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Thermon Group Holdings, Inc. (THR)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered 5% revenue growth to $134.1M, with gross margin expanding 330 bps YoY to 44.3% and adjusted EBITDA margin up to 22.7%; orders rose 19% and backlog climbed 29%, signaling continued demand strength .
  • Results beat Wall Street consensus: revenue $134.1M vs $133.6M estimate*, EPS $0.56 (Adjusted) vs $0.505 estimate*, and EBITDA $31.1M vs $28.8M estimate*; book-to-bill was 1.04x, marking the fourth consecutive positive quarter .
    Values retrieved from S&P Global.*
  • FY2026 guidance introduced: revenue $495–$535M, adjusted EBITDA $104–$114M, GAAP EPS $1.35–$1.57, and adjusted EPS $1.77–$1.99; management flagged tariff-driven margin headwinds in H1 with mitigation actions and pricing catching up in H2 .
  • Catalysts: accelerating LNG project activity and diversified end-market strength (data centers, petrochem, transit), plus refreshed $50M share repurchase authorization and net leverage at 0.9x supporting capital return and M&A capacity .

What Went Well and What Went Wrong

What Went Well

  • Broad-based execution with organic growth returning (+3% ex-F.A.T.I.) and four straight quarters of positive book-to-bill; backlog +29% YoY to $240.3M supports near-term visibility .
  • Margin expansion from favorable mix, pricing, and operational efficiencies: gross margin 44.3% (up from 41.0% YoY) and adjusted EBITDA margin 22.7% (up from 18.5% YoY) .
  • Management emphasized strategic progress and demand across electrification, onshoring, decarbonization and power; “record revenue and Adjusted EBITDA” for FY2025 and “accelerating order momentum” position well for FY2026 .

What Went Wrong

  • Large project revenue remained soft ($22.3M, down 4.7% YoY) despite sequential improvement, keeping overall growth modest vs prior quarter and adding mix volatility .
  • Tariffs create near-term margin pressure; gross impact estimated at $16–$20M, net impact ~$4–$6M in FY2026 before mitigation fully offsets in H2 .
  • Free cash flow in the quarter declined YoY to $29.0M (from $34.3M) driven by timing and ERP investments; working capital rose 3% QoQ to $167.6M .

Financial Results

Headline Metrics vs Prior Periods

Metric (USD)Q4 2024Q3 2025Q4 2025
Revenue ($M)$127.7 $134.4 $134.1
GAAP Diluted EPS ($)$0.29 $0.54 $0.50
Adjusted EPS ($)$0.34 $0.56 $0.56
Gross Margin (%)41.0% 46.2% 44.3%
Adjusted EBITDA ($M)$23.6 $31.8 $30.5
Adjusted EBITDA Margin (%)18.5% 23.7% 22.7%
Orders ($M)$117.0 $138.6 $138.8
Backlog ($M)$186.1 $235.6 $240.3
Book-to-Bill (x)—1.03x 1.04x

Results vs S&P Global Consensus (Q4 2025)

MetricConsensusActual
Revenue ($M)$133.65*$134.08
Primary EPS ($)$0.505*$0.56*
EBITDA ($M)$28.78*$31.06*

Values retrieved from S&P Global.*

Segment/Mix Breakdown

Mix MetricQ4 2024Q3 2025Q4 2025
Point-in-Time Sales ($M)$86.0 $99.6 $94.5
Over Time – Small ($M)$18.3 $16.2 $17.3
Over Time – Large ($M)$23.4 $18.6 $22.3
OPEX Sales ($M)$104.3 $115.8 $111.8
OPEX Sales (% of Total)81.7% 86.2% 83.4%

KPIs and Balance Sheet

KPIQ4 2024Q3 2025Q4 2025
Free Cash Flow ($M)$34.3 $8.5 $29.0
Working Capital ($M)$162.2 $177.2 $167.6
Cash & Equivalents ($M)$48.6 $38.7 $39.5
Total Debt ($M)$172.5 $153.4 $138.9
Net Debt / TTM Adj. EBITDA (x)1.2x 1.1x 0.9x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY2025$495–$515 —Maintained through Q3; FY2026 introduced
Adjusted EBITDA ($M)FY2025$105–$110 —Maintained through Q3; FY2026 introduced
GAAP EPS ($)FY2025$1.46–$1.58 —Maintained through Q3; FY2026 introduced
Adjusted EPS ($)FY2025$1.77–$1.89 —Maintained through Q3; FY2026 introduced
Revenue ($M)FY2026—$495–$535 New (raised midpoint vs FY2025 guide)
Adjusted EBITDA ($M)FY2026—$104–$114 New (essentially flat at midpoint per mgmt)
GAAP EPS ($)FY2026—$1.35–$1.57 New (lower midpoint vs FY2025 guide)
Adjusted EPS ($)FY2026—$1.77–$1.99 New (slightly higher midpoint vs FY2025 guide)

Notes: Management expects H1 margin headwinds from tariffs with pricing and mitigation actions catching up in H2; $5M one-time ERP tech investment will be adjusted out of adjusted metrics .

