Forgent Power Solutions, Inc.

What they do

Forgent designs and manufactures every major category of electrical distribution equipment, including automatic transfer switches, dry type and liquid filled transformers, electrical houses, generator connection cabinets, panelboards, power distribution units, power skids, remote power panels, switchboards, switchgear and tap boxes. It sells Custom Products engineered to a specific project, Powertrain Solutions that combine custom products into integrated or skidded systems, Standard Products built from common designs, and on-site commissioning and maintenance services. Customers are technology, power, utility and industrial companies, OEMs and integrators, and contractors building data centers, power plants and transmission and distribution infrastructure.

Revenue drivers

• Custom Products — Engineered-to-order equipment designed with the customer's engineers; about 70% of fiscal 2026 revenue.
• Powertrain Solutions — Custom products integrated or skidded into a system; about 25% of fiscal 2026 revenue and grew 259% in fiscal 2026, accounting for nearly one-third of fourth quarter revenue.
• Standard Products — Common-design products manufactured in large quantities for basic applications; about 3% of fiscal 2026 revenue.
• Services — On-site commissioning and maintenance for the installed product base; about 2% of fiscal 2026 revenue.

Recent performance

Fiscal fourth quarter 2026 revenue was $462 million, up 94% year over year, and full year revenue was $1,420 million, up 89%. Fourth quarter bookings were $1,503 million, up 375% year over year, for a 3.3x book-to-bill ratio, and backlog reached $3.0 billion as of June 30, 2026, up 256% year over year. Fourth quarter net income was $66 million versus a prior year loss of $5 million, with a 14.3% net income margin, and Adjusted EBITDA was $113 million, a 24.4% margin. Full year net income was $106 million on a reported basis, though the XBRL annual data show $81.8 million for 2026, and operating cash flow was $109.1 million for the year. Management said revenue, Adjusted EBITDA and Adjusted Net Income exceeded the high end of May guidance.

Strategy

Forgent is adding capacity for modular products, announcing a $35 million expansion of Powertrain Solutions manufacturing at its Tijuana, Mexico campus for dedicated e-House and Powerskid production. That 2027 PTS Capacity Expansion is incremental to the 2025-2026 Capacity Expansion begun before the IPO, which is now substantially complete, and is expected to come online in the fourth quarter of fiscal 2027. Management expects the new investment to raise Powertrain Solutions capacity by more than 50% and total revenue capacity to approximately $5.8 billion, about $800 million higher. The strategy relies on engineer-to-order design tools that can engineer a custom product in as little as a few hours and ship in as little as a week, plus continued share gains in data center, grid and industrial markets.

Risks

• Pricing and demand reversal — Prices for electrical distribution equipment have risen significantly, so lower demand or greater supply could reduce prices, revenue growth and margins.
• Raw material and tariff exposure — The company uses large amounts of electrical steel, carbon steel, aluminum and copper sourced from international vendors subject to duties and tariffs, and cannot always pass cost increases through to customers.
• Dependence on data center and AI investment — Growth depends partly on continued investment in new data centers, which in turn depends on continued interest in developing AI.
• Cyclical construction demand — Construction activity has declined significantly during past recessions, and any sustained reduction could reduce demand for the company's products.

Outlook

For fiscal 2027, management guides revenue of $2,400 to $2,600 million, about 76% growth at the midpoint, and Adjusted EBITDA of $575 to $625 million, about 86% growth at the midpoint. Adjusted EPS guidance is $1.26 to $1.40, roughly 95% growth at the midpoint. The company says it enters fiscal 2027 with all-time high backlog and expects the Tijuana Powertrain Solutions expansion to come online in the fourth quarter of fiscal 2027.