fps-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-43102

___________________________________

Forgent Power Solutions, Inc.

(Exact name of registrant as specified in its charter)

___________________________________


Delaware						39-3386651
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11500 Dayton Parkway Dayton, MN						55369
(Address of Principal Executive Offices)						(Zip Code)

(763) 588-0536

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.00001 per share	FPS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class of Common Stock	Number of Shares Outstanding
Class A Common Stock, $0.00001 par value per share	244,118,850	shares outstanding as of May 7, 2026
Class B Common Stock, $0.00001 par value per share	60,310,039	shares outstanding as of May 7, 2026

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some information in this Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements that are based on our management’s beliefs, expectations and assumptions and currently available information. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, financing and investment plans, dividend policy, competitive position, industry and regulatory environment, potential growth opportunities and the effects of competition. Forward-looking include statements that are not historical facts may be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” and similar expressions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent risks, uncertainties and other changes in circumstances we cannot predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements and you should not place undue reliance on such statements.

Important factors that could cause actual results to differ materially from our expectations include:

•if there is less demand for, or greater supply of, electrical distribution equipment in the future, the price of electrical distribution equipment could decline which would adversely impact both our revenue growth and profit margins;

•if the prices of raw materials, such as electrical steel, carbon steel, aluminum or copper, or labor costs increase in the future and we are unable to pass those increases on to our customers, our profit margins could be significantly impacted;

•our cost of and access to raw materials and components from international vendors could be adversely impacted by changes in government policies, including the imposition of additional duties, tariffs and other charges on imports and exports or restrictions on purchases of components from certain foreign countries;

•significant disruptions to our supply chain, including the high cost or unavailability of raw materials and components required to manufacture our products, and significant disruptions to our distribution networks could have a material adverse effect on our business, financial condition and results of operations;

•our growth depends in part on continued investment in new data centers, which depends in part on continued interest in developing artificial intelligence;

•demand for our products depends, in large part, on new construction activity which has declined significantly during past recessions;

•any delay or interruption in the operations of any of our manufacturing campuses could impair our ability to provide products to customers;

•if we are unable to complete our expansion in the timeframe we anticipate or the expansion does not give us the additional capacity that we expect, we may not be able to achieve our anticipated level of growth;

•amounts included in our backlog may not result in the revenue or generate profits in the amount we expect or on the timeframe that we anticipate;

•we operate in competitive environments, and our failure to compete successfully could cause us to lose market share;

•any failure of our products could subject us to substantial liability, including product liability claims, which could damage our reputation or the reputation of one or more of our brands;

•the long sales cycles for certain of our electrical distribution equipment, as well as unpredictable placing or canceling of customer orders, particularly large orders, may cause our revenues and operating results to vary significantly from quarter to quarter, which could make our future results of operations less predictable;

•if changing efficiency standards for transformers increases the cost of producing our transformer products and we are unable to pass these higher costs on to our customers, margins on our transformer products could decline;

•if we fail to motivate and retain our key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our anticipated level of growth;

•changes in technology or customer preferences could result in less demand for certain categories of electrical distribution equipment;

•large companies often require more favorable terms and conditions in our contracts, which could result in downward pricing pressures on our business, less desirable payment terms or greater warranty and contractual obligations;

•our strategy to increase our sales of Powertrain Solutions could result in a concentration of our sales with fewer customers and a significant reduction in orders from any one of these customers could adversely impact our business;

•our operations and quality control could be disrupted if we encounter problems with outside vendors, subcontractors and third-party suppliers;

•unexpected events, such as natural disasters, geopolitical conflicts, pandemics, a volatile global economic environment, inflation, high interest rates, a potential recession and other events beyond our control, may increase our cost of doing business or disrupt our operations;

•the integration of the business acquisitions poses risks to the operation of our business;

•environmental, health and safety (“EHS”) laws and regulations could result in substantial costs and liabilities;

•the impact of import or export laws could have a material adverse effect on our business, financial condition and results of operations;

•our indebtedness may restrict our current and future operations;

•our organizational structure, including the Tax Receivable Agreement (as defined in Note 11, “Payable Pursuant to the Tax Receivable Agreement” included herein), confers certain benefits upon the Continuing Equity Owners (as defined in Note 2, “Summary of Significant Accounting Policies” included herein) that will not benefit certain holders of our Class A common stock to the same extent it will benefit the Continuing Equity Owners;

•in certain cases, payments under the Tax Receivable Agreement to the Continuing Equity Owners may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement;

•our status as a “controlled company” and ability to rely on exemptions from certain corporate governance requirements;

•Neos Partners, LP (“Sponsor”) will have significant influence over us and its interests may conflict with our interests and the interests of other stockholders;

•Delaware law and anti-takeover provisions in our governing documents may have the effect of delaying or preventing a change of control or changes in our management and may deprive our investors of the opportunity to receive a premium for their shares;

•the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members and officers; and

•the risk factors described under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in our final prospectus, dated March 26, 2026, filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended, (the “Prospectus”) and other cautionary statements included in this Quarterly Report.

The forward-looking statements included in this Form 10-Q represent our management's belief and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update or revise these forward-looking statements as a result of new information, future events or otherwise.

TABLE OF CONTENTS


		Page
Part I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Changes in Stockholder 's / Member's Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39

Part II - OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
SIGNATURES		43

Table of Contents

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

FORGENT POWER SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)


	March 31, 2026		June 30, 2025
Assets
Current Assets
Cash and cash equivalents	$	93,831	$	111,322
Accounts receivable, net	274,592		159,970
Inventory, net	179,496		117,577
Prepaid and other current assets	59,528		56,278
Total Current Assets	607,447		445,147
Property and equipment, net	179,374		108,170
Operating lease right of use assets	110,779		117,769
Goodwill	516,629		516,629
Other intangible assets, net	300,265		337,271
Deferred tax assets	131,675		—
Other assets	7,172		11,700
Total Assets	$	1,853,341	$	1,536,686

Liabilities and Stockholders’s Equity / Member's Equity
Current Liabilities
Accounts payable	$	104,693	$	61,943
Accrued expenses	116,612		79,541
Payables pursuant to the acquisitions	1,081		17,226
Deferred revenue	133,514		110,895
Operating lease liabilities, current portion	8,346		6,879
Long-term debt, current portion	6,000		5,173
Total Current Liabilities	370,246		281,657
Long-term debt, net of discount and deferred financing costs, less current portion	578,129		496,934
Payable pursuant to the Tax Receivable Agreement	207,286		—
Deferred tax liability, net	—		63,318
Operating lease liabilities, less current portion	115,084		121,491
Total Liabilities	1,270,745		963,400
Commitments and Contingencies (Note 21)
Stockholder's Equity / Member's Equity
Member’s equity	—		374,534

Class A common stock, $0.00001 par value; 2,000,000,000 shares authorized; 244,118,850 issued and outstanding	2		—
Class B common stock, $0.00001 par value; 100,000,000 shares authorized; 60,310,039 issued and outstanding	1		—
Additional paid-in capital	420,457		—
Retained earnings	26,021		—
Total Stockholder's Equity Attributable to Forgent Power Solutions, Inc. / Member's Equity	446,481		374,534
Non-controlling interests	136,115		198,752
Total Stockholder’s Equity / Member's Equity	582,596		573,286
Total Liabilities and Stockholder’s Equity / Member's Equity	$	1,853,341	$	1,536,686

See Accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FORGENT POWER SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
Revenues	$	378,709	$	186,224	$	958,387	$	515,575
Cost of Revenues	247,513		118,059		627,483		317,210
Gross Profit	131,196		68,165		330,904		198,365
Operating Expenses
Selling, general, and administrative expenses	78,518		32,108		200,246		87,911
Depreciation and amortization	13,342		13,657		40,069		46,508
Total Operating Expenses	91,860		45,765		240,315		134,419
Income from Operations	39,336		22,400		90,589		63,946
Other Income (Expense)
Interest expense	(10,839)		(13,219)		(45,704)		(41,833)
Interest income	701		1,285		2,088		4,509
Other expense	(319)		(131)		(95)		(462)
Total Other Expense, net	(10,457)		(12,065)		(43,711)		(37,786)
Income Before Tax Expense	28,879		10,335		46,878		26,160
Income Tax Expense	(4,404)		(1,896)		(6,938)		(3,953)
Net Income	24,475		8,439		39,940		22,207
Less: net income attributable to non-controlling interests	6,188		1,557		11,394		4,451
Net Income Attributable to Forgent Power Solutions, Inc.	$	18,287	$	6,882	$	28,546	$	17,756

					Period from February 5, 2026 to March 31, 2026
Earnings per share of Class A common stock:
Basic					$	0.08
Diluted					$	0.08

Weighted average shares of Class A common stock outstanding:
Basic					233,735
Diluted					233,902

See Accompanying Notes to Condensed Consolidated Financial Statements.

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FORGENT POWER SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S / MEMBER'S EQUITY (UNAUDITED)

(in thousands)

For the three and nine months ended March 31, 2026


			Class A Common Stock			Class B Common Stock
	Member's Equity		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interests		Total Member’s / Stockholder's Equity
Balance at June 30, 2025	$	374,534	—	$	—	—	$	—	$	—	$	—	$	198,752	$	573,286
Equity-based compensation	560		—	—		—	—		—		—		—		560
Distributions	(1,440)		—	—		—	—		—		—		—		(1,440)
Net income	10,013		—	—		—	—		—		—		5,543		15,556
Balance at September 30, 2025	383,667		—	—		—	—		—		—		204,295		587,962
Equity-based compensation	1,627		—	—		—	—		—		—		—		1,627
Net income (loss)	246		—	—		—	—		—		—		(337)		(91)
Balance at December 31, 2025	$	385,540	—	—		—	—		—		—		203,958		589,498
Equity-based compensation prior to Organizational Transactions	302		—	—		—	—		—		—		—		302
Net loss prior to Organizational Transactions	(1,339)		—	—		—	—		—		—		(449)		(1,788)
Effect of Organizational Transactions	(384,503)		214,261,254	2		90,167,635	1		378,105		6,395		—		—
Issuance of Class A common stock sold in IPO, net of underwriting discounts and commissions	—		19,074,391	—		—	—		491,833		—		—		491,833
Purchase of Opco LLC Interests and Class B common stock related to IPO	—		—	—		(19,074,391)	—		(491,833)		—		—		(491,833)


Deferred tax adjustments related to Tax Receivable Agreement related to IPO	—		—	—		—	—		(20,200)		—		—		(20,200)
Issuance of Class A common stock sold in follow-on offering, net of underwriting discounts	—		10,783,205	—		—	—		308,561		—		—		308,561
Purchase of Opco LLC Interests and Class B common stock related to follow-on offering	—		—	—		(10,783,205)	—		(308,561)		—		—		(308,561)
Deferred tax adjustments related to Tax Receivable Agreement related to follow-on offering	—		—	—		—	—		11,553		—		—		11,553
Net income	—		—	—		—	—		—		19,626		6,637		26,263
Equity-based compensation	—		—	—		—	—		3,055		—		—		3,055

Table of Contents

FORGENT POWER SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S / MEMBER'S EQUITY (UNAUDITED) (continued)

(in thousands)


			Class A Common Stock			Class B Common Stock
	Member's Equity		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Non-Controlling Interests		Total Member’s / Stockholder's Equity
Deferred offering costs	—		—	—		—	—		(26,087)		—		—		(26,087)
Reallocation of non-controlling interests	—		—	—		—	—		74,031		—		(74,031)		—
Balance at March 31, 2026	$	—	244,118,850	$	2	60,310,039	$	1	$	420,457	$	26,021	$	136,115	$	582,596

