Industry Overview - The Zacks Instruments – Control industry is positioned to benefit from a focus on energy-efficient production processes and integrated software systems, with rising demand for advanced technology to replace legacy industrial controls driving growth [1] - The industry comprises manufacturers of precision and specialty motion-control components and systems used across various sectors, providing solutions for flow measurement, control, and communication for air, water, and other gases and liquids [3] Growth Drivers - The industry's growth is primarily driven by the emphasis on digitized technologies in manufacturing, such as the Industrial Internet of Things, and the demand for process automation and safety automation systems [4] - Increased adoption of automation and higher investments in new technologies are expected to drive growth, particularly in North America, supported by rising infrastructural investments in the energy sector and favorable government policies [6] Challenges - Elevated customer inventory levels, high capital expenditures for infrastructure upgrades, and intense market volatility may hinder the process automation and instrumentation market [2] - Material cost inflation and rising transportation costs, along with high raw material prices due to geopolitical tensions, are affecting industry players' margins and profitability [5] Market Performance - The Zacks Instruments – Control industry has lagged behind the S&P 500 and the broader Zacks Computer and Technology sector over the past year, gaining only 2.2% compared to the S&P 500's 18.2% and the sector's 23.3% [9] - The industry has a trailing 12-month Enterprise Value-to-EBITDA (EV/EBITDA) ratio of 13.89X, which is below the S&P 500's 17.98X and the sector's 18.29X [12] Notable Companies - **Watts Water Technologies, Inc. (WTS)**: Focuses on water safety and flow control products, benefiting from cost-reduction actions and a strong balance sheet, with a long-term earnings growth expectation of 7.4% and a stock gain of 24.8% in the past year [15] - **Sensata Technologies Holding plc (ST)**: A global industrial technology company specializing in sensor-based solutions, with a long-term earnings growth expectation of 7.3% and a focus on electrification for hybrid and electric vehicles [18][19] - **Thermon Group Holdings, Inc. (THR)**: Provides engineered industrial process heating solutions, with a recent acquisition enhancing its market exposure and a long-term earnings surprise of 12.7% on average in the trailing four quarters [22]

Core Insights - Ascletis Pharma Inc. is conducting a randomized, double-blind, placebo-controlled study (ASC47-103) to evaluate the safety, tolerability, and preliminary efficacy of ASC47 in combination with semaglutide for obesity treatment [2][5] - The study has successfully enrolled 28 participants in less than two months, indicating strong interest in new obesity treatment options [3][8] - Topline data from the study is expected to be released in the fourth quarter of 2025 [4][8] Company Overview - Ascletis Pharma Inc. is a biotechnology company focused on developing and commercializing therapeutics for metabolic diseases, utilizing proprietary platforms for drug discovery [6] - The company is listed on the Hong Kong Stock Exchange under the ticker 1672.HK [6] Study Details - The ASC47-103 study includes three cohorts receiving single doses of ASC47 (10 mg, 30 mg, and 60 mg) or placebo, along with four doses of semaglutide (0.5 mg, once weekly) [5] - ASC47 is characterized as an ultra-long-acting subcutaneously administered thyroid hormone receptor beta selective small molecule agonist, with a half-life of up to 40 days [3][5] - In preclinical studies, ASC47 demonstrated superior fat mass reduction compared to semaglutide and tirzepatide in diet-induced obese mouse models [3]

Group 1 - The article promotes a premium service called "Value in Corporate Events" that focuses on major earnings events, M&A, IPOs, and other significant corporate events with actionable investment ideas [1] - The service aims to provide members with opportunities to capitalize on various corporate events, covering 10 major events a month to identify the best investment opportunities [1] Group 2 - The article includes a disclosure stating that the author has no stock or derivative positions in any mentioned companies and does not plan to initiate any positions within the next 72 hours [2] - It emphasizes that past performance is not indicative of future results and that no specific investment recommendations are provided [2]

