THR - Earnings call 3 2023 | Thermon Group Holdings, Inc.

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Operator

Greetings, and welcome to the Thermon Earnings Conference Call for Third Quarter Fiscal Year 2023. [Operator Instructions] And as a reminder, this conference is being recorded.

It is now my pleasure to introduce to you, Ivonne Salem, Vice President of FP&A and Investor Relations. Thank you, Ivonne, you may begin.

Ivonne Salem

Thank you, John. Good morning, and thank you for joining today's fiscal 2023 third quarter conference call.

Relations issued the press and SEC available the we been which is morning, website. on with our filed on Investor this an release, earnings has also Earlier of section Form X-K

Additionally, the can in Call IR IR our QX Events conference XXXX. under and Earnings be News found website calendar for slides this call Conference

During accepted accounting generally not conform the call, to we will discuss some items that do principles.

of tables the to the press most GAAP at We the measures reconciled the end not as non-GAAP in those items These measures a have considered substitute in reported GAAP. addition earnings accordance performance and measures release. comparable be for in should financial with of to

our remind this our make impact I'd to statements, we our future information recent like annual uncertainties report during that risks and forward-looking our could you more report including SEC to for Please the the company. and filed most regarding with refer statements call, regarding quarterly might certain results. forward-looking that

actual any as results undertake law. publicly or information, except differ to developments by required contemplated be as obligation no and those update forward-looking future from statements, statements, result these of we whether otherwise, a new Our by may forward-looking materially might

to Now for Officer, President for would his Bruce the opening to I introduce and like you -- our Thames, Chief Executive remarks.

Bruce Thames

us Thank you, Ivonne, today. joining thank morning, everyone, for and good you and

Thermon. to setting a by overview the begin wanted of with I stage quick

new might you of those story. be who the For to

in facilities continents. process heating a proven innovative industrial reliable leader to safe, across As customers in and company, a many economic tested XX-year-old world XX cycles. on We're been resilient we've from and mission-critical X countries solutions providing

value a update. dedicated customers industry-leading and examples are morning's for by provide of our will strategy plan, and employees safety have executing during few an action this to Our strategic over long-term our our and X,XXX I and record, creating

commitment performance your quarter like I'd to and our of strong contributing ongoing our to thank for very this all to for employees

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would presented the clarity in see the lower data. are we've I of type that for simplicity, this like and this we left you quarter, where showing by previously how We page beginning note to revenue revised detail changed our versus the so time. of CFO, over sales in this rationale more presentation. on will our later as data provide [suit] for this and Kevin the point in time doing Fox,

X, On see our Slide you strategic can

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shareholders order our over the term, In create value to long for

Gap] [Audio

key is X areas. on

First,

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in our second, installed base; diversification

[Audio Gap]

and third, allocation. decarbonization and capital

Gap] [Audio

but from traditional growth significant a while very capture driving opportunity our large recurring provides across which verticals. market installed revenue global base, to and

through beverage, as growth transit, attractive commercial, other food such end and diversification through We're and adjacencies, driving rail and additional renewables and markets.

help solutions towards enable Our sources. sustainable also energy transition the

products demand solutions customer expanding are with for safety Things Internet enhancements. of and that our We and productivity, the industrial digital efficiency reliability, support utilize

providing new call an on while discuss introductions, launch looking I the at today's product on further recent our will specifically digitization update

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Because we priorities our are seeing an strategic opportunity in decarbonization,

Gap] [Audio

capitalize markets larger our this developing on existing to opportunity with

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significant We the few decades, see over next growth

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some moments. more in few a detail

we're allocation. Finally, to disciplined committed capital

acquisitions Our with include growth through current inorganic returns priorities

Gap] [Audio

weighted and year cycles. [Audio strength sheet the X average balance cost through by Gap] of maintaining capital

mark emerging large a seeing We're

Gap] [Audio

global generates use decarbonization. XX Energy over

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emissions. gas

you As roughly heating can XX here, represents see

Gap] [Audio

used consumption for the the energy of heat

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is Today, only used with X% industry of sources. sources the the is hydrocarbon-based from of from heating industrial in heating XX%

