Most of us have heard the dictum "the trend is your friend." And this is undeniably the key to success when it comes to short-term investing or trading. But it isn't easy to ensure the sustainability of a trend and profit from it.Often, the direction of a stock's price movement reverses quickly after taking a position in it, making investors incur a short-term capital loss. So, it's important to ensure that there are enough factors -- such as sound fundamentals, positive earnings estimate revisions, etc. -- ...

Core Thesis - Thermon Group Holdings, Inc. (THR) is positioned to benefit from the electrification and infrastructure capital expenditure cycle, with a significant upside potential to a $55 price target, representing a 12% internal rate of return (IRR) over four years [2]. Company Overview - THR provides engineered industrial process heating solutions, including thermal management products and services such as electrical heat tracing systems and industrial process-heating equipment, serving various end markets including industrial, oil & gas, and chemical/petrochemical [3]. Market Dynamics - The company is shifting focus from oil and gas to growth drivers like data centers, utilities, and the re-shoring of U.S. manufacturing, where temperature control and process heating are increasingly important [4]. - Regulatory standards, such as NERC and FERC cold-weather reliability standards, are creating additional demand for heat-tracing and thermal commissioning work in high-risk regions [4]. Growth Opportunities - THR is entering the liquid load bank (LLB) market, aiming for a 20-25% market share, which could add $60 million in incremental gross profit over the next four years [5]. - The heat-tracing market is estimated at approximately $3 billion, growing at an 8% compound annual growth rate (CAGR) through 2030, supporting THR's organic growth [5]. Financial Outlook - The company expects to generate over $300 million in cumulative free cash flow through FY30, driven by higher-margin LLB sales and strong EBITDA-to-CFFO conversion rates [6]. - THR's stock presents limited downside risk due to low leverage, high free cash flow margins, and potential margin expansion from product mix [6].

Revenue and Growth - For YTD 2026, the company's revenue was generated approximately 52% from outside the United States, compared to 50% in YTD 2025[102]. - Thermon reported sales of $147.3 million for the three months ended December 31, 2025, a 10% increase from $134.4 million in the same period of 2024[119]. - For the nine months ended December 31, 2025, sales totaled $387.9 million, a 7% increase from $364.1 million in the same period of 2024[133]. - Revenue from the EMEA region grew significantly by 36.5% to $18.9 million, driven by increased project activity and the acquisition of F.A.T.I.[121]. - The company experienced a 21% compound annual growth rate in the liquid load bank market, projected to grow from $84 million in 2024 to $386 million by 2032[115]. Revenue Recognition - Revenue recognized at a point-in-time accounted for 69% of total revenue for the three months ended December 31, 2025, down from 74% in the same period of 2024[109]. - Over time revenue represented 31% of total revenue for the three months ended December 31, 2025, compared to 26% in the same period of 2024[109]. - Approximately 69% of total revenue in Q1 2026 was recognized at a point in time, indicating a shift towards more project-related activity compared to 74% in the prior year[120]. Financial Performance - Gross profit for the same period increased to $68.7 million, reflecting an 11% rise from $62.1 million, resulting in a gross margin of 46.6%, up 40 basis points year-over-year[119][123]. - Thermon’s net income for the three months ended December 31, 2025, was $18.3 million, a slight decrease of 1% from $18.5 million in the same period of 2024[119]. - The company’s effective tax rate was 25.7% for Q1 2026, a marginal decrease from 25.9% in Q1 2025[130]. - In YTD 2026, the effective tax rate was 24.8%, a decrease from 25.5% in YTD 2025, influenced by discrete tax items[145]. - Interest expense decreased to $131 million in YTD 2026 from $163 million in YTD 2025, with an average interest rate decline from 6.1% to 5.4%[143]. Cash Flow and Investments - Free Cash Flow for YTD 2026 was $25.7 million, up from $23.9 million in YTD 2025, driven by higher operating cash flows[159]. - Operating cash flows increased to $36.1 million in YTD 2026 compared to $31.1 million in YTD 2025, primarily due to higher net income[152]. - Cash used in investing activities decreased to $(9.9) million in YTD 2026 from $(11.3) million in YTD 2025, reflecting fewer acquisitions[154]. - As of December 31, 2025, the company had $46.9 million in cash and cash equivalents and $94.3 million in available borrowing capacity[148]. - The company expects capital expenditures to be approximately 2.5% to 3.0% of revenue in fiscal 2026[151]. Risk Factors - The company is exposed to commodity price risks due to reliance on market prices for raw materials without long-term purchase commitments or hedging instruments[171]. - Recent periods have seen shortages in certain raw materials, leading to increased costs attributed to tariffs, alternate suppliers, higher freight costs, and increased lead times[172]. - The company cannot guarantee the ability to mitigate temporary raw material shortages or pass cost increases to customers, which may adversely affect operational results[172]. - A 10% appreciation of the U.S. dollar relative to the Canadian dollar would decrease net income by $2.3 million for YTD 2026[166]. Strategic Initiatives - The company aims to secure more new facility project bids and generate more revenue from facility maintenance and upgrades[96]. - The company has implemented price adjustments and optimized its global manufacturing footprint to manage tariff-related costs[114]. - The company has a diversified product offering with over 250 products, software, and services across multiple brands[100]. - The company is focused on developing strategic alliances with major customers and suppliers to enhance its market position[96]. - The company’s acquisition strategy focuses on businesses in the process heating solutions industry, contributing to growth and diversification[117]. Foreign Exchange Impact - Foreign exchange rates positively impacted revenues by approximately $1.5 million in Q1 2026 due to a weaker U.S. dollar[122]. - The unrealized effects of foreign currency translations resulted in gains of $15.5 million in YTD 2026 compared to losses of $18.3 million in YTD 2025[169]. Backlog - The backlog at December 31, 2025, was $259.4 million, an increase from $240.3 million at March 31, 2025[104].

