Executive Summary

Thermon delivered a clean beat: Q2 FY26 revenue $131.7M (+14.9% YoY) and adjusted EPS $0.55, with adjusted EBITDA margin expanding to 23.2% on pricing, tariff mitigation, and backlog conversion from Q1 delays .
Versus S&P Global consensus, revenue beat by ~10% and EPS (Primary) by ~$0.19; EBITDA (Primary) also came in well ahead, reflecting stronger mix and execution in large CapEx and OPEX channels (see Estimates Context) *.
Management raised FY26 guidance across revenue, adjusted EBITDA, GAAP EPS, and adjusted EPS; backlog grew 17% (4% organic), book-to-bill was 1.0x, and net leverage held at 1.0x, positioning for a stronger H2 .
Emerging catalysts: first order for Poseidon liquid load bank (data centers/AI), growing quote log (~~$30M), and medium-voltage heaters’ early wins (~~$10M orders), with both expected to contribute more meaningfully in coming quarters .

What Went Well and What Went Wrong

What Went Well
- Pricing, tariff mitigation, and productivity drove margin expansion: gross margin 46.4% (+200 bps YoY) and adjusted EBITDA margin 23.2% (+240 bps YoY) despite higher large project mix .
- Large CapEx re-accelerated: over-time large projects (CAPEX) revenue up 41% YoY to $24.7M as LNG projects moved from design to execution; OPEX remained 81% of sales, underpinning resilience .
- Strategic pipeline building in data centers: “first order for the Poseidon liquid load bank” and ~$30M quote log; goal of 20–25% share in a fast-growing liquid load bank market .
What Went Wrong
- Free cash flow softer: Q2 FCF $4.4M vs $6.7M LY on inventory build, increased project activity, and timing of shipments .
- Orders flat YoY (organic bookings -4%) and OPEX mix down YoY (81% vs 85% LY), reflecting timing variability of project awards and small project activity .
- APAC softness tied to trade policy uncertainty with China; management continues to monitor tariff-related second/third-order effects .

Financial Results

Headline metrics by quarter

Metric	Q4 2025	Q1 2026	Q2 2026
Revenue ($M)	$134.1	$108.9	$131.7
GAAP EPS ($)	—	$0.26	$0.45
Adjusted EPS ($)	—	$0.36	$0.55
Gross Margin %	—	44.1%	46.4%
Adjusted EBITDA ($M)	$30.5	$21.2	$30.6
Adjusted EBITDA Margin %	22.7%	19.5%	23.2%

Q2 FY26 vs S&P Global consensus (Primary)

Metric	Consensus	Actual (SPGI)	Surprise
Revenue ($M)	119.43*	131.72*	+12.30 (+10.3%)*
EPS (Primary, $)	0.3625*	0.55*	+0.1875*
EBITDA ($M)	21.79*	27.39*	+5.60 (+25.7%)*

Values with asterisks (*) retrieved from S&P Global.

Q2 FY26 YoY snapshot

Metric	Q2 2026	YoY Change
Revenue ($M)	$131.7	+14.9%
Gross Margin %	46.4%	+200 bps (from 44.4%)
Adjusted EBITDA ($M)	$30.6	+28.6%
Adjusted EBITDA Margin %	23.2%	+240 bps
GAAP EPS ($)	$0.45	+60.7%
Adjusted EPS ($)	$0.55	+44.7%

Segment/channel mix (Q2 YoY)

Segment / Mix	Q2 2025	Q2 2026
Point-in-Time Sales ($M)	$82.279	$93.484
Over Time – Small Projects ($M)	$14.885	$13.542
Over Time – Large Projects (CAPEX) ($M)	$17.484	$24.697
Total Sales ($M)	$114.648	$131.723
OPEX Sales ($M)	$97.164	$107.026
OPEX Sales %	84.7%	81.3%
CAPEX Sales %	15.3%	18.8%

KPIs and balance sheet

KPI	Q4 2025	Q1 2026	Q2 2026
Orders ($M)	—	—	$131.0
Book-to-Bill (x)	1.04x	1.11x	1.0x
Backlog ($M)	—	—	$251.3 (+16.9% YoY)
Net Leverage (x)	—	1.0x	1.0x
Free Cash Flow ($M)	—	—	$4.4
Cash ($M)	—	—	$29.7
Total Debt ($M)	—	—	$139.7
Net Debt ($M)	—	—	$110.0
Liquidity ($M)	—	$130.8	$129.1

Non-GAAP notes: Adjusted EPS excludes amortization, restructuring, ERP implementation costs, transaction/debt issuance costs, and related tax effects; Adjusted EBITDA excludes net interest, taxes, D&A, stock comp, restructuring, ERP, transaction and debt issuance costs .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance (11/6/25)	Change
Revenue	FY26	$495–$535M	$506–$527M	Raised
Adjusted EBITDA	FY26	$104–$114M	$112–$119M	Raised
GAAP EPS	FY26	$1.35–$1.57	$1.62–$1.77	Raised
Adjusted EPS	FY26	$1.77–$1.99	$2.00–$2.15	Raised

