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On January 31st, 2023, the board of directors authorized the Company to withdraw from its operations in the Russian Federation through a disposition of its Russian subsidiary (the “Russia Exit”), which is expected to be completed by the first fiscal quarter of 2024. The Russia Exit resulted in a total pretax charge during the three months ended December 31, 2022, of approximately $8.3 million. The Company reported GAAP gross profit of $50.5 million for the quarter, which was impacted by a charge of $4.8 million related to the Russia Exit. The Company also reported GAAP net income of $8.4 million and fully diluted GAAP earnings per share (“EPS”) of $0.25, impacted by charges related to the Russia Exit by $7.3 million or $0.22 earnings per share, respectively.

"Building on the strong momentum from the first two quarters, our global Thermon team delivered another quarter of excellent performance with robust profitability, including revenue growth of 21% and adjusted EBITDA growth of 45%," said Bruce Thames, President and CEO. "Our operational excellence program and price realization, in addition to higher volume and favorable mix, enabled us to grow profit margins year over year. Western Hemisphere customer demand remained strong during the third quarter and was the main growth driver, while Europe continues to be challenged by geopolitical events and higher energy costs. Record orders of $126 million in the quarter grew 40%, bringing our trailing twelve-month total to over $437 million, an all-time high. We are also seeing strong traction in the adoption of Genesis, our networked industrial IoT solution, which provides our customers with enhanced operational awareness of heat trace systems, streamlined maintenance, and reduced total installed costs. We continue to execute our long-term strategy, which includes the sizable and accelerating opportunity around decarbonization and the energy transition, while allocating investment towards our strategic initiatives and managing controllable spending."


Financial Highlights	Three Months Ended December 31,								Nine months ended December 31,

in millions, except per share data	2022			2021			% Change		2022			2021			% Change

Sales 1	$	122.1		$	100.6		21.4	%	$	318.1		$	253.1		25.7	%
Point-in-Time	78.4			57.6			36.1	%	199.5			152.1			31.2	%
Over Time - Small Projects	16.9			15.2			11.7	%	46.7			40.9			14.2	%
Over Time - Large Projects	26.8			27.8			(3.6)	%	71.9			60.1			19.6	%
Net Income (Loss)	8.4			11.3			(25.2)	%	26.0			11.4			127.6	%
EPS	0.25			0.33			(25.7)	%	0.77			0.34			125.8	%
Adjusted Net Income (Loss) 2	17.5			12.4			41.8	%	38.8			17.5			121.4	%
Adjusted EPS 2	0.52			0.37			40.5	%	1.15			0.52			121.2	%
Adjusted EBITDA3	29.8			20.6			44.5	%	68.2			40.1			70.0	%

% of Sales:
Point in Time	64.2		%	57.3		%	690 bps		62.7		%	60.1		%	260 bps
Over-Time - Small Projects	13.8		%	15.1		%	-130 bps		14.7		%	16.2		%	-150 bps
Over-Time - Large Projects	21.9		%	27.6		%	-570 bps		22.6		%	23.7		%	-110 bps
Net Income (Loss)	6.9		%	11.2		%	-430 bps		8.2		%	4.5		%	370 bps
Adjusted Net Income (Loss) 2	14.3		%	12.3		%	200 bps		12.2		%	6.9		%	530 bps
Adjusted EBITDA 3	24.4		%	20.5		%	390 bps		21.4		%	15.8		%	560 bps

Kevin Fox, Thermon's Chief Financial Officer, added, "Due to the strong performance in the first three quarters of the year, we are again raising our annual guidance. For our fiscal year ending March 31, 2023, we expect revenue will be approximately $429-$437 million, which includes $18 million of revenue contribution from the Powerblanket acquisition. We also expect GAAP EPS in Fiscal 2023 to be approximately $1.11-$1.15 per share, with Adjusted EPS to be approximately $1.55-$1.59 per share, the adjusted guidance does not include any potential impact to the Russia Exit that we will incur at closing. We expect continued strength in the Western Hemisphere to offset the contraction we are seeing in Europe, and we believe the combination of our operational excellence program with disciplined capital allocation priorities will deliver solid cash flow and profitable growth throughout the remainder of Fiscal 2023."

Thermon's senior management team, including Bruce Thames, President and Chief Executive Officer, and Kevin Fox, Senior Vice President and Chief Financial Officer, will discuss Q3 2023 results during a conference call today, February 2, 2023 at 10:00 a.m. (Central Time). The call will be simultaneously webcast and the accompanying slide presentation containing financial information can be accessed on Thermon's investor relations website located at http://ir.thermon.com. Investment community professionals interested in participating in the question-and-answer session may access the call by dialing (877) 407-5976 from within the United States/Canada and (412) 902-0031 from outside of the United States/Canada. A replay of the webcast will be available on Thermon's investor relations website after the conclusion of the call.

