THERMON REPORTS SECOND QUARTER FISCAL 2018 RESULTS

Thermon Announces Fiscal 2018 Second Quarter Revenue of $61.6 million and EPS of $0.15

SAN MARCOS, Texas, October 23, 2017 -- Thermon Group Holdings, Inc. (NYSE:THR) (the "Company," "Thermon," "we" or "our") today announced consolidated financial results for the second quarter of the fiscal year ending March 31, 2018 ("Q2 2018").

Financial summary for Q2 2018 compared to the three months ended September 30, 2016 ("Q2 2017"):

Revenue of $61.6 million, a decrease of 10%
Backlog of $121.1 million vs. $85.7 million, growth of 41%
Orders of $72.6 million, a 23% increase
Gross margin of 50% vs. 42%
Fully diluted GAAP EPS and adjusted EPS are both $0.15 compared to $0.11 and $0.10, respectively

"We are pleased with our Q2 2018 operating results. While revenue was down from the prior year, orders during the quarter represented a 23% increase over Q2 2017 and backlog ended at a record level. Strong gross margins drove our bottom line results with net income of $4.8 million and fully diluted EPS of $0.15. We remain optimistic in our second half fiscal 2018 organic forecast and look forward to closing the previously announced acquisition of CCI Thermal Technologies, Inc. ('CCI') in the next few weeks,” said Bruce Thames, President and Chief Executive Officer.

During Q2 2018, the Company generated revenue of $61.6 million versus $68.8 million in Q2 2017, a decrease of $7.2 million or 10%. On a comparative basis, foreign currency translation effects positively impacted Q2 2018 revenue by $1.5 million or 2%. During Q2 2018, Greenfield and MRO/UE (facility maintenance, repair and operations and upgrade or expansion) revenue totaled 34% and 66% of revenue, respectively, compared to 36% and 64% in Q2 2017, respectively.

Gross margin during Q2 2018 was 50.2% compared to 42.0% in Q2 2017. Gross margin performance during the quarter was positively impacted by a higher concentration of MRO sales comprised primarily of Thermon's core manufactured products. Additionally, Greenfield sales generated modestly stronger margins due to a combination of favorable pricing, cost control and project execution.

Q2 2018 orders were $72.6 million versus $59.1 million in Q2 2017, an increase of $13.5 million or 23%. Q2 2018 backlog of $121.1 million represents a 41% increase over Q2 2017 backlog of $85.7 million.

Q2 2018 net income attributable to Thermon and GAAP EPS was $4.8 million or $0.15 per fully diluted common share compared to $3.5 million or $0.11 per fully diluted common share in Q2 2017. After taking into account certain one-time charges (see table, Reconciliation of Net Income attributable to Thermon to Adjusted Net Income and Adjusted EPS), the Company generated Adjusted net income in Q2 2018 of $5.0 million and Adjusted EPS of $0.15 per fully diluted common share compared to $3.1 million and $0.10 per fully diluted common share in Q2 2017.

During the first six months of the fiscal year ending March 31, 2018 ("YTD 2018"), the Company generated revenue of $113.4 million compared to $132.2 million in the first six months of the fiscal year ended March 31, 2017 ("YTD 2017"), a decrease of $18.8 million or 14%.

YTD 2018 orders were $127.7 million versus $136.7 million in YTD 2017, a decrease of $9.0 million or 7%.

YTD 2018 net income attributable to Thermon and GAAP earnings per share were $5.3 million and $0.16 per fully diluted common share, respectively compared to $6.0 million and $0.19 per fully diluted common share, respectively in YTD 2017. After taking into account certain one-time charges (see table, Reconciliation of Net Income attributable to Thermon to Adjusted Net Income and Adjusted EPS), the Company generated Adjusted Net Income in YTD 2018 of $5.5 million and Adjusted EPS of $0.17 per fully diluted common share compared to Adjusted Net Income of $5.7 million and Adjusted EPS of $0.17 per fully diluted common share during YTD 2017.






Outlook

We maintain our full year fiscal 2018 organic revenue guidance of low to mid single-digit decline as compared to fiscal 2017. Depending on the timing of the closing of the CCI acquisition, we expect inorganic revenue contribution of approximately $38 million to $41 million for the remainder of fiscal 2018.

