Financial Analysis

Acquisitions Acquisition of MGM On the MGM Acquisition Date, the Company and its affiliates acquired 100% of the outstanding equity and assets of MGM in exchange for cash, equity in Forgent Parent I and a payable to the MGM Sellers. The acquisition resulted in an ownership change in MGM and was accounted for as a business combination using the acquisition method of accounting. The aggregate purchase price was $424.7 million, consisting of $365.6 million in cash, $46.1 million in equity of Forgent Parent I and a $13.0 million payable to the MGM Sellers. The cash portion of the purchase price was funded by a capital contribution and proceeds from the Senior Debt. The fair value of the equity was determined using the value of other contributions received from other investors as of the MGM Acquisition Date, which was $36.0 million, and the fair value of the equity using an option pricing model, which was $10.1 million. The purchase price paid in the acquisition has been allocated to record the acquired assets and liabilities assumed at their fair values. When determining the fair value of the assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $216.7 million was recorded. The goodwill recognized was primarily attributable to the product quality track record, workforce, available excess capacity and future ca …

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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). In March 2026, the Court of International Trade further ruled that U.S. Customs and Border Protection (CBP) must refund IEEPA tariffs that were previously collected. During the year ended June 30, 2026, the Company paid tariffs imposed under IEEPA totaling $6.0 million. As of June 30, 2026, the Company received $0.2 million of IEEPA tariff refunds, which was recognized as a reduction to cost of revenues on the consolidated/combined statements of operations for the year ended June 30, 2026. Subsequent to June 30, 2026, the Company has received an additional $5.6 million of IEEPA tariff refunds. The Company will evaluate the appropriate treatment for such refunds during fiscal 2027. Management concluded that potential tariff refunds represented a contingent gain as of June 30, 2026, and therefore no receivable was recognized until realization became assured through receipt of the related amounts. The Company will continue to mon …

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Long-Term Debt Long-term debt consists of the following (in thousands): June 30, 2026 2025 Term Loan Facility $ 598,500 $ Revolving Facility 2023 Term Loan Facility 511,112 2023 Revolving Facility Less: discount and deferred financing costs (16,325) (9,005) Total debt, net of discount and deferred financing costs 582,175 502,107 Less: current portion (6,000) (5,173) Long-term debt, net current portion $ 576,175 $ 496,934 Senior Credit Agreement On December 19, 2025, our wholly owned subsidiaries Forgent Power LLC (f/k/a Forgent Intermediate IV LLC), a Delaware limited liability company (the Parent Borrower), and Forgent Intermediate III LLC (Holdings) and certain other of our wholly owned subsidiaries (together with the Parent Borrower, collectively, the Borrowers) entered into a senior credit agreement (the Senior Credit Agreement) with 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). The 2025 Term Loan Facility was issued at a 1% discount, resulting in net proceeds of approximately $594 mill …

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The following table disaggregates revenues by principal offering and timing of transfer of control (in thousands): Successor Predecessor Year Ended June 30, 2026 Year Ended June 30, 2025 Period from Inception to June 30, 2024 Period from July 1, 2023 to October 31, 2023 Revenues by principal offering: Custom products $ 990,484 $ 590,646 $ 152,386 $ 51,426 Powertrain solutions 357,409 99,479 1,423 Standard products 42,452 34,624 21,310 13,052 Services 29,714 28,439 6,191 Revenues $ 1,420,059 $ 753,188 $ 181,310 $ 64,478 Revenues by timing of recognition: Over-time revenues $ 907,768 $ 469,947 $ 125,273 $ 51,426 Point-in-time revenues 512,291 283,241 56,037 13,052 Revenues $ 1,420,059 $ 753,188 $ 181,310 $ 64,478 …

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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 members 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 resu …

