Greetings and welcome to the Forgent Power Solutions Fiscal Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kate Africk, Vice President

of investor relations. Thank you. You may begin. Thank you, Operator, and thank you, everyone, for joining us today for Forgent Power Solutions' second fiscal quarter 2026 earnings call. With me today are Gary Niederperum, our chief executive officer, and Ryan Fiedler, our chief financial officer. On this call, management will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of various factors, including those discussed in today's earnings release and during this conference call, and in our latest filings with the Securities and Exchange Commission, each of which can be found on our website. Today's presentation also includes references to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and adjusted net income. You should refer to the information contained in the company's earnings release and presentation for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures. And with that, I will turn the call over to Gary. Thank you, Kate, and good morning everyone.

Given that this is our first earnings call as a public company and that we have many new investors listening in, I'll begin with a brief introduction to Forgent and what makes us unique before I turn it over to Ryan to discuss our second quarter 2026 results. Then I'll pick it back up to provide an update on our markets, growth initiatives, and operational dynamics, and Ryan will wrap up with our fiscal 2026 guidance. Let's turn to slide five. Forgent is a lean designer and manufacturer of electrical distribution equipment using data centers, the power grid, and energy-intensive industrial facilities. The category encompasses all of the equipment that is needed to deliver electricity safely and efficiently from the power plant all the way through to the end device. Electrical distribution equipment is not an optional purchase. Customers have to buy it, and because it has a high consequence of failure, reliability and safety are more important to the customer than price. The market for electrical distribution equipment is very large and includes everything from power plants to your home. But we focus on the most technically demanding segments of the market. Said differently, we make the equipment for the highest value applications that are the hardest to do. What are some of those? It's data centers, semiconductor fabs, battery energy storage projects, all areas that are seeing tremendous investment now. Those applications are hard, and only a few companies can do them because they require a significant amount of upfront engineering work. You also have to comply with multiple standards, and therefore, making this equipment requires specialized labor. Because of the safety aspect, these have to be zero-defect products. And oftentimes, customers require them to be made in the U.S., either because of cybersecurity or to be eligible for incentives, which is a big benefit to us. When you combine these mission-critical products targeted at technically demanding applications that only a few companies can do, you get the financial profile that you see on this page. Over the last 12 months, we've generated a billion dollars of revenue, $212 million of adjusted EBITDA, which is a 21% margin, and we had a $1.5 billion backlog at the end of December 31st, 2025. Now, on slide six, there are three things that really differentiate our business from other companies in the industry. The first is our market focus. Approximately 85% of our revenue comes from three end markets, data centers, grid, and industrial. Each has seen a step change in infrastructure investment. Data centers are being fueled by cloud and AI demand, the grid by modernization and replacement of aging assets alongside new generation to meet load growth, and industrial by the reshoring of manufacturing driven by trade policy and geopolitics. We believe this focused exposure positions us to grow materially faster than the broader electrical equipment industry, while our diversification across all three end markets gives us multiple ways to win. The second thing that differentiates us is our combination of product breadth and manufacturing We make everything our customers need in-house, and we have the capacity to meet their demand at scale. That means that we can take share from our competitors who can't deliver fast enough because they rely on third-party suppliers for key equipment categories or just don't have the capacity at all. The third thing that differentiates us is our focus on custom products. Approximately 90% of our revenue comes from engineer-to-order products. Engineer-to-order means products that are designed to a customer specification rather than built from a standard pre-config design. To put our focus on customization in context, our average batch count is 15. Batch count is how many units we manufacture per design. For most of our peers who focus on standard products, that number would be in the hundreds or even thousands. Focusing on custom products allows us to earn higher margins because customers are willing to pay more to get it their way. The result of our differentiated market focus, scaled manufacturing capacity, and customization capabilities is that we can grow faster than the overall market, take share from our competitors, and earn attractive margins. Each of those themes are reflected in our fiscal second quarter results, which Ryan will address next. Over to you, Ryan.