Financial Performance & Business Mix - Thermon's FY2025 total revenue reached $492 million[8] - Adjusted EBITDA margin was 21% in FY2025[8] - The company is shifting its business mix towards OPEX, targeting 84% of revenue compared to 66% in FY2017[20] - Q3 FY2025 revenue was $134.4 million, a decrease of 1.5% year-over-year[72] - Q3 FY2025 Adjusted EBITDA increased by 3.3% year-over-year to $31.8 million[72] Growth & Strategy - The company is targeting 90,000 Genesis Network Remote Monitoring & Diagnostics circuits by FY2026[27] - OPEX sales increased 12.6% year-over-year in Q3 FY2025[74] - The company is aiming for a long-term Net Debt to Adjusted EBITDA leverage ratio of 1.5x – 2.0x[38] Market Trends & Opportunities - The company is capitalizing on key secular trends including Energy Transition (~10% CAGR), Developing Market Growth (~5% CAGR), Chemical and Petrochemical Demand Growth (~5% CAGR), and Industrial Internet of Things (~25% CAGR)[29] - The company sees a substantial runway in the energy transition, noting that only 13% of energy for industrial applications in the U S came from electricity in 2022[51] Guidance - The company maintains its full-year FY2025 revenue guidance of $495 million - $515 million, representing 0% - 4% growth[88] - The company anticipates an adjusted EBITDA margin of 21.2% - 21.4% for FY2025[88]

Thermon Group Holdings (THR) Conference Call Summary Company Overview - **Company**: Thermon Group Holdings (THR) - **Market Cap**: $1 billion - **Revenue**: Approximately $500 million - **Industry Focus**: Custom heating solutions for process industries - **Key Markets**: Oil and gas, chemical, petrochemical, power, food and beverage, rail and transit, semiconductor, and general industrial applications [3][5][6] Core Business Insights - **Product Categories**: Engineered heating solutions with a strong engineering team of over 200 engineers globally [5][6] - **Margin Profile**: EBITDA margins at 22% and gross margins at 44.7% for fiscal year 2025 [7] Financial Performance and Guidance - **Backlog Growth**: Organic backlog increased by 20%, overall backlog up by 29% [9] - **Book to Bill Ratio**: 1.08x for FY 2025, indicating strong order intake [8] - **Revenue Guidance for 2026**: Projected revenue between $495 million to $535 million, with EBITDA between $104 million to $114 million [13] Impact of Tariffs and Costs - **Tariff Impact**: Estimated indirect costs due to tariffs between $16 million to $20 million [11] - **Supply Chain Adjustments**: Reconfiguration of supply chains and manufacturing shifts to mitigate tariff impacts [11][14] Strategic Initiatives - **Electrification of Industrial Heat**: Positioned to lead the transition from hydrocarbon-based heating to electrical heating [25] - **Acquisition of Fatih**: Acquired for €12.5 million in revenue with a backlog of $15 million, now increased to $30 million [26][27] - **New Technology Launch**: Medium voltage heating technology launched, with orders of $5 million each for LNG and petrochemical plants [28][30] Market Opportunities - **Decarbonization**: Significant opportunity in converting hydrocarbon-based heating to electrical heating, with 80% of industrial heating potentially convertible [34] - **Onshoring Trends**: Strong demand in general industrial applications, contributing to 25% of revenue [36] - **Data Center Opportunities**: Increased demand for load banks in data centers for startup and commissioning [32] Digital Transformation - **Genesis Platform**: Represents 12% of overall revenues for heat tracing, enhancing operational efficiency and customer engagement [43][44] Capital Allocation Strategy - **Capital Expenditure**: Historically 2% to 3% on capital projects, with a focus on R&D and acquisitions [46] - **Share Repurchase Program**: $24 million repurchased since March 2024, with a refreshed total of $50 million [51][53] Financial Health - **Leverage Ratio**: Under 1x, with $137 million in liquidity and strong cash flows of approximately $53 million [54][55] Conclusion - **Overall Outlook**: Despite tariff uncertainties, Thermon is positioned for growth through strategic acquisitions, technological advancements, and a focus on electrification and decarbonization in industrial heating [12][25][34]

