On November 7, 2024, Thermon Group Holdings Inc (THR, Financial) released its 8-K filing detailing the financial results for the second quarter of fiscal year 2025. Thermon, a leader in industrial process heating solutions, reported a revenue of $114.6 million, marking a 7.4% decrease compared to the same period last year. The company, which provides engineered thermal solutions for process industries, continues to focus on strategic growth initiatives despite facing challenges in large project revenues.
Company Overview and Strategic Focus
Thermon Group Holdings Inc is a U.S.-based company specializing in engineered thermal solutions, including electric heat tracing cables and steam tracing components. The company serves a diverse clientele, including oil and gas companies, commercial subcontractors, and electrical component distributors, with a presence in the U.S., Latin America, Canada, EMEA, and Asia-Pacific. The company is strategically focusing on growth through diversification, decarbonization, and digitization, aiming to capitalize on long-term secular growth drivers such as electrification and onshoring.
Financial Performance and Challenges
Thermon's Q2 2025 results reflect a challenging environment, with a 35.4% decline in net income to $9.5 million, or $0.28 per diluted share. The company also reported a 14.1% decrease in adjusted EBITDA to $23.8 million, with an adjusted EBITDA margin of 20.8%. Despite these challenges, Thermon achieved a 12.6% increase in new orders, totaling $131.1 million, and maintained a book-to-bill ratio of 1.14x, indicating strong demand for its products.
Our second quarter results once again demonstrated the benefits of our disciplined execution against our key strategic pillars," stated Bruce Thames, President and CEO of Thermon.
Key Financial Metrics and Achievements
Thermon's gross profit for the quarter was $50.9 million, with a gross margin of 44.4%, slightly up from last year. The company's operational expenses increased to $31.3 million, reflecting investments in growth strategies and the acquisition of Vapor Power. The backlog at the end of the quarter was $214.9 million, a 28.8% increase from the previous year, highlighting the company's strong market position.
| Metric | Q2 2025 | Q2 2024 | % Change |
|---|---|---|---|
| Revenue | $114.6 million | $123.7 million | -7.4% |
| Net Income | $9.5 million | $14.7 million | -35.4% |
| Adjusted EBITDA | $23.8 million | $27.7 million | -14.1% |
| New Orders | $131.1 million | $116.4 million | +12.6% |
Analysis and Outlook
Thermon's performance in Q2 2025 underscores the challenges faced by the industrial products sector, particularly in large project revenues, which saw a significant decline. However, the company's strategic focus on diversification and growth in non-oil & gas markets, which now represent over 70% of total revenues, positions it well for future growth. The company's updated guidance for fiscal 2025 reflects these challenges, with expected revenue between $495 million and $515 million, and adjusted EBITDA between $105 million and $110 million.
Our ongoing focus on financial discipline resulted in non-GAAP free cash flow of $6.7 million in the second quarter," stated Jan Schott, Senior Vice President and CFO of Thermon.
Thermon's strategic initiatives, including the acquisition of Vapor Power and the consolidation of its Denver facility, are expected to drive long-term value creation. The company's strong balance sheet, with net leverage of 1.3x and total liquidity of $129.8 million, provides financial flexibility to pursue growth opportunities and manage market uncertainties.
Explore the complete 8-K earnings release (here) from Thermon Group Holdings Inc for further details.
