THR - Earnings call 2 2024 | Thermon Group Holdings, Inc.

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Operator

Greetings, and welcome to the Thermon Group Holdings Inc.

Second Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ivonne Salem, Vice President of FP&A and Investor Relations. Thank you.

begin. may You

Ivonne Salem

been Good Investor to Latonia. this thank for also which you we Form SEC Thank and section X-K XXXX morning, of Second today is has release, press fiscal an on Earlier with Quarter joining the issued on our you, available earnings and filed Relations Conference morning, website. Call. our

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

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

filed We for GAAP in These we considered impact to have make recent refer end of our remind results. in reported measures non-GAAP tables GAAP. and annual may reconciled report of company. those could including in uncertainties the substitute be more the forward-looking certain should addition items financial would risks statements, to performance future to the forward-looking report most at the like with this that most release. measures Please accordance measures and during regarding comparable our the not I information press regarding to with that earnings you and a our the our as SEC for call, statements quarterly

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

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

Bruce Thames

a to the in safe, XX facilities from be a to you story. in for joining and begin solutions everyone, mission-critical Thermon continents. innovative of us countries like world I'd you may quick Ivonne, thank providing who on customers industrial process of heating morning, for to you, leader new and thank X good overview Well, the day reliable We're with those today. and

the our and energy transition agnostic electrification. solutions to many is enable and technology Our of decarbonization

X,XXX our employees on a slide. safety have in plan, record value dedicated the best-in-class by for and our stakeholders cover approximately strategic are long-term detail I'll Our executing more next to creating which

Turning pillars. first, facility, typically solutions. base; long-term realize growing cost technology and less We're global with capital mission-critical solutions efficient over than critical increase excellence. to to by based strategic diversification; that operations. expanding our on These value developed profitably ensuring digitization reliable safe, through process implementing strategy margins of the while We've XX industrial by X but years heating our pillars: process represent capital and large our second, disciplined is traditional base revenues our a now to generating customers X and decarbonization, initial in-market Slide Thermon's operational enables sustainable verticals and the recurring are last installed of the allocation. X% across providing us installed This growth third, and

addition, In our long-term initiatives through diversification. and digitization strategic of decarbonization, we're driving growth

enabler industrial We decarbonization through of the and transition key energy are Inc. of electrification a

Through our maintenance Our to circular facilitate also controls solutions, their our customers goals. and digital help achieve a innovative and solutions optimize customers efficiency, sustainability we enhanced drive monitoring. our help economy energy through

the having core the oil supporting strategic diversify our XXXX. disciplined of with gas Underpinning outside Our end pillars of capital are first to our our from fiscal solutions commitment approximately decarbonization a come strategy. end goal efforts digitization X of revenues plus allocation our our a technologies markets our is of and to and by XX%

On bolt-on significant you coming our our the progress in our us from XXX% in that success of food revenue inorganic our allows year. XX% the of strategy Slide to last financial acquisitions meet revenue market through growth We've XX-month can drive over growth X, positions reinvest trailing seen sheet strong business and objectives. to organic growth pursue us with approximately strategic well to Our balance to highly with in that beverage markets. end-market diversification continuing diversified we're end see

continue transit market, commercial where up year-over-year the in XX% where was expansion and is the the market, We up is also and increasing testament in market enabling end fuels, year-over-year Of also and capture rail revenue in hydrogen across XX% energy growth renewables to revenue ways to transition. reflects XX%. ammonia. is note market, share the the that activity was which the particular a alternative Thermon renewables The in

longer the our we're demand, well positioned to markets needed additional their gas and end Additionally, downstream midstream growth. from transition support investments in oil take and to X to to end well diversified oil Despite support continued gas now outpace be are driving needs.Turning and Slide prices, energy Should traditional to to and gas. sector. upstream high oil orders order the on continue positioned meet from and markets orders diversified we

markets, up gas XX% and XX% oil As of were orders from while were of approximately orders September end XX, year-over-year, end our XX% down year-over-year. diversified from year-to-date markets

