Thermon (THR) Q1 2025 earnings summary

Executive summary

• Revenue grew 8% year-over-year to $115.1 million, driven by the Vapor Power acquisition and strong OPEX growth, offsetting a 5% organic revenue decline due to a 34% drop in large project revenue.

• Net income declined 22% year-over-year to $8.5 million, with margin pressure from higher SG&A, restructuring, and interest expense.

• Achieved 70%+ revenue diversification from non-oil & gas end markets, ahead of plan, reducing reliance on oil & gas.

• OPEX revenues grew 22% year-over-year, now representing 85% of total revenue, providing stability and higher gross margins.

• Backlog rose to $198.5 million, up 15% year-over-year, supporting future revenue visibility.

Financial highlights

• Adjusted EBITDA increased 5% to $23.2 million (20.2% margin); adjusted EPS was $0.38, down 5% year-over-year.

• Free cash flow improved to $8.8 million from a usage of $1.9 million last year.

• Cash and equivalents were $49.1 million; total debt $169.1 million; net leverage improved to 1.1x.

• Gross profit was $50.4 million (43.8% margin), up 7% year-over-year; net income margin decreased to 7.4%.

• Orders increased 12% year-over-year to $127.2 million; book-to-bill ratio at 1.1x.

Outlook and guidance

• FY2025 revenue guidance: $527M–$553M (including $55M–$59M from Vapor Power); Adjusted EBITDA: $112M–$120M; Adjusted EPS: $1.90–$2.06.

• Management expects improved momentum in the second half of the year, with 57%–59% of annual revenue generated in H2 due to seasonality and large project ramp.

• FY2026 targets reaffirmed: $600M–$700M revenue, ~24% EBITDA margin, >70% diversified revenue mix.