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Goodwill and Other Intangible Assets, net Goodwill Goodwill totaled $516.6 million as of both June 30, 2026 and 2025 and relates to prior acquisitions. During the years ended June 30, 2026 and 2025, there were no impairment charges related to goodwill, and as of both June 30, 2026 and 2025, there was no accumulated impairment related to goodwill. Other Intangible Assets Other intangible assets, net consisted of the following (in thousands): Estimated Useful Lives (Years) June 30, 2026 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 (33,458) (18,784) Trade name (20,566) (11,634) Backlog (68,454) (45,963) Noncompete agreements (4,208) (2,437) Trademarks (7) Total accumulated amortization (126,693) (78,818) Other intangible assets, net $ 289,490 $ 337,271 Amortization expense for the years ended June 30, 2026 and 2025 and the period from Inception to June 30, 2024 was $47.9 million, $58.7 million, and $20.1 million, respectively. Estimated future annual amortization expense for the above amortizable intangible assets are as follows (in thousands): For the Year Ending June 30, 2027 $ 25,290 2028 25,054 2029 24,259 2030 22,843 2031 22,843 Thereafter 169,201 $ 289,490 …

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Income Taxes The components of the Companys income (loss) before tax (expense) benefit are as follows (in thousands): Successor Predecessor Year Ended June 30, 2026 Year Ended June 30, 2025 Period from Inception to June 30, 2024 Period from July 1, 2023 to October 31, 2023 U.S. $ 120,275 $ 19,901 $ (25,387) $ 11,432 Foreign 7,125 2,885 228 219 Income (loss) before tax (expense) benefit $ 127,400 $ 22,786 $ (25,159) $ 11,651 The income tax (expense) benefit charged to operations consisted of the following (in thousands): Successor Predecessor Year Ended June 30, 2026 Year Ended June 30, 2025 Period from Inception to June 30, 2024 Period from July 1, 2023 to October 31, 2023 Current (expense) benefit: Federal $ 1,779 $ (17,360) $ (3,401) $ (4,224) State (6,396) (2,576) (215) (395) Foreign (2,113) (1,137) (263) (56) (6,730) (21,073) (3,879) (4,675) Deferred (expense) benefit: Federal (15,891) 14,846 6,502 1,443 State 1,625 331 3,370 42 Foreign (369) 556 (36) (14,635) 15,733 9,836 1,485 Income tax (expense) benefit $ (21,365) $ (5,340) $ 5,957 $ (3,190) Significant components of the Companys deferred tax assets and liabilities were as follows (in thousands): June 30, 2026 2025 Deferred tax assets: Accrued expenses $ 3,138 $ 1,561 Operating lease liabilities 11,886 13,003 Capitalized research and development costs 9,971 15,847 Research and development credits 4,036 3,138 Net operating losses 187 187 Disallowed business interest 291 1,011 Investment in Opco 268,032 Other 775 757 De …

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Operating Leases The following table summarizes the right of use assets and lease liabilities (in thousands): June 30, 2026 2025 Operating right of use assets, net $ 108,432 $ 117,769 Operating lease liabilities, current portion $ 8,626 $ 6,879 Operating lease liabilities, net of current portion 112,970 121,491 Operating lease liabilities $ 121,596 $ 128,370 The details of the Companys lease expense are as follows (in thousands): Successor Predecessor Year Ended June 30, 2026 Year Ended June 30, 2025 Period from Inception to June 30, 2024 Period from July 1, 2023 to October 31, 2023 Operating lease expense $ 20,797 $ 17,226 $ 1,700 $ 397 Variable lease expense 2,718 2,169 75 67 Short-term lease expense 1,759 1,511 1,162 243 Total operating lease expense $ 25,274 $ 20,906 $ 2,937 $ 707 The following table presents the maturities of the Companys lease liabilities (in thousands): Year Ending June 30, Amount 2027 $ 19,392 2028 20,507 2029 20,818 2030 20,253 2031 19,513 Thereafter 77,527 178,010 Less: the effects of discounting (56,414) Total operating lease liabilities $ 121,596 The Companys weighted average remaining lease-term and weighted average discount rate are as follows: Year Ended June 30, 2026 2025 Weighted average remaining lease-term 8.6 years 9.5 years Weighted average discount rate 9 % 9 % Supplemental cash flow and other information related to operating leases are as follows (in thousands): Successor Predecessor Year Ended June 30, 2026 Year Ended June 30, 2025 Per …

