00014890963/312020Q3false1,09583453,82143,5503,7194,4470.0010.001150,000,000150,000,00033,186,21832,916,81833,186,21832,916,8180.0010.00110,000,00010,000,000P1Y13,7194,447P3Y00014890962020-04-012020-12-31xbrli:shares00014890962021-02-04iso4217:USD00014890962020-12-3100014890962020-03-310001489096srt:SubsidiariesMember2020-12-310001489096srt:SubsidiariesMember2020-03-31iso4217:USDxbrli:shares00014890962020-10-012020-12-3100014890962019-10-012019-12-3100014890962019-04-012019-12-310001489096us-gaap:CommonStockMember2020-03-310001489096us-gaap:AdditionalPaidInCapitalMember2020-03-310001489096us-gaap:RetainedEarningsMember2020-03-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001489096us-gaap:CommonStockMember2020-04-012020-06-300001489096us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000014890962020-04-012020-06-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2020-04-012020-06-300001489096us-gaap:CommonStockMembersrt:ExecutiveOfficerMember2020-04-012020-06-300001489096us-gaap:CommonStockMembersrt:DirectorMember2020-04-012020-06-300001489096us-gaap:RetainedEarningsMember2020-04-012020-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001489096us-gaap:CommonStockMember2020-06-300001489096us-gaap:AdditionalPaidInCapitalMember2020-06-300001489096us-gaap:RetainedEarningsMember2020-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000014890962020-06-300001489096us-gaap:CommonStockMember2020-07-012020-09-300001489096us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-3000014890962020-07-012020-09-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2020-07-012020-09-300001489096us-gaap:CommonStockMembersrt:ExecutiveOfficerMember2020-07-012020-09-300001489096us-gaap:CommonStockMembersrt:DirectorMember2020-07-012020-09-300001489096us-gaap:RetainedEarningsMember2020-07-012020-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001489096us-gaap:CommonStockMember2020-09-300001489096us-gaap:AdditionalPaidInCapitalMember2020-09-300001489096us-gaap:RetainedEarningsMember2020-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-3000014890962020-09-300001489096us-gaap:CommonStockMember2020-10-012020-12-310001489096us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-310001489096us-gaap:CommonStockMemberthr:EmployeesMember2020-10-012020-12-310001489096us-gaap:CommonStockMembersrt:DirectorMember2020-10-012020-12-310001489096us-gaap:RetainedEarningsMember2020-10-012020-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001489096us-gaap:CommonStockMember2020-12-310001489096us-gaap:AdditionalPaidInCapitalMember2020-12-310001489096us-gaap:RetainedEarningsMember2020-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001489096us-gaap:CommonStockMember2019-03-310001489096us-gaap:AdditionalPaidInCapitalMember2019-03-310001489096us-gaap:RetainedEarningsMember2019-03-310001489096us-gaap:NoncontrollingInterestMember2019-03-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100014890962019-03-310001489096us-gaap:CommonStockMember2019-04-012019-06-300001489096us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-3000014890962019-04-012019-06-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2019-04-012019-06-300001489096us-gaap:CommonStockMembersrt:ExecutiveOfficerMember2019-04-012019-06-300001489096us-gaap:CommonStockMembersrt:DirectorMember2019-04-012019-06-300001489096us-gaap:RetainedEarningsMember2019-04-012019-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001489096us-gaap:NoncontrollingInterestMember2019-04-012019-06-300001489096us-gaap:CommonStockMember2019-06-300001489096us-gaap:AdditionalPaidInCapitalMember2019-06-300001489096us-gaap:RetainedEarningsMember2019-06-300001489096us-gaap:NoncontrollingInterestMember2019-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-3000014890962019-06-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2019-07-012019-09-300001489096us-gaap:CommonStockMembersrt:ExecutiveOfficerMember2019-07-012019-09-300001489096us-gaap:CommonStockMembersrt:DirectorMember2019-07-012019-09-300001489096us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-3000014890962019-07-012019-09-300001489096us-gaap:RetainedEarningsMember2019-07-012019-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001489096us-gaap:NoncontrollingInterestMember2019-07-012019-09-300001489096us-gaap:CommonStockMember2019-09-300001489096us-gaap:AdditionalPaidInCapitalMember2019-09-300001489096us-gaap:RetainedEarningsMember2019-09-300001489096us-gaap:NoncontrollingInterestMember2019-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-3000014890962019-09-300001489096us-gaap:CommonStockMember2019-10-012019-12-310001489096us-gaap:AdditionalPaidInCapitalMember2019-10-012019-12-310001489096us-gaap:CommonStockMemberthr:EmployeesMember2019-10-012019-12-310001489096us-gaap:CommonStockMembersrt:DirectorMember2019-10-012019-12-310001489096us-gaap:RetainedEarningsMember2019-10-012019-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-10-012019-12-310001489096us-gaap:CommonStockMember2019-12-310001489096us-gaap:AdditionalPaidInCapitalMember2019-12-310001489096us-gaap:RetainedEarningsMember2019-12-310001489096us-gaap:NoncontrollingInterestMember2019-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-3100014890962019-12-310001489096thr:COVID19Member2020-10-012020-12-310001489096thr:COVID19Member2020-04-012020-12-310001489096us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2020-12-310001489096us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2019-12-310001489096us-gaap:OtherAssetsMember2020-12-310001489096us-gaap:OtherAssetsMember2019-12-310001489096us-gaap:LoansPayableMemberus-gaap:FairValueInputsLevel2Member2020-12-310001489096us-gaap:LoansPayableMemberus-gaap:FairValueInputsLevel2Member2020-03-310001489096us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMember2020-10-012020-12-310001489096us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMember2020-04-012020-12-310001489096us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMember2020-12-310001489096us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMember2020-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:RUB2020-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:RUB2020-03-310001489096currency:EURus-gaap:ForeignExchangeForwardMember2020-12-310001489096currency:EURus-gaap:ForeignExchangeForwardMember2020-03-310001489096currency:CADus-gaap:ForeignExchangeForwardMember2020-12-310001489096currency:CADus-gaap:ForeignExchangeForwardMember2020-03-310001489096currency:KRWus-gaap:ForeignExchangeForwardMember2020-12-310001489096currency:KRWus-gaap:ForeignExchangeForwardMember2020-03-310001489096currency:MXNus-gaap:ForeignExchangeForwardMember2020-12-310001489096currency:MXNus-gaap:ForeignExchangeForwardMember2020-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:AUD2020-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:AUD2020-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:GBP2020-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:GBP2020-03-310001489096us-gaap:ForeignExchangeForwardMember2020-12-310001489096us-gaap:ForeignExchangeForwardMember2020-03-310001489096us-gaap:ForeignExchangeForwardMember2020-10-012020-12-310001489096us-gaap:ForeignExchangeForwardMember2019-10-012019-12-310001489096us-gaap:ForeignExchangeForwardMember2020-04-012020-12-310001489096us-gaap:ForeignExchangeForwardMember2019-04-012019-12-310001489096srt:MaximumMemberus-gaap:LandAndBuildingMember2020-12-310001489096srt:MinimumMemberus-gaap:EquipmentMember2020-12-310001489096srt:MaximumMemberus-gaap:EquipmentMember2020-12-310001489096srt:MinimumMemberus-gaap:LandAndBuildingMember2020-04-012020-12-310001489096srt:MaximumMemberus-gaap:LandAndBuildingMember2020-04-012020-12-31xbrli:pure0001489096us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-10-012020-12-310001489096us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-10-012019-12-310001489096us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-04-012020-12-310001489096us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-04-012019-12-310001489096us-gaap:InterestExpenseMember2020-10-012020-12-310001489096us-gaap:InterestExpenseMember2019-10-012019-12-310001489096us-gaap:InterestExpenseMember2020-04-012020-12-310001489096us-gaap:InterestExpenseMember2019-04-012019-12-310001489096srt:MinimumMemberus-gaap:LandAndBuildingMember2020-12-31thr:positions0001489096country:CA2020-10-012020-12-310001489096thr:ThermonSouthAfricaPropriearyLimitedMember2020-12-152020-12-15iso4217:ZAR00014890962020-12-152020-12-150001489096thr:ThermonSouthAfricaPropriearyLimitedMember2020-12-150001489096thr:UnitedStatesAndLatinAmericaSegmentMember2020-10-012020-12-310001489096thr:UnitedStatesAndLatinAmericaSegmentMember2020-04-012020-12-310001489096thr:CanadaSegmentMember2020-10-012020-12-310001489096thr:CanadaSegmentMember2020-04-012020-12-310001489096thr:EuropeMiddleEastAndAfricaSegmentMember2020-10-012020-12-310001489096thr:EuropeMiddleEastAndAfricaSegmentMember2020-04-012020-12-310001489096thr:AsiaPacificSegmentMember2020-10-012020-12-310001489096thr:AsiaPacificSegmentMember2020-04-012020-12-310001489096us-gaap:EmployeeSeveranceMember2020-03-310001489096us-gaap:EmployeeSeveranceMember2020-04-012020-12-310001489096us-gaap:EmployeeSeveranceMember2020-12-310001489096us-gaap:StockOptionMember2020-10-012020-12-310001489096us-gaap:StockOptionMember2019-10-012019-12-310001489096us-gaap:StockOptionMember2020-04-012020-12-310001489096us-gaap:StockOptionMember2019-04-012019-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2020-10-012020-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2019-10-012019-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2020-04-012020-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2019-04-012019-12-310001489096us-gaap:OperatingSegmentsMemberthr:UnitedStatesSegmentMember2020-03-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2020-03-310001489096us-gaap:OperatingSegmentsMemberthr:EuropeSegmentMember2020-03-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2020-03-310001489096us-gaap:OperatingSegmentsMember2020-03-310001489096us-gaap:OperatingSegmentsMemberthr:UnitedStatesSegmentMember2020-04-012020-12-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2020-04-012020-12-310001489096us-gaap:OperatingSegmentsMemberthr:EuropeSegmentMember2020-04-012020-12-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2020-04-012020-12-310001489096us-gaap:OperatingSegmentsMember2020-04-012020-12-310001489096us-gaap:OperatingSegmentsMemberthr:UnitedStatesSegmentMember2020-12-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2020-12-310001489096us-gaap:OperatingSegmentsMemberthr:EuropeSegmentMember2020-12-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2020-12-310001489096us-gaap:OperatingSegmentsMember2020-12-310001489096us-gaap:ProductMember2020-12-310001489096us-gaap:ProductMember2020-03-310001489096us-gaap:TrademarksMember2020-12-310001489096us-gaap:TrademarksMember2020-03-310001489096us-gaap:DevelopedTechnologyRightsMember2020-12-310001489096us-gaap:DevelopedTechnologyRightsMember2020-03-310001489096us-gaap:CustomerRelationshipsMember2020-12-310001489096us-gaap:CustomerRelationshipsMember2020-03-310001489096us-gaap:CertificationMarksMember2020-12-310001489096us-gaap:CertificationMarksMember2020-03-310001489096us-gaap:LoansPayableMemberthr:VariableRateTermLoandueOctober2024Member2020-12-310001489096us-gaap:LoansPayableMemberthr:VariableRateTermLoandueOctober2024Member2020-03-310001489096thr:VariableRateSeniorSecuredTermLoanBMemberus-gaap:SecuredDebtMember2017-10-300001489096us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2017-10-300001489096thr:TermLoanAdueApril2019Member2017-10-302017-10-300001489096us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2017-10-302017-10-30iso4217:CAD0001489096thr:ThermonHeatingSystemsInc.Member2017-10-302017-10-300001489096us-gaap:BaseRateMemberthr:VariableRateSeniorSecuredTermLoanBMemberus-gaap:SecuredDebtMember