For the three and nine months ended March 31, 2025


	Member’s Equity		Non-Controlling Interests		Total Member’s Equity
Balance at June 30, 2024	$	517,950	$	75,002	$	592,952
Equity-based compensation	493		—		493
Net income	6,281		1,056		7,337
Balance at September 30, 2024	524,724		76,058		600,782
Equity-based compensation	412		—		412
Net income	4,593		1,838		6,431
Balance at December 31, 2024	529,729		77,896		607,625
Equity-based compensation	367		—		367
Net income	6,882		1,557		8,439
Balance at March 31, 2025	$	536,978	$	79,453	$	616,431

See Accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FORGENT POWER SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine Months Ended March 31,
	2026		2025
Cash Flows from Operating Activities
Net income	$	39,940	$	22,207
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,406		49,775
Amortization / write off of discounts and deferred financing costs	11,682		1,955
Deferred taxes	3,646		(2,909)
Provision (recovery) for credit losses	1,552		(446)
Provision for slowing-moving and excess inventory	3,898		353
Equity-based compensation	5,544		1,272
Reduction in carrying amount of ROU asset, operating leases	6,990		6,037
Changes in assets and liabilities:
Accounts receivable	(116,174)		(49,811)
Inventory	(65,817)		(26,689)
Prepaid and other assets	(3,987)		(16,044)
Accounts payable	42,750		24,717
Accrued expenses	37,071		8,689
Deferred revenue	22,619		34,823
Lease liabilities, operating leases	(4,940)		(1,698)
Net Cash Provided by Operating Activities	35,180		52,231
Cash Flows from Investing Activities
Purchases of property and equipment	(84,604)		(43,088)
Net Cash Used in Investing Activities	(84,604)		(43,088)
Cash Flows from Financing Activities
Proceeds from issuance of Class A common stock sold in an IPO, net of underwriting discounts and commissions	491,833		—
Purchase of OpCo LLC Interests from Existing Shareholders with proceeds from IPO	(491,833)		—
Proceeds from issuance of Class A common stock sold in follow-on offering, net of underwriting discounts and commissions	308,561		—
Purchase of OpCo LLC Interests from Existing Shareholders with proceeds from follow-on offering	(308,561)		—
Proceeds from long-term debt	594,000		—
Payments on long-term debt	(511,110)		(3,879)
Debt financing costs	(11,757)		—
Distribution to member	(1,440)		—
Payment of payable pursuant to the acquisitions	(16,145)		(13,066)
Deferred offering costs	(21,615)		(3,310)
Net Cash Provided by (Used in) Financing Activities	31,933		(20,255)
Net Decrease in Cash and Cash Equivalents	(17,491)		(11,112)
Cash and Cash Equivalents - Beginning of Period	111,322		186,396
Cash and Cash Equivalents - End of Period	$	93,831	$	175,284

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FORGENT POWER SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)

(in thousands)


	Nine Months Ended March 31,
	2026		2025
Supplemental Cash Flows Information:
Cash paid for interest	$	34,525	$	42,431
Cash paid for taxes	$	1,960	$	1,879
Non-cash financing activities:
Recording of deferred tax assets related to exchanges of Class B common stock to Class A common stock	$	196,324	$	—
Recording of amounts payable pursuant to tax receivable agreement	$	207,286	$	—
Capital contribution related to tax receivable agreement exchanges of Class B common stock to Class A common stock	$	8,647	$	—

Reclassification of deferred offering costs to additional paid-in capital	$	4,472	$	—

See Accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Nature of Business

Forgent Power Solutions, Inc. (the “Company”) was incorporated in Delaware on July 21, 2025 for the purpose of completing an initial public offering (“IPO”) of its Class A common stock, par value $0.00001 per share (“Class A common stock”) and related transactions in order to continue the business of Forgent Power Solutions LLC (“Opco”). After the IPO, the Company became a holding company in an umbrella partnership C corporation (“Up-C”) structure and a sole managing member of Opco with its only material asset consisting of limited liability company interests of Opco (“Opco LLC Interests”).

The Company designs, manufactures and sells electrical distribution equipment used in data centers, the power grid and industrial facilities. The Company specializes in producing custom products that are “engineered-to-order” for technically demanding applications. Major product categories of electrical distribution equipment that the Company sells include automatic transfer switches, dry type transformers, electrical houses, generator connection cabinets, liquid filled transformers, panelboards, power distribution units, power skids, remote power panels, switchboards, switchgear and tap boxes. The Company also provides on-site commissioning and maintenance services for its products.

Initial Public Offering

On February 6, 2026, the Company closed an IPO of 19,074,391 shares of Class A common stock sold by the Company and 45,325,609 shares of Class A common stock sold by parent entities of Opco (collectively, the “Selling Stockholders”), in each case, at an IPO price of $27.00 per share.

From the IPO, the Company received $491.8 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 19,074,391 Opco LLC Interests, and Opco utilized the net proceeds it received from the sale of Opco LLC Interests to the Company to redeem Opco LLC Interests from Forgent Parent II LP and Forgent Parent III LP (the “Existing Opco LLC Owners”). The Company did not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders. Immediately prior to the IPO and following the IPO, Forgent Intermediate LLC was and is a wholly owned subsidiary of the Company and is the managing member and owns all of the limited liability company units of Forgent Intermediate II LLC. In turn, Forgent Intermediate II LLC is the managing member of Opco. Forgent Intermediate LLC and Forgent Intermediate II LLC collectively own a majority of the Opco LLC Interests, and the remaining Opco LLC Interests are owned by the Existing Opco LLC Owners.

As a result of the IPO, the related reorganization transactions that occurred in connection with the IPO, and the Follow-On Offering (described below), the Company is the indirect sole managing member of Opco and indirectly owns 80.19% of the economic interests of Opco. Accordingly, the Company consolidates the financial results of Opco and reports a non-controlling interest in the Company's condensed consolidated financial statements related to the interest held by the Existing Opco LLC Owners.

Reorganization Transactions

In connection with the IPO, the Company and Opco completed a series of transactions (the “Reorganization Transactions”), including the following:

•the limited liability company agreement of Opco (the “Amended and Restated Opco LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of capital ownership interests of Opco LLC Interests in Opco, (ii) exchange all of the then existing membership interests of the holders of Opco capital ownership interests for Opco LLC Interests and (iii) appoint Forgent Intermediate II LLC, a wholly-owned, indirect subsidiary of the Company, as the sole managing member of Opco;

•the Company's certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) was amended and restated to, among other things, (i) provide for Class A common stock with voting and economic rights (ii) provide for Class B common stock, par value $0.00001 per share (“Class B common stock”) with voting rights but no economic rights and (iii) issue 90,167,635 shares of Class B common stock to the former Existing Opco LLC Owners on a one-to-one basis with the number of Opco LLC Interests they owned prior to the IPO;

•Forgent Parent I LP contributed 100% of the equity interests of Forgent Intermediate LLC to the Company in exchange for 210,055,933 shares of Class A common stock of the Company, and Forgent Intermediate LLC merged with and into Forgent Intermediate Merger Sub LLC, with Forgent Intermediate Sub LLC surviving and renamed Forgent Intermediate LLC;

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

•the acquisition by Forgent Intermediate LLC, by merger, of Opco LLC Interests held by Forgent Blocker I LLC and Forgent Blocker II LLC (each, a “Blocker”), for which the Company issued 4,205,321 shares of Class A common stock as merger consideration (the “Blocker Merger”).

Follow-On Offering

On March 30, 2026, the Company completed a follow-on offering (the “Follow-On Offering”) consisting of 10,783,205 shares of Class A common stock offered by the Company and 23,716,795 shares of Class A common stock offered by the Selling Stockholders, including the exercise in full of the underwriters' option to purchase additional shares, at a public offering price of $29.50 per share.

From the Follow-On offering, the Company received $308.6 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 10,783,205 Opco LLC Interests, and Opco utilized the net proceeds it received from the sale of Opco LLC Interests to the Company to redeem Opco LLC Interests from the Existing Opco LLC Owners. The Company did not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.

Emerging Growth Company

The Company qualifies as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and may take advantage of certain reduced public company reporting requirements. The Company has elected to use the extended transition period for complying with new or revised accounting standards and, as a result, may adopt such standards on the private company adoption dates. Accordingly, the Company’s condensed consolidated financial statements may not be comparable to the financial statements of public companies that are not emerging growth companies or that have opted out of using the extended transition period.

2. Summary of Significant Accounting Policies

Basis of Accounting and Presentation

The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Company uses the U.S. dollar as its functional currency. Gains and losses from foreign currency transactions are included in other expense and are not material to the condensed consolidated financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Forgent Intermediate LLC and its subsidiaries. The Company consolidates Opco as a variable interest entity in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”). A parent of Forgent Parent I LP has the contractual right to appoint a majority of the board of managers of Opco, which has power over Opco, including making all significant economic decisions of Opco, and Forgent Intermediate II LLC owns a majority of the economic interests in Opco. The assets and liabilities of Opco represent substantially all of the Company’s assets and liabilities with the exception of certain tax balances.

All intercompany balances and transactions have been eliminated in consolidation.

Non-controlling Interests

The non-controlling interests on the condensed consolidated statement of operations represent the portion of earnings or loss attributable to the economic interest in the Company's subsidiary, Opco, held by the Existing Opco LLC Owners. Non-controlling interests on the condensed consolidated balance sheet represent the portion of net assets of the Company attributable to the Existing Opco LLC Owners, based on the portion of the Opco LLC Interests owned by such unit holders. As of March 31, 2026, the non-controlling interests were 19.81%.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheets as of March 31, 2026 and June 30, 2025, the condensed consolidated statements of operations, changes in member’s equity and cash flows for the three and nine months ended March 31, 2026 and 2025 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2026 and the results of its operations and its cash flows for the three and nine months ended March 31, 2026 and 2025. The financial data and other information disclosed in these notes related to the three and nine months ended March 31, 2026 and 2025 are also unaudited. The results for the three and nine months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending June 30, 2026, any other interim periods, or any future year or period. The consolidated balance sheet as of June 30, 2025 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Final Prospectus dated February 4, 2026 and filed with the Securities and Exchange Commission (the “SEC”) on February 6, 2026 (the “IPO Prospectus”).

Except for the Tax Receivable Agreement entered into during the three months March 31, 2026 (see below), there have been no changes to the Company’s significant accounting policies described in the Company’s IPO Prospectus that have had a material impact on its condensed consolidated financial statements and related notes.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimated profit on contracts recognized over time measured using the input method, variable consideration on revenues, allowance for credit losses, reserve for excess and obsolete inventory, warranty liability, incremental borrowing rates on operating leases, income taxes, uncertain tax positions, fair value of net assets acquired, liabilities assumed and equity-based consideration issued in a business combination, equity-based compensation, useful lives of property and equipment, useful lives of intangible assets, and the payable related to the tax receivable agreement.

Concentrations of Credit Risk

The Company has cash and cash equivalents deposited at certain financial institutions which, at times, may exceed the limits provided by the Federal Deposit Insurance Corporation. The Company has not experienced any losses on such amounts and believes it is not subject to significant credit risk related to cash balances.

During the three months ended March 31, 2026, the Company had one customer whose revenues were greater than 10% of revenues. This customer represented approximately 12% of revenues and 7% of accounts receivable. During the nine months ended March 31, 2026, the Company had no customers whose revenues were greater than 10% of revenues. During the three and nine months ended March 31, 2025 the Company had no customers whose revenues were greater than 10% of revenues.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Tax Receivable Agreement

In connection with our IPO, the Company entered into a tax receivable agreement (“TRA”) with the Forgent Parent I LP, Forgent Parent II LP, Forgent Parent III LP and Forgent Parent IV LP (collectively, the “Continuing Equity Owners”). The TRA provides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of tax savings, if any, in U.S. federal, state and local income tax that the Company actually realizes, or in certain circumstances is deemed to realize, as a result of (i) the Company’s allocable share of tax basis attributable to its acquisition or ownership of Opco LLC Interests, (ii) certain tax attributes the Company acquired from the Blockers in the Blocker Mergers (including net operating losses and the Blockers’ allocable share of tax basis), (iii) increases in the Company’s allocable share of then existing tax basis, and certain adjustments to the tax basis of the assets of Opco and its subsidiaries as a result of actual or deemed sales or exchanges of Opco LLC Interests in connection with the IPO and future redemptions or exchanges of Opco LLC Interests, (iv) imputed interest arising from any payments the Company makes under the TRA and (v) certain other tax benefits related to entering into the TRA, including certain payments made under the TRA.