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to than we at more which thermal compounded billion an we addressable $XX existing expect is double to annual as XXXX, grow X.X% well $X.X globally. $X.X roughly By energy this anticipated as market our market growing is technology. to this than billion billion rate. storage By with growth believe anticipated more XXXX, is to

this global market. we technology that XX% Thermon Today, has and electric the to address resistance believe heating products of

well the on opportunity. market technology and has Going poised forward, capitalize is we growing to this products, Thermon believe rapidly

energy Slide decarbonization. enabling on to transition and X the Moving

are we of storage the systems examples of of and plants an [indiscernible] and part providing opportunities which U.S. space. In capture includes in [indiscernible] the carbon seeing heating aggregate a across and to other Here, we couple scope processing as for examples, a ethanol of technology have cultural project, of [indiscernible] this reduce many we're both types Midwest. at the refinery

couple While FY these million from full have examples represent through quarter energy go. up $XX just another and roughly X year with a opportunities in of this year, over booked we quarters, transition decarbonization to the in XX% 'XX

addition costs Moving of industry features These units of our with trends, can for This is be the with new mesh IIoT interface to has digital have track here ability and in features product never this the multifunction historical been has controller that development. feedback It light a an on Duo pleased self-healing to size. X-channel the with announce I'm our ring total on mounting, new X market-leading provides seen intuitive the lowering operators. installed platform side this Slide controller to to shown offers very to a that control before slide. enabled operators. Genesis touchscreen visual right the of and advanced decentralizing communications, latest control pipe in

of the you see X products examples last side can new the years. On the left of slide, launched over

a technologies development resulted in Thermon with a and This real controls competitive communications applications. with the efforts demanding have robust revenues. for year-to-date product combination vitality of heating products pipeline advanced XX% new of new our advantage most has index Our representing in created for

for an to now update X on Slide diversification. Turning

to and You the we investments Hellfire and fired targeted sector and U.S. can year-over-year illustrating Act Reduction examples including duty. forward. The Hovey rail see see our to Inflation food introduction growth Blizzard of XX% in city is our diversification, across wins transit, electric. recently ordinances commercial, here In markets new business pace commercial, with rail and rail benefit the X In our and driving for continued the we passed of believe transit driving achieve beverage transit. hydrocarbon of momentum will going of the we're boilers on that recent conversion

year. Carolina, revenues in market, million the beverage and beverage seed plant food than fiscal and prior a market end food in double and we won in expect a in the opportunity in to more XXXX we Finally, our $X.X North versus oil

would looking our external X, like again market environment, that I the progress the Slide made emphasize end at On diversification against strategy. we've to

an Here, we on compared mix year XX% gas to with fiscal year of XXXX. In the and our on are recovery increase came combined largely strong roughly trailing efforts XX% period base. in throughput XX, maintenance, oil the chart our and fiscal 'XX. to gas with December Approximately updated that from XX-month of in-market 'XX, seeing a we sector focused markets revenue for ending is reliability see the and end in non-oil installed

upstream support and recurring product are to base. to the installed sales sales of XX% oil fact, the market maintain In

of growing achieving also diverse and and We're to seeing diligently long-term are by markets continued our revenue progress gas the our non-oil XXXX. of XX% towards XX% end our end year in working fiscal goal

the feedstock across majority over in with and We see markets end from cheaper plastics, U.S. to the enables The maintenance for believe strong continue We abundant the increased in and our strength chemicals and the margin petrochemicals, longer combined term. by offset grow prices are those of partially energy headwinds the markets. to environment customer demand end-use European pressures

fiscal in storm power the revenues uri. sector, seen 'XX doubled we've In the following year after moderate growth winter

energy which remain long-term to in rise mid- drivers renewable the believe we electrification, include Asia. intact, the and in However, class middle

nuclear growth the hydrogen, continue to and including make renewables, that verticals adjacencies the of category such as biofuels strategic experience power. up Several

macroeconomic our earlier, ongoing $XX orders to year compared immune a mentioned the up As fiscal 'XX. the turbulence. fiscal of not full variety our this across secured well. to combined geographic diversification we're have to end wide we serve XX% with from impact in and us markets of believe continues breadth over in while year to solutions, date, year million Overall, We

geopolitical year adjusted Europe. on quarter our Slide industry, to of our chain. XX. earnings quarter of We third quarter with the despite America, uncertainty driven which ongoing team's improving ongoing combined fiscal macroeconomic to an share outstanding now outperformance the achieved due and recovery in oil Thermon the in another North gas per XXXX for benefited performance in from supply and Turning challenges strong record execution by third results had continuing