2017-10-302017-10-300001489096thr:VariableRateSeniorSecuredTermLoanBMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:SecuredDebtMember2017-10-302017-10-300001489096us-gaap:BaseRateMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2017-10-302017-10-300001489096us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2017-10-302017-10-300001489096us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberthr:CanadianBaseRateMember2017-10-302017-10-300001489096us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberthr:CDORMember2017-10-302017-10-300001489096thr:VariableRateSeniorSecuredTermLoanBMemberus-gaap:SecuredDebtMember2018-04-010001489096thr:VariableRateSeniorSecuredTermLoanBMemberus-gaap:SecuredDebtMember2020-04-012020-12-310001489096us-gaap:LoansPayableMemberthr:PeriodOneMember2020-04-012020-12-3100014890962017-10-302017-10-300001489096us-gaap:RevolvingCreditFacilityMember2020-12-310001489096thr:VariableRateTermLoandueOctober2024Member2020-12-310001489096thr:VariableRateSeniorSecuredTermLoanBMemberthr:SubsidiaryEquityMemberus-gaap:SecuredDebtMember2017-10-302017-10-300001489096thr:StockofFirstTierMaterialForeignSubsidiariesDomesticBorrowerandDomesticSubsidiaryMemberthr:VariableRateSeniorSecuredTermLoanBMemberus-gaap:SecuredDebtMember2017-10-302017-10-300001489096us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2020-12-312020-12-3100014890962020-06-182020-06-18thr:principal0001489096us-gaap:PrincipalOwnerMember2015-04-010001489096us-gaap:PrincipalOwnerMemberthr:TPSMember2015-04-010001489096us-gaap:PrincipalOwnerMemberthr:PaymentstoRelatedPartyMember2017-03-310001489096us-gaap:PrincipalOwnerMemberthr:PaymentstoRelatedPartyMember2017-04-012017-09-300001489096us-gaap:LoansPayableMember2017-03-310001489096thr:SumacBusinessMember2020-03-3100014890962018-04-022018-04-020001489096thr:TPSMember2018-04-020001489096thr:SumacBusinessMember2019-04-0200014890962019-08-012019-08-010001489096thr:SumacBusinessMember2019-08-01thr:plan00014890962010-05-312014-06-300001489096thr:RestrictedStockAndStockOptionPlanMember2010-07-280001489096thr:LongTermIncentivePlan2011Member2011-04-080001489096thr:LongTermIncentivePlan2020Member2020-07-220001489096srt:ManagementMember2020-04-012020-12-310001489096srt:MinimumMember2020-04-012020-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2020-04-012020-12-310001489096us-gaap:CommonStockMember2020-12-310001489096us-gaap:CommonStockMember2020-10-012020-12-310001489096us-gaap:CommonStockMember2020-04-012020-12-310001489096us-gaap:PerformanceSharesMember2020-04-012020-12-310001489096srt:MaximumMember2020-04-012020-12-310001489096srt:ManagementMemberus-gaap:PerformanceSharesMember2020-04-012020-12-310001489096srt:MinimumMembersrt:ManagementMember2020-04-012020-12-310001489096srt:ManagementMemberus-gaap:PerformanceSharesMembersrt:MaximumMember2020-04-012020-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:US2020-10-012020-12-310001489096us-gaap:TransferredOverTimeMembercountry:US2020-10-012020-12-310001489096country:US2020-10-012020-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:US2019-10-012019-12-310001489096us-gaap:TransferredOverTimeMembercountry:US2019-10-012019-12-310001489096country:US2019-10-012019-12-310001489096country:CAus-gaap:TransferredAtPointInTimeMember2020-10-012020-12-310001489096country:CAus-gaap:TransferredOverTimeMember2020-10-012020-12-310001489096country:CAus-gaap:TransferredAtPointInTimeMember2019-10-012019-12-310001489096country:CAus-gaap:TransferredOverTimeMember2019-10-012019-12-310001489096country:CA2019-10-012019-12-310001489096srt:EuropeMemberus-gaap:TransferredAtPointInTimeMember2020-10-012020-12-310001489096srt:EuropeMemberus-gaap:TransferredOverTimeMember2020-10-012020-12-310001489096srt:EuropeMember2020-10-012020-12-310001489096srt:EuropeMemberus-gaap:TransferredAtPointInTimeMember2019-10-012019-12-310001489096srt:EuropeMemberus-gaap:TransferredOverTimeMember2019-10-012019-12-310001489096srt:EuropeMember2019-10-012019-12-310001489096srt:AsiaMemberus-gaap:TransferredAtPointInTimeMember2020-10-012020-12-310001489096srt:AsiaMemberus-gaap:TransferredOverTimeMember2020-10-012020-12-310001489096srt:AsiaMember2020-10-012020-12-310001489096srt:AsiaMemberus-gaap:TransferredAtPointInTimeMember2019-10-012019-12-310001489096srt:AsiaMemberus-gaap:TransferredOverTimeMember2019-10-012019-12-310001489096srt:AsiaMember2019-10-012019-12-310001489096us-gaap:TransferredAtPointInTimeMember2020-10-012020-12-310001489096us-gaap:TransferredOverTimeMember2020-10-012020-12-310001489096us-gaap:TransferredAtPointInTimeMember2019-10-012019-12-310001489096us-gaap:TransferredOverTimeMember2019-10-012019-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:US2020-04-012020-12-310001489096us-gaap:TransferredOverTimeMembercountry:US2020-04-012020-12-310001489096country:US2020-04-012020-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:US2019-04-012019-12-310001489096us-gaap:TransferredOverTimeMembercountry:US2019-04-012019-12-310001489096country:US2019-04-012019-12-310001489096country:CAus-gaap:TransferredAtPointInTimeMember2020-04-012020-12-310001489096country:CAus-gaap:TransferredOverTimeMember2020-04-012020-12-310001489096country:CA2020-04-012020-12-310001489096country:CAus-gaap:TransferredAtPointInTimeMember2019-04-012019-12-310001489096country:CAus-gaap:TransferredOverTimeMember2019-04-012019-12-310001489096country:CA2019-04-012019-12-310001489096srt:EuropeMemberus-gaap:TransferredAtPointInTimeMember2020-04-012020-12-310001489096srt:EuropeMemberus-gaap:TransferredOverTimeMember2020-04-012020-12-310001489096srt:EuropeMember2020-04-012020-12-310001489096srt:EuropeMemberus-gaap:TransferredAtPointInTimeMember2019-04-012019-12-310001489096srt:EuropeMemberus-gaap:TransferredOverTimeMember2019-04-012019-12-310001489096srt:EuropeMember2019-04-012019-12-310001489096srt:AsiaMemberus-gaap:TransferredAtPointInTimeMember2020-04-012020-12-310001489096srt:AsiaMemberus-gaap:TransferredOverTimeMember2020-04-012