thr-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-35159

THERMON GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware			27-2228185
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

7171 Southwest Parkway, Building 300, Suite 200, Austin, Texas 78735

(Address of principal executive offices) (zip code)

(512) 690-0600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

THR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes ☒ No

As of November 1, 2023, the registrant had 33,696,760 shares of common stock, par value $0.001 per share, outstanding.

THERMON GROUP HOLDINGS, INC.

QUARTERLY REPORT

FOR THE QUARTER ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS


			Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2023 and March 31, 2023			2
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) for the three and six months ended September 30, 2023 and 2022			3
Condensed Consolidated Statements of Equity for the three and six months ended September 30, 2023 and 2022			4
Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2023 and 2022			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3. Quantitative and Qualitative Disclosures About Market Risk			28
Item 4. Controls and Procedures			29
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			30
Item 1A. Risk Factors			30
Item 2. Unregistered Sales of Equity Securities ,Use of Proceeds and Issuer Purchases of Equity Securities			30
Item 3. Defaults Upon Senior Securities			30
Item 4. Mine Safety Disclosures			30
Item 5. Other Information			30
Item 6. Exhibits			30
EXHIBIT INDEX			31
SIGNATURE			32

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Thermon Group Holdings, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share and per share data)


	September 30, 2023		March 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	30,532	$	35,635
Accounts receivable, net of allowances of $2,812 and $2,682 as of September 30, 2023, and March 31, 2023, respectively	101,564		97,627
Inventories, net	92,550		82,132
Contract assets	27,259		16,272
Prepaid expenses and other current assets	16,865		16,138
Income tax receivable	1,109		3,138
Total current assets	$	269,879	$	250,942
Property, plant and equipment, net of depreciation and amortization of $70,610 and $67,450 as of September 30, 2023, and March 31, 2023, respectively	64,794		63,288
Goodwill	218,864		219,612
Intangible assets, net	88,018		93,970
Operating lease right-of-use assets	12,319		13,570
Deferred income taxes	703		688
Other non-current assets	9,146		7,559
Total assets	$	663,723	$	649,629
Liabilities
Current liabilities:
Accounts payable	$	34,603	$	27,330
Accrued liabilities	30,585		39,364
Current portion of long-term debt	10,226		10,222
Borrowings under revolving credit facility	27,500		14,500
Contract liabilities	7,261		8,483
Lease liabilities	3,387		3,364
Income taxes payable	4,366		6,809
Total current liabilities	$	117,928	$	110,072
Long-term debt, net	72,599		87,710
Deferred income taxes	10,438		12,084
Non-current lease liabilities	11,389		12,479
Other non-current liabilities	9,063		8,296
Total liabilities	$	221,417	$	230,641
Commitments and contingencies (Note 10)
Equity
Common stock: $0.001 par value; 150,000,000 authorized; 33,690,712 and 33,508,076 shares issued and outstanding at September 30, 2023 and March 31, 2023, respectively	$	34	$	33
Preferred stock: $0.001 par value; 10,000,000 authorized; no shares issued and outstanding	—		—
Additional paid in capital	240,833		239,860
Accumulated other comprehensive loss	(61,424)		(58,100)
Retained earnings	262,863		237,195
Total equity	$	442,306	$	418,988
Total liabilities and equity	$	663,723	$	649,629

The accompanying notes are an integral part of these condensed consolidated financial statements

Thermon Group Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited)

(Dollars in thousands, except share and per share data)


	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		Six Months Ended September 30, 2023		Six Months Ended September 30, 2022
Sales	$	123,659	$	100,557	$	230,548	$	195,999
Cost of sales	69,201		54,631		128,781		112,848
Gross profit	54,458		45,926		101,767		83,151
Operating expenses:
Selling, general and administrative expenses	30,490		27,754		59,144		52,157
Deferred compensation plan expense/(income)	(247)		(303)		26		(963)
Amortization of intangible assets	2,227		2,437		4,614		4,705
Restructuring and other charges/(income)	304		—		885		—
Income from operations	21,684		16,038		37,098		27,252
Other income/(expenses):
Interest expense, net	(1,925)		(1,408)		(3,509)		(2,243)

Other income/(expense)	(267)		(335)		74		(1,251)
Income before provision for income taxes	19,492		14,295		33,663		23,758
Income tax expense	4,762		3,311		7,995		6,218
Net income	$	14,730	$	10,984	$	25,668	$	17,540


Comprehensive income/(loss):
Net income	$	14,730	$	10,984	$	25,668	$	17,540
Foreign currency translation adjustment	(7,845)		(17,811)		(3,388)		(22,963)
Other miscellaneous income	51		116		64		118
Comprehensive income/(loss)	$	6,936	$	(6,711)	$	22,344	$	(5,305)
Net income per common share:
Basic	$	0.44	$	0.33	$	0.76	$	0.52
Diluted	$	0.43	$	0.33	$

SEC Form 10-Q filed by Thermon Group Holdings Inc.