Thanks, Gary. I'll begin with the highlights of the second quarter, then I'll discuss the key drivers of revenue and adjusted EBITDA in the period. Turning to slide eight, we had very strong commercial and financial performance in the second quarter. Revenues increased 69% year over year. adjusted EBITDA rose 51% to 20.4%, adjusted EBITDA margin, and adjusted net income increased 66%. Turning to slide 9, revenues in the quarter were $296 million, an increase of $121 million versus the prior year's quarter. To put that into perspective, the year-over-year increase by itself exceeded the total revenues we generated in some quarters of fiscal 2024. All of the growth and revenues in the period was organic and reflects both growing demand for electrical distribution equipment and market share gains. Our ability to deliver this level of growth was driven in part by the investments we made in capacity at our campuses in Minnesota, Texas, and Tijuana. Sales of all offerings grew in the second quarter versus last year. Custom products grew 59% to $235 million, or 79% of our revenues in the quarter. Powertrain solutions, which included combinations of custom products that are integrated together to work as a system, more than tripled to $46 million, or 16% of our revenues in the quarter. Standard products and services grew at 13% and 5%, respectively, and represented 3% and 2%, respectively, of our revenues in the quarter. Services accounted for a low percentage of our revenues today, but it's an area we are investing in and expect to grow in the future. Turning to page 10, adjusted EBITDA in the quarter was $60 million, an increase of $21 million versus the prior year's quarter. Significant increase in adjusted EBITDA was driven by a 60% increase in gross profit, partially offset by increased selling, general, and administrative expenses to support growth across operations, engineering, and sales, and to support public company functions. Adjusted EBITDA margins were 20.4% in the quarter and include the impact of approximately $4.2 million of underabsorbed labor, $1.2 million of underabsorbed fixed overhead, and $600,000 of one-time startup costs for our new campuses. The one-time startup costs related primarily to office and service trailers, as well as generators that we rented in the period while our new campuses in Texas and Maryland were being completed. The underabsorbed overhead related primarily to rent for campuses not yet operational, and the underabsorbed labor costs related to hires made during the quarter to support production plan for future periods. We have accelerated our hiring plans to support greater than anticipated demand, and we expect to have additional underabsorbed labor in fiscal Q3 as we continue to onboard new manufacturing employees. We are providing this detail to help investors understand the drivers of margin. However, we do not add these growth-related costs back in our calculation of adjusting to the death. We expect margins to expand sequentially in Q3 and again in Q4 as startup costs roll off and labor and overhead absorption improves as our new campuses ramp to planned run rates. With that, I'll turn it to Gary.