As I markets across of compared of and continues XX% end orders power petrochemical well. to diversified end increased these previous markets. XX% demand slide, in rail and mentioned transit about to trailing from indicating revenue solutions year-to-date, XX-month the diversified markets for end accelerate our is We're as on demand seeing our that

you strategy of related of of Slide decarbonization markets. to across wide a decarbonization our approximately X we're see end Additionally, into how range are action. our and recent putting bookings XX% can X, On year-to-date electrification examples

over of growing during and second XX% $XXX the pipeline revenues the opportunities quarter related of orders XXXX, second X% During of fiscal -- were now decarbonization fiscal million. our to incoming to with

hydrogen exciting the X have opportunities in emerging we economy. examples Here, of

heat their Canada. wide lines. site, emission this across a of the supports heating X and net supplied XXXX example environmental of to Starmount's products gas digitization and the for energy part as comprehensive The and electric heating. targets project in We're our facility as Alberta clean solutions goals. through Thermon clean is multiple emissions reductions solutions powered Edmonton, system that analytics heating contribution is will plant. XXXX products After well and hydrogen emerging be Genesis and use well Thermon in scalable operational, The Thermon's as also product range completed hydrogen fully Across product the unit from tracing our The the products accelerator first and supplying power first energy requires from lines. an predictive will program details greenhouse generated the circulation complex as process The by energy complex up site job Canada's network.

fuel. emerging produce for sustainable the towards example refiner markets. highlights jets biofuels solutions with provided commercial system admissions focus series Thermon the to aviation In the provide second partnered with hydrogenated of of to aircraft. reducing for The our a a sustainable goal heating case, this Thermon a of from production overall unique decarbonization

X In addition that emissions customer implementing for to wanted heat inputs reduce by fired. to our providing have cleaner Scope electric would traditionally been alternatives burning fuels, hydrocarbon

solutions mix enable to to make these new control refining the Additionally, sustainable of X and enable the turn of future and future supply, electric To breadth precise expertise the processes and an critical services positioned that also heating hydrogen our throughout more illustrate us To the scalability. down economy. heating needed examples support Thermon options increase product solutions rapid refinery all yield. to meet process our start-up and process. electric for depth unmatched industrial the fuel we the uniquely and standardized provide to Aviation These Thermon's needed the developed heating the heating foundation goals, electric growth for be used design to of technology

our now Turning second results. and XXXX X to fiscal Slide quarter

growth from by increase year-over-year This strong associated XX% million, revenue Thermon with $XXX.X in U.S., had generated We activity in Asia. OpEx an team quarter, year-over-year, recurring of double-digit the record driven of maintenance. Europe and revenue growth

to Adjusted to EPS due growth, basis EBITDA leverage Our on profitability This points, by margins grow prior DSOs. and cost of productivity. by EBITDA fixed with to share, was up million. XX.X% $X.X period. increased improving continued increase the year-over-year an approximately million $XX.X largely flow XX% cash was $X.XX over driven base. price adjusted per due improved year to our volume year-over-year Adjusted XX Free

book-to-bill grew turn call of to But at be a bookings bookings over the book-to-bill basis a and year-over-year, and results. positive Kevin like to impressive to quarter. an that, Xx, our more our continues trailing financial review our for Kevin? was million. $XXX X.XXx now Finally, XX% I'd Year-to-date, in are in-depth the the with XX-month ratio on

Kevin Fox

Bruce. you, Thank

QX strong results across financial deliver continued to performance million the flat Turning Latin in in fiscal the and year-over-year. spending U.S. was Thermon global remained XXXX on quarter. Canada. strong demand to Demand the team Slide remained in America, incoming Customer quarter, X. reached second The $XXX in up XX% while orders We healthy.

fiscal the execute last accounts markets. adjusted increase end our geopolitical XX% quarter, sector while combined million. updated modeling to in XX%. of the and of the currently debt beverage macroeconomic expansion million, XX-month On prior $XX renewables, demand X%. we year-over-year basis, EBITDA was the growth and maintenance $XXX year-over-year to represented $X.XX and impact approximately end combination our of customer our the which compared capital up controlling $XXX a in the XX% Slide growth full a OpEx adjusted decrease second of by future. and over XX%, strategic Through quarter in our XX% expanding in revenue by increase and the build margin million, the XX Total XX% chemical sheet. small terms representing the XXXX. We diluted fixed derived EBITDA second In of estimating up X.Xx debt margins believe fiscal the XX-month a first beverage adjusted of X.Xx basis and XX.X%. XX.X% a million the profitable down months were million, per uncertain collections delivered increase to with winter market XX-month with in during Adjusted was was EBITDA versus balance trailing the a lower, up in trailing the in in plan EBITDA $X.XX saw note, quarter, $XX supports in and EPS was On year, the simultaneously reached net year continuing for orders of decrease decrease, the we the investing of share food at have petrochemical XX-month year-over-year and quarter months, we share was repairs growth quarter our approximately advance primarily the quarter, projects Adjusted rail we of of quarter sizable ratio million, revenues offset of EBITDA the million, costs quick power Working and will due EBITDA with from deliveries increase sales $XX transit from inventory mainly This for million, to a guidance On customer in most across projects capital increasing revenue half while resulted year-over-year year-over-year $XXX in which the in by orders, was in XX% cover points. the quarter. spend. in year, trailing coming a amortization are driven totaled On end the an payable. end and we year of strategic Revenue primarily as our seasonal food was of a the XX renewables, a from million, the XX%. and adjusted $XXX in to updated to range.Revenue the per markets quarter basis, activity. with environment large driven XX, the from was Working of an growth by $XX with second a cash X%, at Trailing $XXX prior period. improved at adjusted percentage inventory ended