020-12-310001489096srt:AsiaMember2020-04-012020-12-310001489096srt:AsiaMemberus-gaap:TransferredAtPointInTimeMember2019-04-012019-12-310001489096srt:AsiaMemberus-gaap:TransferredOverTimeMember2019-04-012019-12-310001489096srt:AsiaMember2019-04-012019-12-310001489096us-gaap:TransferredAtPointInTimeMember2020-04-012020-12-310001489096us-gaap:TransferredOverTimeMember2020-04-012020-12-310001489096us-gaap:TransferredAtPointInTimeMember2019-04-012019-12-310001489096us-gaap:TransferredOverTimeMember2019-04-012019-12-3100014890962021-10-012020-12-310001489096srt:ScenarioForecastMember2021-04-012021-06-30thr:segmentthr:Geographic_Region0001489096thr:SumacFabricationCompanyLimitedMember2020-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2019-10-012019-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2020-04-012020-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2019-04-012019-12-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2020-10-012020-12-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2019-10-012019-12-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2020-04-012020-12-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2019-04-012019-12-310001489096us-gaap:OperatingSegmentsMemberthr:EuropeSegmentMember2020-10-012020-12-310001489096us-gaap:OperatingSegmentsMemberthr:EuropeSegmentMember2019-10-012019-12-310001489096us-gaap:OperatingSegmentsMemberthr:EuropeSegmentMember2020-04-012020-12-310001489096us-gaap:OperatingSegmentsMemberthr:EuropeSegmentMember2019-04-012019-12-310001489096us-gaap:OperatingSegmentsMemberthr:AsiaSegmentMember2020-10-012020-12-310001489096us-gaap:OperatingSegmentsMemberthr:AsiaSegmentMember2019-10-012019-12-310001489096us-gaap:OperatingSegmentsMemberthr:AsiaSegmentMember2020-04-012020-12-310001489096us-gaap:OperatingSegmentsMemberthr:AsiaSegmentMember2019-04-012019-12-310001489096us-gaap:OperatingSegmentsMember2020-10-012020-12-310001489096us-gaap:OperatingSegmentsMember2019-10-012019-12-310001489096us-gaap:OperatingSegmentsMember2019-04-012019-12-310001489096us-gaap:IntersegmentEliminationMemberthr:UnitedStatesSegmentMember2020-10-012020-12-310001489096us-gaap:IntersegmentEliminationMemberthr:UnitedStatesSegmentMember2019-10-012019-12-310001489096us-gaap:IntersegmentEliminationMemberthr:UnitedStatesSegmentMember2020-04-012020-12-310001489096us-gaap:IntersegmentEliminationMemberthr:UnitedStatesSegmentMember2019-04-012019-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2020-10-012020-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2019-10-012019-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2020-04-012020-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2019-04-012019-12-310001489096us-gaap:IntersegmentEliminationMemberthr:EuropeSegmentMember2020-10-012020-12-310001489096us-gaap:IntersegmentEliminationMemberthr:EuropeSegmentMember2019-10-012019-12-310001489096us-gaap:IntersegmentEliminationMemberthr:EuropeSegmentMember2020-04-012020-12-310001489096us-gaap:IntersegmentEliminationMemberthr:EuropeSegmentMember2019-04-012019-12-310001489096us-gaap:IntersegmentEliminationMemberthr:AsiaSegmentMember2020-10-012020-12-310001489096us-gaap:IntersegmentEliminationMemberthr:AsiaSegmentMember2019-10-012019-12-310001489096us-gaap:IntersegmentEliminationMemberthr:AsiaSegmentMember2020-04-012020-12-310001489096us-gaap:IntersegmentEliminationMemberthr:AsiaSegmentMember2019-04-012019-12-310001489096us-gaap:IntersegmentEliminationMember2020-10-012020-12-310001489096us-gaap:IntersegmentEliminationMember2019-10-012019-12-310001489096us-gaap:IntersegmentEliminationMember2020-04-012020-12-310001489096us-gaap:IntersegmentEliminationMember2019-04-012019-12-310001489096thr:UnitedStatesSegmentMember2020-10-012020-12-310001489096thr:UnitedStatesSegmentMember2019-10-012019-12-310001489096thr:UnitedStatesSegmentMember2020-04-012020-12-310001489096thr:UnitedStatesSegmentMember2019-04-012019-12-310001489096thr:CanadaSegmentMember2020-10-012020-12-310001489096thr:CanadaSegmentMember2019-10-012019-12-310001489096thr:CanadaSegmentMember2020-04-012020-12-310001489096thr:CanadaSegmentMember2019-04-012019-12-310001489096thr:EuropeSegmentMember2020-10-012020-12-310001489096thr:EuropeSegmentMember2019-10-012019-12-310001489096thr:EuropeSegmentMember2020-04-012020-12-310001489096thr:EuropeSegmentMember2019-04-012019-12-310001489096thr:AsiaSegmentMember2020-10-012020-12-310001489096thr:AsiaSegmentMember2019-10-012019-12-310001489096thr:AsiaSegmentMember2020-04-012020-12-310001489096thr:AsiaSegmentMember2019-04-012019-12-310001489096us-gaap:MaterialReconcilingItemsMember2020-10-012020-12-310001489096us-gaap:MaterialReconcilingItemsMember2019-10-012019-12-310001489096us-gaap:MaterialReconcilingItemsMember2020-04-012020-12-310001489096us-gaap:MaterialReconcilingItemsMember2019-04-012019-12-310001489096thr:UnitedStatesSegmentMember2020-12-310001489096thr:UnitedStatesSegmentMember2020-03-310001489096thr:CanadaSegmentMember2020-12-310001489096thr:CanadaSegmentMember2020-03-310001489096thr:EuropeSegmentMember2020-12-310001489096thr:EuropeSegmentMember2020-03-310001489096thr:AsiaSegmentMember2020-12-310001489096thr:AsiaSegmentMember2020-03-310001489096thr:UnitedStatesSegmentMember2020-10-012020-12-310001489096thr:UnitedStatesSegmentMember2019-10-012019-12-310001489096thr:UnitedStatesSegmentMember2020-04-012020-12-310001489096thr:UnitedStatesSegmentMember2019-04-012019-12-310001489096thr:CanadaSegmentMember2019-10-012019-12-310001489096thr:CanadaSegmentMember2019-04-012019-12-310001489096thr:EuropeSegmentMember2020-10-012020-12-310001489096thr:EuropeSegmentMember2019-10-012019-12-310001489096thr:EuropeSegmentMember2020-04-012020-12-310001489096thr:EuropeSegmentMember2019-04-012019-12-310001489096thr:AsiaSegmentMember2020-10-012020-12-310001489096thr:AsiaSegmentMember2019-10-012019-12-310001489096thr:AsiaSegmentMember2020-04-012020-12-310001489096thr:AsiaSegmentMember2019-04-012019-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2020
 