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Recent Accounting Pronouncements Adopted Effective June 30, 2026, the Company adopted Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , on a prospective basis. This ASU enhances disclosures in an entitys income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The adoption of the amended guidance resulted in expanded disclosures in Note 11, Income Taxes in this report but did not have a significant impact on the Companys consolidated/combined financial statements. Not Yet Adopted In November 2024, the Financial Accounting Standards Board (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/combined 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 Companys co …

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Retirement Plans The Company has a 401(k) plan (Plan) covering all eligible employees. Employees are generally eligible to participate in the Plan after they have completed ninety days of employment. The Company makes matching contributions and discretionary contributions. The Company made $2.5 million, $1.4 million, $0.3 million, and $0.1 million in contributions to the Plan for the years ended June 30, 2026 and 2025, the period from Inception to June 30, 2024, and the period from July 1, 2023 to October 31, 2023 (Predecessor), respectively. …

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Related Party Transactions Operating Leases The Company incurred rent expense totaling $2.7 million, $2.9 million, $1.6 million, and $0.4 million for the years ended June 30, 2026 and 2025, the period from Inception to June 30, 2024, and the period from July 1, 2023 to October 31, 2023 (Predecessor), respectively, related to related party operating leases for properties owned by the former owners. As of June 30, 2026 and 2025, the Company had related party operating lease right of use assets totaling $3.5 million and $4.7 million and operating lease liabilities totaling $3.6 million and $4.7 million, respectively. See Note 13, Operating Leases for further information. Sponsor Fees and Expenses During the years ended June 30, 2026 and 2025 and the period from Inception to June 30, 2024, the Company incurred sponsor fees and expenses from Neos Partners, LP totaling $18.8 million, $15.2 million, and $2.4 million, respectively. As of June 30, 2025, the Company owed the private equity sponsor $11.1 million, which is included in accrued expenses in the consolidated balance sheets. As of June 30, 2026, the Company had no outstanding payables to the private equity sponsor. Revenues from Related Parties The Company earned revenues from other portfolio companies controlled by Neos Partners, LP totaling $2.0 million and $0.6 million, and $0.1 million for the years ended June 30, 2026 and 2025 and the period from Inception to June 30, 2024, respectively. As of June 30, 2026 and 2025, the …

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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 …

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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 Companys 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/combined statements of operations. Significant segment expenses are consistent with those presented on the consolidated/combined statements of operations. The measure of segment assets is reported on the consolidated balance sheets as total assets, and total capital expenditures and depreciation and amortization is reported on the consolidated/combined 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. The following table presents selected financial information with respect to the Companys single operating segment (in thousands): Successor Predecessor Year Ended June 30, 2026 Year Ended June 30, 20 …

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Summary of Significant Accounting Policies Basis of Accounting and Presentation The accompanying consolidated/combined financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company uses the U.S. dollar as its functional currency. Gains and losses from foreign currency transactions are included in other income (expense) and are not material to the consolidated/combined financial statements. Principles of Consolidation (Successor) The consolidated/combined financial statements include the accounts of Forgent Power Solutions, Inc. 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 Companys assets and liabilities with the exception of restricted cash, certain income tax balances, and the payable pursuant to the Tax Receivable Agreement. In the MGM Acquisition, described above and in Note 3, Acquisitions, US MetalCo was identified as the acquirer for accounting purposes, and MGM as …

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Stockholders Equity Amendment and Restatement of Certificate of Incorporation As discussed in Note 1, Organization and Nature of Business, on February 4, 2026, the Companys 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 Companys 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 o …

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Subsequent Events On July 6, 2026, the Company completed a follow-on offering consisting of 14,555,925 shares of Class A common stock offered by the Company and 29,094,075 shares of Class A common stock offered by the Selling Stockholders, at a public offering price of $49.00 per share. From this follow-on offering, the Company received $695.4 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 14,555,925 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 retain any of the proceeds from the sale of Class A common stock by the Selling Stockholders. As a result of this follow-on offering, the Company owned 90.18% of Opco.

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