was our for cash investments preheating business. was in incremental quarter Net second builds flow. strategic particularly CapEx and and year-over-year. inventory spend flow income was million, cash up season million reflecting around our growth, to $XX free capacity Turning for $X.X the heating XX% million, process $X normal ongoing

inventory in consumption expect to heating cash generation by during increased the season. finished of significantly We and goods third and driven the the improve volume fourth quarters,

XXXX, fiscal regions pleased and very in performance produce end of markets, first are financial our to We we our the solid continue and metrics. growth across strong with half

we look are fiscal XXXX, we to scenarios. half well wide to As we positioned of the to manage economic are ahead a deliver growth, and second prepared variety of profitable

back delivering team dedication to for hard the I'll like I with our global and to Finally, their commitment to our Thermon Bruce. for And thank to customers it work, turn that, shareholders. long-term value would over

Bruce Thames

now Well, Kevin. thank turn you, to to XX. Slide I'd like

we be revised year, continue XXXX. As to positive This half our and look the guidance we first full this, and global for to acknowledging fiscal for year the spending uncertainty policy. we half while of In our back of our earnings guidance growth. of we're the year, fiscal monetary with see balances growth revenue raising potential in macroeconomic continue impact to of light ongoing geopolitical fiscal investing the and while prudent

share be in at raising $XXX $X.XX million at now our GAAP represents from XX% represents guidance of to are at We the $X.XX $X.XX to from share growth growth growth. been to EPS the midpoint share, to upper million, is year-over-year of represents per to midpoint lower expected $XXX $XXX per XX% midpoint. the end which raised organic end and EPS per the increasing has range million revenue the Adjusted million year-over-year. which to $X.XX which guidance per the share, XX% $XXX

on for Thermon's members Joined New XX more held Tuesday, We Investor now City be York leadership Slide Turning and via pleased detail outlook long-term person hope senior in which and XX. plus be for you'll invite join or the to November us team webcast. I'm join to in will first about Kevin Day, strategy, to me, to live other us. our of financial able and you Q&A.

on up leading end technology a following like a variety XX, you brand global that Thermon today to As provides mission-critical diverse with of we'd Slide is heating to we the leave process messages. solutions markets. and wrap

solutions innovative advantages significant are and operational differentiated for sustainable and Our our shareholders. and products customers create excellence, value competitive

to existing heat. on customer base the decarbonization franchise energy through we we're that high-margin that Our opportunity capitalize a large and recurring Through global revenue. well installed believe industrial positioned associated the the relationships our resilient vast with generates drives with aftermarket of electrification transition long-standing technology,

entire enable Our as healthy I'd model, end safety high to to provide resilient commitment and remain the balance meeting by outperformance, gross our today and capital-light to cycles to well their for sheet economic with low leverage team significant and needs. Thermon thanking margins business across like dedication as our Thermon unwavering optionality. customers'

Gap] [Audio ahead look we As

Operator

Brian Blair. Drab question [Operator from comes first Our Instructions] with William

Brian Drab

XX don't I want consensus beat management. calls on XX just have you estimates. conference revenue I time XX of guys congratulating out -- usually out I point these spend mean last But the quarters to

And an Well, that, impressive impressive really to I'll very So congratulations. and turn it's execution. some-- with

of like what the numbers, can at be any the looking jut to not congrats, So so maybe regarding was Day, laying longer-term Day, out perhaps financial actually give and there sort I I some of you you be will Analyst that. Analyst wondering expect preview forward analysts goals? , can will but investors,

Bruce Thames

goals well Yes. do on what on you first team Well, opportunity. we'll kind more dive these but XXXX think behind management broader financial Brian, be deep achieve. And what to -- all, we'll strategic really great And I our it we'll to as still really the that's a about talking the results. is a path deeper our objectives as taking just around and our detail providing of driving is of do we'll that's meet be focused objectives, our get

you I well. join other and and really existing will attending us so And as hope look prospective investors forward to