OR
 
       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
 
Commission File Number: 001-35159
 
 
THERMON GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware27-2228185
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
7171 Southwest Parkway, Building 300, Suite 200, Austin, Texas 78735
(Address of principal executive offices) (zip code)
 
(512690-0600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareTHRNew York Stock Exchange


        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of February 4, 2021, the registrant had 33,197,264 shares of common stock, par value $0.001 per share, outstanding.
 



THERMON GROUP HOLDINGS, INC.
 
QUARTERLY REPORT
FOR THE QUARTER ENDED December 31, 2020
 
TABLE OF CONTENTS
 Page
PART I — FINANCIAL INFORMATION 
 
Thermon Group Holdings, Inc. and its Consolidated Subsidiaries 
PART II — OTHER INFORMATION 
EX-10.1
EX-31.1 
EX-31.2 
EX-32.1 
EX-32.2 
 
i


PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Thermon Group Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in Thousands, except share and per share data)
 December 31, 2020March 31, 2020
(Unaudited)
Assets  
Current assets:  
Cash and cash equivalents$49,617 $43,237 
Accounts receivable, net of allowances of $1,095 and $834 as of December 31, 2020 and March 31, 2020, respectively76,612 92,478 
Inventories, net74,153 60,273 
Contract assets11,746 10,194 
Prepaid expenses and other current assets10,696 9,219 
Income tax receivable6,889 2,535 
Total current assets229,713 217,936 
Property, plant and equipment, net of depreciation and amortization of $53,821 and $43,550 as of December 31, 2020 and March 31, 2020, respectively72,052 72,542 
Goodwill212,461 197,978 
Intangible assets, net105,554 104,546 
Operating lease right-of-use assets13,527 16,637 
Deferred income taxes2,800 2,904 
Other long-term assets6,250 8,362 
Total assets$642,357 $620,905 
Liabilities  
Current liabilities:  
Accounts payable$23,212 $25,070 
Accrued liabilities21,804 23,757 
Current portion of long-term debt2,500 2,500 
Contract liabilities3,771 4,538 
Lease liabilities2,482 3,553 
Income taxes payable118 1,217 
Total current liabilities53,887 60,635 
Long-term debt, net of current maturities and deferred debt issuance costs and debt discounts of $3,719 and $4,447 as of December 31, 2020 and March 31, 2020, respectively162,906 169,053 
Deferred income taxes21,706 22,245 
Non-current lease liabilities14,492 15,571 
Other non-current liabilities9,784 6,962 
Total liabilities$262,775 $274,466 
Commitments and contingencies (Note 11)
 Equity
Common stock: $.001 par value; 150,000,000 authorized; 33,186,218 and 32,916,818 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively33 33 
Preferred stock: $.001 par value; 10,000,000 authorized; no shares issued and outstanding  
Additional paid in capital230,450 227,741 
Accumulated other comprehensive loss(35,388)(63,894)
Retained earnings 184,487 182,559 
Total equity379,582 346,439 
Total liabilities and equity$642,357 $620,905 
The accompanying notes are an integral part of these condensed consolidated financial statements
1


Thermon Group Holdings, Inc.
 
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(Dollars in Thousands, except share and per share data)
 
Three Months Ended December 31, 2020Three Months Ended December 31, 2019Nine Months Ended December 31, 2020Nine Months Ended December 31, 2019
Sales$79,604 $100,468 $202,858 $295,115 
Cost of sales42,644 56,988 112,848 169,061 
Gross profit36,960 43,480 90,010 126,054 
Operating expenses:
Marketing, general and administrative and engineering20,882 26,554 67,602 82,402 
Amortization of intangible assets2,135 4,460 7,265 13,354 
Restructuring and other charges/(income)3,783  8,692  
Income (loss) from operations10,160 12,466 6,451 30,298 
Other income/(expenses):
Interest income16 57 58 173 
Interest expense(2,449)(3,595)(7,462)(11,316)
Other income/(expense)874 (62)2,188 (1)
Income (loss) before provision for income taxes8,601 8,866 1,235 19,154 
Income tax expense (benefit)2,426 2,344 (693)4,250 
Net income (loss)$6,175 $6,522 $1,928 $14,904 
Income (loss) attributable to non-controlling interests   (2)
Net income (loss) available to Thermon Group Holdings, Inc.$6,175 $6,522 $1,928 $14,906 
Comprehensive income (loss):
Net income (loss) available to Thermon Group Holdings, Inc.$6,175 $6,522 $1,928 $14,906 
Foreign currency translation adjustment14,516 6,099 29,245 5,721 
Other miscellaneous income/(loss)(152) (731)337 
Comprehensive income$20,539 $12,621 $30,442 $20,964 
Net income (loss) per common share:
Basic$0.19 $0.20 $0.06 $0.46 
Diluted0.18 0.20 0.06 0.45 
Weighted-average shares used in computing net income per common share:
Basic33,180,562 32,785,753 33,110,877 32,716,317 
Diluted33,419,573 33,258,937 33,234,357 33,124,580 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
2


Thermon Group Holdings, Inc.

Condensed Consolidated Statements of Equity (Unaudited)
(Dollars in Thousands)
Common Stock OutstandingCommon StockAdditional Paid-in CapitalRetained Earnings (Loss)Accumulated Other Comprehensive Income (Loss)Total
Balances at March 31, 202032,916,818 $33 $227,741 $182,559 $(63,894)$346,439 
Issuance of common stock in exercise of stock options81,995 — 437 — — 437 
Issuance of common stock as deferred compensation to employees39,458 — — — — — 
Issuance of common stock as deferred compensation to executive officers63,477 — — — — — 
Issuance of common stock as deferred compensation to directors13,520 — — — — — 
Stock compensation expense— — 1,133 — — 1,133 
Repurchase of employee stock units on vesting— — (557)— — (557)
Net loss available to Thermon Group Holdings, Inc.— — — (6,085)— (6,085)
Foreign currency translation adjustment— — — — 9,475 9,475 
Other— — — — (380)(380)
Balances at June 30, 202033,115,268 $33 $228,754 $176,474 $(54,799)$350,462 
Issuance of common stock in exercise of stock options1,344 — 15 — — 15 
Issuance of common stock as deferred compensation to employees33,789 — — — — — 
Issuance of common stock as deferred compensation to executive officers6,005 — — — — — 
Issuance of common stock as deferred compensation to directors13,392 — — — — — 
Stock compensation expense— — 1,358 — — 1,358 
Repurchase of employee stock units on vesting— — (129)— — (129)
Net income available to Thermon Group Holdings, Inc.— — — 1,838 — 1,838 
Foreign currency translation adjustment— — — — 5,254 5,254 
Other— — — — (199)(199)
Balances at September 30, 202033,169,798 $33 $229,998 $178,312 $(49,744)$358,599 
Issuance of common stock in exercise of stock options — 16 — — 16 
Issuance of common stock as deferred compensation to employees1,867 — — — — — 
Issuance of common stock as deferred compensation to directors14,553 — — — — — 
Stock compensation expense— — 430 — — 430 
Repurchase of employee stock units on vesting— — (2)— — (2)
Net income available to Thermon Group Holdings, Inc.— — — 6,175 — 6,175 
Foreign currency translation adjustment— — — 14,516 14,516 
Other— — — (160)(152)
Balances at December 31, 202033,186,218 $33 $230,450 $184,487 $(35,388)$379,582 

The accompanying notes are an integral part of these condensed consolidated financial statements.
3