have make longer grow our been term. investments the material strong transportation to while controllable diligently with and managing offset also strategic able realizations costs over business to to price continuing We increased costs and

points. increase more million customer the driven margin Free cash million XX.X%, quarter of than EPS period. with $XX.X earnings $X.XX integration acquisition year basis prior increase track the a at from Adjusted and quarter million attractive of during flow share, for year margins the was quarter. record was of a EBITDA an strong on year-over-year this collections. $XXX.X produced year-over-year. was during our example, remains fiscal first announced the of of XX% increased revenue to For Revenue of million Powerblanket XXX by and of Adjusted $XX.X XX% over the of up $X XX% a an

incoming EPS fiscal and and strength we're backlog guidance the Given year. orders, raising in revenue for full our the adjusted

XX, our On that you Slide the very can the continue backlog strong. business. in to remain orders momentum pleased We're with see and

grew This XX% trailing quarter, XX-month $XXX on incoming bookings achieved we XX% of while record million, year-over-year, a orders basis. up

ninth X.XXx. last the achieved we of Our book-to-bill was the This quarter have where a represents book-to-bill. XX positive

XX% $XXX.X excluding record FX of and million was up impacts. backlog levels year-over-year, is Our at

like financial more a I'd review our turn Kevin? in-depth the to to With our over for CFO, call that, of results. Kevin

Kevin Fox

Thanks, Bruce.

Russia. to into get highlight our operations that our we would like withdraw have results, to we decision I the Before in announced detailed from

the dedicated present impact a on will our adjusted in the have later basis. financials through to financial an deck performance, the we the to walk in We upcoming slides and slide

filed be in available information Additional will our today. later XX-Q

of Bruce describe Next, touched I change to that revenue like would at call. beginning in the reporting briefly on the the

it operating typically in maintenance dollars. reported categories: conditions that more over to tied our community. could macroeconomic and previously more repair are in categories found time. spending budgets X our these we installed broken recall, base installed from customer view, be customers' And production of base and operating to cycle. our customer CapEx builds volatile spending you as sales We whether important investment derived time, even our is which optimize valuable the budgets closely As instead ongoing volatile The that from over revenue sustain is is or spending more understand whereas into be what is to less and value can capital that but point-in-time expense

budgets. believe A revenue will CapEx over revenues as through typically now greater defined large time projects we than time change typically OpEx now as reason, point-in-time funded is time this time will over for we believe show we be to over There less second So no projects which budgets. are $XXX,XXX, and category small through than $XXX,XXX, which presented are are reporting. revenues funded over

to small size well $XX,XXX, all approximately of We in below categories a point helpful the hope For reference, established. of clarification of order $XXX,XXX time year-to-date our the the an capturing we've is you. XXXX over will large and average both this fiscal be threshold

on Turning Page revenue to XX.

exceeding We versus was the the are markets million, and continued chemical result gas performance global activity and by pleased Thermon Revenue growth internal drive as third the quarter our while team Western was prior commodity of Hemisphere expectations. a Sales investments and $XXX growth to downstream in global up customer continued upstream quarter XX% meeting prices overall maintenance strong this in and deferred with oil and year sustained in profitable end and driven demand. demand.

the in and we spending least focused diversification. come fiscal total of market oil the XXXX, of XX% growing from diversified still By considerably, at gas that maintenance expect will other against we end our oil executing long-term on While is than goal gas. markets revenues are and market of

our in rail We revenues on transit and end beverage, XX% Renewables continue prior up up year. progress XXX% are year-to-date see and markets almost versus basis. Xx a to diversified food and with up

tailwinds, legacy ahead. and today these them end other component Thermon's While with to trajectory key we than of long-term segments the represent years markets, growth be smaller expect in a opportunities

the FX due in $X stronger our financials a $X continue full also quarter negatively ahead. the expect impacted million include which impact Reported to we quarters worth Powerblanket results to to revenue in revenue. of by million USD, business

revenue schedule. We constant on are excluding acquisitions pleased that Thermon's a was acquisition and XX% on basis year-over-year. remains currency the growth, our Powerblanket integration of

to due onetime the the project year. declined of contract the in large previous fiscal X% nonrecurrence Large quarter revenues the from