Actual tax benefits realized by the Company may differ from tax benefits calculated under the TRA as a result of the use of certain assumptions in the TRA, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. Payments to be made under the tax receivable agreement will depend upon a number of factors, including the timing and amount of our future income.

The Company accounts for amounts payable under the TRA in accordance with ASC Topic 450, Contingencies. As such, subsequent changes in the value of the tax receivable agreement liability between reporting periods are recognized in the statement of operations. See Note 11, “Payable Pursuant to the Tax Receivable Agreement” for additional information on the TRA.

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs may be used to measure fair value, as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.

The fair values of the Company’s cash and cash equivalents, accounts receivable, accounts payable, and payables pursuant to acquisitions approximate their carrying values due to their short maturities. The long-term debt is Level 2 in the fair value hierarchy, and the carrying value of the Senior Secured Debt approximates its fair value, as it is based on current market rates at which the Company could borrow funds with similar terms.

3. Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The Company will be required to adopt the update as of June 30, 2026. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and related disclosures.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements and related disclosures.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

4. Accounts Receivable, net

Accounts receivable, net consisted of the following (in thousands):


	March 31, 2026		June 30, 2025
Accounts receivable	$	277,639	$	161,827
Less: allowance for credit losses	(3,047)		(1,857)
Accounts receivable, net	$	274,592	$	159,970

5. Inventory, net

Inventory, net consisted of the following (in thousands):


	March 31, 2026		June 30, 2025
Raw materials	$	143,429	$	85,528
Work in process	31,942		23,549
Finished goods	10,452		11,169
Less: allowance for slow-moving and excess inventory	(6,327)		(2,669)
Inventory, net	$	179,496	$	117,577

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):


	Estimated Useful Lives (Years)	March 31, 2026		June 30, 2025
Machines and equipment	3-10	$	78,047	$	41,067
Leasehold improvements	7-10	69,715		40,422
Vehicles	5	1,491		1,386
Furniture and fixtures	3-7	3,651		1,253
Software	7	4,035		3,501
Construction in progress	—	41,504		27,891
		198,443		115,520
Less: accumulated depreciation		(19,069)		(7,350)
Property and equipment, net		$	179,374	$	108,170

Construction in progress is primarily related to the expansion of both new and currently leased manufacturing campuses. These assets will be placed in service and reclassified to machinery and equipment and leasehold improvements when the related projects are complete.

Depreciation expense for the three months ended March 31, 2026 and 2025 was $6.4 million and $1.4 million, respectively. During the three months ended March 31, 2026, $4.8 million and $1.6 million were allocated to cost of revenues and operating expenses, respectively. During the three months ended March 31, 2025, $1.1 million and $0.3 million were allocated to cost of revenues and operating expenses, respectively.

Depreciation expense for the nine months ended March 31, 2026 and 2025 was $13.4 million and $3.9 million, respectively. During the nine months ended March 31, 2026, $10.4 million and $3.0 million were allocated to cost of revenues and operating expenses, respectively. During the nine months ended March 31, 2025, $3.1 million and $0.8 million were allocated to cost of revenues and operating expenses, respectively.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7. Goodwill and Other Intangible Assets, net

Goodwill

Goodwill totaled $516.6 million as of both March 31, 2026 and June 30, 2025 and relates to prior acquisitions.

Other Intangible Assets

Other intangible assets, net consisted of the following (in thousands):


	Estimated Useful Lives (Years)	March 31, 2026		June 30, 2025
Amortizable:
Costs:
Customer relationships	12-15	$	213,202	$	213,202
Trade names	3-15	125,579		125,579
Backlog	1-2	68,454		68,454
Noncompete agreements	5	8,854		8,854
Trademarks	10	94		—
Total amortizable intangibles		416,183		416,089
Accumulated amortization:
Customer relationships		(29,789)		(18,784)
Trade name		(18,333)		(11,634)
Backlog		(64,026)		(45,963)
Noncompete agreements		(3,765)		(2,437)
Trademarks		(5)		—
Total accumulated amortization		(115,918)		(78,818)
Other intangible assets, net		$	300,265	$	337,271

Amortization expense for the three and nine months ended March 31, 2026 was $11.7 million and $37.0 million, respectively. Amortization expense for the three and nine months ended March 31, 2025 was $13.4 million and $45.8 million, respectively.

8. Supplemental Balance Sheet Information

Prepaid and other current assets consisted of the following (in thousands):


	March 31, 2026		June 30, 2025
Vendor deposits	$	33,730	$	34,906
Prepaid expenses	12,014		10,859
Other	13,784		10,513
Prepaid and other current assets	$	59,528	$	56,278

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Accrued expenses consisted of the following (in thousands):


	March 31, 2026		June 30, 2025
Accrued compensation	$	37,080	$	20,363
Accrued commissions	4,752		2,822
Accrued rebates	4,051		1,897
Accrued taxes	14,971		11,559
Accrued warranties	9,668		2,670
Accrued interest	4,439		4,967
Accrued purchases	13,161		5,233
Accrued legal and accounting fees	11,126		5,273
Accrued sponsor fees and expenses	—		11,040
Other accrued expenses	17,364		13,717
Accrued expenses	$	116,612	$	79,541

9. Long Term Debt

Long-term debt consisted of the following (in thousands):


	March 31, 2026		June 30, 2025
2025 Term Loan Facility	$	600,000	$	—
Revolving Facility	—		—
2023 Term Loan Facility	—		511,112
2023 Revolving Facility	—		—
Less: discount and deferred financing costs	(15,871)		(9,005)
Total debt, net of discount and deferred financing costs	584,129		502,107
Less: current portion	(6,000)		(5,173)
Long-term debt, net current portion	$	578,129	$	496,934

Senior Credit Agreement

On December 19, 2025, the Borrowers entered into a senior credit agreement (the “Senior Credit Agreement”) with Holdings and certain wholly-owned U.S. subsidiaries of the Parent Borrower (collectively, with Holdings, the “Guarantors”, and the Guarantors collectively with the Borrowers, the “Loan Parties”), the lenders and issuing banks party thereto and Jefferies Finance LLC, as administrative agent and as collateral agent, consisting of (a) an initial term loan credit facility in an original principal amount equal to $600 million (the “2025 Term Loan Facility” and the loans thereunder, the “2025 Term Loans”) and (b) a revolving credit facility with commitments in an original principal amount equal to $250 million, including a $50 million sublimit for letters of credit and a $25 million sublimit for swingline loans (the “Revolving Facility” and, together with the 2025 Term Loan Facility, the “Senior Credit Facilities”). The 2025 Term Loan Facility was issued at a 1% discount, resulting in net proceeds of approximately $594 million. The 2025 Term Loan Facility matures on December 19, 2032, and the Revolving Facility matures on December 19, 2030. As of March 31, 2026, no amounts were outstanding under the Revolving Facility, and $600 million was outstanding under the 2025 Term Loan Facility.

The obligations of the Borrowers under the Senior Credit Agreement are guaranteed by the Guarantors and are secured by first priority security interests on all or substantially all of the Loan Parties’ assets (subject to certain customary exceptions).

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Interest Rate

As of December 19, 2025, the Senior Credit Facilities bore interest based on, at the option of the Parent Borrower, (1) a “base rate” (defined as the highest rate of: a) the Federal Funds Rate plus 0.5%, b) the one-month Term SOFR, a forward-looking interest rate benchmark derived from the secured overnight financing rate as administered by the Federal Reserve Bank of New York (after giving effect to a 0.00% per annum floor), plus 1% per annum, and c) the prime rate) plus a margin of 2.25% per annum or (2) Term SOFR, subject to a 0.00% per annum floor for the applicable interest period, plus a margin of 3.25% per annum. Upon the consummation of the Public Company Transaction (as defined in the Senior Credit Agreement, and which includes the IPO), the Term SOFR margin was reduced to 3.00% per annum. The effective interest rate as of March 31, 2026 was 6.63%.

Voluntary Prepayments; Repayments of Principal

Subject to certain notice requirements, the Borrowers may voluntarily prepay outstanding loans under the Senior Credit Agreement, in whole or in part, subject to (a) customary “breakage” costs with respect to Term SOFR loans prepaid on any date other than the last day of the applicable interest period and (b) in the case of any voluntary prepayment of the 2025 Term Loans on or prior to June 19, 2026 in connection with a Repricing Transaction (as defined in the Senior Credit Agreement), a premium of 1.00% of the aggregate principal amount of the 2025 Term Loans prepaid, subject to certain exclusions.

The 2025 Term Loans amortize at an annual rate of 1.00% of the original principal amount thereof, payable in quarterly installments, commencing with the installment due June 30, 2026. The 2025 Term Loans are subject to mandatory prepayments with the proceeds of certain asset sales, insurance proceeds and debt issuances, subject in the case of asset sale and insurance mandatory prepayments, to a customary reinvestment right. In addition, an annual mandatory prepayment of the 2025 Term Loans is required with a portion of the Parent Borrower’s excess cash flow, subject to a de minimis threshold and certain deductions.

Certain Covenants; Representations and Warranties

The Senior Credit Agreement contains customary affirmative covenants (including reporting obligations and transactions with affiliates) and negative covenants and requires the Parent Borrower and certain of its subsidiaries to make customary representations and warranties in connection with credit extensions under the Revolving Facility. With respect to the negative covenants, these restrictions include, among other things and subject to certain exceptions, thresholds and qualifications (certain of which are based on the Parent Borrower’s Consolidated Adjusted EBITDA (as defined in the Senior Credit Agreement)), limitations on the ability of the Parent Borrower and certain of its subsidiaries to:

•incur or guarantee additional indebtedness;

•create liens;

•pay dividends or make other distributions in respect of equity of the Parent Borrower;

•make certain prepayments in respect of certain material payment-subordinated debt;

•enter into burdensome agreements with negative pledge clauses or restrictions on subsidiary distributions;

•make investments, including acquisitions, loans and advances;

•consolidate, merge, liquidate or dissolve; and

•sell, transfer, or otherwise dispose of assets.

In addition, the Senior Credit Agreement includes a springing financial covenant for the benefit of the Revolving Facility that will be tested on the last day of any fiscal quarter only if the aggregate outstanding amount of revolving credit borrowings under the Senior Credit Agreement (excluding, for the avoidance of doubt, all undrawn letters of credit) exceeds 40% of the aggregate amount of revolving credit commitments as of the last day of any fiscal quarter, commencing (if applicable) with June 30, 2026. If such condition is met, the financial covenant requires the Parent Borrower to maintain a ratio of consolidated first lien debt to consolidated Adjusted EBITDA (as defined in the Senior Credit Agreement) no greater than 7.50 to 1.00 on the last day of such fiscal quarter.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Events of Default

The Senior Credit Agreement contains customary events of default, subject in certain circumstances to specified grace periods, thresholds and exceptions, including, among others, payment defaults, cross-defaults to certain material indebtedness, covenant defaults, material inaccuracy of representations and warranties, bankruptcy events, material judgments, material events related to the Employee Retirement Income Security Act of 1974, as amended, and change of control. If an event of default occurs, the lenders will be entitled to take various actions, including acceleration of the loans and termination of the commitments under the Senior Credit Agreement, foreclosure on collateral and all other remedial actions available to a secured creditor. Failure to pay certain amounts owing under the Senior Credit Agreement when due may result in an increased interest rate equal to 2.00% per annum plus the interest rate otherwise applicable to the relevant overdue loan or letter of credit disbursement (or, in the case of any overdue premium or fee, the interest rate otherwise applicable to revolving loans that are ABR loans).

