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Highlights for the quarter and comparisons versus the prior year quarter include:
"
Q2 2013 revenue of
Gross margin percentage was 48.5% of revenue in Q2 2013 versus 47.0% in Q2 2012. The increase was due to margin improvement within Greenfield projects as well as within MRO/UE (maintenance, repair, overhaul/upgrade and expansion) business. Record Adjusted EBITDA excluding management fees was
Q2 2013 net income of
On a year to date basis the Company generated record revenue of
Net income year to date was
Adjustments to GAAP net income in Q2 2012 and Q2 2013 are due to capital market transactions, primarily the effects of optional redemptions of long-term debt in fiscal 2012 and expenses associated with a refinancing of the Company's revolving line of credit and secondary offering of common stock in fiscal 2013. See the tables titled "Reconciliation of Net Income (Loss) to Adjusted EBITDA excluding management fees and Return on Equity" and "Reconciliation of Net Income (Loss) to Adjusted Net Income and EPS" for additional details.
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Non-GAAP Financial Measures
Disclosure in this release to "Adjusted EPS," "Adjusted EBITDA excluding management fees," "Adjusted net income" and "Return on equity" which are "non-GAAP financial measures" as defined under the rules of the
We believe these non-GAAP financial measures are meaningful to our investors to enhance their understanding of our financial performance and are frequently used by securities analysts, investors and other interested parties to compare our performance with the performance of other companies that report Adjusted EPS, Adjusted EBITDA, Adjusted net income or Return on equity. Adjusted EPS, Adjusted EBITDA excluding management fees, Adjusted net income and Return on equity should be considered in addition to, not as substitutes for, income from operations, net income (loss), net income (loss) per share and other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted EPS, Adjusted EBITDA excluding management fees, Adjusted net income and Return on equity may not be comparable to similarly titled measures reported by other companies. For a description of how Adjusted EPS, Adjusted EBITDA excluding management fees, Adjusted net income and Return on equity are calculated from our net income (loss) and a reconciliation of our Adjusted EPS, Adjusted EBITDA excluding management fees, Adjusted net income and Return on equity to net income (loss) per share and net income, as applicable, see the sections of this release titled "Reconciliation of Net Income (Loss) to Adjusted EBITDA excluding management fees and Return on Equity" and "Reconciliation of Net Income (Loss) to Adjusted Net Income and EPS."
Forward-Looking Statements
This release may include forward-looking statements within the meaning of the U.S. federal securities laws in addition to historical information. These forward-looking statements include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. When used, the words "anticipate," "assume," "believe," "budget," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "will," "future" and similar terms and phrases are intended to identify forward-looking statements in this release. Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows.
Actual events, results and outcomes may differ materially from our expectations due to a variety of factors. Although it is not possible to identify all of these factors, they include, among others, (i) general economic conditions and cyclicality in the markets we serve; (ii) future growth of energy and chemical processing capital investments; (iii) changes in relevant currency exchange rates; (iv) our ability to comply with the complex and dynamic system of laws and regulations applicable to international operations; (v) a material disruption at any of our manufacturing facilities; (vi) our dependence on subcontractors and suppliers; (vii) our ability to obtain standby letters of credit, bank guarantees or performance bonds required to bid on or secure certain customer contracts; (viii) competition from various other sources providing similar heat tracing products and services, or other
alternative technologies, to customers; (ix) our ability to attract and retain qualified management and employees, particularly in our overseas markets; (x) our ability to continue to generate sufficient cash flow to satisfy our liquidity needs; (xi) the extent to which federal, state, local and foreign governmental regulation of energy, chemical processing and power generation products and services limits or prohibits the operation of our business; and (xii) other factors discussed in more detail under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended
Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statements. We do not intend to update these statements unless we are required to do so under applicable securities laws.
Thermon Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in Thousands)
September 30,
2012 March 31,
(Unaudited) 2012
-------------- ---------------
Assets
Current assets:
Cash and cash equivalents $ 16,410 $ 21,468
Accounts receivable, net of allowance for
doubtful accounts of $934 and $1,434 as of
Sept. 30, 2012 and March 31, 2012 ,
respectively 53,673 50,037
Inventories, net 41,574 38,453
Costs and estimated earnings in excess of
billings on uncompleted contracts 2,164 1,996
Income taxes receivable 5,070 5,193
Prepaid expenses and other current assets 7,967 6,853
Deferred income taxes 3,266 3,664
-------------- --------------
Total current assets 130,124 127,664
Property, plant and equipment, net 29,190 27,661
Goodwill 117,935 118,007
Intangible assets, net 139,086 144,801
Debt issuance costs, net 4,542 7,446
-------------- --------------
Total assets $ 420,877 $ 425,579
============== ==============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 22,366 $ 15,728
Accrued liabilities 15,754 22,442
