rising materially
The company reported a $10.4 million accrued warranty reserve at June 30, 2026, up from $2.7 million, while warranty expense increased to $13.4 million from $1.6 million. Customized, mission-critical equipment failures could create substantial repair, liability, and reputational costs.
Management's outlook
The 10-K does not provide numerical fiscal 2027 guidance. Quantitative outlook was provided separately in the Q4 earnings release/call, including fiscal 2027 revenue guidance of $2.4-$2.6 billion and adjusted EPS guidance of $1.26-$1.40.
Earlier filings 2
10-Q · March 16, 2026
Forgent Power Solutions reported strong Q2 2026 results, with revenues of $296.4 million, up 69% year-over-year. The company delivered an EPS of $0.15, exceeding estimates by 0.04, but net loss reached $(0.1) million…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.