Thermon (THR) Q2 2025 earnings summary

Executive summary

• Q2 revenue declined 7.4% year-over-year to $114.6 million, with organic revenue down 17.1% excluding Vapor Power acquisition; net income fell 35.4% to $9.5 million.

• OPEX sales grew 10.2% to $97.2 million, now representing 85% of total revenue, while large project revenue dropped 50.7%.

• Orders increased 12.6% to $131.1 million, driving record backlog of $214.9 million, up 29% year-over-year.

• Recent acquisitions (Vapor Power, F.A.T.I.) expanded market exposure and geographic footprint, supporting diversification and electrification strategies.

• Management highlights strategic progress in diversification, decarbonization, and operational excellence.

Financial highlights

• Q2 revenue was $114.6 million, down 7.4% year-over-year; Vapor Power contributed $12.1 million.

• Adjusted EBITDA was $23.8 million (20.8% margin), down 14.1% year-over-year.

• Free cash flow for the quarter was $6.7 million, up from $0.6 million last year; YTD free cash flow reached $15.5 million.

• GAAP net income: $9.5 million, down 35.4% year-over-year; diluted EPS: $0.28, down 34.9%.

• Gross margin improved to 44.4% in Q2.

Outlook and guidance

• FY2025 revenue guidance set at $495–$515 million, including recent acquisitions; adjusted EBITDA expected at $105–$110 million; adjusted EPS at $1.77–$1.89.

• Vapor Power revenue contribution forecasted at $55–$57 million for the year.

• FY2026 targets: $600–$700 million revenue, ~24% EBITDA margin, >70% revenue from diversified markets.

• Guidance reflects backlog conversion delays, large project weakness, and macro uncertainty.

• Anticipates continued strong free cash flow and incremental debt paydown of $20–$30 million.