Thermon Beats on Q3 Earnings, Lags on Rev - Analyst Blog


Thermon Group Holdings, Inc. ( THR ) reported improved year-over-year earnings for the third quarter of fiscal 2014 (ended Dec 31, 2013). Adjusted earnings per share in the quarter came in at 37 cents, up 54.2% year over year and a cent above the Zacks Consensus Estimate of 36 cents. The hike in earnings was mainly a result of increase in the margins.

On a GAAP-basis, earnings per share were 39 cents, up from 24 cents in the year-ago comparable quarter.


Thermon Group generated revenues of $71.5 million in the fiscal third-quarter 2014, down 7.0% year over year. The decrease can be attributed to a decline in Greenfield activity in Asia and Canada. Moreover, foreign currency transactions negatively impacted revenues by $1.2 million, primarily due to weakness in the Canadian dollar. Reported revenues also missed the Zacks Consensus Estimate of $82.0 million comprehensively. 

Exiting fiscal third-quarter 2014, Thermon Group had a backlog of $90.5 million compared with $91.8 million at the end of fiscal second-quarter 2014.


Cost of sales in fiscal third-quarter 2014 decreased 15.4% year over year and represented 49.5% of total revenue, down from 54.5% in the year-ago quarter. Gross margin increased 500 basis points year over year to 50.5% on the back of hike in the maintenance, repair, operations/upgrade and expansion revenues.

Marketing, general and administrative and engineering expenses of Thermon group, as a percentage of total revenue, stood at 20.8%. Adjusted earnings before interest, taxes, depreciation and amortization in the quarter were $21.9 million, up from $18.9 million in the year-ago quarter.

Balance Sheet

Exiting fiscal third-quarter 2014, cash and cash equivalents of Thermon Group were $67.3 million, up 26.0% sequentially. Long-term debt, net of current portion, decreased 3.0% to $111.4 million.

Cash Flow

Thermon Group's net cash flow generation from operating activities were up 58.4% year over year to $19.5 million. Capital spending on purchase of property, plant and equipment was $973,000, up from $2.4 million in the comparable quarter a year ago.

Other Stocks to Consider

Thermon Group currently has a market capitalization of $835.6 million and carries a Zacks Rank #3 (Hold). Some better-ranked stocks to watch out for in the industry include Watts Water Technologies,Inc. ( WTS ), Graco Inc. ( GGG ) and Kaman Corporation ( KAMN ). All these stocks carry a Zacks Rank #2 (Buy).

GRACO INC (GGG): Free Stock Analysis Report

KAMAN CORP A (KAMN): Free Stock Analysis Report

THERMON GROUP (THR): Free Stock Analysis Report

WATTS WATER TEC (WTS): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: GGG , KAMN , THR , WTS

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