Forgent Power Solutions closed fiscal 2026 with its strongest quarter to date, combining rapid revenue growth, record bookings and a substantially larger backlog with a sharp improvement in profitability. The electrical distribution equipment manufacturer reported fourth-quarter revenue of $461.7 million for the period ended June 30, up from $237.6 million a year earlier, an increase of 94%. The result also cleared the $392 million to $432 million fourth-quarter revenue range that Forgent had provided in May, extending a pattern of upward revisions and stronger-than-anticipated execution during the fiscal year.

The more consequential number for the company’s forward outlook was bookings. Forgent recorded $1.503 billion of new orders during the quarter, an increase of 375% from the prior-year period and 73% from the third quarter. That produced a book-to-bill ratio of 3.3 times, compared with 2.3 times in the preceding quarter. In practical terms, the company received more than three dollars of orders for each dollar of fourth-quarter revenue, giving it a substantially larger base of committed work as it begins fiscal 2027.

Backlog consequently climbed to approximately $3.0 billion at June 30, an all-time high for Forgent. The figure increased 256% from a year earlier and 53% from the end of the March quarter, when backlog stood at roughly $1.98 billion. The acceleration matters because Forgent’s business centers on engineered-to-order electrical distribution systems, where customer projects can involve long production schedules and substantial customization. Backlog therefore provides an important, though not guaranteed, indicator of revenue that could be recognized as projects move through manufacturing and delivery.

Management attributed the order momentum to strong demand for electrical distribution equipment and continued market-share gains. Chief Executive Gary Niederpruem said fourth-quarter orders alone exceeded Forgent’s revenue for the entire fiscal year, underscoring the scale of the recent acceleration. The company serves customers in data centers, power-grid infrastructure and energy-intensive industrial facilities, markets where large projects require transformers, switchgear and other equipment that can handle increasingly complex and high-density power requirements.

Profitability strengthened alongside the revenue increase. Forgent reported fourth-quarter net income of $66.1 million, compared with a $4.8 million loss in the year-earlier quarter. The company’s net income margin reached 14.3%, improving by about eight percentage points sequentially. Forgent said the improvement reflected higher gross profit as revenue increased faster than operating expenses and newer manufacturing campuses moved closer to their targeted production rates.

Operating income rose to $91.9 million from $8.3 million a year earlier. Gross profit more than doubled to $166.7 million from $79.7 million, while selling, general and administrative expenses increased much more moderately, to $62.6 million from $58.4 million. That operating leverage was an important feature of the quarter: Forgent did not merely translate higher demand into additional sales, but converted a greater portion of its revenue base into operating earnings as recently added capacity became more productive.

On an adjusted basis, fourth-quarter EBITDA increased 163% to a record $112.7 million from $42.8 million. Adjusted EBITDA margin reached 24.4%, up from 18.0% in the corresponding period last year and about two percentage points higher than in the third quarter. Adjusted net income rose 275% to $77.3 million. Adjusted earnings per share were $0.25, while GAAP diluted earnings per Class A share were $0.21 for the quarter.

The quarter also surpassed the earnings ranges Forgent had issued in May. At that time, the company projected fourth-quarter adjusted EBITDA of $100 million to $110 million and adjusted net income of $67 million to $77 million. Actual adjusted EBITDA of $112.7 million came in above the top of that range, while adjusted net income of $77.3 million narrowly exceeded the previous ceiling. Revenue exceeded the prior high-end forecast by almost $30 million.

Full-year results showed how quickly Forgent’s scale changed during fiscal 2026. Revenue rose 89% to $1.420 billion from $753.2 million. Net income increased to $106.0 million from $17.4 million, a gain of 508%, while adjusted EBITDA climbed 91% to $322.9 million. Adjusted net income totaled $207.6 million, up 136%. Full-year adjusted EBITDA margin was 22.7%, compared with 22.5% in fiscal 2025, indicating that the company broadly preserved underlying profitability despite the unusually rapid production expansion.

Those results were also above Forgent’s latest full-year guidance. In May, management had projected fiscal 2026 revenue of $1.35 billion to $1.39 billion, adjusted EBITDA of $310 million to $320 million and adjusted net income of $197 million to $207 million. The final results exceeded the high end of all three ranges. That performance provides the foundation for a much larger fiscal 2027 outlook rather than a more conservative stabilization year following fiscal 2026’s expansion.

Forgent expects fiscal 2027 revenue of $2.4 billion to $2.6 billion. At the $2.5 billion midpoint, that represents approximately 76% year-over-year growth. Adjusted EBITDA is projected at $575 million to $625 million, or $600 million at the midpoint, representing roughly 86% growth. The company expects adjusted EPS of $1.26 to $1.40, with the midpoint implying growth of about 95% from fiscal 2026 adjusted EPS.

Management also indicated that growth is expected to build as the year progresses rather than arrive evenly. Forgent expects both quarterly revenue and adjusted EBITDA to increase consecutively through fiscal 2027. The first quarter will include significant personnel and facility investment intended to support higher production volumes later in the year, meaning investors may see a greater portion of the year’s earnings generation in subsequent quarters as manufacturing capacity ramps.

The backlog provides significant support for that outlook, but execution now becomes increasingly important. Converting $3 billion of orders into revenue requires Forgent to expand staffing, manage raw-material availability, keep new manufacturing capacity on schedule and meet customer delivery commitments. The company itself cautions that backlog does not guarantee an equivalent amount of future revenue and that orders can be affected by project schedules, customer decisions and broader construction conditions.

