FPS Management Meeting Questions

"This is your first quarter as a public company. Revenue up 69%, orders up 268%, backlog doubled. The numbers are extraordinary. But I want to understand the quality and durability of this growth. Walk me through what's changed in the last 6-12 months that's driven this acceleration, and specifically how much of it is market growth vs. Forgent gaining share."

Opens by acknowledging the blowout numbers but immediately pivots to the sustainability question. Forces decomposition of market vs. share gain, which changes the forward model entirely.

You booked $762M of orders in Q2, more than total FY25 revenue. What percentage of those bookings came from hyperscalers and colocation providers vs. grid utilities vs. industrial? How concentrated was the order book?

If 60-70% of orders are data center, the thesis is heavily dependent on AI capex sustainability. If diversified, the growth is more durable.

You said backlog could "meaningfully increase again in Q3." What's the average duration of your current $1.5B backlog? How far out are you booking work right now, and has the booking horizon extended vs. a year ago?

Longer booking horizons mean better visibility but also raise the question of whether customers are over-ordering to secure capacity. If booking horizon has gone from 6 months to 18+ months, some orders may be pulled forward.

What are the cancellation provisions in your backlog? If a hyperscaler or developer delays a project by 6-12 months, what's your contractual protection? Have you seen any cancellations or deferrals in the last two quarters?

$1.5B of backlog is only valuable if it converts. In the last equipment cycle (2022-2023 for some categories), customers over-ordered and then deferred. Need to understand stickiness.

S-1 risk factors explicitly flag: "amounts included in our backlog may not result in the revenues or generate profits in the amount we expect."

You described your customer base as "a broad mix of colos and neo clouds, including platforms that serve hyperscalers." Are you selling directly to Microsoft, Amazon, Google, or Meta, or are you selling through colocation intermediaries and systems integrators? Does it matter?

Direct hyperscaler relationships = higher switching costs and longer-term visibility. Indirect through colos = more competition on every deal and price pressure as colos consolidate.

How many customers represent more than 5% of revenue? Has customer concentration increased as Powertrain Solutions grows? You flagged in the S-1 that this strategy "could result in a concentration of sales with fewer customers."

Powertrain Solutions tripled Y/y and is now 16% of rev, but it concentrates spend. A single large customer deferral could swing a quarter.

Walk me through a Powertrain Solutions deal from start to finish. What's the average contract value, the engineering and manufacturing cycle time, and how does margin compare to standalone custom products?

Powertrain is the highest-growth segment and the strategic differentiator. Need to understand unit economics, not just revenue growth.

The $205M expansion program supports up to $5B of annual revenue. You're guiding to ~$1.3B for FY26. What does the path from $1.3B to $5B look like? Is that a 5-year ramp, a 10-year ramp, or dependent on another round of expansion?

$5B capacity on a $1.3B revenue base implies enormous operating leverage if demand holds. But the ramp cadence determines when shareholders see it.

You said maintenance capex drops to ~1% of revenue after the expansion is complete. What's the total annual capex run rate right now, and where does it settle in FY27?

The shift from $26M/quarter capex to 1% of revenue (~$13M/yr at current run rate) is a massive free cash flow inflection. Need to pin the timing.

You're running four campuses: Minnesota, Texas, Maryland, and Tijuana. Which are operational today, and which are still ramping? When does each reach steady-state production rates?

The $6M of under-absorbed costs in Q2 came from campuses not yet at run rate. Timing of absorption improvement drives the margin bridge.

With book-to-bill at 2.6x, you're clearly demand-constrained right now. When does new capacity allow you to close the gap? Are you leaving revenue on the table today because you can't produce fast enough?

A 2.6x book-to-bill is extraordinary but also means customers are waiting. If a competitor can deliver faster, you lose the deal. Urgency of capacity matters.

What's your current lead time for medium-voltage switchgear and for substation transformers? How does that compare to Eaton, Schneider, or GE Vernova? Is the lead-time advantage widening or narrowing?

Lead time is the stated competitive moat. If competitors are expanding capacity and closing the gap, the advantage is transient.

Adj EBITDA margin was 20.4% in Q2 including $6M of headwinds from under-absorbed labor, overhead, and startup costs. If I add those back, you're running closer to 22.5%. Is 22-25% the right normalized EBITDA margin range, or can this business structurally go higher?

The guide implies 2H margins of ~25-26%. Need to understand whether that's peak or a stepping stone.

FY26 guide midpoint: $305M EBITDA on ~$1,300M revenue = 23.5% margin. 2H guide: $180M on $720M = 25%.

You said you're "accelerating hiring plans" and expect additional under-absorbed labor in Q3. How many manufacturing employees have you added in the last 6 months, and what's the target headcount by end of FY26?