Common Stock OutstandingCommon StockAdditional Paid-in CapitalRetained EarningsNon-controlling InterestsAccumulated Other Comprehensive Income (Loss)Total
Balances at March 31, 201932,624,200 $33 $223,040 $170,621 $4,204 $(48,949)$348,949 
Issuance of common stock in exercise of stock options5,417  62 — — — 62 
Issuance of common stock as deferred compensation to employees39,139 — — — — — — 
Issuance of common stock as deferred compensation to executive officers32,621 — — — — — — 
Issuance of common stock as deferred compensation to directors3,654 — — — — — — 
Stock compensation expense— — 1,019 — — — 1,019 
Repurchase of employee stock units on vesting— — (784)— — — (784)
Net income available to Thermon Group Holdings, Inc.— — — 1,471 — — 1,471 
Foreign currency translation adjustment— — — — — 4,435 4,435 
Remeasurement of non-controlling interest— — (315)— 315 — — 
Loss attributable to non-controlling interests— — — — (10)— (10)
Balances at June 30, 201932,705,031 $33 $223,022 $172,092 $4,509 $(44,514)$355,142 
Issuance of common stock as deferred compensation to employees16,262 — — — — — — 
Issuance of common stock as deferred compensation to executive officers14,757 — — — — — — 
Issuance of common stock as deferred compensation to directors6,389 — — — — — — 
Stock compensation expense— — 1,323 — — — 1,323 
Repurchase of employee stock units on vesting— — (95)— — — (95)
Net income available to Thermon Group Holdings, Inc.— — — 6,913 — — 6,913 
Foreign currency translation adjustment— — — — — (4,813)(4,813)
Purchase of shares from non-controlling interests— —  — (4,508) (4,508)
Remeasurement of non-controlling interest— — 10 — (10)— — 
Income attributable to non-controlling interests— — — — 9 — 9 
Other— — — — — 337 337 
Balances at September 30, 201932,742,439 $33 $224,260 $179,005 $ $(48,990)$354,308 
Issuance of common stock in exercise of stock options101,455 — 798 — — — 798 
Issuance of common stock as deferred compensation to employees23,748 — — — — — — 
Issuance of common stock as deferred compensation to directors9,477 — — — — — — 
Stock compensation expense— — 1,328 — — — 1,328 
Repurchase of employee stock units on vesting— — (11)— — — (11)
Net income available to Thermon Group Holdings, Inc.— — — 6,522 — — 6,522 
Foreign currency translation adjustment— — — — — 6,099 6,099 
Balances at December 31, 201932,877,119 $33 $226,375 $185,527 $ $(42,891)$369,044 

The accompanying notes are an integral part of these consolidated financial statements

4


Thermon Group Holdings, Inc.
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands) 
 Nine Months Ended December 31, 2020Nine Months Ended December 31, 2019
Operating activities  
Net income (loss)$1,928 $14,904 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Depreciation and amortization15,617 21,079 
Amortization of deferred debt issuance costs773 1,574 
Stock compensation expense2,921 3,670 
Deferred income taxes(2,698)(3,416)
Release of reserve for uncertain tax positions, net (421)
Loss on long-term cross currency swap5,068 1,897 
Remeasurement gain on intercompany balances(6,996)(2,264)
Loss on sale of business, net of cash surrendered2,045  
Changes in operating assets and liabilities:  
Accounts receivable21,028 9,747 
Inventories(10,618)1,957 
Contract assets(2,148)8,167 
Other current and non-current assets(2,833)(4,422)
Accounts payable(2,263)503 
Accrued liabilities and non-current liabilities(991)(4,441)
Income taxes payable and receivable(5,354)3,821 
Net cash provided by operating activities$15,479 $52,355 
Investing activities  
Purchases of property, plant and equipment(4,708)(6,701)
Sale of rental equipment65 371 
Proceeds from sale of property, plant and equipment 242 
Net cash used in investing activities$(4,643)$(6,088)
Financing activities  
Proceeds from revolving credit facility37,189 10,000 
Payments on long-term debt and revolving credit facility(44,339)(46,279)
Purchase of shares from non-controlling interests (4,508)
Proceeds from exercise of stock options468 860 
Repurchase of employee stock units on vesting(688)(890)
Payments on finance leases(218)(106)
Net cash used in financing activities$(7,588)$(40,923)
Effect of exchange rate changes on cash, cash equivalents and restricted cash3,057 503 
Change in cash, cash equivalents and restricted cash6,305 5,847 
Cash, cash equivalents and restricted cash at beginning of period46,006 33,841 
Cash, cash equivalents and restricted cash at end of period$52,311 $39,688 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5


Thermon Group Holdings, Inc.
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data)
 
1. Basis of Presentation and Accounting Policy Information
Thermon Group Holdings, Inc. and its direct and indirect subsidiaries are referred to collectively as “we,” “our,” or the “Company” herein. We are a provider of highly engineered industrial process heating solutions for process industries. Our core thermal solutions product - also referred to as heat tracing - provides an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature and flow maintenance, environmental monitoring, and surface snow and ice melting. In addition to our heat tracing products, we also provide (i) industrial process heating solutions focused on advanced heating and filtration solutions for industrial and hazardous area applications, which are sold under our Thermon Heating Solutions (or “THS”) brand, and (ii) temporary power products that are designed to provide a safe and efficient means of supplying temporary electrical power distribution and lighting at energy infrastructure facilities for new construction and during maintenance and turnaround projects at operating facilities, which are sold under our Thermon Power Solutions (or “TPS”) brand. As a manufacturer, we offer a full suite of products (such as heating units, heating cables, tubing bundles and control systems) and services (such as design optimization, engineering, installation and maintenance services) required to deliver comprehensive solutions to complex projects.
    The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2020, ("fiscal 2020"). In our opinion, the accompanying consolidated financial statements reflect all adjustments considered necessary to present fairly our financial position at December 31, 2020 and March 31, 2020, and the results of our operations for the three and nine months ended December 31, 2020 and 2019.
Impact of the COVID-19 Pandemic
The recent COVID-19 pandemic and the measures being taken to address and limit the spread of the virus have adversely affected the economies and financial markets of many countries, resulting in an economic downturn that has negatively impacted, and may continue to negatively impact, global demand for our products and services. We may experience a decline in the demand of our products and services that could materially and negatively impact our business, financial condition, results of operation and overall financial performance in future periods.
On April 11, 2020, the Canadian government officially enacted the Canadian Emergency Wage Subsidy (the “CEWS”) for the purposes of assisting employers in financial hardship due to the COVID-19 pandemic and of reducing potential lay-offs of employees. The CEWS, which was made retroactive to March 15, 2020, generally provides “eligible entities” with a wage subsidy of up to 75% of “eligible remuneration” paid to an eligible employee per week, limited to a certain weekly maximum. On September 23, 2020, the Canadian government announced that the CEWS program would be extended through the summer of 2021 and announced certain modifications to the subsidy calculation. Our Canadian operations have benefited from such wage subsidies and have received distributions from the Canadian government during the nine months period ended December 31, 2020. During the three and nine months ended December 31, 2020, we recorded subsidies in the amount of $979 and $5,928, respectively, for which we qualify, as an offset or reduction to the related underlying expenses and assets, accordingly.
Use of Estimates
Generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. While our management has based their assumptions and estimates on the facts and circumstances existing at December 31, 2020, actual results could differ from those estimates and affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities and the corresponding revenues and expenses as of the date of the financial statements. The operating results for the three and nine months ended December 31, 2020 are not necessarily indicative of the results that may be achieved for the fiscal year ending March 31, 2021 ("fiscal 2021"). 
Restricted Cash and Cash Equivalents

    The Company maintains restricted cash related to certain letter of credit guarantees and performance bonds securing performance obligations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash included in
6


prepaid expenses and other current assets and restricted cash included in other long-term assets reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.
December 31,
20202019
Cash and cash equivalents$49,617 $37,054 
Restricted cash included in prepaid expenses and other current assets2,314 2,123 
Restricted cash included in other long-term assets380 511 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$52,311 $39,688 

    Amounts shown in restricted cash included in prepaid expenses and other current assets and other long-term assets represent those required to be set aside by a contractual agreement, which contain cash deposits pledged as collateral on performance bonds and letters of credit. Amounts shown in restricted cash in other long-term assets represent such agreements that require a commitment term longer than one year.