Financial Data and Key Metrics Changes - The company achieved record-breaking results in Q3, with revenues up 10% year-over-year to $147.3 million, and adjusted EBITDA increased by 12% to $35.6 million [6][21][25] - Adjusted EBITDA margin was 24.2%, up 50 basis points from the previous year, while gross margins improved to 46.6% from 46.2% [25][24] - GAAP earnings per share rose to $0.55, a slight increase from $0.54, while adjusted earnings per share increased by 18% to $0.66 [25] Business Line Data and Key Metrics Changes - OpEx revenues were $122 million, a 5% increase, representing 83% of total revenues, while large project revenue surged 37% to $25.4 million [21][22] - Orders grew by 14% to $158.2 million, with a book-to-bill ratio of 1.1x, indicating strong demand across various sectors [25][9] Market Data and Key Metrics Changes - The U.S. market saw a 10% revenue increase, while EMEA experienced a robust 37% growth, driven by electrification and decarbonization trends [26] - The backlog increased by 10%, supported by a positive book-to-bill ratio and favorable project timing [25] Company Strategy and Development Direction - The company is focused on capitalizing on trends such as data center growth, power generation demand, decarbonization, and electrification [7][30] - Strategic initiatives include expanding capabilities in liquid load banks and medium voltage heaters, with significant investments planned for growth [14][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving macro conditions and strong customer relationships, supporting a positive outlook for the remainder of the fiscal year and into 2027 [8][30] - The company raised its full-year 2026 financial guidance for revenue to a range of $516 million-$526 million and adjusted EBITDA to $114 million-$120 million [29][30] Other Important Information - The company generated $13.1 million in free cash flow during Q3, up from $8.4 million, reflecting healthy operating performance [27] - The company ended the quarter with net debt of $96.3 million and a net leverage ratio of 0.8 times, indicating a strong balance sheet [28] Q&A Session Summary Question: Can you talk about the sustainability of the 46%+ gross margin? - Management noted that improved gross margins are driven by the Thermon Business System, productivity gains, and a favorable project mix, with expectations for sustained margins [35][36][37] Question: How have conversations with potential customers in the data center industry evolved? - The company has formed relationships with various stakeholders, including data center construction contractors and end users, indicating a broad engagement strategy [39][41] Question: What is the competitive landscape for liquid load banks? - Management confirmed that the market remains robust, with a significant increase in quoting activity, indicating a strong growth opportunity [49][50] Question: How do you see the medium voltage opportunity progressing? - The company has a backlog of $11 million and a quote pipeline exceeding $150 million, indicating a multi-year growth opportunity [57][58] Question: Can you discuss the growth drivers in the LNG and midstream markets? - Management highlighted ongoing projects in LNG liquefaction and midstream gas processing, which are expected to drive demand for their products [59][61]