of product large we aligned were are point-in-time a XX% project and believe overtime which budgets nature, and revenues, reminder, small a in installed and and more and maintenance, customer that XX% volatile base As XX% quarter, on and TTM production, a and repair customers basis, maximize up on our upgrades help representative respectively, the our time efficiency. with capital revenues up in spending while projects small XX%

the revenue growth product current revenue projects, quarter. was Small represented projects Small activity downstream and driven and of in XX% in and and chemical by products smaller particularly increased revenue projects supply end in markets. oil design

provide Now of a an on with are product basis in XX.X% margins driven last Page In few of out and the to for the XX. gross margins we'll volume and reported SG&A XXXX, versus mix call Adjusted performance. fiscal a projects items quarter sales. year, on points the quarter gross XXX XX.X% in improved the increase third by contributed small context

We supply equation impact continue basis price/cost chain the with to XXX global be favorable able points, points. up to XXX this manage quarter, by slightly of offset basis headwinds pricing

have May our supply large we seen calls generally are XXXX. note basis impact XX previous includes pockets and trailing data and months work completed Operational discussed the Please on-site in XX prior on labor quarters, While last of in that the chains of the which the additional to we year for quarter of efficiencies challenges onetime some contract was points. improving there continue still contributed we X an navigate.

SG&A.

reminder, resources administrative revenue, expenses $XX.X XX-month the general quarter, the we to revenues up a reported focused remain arrive the SG&A XX% basis, million aggregate million deduct growth XX% and in and XXXX our slide. longer of million will execute prior $XX.X million As Powerblanket quarter. or year XX.X% in diligently compared expense continue trailing invest on a increase or the over the fourth fiscal of on profitable from and at the to or revenue the quick plan. from $XX of as the $X driving selling, of long-term to strategic XX% prior We was expense of the additional On SG&A depreciation revenue. $XX in of to during SG&A SG&A an we contributed SEC term, of year. our In quarter was versus million

done in each managing invest the excellent of value maximizing will the balance we has focus profitability, on team continue an we The growth between to job and the dollar business. and

Page profitable environment growth. pricing contributions representative and strong to in is we adjusted a EBITDA our XX Thermon model to share. of volatile yielded of combination strength and business shareholders. has per for on excellence Moving a deliver of of expect the The earnings again continuing pursuit operational of volumes, positive higher for quarter This the execution and the

in an Adjusted of the the was EBITDA million basis, XX-month margins EBITDA million or great with is $XX.X $X year, margin over expansion sales XXX Adjusted XX.X% basis from with quarter. over up prior of XX%, now really points. basis for up increased team. $XX.X expansion points, to along XXX of On a the result a trailing EBITDA adjusted million, of along XX.X%,

year, performance Given the adjusted the in projecting we for now EBITDA strong XX% quarters the year. of full fiscal are X margins the XX% first of to

in year's the EPS per per $X.XX share EPS GAAP the $X.XX Adjusted was second prior a share. compared per in $X.XX last record versus share quarter was share $X.XX to per year.

the EPS For XX-month trailing adjusted share. was EPS per period, and a GAAP $X.XX record $X.XX of

improvement prior after associated X.Xx, acquisition ratio in a accounting and adjusted results adjusted offset updated year. of an the by year-over-year unchanged debt strategically inventory growth season million. with disruptions. the heating buffer XX, in the $XX was demand balance cash the with net elevated X.Xx we'll supply for capital Working sheet. seasonally for resulted mixed strong to cover and the were meeting versus building EBITDA Page inventory to ended potential chain collections, EBITDA of On quarter Debt with We Powerblanket

not observed environment supply but areas. sequential yet improving an chain navigate to and many continue we successfully, have We fully in reliable improvements

and of million in down of reflects of $XX Free the net us of XX% debt quarter. income $XX.X and enabled to cash flow million revenue XXX% pay

priority growth, allocation strategic debt strategic capital our expanding main capital on diversifying recurring pursue and our reminder, including value-enhancing heating In year M&A, our of continue we to X Finance of two, the all strategy our our to we evaluate Board's digitization markets; down WAAC decarbonization, inorganic X. Committee and return accretive while shareholders of in target industrial execute one, absence current we invested tenets: to build we initiatives to when while process revolves finally, diversification. to by on options, investing M&A allocation platform addressable our will capital a pay a returning be As around exceed basis. capital And our will with

on withdraw reducing booked announced exit wanted to the event. update quarter to Russia GAAP in quick to decision the share. per million. complete, highlights of million Russia, income million, of our related reference pretax share. per of your statement negative income highlight by $X.X adjusted A $X.XX an negative time an Page net impairment $X.XX some and income We $X.X We've charge and on of $X.X profit operations we to the $X.X and items the expect Today, I By we million that earnings EPS for $X.XX in with additional in included third our XX. to of impacting million, revenue by net GAAP by is the $X.X take EBITDA

