0002080126-26-000011
SEC filingRevenue surged 69% YoY to $296M, powered by data center and grid demand, but net income swung to a loss on a $10M refinancing write-off.
In the three months ended December 31, 2025, revenue surged 69% to $296.4 million from $175.3 million in the prior year period, driven by strong demand for Custom Products and Powertrain Solutions, particularly from data center and grid customers, and contributions from new manufacturing campuses. Gross profit increased 60% to $101.8 million, but gross margin contracted to 34.3% from 36.4%, as cost of revenue grew faster due to under-absorbed labor and overhead from accelerated headcount growth and new campus ramp-up costs. Operating income rose only 6% to $20.1 million, as selling, general and administrative expenses more than doubled to $68.1 million, driven by investments in headcount, sales, and IT to support growth, and depreciation and amortization decreased 11% to $13.5 million. Net income swung to a loss of $(0.1) million from income of $6.4 million, primarily due to a $10.0 million non-recurring write-off of deferred financing costs related to refinancing the 2023 Credit Agreement. Adjusted EBITDA, a non-GAAP measure, grew 51% to $60.4 million, indicating strong underlying operational performance.
For the six months ended December 31, 2025, revenue increased 76% to $579.7 million from $329.4 million, with similar drivers. Gross profit rose 53% to $199.7 million, but gross margin declined to 34.5% from 39.5%. Operating income grew 23% to $51.3 million, as SG&A expenses more than doubled. Net income increased 12% to $15.5 million from $13.8 million, despite higher interest expense. Adjusted EBITDA for the six months was $125.5 million, up 51%.
The MD&A does not provide discrete segment financials, but discusses product categories: Custom Products, Powertrain Solutions, and Standard Products. The revenue growth was driven by Custom Products and Powertrain Solutions, which are engineered-to-order and carry higher margins. The mix shift toward these products is a positive indicator of demand from technically demanding applications. Standard Products also contributed but at lower margins. The company’s focus on data center and grid end markets continues to drive momentum, as evidenced by the significant revenue increase and backlog growth (deferred revenue increased $44.0 million in the six months).
The MD&A does not provide explicit numerical guidance, but outlines key factors affecting performance: data center construction activity, infrastructure investment, offering mix, capacity utilization, and raw material/labor costs. The company expects to continue expanding manufacturing capacity, with capital expenditures of $56.4 million in the six months, and plans to complete capacity expansion by end of fiscal 2026. Management highlights the cyclical nature of demand but is optimistic about sustained growth in digital infrastructure and grid modernization. The recent IPO provides additional liquidity and a public currency for growth. However, risks include potential margin compression from under-absorbed costs as new campuses ramp, and the impact of tariffs and raw material volatility.
As of December 31, 2025, Forgent Intermediate LLC held $106.2M in cash and cash equivalents, with total assets of $1.70B. Total debt (net of discount and deferred financing costs) was $583.5M, consisting of a $600M term loan issued in December 2025, partially offset by $16.5M in unamortized costs. The 2023 Term Loan Facility was fully repaid. The revolving credit facility of $250M remained undrawn. Stockholders' equity totaled $589.5M, including $204.0M in non-controlling interests. Inventory was $160.5M (net), and deferred revenue was $154.9M.
The Notes disclose $125.3M in operating lease liabilities (current $7.8M, long-term $117.5M). Payables pursuant to acquisitions were $1.1M. No other material purchase commitments or contractual obligations were disclosed.
No share buybacks or dividends were mentioned. The company undertook a significant debt refinancing: issuing $600M in new term loans and repaying $511.1M of the prior facility, resulting in a net debt increase of $81.4M. Capital expenditures were $56.4M for the six months ended December 31, 2025, primarily for manufacturing campus expansion. The IPO in February 2026 raised $491.8M net proceeds, used to purchase Opco LLC interests.
The company operates as a single reportable segment: electrical distribution equipment. No geographic breakdown was provided. Revenues are disaggregated into custom products ($439.7M in H1), powertrain solutions ($111.8M), standard products ($18.1M), and services ($10.1M). Performance is assessed via consolidated net income.
Net income of $15.5M for the six months ended December 31, 2025 was significantly higher than operating cash flow of $6.0M, indicating a large working capital outflow. The primary drag was a $91.5M increase in accounts receivable and $45.3M inventory build, partially offset by a $44.0M rise in deferred revenue. Depreciation and amortization of $32.3M and amortization of deferred financing costs of $11.0M were non-cash charges.
Capital expenditures surged to $56.4M (from $24.4M), representing 376% of operating cash flow, implying heavy investment. There is no free cash flow figure stated, but the combination of low OCF and high capex results in negative free cash flow.
Financing activities provided $45.2M, driven by $594.0M in debt proceeds offset by $511.1M in repayments and $11.8M in financing costs. A $1.4M distribution to member was made, representing minimal capital return. The company ended the period with $106.2M cash, down from $111.3M. Overall, cash generation from operations was weak due to working capital absorption, while the company invested heavily and relied on debt for liquidity.