Turning to slide 12, I'll start by highlighting the main takeaways from the second quarter and then turn to what we are seeing in our markets, how we are executing against our growth strategy, and what we're focused on operationally as we move through the next few quarters. The big takeaway is simple. Demand is running ahead of our expectations. Orders were up 268% in Q2, and that strength was broad-based, but especially in data center and grid. We're seeing both a growing market and continued share gains, which speaks to the unique value proposition that we offer. Customization at scale was some of the shortest lead times in our industry. To keep up, we're hiring and manufacturing faster than planned. The cost of that labor shows up immediately, but it takes time for new hires to get trained and to reach full productivity, so margins can dip during the hiring phase and then improve as output ramps. We saw that impact in the second quarter, as Ryan talked about earlier, and it may continue into the third quarter, but we still expect sequential margin expansion in Q3 and Q4 as productivity and volumes ramp. Turning to slide 13. Let me step back for a moment and talk about the markets we serve, what we're seeing in the demand today, the key trends shaping customer spend, and how that sets up for our outlook over the next few quarters. In data center, AI and cloud build-outs are driving sustained high-growth demand for electrical infrastructure. Power availability remains a key bottleneck, which is pushing spending upstream into substations and utility interconnect equipment. At the same time, higher power density are increasing equipment content per megawatt and shortening retrofit and replacement cycles. In grid, we continue to see steady baseline growth in demand for transformers and switch gear related to modernization and replacement of aging infrastructure incremental demand is coming from new generation and interconnection activity solar gas and large load additions all of which require significant substation equipment we're also seeing rising reliability and resilience requirements which also play into more demand for battery energy storage systems and in industrial electrical, electrification, and reshoring are supporting increasing demand for electrical distribution equipment. Customers are also adopting smarter gear with monitoring, controls, and predictive maintenance features which support higher ASPs. And tighter requirements around energy efficiency, power quality, and uptime are driving incremental demand for conditioning and protection systems. Overall, these trends create a very favorable backdrop for Forgent, characterized by accelerating demand, more content per megawatt, and greater visibility. Moving to slide 14, you see that backdrop reflected clearly in our bookings and backlog. In the second quarter, we booked $762 million of orders. To put that in context, that's more than our total revenues for all of fiscal 2025, and it represents 268% year-over-year and 66% quarter-over-quarter growth. The order increase was led by data centers followed by the grid. Within data centers, we're seeing demand from a broad mix of colos and neoclouds, including platforms that serve hyperscalers. In grid, we're seeing strong demand from utility customers, where we believe we're gaining share, as well as from developers building solar, battery energy storage systems, gas generation, and related interconnection infrastructure. Our book-to-build ratio in the second quarter was 2.6, reflecting the pace of the demand acceleration that we are seeing. As of December 31st, 2025, backlog was $1.5 billion, twice last year's level, and 45% higher than at the end of September. Given current order activity, we expect backlog could meaningfully increase again in Q3. Importantly, our growth isn't being driven by the market alone. We're also taking share. On slide 15, we highlight two of the ways we track Wallet Share. First is a mix of revenue from Powertrain Solutions. As a reminder, these are combinations of our custom products that are integrated together, skidded together, or designed to work together as a system. because powertrain solutions represent complete systems rather than a single piece of equipment they typically drive larger orders and capture a greater share of customers electrical infrastructure spend powertrain solutions were our fastest growing offering in the second quarter up 230 percent year over year and increased to 16 percent of revenues up from eight percent last year. The second way we measure wallet share is average customer spend. Customer spend with us increased 99% year-over-year and 21% sequentially, which is another clear indicator that we're winning a larger share of wallet. We believe we're still early in our share game opportunity. We're only beginning to fully leverage two key advantages, our expanding manufacturing depth, and our strength in longer lead time products like medium voltage switch gear and transformers. As our full capacity expansion comes online, we expect to be one of the few suppliers that can deliver custom products at scale with short lead times. When you can consistently beat the competition on lead time, it becomes much easier to win. We're also using our edge in medium-voltage switchgear and transformers to pull through additional products with the goal of capturing more of the total project scope, not just the hardest-to-source items. Page 16 puts some numbers around how powerful that pull-through can be. All facilities have medium-voltage and low-voltage equipment in their electrical infrastructure. A data center project will typically buy $6 to $7 of low-voltage equipment for every $1 of medium-voltage equipment. Borgent has long been recognized as a leader in medium-voltage, but historically, we didn't always pursue or win the low-voltage scope of a project. One of my first priorities when I joined the company was to change that because of the growth opportunity it unlocks. The example on this page clearly demonstrates that. During the second quarter, we worked closely with a data center customer who approached us initially to buy medium voltage transformers. We were able to expand the order to include not only the low voltage scope for the project, but also the entire e-house and integration work. That expansion increased the size of the order by about seven times. To put that in perspective, if we had achieved similar pull-through across all of our data center customers in fiscal 2025, our data center business would have been roughly two and a half times larger. That's hundreds of millions of dollars of incremental revenue potential. We were able to win because we could deliver multiple equipment categories on the timeline required, including more than 180 megawatts of power through e-houses with complex specs. We closed the deal in 45 days, and we expect to begin deliveries over the next few months. This is the playbook we're looking to replicate across more customers going forward. Turning to the operational dynamics slide on page 17, there are two key messages. Our capacity expansion is on track, and we're accelerating hiring to meet growing demand, which can create short-term margin headwind as new teams ramp. On the left, you can see our capacity expansion plan. As of December 31st, 2025, we spent about $132 million of the roughly $205 million program with approximately $73 million remaining. When fully completed, this expansion supports up to $5 billion of capacity for revenues versus the $1 billion of LTM revenues we generated through December 31st. We expect to deploy the remaining CapEx primarily in the second half of 2026, and once the program is complete, CapEx should step down towards maintenance levels of roughly 1% of revenues, meaning the CapEx drag on free cash flow should begin to ease. On the right, we've accelerated our hiring plan to keep pace with stronger than anticipated demand. Manufacturing headcount increased 80% year over year, which is faster than our 69% growth in revenues in the quarter. That greater than one-to-one relationship reflects deliberate staffing ahead of higher production requirements. The tradeoff is a temporary labor absorption lag. We incur costs immediately, but new hires take time to train and to reach full productivity. As Ryan spoke about earlier, the combined impact of labor and overhead under absorption and startup cost impacted our gross profit and adjusted EBITDA by approximately $6 million in the quarter. Putting it together, as our capacity build-out finishes and the new campuses and hires reach steady-state productivity, we expect sequential margin expansion in Q3 and again in Q4. With that, I'll turn the call back over to Ryan to discuss our outlook.

