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Thermon Group's Q1 Earnings Lag Ests - Analyst Blog

By: Zacks.com
Posted: 8/12/2013 9:36:00 AM
Referenced Stocks: CMI;LII;NDSN;THR

Thermon Group Holdings, Inc. ( THR ) reported its financial results for the first quarter of fiscal year 2014 (ended Jun 30, 2013) on Aug 8, 2013. Adjusted earnings per share in the quarter came in at 23 cents, in line with the year-ago quarter earnings but below the Zacks Consensus Estimate of 27 cents.

Revenues

Thermon Group's revenues in the quarter fell 3% year over year to $65.6 million primarily due to lower revenue generation in Europe.

Margins

Cost of sales in the first quarter of 2014 increased 0.7% year over year and represented 52.7% of the total revenue; up from 50.7% in the year-ago quarter. Marketing, general and administrative and engineering expenses of Thermon group, as a percentage of the total revenue, stood at 24.1%. Operating margin in the quarter was 18.4%, down from 21.5% in the year-ago quarter.

Balance Sheet

Exiting the fiscal first quarter of 2014, cash and cash equivalents of Thermon Group were approximately $45.4 million, up 3.7% from $43.8 million in the previous quarter. On the other hand, long-term debt, net of current maturities was stable at $118.1 million.

In May 2013, Thermon Group completed redemption of 9.5% senior notes by using a new loan with lower interest rates. This new adjustment is likely to reduce interest expense by $7.5 million or 23 cents per share on an annual basis, resulting in nearly $30 million savings in the next four years.

Cash Flow

Cash flow from operating activities in the first quarter was $6.2 million, up from $0.4 million in the year-ago quarter while capital expenditure by Thermon Group was $0.6 million versus $1.3 million in the year-ago quarter.

Increase in cash flow from operating activities and fall in capital spending led to drastic increase in free cash flow that came in at $5.5 million.

Outlook: For fiscal year 2014, Thermon Group's management expects mid-single digit revenue growth.

Thermon Group currently has a $611.8 million market capitalization and carries a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Lennox International, Inc. ( LII ), Nordson Corporation ( NDSN ) and Cummins Inc. ( CMI ). While Lennox carries a  Zacks Rank #1 (Strong Buy), Nordson and Cummins hold a Zacks Rank #2 (Buy).



CUMMINS INC (CMI): Free Stock Analysis Report

LENNOX INTL INC (LII): Free Stock Analysis Report

NORDSON CORP (NDSN): Free Stock Analysis Report

THERMON GROUP (THR): Free Stock Analysis Report

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