Recent Accounting Pronouncements

    Financial Instruments- In June 2016, the FASB issued Accounting Standards Update 2016-13 Financial Instruments -Credit Losses (“ASC Topic 326”), which amends the guidance on the impairment of financial instruments. The standard adds an impairment model, referred to as current expected credit loss, which is based on expected losses rather than incurred losses. The standard applies to most debt instruments, trade receivables, lease receivables, reinsurance receivables, financial guarantees and loan commitments. Under the guidance, companies are required to disclose credit quality indicators disaggregated by year of origination for a five-year period. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. We adopted this standard effective April 1, 2020, and such adoption did not have a material impact on our consolidated financial statements.

    Intangibles- In January 2017, the FASB issued Accounting Standards Update 2017-04 Intangibles - Goodwill and other (“ASC Topic 350”), which amends and simplifies the accounting for goodwill impairment by eliminating step 2 of the goodwill impairment test. Under the amended guidance, goodwill impairment will be measured as the excess of the reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill for that reporting unit. The changes are effective for annual and interim periods beginning after December 15, 2019, and amendments should be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. We adopted this standard effective April 1, 2020, and such adoption did not have a material impact on our consolidated financial statements.

Reference Rate Reform - In March 2020, the FASB issued Accounting Standards Update 2020-04 - Reference Rate Reform ("ASC Topic 848"). The update is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. As of December 31, 2020, we have not yet elected any optional expedients provided in the standard. We will apply the accounting relief, if necessary, as relevant contract and hedge accounting relationship modifications are made during the reference rate reform transition period.

Income Taxes - In December 2019, the FASB issued Accounting Standards Update 2019-12 Income Taxes ("ASC Topic 740"): Simplifying the Accounting for Income Taxes." This ASU amends ASC 740 to add, remove, and clarify disclosure requirements related to income taxes. The new standard is effective for fiscal years beginning after December 15, 2020. We are still evaluating the impact of this new standard.
2. Fair Value Measurements
Fair Value
We measure fair value based on authoritative accounting guidance, which defines fair value, establishes a framework for measuring fair value and expands on required disclosures regarding fair value measurements.
Inputs are referred to as assumptions that market participants would use in pricing the asset or liability. The uses of inputs in the valuation process are categorized into a three-level fair value hierarchy.
Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.
7


Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. 
Financial assets and liabilities with carrying amounts approximating fair value include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities. At December 31, 2020 and March 31, 2020, no assets or liabilities were valued using Level 3 criteria. 
Information about our long-term debt that is not measured at fair value is as follows:
 December 31, 2020March 31, 2020 
 Carrying
Value
Fair ValueCarrying
Value
Fair ValueValuation Technique
Financial Liabilities     
Outstanding principal amount of senior secured credit facility$169,125 $169,125 $176,000 $150,480 Level 2 - Market Approach
 
At December 31, 2020 and March 31, 2020, the fair value of our long-term debt is based on market quotes available for issuance of debt with similar terms. As the quoted price is only available for similar financial assets, the Company concluded the pricing is indirectly observable through dealers and has been classified as Level 2. The Company believes the decline in fair value as of March 31, 2020 is temporary and attributable to the COVID-19 pandemic.
Cross Currency Swap
    The Company has entered into a long-term cross currency swap to hedge the currency rate fluctuations related to a $42,958 intercompany receivable at December 31, 2020 from our wholly-owned Canadian subsidiary, Thermon Canada Inc., maturing on October 30, 2022. Periodic principal payments are to be settled twice annually with interest payments settled quarterly through the cross currency derivative contract. We do not designate the cross currency swap as a cash flow hedge under ASC Topic 815, Derivatives and Hedging ("ASC 815"). We recorded $1,869 and $5,319 of unrealized mark-to-market losses on the cross currency swap, which is reported as "Other income and expense" in the condensed consolidated statement of operations and comprehensive income for the three and nine months ended December 31, 2020, respectively. Cross currency swap contracts are measured on a recurring basis at fair value and are classified as Level 2 measurements. Hedge (liabilities) assets in the amount of ($786) and $4,011 were included in "Other non-current liabilities" and"Other long-term assets," respectively, in the condensed consolidated balance sheet as of December 31, 2020 and March 31, 2020, respectively. For the nine months ended December 31, 2020, the loss on the long-term cross currency swap derivative contract was offset by unrealized gain on the intercompany note of $5,806 for a net gain of $487.
Deferred Compensation Plan
    The Company provides a non-qualified deferred compensation plan for certain highly compensated employees where payroll contributions are made by the employees on a pre-tax basis. Included in “Other long-term assets” in the condensed consolidated balance sheet at December 31, 2020 and March 31, 2020 were $4,814 and $2,849, respectively, of deferred compensation plan assets held by the Company. Deferred compensation plan assets (mutual funds) are measured at fair value on a recurring basis based on quoted market prices in active markets (Level 1). The Company has a corresponding liability to participants of $4,812 and $2,886 included in “Other long-term liabilities” in the condensed consolidated balance sheet at December 31, 2020 and March 31, 2020, respectively. Deferred compensation expense (income) included in "Marketing, general and administrative and engineering" were $599 and $(228) for the three months ended December 31, 2020 and 2019, respectively, and $1,380 and $139 for the nine months ended December 31, 2020 and 2019, respectively. Expenses and income from our deferred compensation plan were offset by unrealized gains and losses for the deferred compensation plan included in "Other income and expense" on our condensed consolidated statements of operations and comprehensive income. Our unrealized gains on investments were $651 and $21 for the three months ended December 31, 2020 and 2019, respectively, and $1,419 and $116 for the nine months ended December 31, 2020 and 2019, respectively.
    