Disclosure in this release of "Adjusted EPS," "Adjusted EBITDA," "Adjusted EBITDA margin," "Adjusted Net Income/(Loss)," "Free Cash Flow," and "Net Debt," which are "non-GAAP financial measures" as defined under the rules of the Securities and Exchange Commission (the "SEC"), are intended as supplemental measures of our financial performance that are not required by, or presented in accordance with, U.S. generally accepted accounting principles ("GAAP"). "Adjusted Net Income/(Loss)" and "Adjusted EPS" (or "Adjusted fully diluted EPS") represent net income/(loss) before the impact of restructuring and other charges/(income), costs associated with impairments and other charges, acquisition costs, amortization of intangible assets, tax expense for impact of foreign rate increases, the benefit from the CEWS, and any tax effect of such adjustments. "Adjusted EBITDA" represents net income/(loss) before interest expense (net of interest income), income tax expense, depreciation and amortization expense, stock-based compensation expense, acquisition costs, costs associated with restructuring and other income/(charges), costs associated with impairments and other charges, and income related to the CEWS.

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 EBITDA margin or Adjusted Net Income/(Loss). Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income/(Loss) and Free Cash Flow should be considered in addition to, and 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. We provide Free Cash Flow as a measure of liquidity. Our calculation of Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income/(Loss) and Free Cash Flow may not be comparable to similarly titled measures reported by other companies. For a description of how Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income/(Loss) and Free Cash Flow are calculated and reconciliations to the corresponding GAAP measures, see the sections of this release titled "Reconciliation of Net Income/(Loss) to Adjusted EBITDA," "Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) and Adjusted EPS" and "Reconciliation of Cash Provided by Operating Activities to Free Cash Flow."

This release includes forward-looking statements within the meaning of the U.S. federal securities laws in addition to historical information. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 such as the anticipated financial performance of our Powerblanket acquisition, our execution of our strategic initiatives, our ability to complete the disposition of our Russian subsidiary and anticipated timing and associated charges and our ability to achieve our financial performance targets for fiscal 2026 and our Fiscal 2023 full-year guidance. When used herein, the words "anticipate," "assume," "believe," "budget," "continue," "contemplate," "could," "should" "estimate," "expect," "intend," "may," "plan," "possible," "potential," "predict," "project," "will," "would," "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) the outbreak of a global pandemic, including the current pandemic (COVID-19 and its variants); (ii) general economic conditions and cyclicality in the markets we serve; (iii) future growth of energy, chemical processing and power generation capital investments; (iv) our ability to operate successfully in foreign countries; (v) our ability to successfully develop and improve our products and successfully implement new technologies; (vi) competition from various other sources providing similar heat tracing and process heating products and services, or alternative technologies, to customers; (vii) our ability to deliver existing orders within our backlog; (viii) our ability to bid and win new contracts; (ix) the imposition of certain operating and financial restrictions contained in our debt agreements; (x) our revenue mix; (xi) our ability to grow through strategic acquisitions; (xii) our ability to manage risk through insurance against potential liabilities (xiii) changes in relevant currency exchange rates; (xiv) tax liabilities and changes to tax policy; (xv) impairment of goodwill and other intangible assets; (xvi) our ability to attract and retain qualified management and employees, particularly in our overseas markets; (xvii) our ability to protect our trade secrets; (xviii) our ability to protect our intellectual property; (xix) our ability to protect data and thwart potential cyber-attacks; (xx) a material disruption at any of our manufacturing facilities; (xxi) our dependence on subcontractors and third-party suppliers; (xxii) our ability to profit on fixed-price contracts; (xxiii) the credit risk associated to our extension of credit to customers; (xxiv) our ability to achieve our operational initiatives; (xxv) unforeseen difficulties with expansions, relocations, or consolidations of existing facilities; (xxvi) potential liability related to our products as well as the delivery of products and services; (xxvii) our ability to comply with foreign anti-corruption laws; (xxviii) export control regulations or sanctions; (xxix) changes in government administrative policy; (xxx) the current geopolitical instability in Russia and Ukraine and related sanctions by the U.S. and Canadian governments and European Union; (xxxi) environmental and health and safety laws and regulations as well as environmental liabilities; and (xxxii) climate change and related regulation of greenhouse gases, and (xxxiii) those factors listed under Item 1A “Risk Factors” included in our


Thermon Group Holdings, Inc.
Consolidated Statements of Operations
(unaudited, in thousands except per share amounts)

	Three Months Ended December 31,				Nine months ended December 31,
	2022		2021		2022		2021

