Thermon(US:THR)2023-11-06 06:35Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 26.5% year-over-year to $27.7 million, driven by volume growth, price, and productivity [18] - Adjusted EPS rose to $0.49 per share, marking a 30% increase compared to the prior year [19] - Revenue for the second quarter reached $124 million, a 23% year-over-year increase, primarily due to growth in renewables, power, and food and beverage end markets [21] - Net income for the quarter was $15 million, up 34% year-over-year [24] - Cash at the end of the quarter was $31 million, a 4% decrease year-over-year, while total debt decreased by 23% to $111 million [23] Business Line Data and Key Metrics Changes - Revenue from large projects was $36 million, up 54% year-over-year, while revenue from small projects and maintenance and repairs totaled $88 million, up 14% [21] - Approximately 64% of trailing 12-month revenue came from diversified end markets, with 74% of year-to-date orders from these markets, up 33% year-over-year [13][11] - The renewables end market saw a notable 92% year-over-year growth [12] Market Data and Key Metrics Changes - Orders from diversified end markets outpaced those from the oil and gas sector, with a 33% year-over-year increase in orders from diversified markets [13] - Customer demand remained strong across the US and Latin America, while spending in Canada was flat [20] - The company reported a 40% increase in Europe and a 17% increase in the Asia-Pacific region [96] Company Strategy and Development Direction - The company aims to have approximately 70% of revenues come from outside the oil and gas sector by the end of fiscal 2026 [5] - Strategic pillars include profitably growing the installed base, decarbonization, digitization, diversification, and disciplined capital allocation [4][40] - The company is focused on expanding its product portfolio to capture growth in process heating, which is growing at nearly double the rate of heat tracing [63] Management's Comments on Operating Environment and Future Outlook - Management raised full-year revenue and earnings guidance for fiscal 2024, reflecting positive growth despite macroeconomic uncertainties [26] - The company is well-positioned to deliver profitable growth and manage various economic scenarios in the second half of fiscal 2024 [53] - Management expressed confidence in the ongoing investments in hydrogen and alternative fuels, indicating a robust project pipeline [84] Other Important Information - The company reported a book-to-bill ratio of 0.94 times for the quarter, with trailing 12-month bookings reaching $489 million [48] - Free cash flow improved by $1.9 million year-over-year due to better days sales outstanding [47] - The company will hold its first Investor Day on November 14, providing more details on long-term strategy and financial outlook [55] Q&A Session Summary Question: How is the company thinking about the long-term goal of diversifying revenue? - Management is targeting a 70% diversification goal by 2026 and believes they can exceed this with current growth trends [60] Question: What is the outlook for the food and beverage segment? - The food and beverage segment has seen significant growth, with a 219% increase over the last year, and management sees continued opportunities in this area [41][62] Question: How is the company addressing the growth in process heating versus heat tracing? - Growth in process heating is nearly double that of heat tracing, with significant investments being made to expand capacity in this area [63] Question: Are there any impacts from higher interest rates on the project pipeline? - Management has not seen significant softness in the pipeline due to higher interest rates, with ongoing investments in hydrogen and alternative fuels [84] Question: What is the outlook for sales in Europe? - There are positive trends in Europe, with signs of growth in incoming orders and a favorable pipeline of opportunities [88]