Senior Debt

On October 31, 2023, our wholly owned subsidiaries US MetalCo Holdings LLC (the “Initial Borrower”), Forgent Holdings I LLC and certain of its subsidiaries (collectively, the “Initial Credit Parties”) entered into a Credit and Guaranty Agreement (the “2023 Credit Agreement”) with the lenders party thereto and Churchill Agency Services LLC, as administrative agent and as collateral agent, pursuant to which the lenders made available to the Initial Borrower (1) initial term loans in an aggregate principal amount of $203.3 million and delayed draw term loan commitments in an aggregate amount of $55.0 million (collectively, the “2023 Term Loan Facility”) and (2) revolving credit commitments in an aggregate amount of $35.0 million (the “2023 Revolving Facility” and, together with the 2023 Term Loan Facility, collectively, the “2023 Debt Facilities”). On June 14, 2024, the Initial Credit Parties entered into an Amendment No. 1 (“Amendment No. 1”) to the 2023 Credit Agreement, pursuant to which the lenders party thereto (1) made available additional term loans under the 2023 Term Loan Facility in an aggregate principal amount of $259.0 million and (2) increased the revolving credit commitments under the 2023 Revolving Facility by an aggregate amount of $25.0 million. On September 8, 2025, the Initial Credit Parties entered into an Amendment No. 2 (“Amendment No. 2”) to the 2023 Credit Agreement, pursuant to which, among other things, (1) the interest rates applicable to the loans under the 2023 Debt Facilities were decreased, (2) our wholly owned subsidiary Forgent Power LLC (f/k/a Forgent Intermediate IV LLC), a Delaware limited liability company (the “Parent Borrower”), and certain other of our wholly owned subsidiaries (together with the Parent Borrower and the Initial Borrower, collectively, the “Borrowers”) were added as borrowers under the 2023 Credit Agreement and (3) our wholly owned subsidiary, Forgent Intermediate III LLC (“Holdings”), and certain of wholly owned subsidiaries of the Parent Borrower were added as guarantors under the 2023 Credit Agreement. On December 19, 2025, in connection with entry into the Senior Credit Agreement (as defined below), the 2023 Debt Facilities were paid off and all commitments thereunder, and guaranties and security interests in respect thereof, were terminated.

Interest Expense

Interest expense for the three and nine months ended March 31, 2026 was $10.8 million and $45.7 million, respectively, which included amortization / write-off of discounts and deferred financing costs of $0.6 million and $11.7 million, respectively. Interest expense for the three and nine months ended March 31, 2025 was $13.2 million and $41.8 million, respectively, which included amortization / write-off of discounts and deferred financing costs of $0.6 million and $2.0 million, respectively.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

10. Income Taxes

The Company is taxed as a subchapter C corporation and, therefore, is subject to federal, state and local income taxes. The Company’s sole material asset is its investment in Opco, which is a limited liability company that is taxed as a partnership for U.S. federal and certain state and local income tax purposes. Opco includes disregarded entities whose net taxable income and related tax credits, if any, are passed through to its members and included in the member’s tax returns, along with a subchapter C corporation and foreign entities whose net taxable income are subject to federal, state and foreign taxes. Opco’s disregarded entities are subject to and report an entity-level tax in various states.

A significant portion of the earnings allocated to the non-controlling interest holders is not subject to federal and state income taxes by the Company. As a result, the Company’s effective tax rate can differ materially from the statutory rate, depending on the ownership percentage of the non-controlling interests.

Income tax expense was $4.4 million and $1.9 million for the three months ended March 31, 2026 and 2025, respectively, and $6.9 million and $4.0 million for the nine months ended March 31, 2026 and 2025, respectively. Our effective income tax rate for the three months ended March 31, 2026 and 2025 was 15.2% and 18.3%, respectively. Our effective income tax rate for the nine months ended March 31, 2026 and 2025 was 14.8% and 15.1%, respectively. For the three and nine months ended March 31, 2026 our effective income tax rate differed from the federal statutory rate of 21% primarily due to our non-controlling interest not being subject to income taxes, favorable discrete adjustments related to the filing of our 2024 federal return, and the use of R&D credits. For the three and nine months ended March 31, 2025, the effective income tax rate differed from the federal statutory rate primarily due to a large portion of our non-controlling interest not being subject to income taxes and the use of R&D credits.

In calculating the provision for interim income taxes, in accordance with ASC Topic 740, an estimated annual effective tax rate is applied to year-to-date ordinary income. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year.

For annual periods, the Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change.

The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. The Company recognizes penalties and interest related to uncertain tax positions within the provision (benefit) for income taxes line in the accompanying condensed consolidated statements of operations. The Company recognizes penalties and interest related to uncertain tax positions within the income tax expense line in the accompanying condensed consolidated statements of operations.

The Company files U.S. federal, certain state, and foreign income tax returns. The income tax returns of the Company are subject to examination by U.S. federal, state, and foreign taxing authorities for various time periods, depending on those jurisdictions’ rules, generally after the income tax returns are filed.

On July 4, 2025, the “One Big Beautiful Bill Act” (“Act”) was enacted into law. The Act includes changes to U.S. tax law that will be applicable to the Company beginning in calendar year 2025. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures, accelerated bonus depreciation for property and equipment, changes in calculating interest expense limitations, and other provisions.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

11. Payable Pursuant to the Tax Receivable Agreement

In connection with the IPO and the Reorganization Transactions, the Company entered into the TRA with the Continuing Equity Owners that provides for the payment by the Company to such the Continuing Equity Owners of 85% of the benefits, that the Company realizes, or is deemed to realize, as a result of (i) future redemptions funded by the Company or exchanges of Opco LLC Interests for the Company’s Class A common stock, and (ii) the Company’s allocable share of existing tax basis acquired in its IPO and other tax benefits related to entering into the TRA.

During the three months ended March 31, 2026, the Company indirectly redeemed an aggregate of 29,857,596 Opco LLC Interests, which resulted in an increase in the tax basis of the Company’s investment in Opco, subject to the provisions of the TRA. As a result of these redemptions, during the three months ended March 31, 2026, the Company recognized an increase to its deferred tax assets (net of valuation allowance) in the amount of $196.3 million, and corresponding TRA liabilities of $207.3 million, representing 85% of the tax benefits due to the Continuing Equity Owners.

As of March 31, 2026, the total amount due under the TRA was $207.3 million, and the Company has yet to make its first TRA payment.

12. Operating Leases

The following table summarizes the right of use assets and lease liabilities (in thousands):


	March 31, 2026		June 30, 2025
Operating right of use assets	$	110,779	$	117,769
Operating lease liabilities, current portion	$	8,346	$	6,879
Operating lease liabilities, net of current portion	115,084		121,491
Operating lease liabilities	$	123,430	$	128,370

The details of the Company’s lease expense were as follows (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
Operating lease expense	$	5,175	$	5,019	$	15,482	$	12,153
Variable lease expense	806		722		2,215		1,501
Short-term lease expense	463		392		1,481		1,171
Total operating lease expense	$	6,444	$	6,133	$	19,178	$	14,825

Supplemental cash flow and other information related to operating leases were as follows (in thousands):


	Nine Months Ended March 31,
	2026		2025
Operating cash flows from operating leases	$	17,179	$	10,830
Non-cash activities:
Operating lease liabilities from obtaining right of use assets	$	—	$	113,216

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

13. Revenues

The Company has four principal offerings:

Custom Products

Custom products include products designed for a specific project or application, involving significant consultation between our in-house engineering team and the customer. Each custom product identified and deliverable in a contract represents a distinct performance obligation within a sales contract. The Company recognizes revenue from custom products either over time, primarily using the output method, or at the point in time when control is transferred to the customer. Revenue is recognized over time using the output method when the manufactured products do not have alternative use and the Company has an enforceable right to payment. The output method is measured based on the units manufactured, which management believes best depicts the extent of transfer of control to the customer. For custom products sold that do not meet the criteria to be recognized over time, revenue is recognized at a point in time when control transfers to the customer, which generally occurs when the custom products have been shipped or delivered to the customer, depending on shipping terms.

Powertrain Solutions

Powertrain solutions include combinations of custom products that are integrated together, skidded together, or designed to work together as a system. Each powertrain solution identified and deliverable in a contract represents a distinct performance obligation within a sales contract. The Company recognizes revenue for the sale of powertrain solutions either over time, primarily using the input method, or at a point in time when control has transferred to the customer. Revenue is recognized over time using the input method when the manufactured products do not have alternative use and the Company has an enforceable right to payment. The input method is measured based on costs incurred relative to total estimated project costs. For powertrain solutions that do not meet the criteria to be recognized over time, revenue is recognized at a point in time when control transfers to the customer, which generally occurs when the products have been shipped or delivered to the customer, depending on shipping terms.

Standard Products

Standard products include common designs that are suitable for basic applications and are typically stocked by distributors. Each standard product identified and deliverable in a contract represents a distinct performance obligation within a sales contract. The Company recognizes revenue for the sale of standard products at a point in time when control has been transferred to the customer which generally occurs when the products have been shipped or delivered to the customer, depending on shipping terms.

Services

Services include installation, repair, maintenance, and commissioning. Services revenue is generally recognized over time as the services are provided, using the input method of costs incurred in relation to the estimated contract costs to complete, or straight-line for stand-ready contracts, because the customer simultaneously receives and consumes the benefit as we perform the services.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Disaggregation of Revenues

The following table disaggregates revenues by principal offering and timing of transfer of control (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
Revenues by principal offering:
Custom products	$	259,283	$	142,170	$	698,971	$	422,347
Powertrain solutions	98,924		28,427		210,707		48,322
Standard products	13,207		8,618		31,292		24,585
Services	7,295		7,009		17,417		20,321
Revenues	$	378,709	$	186,224	$	958,387	$	515,575
Revenues by timing of recognition:
Over-time revenues	$	214,505	$	113,162	$	550,018	$	327,011
Point-in-time revenue	164,204		73,062		408,369		188,564
Revenues	$	378,709	$	186,224	$	958,387	$	515,575

14. Stockholder's Equity

Amendment and Restatement of Certificate of Incorporation

As discussed in Note 1, on February 6, 2026, the Company's certificate of incorporation was amended and restated to, among other things, provide for the (i) authorization of 2,000,000,000 shares of Class A common stock; (ii) authorization of 100,000,000 shares of Class B common stock; (iii) authorization of 20,000,000 shares of preferred stock with a par value of $0.00001 per share that may be issued from time to time by the Company's board of directors in one or more series; and (iv) establishment of a classified board of directors, divided into three classes, each of whose members will serve for staggered terms.

Holders of Class A common stock and Class B common stock are entitled to one vote per share and, except as otherwise required, will vote together as a single class on all matters on which stockholders generally are entitled to vote. Holders of Class B common stock are not entitled to receive dividends and will not be entitled to receive any distributions upon the liquidation, dissolution or winding up of the Company. Shares of Class B common stock may only be issued to the extent necessary to maintain the one-to-one ratio between the number of Opco LLC Interests held by the Existing Opco LLC Owners and their permitted transferees and the number of shares of Class B common stock held by the Existing Opco LLC Owners and their permitted transferees. Shares of Class B common stock are transferable only together with an equal number of Opco LLC Interests. Shares of Class B common stock will be canceled on a one-for-one basis if an Existing Opco LLC Owner elects to redeem their Opco LLC Interests in exchange for, at the Company's election, newly issued shares of Class A common stock or cash.

The Company must, at all times, maintain a one-to-one ratio between the number of shares of Class A common stock issued by the Company and the number of Opco LLC Interests owned by the Company (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities).