Assumptions: current tariff structures persist; improved trends sustained .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY25 and Q1 FY26)	Current Period (Q2 FY26)	Trend
AI/Data centers (liquid load banks)	Launch of Pontus/Poseidon; pipeline building; aim to begin revenue in back half of FY26	First Poseidon order (20 units), ~$30M quote log; targeting 20–25% share; strong customer response	Accelerating opportunity; orders starting
Tariffs/Macro	Anticipated $16–$20M gross impact; net $4–$6M after mitigation; H1 margin headwinds; price offsets in H2	Pricing + tariff mitigation contributing to margin expansion; continued monitoring	From headwind to managed risk
Large CapEx/LNG	Backlog up 29% YoY entering FY26; LNG opportunities ~$80M content; H2 execution expected	Large projects +41% YoY; two NA LNG projects into execution; pipeline up 140% YoY	Broad-based recovery, LNG strong
Digitization (Genesis)	Installed circuits projected +50% in FY26; growing controls mix	86,000 installed circuits (up from 58,000 at FY25 end); expanding across product lines	Scaling adoption and pull-through
Decarbonization/Medium-voltage heaters	F.A.T.I. backlog doubled post-acquisition; Europe/Middle East electrification strength	First two Quantum MV heater orders (~$10M); scaling capacity NA/EU	Early revenue visibility
Regional	EMEA strength; Canada softness; APAC tariff-related risk	EMEA doubled (incl. F.A.T.I.), APAC -4% on China trade uncertainty	EMEA outperformance, APAC drag
Rail/Transit	Backlog growth; stimulus tailwinds	Organic orders down partly due to tough rail & transit comp	Normalizing after surge

Management Commentary

“Thermon delivered exceptional second quarter results… 23% Adjusted EBITDA margin… momentum into the third quarter… raising our full-year 2026 revenue and EPS guidance.” — Bruce Thames, CEO .
“Our total bid pipeline was up 11%… ~80% from diversified end markets including power generation, renewables, commercial and data centers… first order for the Poseidon liquid load bank… expect order activity to ramp meaningfully.” — Bruce Thames, CEO .
“We ended with a leverage ratio of just 1.0x… $129.1 million in total liquidity… repurchased $6 million of shares… robust M&A pipeline.” — Jan Schott, CFO .
“Adjusted EBITDA was $30.6 million… margin was 23.2%… gross margin was 46%… driven by pricing, execution and tariff mitigation.” — Jan Schott, CFO .

Q&A Highlights

Large CapEx cadence and LNG: management expects the flow of projects moving from design to execution to continue in H2; LNG pipeline up ~140% YoY; emphasized the rebound is broad-based across sectors (not just O&G) .
Margins durability: despite large project mix headwinds, price, productivity, and tariff mitigation supported gross margin; aspiration remains ~24% adjusted EBITDA margin over time .
Data center ramp: zero revenue impact in Q2; first Poseidon order booked; expecting additional orders in coming quarters; building channels with owners/operators and rental houses .
Capital allocation: priority on funding organic growth (SG&A and capex to scale); active pipeline for bolt-on M&A; continued opportunistic buybacks .
Limited government exposure: federal government shutdown risk is a “non-event” given minimal direct exposure .

Estimates Context

Q2 FY26 results vs S&P Global consensus: revenue $131.72M vs $119.43M (beat +10.3%); EPS (Primary) $0.55 vs $0.3625; EBITDA (Primary) $27.39M vs $21.79M *.
FY26 consensus baseline: revenue $517.31M*, EBITDA $115.98M*, Primary EPS $2.0775*; company raised guidance to revenue $506–$527M and adjusted EBITDA $112–$119M, implying street may push the midpoint mix higher (especially on margins) *.
Note on EPS definitions: company-reported GAAP EPS was $0.45 for Q2; S&P “Primary EPS” actual of $0.55 aligns with normalized/adjusted EPS convention used in the dataset *.

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

Beat-and-raise quarter: strong revenue conversion, margin expansion, and higher FY26 guide signal improved execution and H2 visibility; multiple secular growth vectors (electrification, data centers) support the narrative .
Mix resilience: even with a higher large project mix, price, productivity, and tariff mitigation preserved gross/EBITDA margin expansion—underscoring improved structural profitability .
Data center optionality: first Poseidon order and ~$30M quote log offer upside option value as liquid cooling accelerates; medium-voltage heaters add a second, early-stage growth leg .
Balanced capital allocation: liquidity of ~$129M, net leverage 1.0x, ongoing buybacks ($6M in Q2) and active M&A pipeline create multiple levers for EPS growth .
Watch APAC/tariff risk: APAC remains soft on trade-policy uncertainty; continued price/mix/productivity actions are key to offsetting potential headwinds .
Near-term trading lens: beats on revenue/EPS/EBITDA vs consensus with a guide-up typically screens positively; incremental data center order wins and further backlog conversion in LNG/CapEx could be next catalysts *.

Appendix: Additional Detail

Cash flow and balance sheet (Q2 FY26)

Cash $29.7M; Total debt $139.7M; Net debt $110.0M; Net leverage 1.0x; FCF $4.4M; Capex $3.1M .
Liquidity: ~$129.1M (cash + revolver availability) .

Operating channel detail (Q2 FY26)

OPEX Sales $107.0M (81.3% of sales); CAPEX (Over Time – Large Projects) $24.7M (18.8%); Point-in-Time $93.5M; Over Time – Small Projects $13.5M .

Drivers of the beat

Backlog conversion from Q1 delays, improved large project execution, pricing, and tariff mitigation measures .

Non-GAAP reconciliation highlights

Adjusted EPS excludes amortization, restructuring, ERP, transaction/debt issuance costs, with tax effects; Adjusted EBITDA adds back net interest, taxes, D&A, stock comp, restructuring, ERP, transaction, and debt issuance costs .

Search coverage

Read: Q2 FY26 8-K earnings press release, Q2 FY26 call transcript; prior Q1 FY26 and Q4 FY25 transcripts for trend context .
No other Thermon-issued Q2 press releases located in the period besides the 8-K; one unrelated third-party market research release (heating pads) was excluded as immaterial to Thermon’s quarter .

Thermon Group Holdings, Inc. (THR)·Q2 2026 Earnings Summary