Quantifies the labor ramp. Hiring ahead of revenue is the right move if demand is real, but it compresses near-term margins. Need the curve.

How much of your revenue growth is coming from price vs. volume? Have you been raising prices, and if so, at what rate? Are customers pushing back on pricing given the supply-demand imbalance?

In a capacity-constrained market, pricing power should be significant. If they're not raising prices aggressively, it's either competitive pressure or a strategic choice to build share.

How much of your input cost base is electrical steel, carbon steel, aluminum, and copper? Do your contracts include raw material escalation clauses, or are you absorbing commodity risk on fixed-price orders?

Raw materials are a key risk factor in the S-1. If 30-40% of COGS is metal and you lack pass-through mechanisms, a commodity spike could wipe margin gains.

What percentage of Q2 revenue and bookings came from data center customers specifically? Has that concentration increased vs. FY25?

Everyone knows data center is the growth driver. Need to size it precisely because it determines how exposed FPS is to AI capex cycles.

How much electrical distribution content is in a typical 100MW data center? And how does that content change when you go from a 30kW per rack traditional facility to a 100kW+ per rack AI training cluster?

Higher power density = more electrical content per MW = structural tailwind. This is the "content per unit" growth lever separate from unit growth.

Power availability is the number-one bottleneck for data center development. You said demand is "pushing spending upstream into substations and utility interconnect equipment." How much of your data center business is now on the utility-side of the meter vs. inside the data center?

Utility-side equipment is longer lead time, higher ASP, and often has regulatory requirements that favor US manufacturers. If FPS is moving up the power chain, TAM expands significantly.

If hyperscaler AI capex slowed by 20-30% from current levels, how would that flow through to your order book? Is there a lag? Would existing backlog insulate you for 12+ months?

The bull case assumes AI capex continues accelerating. The bear case is that the current buildout overshoots. Need to understand the demand sensitivity.

Are you seeing any customers requesting delivery deferrals or asking to push projects out? Any signals that the pace of data center construction is changing?

Real-time demand check. If the answer is "no deferrals," that's strongly bullish. Any hesitation is a yellow flag.

Grid was called out as the second-largest source of Q2 order strength. What's driving that specifically? Is it transformer replacement for aging infrastructure, interconnection for new generation (solar, gas, BESS), or both?

Grid modernization is a multi-decade cycle that's less correlated to AI capex. If grid is a meaningful and growing piece, it de-risks the data center concentration.

The US transformer market has been severely supply-constrained, with lead times extending to 2-3 years for some categories. Where are your transformer lead times today, and what market share do you hold in the categories you compete in?

Transformer shortage has been a headline theme. If FPS has meaningfully shorter lead times than Hitachi, GE-Prolec, or WEG, that's a durable competitive advantage worth sizing.

The industrial segment benefits from reshoring and electrification. How do you define "industrial" for FPS? Is it semiconductor fabs, EV battery plants, general manufacturing, or something else? What's the typical project size?

Industrial is the most diverse bucket. Understanding what's actually in it matters for cyclicality and growth trajectory.

What percentage of your total revenue comes from BESS (battery energy storage systems)? Is that growing faster than your overall rate?

BESS is one of the fastest-growing infrastructure segments. If FPS has exposure, it's an additional secular growth vector.

You said your average batch count is 15, vs. hundreds or thousands for peers focused on standard products. Walk me through why a customer pays more for a batch-of-15 custom product vs. a standard off-the-shelf solution from Eaton or Schneider.

This is the moat question. If the answer is just "customization," competitors can replicate. If it's integrated engineering + testing + lead time, the barrier is higher.

Gary, you came from Vertiv. Vertiv is also expanding aggressively into data center power infrastructure. How do you differentiate from your former employer, and are you seeing them in competitive situations?

Direct competitive comparison with the CEO's former company. He knows Vertiv's playbook better than anyone. His answer reveals how seriously he takes the competitive threat.

Eaton, Schneider, and GE Vernova all have order-of-magnitude more revenue and are investing billions in capacity expansion. In 3-5 years when the supply-demand imbalance normalizes, can FPS still win on lead time and customization, or does scale advantage shift back to the majors?

The current super-cycle favors smaller, nimble players. The question is whether the competitive advantage is structural or cyclical. Critical for a long-duration investment thesis.

How defensible is the "full powertrain" integrated offering? Can a large customer unbundle and buy switchgear from you, transformers from GE, and PDUs from Schneider for less money?

Powertrain Solutions is the highest-value offering. If it's easily unbundled, the pricing premium disappears and the growth story weakens.

You manufacture in Tijuana. How much of your total production runs through Mexico, and what's the tariff exposure under current and proposed US trade policy?