The Company's board of directors is authorized to direct the Company to issue shares of preferred stock in one or more series and its discretion to determine the number and designation of such series and the powers, rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each series of preferred stock. As of March 31, 2026, no series of preferred stock have been issued.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

15. Non-Controlling Interests

On February 6, 2026, the Company used net proceeds from the IPO to indirectly redeem 19,074,391 Opco LLC Interests from the Existing Opco LLC Owners. On March 30, 2026, the Company used net proceeds from the Follow-On offering to indirectly redeem 10,783,205 Opco LLC Interests from the Existing Opco LLC Owners. As of March 31, 2026, the Company owned 80.19% of Opco.

The following table summarizes the effects of the changes in ownership in Opco on the Company's equity (in thousands):


	Three Months Ended March 31, 2026
Net income attributable to non-controlling interest	$	6,188
Transfers to non-controlling interests:




Decrease from reallocation of non-controlling interest	(74,031)
Change from net income attributable to/from non-controlling interest and transfers to non-controlling interest	$	(67,843)

Issuance of Additional Opco LLC Interests

Under the Opco LLC Agreement, the Company is required to cause Opco to issue additional Opco LLC Interests to the Company when the Company issues additional shares of Class A common stock. Other than as it relates to the issuance of Class A common stock in connection with an equity incentive program, the Company must contribute to Opco net proceeds and property, if any, received by the Company with respect to the issuance of such additional shares of Class A common stock. The Company must cause Opco to issue a number of Opco LLC Interests equal to the number of shares of Class A common stock issued such that, at all times, the number of Opco LLC Interests held by the Company equals the number of outstanding shares of Class A common stock.

Distributions for Taxes

As a limited liability company (treated as a partnership for income tax purposes), Opco does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. As authorized by the Opco LLC Agreement, Opco is required to distribute cash, to the extent that Opco has cash available, on a pro rata basis, to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to each member’s share of Opco taxable earnings. Opco makes such tax distributions to its members quarterly, based on the single highest marginal tax rate applicable to its members applied to projected year-to-date taxable income, with a final accounting once actual taxable income or loss has been determined. There were no tax distributions made to non-controlling Opco LLC Interests holders during the three months ended March 31, 2026.

Other Distributions

Pursuant to the Opco LLC Agreement, the Company has the right to determine when distributions will be made to Opco LLC members and the amount of any such distributions. If the Company authorizes a distribution, such distribution will be made to the members of the Opco LLC (including the Company) pro rata in accordance with the percentages of their respective Opco LLC units.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

16. Earnings per Share

Basic earnings per share is computed by dividing net income attributable to the Company by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share is computed by adjusting the net income available to the Company and the weighted average shares outstanding to give effect to potentially dilutive securities. The Company's restricted stock units are considered stock equivalents for this purpose.

Earnings per share is presented for the period from after the IPO, February 6, 2026, to March 31, 2026. The Company's current capital structure is not reflective of the capital structure of Opco prior to the IPO and related reorganization transactions. Therefore, earnings per share has not been presented for the period of the year prior to the IPO or for the three and nine ended March 31, 2025.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted net income per share of Class A common stock for the periods following the IPO and related reorganization transactions (in thousands, except per share amounts):


	Period from February 6, 2026 to March 31, 2026
Numerator:
Net income attributable to Forgent Power Solutions, Inc. - basic	$	19,626
Add: Net income impact from assumed redemption of all Opco LLC Interests to common stock	—

Net income attributable to Forgent Power Solutions, Inc. - diluted	$	19,626
Denominator:
Weighted average shares of Class A common stock outstanding - basic	233,735
Dilutive effects of:
Opco LLC Interests that are exchangeable to common stock	—
Unvested restricted stock units	167
Weighted average shares of Class A common stock outstanding - diluted	233,902

Earnings per share of Class A common stock - basic	$	0.08
Earnings per share of Class A common stock - diluted	$	0.08

For the period from February 6, 2026 to March 31, 2026, the reallocation of net income attributable to non-controlling interest from the assumed conversion of Opco LLC Interests has been excluded along with the dilutive effect of the Opco LLC Interests to the weighted average shares of Class A common stock outstanding - dilutive as it was antidilutive.

17. Segment Reporting

The Company is organized and operates as one reportable segment, which carries out business activities related to the design, development, manufacturing, and marketing of products and services. The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, reviews operating results and profitability metrics at a consolidated entity level for purposes of making resource allocation decisions and for evaluating financial performance.

The CODM assesses performance of the Company and decides how to allocate resources based on net income (loss) that is also reported on the consolidated income statement. Significant segment expenses are consistent with those presented on the consolidated statements of operations. The measure of segment assets is reported on the consolidated balance sheets as total assets, and total capital expenditures, depreciation, and amortization are reported on the consolidated statements of cash flows. The CODM is involved in determining and reviewing projected net income and income from operations as part of the annual operating plan process. Throughout the year, the CODM considers forecast to actual results and variances on a monthly and quarterly basis to allocate resources for the Company.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents selected financial information with respect to the Company’s single reportable segment as follows (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
Revenues	$	378,709	$	186,224	$	958,387	$	515,575
Cost of Revenues	247,513		118,059		627,483		317,210
Gross Profit	131,196		68,165		330,904		198,365
Operating Expenses
Selling, general and administrative expenses	78,518		32,108		200,246		87,911
Depreciation and amortization	13,342		13,657		40,069		46,508
Total operating expenses	91,860		45,765		240,315		134,419
Income from Operations	39,336		22,400		90,589		63,946
Total Other Expense, net	(10,457)		(12,065)		(43,711)		(37,786)
Income Tax Expense	(4,404)		(1,896)		(6,938)		(3,953)
Net Income	$	24,475	$	8,439	$	39,940	$	22,207

18. Payables Pursuant to the Acquisitions

The Company has payables that provide the sellers from certain prior acquisitions 100% of the cash tax savings, if any, that the Company actually realizes or is deemed to realize as a result of the Company’s share of tax basis created from certain transaction expenses as defined in the purchase agreements and for an amount equal to the difference that certain sellers owe related to taxes from the sale of a portion of the businesses as a stock sale versus an asset sale. These contractual obligations are due as the Company realizes or is deemed to realize a reduction in the Company’s tax liability or upon filing tax returns. As of March 31, 2026 and June 30, 2025, the Company had related payables totaling $1.1 million and $17.2 million, respectively. During the nine months ended March 31, 2026, the Company paid $16.1 million of these outstanding payables.

19. Equity-Based Compensation

Pre-IPO Equity-Based Compensation

The Company accounts for equity grants to employees as equity-based compensation under ASC 718. The incentive units granted to employees are incentive units of Forgent Parent I LP, Forgent Parent II LP, and Forgent Parent III LP. Incentive units contain various vesting provisions, as defined in the unit agreements. Incentive units also vest upon certain performance criteria as defined in the unit agreement. Vested units do not forfeit upon termination and represent a residual interest in a partnership. Holders of the incentive units are entitled to distributions on vested awards in accordance with their respective distribution waterfall. Equity-based compensation cost is measured at the grant date fair value and is recognized on a straight-line basis over the requisite service period, including those units with graded vesting with a corresponding credit to member’s equity as a capital contribution. The incentive units issued to employees are measured at fair value on the grant date using an option pricing model. The Company utilizes the estimated weighted average of the expected fund life dependent on various exit scenarios to estimate the expected term of the awards. Expected volatility is based on the average of historical and implied volatility of a set of comparable companies, adjusted for size and leverage. The risk-free rates are based on the yields of U.S. Treasury instruments with comparable terms. Actual results may vary depending on the assumptions applied within the model.

During the three and nine months ended March 31, 2026, the Company recognized $2.0 million and $4.2 million, respectively, in equity-based compensation. During the three and nine months ended March 31, 2025, the Company recorded $0.4 million and $1.3 million, respectively, in equity-based compensation. As of March 31, 2026, the Company had $18.7 million of unrecognized compensation costs which are expected to be recognized over a weighted average period of 1.8 years. For the three and nine months ended March 31, 2026 and 2025, forfeitures were immaterial.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Restricted Stock Units

In February 2026, the Company's then-existing stockholder approved the 2026 Incentive Award Plan (the “Incentive Plan”), which became effective in connection with the IPO. The Incentive Plan is administered by the Compensation Committee. The Company's board of directors has the authority to amend and modify the Incentive Plan, subject to any stockholder approval. Under the Incentive Plan, the Company can issue restricted stock units (“RSUs”) to certain of its directors, officers, and employees. These RSUs generally vest annually over one to three years.

The following table summarizes the RSU activity for the three months ended March 31, 2026 (in thousands, except per share amounts):


	Restricted Stock Units	Weighted Average Price
Outstanding at beginning of period	—	$	—
Granted	682,685	$	27.16
Exercised	—	$	—
Forfeited	—	$	—
Vested	—	$	—
Outstanding at end of period	682,685	$	27.16

For the three months ended March 31, 2026, the Company recognized $1.4 million in RSU-related compensation. As of March 31, 2026, the Company had $17.2 million of unrecognized RSU compensation costs, which is expected to be recognized over a weighted-average period of 2.5 years.

20. Related Party Transactions

Operating Leases

The Company incurred rent expenses totaling $0.7 million and $2.2 million for the three and nine months ended March 31, 2026, respectively, related to related party operating leases for properties owned by the former owners, and $0.7 million and $2.2 million for the three and nine months ended March 31, 2025, respectively. As of March 31, 2026 and June 30, 2025, the Company had related party operating lease right of use assets totaling $4.1 million and $4.7 million and operating lease liabilities totaling $4.2 million and $4.7 million, respectively. See Note 12, “Operating Leases" for further information.

Sponsor Fees and Expenses

During the three and nine months ended March 31, 2026, the Company incurred sponsor fees and expenses from Neos Partners, LP totaling $1.7 million and $18.8 million, respectively, and $2.9 million and $7.3 million during the three and nine months ended March 31, 2025, respectively. As of June 30, 2025, the Company owed the private equity sponsor $11.0 million, which is included in accrued expenses in the condensed consolidated balance sheets. As of March 31, 2026, the Company had no outstanding payables to the private equity sponsor.

Revenue from Related Parties

The Company earned revenue from other portfolio companies controlled by Neos Partners, LP totaling $0.5 million and $1.0 million for the three and nine months ended March 31, 2026, respectively, and $0.4 million and $1.0 million for the three and nine months ended March 31, 2025, respectively. As of March 31, 2026 and June 30, 2025, the Company had receivables totaling $0.5 million and $0.3 million, respectively, due from other portfolio companies.

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FORGENT POWER SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Expenses from Related Parties

The Company incurred expenses from other portfolio companies controlled by Neos Partners, LP totaling $7.1 million and $9.2 million for the three and nine months ended March 31, 2026, respectively, and $0.1 million and $0.2 million for the three and nine months ended March 31, 2025, respectively. As of March 31, 2026, the Company had $3.8 million outstanding payables to the other portfolio companies controlled by Neos Partners, LP. As of June 30, 2025, the Company had no outstanding payables to the other portfolio companies controlled by our private equity sponsor.

21. Commitments and Contingencies

Legal Proceedings

The Company is from time to time subject to legal proceedings and claims, which arise in the normal course of its business. In the opinion of management and legal counsel, the amount of losses that may be sustained, if any, would not have a material effect on the financial position, results of operations or cash flows of the Company.

Tariffs

In February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). As a result of this ruling, the Company may be eligible for a refund of tariffs previously paid on imported goods. As the recoverability and timing of any such refund remains uncertain, the Company has not recognized a receivable and corresponding offset to expense or asset as of March 31, 2026, and the Company will not until such amounts are realized or realizable. The Company will continue to monitor these developments and their potential impact on our results of operations, including reduction of revenue for any potential refunds to certain customers for which a contractual obligation exists.