Earnings Call Themes & Trends

TopicQ-2 (Q2 2025)Q-1 (Q3 2025)Current (Q4 2025)Trend
Tariffs/MacroPolicy clarity post-election hoped to normalize capital spend; strategy to be close to customers limits tariff exposure Fluid tariff situation; footprint insulates; limited Mexico/China exposure; cautious outlook Detailed tariff assumptions (steel/aluminum 25%, China 30%, Canada/Mexico 25%); $16–$20M gross impact, $4–$6M net; mitigation via pricing, footprint, supply chain Intensifying headwind with defined mitigation
LNG & Energy ProjectsPipeline $1.2B with decarb ~$320M; large projects pushed, some awards (transit, carbon capture) Improving LNG after permit moratorium lifted; backlog +48% YoY; first organic growth in over a year LNG resurgence; ~$80M tracked; multiple awards; positive bidding along Gulf Coast & Middle East Strengthening activity and visibility
Digitization/GenesisProduct releases; focus on nuclear/boilers use cases High gross margin; mix improves profitability Genesis controls now 12% of heat-tracing revenue; installed circuits +~90% TTM with +50% projected Adoption accelerating
Diversification & M&AF.A.T.I. acquired; backlog >$15M; Vapor Power integration Vapor/F.A.T.I. contributed; margin dilution expected to improve over 18–24 months F.A.T.I. strong demand; Vapor Power capacity constraints; positive book-to-bill; repurchase refreshed to $50M Continued integration; capacity scaling
Regional TrendsCanada recovering; normalized winter boosts materials Canada sales +6%; U.S.-LAM soft on projects; EMEA +11% U.S.-LAM +6% QoQ; EMEA +51% reported; APAC $9.2M; Canada -6% YoY in Q4 but LNG tailwinds Mixed, with EMEA strong; Canada mixed

Management Commentary

  • “We successfully integrated the Vapor Power and F.A.T.I. acquisitions… returned to organic growth, expanded our Adjusted EBITDA margins, and saw accelerating order momentum” — Bruce Thames, CEO .
  • “Our Board… increased our remaining share repurchase authorization back to $50 million… net leverage ratio of 0.9x… total cash and available liquidity of $137 million” — Jan Schott, CFO .
  • “Providing fiscal 2026 guidance… revenue $495–$535M and Adjusted EBITDA $104–$114M… margin headwinds in the first half… slowing growth in the back half” — Bruce Thames .

Q&A Highlights

  • LNG pipeline visibility: ~$80M in content opportunities; awards along U.S. Gulf Coast and Middle East; book-to-bill positive for four quarters .
  • Tariff impact: gross $16–$20M; net $4–$6M for FY2026, mostly H1; mitigation via pricing, footprint optimization, USMCA compliance, supply chain reconfiguration .
  • Mix and margin cadence: margin headwinds H1 due to lag in pricing taking effect; expectation of offsets in late Q2/H2 .
  • Data centers: ~$10M orders for electric boiler load banks in liquid-cooled facilities; TAM seen growing materially .
  • Capital allocation: 2–3% CapEx plus ~1% tech investment; opportunistic buybacks under refreshed $50M authorization; active M&A pipeline .

Estimates Context

  • Q4 FY2025 delivered beats vs S&P Global consensus: revenue $134.08M vs $133.65M*, primary EPS $0.56 vs $0.505*, EBITDA $31.06M vs $28.78M*; estimates based on ~4 contributors for EPS and revenue*.
    Values retrieved from S&P Global.*
  • Implications: FY2026 consensus may need to reflect tariff mitigation timing and stronger LNG/data center pipelines; near-term margin pressure likely weighted to H1 before pricing actions flow through .

Key Takeaways for Investors

  • Strong demand indicators (orders +19%, backlog +29%) and four straight positive book-to-bill support near-term revenue durability despite project timing volatility .
  • Margin playbook credible: mix, pricing, and operational excellence lifted Q4 GM to 44.3% and adj EBITDA margin to 22.7%; expect tariff headwinds H1 with mitigation catching up in H2 .
  • LNG resurgence and diversified end markets (petrochem, transit, power, data centers) expand the pipeline; watch execution and capacity scaling at Vapor Power/F.A.T.I. .
  • Balance sheet optionality: net leverage 0.9x and refreshed $50M buyback authorization provide flexibility for opportunistic repurchases and bolt-on M&A .
  • FY2026 guide is cautious but constructive: revenue midpoint up vs FY2025 guidance, adjusted EBITDA essentially flat, adjusted EPS midpoint higher; tariff trajectory is the key swing factor .
  • Near-term trading lens: any updates on tariff mitigation, LNG awards, and data center wins can drive sentiment; monitoring H1 margin prints vs management’s mitigation timeline is critical .
  • Non-GAAP adjustments matter: adjusted EPS/EBITDA exclude amortization, ERP, acquisition, restructuring; investors should track normalization as integrations mature .