FPS 10-K & 10-Q changes, risk factors and insider trading

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 Forgent Power Solutions, Inc.'s ("Forgent Power Solutions")Company’s final prospectus dated FebruaryMarch 4,26, 2026 and filed with the SEC on FebruaryMarch 6,30, 2026 (the "“Follow-On Prospectus"”). There have been no material changes to our risk factors as previously disclosed in the Follow-On Prospectus.

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 Forgent Power Solution, Inc.'sour Prospectus dated as of FebruaryMarch 4,26, 2026 and filed with the Securities and Exchange Commission (the "“SEC"”) on FebruaryMarch 6,30, 2026 relating to our Registration Statement on Form S-1 (File No. 333-292632333-294578). 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 on Form 10-Q 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 andEBITDA, 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 on Form 10-Q 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 on Form 10-Q 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.”

Electrical distribution equipment is essential for delivering electricity safely and efficiently from power plants to homes, businesses,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.

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 transmission and distribution ("T&D") infrastructure; and electrical products distributors.

On February 6, 2026, Forgent Power Solutions, Inc. (the “Forgent Power SolutionsCompany”) and parent entities of Forgentthe Power Solutions controlled by Neos Partners, LPCompany (the “Selling Stockholders”) sold 16,586,42719,074,391 and 39,413,57345,325,609 shares of Class A common stock of Forgentthe Power Solutions,Company, respectively, at aan public offeringIPO price of $27.00 per share (the “IPO”). On February 9, 2026, Forgent Power Solutions and the Selling Stockholders completed the sale of 2,487,964 and 5,912,036 shares of Class A common stock, respectively, pursuant to the exercise in full of the underwriters' overallotment option. From the IPO and exercise ofIPO, the underwriters’ overallotment option, Forgent Power SolutionsCompany 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”). Neither theThe Company nordid Forgentnot Power Solutions receivedreceive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.

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

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 Forgentthe PowerCompany’s Solution'sfinal prospectus dated FebruaryMarch 4,26, 2026, and filed with the SEC on FebruaryMarch 6,30, 2026 (the "“Follow-On Prospectus"”).

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 FormQuarterly 10-QReport 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.”

Comparison of Operations for the Three Months Ended DecemberMarch 31, 20252026 and 20242025

Revenues for the three months ended DecemberMarch 31, 20252026 were $296.4$378.7 million as compared to $175.3$186.2 million for the three months ended DecemberMarch 31, 2024.2025. 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 periodcurrent year to meet customer demand.

Cost of revenues for the three months ended DecemberMarch 31, 20252026 were $194.6$247.5 million as compared to $111.6$118.1 million for the three months ended DecemberMarch 31, 2024.2025. 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.

Selling, GeneralGeneral, and Administrative

Selling, generalgeneral, and administrative expenses for the three months ended DecemberMarch 31, 20252026 were $68.1$78.5 million as compared to $29.7$32.1 million for the three months ended DecemberMarch 31, 2024.2025. The increase in selling, generalgeneral, and administrative expenses was driven by increases in headcount, sales and marketing costs, professional services, and IT costs to support our growth.growth, as well as IPO-related bonuses.

Depreciation for the three months ended DecemberMarch 31, 20252026 was $1.1$1.6 million as compared to $0.3 million for the three months ended DecemberMarch 31, 2024.2025. The increase in depreciation was primarily driven by an increase in property and equipment in the current fiscal year.

Amortization of intangibles for the three months ended DecemberMarch 31, 20252026 was $12.5$11.7 million as compared to $14.9$13.4 million for the three months ended DecemberMarch 31, 2024.2025. The decrease in amortization was driven by backlog from certain acquisitions being fully amortized in the current fiscal year.

Interest expense for the three months ended DecemberMarch 31, 20252026 was $21.0$10.8 million as compared to $13.7$13.2 million for the three months ended DecemberMarch 31, 2024.2025. The increasedecrease in interest expense was primarily driven by lower interest rates in the write-offcurrent of approximately $10 million of deferred financing costs related to refinancing our 2023 Credit Agreement.year.

Interest income for the three months ended DecemberMarch 31, 20252026 was $0.5$0.7 million as compared to $1.5$1.3 million for the three months ended DecemberMarch 31, 2024.2025. 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 benefit (expense) was $0.4$4.4 million and $(0.8)$1.9 million for the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. Our effective income tax rate for the three months ended DecemberMarch 31, 20252026 and 20242025 was 81.5%15.2% and 11.6%,18.3%, respectively. For the three months ended DecemberMarch 31, 2025,2026, 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 andtaxes, favorable discrete adjustments related to the filing of our 2024 federal taxreturn, return.and the use of R&D credits.

Net Income (Loss)

Comparison of Operations for the SixNine Months Ended DecemberMarch 31, 20252026 and 20242025

Revenues for the sixnine months ended DecemberMarch 31, 20252026 were $579.7$958.4 million as compared to $329.4$515.6 million for the sixnine months ended DecemberMarch 31, 2024.2025. 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 for the sixnine months ended DecemberMarch 31, 20252026 were $380.0$627.5 million as compared to $199.2$317.2 million for the sixnine months ended DecemberMarch 31, 2024.2025. 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.