22. Subsequent Events

On April 15, 2026, the Company made tax distributions to non-controlling Opco LLC Interest holders as authorized by the Opco LLC Agreement totaling $7.4 million.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and our audited consolidated financials statements and the related notes included in our Prospectus dated as of March 26, 2026 and filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2026 relating to our Registration Statement on Form S-1 (File No. 333-294578). In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions about our business and operations. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections of this Quarterly Report captioned “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains the presentation of Adjusted EBITDA, Adjusted Net Income, which are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Adjusted EBITDA and Adjusted Net Income are being presented because it provides the Company and readers of this Quarterly Report with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend Adjusted EBITDA and Adjusted Net Income to be substitutes for any GAAP financial information. Readers of this Quarterly Report should use Adjusted EBITDA and Adjusted Net Income only in conjunction with Net Income, the most comparable GAAP financial measure. Reconciliations of Adjusted EBITDA and Adjusted Net Income to Net Income, the most comparable GAAP measure, are provided in “—Non-GAAP Financial Measures.”

Overview

We are a leading designer and manufacturer of electrical distribution equipment used in data centers, the power grid and energy-intensive industrial facilities. Demand for our products is growing rapidly as (i) companies accelerate investment in data centers to meet the computational requirements for cloud computing and artificial intelligence (“AI”), (ii) independent power producers build new generation capacity to satisfy rising electricity demand, (iii) utilities upgrade and expand transmission & distribution (“T&D”) infrastructure to address rapid load growth and (iv) manufacturers reshore their factories to secure their supply chains and mitigate the impact of tariffs.

Electrical distribution equipment is essential for delivering electricity safely and efficiently from power plants to homes, businesses and industrial facilities and between equipment and devices within buildings. Every power plant, utility grid, data center, manufacturing facility and commercial building requires electrical distribution equipment to operate. Because distributing electricity safely and within the parameters required for the application where it is used is fundamental, purchases of electrical distribution equipment for new facilities or to replace equipment that is at the end of its useful life are rarely, if ever, optional. Additionally, because electrical distribution equipment has a high consequence of failure, including lost revenue, equipment damage and even serious injury or death, we believe customers prioritize reliability and safety over price when they select which products to purchase.

Major product categories of electrical distribution equipment that we manufacture and sell include automatic transfer switches (“ATS”), dry type transformers, electrical houses (“eHouse”), generator connection cabinets, liquid filled transformers, panelboards, power distribution units (“PDU”), power skids, remote power panels (“RPP”), switchboards, switchgear and tap boxes.

We sell Custom Products, Powertrain Solutions, and Standard Products. Our Custom Products are designed for a specific project or application, involve significant consultation between our in-house engineering team and the customer and are typically produced in small quantities. Our Powertrain Solutions are combinations of Custom Products that are integrated together, skidded together, or designed to work together as a system. Our Standard Products leverage common designs that are suitable for basic applications and are typically manufactured in large quantities. We also provide on-site commissioning and maintenance services for our products.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We specialize in manufacturing Custom Products and Powertrain Solutions that are “engineered-to-order” for technically demanding applications, including data center power distribution, utility substations and energy-intensive manufacturing. Demand for customized electrical distribution equipment is increasing as data centers, independent power producers, utilities and other customers seek to address varying power quality and availability, stringent uptime requirements, challenging form factors and environments, demanding thermal management requirements, integration with other equipment and systems, evolving regulatory requirements and safety considerations and rising construction costs and labor scarcity.

Our customers include technology, power, utility and industrial companies who purchase from us directly; intermediaries such as original equipment manufacturers (“OEMs”) and integrators who incorporate our products into systems that they sell; contractors that build data centers, power plants and T&D infrastructure; and electrical products distributors.

We are a U.S. company. Our principal manufacturing campuses are located in Minnesota, Texas, Maryland, California and Mexico.

Recent Developments

On February 6, 2026, Forgent Power Solutions, Inc. (the “Company”) and parent entities of the Company (the “Selling Stockholders”) sold 19,074,391 and 45,325,609 shares of Class A common stock of the Company, respectively, at an IPO price of $27.00 per share (the “IPO”). From the IPO, the Company received $491.8 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 19,074,391 Opco LLC Interests from Opco and, and Forgent Power Solutions LLC (“Opco”) utilized the net proceeds it received from the sale of Opco LLC Interests to us to redeem Opco LLC Interests from Forgent Parent II LP and Forgent Parent III LP (the “Existing Opco LLC Owners”). The Company did not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.

From the Follow-On Offering, the Company received $308.6 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 10,783,205 Opco LLC Interests, and Opco utilized the net proceeds it received from the sale of Opco LLC Interests to the Company to redeem Opco LLC Interests from the Existing Opco LLC Owners. The Company did not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.

Performance Measures

In managing our business and assessing financial performance, we supplement the information provided by the consolidated financial statements with other operating metrics. These operating metrics are utilized by our management to evaluate our business, measure our performance, identify trends affecting our business and formulate projections.

We present non-GAAP performance measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with GAAP.

These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe investors benefit from having access to the same financial measures that management uses in evaluating our operations.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The primary financial metrics we use to evaluate our overall performance and to track the business results from year to year are Revenues, Net Income, Adjusted EBITDA, and Adjusted Net Income.

The following table sets forth a summary of our financial highlights for the periods indicated (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
Revenues	$	378,709	$	186,224	$	958,387	$	515,575
Net Income	$	24,475	$	8,439	$	39,940	$	22,207
Adjusted EBITDA(1)	$	84,682	$	43,254	$	210,165	$	126,348
Adjusted Net Income(1)	$	55,272	$	23,797	$	130,359	$	68,586

(1)Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. See “—Non-GAAP Financial Measures” below for additional information about Adjusted EBITDA and Adjusted Net Income and for reconciliations to net income, the most directly comparable GAAP financial measures.

Key Factors Affecting Our Performance

We believe our financial performance, results of operations and future success depend on a number of factors that present significant opportunities for us, but also pose risks and challenges, including those described below and in the Company’s final prospectus dated March 26, 2026, and filed with the SEC on March 30, 2026 (the “Follow-On Prospectus”).

Data Center Construction Activity

We derive a significant portion of our revenues from products used in data centers, and demand for our products depends, in part, on continued investment in digital infrastructure generally and data centers specifically. Investment in data centers is subject to a number of factors, including the frequency and nature of innovations, whether or not developing or implementing those innovations requires new physical infrastructure and the availability of capital to fund investments in that infrastructure.

Infrastructure Investment

Demand for our products depends in part on the level of investment in new data centers, manufacturing facilities, power plants and T&D infrastructure, which is subject to business and economic cycles. We typically see greater demand for our products when the economy is growing, interest rates are stable or falling and government policy stimulates domestic investment because these conditions encourage businesses to invest in their facilities. We typically see less demand for our products when the economy is contracting and interest rates are rising.

Offering Mix

The profit margins we earn can vary significantly based on the type of product we sell, the level of customization, the size of the order and other factors. We typically earn higher profit margins on engineered to order Custom Products and Powertrain Solutions than on Standard Products. Our overall profit margins can vary between quarters based on offering mix in the period. Our profit margins can also vary based on the amount of revenue from services that we generate as a percentage of our total revenues in the period.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Capacity Utilization

Our industry is currently capacity constrained in many product categories. Higher capacity utilization gives us and our competitors greater pricing power as well as additional leverage on our fixed costs. We believe we are more vertically integrated than many of our competitors so we typically benefit when products or components that we make in-house, but that many of our competitors must purchase, such as medium voltage switchgear and transformers, are in short supply. Changes in the level of capacity utilization in our factories and across our industry can influence the pricing of our products and increase or decrease our profit margins in the period.

Cost of Raw Material and Labor Inputs

Our largest expenses for purchases of key raw materials are electrical steel, carbon steel, copper, aluminum and other key raw materials used to manufacture our products. Steel and copper are subject to significant price volatility. The cost of raw materials that we purchase, as well as the cost of components that we manufacture in Mexico and ship to the United States, can also be impacted directly or indirectly by the imposition of tariffs on foreign imports to the United States or geopolitical events that disrupt our supply chain. Our profit margins are impacted by, among other things, our ability to pass increases in the cost of our raw materials on to our customers, including any tariffs, and to manage the level of raw material inventory that we hold. In addition, the cost of hourly labor to produce our products, the rate that we add new employees, and our total number of employees has impacted, and may in the future impact, our profit margins. The cost of labor is influenced by the availability of labor, prevailing wages in the areas where our plants are located and other factors. While we have not experienced any significant adverse impact on our business from raw material price volatility, tariffs, supply chain disruptions or labor shortages, any of these factors could have a significant adverse impact on our business in the future. In addition, we may need to hire more personnel than we currently anticipate to support our operations and growth initiatives, and any resulting increases in labor costs could adversely affect our margins and operating results.

Key Components of Our Results of Operations

The following discussion describes certain line items in our consolidated statements of operations.

Revenues

We generate revenues primarily from the sale of electrical distribution equipment. Major categories of electrical distribution equipment that we sell include ATSs, dry type transformers, eHouses, generator connection cabinets, liquid filled transformers, panelboards, PDUs, power skids, RPPs, switchboards, switchgear and tap boxes. We typically sell our products pursuant to purchase orders or sales contracts that specify price, design specifications, delivery dates and warranty for the products being purchased, among other things. Purchase orders and sales contracts can range in value from several thousand to millions of dollars.

Our revenue is affected by changes in the volume and price of products purchased by our customers. Volume is driven by the demand for our products while price is determined by product type, design specifications, lead-time, the level of customization, end market, availability of supply and strength of competitors’ product offerings.

Our revenue growth is dependent on: continued growth in the end markets we serve, including the Data Center, Grid and Industrial markets; our ability to expand our manufacturing capacity to meet demand; and our ability to develop and introduce new and innovative products that address the changing technology and performance requirements of our customers.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cost of Revenues and Gross Profit

Cost of revenues consists primarily of product costs and fixed overhead. Product costs include purchased materials and labor as well as costs related to shipping, tariffs, customer support and product warranty. Fixed overhead includes facilities cost and depreciation of testing and manufacturing equipment which are not directly affected by sales volume. Labor costs in our cost of revenues include both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or components into finished goods and the transportation of finished goods to the customer. Our product costs are affected by: our sales volume; the cost of raw materials, including electrical steel, carbon steel, copper, aluminum, and other key raw materials; the cost of components, including circuit breakers, accessories and gauges; technological innovation; economies of scale; and improvements in production processes and automation. We do not currently hedge against changes in the price of raw materials.

Gross profit may vary from quarter to quarter and is primarily affected by our sales volume, product costs, product mix, customer mix, end market mix, and seasonality. We have increased and expect to continue to increase our manufacturing headcount in connection with the expansion of our business. The rate at which we add new manufacturing employees and the period of time it takes to train them and for them to reach full productivity has and can in the future impact our gross profit.

Operating Expenses

Operating expenses consist of selling, general and administrative expenses, transaction costs and depreciation and amortization. We expect to continue to invest substantial resources to support our growth and anticipate our operating expenses will increase in absolute dollar amounts for the foreseeable future.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, share-based compensation, employee benefits and payroll taxes related to our executives, sales, finance and accounting, human resources, IT, engineering and legal organizations, travel expenses, facilities costs, marketing expenses, bad debt expense and fees for professional services. Professional services consist of audit, legal, tax, insurance, IT and other costs. We have increased and expect to continue to increase our sales and marketing personnel in connection with the expansion of our business. We also expect to incur additional expenses related to becoming publicly traded, including additional directors’ and officers’ liability insurance, director fees, additional expenses associated with complying with the reporting requirements of the SEC, transfer agent fees, costs relating to additional accounting, legal and administrative personnel, increased auditing, tax and legal fees, stock exchange listing fees and other public company expenses.

Depreciation

Depreciation in our operating expenses consists of costs associated with property and equipment not used in the manufacturing of our products. We expect that as we continue to grow both our revenue and our general and administrative personnel, we will require additional property and equipment to support this growth resulting in additional depreciation expenses.

Amortization

Amortization of intangibles consists of customer relationships, trade names, backlog, and non-compete agreements over their expected period of use.

