Thermon’s Earnings Call: Positive Growth Amid Challenges

Thermon ((THR)) has held its Q4 earnings call. Read on for the main highlights of the call.

Thermon’s Latest Earnings Call Reflects Positive Momentum Amid Challenges

The recent earnings call for Thermon Group Holdings painted a generally positive picture, highlighting strong organic growth, strategic achievements, and margin expansion. Despite facing challenges from tariffs and economic uncertainty, the company demonstrated solid momentum and strategic progress, offering a balanced view of its current standing.

Strong Organic Growth and Bookings Momentum

Thermon reported a 3% organic growth in Q4 2025, marking the first positive growth in over a year. The company also saw a 29% increase in its backlog from the previous year, with a book-to-bill ratio of 1.08 times for the year, indicating favorable trends in its end markets.

Operational Excellence and Margin Expansion

The company’s EBITDA margin for Q4 2025 was 22.7%, a significant 423 basis point improvement from the previous year. For fiscal 2025, the adjusted EBITDA margin rose by 86 basis points to 22%, showcasing Thermon’s operational excellence and favorable revenue mix.

Successful Strategic Initiatives

Thermon achieved its goal of deriving 70% of its revenue from diverse end markets two years ahead of schedule. The company also reported significant advancements in its 3D initiatives, which contributed $93 million in revenue.

Share Repurchase and Financial Discipline

In Q4, Thermon repurchased over $14 million in shares and refreshed its share repurchase authorization to $50 million. The company ended fiscal 2025 with a net leverage of just under one times, reflecting its strong financial discipline.

Positive Impact of Acquisitions

The acquisition of Vapor Power expanded Thermon’s addressable market by 25%, while the Fati acquisition doubled its backlog due to strong demand from legacy customers, highlighting the positive impact of strategic acquisitions.

Softness in Large CapEx Revenue

Despite improved booking momentum, Thermon experienced a 5% year-over-year decline in large capital project revenue in Q4 2025, indicating continued softness in this area.

Tariff and Trade Challenges

Tariffs continue to present challenges for Thermon, with an expected annualized impact of $16 to $20 million on a gross basis, and a net impact of $4 to $6 million after mitigation efforts.

Economic Uncertainty and Potential Slowdown

The company expressed caution due to broader macroeconomic uncertainty and potential headwinds in the second half of fiscal 2026, despite strong order momentum and backlog.

Forward-Looking Guidance

Looking ahead, Thermon is optimistic about its strategic initiatives and market position. The company achieved 3% organic growth in Q4, driven by increased activity in the LNG market. With a 29% rise in backlog and a 20% increase in organic backlog, Thermon is well-positioned for future growth. The company also highlighted its strong bid pipeline, up 25% from the previous year, and its commitment to returning value to shareholders through share repurchases and debt repayments.

In summary, Thermon’s latest earnings call reflects a positive sentiment, driven by strong organic growth, strategic achievements, and margin expansion. While challenges such as tariffs and economic uncertainty persist, the company’s strategic progress and financial discipline offer a balanced and optimistic outlook for the future.