Sales	$	122,110	$	100,613	$	318,109	$	253,090
Cost of sales	71,660		59,866		184,508		154,084
Gross profit	50,450		40,747		133,601		99,006
Operating expenses:
Selling, general and administrative expenses	30,889		22,099		83,046		66,820
Deferred compensation plan expense/(income)	464		292		(499)		610
Amortization of intangible assets	2,367		2,187		7,072		6,613
Restructuring and other charges/(income)	2,668		—		2,668		(414)
Income/(loss) from operations	14,062		16,169		41,314		25,377
Other income/(expenses):
Interest expense, net	(1,877)		(842)		(4,120)		(5,029)
Other income/(expense)	659		(627)		(592)		(3,517)
Income/(loss) before provision for taxes	12,844		14,700		36,602		16,831
Income tax expense/(benefit)	4,419		3,430		10,637		5,424
Net income/(loss)	$	8,425	$	11,270	$	25,965	$	11,407

Net income/(loss) per common share:
Basic income/(loss) per share	$	0.25	$	0.34	$	0.78	$	0.34
Diluted income/(loss) per share	$	0.25	$	0.33	$	0.77	$	0.34
Weighted-average shares used in computing net income/(loss) per common share:
Basic common shares	33,494		33,340		33,457		33,293
Fully-diluted common shares	33,880		33,658		33,756		33,482


Thermon Group Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share per share data)
	(Unaudited)
	December 31, 2022		March 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	35,363	$	41,445
Accounts receivable, net of allowances of $3,334 and $2,177 as of December 31, 2022 and March 31, 2022, respectively	92,380		95,305
Inventories, net	91,418		71,650
Contract assets	16,597		19,626
Prepaid expenses and other current assets	15,981		11,786
Income tax receivable	1,469		4,626
Total current assets	253,208		244,438
Property, plant and equipment, net of depreciation and amortization of $67,024 and $63,954 as of December 31, 2022 and March 31, 2022, respectively	61,039		66,039
Goodwill	221,195		212,754
Intangible assets, net	96,162		94,908
Operating lease right-of-use assets	10,377		10,534
Deferred income taxes	778		1,211
Other non-current assets	7,336		6,785
Total assets	$	650,095	$	636,669
Liabilities and equity
Current liabilities:
Accounts payable	30,003		33,567
Accrued liabilities	28,234		26,971
Current portion of long-term debt	10,219		7,929
Borrowings under revolving credit facility	24,500		—
Contract liabilities	9,780		8,010
Lease liabilities	3,506		3,624
Income taxes payable	3,570		897
Total current liabilities	$	109,812	$	80,998
Long-term debt, net	97,574		120,431
Deferred income taxes	12,531		17,943
Non-current lease liabilities	9,642		9,659
Other non-current liabilities	9,032		8,434
Total liabilities	$	238,591	$	237,465
Equity
Common stock: $.001 par value; 150,000,000 authorized; 33,495,287 and 33,364,722 shares issued and outstanding at December 31, 2022 and March 31, 2022, respectively	$	33	$	33
Preferred stock: $.001 par value; 10,000,000 authorized; no shares issued and outstanding	—		—
Additional paid in capital	238,399		234,549
Accumulated other comprehensive loss	(56,423)		(38,906)
Retained earnings	229,495		203,528
Total equity	$	411,504	$	399,204
Total liabilities and equity	$	650,095	$	636,669


Thermon Group Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
	Nine months ended December 31,
	2022		2021

Operating activities
Net income/(loss)	$	25,965	$	11,407
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization	14,557		15,349
Amortization of deferred debt issuance costs	230		495
Loss on extinguishment of debt	—		2,569
Impairment of property, plant and equipment	367		—
Stock compensation expense	4,438		2,699
Deferred income taxes	(4,186)		(878)
Reserve for uncertain tax positions, net	36		58
(Gain)/Loss on long-term cross currency swap	—		(1,391)
Remeasurement (gain)/loss on intercompany balances	134		(556)
Loss on sale of business, net of cash surrendered	—		310
Changes in operating assets and liabilities:
Accounts receivable	1,145		(15,471)
Inventories	(18,047)		(6,137)
Contract assets	4,447		(6,287)
Other current and non-current assets	(695)		(3,293)
Accounts payable	(4,066)		15,221
Accrued liabilities and non-current liabilities	1,433		(824)
Income taxes payable and receivable	5,847		475
Net cash provided by/(used in) operating activities	$	31,605	$	13,746
Investing activities
Purchases of property, plant and equipment	(5,173)		(2,920)
Sale of rental equipment	163		235

