Thermon(US:THR)2023-08-05 16:36Financial Data and Key Metrics Changes - Revenue in the first quarter was $107 million, a year-over-year increase of 12%, primarily driven by midstream and downstream oil activity across the U.S. and Latin America [29] - Adjusted EBITDA for the first quarter was $22 million, up 33% year over year, with adjusted EBITDA margin expansion of approximately 330 basis points [50] - Adjusted diluted earnings per share was $0.40 in the quarter, a year-over-year increase of 58% [51] - The net debt to adjusted EBITDA ratio was 0.8x in the current quarter compared to 1.7x in the previous year, with total debt down 25% to $114 million [31] Business Line Data and Key Metrics Changes - Revenue from large projects was $27 million, up 21% versus the prior year, while revenue from small projects and maintenance and repairs totaled $80 million, up 9% [29] - Bookings from rail and transit were up by 39% year over year, commercial was up by 29%, and food and beverage was up 120% [25] - Bookings from data centers were up over 600% and bookings from the semiconductor end market were up over 90% [25] Market Data and Key Metrics Changes - Bookings this year were up 16% over the prior year, with trailing 12-month orders reaching $475 million [13] - The U.S. market showed strong growth, with significant activity in petrochemical wins and LNG opportunities [13] - The company is seeing recovery in Asia, with positive incoming order rates [6] Company Strategy and Development Direction - The company is pursuing growth in decarbonization, digitization, and diversification, aiming for approximately 65% to 70% of revenues to come from end markets outside of oil and gas by the end of fiscal 2026 [43][22] - The company is focused on maintaining a healthy balance sheet and disciplined capital allocation to support organic growth and evaluate bolt-on acquisitions [64][54] - New technology, such as the Quantum Truflow Heater, is being developed to enhance heating efficiency and support the energy transition [24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the balance of the year, noting strength in margins and backlog [7] - The company raised its full-year revenue guidance, increasing the lower end from $455 million to $462 million and the upper range to $488 million [53] - Continuous improvement efforts are yielding positive results, contributing to performance and productivity gains [7] Other Important Information - The company reported a book-to-bill ratio of 1.12x, indicating continued strong demand from customers [27] - Free cash flow was negative in the quarter due to timing of certain payments, but the company expects to generate significant free cash flow throughout the year [52] - The company is committed to helping customers achieve sustainability goals through its products and solutions [22] Q&A Session Summary Question: What factors went into your full year guidance raise? - Management highlighted strong order intake and profitability from decarbonization initiatives as key factors supporting the raised guidance [56][58] Question: What goes into transitioning opportunities into wins for end markets? - Management noted that timing and competitive positioning are crucial, along with investments in capacity to meet market demand [60][61] Question: Can you provide an update on your renewables opportunity? - Management reported booking over $8 million in renewables opportunities during the quarter and emphasized ongoing growth in this area [69]