Thanks, Gary. Turning to slide 19. Given we're midway through the year, I'll focus on our second half outlook, and then I'll round out the discussion with what that means for the full year. We expect revenues in the range of $695 million to $745 million, adjusted EBITDA in the range of $175 million to $185 million, and adjusted net income in the range of $115 million to $125 million. At midpoint, this represents 70% year-over-year organic growth in revenues, 109% year-over-year growth in adjusted EBITDA and 173 percent year-over-year growth in adjusted net income. Our outlook for continued strong revenue growth is supported by our $1.5 billion backlog. We expect the vast majority of our current backlog will be delivered over the next 12 months, providing excellent visibility through fiscal year-end and into fiscal 2027. With higher volumes, improving overhead and labor absorption, and disciplined SG&A growth, we expect adjusted EBITDA and adjusted net income to more than double in the back half and margins to increase substantially year over year. Moving to slide 20. The takeaway for full year 2026 is that we anticipate accelerating growth for both revenues and adjusted EBITDA, on top of the 56% and 71% growth that we delivered in fiscal year 2025, respectively. As a reminder, all quoted growth figures are 100% organic. Specifically, for fiscal year 2026, we expect revenues in the range of $1.275 billion to $1.325 billion, adjusted even down the range of $300 million to $310 million, and adjusted net income in the range of $190 million to $200 million. At midpoint, this represents 73% year-over-year organic growth in revenues, 80% year-over-year growth in adjusted EBITDA, and 120% year-over-year growth in adjusted net income. With that, I'll turn it back to Gary for closing remarks.

Thanks, Ryan. Before we open it up for Q&A, I want to recognize a few groups. First, thank you to our Forgent family for the work that brought Forgent successfully to the public markets and for the relentless customer focus and day-to-day execution that is driving strong growth and profitability. Second, thank you to our new investors. We have high conviction in the trajectory of this business, and we appreciate the support you've shown so far. And finally, thank you to our customers. A customer-first mindset is at the core of everything we do, and becoming a public company strengthens our ability to invest and deliver for you over the long term. Looking ahead, we're building the capacity, capabilities, team, and culture for the forgent of tomorrow, not just the forgent of today. I'm proud of what we've accomplished, and we believe we're still in the early ends. Thank you for your time today, and we would now like to open the call up for questions. Operator?

Thank you. And at this time, we will conduct the Q&A session. In order to get through all the questions in the remaining time, please limit yourselves to one question for today's Q&A session. To ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You can press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. And our first question comes from Nigel Koh with Wolf Research. Please state your question.

Good morning, everyone, and congratulations on your first public company earnings release. So, nice one. I'll keep this to one question. I think, Gary, you mentioned expectation that backlog in this quarter, third quarter, will expand meaningfully. I'm just wondering if you could maybe put some additional color around that comment.

Good morning, Nigel. Yeah, congratulations to you. You're the first caller on our first official call. So, good work to you. Yeah, here's what I would say. I don't want to put any dollars or bookends on it. But when we met a couple of months ago, we were thinking that, you know, Q3 order rates would definitely not be as robust as Q2. I'm not going to say we're going to get all the way to where Q2 was, but we are seeing meaningful order conversion. Pipeline still continues to grow from where we were when we met a couple of months ago. So I think that word meaningful backlog expansion is pretty appropriate knowing those data points.