Cash paid for acquisitions, net of cash acquired	(35,299)		—


Net cash provided by/(used in) in investing activities	$	(40,309)	$	(2,685)
Financing activities
Proceeds from Term Loan A	—		140,425
Proceeds from revolving credit facility	34,500		15,959
Payments on long-term debt and revolving credit facility	(27,121)		(171,862)
Issuance costs associated with revolving line of credit and long term debt	—		(1,248)
Proceeds from exercise of stock options	—		97
Repurchase of employee stock units on vesting	(588)		(562)
Payments on finance leases	(62)		(96)
Net cash provided by/(used in) financing activities	$	6,729	$	(17,287)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(754)		(821)
Change in cash, cash equivalents and restricted cash	(2,729)		(7,047)
Cash, cash equivalents and restricted cash at beginning of period	43,931		42,450
Cash, cash equivalents and restricted cash at end of period	$	41,202	$	35,403


Thermon Group Holdings, Inc.
Reconciliation of Net Income/(Loss) to Adjusted EBITDA
(Unaudited, in thousands)

	Three Months Ended December 31,						Nine months ended December 31,
	2022			2021			2022			2021
GAAP Net income/(loss)	$	8,425		$	11,270		$	25,965		$	11,407
Interest expense, net	1,877			842			4,120			5,029
Income tax expense/(benefit)	4,419			3,430			10,637			5,424
Depreciation and amortization expense	4,705			4,972			14,557			15,349
EBITDA (non-GAAP)	$	19,426		$	20,514		$	55,279		$	37,209
Stock compensation expense	1,994			275			4,438			2,698
Acquisition costs	—			—			126			—
Restructuring and other charges/(income)1	2,668			—			2,668			(414)
Other impairment charges/(income)1	5,666			—			5,666			—
Loss on debt extinguishment	—			—			—			2,569
Canadian Emergency Wage Subsidy	—			(204)			—			(1,952)
Adjusted EBITDA (non-GAAP)	$	29,754		$	20,585		$	68,177		$	40,110
Adjusted EBITDA %	24.4		%	20.5		%	21.4		%	15.8		%


Thermon Group Holdings, Inc.
Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) and Adjusted EPS
(Unaudited, in thousands except per share amounts)
	Three Months Ended December 31,				Nine months ended December 31,
	2022		2021		2022		2021

GAAP Net income/(loss)	$	8,425	$	11,270	$	25,965	$	11,407
Acquisition costs	—		—		126		—		Operating expense
Amortization of intangible assets	2,367		2,187		7,072		6,613		Intangible amortization
Restructuring and other charges/(income)1	2,668		—		2,668		(414)		Operating expense
Impairments and other charges/(income)1	5,666		—		5,666		—		Cost of Sales and Operating expense
Tax expense/(benefit) for impact of foreign rate adjustments	—		(440)				505		Tax expense
Withholding tax on dividend related to debt amendment	—		—		—		301		Tax expense
Loss on extinguishment of debt	—		—		—		2,569		Other income/(expense)
Canadian Emergency Wage Subsidy	—		(204)		—		(1,952)		Cost of Sales and Operating expense
Tax effect of adjustments	(1,585)		(444)		(2,657)		(1,489)
Adjusted Net Income/(Loss) (non-GAAP)	$	17,541	$	12,369	$	38,840	$	17,540

Adjusted Fully Diluted Earnings per Common Share (Adjusted EPS) (non-GAAP)	$	0.52	$	0.37	$	1.15	$	0.52

Fully-diluted common shares	33,880		33,658		33,756		33,482


Thermon Group Holdings, Inc.
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow
(Unaudited, in thousands)
	Three Months Ended December 31,				Nine months ended December 31,
	2022		2021		2022		2021

Cash provided by/(used in) by operating activities	$	19,074	$	3,295	$	31,605	$	13,746
Cash provided by/(used in) by investing activities	(1,499)		(687)		(40,309)		(2,685)
Cash provided by/(used in) by financing activities	(11,214)		(7,295)		6,729		(17,287)

Cash provided by operating activities	$	19,074	$	3,295	$	31,605	$	13,746
Less: Cash used for purchases of property, plant and equipment	(1,559)		(865)		(5,173)		(2,920)
Plus: Sales of rental equipment	60		178		163		235

Free cash flow provided (non-GAAP)	$	17,575	$	2,608	$	26,595	$	11,061


Balance Sheet Highlights	Three Months Ended December 31,

in millions	2022			2021			% Change


Cash	$	35.4		$	32.6		8.7	%
Total Debt	132.8			132.8			—	%
Net Debt1 / TTM Adjusted EBITDA	1.1		x	2.2		x	(1.1)	x
Working Capital 2	153.8			124.3			23.8	%
Capital Expenditures	1.5			0.7			118.2	%
Free Cash Flow 3	17.6			2.6			573.9	%