Brian Drab

report. goal is quarter How you revenue for this -- schedule more guess, non-oil gas XX maybe mix in seems goal? go like of getting about your like to beyond diversified XX% be XX% you're diverse that It you you with to to or mix diversified that seems get that the I more -- -- ahead It be to and today's thinking getting could say. the longer-term as are with

Bruce Thames

Yes.

start So XX% say like kind range. question. we a to were that's guiding to XX% great a I'd of and to

achieving we more extend kind towards that begin line our we'll at we're just of certainly, XX% as further where can like by XX of we'd look now go we XX% approach time And that there because think XXXX. to and that diversification to we end it to goal, get that So overall targeting in markets.

Brian Drab

where growth and continue end is projects, of outstanding potentially? reported talk little markets, the about the then type most Can of that beverage, remind speaking that and quarter. and of there to business you runway what growth outlook And segment us of you the the success for And geographies? a types food seeing bit how you're during

Bruce Thames

Yes.

markets and you diverse. actually a particularly the food including global. than across higher more that geographically, with The our our gives So Beverage, it it's maybe and in markets, product in to beverage boilers that all, of gives and Eastern of and end of market. Food look as more end on at mean opportunity really focus expansion -- Hemisphere, we oil just And steam business diverse Asia, things us of than see Western we see other much the gas like much heat began I sustainable opportunity actually an is, us that -- think we mix we in Europe. larger, of some North see portfolio the about and emerged really end tracing. all, We really great first do and about a extremely really if traditional build more of But mix it's heating it that, the more thing and a we in of first America position. kind

certainly, room XXX% of just like on and given but really size a strong run feel the of base, growth. market share. kind our we've we the fairly of is So the It's there existing small to got lot a

the increased So the feel focus front-end sales we're there progress we about good with making and teams. our

Brian Drab

more same Are tracing? in they one having several to the the heating, point? process you portfolio Or coming I the both versus addressable process in or made I'll orders growing in on But and this at primarily get focused are area Where the pass you success you before growth tracing. the other heat Maybe into diversify at ask just to focus are it product relative years heat heating the the historical ago, rate? seeing the more expand one of on. effort and market terms

Bruce Thames

Well, but as business. some number process process first opportunities look Xx at And the of transition will really that of heating, really that at areas, a the see in across decarbonization, that heat big you But product of business. the tracing heating for around all as we is look are all, that there really we're opportunities we particularly and I growth almost energy seeing say of there portfolio. the growth

lines. XX% production Some investment exit to to really this to talked increase we've capacity expanding hope basically growing be progress. process with supply capacity the is of can product about about great from increasing of really that in fired the we've year around this able areas the so We those made year for in our some Difficulty] And hydrocarbon we our technology. transition traditional heating, really electric really [Technical to heaters demand

Kevin Fox

it's this just the if markets markets line diversified those bottom see heat but line from Brian, perspective oil just process slightly those I we not in generally go those well. at, growth, versus gross and top heating the not better versus could or as And if this addressable into is in, market, that add tracing Kevin, We expanded well. end if targeting think profitability about gas, we're as a margins as it's as profitability addressable we

It's growing. it's we're that So providing products creating our them are the growth of value the given [Indiscernible]. for And clearly, attractive. customers

Brian Drab

come but minute. to pass going on I'm might in it I a on, back

Operator

We a with [Operator have Instructions] Brian William from Blair. follow-up Drab

Brian Drab

comment the just that gross the was an would for this it good important margins detail. Kevin, at one. the here looking now. balance was good never margin trying at trajectory polite, know. a there, I on you for How I that be you leave year? of are to but

Kevin Fox

short that. component a and it's to Yes, [ of ], then John longer-term a term kind

that Power the value faster specifically we at see about are some don't about If segment, price balance mix a down more project-based, day. second, wins, I we a guidance. the in cost, it's quarter continuing end at right? gross of driving in the here had year, So really winterization I execute on there. efforts really the talk a margins that the the the the little again, clearly, team were attractive for front. necessarily for the But And look give of the year. mix the it's could that think when projects margins, nice particularly some business, managing us. still at continues if We that to the We're outweigh to of you Texas margin to look really related this large even growing growth nice though gap

quite at know, but So however, Canada maintenance it guys the U.S. as in We slightly just a strength the projects dilutive growing, the geographical thing well APAC on same the that we EMA dispersion and well. just margins And That's look you on if rate. not as to trend dilutive that even mix, bit of really and mentioned as that then the look closely, The things. the versus repair little think last margins. at is about at I in there. side geographically, and continues backlog you

that to is to feel where markets, got during continuous if gross more we kind community So in improvement operational the that investment that Roberto Day, drive Investor can margin we've the We we a diversified growth future. expansion, program us today levers versus margin continue about of where like front are going to few in of of improvement. the really future, in excellence about these think into talk go underway combination where the there we can were the is