Conference Call and Webcast Information

Thermon's senior management team, including Bruce Thames, President and Chief Executive Officer and Jay Peterson, Chief Financial Officer, will discuss Q2 2018 results during a conference call today at 10:00 a.m. (Central Time), which will be simultaneously webcast on Thermon's Investor Relations website located at http://ir.thermon.com. Investment community professionals interested in participating in the question-and-answer session may access the call by dialing (877) 312-5421 from within the United States/Canada and (253) 237-1121 from outside of the United States/Canada. A replay of the webcast will be available on Thermon's Investor Relations website beginning two hours after the conclusion of the call.

About Thermon

Through its global network, Thermon provides highly engineered thermal solutions, known as heat tracing, and complementary products and services for process industries, including energy, chemical processing and power generation. Thermon's products provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature maintenance, environmental monitoring and surface snow and ice melting. Thermon is headquartered in San Marcos, Texas. For more information, please visit www.thermon.com.

Non-GAAP Financial Measures

Disclosure in this release of "Adjusted EPS," "Adjusted EBITDA," "Adjusted net income," "Free cash flow" and "Return on equity," which are "non-GAAP financial measures" as defined under the rules of the Securities and Exchange Commission (the "SEC"), are intended as supplemental measures of our financial performance that are not required by, or presented in accordance with, U.S. generally accepted accounting principles ("GAAP"). "Adjusted net income" and "Adjusted fully diluted earnings per share (or EPS)" represents net income attributable to Thermon before acquisition related contingent consideration accounted for as compensation, adjustments to our deferred tax liability for a tax rate change, and the income tax effect of any non-tax adjustments, per fully-diluted common share in the case of Adjusted EPS. "Adjusted EBITDA" represents net income attributable to Thermon before interest expense (net of interest income), income tax expense, depreciation and amortization expense, stock-based compensation expense, income attributable to non-controlling interests and acquisition related contingent consideration accounted for as compensation. "Return on equity" for the three month periods ended September 30, 2017 and 2016, represents Adjusted EBITDA for each respective period that is multiplied by four to represent a full year's results, divided by the average of total equity at September 30 and March 31 for each respective period. We believe that the average total equity properly accounts for net income that occurred during the three and six months ended September 30, 2017 and 2016. "Free cash flow" represents cash provided by (used in) operating activities less cash used for the purchase of property, plant and equipment, net of sales of rental equipment and proceeds from sale of land. Foreign currency impact on revenue is calculated by comparing actual current period revenue in U.S. Dollars to the theoretical U.S. Dollar revenue we would have achieved based on the weighted-average foreign exchange rates in effect in the comparative prior period for all applicable foreign currencies.

We believe these non-GAAP financial measures are meaningful to our investors to enhance their understanding of our financial performance and are frequently used by securities analysts, investors and other interested parties to compare our performance with the performance of other companies that report Adjusted EPS, Adjusted EBITDA, Adjusted net income or Return on equity. Adjusted EPS, Adjusted EBITDA, Adjusted net income and Return on equity should be considered in addition to, not as substitutes for, income from operations, net income, net income per share and other measures of financial performance reported in accordance with GAAP. We provide Free cash flow as a measure of our liquidity. Our calculation of Adjusted EPS, Adjusted EBITDA, Adjusted net income, Free cash flow and Return on equity may not be comparable to similarly titled measures reported by other companies. For a description of how Adjusted EPS, Adjusted EBITDA, Adjusted net income, Return on equity and Free cash flow are calculated and reconciliations to the corresponding GAAP measures, see the sections of this release titled "Reconciliation of Net Income attributable to Thermon to Adjusted EBITDA and Return on Equity" and "Reconciliation of Cash Provided by Operating Activities to Free Cash Flow."





Forward-Looking Statements

This release may include forward-looking statements within the meaning of the U.S. federal securities laws in addition to historical information. These forward-looking statements include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, other financial and operating information, comments about the intended acquisition of CCI, target leverage ratios, acquisition synergies, regulatory developments, market developments, new products and growth strategies, and the effects of any of the foregoing on our future results of operations or financial conditions. When used, the words "anticipate," "assume," "believe," "budget," "continue," "could," "should," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "will," "future" and similar terms and phrases are intended to identify forward-looking statements in this release. Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows.

