September 19, 2018
Jay Peterson
Chief Financial Officer
Thermon Group Holdings, Inc.
100 Thermon Drive
San Marcos, Texas 78666
Re: Thermon Group Holdings, Inc.
Form 10-K for the Fiscal Year Ended March 31, 2018
Filed May 30, 2018
File No. 001-35159
Dear Mr. Peterson:
We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments. In some of our comments, we may
ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Fiscal Year Ended March 31, 2018
Critical Accounting Policies and Estimates
Estimating allowances, specifically the allowance for doubtful accounts and the
adjustment for
excess and obsolete inventories, page 41
1. We note that you value inventories at the lower of cost or market. Tell
us how this is
consistent with FASB ASU 2015-11 which requires inventory be measured at
the lower of
cost and net realizable value. Clarify for us whether you are using LIFO
or the retail
inventory method to measure inventory.
2. We note from the discussion that you write-down excess or obsolete
inventory to its fair
market value and on page 42 you indicate that actual write-offs of
inventory may differ
from estimates and calculations used to determine valuation allowances
due to changes in
Jay Peterson
FirstName LastNameJay Peterson
Thermon Group Holdings, Inc.
Comapany 19, 2018
September NameThermon Group Holdings, Inc.
September 19, 2018 Page 2
Page 2
FirstName LastName
customer demand, customer negotiations, product application,
technology shifts and other
factors. Please address the following:
Describe to us in detail how you account for excess or obsolete
inventory and explain
how your accounting is consistent with SAB Topic 5.BB and ASC
330-10-35-14
which require that you write-down inventory determined to be
excess or obsolete to
the lower of cost or net realizable value, creating a new cost
basis at the fiscal year-end
that subsequently cannot be marked up.
Describe to us what you mean by "actual write-offs" of inventory
and, using journal
entries, explain to us when and how you record the actual
write-offs of previously
impaired excess or obsolete inventory. Include an example where
the actual write-off
differs from your estimates at the time you wrote down the
impaired inventory to its
new cost basis.
Explain to us how you account for any subsequent sales of
inventory previously
written down to a new cost basis, including how these sales
impacted your gross
margins in each of the reported periods.
Revise MD&A in future filings to discuss, if material, the impact
on your gross
margins of any sales of previously written down excess or obsolete
inventory.
3. Further, we note the roll-forward of the inventory valuation reserve
presented in Note 5
and the positive "charge to reserve" recorded in fiscal 2018. Please
address the following:
Describe to us the circumstances that resulted in the positive
"charge to reserve" in
fiscal 2018.
Clarify for us whether you maintain an inventory valuation
allowance through which
subsequent recoveries are recorded, and explain how that is
consistent with the
guidance noted in SAB Topic 5.BB and ASC 330-10-35-14. Otherwise,
revise future
filings to clarify your disclosure referencing an inventory
valuation allowance and
valuation reserves. We note that amounts recorded in separate
accounts to recognize
obsolete and slow-moving inventory ( inventory reserves) are not
considered valuation
accounts for Schedule II of Rule 12-09 of Regulation S-X because
those amounts in
substance represent normal adjustments / impairment of inventory.
Non-GAAP Financial Measures
Return on Equity - non-GAAP basis, page 46
4. We note that you give greater prominence to the non-GAAP measure than
to the
comparable GAAP measure by only presenting "Return on Equity -
non-GAAP basis on
Jay Peterson
Thermon Group Holdings, Inc.
September 19, 2018
Page 3
age 46, without also presenting the GAAP return on equity. Please
refer to Question 102
.10 of the Compliance & Disclosure Interpretations on Non-GAAP
Financial Measures
and revise your future presentations to comply with that guidance.
5. On page 46 you title the measure presented as "Return on Equity -
non-GAAP basis".
However, throughout the discussion on pages 45 and 46 you simply refer
to the measure
as return on equity. Please revise your discussions referring to this
measure in future
filings to consistently use a title, such as "non-GAAP return on
equity" or "adjusted
return on equity" that clearly distinguishes it from GAAP return on
equity. Refer to Item
10(e))(1)(ii)(E) of Regulation S-K.
6. Please revise future filings to clearly disclose what the non-GAAP
Return on Equity
measure you present is intended to communicate to investors. Refer to
Items 10(e)
(1)(i)(C) and (D) of Regulation S-K. Tell us why excluding the cost of
debt from this
measure is consistent with your objective.
Consolidated Financial Statements
Note 17. Segment Information, page 86
7. We note from the business and properties sections that you have
operations in Mexico,
Brazil, Australia and South Africa. Tell us where these operations are
reflected in your
reportable segments. Please revise this note in future filings to
clearly describe
the countries and geographic regions included in each of your
reportable segments.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Gary Newberry at (202) 551-3761 or Martin James, Senior
Assistant
Chief Accountant, at (202) 551-3671 with any questions.
FirstName LastNameJay Peterson Sincerely,
Comapany NameThermon Group Holdings, Inc.
Division of
Corporation Finance
September 19, 2018 Page 3 Office of
Electronics and Machinery
FirstName LastName