Thank you. And your next question comes from Julian Mitchell with Barclays.

please do your question. Hi, good morning, and yes, I'll echo the congratulations. Maybe just a question around the sort of sequential movement within the second half. So you've mentioned several times, you know, margins should be up sequentially third and also fourth quarter. Just trying to understand how back-end loaded that 25% margin guide is for the back half. You know, you did 20% in Q2, so it is a very substantive step up. So maybe help us understand how much of that is happening in third versus fourth quarter. And what's the confidence around kind of getting that step up in light of the extra headcount acceleration and sort of cost inflation that seems to be on the rise? Thank you.

Yeah, Julian, this is Ryan. You know, good to talk to you. You know, great question. You know, first and foremost, you know, we don't give the quarterly guidance, but I will give you some additional color around this. When we think about the sequential improvement in the quarters in the back half, you know, we've had incremental volumes that will continue in the back half of this year. And we do expect that we'll continue to get incremental margins and strong SG&A leverage. You know, as you saw in the second quarter of this year, we had a significant ramp of SG&A. And while we still expect that to grow, that is not going to be at the same rate. And also, just given the fact that we're growing as fast as we are, you know, we do expect margins to increase sequentially from Q2 to Q3, and again from Q3 to Q4. And that will, you know, be sequentially larger as we move into the fourth quarter. You know, as you think about the overall business, you know, we have second half EBITDA in the neighborhood of $175 to $185 million. And, you know, from an EBITDA perspective, we think about 55% to 60% of that will fall into the fourth quarter.

Thank you. And your next question comes from Joe Ritchie with Goldman Sachs. Please state your question.

Hey, guys. Good morning. and I echo the same. Congratulations. My one question, just maybe sticking on this point on the ramp in headcount, just broader question, how difficult has it been to find skilled labor? And then as you kind of think about, you know, your expectations with the capacity, you know, being able to fill, you know, $5 billion in revenues ultimately, how are you thinking about and ramping your hiring going forward to scale with the business. Thank you.

Yeah, good morning, Joe. So there's a couple part answer there to your question. The first is we have continued to have really good success in all of our recruiting and outreach programs, both from an SG&A standpoint as well as in the factory. Most of the headcount that we're adding obviously is in that direct labor and indirect labor So with the locations that we are in, pretty big metropolitan areas, as well as with the recruitment, the training, the retainment portion, we have continued to see very good success in not only the recruitment, but the onboarding, the training, and then that retainment. So that's sort of the first part. The second part is, you know, there's no doubt that we will continue to hire people as the revenue scales up. you know today that ratio from headcount growth to revenue was greater than one-to-one over a period of time that will definitely go to one-to-one and then over a little bit further period of time it will go to less than one-to-one as we just leverage the idl folks that we hire you know into the business so i think those are the uh the couple of answers to that question and thank you very much and look forward to talking again this afternoon your next question

comes from Steve Tusa with JPMorgan Chase. Please get your questions. Hi, good morning.

Morning, Steve. Can you guys just talk about the exit rate on that EBITDA in the fourth quarter, and is that the right thing to think about as we move into 2027, or is there some seasonality or lumpiness of mix that, you know, plays in. And then one other quick follow-up. Not sure we caught this on the IPO, but your revenue recognized over time. Just maybe help us with the accounting on that and just how that, you know, works over, because I think most of your lead times are, you know, relatively short, but I think you recognize a decent amount of revenue over time as opposed to point in time? Just those would be the two questions.

Yeah, great. So let's take the first one first, and then we can hit the second one. So, yeah, look, and I would say, first and foremost, we are laser-focused on delivering for the rest of 26. Don't want to get too far into 27, although I understand the run rate question come out of Q4 into 26 and what that portends for 27. And I would say at this point in time, We still feel really comfortable that 25%, north of 25%, is going to be a good annual number for us from an EBITDA margin perspective in 27. So that's the first half. The second half of your question, there is definitely going to be more and more percentage of completion as time goes on. A lot of these big powertrain solutions are big projects, which do have percentage of completion. So I do expect that the rate of the revenue growth will have more and more percentage of completion as we do these bigger and bigger, larger, more complex projects.

