Thermon Group Holdings Reports Revenue Decline but Net Income Increase for Q3 and Nine Months Ended December 31, 2024

Thermon Group Holdings, Inc. reported its financial results for the three and nine months ended December 31, 2024, revealing a slight decline in revenue but an increase in net income compared to the same period in the previous year. For the third quarter, the company generated sales of $134.4 million, a decrease of 2% from $136.4 million in the prior year. However, net income rose by 17% to $18.5 million, or $0.55 per share, compared to $15.8 million, or $0.47 per share, in the same quarter of 2023. For the nine-month period, total sales were $364.1 million, down 1% from $367.0 million, while net income decreased by 12% to $36.5 million from $41.5 million.

The company's financial performance was influenced by several factors, including a significant decline in "Over time" revenue, which is typically tied to large customer projects. This segment saw a 32% decrease, particularly in the United States and Latin America (US-LAM) region. In contrast, "Point in time" sales, which represent immediate product sales, increased by 16%, bolstered by acquisitions that contributed approximately $13.3 million to revenue. The company noted that foreign exchange rates negatively impacted revenues by about $1.9 million due to a stronger U.S. dollar.

Strategically, Thermon has been active in expanding its market presence through acquisitions. In October 2024, the company acquired Fabbrica Apparecchiature Termoelettriche Industriali (F.A.T.I.), a leading Italian manufacturer of electrical heating systems, for approximately $13.8 million. This acquisition is expected to enhance Thermon's production capabilities and strengthen its market position in Europe, the Middle East, and Africa (EMEA). Additionally, the company completed the acquisition of Vapor Power International, LLC, in December 2023, further expanding its portfolio of industrial heating solutions.

Operationally, Thermon reported a backlog of $235.6 million as of December 31, 2024, an increase from $186.1 million at the end of the previous fiscal year. The company also completed the sale of its Denver facility for approximately $5.8 million, consolidating operations into its San Marcos location. The workforce was reduced by 68 employees as part of a restructuring initiative aimed at streamlining operations and reducing costs. As of the end of the reporting period, Thermon had approximately 1,200 employees.

Looking ahead, Thermon Group Holdings anticipates continued challenges in the market, particularly related to capital expenditures from its customers. The company remains focused on its strategic initiatives, including diversification into new markets and leveraging technology for maintenance solutions. Management expressed confidence in the company's ability to meet liquidity needs, supported by cash reserves of $38.7 million and $97.6 million available under its revolving credit facility. However, the potential impact of tariffs and foreign exchange fluctuations remains a concern for future operations.