Thermon Group Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment Information (Tables)

Segment Information (Tables)

6 Months Ended

Sep. 30, 2016

Total sales and operating income classified by major geographic area in which the company operates

We operate in four reportable segments based on four geographic countries or regions in which we operate: the United States, Canada, Europe and Asia. Within our four reportable segments, our primary products and services are focused on thermal solutions primarily related to the electrical heat tracing industry. Each of our reportable segments serves a similar class of customers, including engineering, procurement and construction ("EPC") companies, international and regional oil and gas companies, commercial sub-contractors, electrical component distributors and direct sales to existing plant or industrial applications. Profitability within our segments is measured by operating income. Profitability can vary in each of our reportable segments based on the competitive environment within the region, the level of corporate overhead, such as the salaries of our senior executives, and the level of research and development and marketing activities in the region, as well as the mix of products and services. Over the last 19 months, we acquired Unitemp, IPI and Sumac. Both Unitemp and IPI offer thermal solutions and have been included in our Europe and United States reportable segments, respectively. Sumac provides temporary power products that differ from our core thermal solutions business. As we anticipate that our full year operating results from Sumac will comprise less than 10% of our total sales and operating income, Sumac has been aggregated in our Canada segment. For purposes of this note, revenue is attributed to individual countries or regions on the basis of the physical location and jurisdiction of organization of the subsidiary that invoices the material and services.

Total sales to external customers, inter-segment sales, depreciation expense, amortization expense, income from operations, property, plant and equipment, net and total assets for each of our four reportable segments are as follows:



	Three Months Ended September 30, 2016			Three Months Ended September 30, 2015			Six Months Ended September 30, 2016			Six Months Ended September 30, 2015
Sales to External Customers:
United States	$	29,838		$	34,611		$	59,992		$	63,109
Canada	13,051			12,632			23,160			25,702
Europe	18,554			15,245			32,317			31,596
Asia	7,369			7,446			16,739			14,750
	$	68,812		$	69,934		$	132,208		$	135,157
Inter-Segment Sales:
United States	13,096			12,759			$	23,735		$	24,314
Canada	436			816			1,025			1,612
Europe	405			373			1,006			742
Asia	505			103			633			203
	14,442			14,051			$	26,399		$	26,871
Depreciation Expense:
United States	890			764			1,751			1,438
Canada	499			156			951			498
Europe	73			58			142			116
Asia	37			46			69			88
	1,499			1,024			$	2,913		$	2,140
Amortization Expense:
United States	1,536			1,666			$	2,850		$	2,924
Canada	890			996			1,791			2,005
Europe	333			361			668			724
Asia	266			265			532			531
	3,025			3,288			$	5,841		$	6,184
Income from operations:
United States	$	424		$	7,579		$	463		$	11,801
Canada (a)	2,711			1,205			4,444			2,535
Europe	2,913			2,775			4,564			5,160
Asia	839			1,145			2,883			2,469
Unallocated:
Stock compensation	(915		)	(999		)	(1,821		)	(1,874		)
Public company costs	(297		)	(384		)	(668		)	(698		)
	$	5,675		$	11,321		$	9,865		$	19,393



	September 30, 2016		March 31, 2016
Property, plant and equipment, net:
United States	$	34,627	$	34,528
Canada	4,048		3,754
Europe	2,716		2,769
Asia	587		566
	$	41,978	$	41,617
Total Assets:
United States	$	193,165	$	196,400
Canada	136,524		145,301
Europe	74,841		76,754
Asia	50,130		50,222
	$	454,660	$	468,677

(a) During the three and six months ended September 30, 2015, the Canadian segment's operating income was negatively impacted by $1,290 and $2,666 due to acquisition related contingent consideration accounted for as compensation. As part of the Sumac transaction, we issued the sellers a $5,905 non-interest bearing note that matured on April 1, 2016. The terms of the performance-based note assume the continued employment of Sumac's principals, and as a result, the performance note payment was accounted for as compensation expense. The performance note was settled during the six months ended September 30, 2016.