Actual events, results and outcomes may differ materially from our expectations due to a variety of factors. Although it is not possible to identify all of these factors, they include, among others, (i) general economic conditions and cyclicality in the markets we serve; (ii) future growth of energy and chemical processing capital investments; (iii) our ability to deliver existing orders within our backlog; (iv) our ability to bid and win new contracts; (v) competition from various other sources providing similar heat tracing products and services, or alternative technologies, to customers; (vi) changes in relevant currency exchange rates; (vii) potential liability related to our products as well as the delivery of products and services; (viii) our ability to comply with the complex and dynamic system of laws and regulations applicable to international operations; (ix) our ability to protect data and thwart potential cyber attacks; (x) a material disruption at any of our manufacturing facilities; (xi) our dependence on subcontractors and suppliers; (xii) our ability to obtain standby letters of credit, bank guarantees or performance bonds required to bid on or secure certain customer contracts; (xiii) our ability to attract and retain qualified management and employees, particularly in our overseas markets; (xiv) our ability to continue to generate sufficient cash flow to satisfy our liquidity needs; (xv) the extent to which federal, state, local and foreign governmental regulation of energy, chemical processing and power generation products and services limits or prohibits the operation of our business; (xvi) risks risks related to the acquisition of CCI, including integration risks and failure to achieve the anticipated benefits of the acquisition; and (xvii) other factors discussed in more detail under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the Securities and Exchange Commission on May 30, 2017. Any one of these factors or a combination of these factors could materially affect our financial condition, results of operations and cash flows and could influence whether any forward-looking statements contained in this release ultimately prove to be accurate.

Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statements. We do not intend to update these statements unless we are required to do so under applicable securities laws.


CONTACT:

Sarah Alexander


(512) 396-5801


Investor.Relations@thermon.com






Thermon Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Selected Balance Sheet Data
(Unaudited, in Thousands except per share amounts)
 
 
Three
Months
Ended
 
Three
Months
Ended
 
Six
Months
Ended
 
Six
Months
Ended
 
September 30, 2017
 
September 30, 2016
 
September 30, 2017
 
September 30, 2016
Sales
$
61,631

 
$
68,812

 
$
113,367

 
$
132,208

Cost of sales
30,671

 
39,888

 
58,593

 
77,170

Gross profit
30,960


28,924

 
54,774

 
55,038

Operating expenses:
 
 
 
 
 
 
 
Marketing, general and administrative and engineering
19,574

 
19,309

 
38,106

 
37,511

Stock compensation expense
947

 
915

 
1,732

 
1,821

Amortization of other intangible assets
3,022

 
3,025

 
5,961

 
5,841

Income from operations
7,417


5,675

 
8,975

 
9,865

Interest income and expense, net
(463
)
 
(666
)
 
(1,023
)
 
(1,372
)
Debt cost amortization
(85
)
 
(100
)
 
(174
)
 
(202
)
Interest expense, net
(548
)
 
(766
)
 
(1,197
)
 
(1,574
)
 
 
 
 
 
 
 
 
Other income (expense)
(103
)
 
(427
)
 
(71
)
 
(150
)
Income before provision for taxes
6,766


4,482

 
7,707

 
8,141

Income tax expense
1,688

 
808

 
1,915

 
1,823

Net income
5,078


3,674

 
5,792

 
6,318

 
 
 
 
 
 
 
 
Income attributable to non-controlling interests
300

 
168

 
535

 
286

Net income attributable to Thermon
$
4,778


$
3,506

 
$
5,257

 
$
6,032

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
Basic income per share
$
0.15

 
$
0.11

 
$
0.16

 
$
0.19

Diluted income per share
$
0.15

 
$
0.11

 
$
0.16

 
$
0.19

Weighted-average shares used in computing net income per common share:
 
 
 
 
 
 
 
Basic common shares
32,408

 
32,278

 
32,413

 
32,256

Fully-diluted common shares
32,790


32,611

 
32,717

 
32,580

 
 
 
 
 
 
 
September 30, 2017 (unaudited)
 
March 31, 2017
 
 
 
 
Cash and investments
$
88,444

 
$
87,628

 
 
 
 
Total debt
70,512

 
80,476

 
 
 
 
Total equity
332,870

 
312,502

 
 
 
 