Non-Operating Expenses

Interest Expense

Interest expense consists of interest and other charges paid in connection with our long-term debt.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest Income

Interest income consists of income received on our cash and cash equivalents invested in money market accounts or similar short-term investments.

Income Taxes

We are subject to federal, state and local income taxes in the United States and foreign taxes.

Results of Operations

The following tables set forth our consolidated results of operations for the periods presented. This information is derived from our accompanying consolidated financial statements included elsewhere in this Quarterly Report and prepared in accordance with GAAP. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future, including for the reasons described above under “—Key Factors Affecting Our Performance.”


	Three Months Ended March 31,								Nine Months Ended March 31,
	2026		2025		Increase / Decrease		% Change		2026		2025		Increase / Decrease		% Change
(in thousands, except change data)
Revenues	$	378,709	$	186,224	$	192,485	103	%	$	958,387	$	515,575	$	442,812	86	%
Cost of Revenues	247,513		118,059		129,454		110	%	627,483		317,210		310,273		98	%
Gross Profit	131,196		68,165		63,031		92	%	330,904		198,365		132,539		67	%
Operating Expenses
Selling, general and administrative expenses	78,518		32,108		46,410		145	%	200,246		87,911		112,335		128	%
Depreciation and amortization	13,342		13,657		(315)		(2)	%	40,069		46,508		(6,439)		(14)	%
Total Operating Expenses	91,860		45,765		46,095		101	%	240,315		134,419		105,896		79	%
Income from Operations	39,336		22,400		16,936		76	%	90,589		63,946		26,643		42	%
Other Income (Expense)
Interest expense	(10,839)		(13,219)		2,380		(18)	%	(45,704)		(41,833)		(3,871)		9	%
Interest income	701		1,285		(584)		(45)	%	2,088		4,509		(2,421)		(54)	%
Other expense	(319)		(131)		(188)		144	%	(95)		(462)		367		(79)	%
Total Other Expense, net	(10,457)		(12,065)		1,608		(13)	%	(43,711)		(37,786)		(5,925)		16	%
Income Before Tax Expense	28,879		10,335		18,544		179	%	46,878		26,160		20,718		79	%
Income Tax Expense	(4,404)		(1,896)		(2,508)		132	%	(6,938)		(3,953)		(2,985)		76	%
Net Income	24,475		8,439		16,036		190	%	39,940		22,207		17,733		80	%
Less: net income attributable to non-controlling interest	6,188		1,557		4,631		297	%	11,394		4,451		6,943		156	%
Net Income Attributable to Forgent Power Solutions, Inc.	$	18,287	$	6,882	$	11,405	166	%	$	28,546	$	17,756	$	10,790	61	%

Comparison of Operations for the Three Months Ended March 31, 2026 and 2025

Revenues

Revenues for the three months ended March 31, 2026 were $378.7 million as compared to $186.2 million for the three months ended March 31, 2025. The increase in revenues was driven by increases in sales of Custom Products and Powertrain Solutions, attributable to growing demand for our products across our end markets, particularly with our data center and grid customers, and new campuses commencing production in the current year to meet customer demand.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cost of Revenues

Cost of revenues for the three months ended March 31, 2026 were $247.5 million as compared to $118.1 million for the three months ended March 31, 2025. The increase in cost of revenues was primarily driven by an increase in material and labor costs related to higher sales volumes and an increase in fixed overhead costs, including depreciation expense related to the expansion of our manufacturing campuses. Cost of revenues as a percentage of revenues increased primarily as a result of under-absorbed labor costs related to accelerated headcount growth, under-absorbed fixed overhead relating to new campuses ramping toward their target production rates, and one-time startup costs at new campuses.

Operating Expenses:

Selling, General, and Administrative

Selling, general, and administrative expenses for the three months ended March 31, 2026 were $78.5 million as compared to $32.1 million for the three months ended March 31, 2025. The increase in selling, general, and administrative expenses was driven by increases in headcount, sales and marketing costs, professional services, and IT costs to support our growth, as well as IPO-related bonuses.

Depreciation

Depreciation for the three months ended March 31, 2026 was $1.6 million as compared to $0.3 million for the three months ended March 31, 2025. The increase in depreciation was primarily driven by an increase in property and equipment in the current fiscal year.

Amortization

Amortization of intangibles for the three months ended March 31, 2026 was $11.7 million as compared to $13.4 million for the three months ended March 31, 2025. The decrease in amortization was driven by backlog from certain acquisitions being fully amortized in the current fiscal year.

Interest Expense

Interest expense for the three months ended March 31, 2026 was $10.8 million as compared to $13.2 million for the three months ended March 31, 2025. The decrease in interest expense was primarily driven by lower interest rates in the current year.

Interest Income

Interest income for the three months ended March 31, 2026 was $0.7 million as compared to $1.3 million for the three months ended March 31, 2025. The decrease in interest income resulted from (i) lower average cash and cash equivalents balances and (ii) lower interest rates in the current year as compared to the prior year.

Income Tax Expense

Income tax expense was $4.4 million and $1.9 million for the three months ended March 31, 2026 and 2025, respectively. Our effective income tax rate for the three months ended March 31, 2026 and 2025 was 15.2% and 18.3%, respectively. For the three months ended March 31, 2026, our effective income tax rate differed from the federal statutory rate of 21% primarily due to our non-controlling interest not being subject to income taxes, favorable discrete adjustments related to the filing of our 2024 federal return, and the use of R&D credits.

Net Income

As a result of the factors discussed above, net income for the three months ended March 31, 2026 was $24.5 million compared to $8.4 million for the three months ended March 31, 2025.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operations for the Nine Months Ended March 31, 2026 and 2025

Revenues

Revenues for the nine months ended March 31, 2026 were $958.4 million as compared to $515.6 million for the nine months ended March 31, 2025. The increase in revenues was driven by increases in sales of Custom Products and Powertrain Solutions, attributable to growing demand for our products across our end markets, particularly with our data center and grid customers, and new campuses coming online in the current fiscal year to meet customer demand.

Cost of Revenues

Cost of revenues for the nine months ended March 31, 2026 were $627.5 million as compared to $317.2 million for the nine months ended March 31, 2025. The increase in cost of revenues was primarily driven by an increase in material and labor costs related to higher sales volumes and an increase in fixed overhead costs, including depreciation expense related to the expansion of our manufacturing campuses. Cost of revenues as a percentage of revenues increased primarily as a result of under-absorbed labor costs related to accelerated headcount growth, under-absorbed fixed overhead relating to new campuses ramping toward their target production rates, and one-time startup costs at new campuses.

Operating Expenses:

Selling, General, and Administrative

Selling, general, and administrative expenses for the nine months ended March 31, 2026 were $200.2 million as compared to $87.9 million for the nine months ended March 31, 2025. The increase in selling, general, and administrative expenses was driven by increases in headcount, sales and marketing costs, professional services, and IT costs to support our growth, along with IPO-related bonuses.

Depreciation

Depreciation for the nine months ended March 31, 2026 was $3.0 million as compared to $0.8 million for the nine months ended March 31, 2025. The increase in depreciation was primarily driven by an increase in property and equipment in the current fiscal year.

Amortization

Amortization of intangibles for the nine months ended March 31, 2026 was $37.0 million as compared to $45.8 million for the nine months ended March 31, 2025. The decrease in amortization was driven by backlog from certain acquisitions being fully amortized in the current fiscal year.

Interest Expense

Interest expense for the nine months ended March 31, 2026 was $45.7 million as compared to $41.8 million for the nine months ended March 31, 2025. The increase in interest expense was driven by the write-off of approximately $10 million of deferred financing costs related to refinancing our 2023 Credit Agreement.

Interest Income

Interest income for the nine months ended March 31, 2026 was $2.1 million as compared to $4.5 million for the nine months ended March 31, 2025. The decrease in interest income resulted from (i) lower average cash and cash equivalents balances and (ii) lower interest rates in the current year as compared to the prior year.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Income Tax Expense

Income tax expense was $6.9 million and $4.0 million for the nine months ended March 31, 2026 and nine months ended March 31, 2025, respectively. Our effective income tax rate for the nine months ended March 31, 2026 and 2025 was 14.8% and 15.1%, respectively. For the nine months ended March 31, 2026, our effective income tax rate differed from the federal statutory rate of 21% primarily due to our non-controlling interest not being subject to income taxes, favorable discrete adjustments related to the filing of our 2024 federal return, and the use of R&D credits.

Net Income

As a result of the factors discussed above, net income was $39.9 million and $22.2 million for the nine months ended March 31, 2026 and 2025, respectively.

Non-GAAP Financial Measures

We present non-GAAP performance measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with GAAP.

These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our Company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe investors benefit from having access to the same financial measures that management uses in evaluating our operations.

The primary limitation of these measures is they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies, which limits their usefulness as a comparative measure.

Among other limitations, Adjusted EBITDA and Adjusted Net Income do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments and do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations. Adjusted EBITDA and Adjusted Net Income also do not reflect income tax expense or benefit.

Because of these limitations, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA and Adjusted Net Income on a supplemental basis. You should review the reconciliations of net income (loss) to Adjusted EBITDA and Adjusted Net Income respectively below and not rely on any single financial measure to evaluate our business.

Our non-GAAP financial measures include:

•Adjusted EBITDA – We define Adjusted EBITDA as net income (loss) plus or minus (i) interest expense, (ii) interest income, (iii) income tax benefit (expense), (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) sponsor fees and expenses, (viii) public company readiness costs, (ix) earnout expenses, (x) non-recurring integration and consulting fees, and (xi) investment banking fees and expenses.

•Adjusted Net Income – We define Adjusted Net Income as net income (loss) plus or minus (i) amortization of intangibles, (ii) amortization of deferred financing costs, (iii) equity-based compensation, (iv) sponsor fees and expenses, (v) public company readiness costs, (vi) earnout expenses, (vii) non-recurring integration and consulting fees, (viii) investment banking fees and expenses, and (ix) tax impact of adjustments.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Adjusted EBITDA

Adjusted EBITDA is intended as a supplemental measure of performance that is neither required by, nor presented in accordance with, GAAP. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

In addition, we use Adjusted EBITDA (i) in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies and (iii) because our debt agreements use a similar metric to measure our compliance with certain covenants.

The table below reconciles Net Income (the most directly comparable GAAP measure) to Adjusted EBITDA (a non-GAAP measure) for the periods presented (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
Net Income	$	24,475	$	8,439	$	39,940	$	22,207
Interest expense	10,839		13,219		45,704		41,833
Interest income	(701)		(1,285)		(2,088)		(4,509)
Income tax expense	4,404		1,896		6,938		3,953
Depreciation expense	6,423		1,444		13,400		3,976
Amortization of intangibles	11,732		13,432		37,006		45,799
Equity-based compensation	3,357		367		5,544		1,272
Sponsor fees and expenses(1)	1,680		2,885		18,818		7,310
Public company readiness costs(2)	16,884		1,648		20,965		2,095
Earnout expenses(3)	—		—		5,400		—
Non-recurring integration and consulting fees(4)	5,589		1,209		18,538		2,412
Adjusted EBITDA	$	84,682	$	43,254	$	210,165	$	126,348

_____________

(1)Represents fees and expense reimbursements paid to our Sponsor.

(2)Represents non-recurring professional services fees we incurred in connection with readying the Company for our initial public offering and statutory SEC reporting, as well as IPO-related bonuses and certain non-recurring recruiting costs.

(3)Represents non-recurring earnout amounts accrued to certain sellers in connection with business acquisitions.

(4)Represents non-recurring professional services fees we incurred in connection with certain post-acquisition activities, including valuation, technical accounting and integration consulting services.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Adjusted Net Income

Adjusted Net Income is intended as a supplemental measure of performance that is neither required by, nor presented in accordance with, GAAP. We present Adjusted Net Income because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted Net Income to evaluate the effectiveness of our business strategies.