USMCA compliance, Section 232 steel/aluminum tariffs, and potential new Mexico tariffs are all live risks. Tijuana production could go from cost advantage to cost problem.

Per S-1: Forgent has "flexibility to shift production between manufacturing campuses in the United States and Mexico to minimize the effect that tariffs" may have. Probe how real that flexibility is.

Your S-1 flagged that "cost of and access to raw materials and components from international vendors could be adversely impacted by changes in government policies." How much of your component supply is imported, and from where?

If key components come from China or countries subject to Section 301 tariffs, the cost structure has an embedded risk that's not in the guide.

How do tariffs interact with your positioning as a US manufacturer? Are some customers explicitly choosing FPS because of Buy American provisions, CHIPS Act requirements, or cybersecurity mandates?

Tariffs cut both ways. If customers are choosing FPS specifically because of trade policy, the tailwind is structural. "Buy American" in data center power is a real, underappreciated advantage.

VIII. Capital Structure & Sponsor Overhang PRIORITY 2

You announced a secondary offering on March 24. What's the size, and is it entirely Neos Partners selling or is the company issuing primary shares?

Secondary vs. primary is critical. Secondary = PE selling, no dilution but overhang signal. Primary = dilution but strengthens balance sheet.

What's Neos Partners' remaining ownership stake after this offering, and what's the lockup schedule for the remaining shares?

PE overhang is the biggest near-term technical risk for the stock. If Neos still owns 60-70%, there's a multi-year selling cycle ahead.

You raised a $600M term loan alongside the IPO. What's the current net debt, interest expense run rate, and are there any covenants that could constrain growth spending?

The IPO was partly used to redeem PE interests. Need to understand the leverage profile and whether the balance sheet supports the growth plan or constrains it.

Cash flow from operations was neutral in Q2 due to working capital investment. When do you expect the business to be consistently free-cash-flow positive, and what's the normalized FCF conversion on EBITDA?

At $9.5B market cap, FCF conversion matters. If working capital continues to consume cash during hyper-growth, FCF yield will disappoint despite strong EBITDA.

IX. Workforce & Talent IF TIME

How many total manufacturing employees do you have today, and how many do you plan to add over the next 12 months? Is the labor market in your key geographies (Minnesota, Texas, Maryland) tight enough to constrain your ramp?

You can build the factory, but you need the people. Labor availability in Dayton, MN or rural Texas could be a real bottleneck.

How long does it take a new manufacturing hire to reach full productivity on custom, engineer-to-order products? Is it weeks, months, or longer given the technical complexity?

If training cycles are 6+ months, the under-absorbed labor headwind persists longer than the market expects. Directly feeds the margin ramp timing.

What's your turnover rate in manufacturing? And how does compensation at FPS compare to the Eatons and Schneiders of the world?

If FPS is poaching from larger players, that works in a tight labor market but creates wage pressure. If attrition is high, the hiring treadmill eats into margin expansion.

X. Governance, Litigation & Risk IF TIME

There's a lawsuit from an individual claiming 50% ownership of MGM Transformers, one of the predecessor businesses that Neos acquired to form Forgent. What's the status of that litigation, and does it create any risk to the company's operations or IP?

Ownership disputes on predecessor businesses are unusual and merit direct questioning. Even if frivolous, it's a governance overhang that sophisticated investors will ask about.

As a newly public company controlled by a PE sponsor, what governance protections exist for minority shareholders? Does Neos have board control, and when does that sunset?

Standard PE-to-public governance question. Dual-class structures, board control, and related-party transactions all matter.

XI. Disconfirming & Bear-Case Questions MUST ASK

In the 2010s, the solar industry experienced a massive over-ordering and inventory correction cycle. Data center electrical equipment has similar characteristics: long lead times, capacity constraints, and panic buying. How do you know we're not in an over-ordering cycle right now?

THE bear case. A 2.6x book-to-bill could mean real demand or could mean double-ordering. Management's answer reveals how seriously they've stress-tested it.

You guide to 73% revenue growth in FY26. What happens to the cost structure if revenue growth slows to 15-20% in FY27 or FY28? How much of the cost base you're building is fixed vs. variable?

Hyper-growth companies that add fixed capacity often struggle when growth decelerates. The margin at 15% growth is more important than the margin at 73% growth.

Your S-1 says you "operate in competitive environments." But the Q2 results make it look like you have no competition. Which competitors specifically are you losing deals to, and on what basis?

If they can't name a single lost deal, either they're not being forthcoming or the competitive environment is genuinely that favorable, which is unusual and worth probing.