Russian on to of observed, the results below improving profile financial breakeven you believe clarity and our As while provides the a and the basis investors decision was we this year-to-date entity profitability slightly business. risk

Additional disclosures later filed will will in our available be XX-Q be that today.

built performance growth, cash on quarter's with excellent positive free last expansion significant flow. quarter This volume and margin

to are cost outlook we Europe the continues see improving, value and the shareholders. its drive and to ahead short- Thermon in lead opportunity soft, times execute long-term be supply and plans, to create against chain While team continues strong for to and results continue

team work communities. for for thanks to great our and the shareholders Many deliver customers, enables and to that our commitment Thermon the global us

over that, to And Bruce. it back I'll with turn

Bruce Thames

long-term Slide to and goals. All right. our Thank revenue turn to now XX you, Kevin. like I'd

more upper our of scale X-year remain size the fiscal opportunities end The next pleased real secular is initial creates a growth sheer will and decarbonization expectations. plan X long-term very number encouraging our is that a opportunity also or and that we for diversification X meaningful believe goals our diverse decades of across for progress Our we're unchanged, on the the the of on tailwind years range be The first markets. of XXXX through performance growth. with

markets are a end The new digital priority And end us outside exposure, solid our us underpinned fiscal represent in by place of the by our revenues and to gives installed our traditional customers in year base momentum and of initiatives oil strategic the a confidence financial market advantage the the to platform well marketplace. industrial that development all advancements specifically give goals finally, within in high product XX% competitive X across markets, of 'XX our fiscal reach. of of year XX% targeting sector on gas diversifying to continue end 'XX. these

Last but margins on EBITDA leverage over our that mid-XX% operational cost combined not least, in to yield period. fixed our the low excellence, will with range same

Slide guidance for Turning and now XXXX. our to updated year fiscal XX the

with environment, to are the backlog guidance. and bookings year. year of of momentum this and In areas strong revenue pleased full third of performance macro We the in Thermon's through us quotations, the give 'XX raise adjusted of year are in fiscal seeing we our uncertainty quarter the positive EPS number fiscal spite confidence

raising $XXX of of midpoint to the a GAAP confirming a the $X.XX million which represents range. EPS of full range share. a for to over $XXX guidance million, year We fiscal the prior are the revenue to 'XX growth year at XX% We're $X.XX

adjusted fiscal growth addition delivered to year increase our $X.XX are the over 'XX. in We of full raising XX% to guidance 'XX an a in to fiscal $X.XX share year for XXX% EPS the year, also

XX. Slide Finally, wrapping up on

a process a a advantage. niche entry, to today, mission-critical Thermon an with leader safe, creates industrial is high competitive which high-value detailed barriers an innovation significant reliable -- market solutions. world This is providing in we heating As innovative

aftermarket that create of cycles. team, capital installed markets, large to recurring variety that low Our combined revenue base, our our end business intensity outstanding resilient and economic a our is global generates business across our a across diversification

beyond believe profitable shareholders. long-term We create Thermon deliver growth is truly and to our the value of that through well remainder year for positioned to 'XX fiscal and

John? to call our like moderator, back the portion John, for turn to With over call. of this that, the I'd Q&A

Operator

And our Brian question Drab line comes Blair. of [Operator Instructions] the from William first with

Brian Drab

there to spend about wasn't back wondering talk go can second XX, Russia, in -- about didn't the on just clarify in way Slide Russian the are you what another to this just if you you here. just you minute clarifying Could quarter. numbers talk this adjusted because I'm didn't

it a and are point second example, apples-to-apples So with -- how between we third in the quarter compare is that would what's at a the margin? saying? was quarter. So for you're gross what the -- then in the quarter? with basis looking third quarter, third Russia, and Is XX.X% profit and headwind XXX And

Kevin Fox

Kevin. Brian, this is Yes,

So when a the margin about on we look gross second basis, We were I I at at XX.X%, think believe. quarter