Financial Performance - Thermon Group Holdings, Inc. (THR) reported fourth-quarter fiscal 2025 adjusted earnings per share (EPS) of 56 cents, exceeding the Zacks Consensus Estimate of 50 cents, representing a year-over-year growth of 64.7% driven by revenue growth, enhanced profitability, and reduced interest expenses [1] - Revenues for the quarter totaled $134.1 million, beating the Zacks Consensus Estimate by 0.4%, and expanded 5% year over year, supported by strong OPEX revenues and contributions from Vapor Power and F.A.T.I. [2] - For the full fiscal year, total revenues reached $498.2 million, up 0.7% year over year, with record revenues and adjusted EBITDA achieved through successful integrations of acquisitions and strategic execution [3] Segment Performance - Revenues from Decarbonization and Electrification reached $63 million in fiscal 2025, marking an 80% year-over-year growth, primarily driven by Vapor Power, although organic revenues in this segment contracted by 19% due to shifts in U.S. policy [3] - The opportunities pipeline for Thermon was $435 million, reflecting a 70% year-over-year increase, indicating positive demand trends in electrification, decarbonization, on-shoring, and power markets [4] Profitability Metrics - Gross margin during the quarter expanded by 330 basis points to 44.3% from 41% in the prior-year quarter, attributed to a favorable revenue mix, improved pricing, and productivity enhancements [5] - Adjusted EBITDA for the quarter increased by 29% year over year to $30.5 million, driven by revenue growth and productivity gains, despite some weakness in large projects [6] Cash Flow and Liquidity - As of March 31, 2025, the company had $39.5 million in cash and cash equivalents and total debt of $138.9 million, compared to $48.6 million and $172.5 million in the prior-year period [8] - For fiscal 2025, THR generated $63.1 million of cash from operating activities, slightly down from $66 million in fiscal 2024 [8] Future Outlook - For fiscal 2026, revenues are projected to be between $495 million and $535 million, indicating a year-over-year growth of 3.5% at the midpoint, with adjusted EBITDA expected to remain flat [10] - Management anticipates GAAP EPS to be between $1.35 and $1.57 and adjusted EPS to be between $1.77 and $1.99 for fiscal 2026 [10] - The effective tax rate for fiscal 2026 is projected to be approximately 26%, with a slight decline in adjusted EBITDA margin expected due to tariff mitigation efforts [11]

Core Insights - Thermon Group reported a 5% year-over-year revenue growth to $134.1 million for fiscal 2025's fourth quarter, with an adjusted EBITDA margin of 22.7% and record annual free cash flow of $53 million [1] - The company experienced a 29% year-over-year increase in backlog as of March 31, driven by strategic expansion into high-growth markets and a rebound in oil and gas activity [2][3] Financial Performance - Revenue for fiscal 2025's fourth quarter was $134.1 million, reflecting a 5% increase from the previous year [1] - Adjusted EBITDA margin stood at 22.7%, indicating strong operational efficiency [1] - Annual free cash flow reached a record $53 million, showcasing robust cash generation capabilities [1] Backlog and Market Dynamics - The backlog increased by 29% year-over-year, with organic backlog growth of 20%, indicating sustained order strength despite a 37% annual decrease in revenue from large capital projects [2] - The book-to-bill ratio has remained above 1.0 for four consecutive quarters, supported by increased activity in the oil and natural gas sectors [2] Strategic Initiatives - The lifting of the U.S. moratorium on new LNG export project permits led to increased project bidding, with Thermon securing five major awards [3] - The acquisition of Vapor Power in January 2024 expanded the sales pipeline by 25%, while the acquisition of Fati later in fiscal 2025 doubled Fati's backlog due to demand from Thermon's legacy customers [3][4] Tariff Impact and Mitigation - Management anticipates an annualized gross tariff headwind of $16 million to $20 million, with a net impact of $4 million to $6 million after mitigation efforts [5][6] - The company is implementing price increases, supply chain reconfigurations, and production shifts to offset cost inflation from new import taxes [5] Future Outlook - For fiscal 2026, management projects revenue between $495 million and $535 million, representing a 3.5% growth at the midpoint, and adjusted EBITDA of $104 million to $114 million [7] - A brief margin dip is expected in the first half of fiscal 2026 due to tariff impacts, but margins are anticipated to recover in the second half as pricing actions take effect [7] - Management remains neutral to cautious on demand expectations due to macroeconomic and trade policy risks, while emphasizing aggressive capital allocation for M&A, share repurchases, and organic growth investments [7]

THERMON GROUP HOLDINGS, INC. EARNINGS PRESENTATION FOURTH QUARTER FISCAL YEAR 2025 MAY 22, 2025 Q4 FY2025 Earnings | 1 Actual events, results and outcomes may differ materially from our expectations due to a variety of factors. Although it is not possible to identify all of these factors, they include, among others, (i) future growth of our key end markets and related capital investments; (ii) our ability to operate successfully in foreign countries; (iii) uncertainty over and changes in administrative poli ...

