Forgent Power Solutions (NYSE:FPS) reported record fourth-quarter and full-year fiscal 2026 results, driven by demand across its data center, grid and industrial markets, as well as growth in its modular Powertrain Solutions business.
Fourth-quarter revenue rose 94% year over year to $462 million, while adjusted EBITDA increased 163% to $113 million. Adjusted EBITDA margin reached 24.4%, up 200 basis points sequentially and 640 basis points from the prior-year quarter. Adjusted net income increased 275% to $77 million.
Bookings and Backlog Reach Records
Fourth-quarter bookings totaled more than $1.5 billion, increasing 375% year over year and 73% sequentially. The company’s book-to-bill ratio was 3.3 times, while year-end backlog rose to $3 billion, up 256% from a year earlier and 53% from the prior quarter.
Niederpruem said the backlog consisted entirely of firm customer purchase orders, rather than letters of intent or memoranda of understanding. He also said pricing has remained consistent and that the company has not experienced meaningful project delays or customer push-outs for its products.
“We are not hearing anything about any massive projects being delayed or the market slowing by any means,” Niederpruem said during the question-and-answer session.
The company said its backlog was approximately 40% Powertrain Solutions at the end of fiscal 2026. Powertrain Solutions encompasses prefabricated, factory-built systems designed to shift work from construction sites into manufacturing facilities.
Powertrain Solutions Expansion and Data Center Strategy
Powertrain Solutions revenue rose 187% year over year and 48% sequentially to $147 million in the fourth quarter. Custom products revenue increased 73% to $292 million, services revenue rose 69% to $12 million, and standard products revenue increased 3% to $11 million.
Forgent said customers are increasingly adopting modular construction to reduce dependence on field labor and accelerate infrastructure deployment. Niederpruem said modular construction can compress portions of data center construction schedules by roughly 30% to 50% compared with traditional field-built approaches, based on customer feedback.
To support demand, the company announced plans to build a dedicated 385,000-square-foot Powertrain Solutions facility at its Tijuana, Mexico campus. The project is expected to increase Powertrain Solutions manufacturing capacity by more than 50% to more than 1 million square feet and raise total revenue capacity by approximately $800 million to $5.8 billion.
The facility is expected to begin operations in the fourth quarter of fiscal 2027. Niederpruem said the company elected to add capacity sooner because modular solutions appear to be the “dominant deployment mechanism” for many customers.
The company also cited progress in broadening its direct data center customer base. It received its first direct order from a frontier artificial intelligence lab during the fourth quarter and signed a master services agreement with a hyperscaler. Niederpruem described the initial AI lab award as a proof point, noting that the customer’s first campus is expected to exceed one gigawatt and that the broader opportunity could span multiple gigawatts.
Fiscal 2027 Outlook
Forgent forecast fiscal 2027 revenue of $2.4 billion to $2.6 billion, representing 76% growth at the midpoint. It expects adjusted EBITDA of $575 million to $625 million, or 86% growth at the midpoint, with adjusted EBITDA margin of approximately 24%, compared with 22.7% in fiscal 2026.
The company also projected adjusted earnings per share of $1.26 to $1.40, representing approximately 95% growth at the midpoint. Management said backlog covers more than 90% of its full-year revenue outlook, with the balance of backlog scheduled for fiscal 2028 delivery.
For the first quarter of fiscal 2027, Forgent forecast revenue of $445 million to $465 million and adjusted EBITDA of $90 million to $100 million. The company expects approximately $10 million in one-time costs during the quarter associated with hiring and capacity investments that it does not expect to fully absorb until production increases in later quarters.
CFO Ryan Fiedler said first-quarter adjusted EBITDA margin is expected to be about 21%, followed by margin improvement as volume rises. He said management expects “a couple of hundred basis points” of margin expansion in the second quarter from the first-quarter level.
Cash Flow, Capital Spending and M&A
Operating cash flow increased to $109 million in fiscal 2026 from $45 million in fiscal 2025. Forgent expects operating cash flow to exceed $300 million in fiscal 2027, although it expects cash generation to be weighted toward the second half as the company invests in working capital and facilities early in the year.
Capital expenditures declined from 11% of sales in fiscal 2025 to 8% in fiscal 2026 and are expected to fall to roughly 3% of sales in fiscal 2027, including the newly announced Tijuana investment.
Management said its first capital-allocation priority as free cash flow grows will be acquisitions that complement its product portfolio, expand capabilities and support long-term growth. Niederpruem said the company is evaluating opportunities in product-line extensions, services and potentially geographic expansion, but said potential targets must meet both strategic and financial criteria.
Beginning in fiscal 2027, Forgent will stop reporting orders and backlog quarterly, citing larger average order sizes that can make quarterly order activity less representative of its underlying run rate. Instead, it plans to disclose orders and backlog annually while providing rolling quarterly guidance for revenue and adjusted EBITDA.
About Forgent Power Solutions (NYSE:FPS)
Forgent Power Solutions, Inc develops and manufactures products used in electric power transmission and distribution infrastructure. Its offerings support the generation, transmission, distribution and management of electrical power for utility and industrial applications.
The company’s product portfolio includes equipment and components used in overhead and underground power networks, including electrical connectors, fittings, line hardware and other engineered solutions designed to support the reliability and efficiency of power-delivery systems.
Forgent Power Solutions serves electric utilities, distributors and industrial customers, primarily through markets connected to North American power infrastructure.
