Thermon Group Holdings, Inc. (NYSE:THR) today announced consolidated financial results for the second quarter of the fiscal year ending March 31, 2017 (“Q2 2017”).
Financial summary for Q2 2017 compared to the three months ended September 30, 2015 (“Q2 2016”):
| • | Revenue of $68.8 million, a decrease of 2% |
| • | Backlog of $85.7 million, an increase of 4% |
| • | Gross margin of 42% compared to 48% |
| • | Fully diluted GAAP EPS of $0.11 and Adjusted EPS of $0.10 compared to $0.21 and $0.26, respectively |
“We are encouraged that our revenue levels this quarter remained comparable to last year in view of the current economic environment. Our gross margin performance for the second quarter was an improvement over Q1 2017; however, it remained below our historical average due to unfavorable product mix and pricing pressures. We anticipate gross margins to modestly improve in Q3 as we enter the heating season, but may fall short of our historical 45% due to a warm start to the winter and weaker capital and maintenance spending,” said Bruce Thames, President and Chief Executive Officer.
During Q2 2017, the Company generated revenue of $68.8 million versus $69.9 million in Q2 2016, a decrease of $1.1 million or 2%. During Q2 2017, Greenfield and MRO/UE (facility maintenance, repair and operations and upgrade or expansion) revenue totaled 36% and 64% of revenue, respectively, compared to 34% and 66% in Q2 2016, respectively.
Gross margin during Q2 2017 was 42.0% compared to 47.7% in Q2 2016. Gross margin performance during the quarter was negatively impacted by a higher concentration of lower margin construction services combined with lower levels of our higher margin manufactured products.
Q2 2017 orders were $59.1 million versus $75.8 million in Q2 2016, a decrease of $16.7 million or 22%. Q2 2017 backlog of $85.7 million represents a 4% increase over Q2 2016 backlog of $82.3 million.
Q2 2017 net income attributable to Thermon and GAAP EPS were $3.5 million and $0.11 per fully diluted common share, respectively compared to $6.9 million and $0.21 per fully diluted common share,respectively in Q2 2016. After taking into account certain one-time charges (see table, Reconciliation of Net Income attributable to Thermon to Adjusted Net Income and Adjusted EPS), the Company generated Adjusted net income in Q2 2017 of $3.1 million and Adjusted EPS of $0.10 per fully diluted common share compared to $8.5 million and $0.26 per fully diluted common share in Q2 2016.
During the first six months of the fiscal year ending March 31, 2017 (“YTD 2017”), the Company generated revenue of $132.2 million compared to $135.2 million in the first six months of the fiscal year ended March 31, 2016 (“YTD 2016”), a decrease of $3.0 million or 2%.
YTD 2017 orders were $136.7 million versus $141.7 million in YTD 2016, a decrease of $5.0 million or 4%.
YTD 2017 net income attributable to Thermon and GAAP earnings per share were $6.0 million and $0.19 per fully diluted common share,respectively compared to $11.3 million and $0.35 per fully diluted common share, respectively in YTD 2016. After taking into account certain one-time charges (see table, Reconciliation of Net Income attributable to Thermon to Adjusted Net Income and Adjusted EPS), the Company generated Adjusted Net Income in YTD 2017 of $5.7 million and Adjusted EPS of $0.17 per fully diluted common share compared to Adjusted Net Income of $14.4 million and Adjusted EPS of $0.44 per fully diluted common share during YTD 2016.
Outlook
The Company is updating its revenue guidance to reflect a mid single-digit percentage decline for fiscal 2017 as compared to fiscal 2016. While backlog remains strong, the Company is encountering project execution delays by our customers as well as the continued deferral of capital and maintenance spending.
Conference Call and Webcast Information
Thermon’s senior management team, including Bruce Thames, President and Chief Executive Officer and Jay Peterson, Chief Financial Officer, will discuss Q2 2017 results during a conference call today at 10:00 a.m. (Central Time), which will be simultaneously webcast on Thermon’s Investor Relations website located at http://ir.thermon.com. Investment community professionals interested in participating in the question-and-answer session may access the call by dialing (877) 312-5421 from within the United States/Canada and (253) 237-1121 from outside of the United States/Canada. A replay of the webcast will be available on Thermon’s Investor Relations website beginning two hours after the conclusion of the call.
About Thermon
Through its global network, Thermon provides highly engineered thermal solutions, known as heat tracing, and complementary products and services for process industries, including energy, chemical processing and power generation. Thermon’s products provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature maintenance, environmental monitoring and surface snow and ice melting. Thermon is headquartered in San Marcos, Texas. For more information, please visit www.thermon.com.