Brian Drab

to for guess today. that at I leave later and now, you it I'll talk

Operator

comes John Our from Capital. Braatz next with Kansas question City

Jon Braatz

front last Bruce, weeks X and interest on noise the or of the diversification lot -- higher your over obviously, a sort efforts, and about recently of the renewable been there's X rates

Bruce Thames

Actually, to a to great The is was hydrogen recently. there's are I And question. an thing the the kind bit is funded, growing. are ahead. a going projects from that highlight told opportunities hydrogen lot be that million you fuel, years the sustainable opportunity, growth seeing. seen year I making moving fuels, so Those biofuels we thing ago, The just we're have sustainable. seeing in seeing think global wanted booked investments XX% stands might that a and most out but whether are hydrogenating the alone. those renewables in was a aviation around of really significant particularly And those these That's I've that this, alternative opportunities $X some around I it opportunities this of several And quarter opposite most fuels that renewables, out. they're we're of are we're that kind over

we're some there big So seeing investments in ammonia. in

I've investment So wind actually that rate think power there ones subsidies, ahead really been I surprised that just projects and some the of seeing around of And upon I type viable are some there. particularly pleased government economically think we're where and may the be reliance maybe move the solar other areas projects. more

But we the reinforce think to is take those all could pace I world as look transition. at is be longer would it which that And be payback transition, I Should all are could can I we certainly technology -- longer. think may moving. the to risk or agree energy our occur. direction at the we this we But think this is the thing is that at periods here agnostic.

technology market to access Our the may energy relationships customer that meet to required grow in if production and hydrocarbons it to and Conversely, be there is moved forward. that during with our to increased investments going this basically period. enable sustain business transition levels needs of

Jon Braatz

all of would a transition or you're So rapidly bases. matter doesn't it if sounds situation I as this covering you, goes whether would you because characterize it sort win-win slowly, for like summarize, it

Bruce Thames

Absolutely.

Jon Braatz

if release been changes up improvement Are continuing Europe of Europe? in Europe Do year-over-year seeing guess, bit press your that sales you while. in a sales, a in little some Secondly, as I any you has see it you're for sales sounded improvement there? this weak real seeing in gains.

Bruce Thames

in trend see well. and do same we're the there, we positive as Yes, seeing a Asia

certainly, were a after COVID. of and they little Europe -- a kind respond to was slower So

Asia even lagged that.

And seeing so -- we're

Jon Braatz

thinking would flow looking net that's Earlier but year half. free in possibility -- I was that spot, flow? And And about you flow get I second don't don't you of free want that are to thinking improvement still be on around level that want a the cash a income. sort of for maybe to in of throw still put cash XX% free cash the to I

Kevin Fox

this driving a are It of that quarter. weaker little stronger next could Perspective flow maybe cash quarter. little be the a bit

I side turns taking collect. which we right certainly, business. really place. at the out, the mind that's it's the -- think direction we starting ability BPO And direction is good keep trend John, are when the about feel the the to trending we then the Inventory in things, velocity right well. with of going of about and in in it leaves when that to as important just to think look seasonality And it's

at really is on flat, that quarter right second to think in place Our got the We we've time roughly where to basis, the so right? right we've it's inventory built a the inventory right quarter-over-quarter got responsive be there. customers

a time factor, little horizon that percentage a business. that at And basis, that a bit the the over of longer on and thinking important. in about we're as driving capital as Keeping sales try look working excellence productivity, operational TTM to so we a it's the of

anybody got a the business think plus shouldn't we build surprise is execute, little I It but the So about net working XX%. Obviously, capital to there's of back summary. here grow to bit a in growing. half continue be that we've pretty as to feel in good we a

Operator

closing At like call the time, Thames for over remarks. back to to would I Bruce turn this

Bruce Thames

our our right. joining Enjoy day. you, quarter forward at during again you rest and updating Day you earnings look and for and to Thermon. today, thank of Antonio, thank All your call. the Thank you We your in interest next Investor all for

Operator

you. Thank This does conclude today's and teleconference webcast. audio

great and time, your day. at You have lines may disconnect a this

Thermon (THR) 2 Nov 232024 Q2 Earnings call transcript