The table below reconciles Net Income (the most directly comparable GAAP measure) to Adjusted Net Income (a non-GAAP measure) for the periods presented (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2026		2025		2026		2025
Net Income	$	24,475	$	8,439	$	39,940	$	22,207
Amortization of intangibles	11,732		13,432		37,006		45,799
Amortization / write off of discounts and deferred financing costs	672		624		11,682		1,955
Equity-based compensation	3,357		367		5,544		1,272
Sponsor fees and expenses(1)	1,680		2,885		18,818		7,310
Public company readiness costs(2)	16,884		1,648		20,965		2,095
Earnout expenses(3)	—		—		5,400		—
Non-recurring integration and consulting fees(4)	5,589		1,209		18,538		2,412
Tax impact of adjustments(5)	(9,117)		(4,807)		(27,534)		(14,464)
Adjusted Net Income	$	55,272	$	23,797	$	130,359	$	68,586

(1)Represents fees and expense reimbursements paid to our Sponsor.

(3)Represents non-recurring earnout amounts accrued to certain sellers in connection with business acquisitions.

(5)Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

The following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods (in thousands):


	Nine Months Ended March 31,
	2026		2025
Net cash provided by operating activities	$	35,180	$	52,231
Net cash used in investing activities	(84,604)		(43,088)
Net cash provided by (used in) financing activities	31,933		(20,255)
Decrease in cash and cash equivalents	$	(17,491)	$	(11,112)

We finance our operations primarily with operating cash flows and short and long-term borrowings. Our ability to generate positive cash flow from operations is dependent upon the amount of income from operations that we generate before amortization expense and other non-cash items. Based on our past performance and current expectations, we believe operating cash flows will be sufficient to meet our future cash needs for the next twelve months. Our revolving credit facility provides an additional source of liquidity to fund operations.

As of March 31, 2026, our cash and cash equivalents were $93.8 million. Net working capital as of March 31, 2026 was $237.2 million.

As of March 31, 2026, we had outstanding borrowings, net of discount and deferred financing fees of $584.1 million, $6.0 million of which was due to be paid in the next 12 months, and $250.0 million available for additional borrowings under our line of credit.

Operating Activities

For the nine months ended March 31, 2026, cash provided by operating activities was $35.2 million. Cash provided by operating activities was primarily driven by net income of $39.9 million. Cash provided by operating activities was favorably impacted by $83.7 million of net non-cash items, including $50.4 million of depreciation and amortization and $11.7 million of amortization / write-off of discounts and deferred financing costs. Cash flow from operations for the nine months ended March 31, 2026 was reduced by $88.5 million for working capital items, including uses of cash of $116.2 million for accounts receivable resulting from increased revenues and $65.8 million for inventory to support orders in backlog, partially offset by sources of cash from accounts payable of $42.8 million primarily related to inventory purchases, $37.1 million in accrued expenses, and $22.6 million in deferred revenue related to our increased backlog.

For the nine months ended March 31, 2025, cash provided by operating activities was $52.2 million. Cash provided by operating activities was primarily driven by net income of $22.2 million. Cash provided by operating activities was favorably impacted by $56.0 million of net non-cash items, including $49.8 million of depreciation and amortization. Cash flow from operations for the nine months ended March 31, 2025 was decreased by $26.0 million for working capital items, including uses of cash of $49.8 million for accounts receivable resulting from increased revenues, $26.7 million for inventory to support orders in backlog, and $16.0 million for prepaid and other assets, partially offset by sources of cash from reductions in deferred revenue of $34.8 million, accounts payable of $24.7 million primarily related to inventory purchases, and accrued expenses of $8.7 million primarily related to compensation and sponsor fees.

Investing Activities

For the nine months ended March 31, 2026 and 2025, cash used in investing activities of $84.6 million and $43.1 million, respectively, was primarily related to purchases of property and equipment for our capacity expansion, which we expect to complete by the end of fiscal year 2026.

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FORGENT POWER SOLUTIONS, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financing Activities

For the nine months ended March 31, 2026, cash provided by financing activities was $31.9 million. Cash provided by financing activities was driven by refinancing our 2023 Credit Agreement during the current period. The Company received $594.0 million, net of discount in proceeds in connection with the refinancing and used those funds to repay $511.1 million for the prior outstanding facilities, along with a $16.1 million payment related to the payable pursuant to the acquisitions, $11.8 million in debt financing costs, and $21.6 million in deferred offering costs in connection with the IPO.

For the nine months ended March 31, 2025, cash used in financing activities was $20.3 million, of which $13.1 million related to the payable pursuant to the acquisitions, $3.9 million related to payments on the 2023 Credit Agreement, and $3.3 million related to deferred offering costs.

Debt Obligations

For a discussion of our debt obligations, see Note 9, “Long-Term Debt” in our consolidated financial statements included elsewhere in this Quarterly Report.

Product Warranties

For a discussion of our product warranties, see Note 2, “Summary of Significant Accounting Policies—Warranty Liability” within the IPO Prospectus.

Recent Accounting Pronouncements

For a discussion of our recent accounting pronouncements, see Note 3, “Recent Accounting Pronouncements” in our consolidated financial statements included elsewhere in this Quarterly Report.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Critical Accounting Estimates” within the IPO Prospectus. There have been no material changes to these estimates during the period, except as noted below.

Payable Pursuant to the Tax Receivable Agreement

As described in Note 11 to our condensed consolidated financial statements included in this Quarterly Report, we are a party to the Tax Receivable Agreement (“TRA”) under which we are contractually committed to pay the Continuing Equity Owners 85% of the amount of the benefits, if any, that we are deemed to realize, as a result of certain transactions. Amounts payable under the TRA are contingent upon, among other things, (i) generation of future taxable income over the term of the TRA and (ii) future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then we generally would not be required to make the related TRA payments. Therefore, we will only recognize a liability for TRA payments if we determine it is probable that we will generate sufficient future taxable income over the term of the TRA to utilize the related tax benefits. Estimating future taxable income is inherently uncertain and requires judgment. In projecting future taxable income, we consider our historical results and incorporate certain assumptions, including revenue growth, and operating margins, among others. As of March 31, 2026, we recognized $207.3 million of liabilities relating to our obligations under the TRA, after concluding that it was probable that we would have sufficient future taxable income to utilize the related tax benefits. There were no transactions subject to the TRA for which we did not recognize the related liability, as we concluded that we would have sufficient future taxable income to utilize all of the related tax benefits generated by all transactions that occurred in connection with the IPO and follow-on offering. If we determine in the future that we will not be able to fully utilize all or part of the related tax benefits, we would de-recognize the portion of the liability related to the benefits not expected to be utilized.

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FORGENT POWER SOLUTIONS, INC.

PART I - FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk exposures or in our risk management policies as disclosed in the IPO Prospectus.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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FORGENT POWER SOLUTIONS, INC.

PART II - OTHER INFORMATION

Part II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. Refer to Part I. Item 1. Note 21, “Commitments and Contingencies” of “Notes to Condensed Consolidated Financial Statements” for additional information.

Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. For a detailed discussion of the risks that affect our business, please refer to the section titled “Risk Factors” in the Company’s final prospectus dated March 26, 2026 and filed with the SEC on March 30, 2026 (the “Follow-On Prospectus”). There have been no material changes to our risk factors as previously disclosed in the Follow-On Prospectus.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds from IPO of Common Stock

On February 6, 2026, Forgent Power Solutions, Inc. (the “Company”) completed its IPO of 19,074,391 shares of Class A common stock sold by the Company and 45,325,609 shares of Class A common stock sold by the Selling Stockholders, in each case, at a public offering price of $27.00 per share. From the IPO, the Company received $491.8 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 19,074,391 capital ownership interests of Opco, and Opco utilized the net proceeds it received from the sale of Opco LLC Interests to us to redeem Opco LLC Interests from Forgent Parent II LP and Forgent Parent III LP. The Company did not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.

On March 30, 2026, the Company completed a Follow-On Offering of 10,783,205 shares of Class A common stock offered by the Company and 23,716,795 shares of Class A common stock offered by the Selling Stockholders, including the exercise in full of the underwriters’ option to purchase additional shares, at a public offering price of $29.50 per share. From the Follow-On Offering, the Company received $308.6 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 10,783,205 capital ownership interests of Opco, and Opco utilized the net proceeds it received from the sale of the Opco LLC Interests to us to redeem Opco LLC Interests from Forgent Parent II LP and Forgent Parent III LP. The Company did not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended March 31, 2026, none of our directors or officers adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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FORGENT POWER SOLUTIONS, INC.

PART II - OTHER INFORMATION

Item 6. Exhibits


Exhibit No.	Description	SEC Document Reference
3.1	Amended and Restated Certificate of Incorporation of Forgent Power Solutions, Inc.	Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-8 filed on February 4, 2026.
3.2	Amended and Restated Bylaws of Forgent Power Solutions, Inc.	Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-8 filed on February 4, 2026.
4.1	Form of Certificate of Class A Common Stock of the Registrant.	Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A filed on January 26, 2026.
10.1	Credit Agreement, dated as of December 19, 2025, by and among the borrowers party thereto, Forgent Intermediate III LLC, a Delaware limited liability company, the lenders and issuing banks from time to time party thereto, and Jefferies Finance LLC, as administrative agent and as collateral agent.	Incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 filed on January 9, 2026.
10.2	Tax Receivable Agreement, dated as of February 4, 2026, by and among the Company and each of the other parties from time to time party thereto.	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 10, 2026.
10.3	Registration Rights Agreement dated as of February 4, 2026, by and among the Company and each of the other parties from time to time thereto.	Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 10, 2026.
10.4*	Forgent Power Solutions, Inc. 2026 Equity Incentive Plan.	Incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on February 4, 2026.
10.5	Form of Director and Officer Indemnification Agreement.	Incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 filed on January 9, 2026.
10.6	Second A&R Opco LLC Agreement, dated February 4, 2026, by and among the Company and the other parties thereto.	Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on February 10, 2026.
10.7	Stockholders Agreement, dated February 4, 2026, by and among the Company, Forgent Parent I LP, Forgent Parent II LP, Forgent Parent III LP and Forgent Parent IV LP.	Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on February 10, 2026.
10.8*	Employment Agreement for Gary Niederpruem.	Incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1/A filed on January 26, 2026.
10.9*	Employment Agreement for Tyson Hottinger, amended and restated.	Incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1/A filed on January 26, 2026.
10.10*	Employment Agreement for Ryan Fiedler, amended and restated.	Incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 filed on January 26, 2026.
10.11*	Form of Grant Notice and Award Agreement for Directors (Annual).	Incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1/A filed on January 26, 2026.
10.12*	Form of Grant Notice and Award Agreement for Directors (One-Time).	Incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1/A filed on January 26, 2026.

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FORGENT POWER SOLUTIONS, INC.

PART II - OTHER INFORMATION


Exhibit No.	Description	SEC Document Reference
10.13*	Form of Grant Notice and Award Agreement for Employees.	Incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-1/A filed on January 26, 2026.
31.1	Certification of Principal Executive Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a) of the Securities Exchange Act of 1934, as amended.	Filed herewith.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a) of the Securities Exchange Act of 1934, as amended.	Filed herewith.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith.
101	Inline XBRL file set for the Consolidated Financial Statements and accompanying notes in Part I, Item 1, “Financial Statements” and for the information under Part II, Item 5, “Other Information” of this Quarterly Report on Form 10-Q.	Filed herewith.
104	Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL file set.	Filed herewith.

_____________

*Denotes compensatory plan, contract or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, Forgent Power Solutions, Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dayton, State of Minnesota on May 14, 2026.


		Forgent Power Solutions, Inc.

Date:	May 14, 2026	By:	/s/ Gary J. Niederpruem
			Gary J. Niederpruem
			Chief Executive Officer

Date:	May 14, 2026	By:	/s/ Ryan Fiedler
			Ryan Fiedler
			Chief Financial Officer