And third so basis, a on XX.X% on an like-for-like. was adjusted quarter

exit. slightly So down COGS out related impact you had once to margin back the the to we was sequentially take that to Russia

the asking, question but think that's it that's numbers that's I you're [good] just

Brian Drab

just I'm confused as No, Yes. little can it, by you a tell.

did when an XX.X% for adjustment is well Russia, second make the adjusted adjusted you the that comparable I So quarter And as gross to number. business in you guess, talked margin? in about low-margin

Kevin Fox

'XX second There's This exit. approved Board was Russia this our fiscal by week. no in impact quarter given the No. the

was there to impact our results. quarter second fiscal So no

Brian Drab

but So business the in you Russia in second quarter. -- did

I'm to did most fiscal recent consistent the gross second go if out just margin this was in it of quarter it any Or down? of picture about quarter completely for the relative sequentially? 'XX, quarter? in So Russia how take you all Was wondering,

Kevin Fox

Yes.

the think look out quarter, you're from question the asking is we would second like? back results the Russia if I would what

Brian Drab

Yes.

Kevin Fox

off negative see Brian, you walk [indiscernible] has business We year-to-date. EBITDA in line basis, that can get the on Yes. you slightly given an would been

and gross you lines. take in previous you improvement of would on would the EBITDA I any slight believe profitability, quarters year, fiscal both if the Russia to So see a of out the

I I question the that's think [indiscernible]. think that --

Brian Drab

issue curious a like gross at sense I'm I'm this a trying interested -- is for are for X%? thinking just obviously margin would up number is trying I the the I'm what positive, X%. just I'm to going. the so every get I'm -- maybe only why everyone is direction to what real just think looks many just -- some it you the the like business looks second quarter then margin business lower gross that third of the how that I is to here. margin you in do had we trajectory second think the had of the we're quarter? gross get here? and was a And for trying see quarter than going I'm sense margin curious, outstanding sense about Yes, headline an margin, a maybe stock from gross be all. in Because third stocks There's -- quarter. That's where up from quarter in

Kevin Fox

think I that's Brian, Yes. fair.

look think pretty year-over-year any we on mentioned, I or EBITDA, increasing can of at you metrics gross those basis. as are a substantially profits

in If materials the you business and we is a like revenues. has want to point in or QX, still QX, those think That or look feel the better. mix sequentially projects at towards very oriented QX, much is business smaller time things getting That I as impact certainly certainly product well. the positive

Pricing XXX in the quarter. points basis

A performing. So business of as positive well. margin business is from line with the the to that's profitability through in lot basis gross momentum falling today difficult us EBITDA down and the a see how to lot a and for really of

that community revenue guidance quarter for speak I but the as good perceived a But would raising to the business can't doing. about by not for I this won't where profit positioned, So and the think negatively is the in very the be we internally, third certainly what imagine the I feel think investment is Street. here, well, I row future today,

Brian Drab

it. Got Yes.

can any you Okay. had And more detail a don't know on that questions. -- momentum you've specific you the renewables. give if can I X in And there. There's obviously of wins lot then

what what can of in are give of So growing the secondly, to those types tell margins of the be given you can business? a projects, types what that or any breakdown for $XX And million in projects, going granularity, of part projects if about sort that's orders? us renewables you

Bruce Thames

Yes, is this Bruce. Brian,

a So was of storage in here carbon those a with little about heat of in tracing. the was $X about pilot heaters project I kind a the Midwest it it smaller this for because $XXX,XXX and was project, project capture refinery gave a examples a another dollars. in was -- the thousand opportunity capture. were Those project few project COX quarter and $XXX,XXX for about opportunity Canadian a of million some a pilot It size but wins, order projects. of hundred process The was a couple

of quite backlog of we're biofuels bookings lot there's opportunities, bit growth our seeing and of a a of As in for leader we types we're biodiesel. plants, kind in biofuel particularly, the look that in a at there's

particularly green For are of those, Most example, there's begin of size pretty up lot go also hydrogen some dramatically. those green of will technologies hydrogen prove mix there's and and are the blue a they a order those scale projects, where as out projects. ones, for the hydrogen, pilot certainly, to

X of our X wins nuclear refurbishments in The We're the seen with only the other area nice some in that companies we've some wins in is space have Canada. nuclear instant. space. globally had We've some

see a And that opportunity. illustrative. just we significant as So are those again,

in with we've this as As of margin seen they're far with kind our what business the consistent profile, historical space.

