Forgent Power Solutions (FPS) Q3 2026 earnings summary

Executive summary

• Q3 2026 revenues surged 103% year-over-year to $379 million, driven by strong demand in data center and grid markets and successful production ramps at new facilities.

• Adjusted EBITDA rose 96% to $85 million, with margin expanding 200 basis points sequentially to 22.4%; adjusted net income increased 132% to $55 million.

• Bookings reached a record $867 million, up 308% year-over-year and 14% sequentially, with backlog at $1.98 billion, up 157% year-over-year and 33% quarter-over-quarter.

• Net income for the quarter rose 190% year-over-year to $24.5 million, reflecting higher sales and improved operational performance.

• Transitioned from cash consumption to cash generation, with operating cash flow improving by up to $37 million year-over-year to $29 million.

Financial highlights

• Custom Products revenue increased 82% year-over-year to $259 million; Powertrain Solutions up 248% to $99 million; Standard Products up 53%; Services up 4%.

• Gross profit for Q3 2026 was $131.2 million, up 92% year-over-year; gross margin improved 30 basis points sequentially to 34.6%.

• Adjusted EBITDA margin was 22.4%, up ~200 bps quarter-over-quarter; adjusted net income margin improved to 14.6%.

• SG&A as a percentage of revenue decreased 230 bps quarter-over-quarter.

• Capital expenditures were $28 million in Q3, mainly for capacity expansion.

Outlook and guidance

• Full-year 2026 guidance raised: revenue $1.35–$1.39 billion (82% growth), adjusted EBITDA $310–$320 million (86% growth), adjusted net income $197–$207 million (128% growth).

• Q4 2026 revenue expected at $392–$432 million (73% YoY growth at midpoint); adjusted EBITDA of $100–$110 million; adjusted net income of $67–$77 million.

• Margins expected to continue expanding sequentially as production scales and growth-related costs moderate.

• Capacity expansion projects expected to be completed by fiscal year-end, supporting up to $5 billion in annual revenues.

• Ongoing investments in manufacturing and personnel to support growth.