Thermon Group Holdings, Inc. and Subsidiaries
Reconciliation of Net Income attributable to Thermon to Adjusted EBITDA and Return on Equity
(Unaudited, in Thousands except Return on Equity)
 
 
 
 
 
 
 
 
 
Adjusted EBITDA and Return on Equity
 
Three
Months
Ended
September 30, 2017
 
Three
Months
Ended
September 30, 2016
 
Six
Months
Ended
September 30, 2017
 
Six
Months
Ended
September 30, 2016
Net income attributable to Thermon
 
$
4,778

 
$
3,506

 
$
5,257

 
$
6,032

Interest expense, net
 
548

 
766

 
1,197

 
1,574

Income tax expense
 
1,688

 
808

 
1,915

 
1,823

Depreciation and amortization expense
 
4,892

 
4,524

 
9,543

 
8,754

EBITDA (non-GAAP basis)
 
$
11,906


$
9,604

 
$
17,912

 
$
18,183

Stock compensation expense
 
947

 
915

 
1,732

 
1,821

Non-controlling interests
 
300

 
168

 
535

 
286

Acquisition related expenses
 
339

 

 
339

 

Adjusted EBITDA (non-GAAP basis)
 
$
13,492


$
10,687

 
$
20,518

 
$
20,290

 
 
 
 
 
 
 
 
 
Adjusted EBITDA - Annualized for a full fiscal year (non-GAAP basis)
 
$
53,968

 
$
42,748

 
$
41,036

 
$
40,580

 
 
 
 
 
 
 
 
 
Average total equity for three and six month periods ended September 30, 2017 and 2016, respectively
 
$
326,185

 
$
303,765

 
$
322,686

 
$
302,174

 
 
 
 
 
 
 
 
 
Return on Equity (non-GAAP basis)
 
17
%
 
14
%
 
13
%
 
13
%








Thermon Group Holdings, Inc. and Subsidiaries
Reconciliation of Net Income attributable to Thermon to Adjusted Net Income and Adjusted EPS
(Unaudited, in Thousands except per share amounts)
 
Adjusted Net Income and Adjusted EPS
 
Three Months
Ended
September 30, 2017
 
Three Months
Ended
September 30, 2016
 
Six Months Ended September 30, 2017
 
Six Months Ended September 30, 2016
 
Adjustment to:
 
 
 
 
 
 
 
 
 
 
 
GAAP net income attributable to Thermon
 
$
4,778

 
$
3,506

 
$
5,257

 
$
6,032

 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related expenses
 
339

 

 
339

 

 
Operating expense
Release of deferred tax liability
 

 
(379
)
 

 
(379
)
 
Income tax expense
Tax effect of non-tax adjustments
 
(85
)
 

 
(85
)
 
$

 
Income tax expense
Adjusted net income (non-GAAP)
 
$
5,032

 
$
3,127

 
$
5,511

 
$
5,653

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted fully-diluted earnings per common share (non-GAAP)
 
$
0.15

 
$
0.10

 
$
0.17

 
$
0.17

 
 
 
 
 
 
 
 
 
 
 
 
 
Fully-diluted common shares
 
32,790

 
32,611

 
32,717

 
32,580

 
 



























Thermon Group Holdings, Inc. and Subsidiaries
Reconciliation of Cash provided by Operating Activities to Free Cash Flow
(Unaudited, in Thousands)
 
 
 
 
 
 
 
 
 
 
 
Three Months
Ended September 30, 2017
 
Three Months
Ended
September 30, 2016
 
Six Months
Ended September 30, 2017
 
Six Months
Ended September 30, 2016
Cash provided by operating activities
 
$
7,042

 
$
9,254

 
$
12,543

 
$
2,220

Less: Cash used for purchases of property, plant and equipment
 
(3,082
)
 
(1,805
)
 
(4,887
)
 
(3,814
)
Plus: Sale of rental equipment
 
165

 
209

 
169

 
229

Plus: Proceeds from land sale
 

 
370

 
8

 
811

Free cash flow provided (used)
 
$
4,125


$
8,028


$
7,833

 
$
(554
)
 
 
 
 
 
 
 
 
 







































View differences made from one to another to evaluate Thermon Group Holdings, Inc.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Thermon Group Holdings, Inc..

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account