Thermon(THR)2024-11-10 15:12Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $115 million, a year-over-year decrease of 7.4%, primarily due to headwinds in large project business, partially offset by contributions from Vapor Power and stable OpEx revenues [20][21] - Adjusted EBITDA was $23.8 million, down from $27.7 million last year, with an adjusted EBITDA margin of 20.8%, down from 22.4% [21][22] - Free cash flow improved to $6.7 million, up $6.1 million from the previous year, with a total of over $15 million generated in the first half of the fiscal year [24][31] Business Line Data and Key Metrics Changes - Large project revenue was $17.5 million, down 51% year-over-year, while OpEx revenues were $97.2 million, an increase of 10% compared to last year [20][21] - OpEx revenues represented over 80% of total revenues on a trailing 12-month basis, with a nearly 11% growth in OpEx revenues [13][20] - The company achieved a 13% increase in orders during Q2, with a backlog of $214.9 million, up 29% year-over-year [23] Market Data and Key Metrics Changes - Sales declined across the US, LAM, EMEA, and APAC, with a 2% increase in Canada [21] - The decarbonization opportunities pipeline grew to approximately $320 million, representing about 4% of the total $1.2 billion pipeline [15][43] Company Strategy and Development Direction - The company aims to reduce exposure to the oil and gas sector, achieving a goal of generating at least 70% of revenues from diversified end markets [14] - Recent acquisitions, including Vapor Power and F.A.T.I., are part of the strategy to enhance market presence and support growth initiatives [10][17] - The company is focused on operational excellence and maintaining financial discipline while investing in strategic initiatives [9][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved order trends and a growing opportunities pipeline, despite ongoing weakness in large project markets [27][29] - The company adjusted its full-year 2025 guidance, expecting revenue between $495 million and $515 million, with adjusted EBITDA ranging from $105 million to $110 million [27] - Management noted that recent spending delays could create pent-up demand as customer confidence improves [29] Other Important Information - The company completed the consolidation of its rail and transit production lines, targeting $5.7 million in annualized savings [23] - The acquisition of F.A.T.I. is expected to enhance the company's ability to serve growing markets for electrification and decarbonization in Europe [17] Q&A Session Summary Question: Sales guidance and Vapor Power contribution - Management confirmed that Vapor Power is still tracking in the $55 million to $57 million range for the year, with strong backlog [34] Question: Large project activity post-election - Management indicated that clarity from the elections could positively impact project activity, with a growing pipeline of opportunities [38] Question: Weather impact on sales - Management noted improved material sales and a more normalized winter is expected, with Canadian business showing year-over-year improvement [40][42] Question: Decarbonization pipeline details - The decarbonization opportunities pipeline is approximately $320 million, part of a larger $1.2 billion pipeline [43] Question: Large project delays and market sectors - Management stated that delays are broad-based, affecting both oil and gas and renewable projects, with expectations for improved activity in 2026 [44][47]