and have And profile of we opportunities it's of over will certainly, So margin forward. some our improvement operational excellence programs drive time. on some we our continuous expansion margin supportive current think certainly, going to

Brian Drab

Even growth fiscal guess, And Okay. a last the from 'XX, only the growth, range? is, not year? revenue one, you're beginning forecasting mean, terms to next Yes. the but less have comment then and away this you're maybe something days on than of XX today, I prepared -- I expecting like process, us what you're give sense through and you any of process for in in budgeting gone you're

Bruce Thames

Yes.

share you for do we're we'll during call. with a typically that right we And We are at our seeing It's So normal We're not at growth year-end now. be point earnings budgeting that that. time. prepared we're of -- coming middle of in set year. a May to to as in prepared process the yet the that kind that course range certainly, where

growth However, business, in we in our we foresee book-to-bill, seeing can year-over-year, momentum mean, 'XX. positive bookings, you continued growth see are XX% in the and are -- I year momentum seeing fiscal the we

Operator

Jon The next comes Kansas Braatz Capital. from Instructions] City with [Operator question

Jon Braatz

Along Brian's year sort definition, the you're benefiting about talked your Kevin. press lines release, this guess, In spending. of And of deferred and it's by maintenance from I question. you Bruce, -- deferred.

when does that do -- they you year? sort a XXXX maybe headwind maintenance a year, been at spending So important next What has versus those of And year? XXXX. of fall sort this deferred how about -- when you year? think after become look there for that this is through you Or expenditures how make next

Bruce Thames

Yes.

contraction saw during So John, certainly great COVID. we significant a really in mean a maintenance question. I spending

seen So we've that course this that really begin rebound. the during And we've to year. of seen

at Now mean, based over this, last And I underinvestment rather a there's really change the kind than X look is strategy building as of lot in been the projects seeing the significant we infrastructure of going we're in and capital and believe or small X that a forward, assets we're allocation a what that upon new seeing greenfield. reinvestment existing years. in we

prior a of would So in to we don't cycles. that spending have big seen surge economic CapEx maybe we expect see

the base. have recurring the you actually our is to business. One, at However, base, where we it's installed global the installed for revenues and if our look we're footprint entitled very favorable

are and in go large higher XXXX. Second, have and fiscal profile kind seen would you more they year where back is peaks what to may tend year some what believe of margin levels And we forward going spending. cycles had 'XX fiscal CapEx than previous of these spending to sustainable our I very be in we

stable year. lot actually we of forward, to maintenance the see fiscal slightly going the So increasing being spending coming in a

Jon Braatz

mentioned think And the I have of points. questions. Kevin, XXX supply you noncash? Russian basis challenges is Okay. X mentioned a all headwind, chain Maybe secondly, you this, sort charge

were chain year. that past improvement on a seen bit challenges we've hearing the little over the of You supply

into you look you As do that to gross improvement improvement next the begin on ease that? year, see and -- front because the of margin on

Kevin Fox

reclassified. from was just $X I'll entry. Yes, rest on cash the order. On noncash it Russia, Jon, we of maybe them that take The sheet P&L, a million balance a in there about it's of

technical of but $X.XX the GAAP GAAP, that once exit is a will entry from to there, lot about all We some accounting EPS but additional noncash see in complete. $X.XX to the it's was QX. impact essentially, team in Again, a

supply you're to chain, With I think respect right.

and turns this look what getting the things us it's at our is improvement, prepared sequential I in many go that And those was to line in we we and upwards built think continue I XXXX. fixed others don't see to like buffers point. inventory we're have at sequentially. I we expect when think think think like inventory think quarters I trend ahead. the everything better that and back it But say I

today the ready So are certainly blue. pockets continue X yes, but much I months challenging, we where to I'm it's There still trends forward. we're to I going those of are And than don't think out think expect that say better quite ago. was it

Operator

would the And session. question-and-answer at this of the comments. And floor reached end time, we over like Thames I have any to to Bruce the turn back for closing

Bruce Thames

thank day. the for I thank here interest Thermon. you Enjoy appreciate your joining and rest you, of today. John, all your in

Operator

teleconference. does That conclude today's everyone. you, Thank

you Thank have great time. this at day. lines your a disconnect for participation, may your You and

Thermon (THR) 2 Feb 232023 Q3 Earnings call transcript