Selling, GeneralGeneral, and Administrative

Selling, generalgeneral, and administrative expenses for the sixnine months ended DecemberMarch 31, 20252026 were $121.7$200.2 million as compared to $55.8$87.9 million for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in selling, generalgeneral, and administrative expenses was driven by increases in headcount, sales and marketing costs, professional services, and IT costs to support our growth.growth, along with IPO-related bonuses.

Depreciation for the sixnine months ended DecemberMarch 31, 20252026 was $1.4$3.0 million as compared to $0.5$0.8 million for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in depreciation was primarily driven by an increase in property and equipment in the current fiscal year.

Amortization of intangibles for the sixnine months ended DecemberMarch 31, 20252026 was $25.3$37.0 million as compared to $32.4$45.8 million for the sixnine months ended DecemberMarch 31, 2024.2025. The decrease in amortization was driven by backlog from certain acquisitions being fully amortized in the current fiscal year.

Interest expense for the sixnine months ended DecemberMarch 31, 20252026 was $34.9$45.7 million as compared to $28.6$41.8 million for the sixnine months ended DecemberMarch 31, 2024.2025. 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 for the sixnine months ended DecemberMarch 31, 20252026 was $1.4$2.1 million as compared to $3.2$4.5 million for the sixnine months ended DecemberMarch 31, 2024.2025. 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 was $2.5$6.9 million and $2.1$4.0 million for the sixnine months ended DecemberMarch 31, 20252026 and sixnine months ended DecemberMarch 31, 2024,2025, respectively. Our effective income tax rate for the sixnine months ended DecemberMarch 31, 20252026 and 20242025 was 14.1%14.8% and 13.0%,15.1%, respectively. For the sixnine months ended DecemberMarch 31, 2025,2026, 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 andtaxes, favorable discrete adjustments related to the filing of our 2024 federal taxreturn, return.and the use of R&D credits.

As a result of the factors discussed above, net income was $15.5$39.9 million and $13.8$22.2 million for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively.

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

_____________ (1)Represents fees and expense reimbursements paid to Neos Partners, 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.

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

_____________ (1)Represents fees and expense reimbursements paid to Neos Partners, 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.

As of DecemberMarch 31, 2025,2026, our cash and cash equivalents were $106.2$93.8 million. Net working capital as of DecemberMarch 31, 20252026 was $230.6$237.2 million.

As of DecemberMarch 31, 2025,2026, we had outstanding borrowings, net of discount and deferred financing fees of $583.5$584.1 million, $4.5$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.

For the sixnine months ended DecemberMarch 31, 2025,2026, cash provided by operating activities was $6.0$35.2 million. Cash provided by operating activities was primarily driven by net income of $15.5$39.9 million. Cash provided by operating activities was favorably impacted by $53.5$83.7 million of net non-cash items, including $32.3$50.4 million of depreciation and amortization and $11.0$11.7 million of amortization / write-off of discounts and deferred financing costs. Cash flow from operations for the sixnine months ended DecemberMarch 31, 20252026 was reduced by $63.0$88.5 million for working capital items, including uses of cash of $91.5$116.2 million for accounts receivable resulting from increased revenues and $45.3$65.8 million for inventory to support orders in backlog, partially offset by sources of cash from accounts payable of $10.6$42.8 million primarily related to inventory purchases, $26.6$37.1 million in accrued expenses, and $44.0$22.6 million in deferred revenue related to our increased backlog.

For the sixnine months ended DecemberMarch 31, 2024,2025, cash provided by operating activities was $59.7$52.2 million. Cash provided by operating activities was primarily driven by net income of $13.8$22.2 million. Cash provided by operating activities was favorably impacted by $36.4$56.0 million of net non-cash items, including $34.9$49.8 million of depreciation and amortization. Cash flow from operations for the sixnine months ended DecemberMarch 31, 20242025 was increaseddecreased by $9.5$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 $36.3$34.8 million, accounts payable of $13.3$24.7 million primarily related to inventory purchases, and accrued expenses of $8.0$8.7 million primarily related to compensation and sponsor fees, partially offset by uses of cash of $31.4 million for accounts receivable resulting from increased revenues, $7.9 million for inventory to support orders in backlog, and $8.0 million for prepaid and other assets.fees.

For the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, cash used in investing activities of $56.4$84.6 million and $24.4$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.

For the sixnine months ended DecemberMarch 31, 2025,2026, cash provided by financing activities was $45.2$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 facilitiesfacilities, asalong wellwith as to paya $16.1 million withpayment respectrelated to the payable pursuant to the acquisitions, $11.8 million in deferreddebt financing costscosts, and $8.3$21.6 million in deferred offering costs in connection with the IPO.

For the sixnine months ended DecemberMarch 31, 2024,2025, cash used in financing activities was $5.9$20.3 million, of which $2.6$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.

For a discussion of our debt obligations, see Note 9, “Long-Term Debt” in our consolidated financial statements included elsewhere in this FormQuarterly 10-Q.Report.

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

For a discussion of our recent accounting pronouncements, see Note 3, “Recent Accounting Pronouncements” in our consolidated financial statements included elsewhere in this FormQuarterly 10-Q.Report.

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.period, except as noted below.