Thank you. And your next question comes from Julian Dumoulin-Smith with Jeffries. Please state your question.

Hey, echoing the same. Congratulations, team. Thank you. Appreciate the opportunity. Look, maybe just to take it a step further, how do you think about annualizing some of the trends that you're seeing improving in the back half of the year into 27 and onwards here? I mean, obviously, you're going to continue to grow out your footprint into that $5 billion opportunity. How would you describe sort of the cadence as it pertains to that ramp and sort of the step functions of opening up new sites, if you will? Can you speak to that maybe just beyond kind of the back half, as you alluded to, and what that might mean into run rate 27 or even beyond is just setting expectations? Again, I know it's a little bit of a rehash of the prior, but I want to come back and press a little bit further on that, if you don't mind.

Yeah, no problem, Julian. Thanks for the double-click there. Let me start with that last piece of it. So, again, I think from what we are seeing today in the pipeline, with the order conversion that we had clearly in fiscal Q2, with what we've seen for the first half of fiscal Q3, plus the acceleration of pipeline, plus knowing all of the capacity that we are adding at this point in time, We do believe FY27 is shaping up to be a really very, very solid and healthy year. How that breaks down by quarters, first half, second half, all too early to tell. That margin profile we gave earlier, something in that 25%, north of 25%, I think is going to be a good number. Like always, we will continue to grow into that footprint. And so I think there will continue to be expansions from that standpoint. But I think outside of that, you know, that's probably the most color that I can share on 27 at this point because, as stated earlier, we are really heads down. We've got, you know, two of the three months of Q3 executed. We've got four more months we've got to deliver, and that's where the majority of our focus is at this point. So appreciate the question and look forward to talking to you again later this afternoon.

Thank you. Your next question comes from Chris Snyder with Morgan Stanley. Please state your question.

Thank you. I wanted to just ask about where you think the company's revenue capacity will be, you know, as you exit this year. So I know the $200 million CapEx program will come to a close. I know that gives you guys, you know, the ability to get up to five. But it sounded like from some of the prior commentary that you're still will be adding in labor, you know, into fiscal 27 to support that growth. So I guess just like, you know, where do you think a company will be at from a revenue, you know, capacity perspective, just given the labor piece, you know, as we exit this year? Thank you.

Yeah, good morning, Chris. So you're right. So we will be materially complete with that $205 million capital expansion program by the end of this fiscal year, which will afford us the ability to have the infrastructure, the fixed cost in place to support up to $5 billion in revenue. That is 100% correct. You know, from a labor standpoint, we will continue to add labor as that revenue goes. And so we can modulate that based on how we see any given quarter. You know, clearly at this point in time, we think we will have grown sequentially Q3 and Q4, not only from a revenue standpoint, but also from an EBITDA standpoint. And I think that that revenue line will continue to accelerate as we get into FY27. How much of that, what that labor efficiency and utilization is, is all just going to be a function based on customer timing and when they want those projects executed. So I think that's probably the best answer I can give you on that one at this point.

Your next question comes from Jeff Hammond with KeyBank Capital Markets. Please say your question.

Hey, good morning, guys. Congrats. Just wanted to hit on lead times. In your IPO presentation, you have good lead time color by category, kind of where you were versus peers. I'm just wondering, as you're seeing, one, all this robust demand and order growth, if you're seeing any movement on your lead times, and then conversely, if you're seeing any lead times getting better anywhere from an industry perspective.

