Thermon Group Holdings, Inc. (THR) SEC Filing 10-Q Quarterly report for the period ending Monday, September 30, 2019

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Thermon Group Holdings, Inc.
Ticker: THR CIK: 1489096

THERMON REPORTS SECOND QUARTER FISCAL 2020 RESULTS

AUSTIN, Texas, November 5, 2019 -- Thermon Group Holdings, Inc. (NYSE:THR) (the "Company," "Thermon," "we" or "our") today announced consolidated financial results for the second quarter ("Q2 2020") of the fiscal year ending March 31, 2020 ("Fiscal 2020").

Q2 2020 highlights, as compared to the three months ended September 30, 2018 ("Q2 2019"), include:


•	Revenue of $102.9 million, an increase of 14% compared to $90.2 million


•	Fully diluted GAAP earnings per share ("EPS") was $0.21 per fully diluted common share, an increase of $0.11 compared to $0.10


•	Non-GAAP Adjusted EPS was $0.29 per fully diluted common share, an increase of $0.07 compared to $0.22


•	Sequential improvement in Gross Margin of 360 basis points as compared to the three months ended June 30, 2019 ("Q1 2020")


•	Generated $26.7 million of cash provided by operating activities, an increase of $20.4 million as compared to $6.3 million

"We are pleased with the results in the second quarter and continue to see the impact of Thermon’s differentiated offering in our year-over-year revenue growth. We are starting to realize the benefits of our pricing increases and cost reduction initiatives, as these factors contributed to a 360 basis point sequential improvement in gross margins as compared to first quarter. Additionally, we were able to generate over $24.5 million in free cash flow during the quarter, while reducing our Net Debt to Adjusted EBITDA ratio to 2.0x. We are continuing to execute our new product development plans and expect to launch five additional products before the end of our fiscal year. I’m proud of what the Thermon team has achieved so far this year as we continue to deliver results for our customers, shareholders and employees," said Bruce Thames, Thermon's President and Chief Executive Officer.

During Q2 2020, the Company generated revenue of $102.9 million versus $90.2 million in Q2 2019, an increase of $12.7 million or 14%. Revenue from our legacy heat tracing business was $85.2 million and revenue from Thermon Heating Systems ("THS") was $17.7 million in Q2 2020. During Q2 2020, new facility construction (or "Greenfield") and facility maintenance, repair and operations and upgrade or expansion ("MRO/UE") activity from our legacy heat tracing business accounted for 47% and 53% of revenue, respectively, which compares to 31% and 69% in Q2 2019.

Despite the increased contribution of Greenfield revenue to the business in Q2 2020 versus Q2 2019, gross margin during Q2 2020 was 44.1%, as compared to 44.8% in Q2 2019. The Q2 2020 result represents a sequential improvement of 360 basis points relative to Q1 2020, on a similar mix of Greenfield and MRO/UE revenues. The Company expects gross margin performance to return to its historical average of 45% during the second half of Fiscal 2020 due to the impact of price increases, ongoing cost reduction initiatives and an increased mix of MRO/UE revenues.

Q2 2020 total orders were $92.6 million versus $95.8 million in Q2 2019, a decrease of $3.2 million or 3%. Q2 2020 backlog of $102.3 million represents a $47.3 million decrease, or 32%, as compared to Q2 2019 backlog of $149.6 million.

Q2 2020 net income attributable to Thermon and GAAP EPS were $6.9 million and $0.21 per fully diluted common share, respectively, compared to $3.2 million and $0.10 per fully diluted common share, respectively, in Q2 2019. After taking into account the impact of an income tax rate reduction in Alberta, Canada and intangible amortization related to prior acquisition activities (see table, Reconciliation of Net Income attributable to Thermon to Adjusted Net Income and Adjusted EPS), the Company generated Adjusted Net Income in Q2 2020 of $9.5 million and Adjusted EPS of $0.29 per fully diluted common share compared to $7.4 million and $0.22 per fully diluted common share, respectively, in Q2 2019.

Adjusted EBITDA was $21.1 million in Q2 2020 as compared to $17.9 million in Q2 2019, an increase of $3.2 million or 18% (see table, Reconciliation of Net Income attributable to Thermon to Adjusted EBITDA).

During the first six months of the fiscal year ending March 31, 2020 ("YTD 2020"), the Company generated revenue of $194.6 million compared to $179.1 million in the first six months of the fiscal year ended March 31, 2019 ("YTD 2019"), an increase of $15.5 million or 9%.

The following information was filed by Thermon Group Holdings, Inc. (THR) on Tuesday, November 5, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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