Sep 15, 2026 earnings call — Record quarter and Powertrain capacity expansion
Company set fiscal '27 revenue guidance of $2.4 billion to $2.6 billion and Q1 revenues of $445 million to $465 million.
Revenue $0.5B (est $0.4B) · EPS $0.25 (est $0.24) · Next-quarter revenue outlook $2.5B
Key quotes
"Fourth quarter bookings reached $1.5 billion, a new company record, increasing 375% year-over-year and 73% sequentially."
"In response to that momentum, today, we announced an incremental investment to build a dedicated 385,000 square foot Powertrain Solutions facility in our Tijuana, Mexico campus."
"Operating cash flow increased approximately 2.5x in fiscal '26 to $109 million from $45 million in fiscal '25."
Analyst Q&A 9
backlog quality and pricing
Q (Andrew Obin · BofA): Analyst asked how backlog quality is changing with new customer types, and what is happening with pricing, terms and conversion timelines.
A: Management said backlog quality is very high and consists of firm purchase orders only, not LOIs or MRUs. They said pricing is consistent with the prior quarter and they are not seeing meaningful project pushouts or market slowdowns.
"So first is backlog quality is unbelievably high, which it has been the entire duration of Forgent." — Gary Niederpruem (CEO)
margin ramp in 2027
Q (Julien Dumoulin-Smith · Jefferies): Analyst asked how margins will ramp through 2027, how the year will end, and the longer-term EBITDA margin trajectory.
A: Management expects margins to improve through the year. They guided to about 21% EBITDA margin in Q1, expected a couple hundred basis points expansion in Q2 versus Q1, and a 24% margin for the full year.
"With a couple of hundred basis points of margin expansion in Q2 from Q1 and then as mentioned, 24% for the full year." — Ryan Fiedler (CFO)
potential capacity agreements
Q (Michael Elias · TD Cowen): Analyst asked about the potential for capacity agreements with customers (longer-term capacity commitments) and the cost to set that up.
A: Management said they have expanded routes to market and are in meaningful dialogue with many customer cohorts about everything from individual purchase orders to longer-term commitments. They said the incremental cost to add talent and program management is covered in their current plan, and they will revisit only if things change drastically.
"So we're in the throes of that conversation with several of those customers." — Gary Niederpruem (CEO)
Powertrain order trends and repeat business
Q (Luke Junk · Baird): Analyst asked why Powertrain Solutions now makes up 40% of backlog and what that says about repeat engagement and displacing incumbents.
A: Management said growth came from adding customers and, more importantly, selling more to existing customers. They said customers who bought from them 1–2 years ago are now spending 30% to 100% more as they buy multiple product lines and integrated solutions.
"One is adding additional customers to the fleet, but almost even more than that, the outsized growth has come from increasing the affluent revenue per customer." — Gary Niederpruem (CEO)
why expand capacity now and Tijuana choice
Q (Joseph Ritchie · Goldman Sachs): Analyst asked why the company decided to expand PTS capacity now and why they chose Tijuana.
A: Management said some product lines were running hotter than anticipated and the backlog and pipeline gave them visibility. They decided to add growth capital now to stay ahead and keep lead times inside market expectations while customers deploy more PTS in e-House and modular skid formats.
"We see it, we feel it, we hear it, we're in the conversations with those customers." — Gary Niederpruem (CEO)
mix impact on margins
Q (Chigusa Katoku · JPMorgan): Analyst asked how growing Powertrain Solutions as a percentage of revenue affects margins, and whether complexity or supply chain issues hurt margins.
A: Management said Powertrain Solutions is more complex than some point products, but the margin profile by product and customer is still within a normal range. They noted sometimes solutions that include third-party gear carry lower markups, but when it is their own content the margins are similar to other products.
"But the margin profile at this point from a product standpoint as well as from an end customer standpoint, is all sort of still within a standard deviation." — Gary Niederpruem (CEO)
M&A priorities and criteria
Q (Noah Kaye · Oppenheimer): Analyst asked what technology-related portfolio needs they would target with M&A and what financial criteria they would use.
A: Management said as cash generation increases they are ramping inorganic activity and looking at product line extensions, services, and possible geographic expansion. They said any acquisition must fit strategically and meet financial metrics; they will not buy just for financial engineering or buy businesses losing money even if strategic.
"But most importantly, it has to be the right strategic fit." — Gary Niederpruem (CEO)
hiring, supply chain and sales cadence
Q (David Tarantino · KeyBanc): Analyst asked how much sales depend on continuing to ramp supply chain and labor, and how that risk is reflected in guidance.
A: Management said 2027 will be similar to 2026, requiring hiring hundreds of employees each quarter and executing the same hiring and training playbook. They pointed to having almost doubled the workforce from about 1,800 to roughly 3,500–3,600 as proof they can scale, and said supply chain has bumps but no unusual long delays.
"We've demonstrated. We almost effectively doubled the workforce over that 12-month period of time." — Gary Niederpruem (CEO)
lead times versus competitors
Q (Nigel Coe · Wolfe): Analyst asked how their lead times have tracked over the last 6–12 months compared to competitors and whether labor or other constraints could lengthen lead times.
A: Management said they hire many people without required skills and train them in plant programs that can last weeks to quarters, and they are hiring many engineers in SG&A as well. They said they still believe they are inside market-expected lead times across all product lines, supported by workforce growth and added factory space.
"And then your first part about lead times, we still do believe that we are inside the expected lead times for every product line that we have in the industry." — Gary Niederpruem (CEO)