Yeah, thanks, Jeff. I would say two things. One is the overall macro answer is not a whole lot of movement, even whether it's in the market or within our lead time. So that's number one. Number two is, so therefore, we do believe that we are delivering inside of market expected lead times in almost every one of our major product categories. And then number three is, I think that powertrain solution win that we highlighted on the call is a really good pressure test of that in that, you know, you guys have seen how large some of these e-houses are and how the complexity of them. So to be able to deliver 180 megawatt in five, six-month lead time is really pretty much world-class. So that's why I feel very good about the lead time advantage that we continue to have in the market. And that is largely predicated on the fact that we did put that expansion in place early, and we are hiring that labor in order to accelerate it. But I think it was very prescient of us to execute on the vast majority of that 200 million square foot expansion that we're doing in a $200 million expansion that we're doing, and that's the reason why our lead times are still well inside of market-expected lead times.

Thank you. Your next question comes from Noah Kay with Oppenheimer & Company. Please see your question.

Hey, congratulations, all. Two-part for me, first building on the lead time comment you just made, Gary. You know, we did see in the orders from the industry this quarter, you know, just a bit of an elongation of the customer project timing, customers getting a little bit more visibility earlier because of the long lead time and getting power availability. So I know your lead times are still a key differentiator, but are you seeing any elongation in terms of expected customer deliveries? How do we think about the conversion timing of the backlog to revenue? I know you said most of over 12 months, but just curious if there's any shift there. And then the second part is really just to understand how to think about operating cash flow generation and working capital as we get into the back half?

Yeah, sure. Thank you, Noah. I'll take the first one, and then I'll have Ryan take the second one. So I would say it's pretty consistent. Yes, there are definitely some projects. You know, just when one project may push out, another project gets pulled in. When you put it all on balance, it's pretty much the same. So the vast majority of everything we're seeing in our backlog right now is going to convert in FY26 and FY27. You know, there might be a little bit of tail at the end of that, but the vast, vast, vast majority is going to be in 26 and then throughout FY27. So I would say that, you know, that 12-month-ish, 9 to 12-month-ish, you know, sort of turnover of the revenue base is still probably a pretty good number from everything we've seen today. So that's the first part, and then I'll let Ryan address your second part here.

Yeah, thanks, Gary. And, you know, certainly a good question. You know, on the operating cash flow standpoint, you know, we expect that we're going to be positive in the second half of this year. I think it's important to note that we are investing heavily in our business. We've talked a lot about the growth, and we're nearing completion of our expansion growth CapEx. We have about $73 million left in the second half of this year, and that wraps up in June. I think it's really important to note that once that is complete and we move into 27, the cash flow will inflect, and we do expect to start to generate some strong operating and pre-cash flow starting in 27, given the fact that that will be wrapped up at that time.

Thank you. The next question comes from Michael Elias with TD Cowan. Please do your question.

Great. Thanks, and echoing with the congratulations. For my question, today we have NVIDIA GTC. Jensen's going to be providing an updated roadmap on the GPU side. As you think about the technology roadmap for GPUs, how do you see the product offering for Forge and evolving on the electrical side, particularly on the low-voltage side? Any call there would be helpful.

Yeah, thanks, Michael. I don't know if you're at GTC, but if you are, enjoy that. It always is illuminating to hear what Jensen has to say for sure. On the LV side for us, I think there's two primary pieces. One is there's no doubt that the amperage in the overall power density is going to increase. So if you look at, you know, PDUs or RPPs, which is a very specific product line in the low voltage category, you know, a couple of years ago, we probably sold on average there were 400 to 500 amp units. Today, the average is probably 1,000 to 1,200, and we're actually designing 1,500 to 1,600 amp units there. So there's no doubt that power density is the first thing that we are solving for. You know, over a period of time, you know, we will continue to make sure those AC, LV products also are able to accept DC. How you do that is a little bit more nuanced, but we've demonstrated we can do that already with the DC distribution units that we are selling to mate up with fuel cells. Those fuel cells have native DC power that comes out of that. So we have DC distribution products that do mate up with that. So I think over a period of time, we will continue to augment the AC-based offerings to include DC, but that's certainly further down the runway at this point in time. We're focused on expanding the density of the AC first, and then we'll get into DC. So I think those are the two biggest ways that we'll see that GPU change the LV profile for us.

Thank you. And that was the last question on today's Forgent Power Solutions fiscal second quarter, 2026 earnings call. You may now disconnect.