Financial Data and Key Metrics Changes - The company achieved record-breaking results in Q3, with revenues of $147.3 million, a 10% increase year-over-year [21] - Adjusted EBITDA increased by 12% to $35.6 million, with an adjusted EBITDA margin of 24.2% [25] - GAAP earnings per share rose to $0.55, up from $0.54 in the prior year, while adjusted earnings per share increased by 18% to $0.66 [25] Business Line Data and Key Metrics Changes - OpEx revenues were $122 million, a 5% increase compared to last year, representing 83% of total revenues [22] - Large project revenue was $25.4 million, up 37% year-over-year, reflecting improved project execution [22] - The company reported a 14% increase in orders to $158.2 million, with a book-to-bill ratio of 1.1 times [25] Market Data and Key Metrics Changes - The USLAM market saw a 10% year-over-year revenue increase, driven by demand for large capital projects [26] - EMEA revenue increased by 37%, attributed to strong execution and rising demand related to electrification and decarbonization [26] - APAC delivered 9% revenue growth, supported by ongoing project activity [26] Company Strategy and Development Direction - The company is focused on capitalizing on trends such as the growth of data centers, decarbonization, and electrification [7] - Strategic initiatives include expanding into the data center market and medium voltage heaters, which are seen as key growth areas [7][14] - The company is raising its fiscal 2026 guidance for revenue and adjusted EBITDA, reflecting confidence in ongoing momentum [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving macro conditions and capital project momentum, supporting a positive outlook for the remainder of the fiscal year [8] - The company is well-positioned to benefit from macroeconomic drivers such as reshoring and increased power demand [30] - Management highlighted the importance of maintaining a strong balance sheet while pursuing growth opportunities [28] Other Important Information - The company has a backlog of $180 million in the power sector, up 58% year-over-year, with over 60% of opportunities in the US market [11] - The liquid load bank solutions for data centers are expected to drive significant growth, with quoting activity doubling to $60 million [16] - The medium voltage heater pipeline has expanded to over $150 million, benefiting from global electrification trends [17] Q&A Session Summary Question: Can you talk about the sustainability of the 46%-plus gross margin? - Management noted that improved gross margins are driven by productivity gains, pricing, and a favorable project mix, with expectations for sustained margins [35][36] Question: How have conversations with potential customers in the data center industry evolved? - The company has formed relationships with various stakeholders, including construction contractors and end users, enhancing its market position [39][41] Question: What is the competitive landscape for liquid load banks? - Management confirmed that the market remains robust, with a significant increase in quoting activity, indicating strong future demand [48][49] Question: How do you see the medium voltage opportunity progressing? - The company has a backlog of $11 million and a quote pipeline exceeding $150 million, indicating a multi-year growth opportunity [55][56] Question: Can you discuss the growth drivers in the LNG and midstream markets? - Management highlighted ongoing projects in LNG liquefaction and midstream gas processing, which are expected to drive demand for their products [57][59]

Thermon (NYSE:THR) Q3 2026 Earnings call February 05, 2026 11:00 AM ET Speaker3Greetings and welcome to the Thermon Group Holdings third quarter fiscal 2026 results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to your h ...

THERMON GROUP HOLDINGS, INC. EARNINGS PRESENTATION THIRD QUARTER FISCAL YEAR 2026 FEBRUARY 5, 2026 Cautionary Note Regarding Forward-looking Statements This presentation includes forward-looking statements within the meaning of the U.S. federal securities laws in addition to historical information. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements r ...

Thermon Group (THR) came out with quarterly earnings of $0.66 per share, beating the Zacks Consensus Estimate of $0.59 per share. This compares to earnings of $0.56 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +11.86%. A quarter ago, it was expected that this maker of heat tracing products would post earnings of $0.36 per share when it actually produced earnings of $0.55, delivering a surprise of +52.78%.Over the last four ...

THERMON REPORTS THIRD QUARTER FISCAL 2026 RESULTS Delivering Record Revenue, Profitability and Bookings Raising Full-Year Fiscal 2026 Guidance AUSTIN, TX / ACCESSWIRE / February 5, 2026 - Thermon Group Holdings, Inc. (NYSE:THR) ("Thermon" or the "Company"), a diversified industrial technology company and a global leader in industrial process heating solutions, today announced consolidated results for the third quarter ("Q3 2026") of the fiscal year ending March 31, 2026 ("Fiscal 2026"). THIRD QUARTER 2026 H ...

Delivering Record Revenue, Profitability and Bookings Raising Full-Year Fiscal 2026 Guidance AUSTIN, TX / ACCESS Newswire / February 5, 2026 / Thermon Group Holdings, Inc. (NYSE:THR) ("Thermon" or the "Company"), a diversified industrial technology company and a global leader in industrial process heating solutions, today announced consolidated results for the third quarter ("Q3 2026") of the fiscal year ending March 31, 2026 ("Fiscal 2026"). THIRD QUARTER 2026 HIGHLIGHTS (all comparisons versus the prior y ...