Current portion of long term debt -- 21,000
Obligations due to settle the CHS
Transactions 3,391 3,528
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,594 2,446
Income taxes payable 1,951 1,374
-------------- --------------
Total current liabilities 45,056 66,518
Long-term debt, net of current maturities 118,145 118,145
Deferred income taxes 42,937 45,999
Other noncurrent liabilities 2,477 2,437
-------------- --------------
Total liabilities 208,615 233,099
Common Stock 31 30
Additional paid in capital 198,228 191,998
Foreign currency translation adjustment 3,326 3,362
Retained earnings accumulated deficit 10,677 (2,910)
-------------- --------------
Total shareholders' equity 212,262 192,480
-------------- --------------
Total liabilities and shareholders' equity $ 420,877 $ 425,579
============== ==============
Thermon Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
(Unaudited, in Thousands except per share amounts)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept 30, Sept. 30,
2012 2011 2012 2011
--------- --------- --------- ---------
Sales $ 67,358 $ 68,023 $ 134,571 $ 132,641
Cost of sales 34,719 36,072 68,593 68,701
--------- --------- --------- ---------
Gross profit 32,639 31,951 65,978 63,940
Operating expenses:
Marketing, general and
administrative and engineering 14,158 14,615 30,115 29,785
Stock compensation expense 336 57 394 6,398
Management fees (a) -- 15 -- 8,120
Amortization of other intangible
assets 2,798 2,878 5,592 5,763
--------- --------- --------- ---------
Income from operations 15,347 14,386 29,877 13,874
Interest expense, net (2,939) (3,505) (6,099) (7,890)
Acceleration of unamortized debt
cost (1,447) (1,051) (2,318) (2,922)
Debt cost amortization (277) (398) (586) (841)
Loss on retirement of debt -- (2,336) -- (2,966)
--------- --------- --------- ---------
Interest expense, net (4,663) (7,290) (9,003) (14,619)
Other income (expense) 93 (1,173) 137 (1,187)
--------- --------- --------- ---------
Income (loss) before provision
for taxes 10,777 5,923 21,011 (1,932)
Income tax expense (benefit) 3,790 2,109 7,424 (780)
--------- --------- --------- ---------
Net income (loss) $ 6,987 $ 3,814 $ 13,587 $ (1,152)
========= ========= ========= =========
Net income (loss) per common
share
Basic income (loss) per share $ 0.23 $ 0.13 $ 0.44 $ (0.04)
Diluted income (loss) per share $ 0.22 $ 0.12 $ 0.43 $ (0.04)
Weighted-average shares used in
computing net income (loss) per
common share:
Basic common shares 30,726 29,524 30,535 28,641
Fully-diluted common shares 31,641 31,262 31,419 28,641
(a) Management fees for the six month period ended September 30, 2011
includes $7.8 million in termination fees paid to our private equity
sponsors at the completion of the IPO in Q1 2012. The fees were paid in
settlement of the remaining term of the management services agreement that
was in place prior to the IPO.
Thermon Group Holdings, Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to Adjusted EBITDA excluding management
fees and Return on Equity
(Unaudited, in Thousands)
Three Three Six Six
Months Months Months Months
Adjusted EBITDA excluding Ended Ended Ended Ended
management fees and Return on Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Equity 2012 2011 2012 2011
--------- --------- --------- ---------
Net income (loss) $ 6,987 $ 3,814 $ 13,587 $ (1,152)
Interest expense, net 4,663 7,290 9,003 14,619
Income tax expense (benefit) 3,790 2,109 7,424 (780)
Depreciation and amortization
expense 3,439 3,392 6,856 7,338
--------- --------- --------- ---------
EBITDA-non-GAAP basis $ 18,879 $ 16,605 $ 36,870 $ 20,025
========= ========= ========= =========
Stock compensation expense 336 57 394 6,398
Refinance revolving line of credit
expense included in operating
expense 94 -- 94 --
Fiscal 2013 Shelf Registration and
secondary offering expenses 263 -- 536 --
--------- --------- --------- ---------
Adjusted EBITDA-non-GAAP basis $ 19,572 $ 16,662 $ 37,894 $ 26,423
========= ========= ========= =========
Termination of management fee
agreement with private equity
sponsor -- -- -- 8,105
Adjusted EBITDA excluding
management fees - non-GAAP basis $ 19,572 $ 16,662 $ 37,894 $ 34,528
========= ========= ========= =========
Adjusted EBITDA Q2 - Annualized
for a full fiscal year $ 78,288
---------
Average total shareholders' equity
for the three month period ended
September 30, 2012 $ 204,554
---------
Return on Equity - non-GAAP basis 38%
=========
Thermon Group Holdings, Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to Adjusted Net Income and EPS
(Unaudited, in Thousands except per share amounts)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
Adjusted Net Income Sept. 30, Sept. 30, Sept. 30, Sept. 30, Adjustment
and EPS 2012 2011 2012 2011 to:
--------- --------- --------- --------- ------------
GAAP Net income (loss) $ 6,987 $ 3,814 $ 13,587 $ (1,152)
Acceleration of stock
compensation in
connection with the Operating
IPO -- -- -- 6,341 expense
Management fees which Operating
terminated at the IPO -- -- -- 8,105 expense
Fiscal 2013 Shelf
Registration and
secondary offering Operating
expenses 263 -- 536 -- expense
Refinance revolving
line of credit
expense - operating Operating
expense 94 -- 94 -- expense
Premium paid on Loss on
redemption of long retirement
term debt -- 2,336 -- 2,966 of debt
Acceleration of
unamortized debt Loss on
costs - optional bond retirement
redemptions -- 1,051 871 2,922 of debt
Acceleration of Acceleration
unamortized debt cost of
- refinance revolving unamortized
line of credit 1,447 -- 1,447 -- debt
Income tax
Tax effect of expense
financial adjustments $ (634) $ (1,205) $ (1,042) $ (7,187) (benefit)
--------- --------- --------- ---------
Adjusted Net Income -
non-GAAP basis $ 8,157 $ 5,996 $ 15,493 $ 11,995
Adjusted fully-diluted
earnings per common
share - non-GAAP
basis $ 0.26 $ 0.19 $ 0.49 $ 0.38
Fully-diluted common
shares 31,641 31,262 31,419 31,262
CONTACT:Sarah Alexander (512) 396-5801 Investor.Relations@thermon.com
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