Forgent is responding to the demand increase with another manufacturing investment. The company announced plans to spend $35 million to expand Powertrain Solutions capacity at its Tijuana, Mexico campus. The project will add dedicated manufacturing capabilities for modular e-House and Powerskid products and is expected to be operational during the fourth quarter of fiscal 2027. Management expects the project to raise total company revenue capacity by approximately $800 million, to about $5.8 billion annually.

The new project is incremental to Forgent’s earlier 2025-2026 capacity program, which management said is now substantially complete. Earlier in fiscal 2026, that program was expected to provide a manufacturing footprint capable of supporting roughly $5 billion of annual revenue. The decision to increase that theoretical capacity to $5.8 billion so soon afterward reflects stronger-than-planned demand in the company’s modular Powertrain Solutions business.

Powertrain Solutions revenue increased 259% during fiscal 2026 and represented nearly one-third of Forgent’s fourth-quarter sales. Management said demand for the products significantly exceeded the assumptions used when the original manufacturing expansion was designed. The additional Tijuana investment is expected to increase Powertrain Solutions capacity by more than 50%, giving Forgent more room to serve customers that want integrated modular power systems rather than purchasing individual components separately.

The capacity program will keep capital spending elevated in fiscal 2027, although the company expects stronger earnings to lift cash generation. Forgent forecasts approximately $87 million of capital expenditures for the new fiscal year. That includes remaining spending associated with the prior expansion, the newly announced Powertrain Solutions investment and maintenance capital expenditures that management estimates at approximately 1% of revenue.

Cash flow improved meaningfully in the fourth quarter despite the working-capital demands associated with rapid growth. Operating cash flow was $74 million, an $81 million improvement from the year-earlier period. Fourth-quarter capital expenditures totaled $31 million, with substantially all of the spending tied to the existing capacity expansion. For the full fiscal year, operating cash flow reached $109.1 million, up from $45.0 million, while purchases of property and equipment totaled $115.9 million.

The balance sheet also reflects the company’s rapid scaling. Accounts receivable increased to $329.6 million at June 30 from $160.0 million a year earlier, while inventory rose to $249.8 million from $117.6 million. Deferred revenue increased to $263.9 million from $110.9 million. Those movements are consistent with a business preparing for substantially greater production volumes, but they also underline the working-capital requirements that accompany growth at the pace Forgent is projecting.

Cash and cash equivalents stood at $97.5 million at fiscal year-end, while long-term debt, excluding the current portion and net of discounts and financing costs, was $576.2 million. Forgent completed its initial public offering during fiscal 2026 and subsequently raised additional capital through follow-on offerings. The company’s cash-flow statement shows about $492 million of net IPO proceeds and more than $1.0 billion from follow-on Class A share offerings, with corresponding uses related to purchases of Opco interests from existing shareholders under its corporate structure.

The principal investment question has therefore shifted. Earlier in Forgent’s public-market history, investors had to assess whether the company could execute a rapid manufacturing expansion while preserving margins. The fourth-quarter results provide evidence of progress on that front: revenue exceeded guidance, adjusted EBITDA margin expanded and operating cash generation strengthened. Fiscal 2027 will test whether the company can repeat that execution at a much larger revenue base.

Several risks remain central to that outlook. Forgent depends partly on continued investment in new data centers, including infrastructure associated with artificial intelligence workloads. A slowdown in data-center construction, industrial investment or grid projects could eventually reduce demand. The company is also exposed to raw-material costs including electrical steel, carbon steel, aluminum and copper, as well as labor costs, tariffs and international supply-chain disruptions. Capacity expansion creates its own risks if plants are delayed or fail to reach expected productivity levels.

Customer concentration could also become more important as the Powertrain Solutions business grows. Large modular projects can generate substantial individual orders, which can make quarterly bookings more volatile and create greater dependence on a smaller set of customers. Forgent has noted that long sales cycles and the timing or cancellation of major customer orders can cause results to vary significantly from quarter to quarter. The record backlog improves visibility, but it does not remove those risks.

The initial market response nevertheless indicated that investors viewed the report positively. Forgent shares rose about 9.8% in U.S. premarket trading on September 15, according to Barron’s, following the release of the fiscal fourth-quarter numbers. The move came after a period in which the stock had already been sensitive to changes in expectations for data-center infrastructure demand and the speed of Forgent’s production ramp.

For fiscal 2027, the central earnings metric will be whether revenue conversion from the $3.0 billion backlog keeps pace with management’s production schedule while margins remain near the levels demonstrated in the fourth quarter. The midpoint of the company’s revenue outlook would add more than $1 billion of annual sales in a single year, while the adjusted EBITDA midpoint would nearly double the fiscal 2026 result. Delivering both would require sustained demand and significant operating execution.

Forgent is entering that test from a stronger position than it held a year ago. Fourth-quarter bookings exceeded full-year fiscal 2026 revenue, backlog is more than three times its year-earlier level, recent manufacturing investments are moving into production and management is already adding another layer of capacity. The fiscal 2027 guidance makes clear that Forgent expects those orders to translate into another year of unusually rapid expansion. After the fourth quarter’s 94% revenue growth and margin improvement, the focus now moves from demonstrating demand to converting a record order book into production, cash flow and earnings at substantially greater scale.