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What were the key takeaways from Thermon Group’s earnings call?

- **Revenue and Profit Growth**: Q2 revenue up 15% YoY to $131.7 million, adjusted EBITDA surging 29% to $30.6 million. Gross margin improved to 46%.
- **Strategic Wins**: 
  - **Data Center**: $30 million quote log for liquid load banks, first 20-unit order secured.
  - **Decarbonization**: $10 million orders for medium-voltage heaters, targeting 17% CAGR market.
- **Execution Momentum**: 41% YoY growth in large CapEx projects, with 17% YoY backlog expansion.
- **Financial Strength**: 1.0x net leverage, $129 million liquidity, and $36 million shares repurchased YTD.
- **Guidance Update**: Full-year 2026 revenue raised to $506-527 million, EBITDA to $112-119 million.

**【CEO Summary Section】**
- **Revenue Growth and Margin Expansion**: Q2 revenue reached $131.7 million (15% YoY), with adjusted EBITDA up 29% to $30.6 million. Gross margin improved to 46% (vs. 44% YoY), driven by pricing, tariff mitigation, and operational efficiency.
- **Strategic Initiatives**: 
  - **Digitization**: Genesis Network installed circuits grew 48% to 86,000, enabling predictive maintenance and energy efficiency across industrial, commercial, and data center solutions.
  - **Decarbonization**: Medium-voltage heaters (Quantum line) secured $10 million in orders, targeting high-growth markets like Europe with 17% CAGR to 2030.
  - **Data Center Diversification**: Liquid load banks (Poseidon/Pontus) achieved $30 million in quotes, with first order for 20 units. Market projected at $386 million by 2032 (21% CAGR).
- **Backlog and Execution Momentum**: Backlog up 17% YoY, with 41% growth in large CapEx projects (e.g., North American LNG). Fiscal 2026 guidance raised to $506-527 million revenue and $112-119 million EBITDA.

**【CFO Financial Commentary】**
- **Financial Health**: 
  - Free cash flow: $4.4 million (down 34% YoY due to inventory build).
  - Net debt: $110 million (1.0x leverage), with $129 million liquidity.
  - Share buybacks: $6 million Q2, $36 million YTD.
- **Revenue Mix**: 
  - OpEx (81% of revenue) grew 10% YoY, driven by F.A.T.I. and industrial solutions.
  - Large projects (19% of revenue) up 41% YoY, offsetting lower-margin execution.
- **Geographic Performance**: 
  - USLAM: +8%, Canada: +10%, EMEA: +100%, APAC: -4% (China trade policy headwinds).

**【Q&A Highlights】**
- **Large CapEx Execution**: 2 LNG projects moved to execution, with 140% YoY growth in LNG pipeline. Diversified end markets (chemical, power) also showing execution momentum.
- **Gross Margin Dynamics**: Higher large project mix (19% vs. 13% YoY) weighed on gross margin, but EBITDA margin expanded to 23.2% (vs. 20.8% YoY).
- **New Product Pipeline**: 
  - Data center load banks: 0 revenue Q2, but $30 million quote log and 20%+ market share target.
  - Medium-voltage heaters: 2 orders in process, scaling capacity in North America and Europe.
- **Inorganic Growth**: Active M&A pipeline, prioritizing bolt-ons aligned with 3D strategy (decarbonization, digitization, diversification).

Thermon Group Holdings, Inc. (THR) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

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Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

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Income Tax Expense

Current Income Tax

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Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

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Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

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Diluted EPS from Discontinued Operations

THR

THR fundamentals

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