A significant amount of your revenue comes from products that need to be certified and compliant with multiple standards. Are there any upcoming regulatory or standards changes (DOE efficiency rules, UL certifications) that could increase manufacturing costs or require retooling?

The S-1 flags "changing efficiency standards for transformers" as a risk. If new DOE rules raise production costs and can't be passed through, margin compression is real.

At $9.5B market cap and ~$1.3B FY26E revenue, you're trading at ~7x revenue and ~31x EBITDA. That's a premium multiple for a capital goods business. What would you point to that justifies that valuation beyond the current cycle?

Forces management to make the structural bull case, not just the cyclical one. The answer should reference secular demand drivers, not just current backlog.

XII. Rapid-Fire Confirmations

Q3 backlog: still expecting meaningful increase?
Data center as % of total bookings: above or below 50%?
Top 5 customer concentration: above or below 30% of revenue?
Pricing actions in FY26: magnitude?
Transformer lead times: weeks, months, or quarters?
Tijuana production as % of total output?
Net debt: approximate level post-IPO?
Neos Partners remaining ownership: rough percentage?
Maintenance capex: confirm ~1% of revenue post-expansion?
FY27 preliminary framework: any directional color?
International revenue: any today, or 100% domestic?
BESS revenue: material or de minimis?
Employee count: total headcount today?
Backlog cancellation rate: what's normal?
Any M&A appetite, or purely organic for now?

XIII. Closer

"You've positioned Forgent as the go-to supplier for custom, mission-critical electrical infrastructure. If we come back in a year, what single metric or milestone would best demonstrate that this is a structurally advantaged business and not just a cyclical beneficiary of the AI buildout?"

Forces self-selection of the KPI they believe proves durability. Reveals strategic priorities.

"What does the investment community still not understand about Forgent?"

Classic closer that often produces the most investable insight. As a newly public company, there should be meaningful information asymmetry.

XIV. Listening Framework

Signal	Bullish Read	Bearish Read
Order durability	"Orders are backed by signed contracts with cancellation fees" and names specific customers expanding	Vague on cancellation protection; "customers are committed" without contractual specifics
Market vs. share gain	Quantifies share gain explicitly: "We took X points of share in switchgear" or "Displaced [competitor] at [customer]"	Attributes all growth to "the market" without evidence of competitive wins
Capacity ramp language	"New campuses ahead of schedule, hiring faster than planned, Q3 absorption already improving"	"On track" with no specifics; avoids campus-level detail; startup costs persist longer than guided
Pricing confidence	"Raising prices across the board" or "customers accept premium for lead time and customization"	"Pricing is competitive" or "we're focused on volume growth" (suggests pricing power is limited)
Data center dependency	Grid and industrial growing at similar rates; diversification is real and accelerating	Avoids sizing data center as % of total; grid and industrial are "steady" but not accelerating
PE sponsor intent	"Neos is a long-term holder, secondary is to establish liquidity for index inclusion"	Evasion on timeline; no clear visibility into remaining sell-down schedule
Competitive moat	Names specific competitor displacements and explains engineering barriers	"We compete on service and relationships" (generic, not defensible)
FCF conversion	"Working capital normalizes in 2H, expect significant FCF generation in Q4 and into FY27"	"Growth requires working capital investment" (persistent cash consumption)
Key words to track	share gain, displaced, won, capacity-constrained, sold out, extending lead times, mission-critical	selective, disciplined, market-dependent, normalized, cautious, phased

XV. Post-Meeting Capture Checklist

Data center as exact % of revenue and bookings
Top customer concentration (top 5, top 10)
Backlog duration and cancellation provisions
Campus-by-campus ramp status and timeline
Pricing actions: magnitude and customer receptivity
Transformer vs. switchgear vs. PDU growth rates
Tariff exposure: quantified or qualitative?
Working capital trajectory and FCF timing
Neos remaining ownership and sell-down plan
Competitive wins or losses named
BESS and grid revenue sizing
Training cycle for new manufacturing hires
FY27 directional commentary (if any)
Tone assessment: confident growth or managed expectations?
Management's self-selected KPI for proving the thesis
What do they think the market gets wrong?
Overall conviction: initiate, pass, or revisit?

Company Overview & What Makes FPS Unique

Fresh Intel: Q2 FY2026 Earnings Call (March 16, 2026)

0. Opener

I. Demand Durability & Order Quality PRIORITY 1

II. Capacity Expansion & Execution PRIORITY 1

III. Margin Trajectory & Operating Leverage PRIORITY 1

IV. Data Center Deep Dive PRIORITY 1

V. Grid & Industrial End Markets PRIORITY 2

VI. Competitive Positioning PRIORITY 2

VII. Tariffs, Trade Policy & Supply Chain PRIORITY 2