Thermon(US:THR)2019-06-12 19:58Revenue and Market Presence - Approximately 60% of the company's revenue for fiscal 2019 was generated outside of the United States[21] - The company derived approximately 51% of its revenue for fiscal 2019 from maintenance, repair, and operations (MRO) activities[24] - Approximately 60% of revenues were generated outside the United States, highlighting the company's global market presence[175] - The company has a diversified revenue mix with thousands of customers, serving large multinational clients for over 60 years[69] - The company operates in four reportable segments: US-LAM, Canada, EMEA, and APAC, with profitability varying based on regional competitive environments[37] Market Segments and Products - The industrial process heating market was estimated at approximately $4.0 billion in annual revenue in 2018, with an additional $1.0 billion added to the addressable market following the acquisition of THS[33] - The oil and gas end market accounted for approximately 38% of the total market for industrial process heating in 2019, equating to approximately $1.5 billion in revenue[35] - The chemical processing end market represented approximately 14% of the total market for industrial process heating in 2019, or approximately $560 million in revenue[35] - The power generation end market accounted for approximately 7% of the total market for industrial process heating in fiscal 2019, or approximately $280 million in revenue[35] - The transportation industry end markets accounted for approximately 6% of the total market for industrial process heating in fiscal 2019, or approximately $240 million in revenue[36] - The company offers a wide range of electric heat tracing products, including self-regulating heating cables and mineral insulated cables, which are designed for high-temperature applications in harsh environments[38] - The acquisition of THS has expanded the company's product offerings to include high-efficiency explosion-proof gas catalytic heaters and advanced filtration systems[52] - The company actively seeks to expand its TraceNet™ product offerings, which allow monitoring of over 30,000 heat trace circuits within the same network[48] - Sumac's products, designed for temporary electrical power distribution, include power distribution panels and lighting fixtures, and are engineered for safety in hazardous environments[55] Financial Performance - For the fiscal year ended March 31, 2019, total sales reached $412.6 million, a 33.8% increase from $308.6 million in 2018[171] - Gross profit for the same period was $175.9 million, representing a gross margin of approximately 42.6%[171] - Net income increased to $23.2 million, up 75.2% from $13.2 million in the previous year, resulting in a diluted net income per share of $0.69[171] - The company reported a backlog of $120.0 million as of March 31, 2019, down from $159.6 million in 2018[177] - Operating expenses increased to $106.7 million in 2019, up from $94.6 million in 2018, primarily due to higher compensation costs[171] - The effective tax rate was 30.1% in fiscal 2019, up from 28.1% in fiscal 2018[202] - The company had $206.5 million of outstanding indebtedness as of March 31, 2019, which could impair its financial condition and reduce available funds for other purposes[119] Acquisitions and Growth Strategy - The company completed the acquisition of CCI Thermal Technologies Inc. for approximately $204.6 million USD in cash in October 2017[32] - The company has acquired four companies since March 2015, enhancing its product and service offerings[175] - The company anticipates continued growth driven by both organic and inorganic initiatives in the industrial process heating solutions market[175] Risks and Compliance - The company is subject to complex tax obligations across various jurisdictions, which could lead to significant additional taxes and penalties that may adversely affect financial results[94] - The company faces significant competition from multinational corporations and regional manufacturers, which could impact market share and pricing strategies[102] - The company is exposed to potential liquidated damages charges in many customer contracts, which could adversely affect project revenue and operating results[116] - The company may incur substantial costs to comply with environmental and health and safety laws and regulations, which are becoming more stringent over time[132] - A material weakness in internal control over financial reporting has been identified, which could lead to material misstatements in financial statements[133] Employee and Operational Insights - The company employs approximately 1,465 full-time employees and retains about 228 independent contractors, with good employee relations and no organized work stoppages[78] - The company has ten manufacturing facilities across three continents, with a focus on automation to reduce labor costs and improve efficiency[56] - The company maintains multiple distribution centers, including locations in San Marcos, Texas, Calgary, Alberta, and the Netherlands, to ensure efficient inventory management and customer service[67] Stock and Dividends - The company does not currently intend to pay dividends on its common stock, with future payments dependent on various financial conditions[165] - The company’s stock performance has fluctuated, with a cumulative total return of $105.74 as of March 31, 2019, compared to an initial investment of $100[162] - As of June 11, 2019, the closing sale price of the company's common stock was $24.24, with approximately 15 holders of common stock of record[160]