Trade Related Foreign Currency Forward Contracts
8


We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts to mitigate foreign currency transaction gains or losses. These foreign currency exposures arise from intercompany transactions as well as third party accounts receivable or payable that are denominated in foreign currencies. Our forward contracts generally have terms of 30 days. We do not use forward contracts for trading purposes or designate these forward contracts as hedging instruments pursuant to ASC 815. We adjust the carrying amount of all contracts to their fair value at the end of each reporting period and unrealized gains and losses are included in "Other income and expense" on our condensed consolidated statements of operations and comprehensive income. These gains and losses are designed to offset gains and losses resulting from settlement of receivables or payables by our foreign operations which are settled in currency other than the local transactional currency. The fair value is determined by quoted prices from active foreign currency markets (Level 2). Fair value amounts for such forward contracts on our condensed consolidated balance sheets are either classified as accounts receivable, net or accrued liabilities depending on whether the forward contract is in a gain (accounts receivable, net) or loss (accrued liabilities) position. Our ultimate realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature. As of December 31, 2020 and March 31, 2020, the notional amounts of forward contracts were as follows:
Notional amount of foreign currency forward contracts by currency
December 31, 2020March 31, 2020
Russian Ruble$1,750 $1,103 
Euro 500 
Canadian Dollar10,000 1,500 
South Korean Won5,000 3,500 
Mexican Peso1,750 2,000 
Australian Dollar900 700 
Great Britain Pound500 500 
Total notional amounts$19,900 $9,803 

The following table represents the fair value of our foreign currency forward contracts:
December 31, 2020March 31, 2020
Fair ValueFair Value
AssetsLiabilitiesAssetsLiabilities
Foreign currency forward contracts$53 $4 $140 $49 
Foreign currency gains or losses related to our forward contracts in the accompanying condensed consolidated statements of operations and comprehensive income were losses of $388 and gains of $132 in the three months ended December 31, 2020 and 2019, respectively, and losses of $437 and $109 for the nine months ended December 31, 2020 and 2019, respectively. Gains and losses from our forward contracts were offset by transaction gains or losses incurred with the settlement of transactions denominated in foreign currencies. For the three months ended December 31, 2020 and 2019, our net foreign currency transactions were gains of $109 and losses of $206, respectively. Likewise, we observed gains of $85 and losses of $84 for the nine months ended December 31, 2020 and 2019, respectively.
3. Leases
For discussion regarding the lease abandonment and impairment charges recognized during the quarter, refer to Note 4 Restructuring and other income/(charges).
Description of Leases
The significant majority of our lease obligations are for real property. We lease numerous facilities relating to our operations, primarily for office, manufacturing and warehouse facilities, as well as both long-term and short-term employee housing. Leases for real property have terms ranging from month-to-month to ten years. We also lease various types of
9


equipment, including vehicles, office equipment (such as copiers and postage machines), heavy warehouse equipment (such as fork lifts), heavy construction equipment (such as cranes), medium and light construction equipment used for customer project needs (such as pipe threading machines) and mobile offices and other general equipment that is normally associated with an office environment. Equipment leases generally have terms ranging from six months to five years.
Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any significant leases that have not yet commenced but that create significant rights and obligations for us.

    We lease temporary power products under our TPS product brand line to our customers on a short-term basis. Lease contracts associated with such rental of the temporary power products have historically been month-to-month contracts without purchase options. No lease contracts in which the Company was the lessor have had an initial term in excess of one year. As such, lease revenues for temporary power products recognized under ASC Topic 842 in the interim period did not materially differ from leases that would have been recorded under ASC Topic 840.
Variable Lease Payments
A majority of our lease agreements include fixed rental payments. A small number of our lease agreements include fixed rental payments that are adjusted periodically for changes in the Consumer Price Index (“CPI”). Payments based on an index or rate such as CPI are included in the lease payments based on the commencement date index or rate. Estimated changes to the index or rate during the lease term are not considered in the determination of the lease payments.
Options to Extend or Terminate Leases
Most of our real property leases include early termination options and/or one or more options to renew, with renewal terms that can extend the lease term for an additional one to five years or longer. The exercise of lease termination and renewal options is at our sole discretion. If it is reasonably certain that we will exercise such renewal options, the periods covered by such renewal options are included in the lease term and are recognized as part of our ROU assets and lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Discount Rate
The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. A large concentration of the Company's operating lease liabilities are attributed to our North American operations. Many of our Europe, Middle East and Africa (“EMEA”) operations and Asia-Pacific operations borrow funds from the debt facilities maintained by our U.S. operating subsidiary and establish intercompany balances to account for these loans. This practice is due to the more preferential rates available to our U.S. operating subsidiary and/or the ease with which funds can be drawn from the debt facilities already established within the United States. With this in mind, the Company has utilized its U.S. credit facility rate as the worldwide incremental borrowing rate. The Company used incremental borrowing rates as of April 1, 2020 for operating leases that commenced prior to April 1, 2020 to establish the lease liabilities. For operating leases that commenced during the nine months ended December 31, 2020, rates applicable at or close to the time of the inception of the lease were used to establish the new lease's ROU liabilities.
Lease Term and Discount RateDecember 31, 2020March 31, 2020
Weighted average remaining lease term:
Operating6.16.2
Finance3.23.4
Weighted average discount rate:
Operating4.81 %4.82 %
Finance6.57 %6.98 %

    Supplemental balance sheet information related to leases was as follows:
10


AssetsClassificationDecember 31, 2020March 31, 2020
OperatingOperating lease right-of-use assets$13,527 $16,637 
FinanceProperty, plant and equipment478 695 
Total right-of-use assets$14,005 $17,332 
Liabilities
Current
OperatingLease liabilities$2,433 $3,352 
FinanceLease liabilities50 201 
Non-current
OperatingNon-current lease liabilities13,985 15,060 
FinanceNon-current lease liabilities507 511 
Total lease liabilities$16,975 $19,124 
    
Supplemental statement of operations information related to leases was as follows:
Lease expenseClassification Three Months Ended December 31, 2020 Three Months Ended December 31, 2019Nine Months Ended December 31, 2020Nine Months Ended December 31, 2019
Operating lease expenseMarketing, general and administrative and engineering$1,070 $860 $3,455 $2,627 
Finance lease expense:
Amortization of ROU assetsMarketing, general and administrative and engineering66 63 211 189 
Interest expense on finance lease liabilitiesInterest expense9 12 31 38 
Short-term lease expenseMarketing, general and administrative and engineering9 225 60 940 
Net lease expense$1,154 $1,160 $3,757 $3,794 

Supplemental statement of cash flows information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilitiesNine Months Ended December 31, 2020Nine Months Ended December 31, 2019
Operating cash used for operating leases$2,747 $2,083 
Operating cash flows used for finance leases31 43 
Financing cash flows used for finance leases218 189 

Future lease payments under non-cancellable operating leases as of December 31, 2020 were as follows:
11


Future Lease PaymentsOperating LeasesFinance Leases
Twelve months ending December 31,
2021$4,375 $212 
20223,507 162 
20232,499 142 
20242,020 84 
20251,697  
Thereafter