Growth Strategy - The company plans to strategically pursue emerging growth opportunities, including strategic acquisitions in diverse regions and across industry sectors [18]. - The company expects to secure more new facility project bids, enhancing its revenue potential [18]. - The company anticipates an increase in revenues, reflecting positive market conditions and operational strategies [18]. - The company aims to integrate acquired companies effectively to achieve synergies and enhance overall performance [18]. - The company is committed to developing strategic alliances with major customers and suppliers to strengthen its market position [18]. Financial Health - The company believes its cash flows will be sufficient to meet operational needs for the next year [18]. Market Competitiveness - The company is focused on responding to new market developments and technological advances to maintain competitiveness [18]. - The company acknowledges risks related to competition and the ability to deliver existing orders within its backlog [19]. - The company recognizes the importance of managing risks associated with foreign operations and economic conditions [19]. - The company is focused on maintaining compliance with environmental and health regulations, which could impact operations [19].

Financial Data and Key Metrics Changes - The company generated $498 million in revenue for fiscal year 2025, a 1% increase year-over-year despite a 37% decline in large capital projects [10] - Adjusted EBITDA margin for fiscal year 2025 was 22%, up 86 basis points from the previous year, reflecting a more favorable revenue mix and productivity gains [10] - Free cash flow for the year was $53 million, with a gross margin expansion of 196 basis points [11][28] Business Line Data and Key Metrics Changes - Organic growth of 3% was achieved in the fourth quarter, marking the first growth in over a year, driven by improved order trends in various verticals, particularly in the LNG market [7][10] - OpEx revenues for the fourth quarter were $111.8 million, a 7% increase compared to the previous year, representing 83% of total revenues [25] - Large project revenue for the fourth quarter was $22.3 million, down 5% year-over-year but up 20% compared to the previous quarter [24] Market Data and Key Metrics Changes - US sales increased by 6%, while EMEA revenue rose by 51% year-over-year, indicating strong performance in those regions [26] - The backlog as of March 31 increased by 29% from the previous year, with organic backlog up 20% [8] - The company reported a book-to-bill ratio of 1.04 times for the fourth quarter, reflecting balanced strength across diversified end markets [25] Company Strategy and Development Direction - The company is focused on three strategic pillars: growing the installed base, pursuing decarbonization, digitization, and diversification, and maintaining disciplined capital allocation [13][16] - The acquisition of Vapor Power has expanded the addressable market, increasing the sales pipeline by 25% [12] - The company aims to leverage existing solutions and new product development to meet customer decarbonization needs, with a strong emphasis on electrification of industrial heating [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying demand for products despite macroeconomic uncertainties, with a focus on navigating a dynamic global trade environment [31][35] - The company anticipates margin headwinds in the first half of fiscal year 2026 due to tariffs but expects to offset these through pricing actions in the latter half of the year [35][44] - The guidance for fiscal year 2026 includes revenue expectations between $495 million and $535 million, representing a 3.5% growth at the midpoint [35] Other Important Information - The company repurchased $14 million in shares during the fourth quarter, with a total of over $20 million in share repurchases for fiscal year 2025 [28] - The board approved a refresh of the share repurchase program back to $50 million, reflecting optimism for future growth [9][29] - The company is actively working on extending the maturity of its existing credit facility, which becomes current in September 2025 [29] Q&A Session Summary Question: Can you elaborate on the resurgence in LNG? - Management noted that since the lift of the moratorium in January, several projects have moved forward quickly, particularly in the U.S. Gulf Coast and the Middle East, with approximately $80 million in LNG opportunities in the pipeline [40][41] Question: What are the expectations for FY 2026 regarding margins and growth? - Management indicated that there will be near-term impacts on gross margins in the first half due to tariffs, but pricing actions are expected to mitigate these effects in the second half [42][44] Question: How is the company viewing the overtime category in the forecast for FY 2026? - Management mentioned a strong backlog build in overtime projects, with expectations for muted order rates until clarity on trade policy is achieved [50] Question: What is the competitive landscape regarding tariffs and trade policy? - Management highlighted that the company has a significant presence in the U.S. and Canada, which provides an advantage, and noted that they are not heavily dependent on China, reducing exposure to tariff impacts [78][80]