SAN MARCOS, Texas, Aug. 13, 2010 (GLOBE NEWSWIRE) -- Thermon Holding Corp. ("Thermon") today announces its results for the year ended March 31, 2010 and for the first quarter ended June 30, 2010.
Fiscal Q1 2011 Highlights
- The private equity firm Code Hennessy & Simmons LLC ("CHS") sponsored an acquisition of Thermon, which closed on April 30, 2010 (the "CHS Acquisition"). Our wholly owned subsidiary, Thermon Industries, Inc., successfully issued $210 million of senior secured notes in connection with the CHS Acquisition.
- Revenues of $51 million, flat as compared to Q1 2010.
- Income from operations of $1 million, as compared to $12 million in Q1 2010. This quarter had a $5 million non-cash increase in cost of sales and a $5 million increase in amortization expense due to the new basis of accounting arising from the CHS Acquisition.
- Q1 2011 had a net loss of $12 million, as compared to net income of $5 million in Q1 2010. This quarter was negatively impacted by the non-cash charges mentioned above, $20 million in transaction related expenses included in miscellaneous expense and $8 million in one-time financing costs included in interest expense. We saw positive impacts this quarter from the reversal of a deferred tax liability of $14 million and a compliance reserve of $1 million.
- Adjusted EBITDA was $12 million, as compared to $13 million in Q1 2010. Adjusted EBITDA includes an add back of $20 million in transaction related expenses in connection with the completion of the CHS Acquisition.
Gross margin was 47% in Q1 2011 before taking into account the non-cash accounting adjustment to cost of sales related to the CHS Acquisition, which reduced reported gross margin to 37%. The pre-adjustment result was up 2 percentage points over Q1 2010.
As of June 30, 2010, Thermon had $9 million in cash as compared to approximately $5 million cash on hand at April 30, 2010, the closing date of the CHS Acquisition. During the quarter, we drew $3 million on our new revolving credit facility for working capital purposes.
Financing costs in Q1 2011 included an increase of approximately $1 million a month for two months in interest expense related to the increased debt levels as well as several one-time expenses, including a $2 million amortization expense relating to our bridge loan fees, a $3 million amortization expense relating to deferred debt costs on repaid indebtedness and $3 million in prepayment penalties.
Geographically, revenue in the Western Hemisphere sales area accounted for 64% of total revenues in Q1 2011, while the Eastern Hemisphere accounted for the remaining 36%.
"We had a solid first quarter, producing strong results with revenues greater than the fourth quarter of the 2010 fiscal year. Our installed base continues to grow through successful project sales on a global basis. Furthermore, the first quarter saw a significant increase in identified future project opportunities and we feel confident about our future as we continue to expand our global footprint." said Rodney L. Bingham, Thermon's President and CEO.
Thermon also reported its full fiscal 2010 results that were not included in the offering memorandum relating to the senior secured notes.
Fiscal Q4 2010 Highlights
- Revenues of $50 million, up 11.8%, as compared to Q4 2009
- Gross margin of 45%, down 5% as compared to Q4 2009
- Income from operations of $8 million, down 13.3% as compared to Q4 2009
- Net income of $4 million, as compared to net income of $9 million in Q4 2009
- Adjusted EBITDA of $9 million, even with $9 million in Q4 2009
Fiscal Year 2010 Highlights
- Revenues of $193 million, down 5.0%, as compared to fiscal 2009
- Gross margin of 47%, down 1% from fiscal 2009
- Income from operations of $42 million, up 1.7% from fiscal 2009
- Net income of $19 million, as compared to net income of $26 million in fiscal 2009
- Adjusted EBITDA of $45 million, as compared to $47 million in fiscal 2009
Conference Call and Webcast Information
Thermon's senior management team, including Rodney Bingham, President and Chief Executive Officer, Jay Peterson, Chief Financial Officer, and David Ralph, Senior Vice President – Finance, will discuss first quarter 2011 and full fiscal 2010 results during a conference call today at 10:00 a.m. (Central Daylight Time), which will be simultaneously webcast 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) 312-5421 from within the United States/Canada and (253) 237-1121 from outside of the United States/Canada. A replay of the webcast will be available on Thermon's Investor Relations website beginning two hours after the conclusion of the call and ending at 5:00 p.m. (Central Daylight Time) on August 27, 2010.
Quarterly Report
A quarterly report containing our unaudited financial statements for the three months ended June 30, 2010 will be made available later today on our Investor Relations website located at http://ir.thermon.com and also mailed to registered holders of our senior secured notes. We expect to file a registration statement with the U.S. Securities and Exchange Commission early next week that will include our audited financial statements for the fiscal year ended March 31, 2010.
About Thermon
Thermon Holding Corp., through its worldwide subsidiaries, provides comprehensive heat tracing solutions to global end-markets that include energy, chemical processing, power generation and industrial and commercial infrastructure. Thermon's products provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature maintenance, environmental monitoring and surface snow and ice melting. For more information, please visit www.thermon.com.
The Thermon logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7808
Non-GAAP Financial Measures
Disclosure in this release of EBITDA and Adjusted EBITDA, which are "non-GAAP financial measures" as defined under the rules of the Securities and Exchange Commission, are intended as supplemental measures of our performance that are not required by, or presented in accordance with, U.S. generally accepted accounting principles ("GAAP"). Neither EBITDA nor Adjusted EBITDA should be considered as an alternative to net income, income from continuing operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with GAAP. EBITDA represents net income before income taxes, interest income, interest expense and depreciation expense and amortization of other intangible assets. Adjusted EBITDA represents EBITDA before other non-cash charges not included in EBITDA such as amortization of stock compensation and other unusual non-recurring transactions not associated with the ongoing operations of Thermon.
We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of high yield issuers, many of which present EBITDA and Adjusted EBITDA when reporting their results. Our presentation of EBITDA and Adjusted EBITDA should not be construed to imply that our future results will be unaffected by unusual or nonrecurring items. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider either of these measures in isolation or as a substitute for analyses of our income or cash flows as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only for supplemental purposes. Please see our financial statements and the related notes thereto included in our quarterly report for the three months ended June 30, 2010. For a description of how EBITDA and Adjusted EBITDA are calculated from our net income and a reconciliation of our EBITDA and Adjusted EBITDA to net income, see the section of this release titled "Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA."
Forward-Looking Statements
This release may include forward-looking statements within the meaning of the U.S. federal securities laws in addition to historical information. 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. 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, the following: general economic conditions and cyclicality in the markets we serve; future growth of energy and chemical processing capital investments; changes in relevant currency exchange rates; our ability to comply with the complex and dynamic system of laws and regulations applicable to international operations; a material disruption at any of our manufacturing facilities; our dependence on subcontractors and suppliers; our ability to obtain standby letters of credit, bank guarantees or performance bonds required to bid on or secure certain customer contracts; competition from various other sources providing similar heat tracing products and services, or other alternative technologies, to customers; our ability to attract and retain qualified management and employees, particularly in our overseas markets; our ability to continue to generate sufficient cash flow to satisfy our liquidity needs; and the extent to which federal, state, local and foreign governmental regulation of energy, chemical processing and power generation products and services limits or prohibits the operation of our business. Any one of these factors or a combination of these factors could materially affect our future results of operations and could influence whether any forward-looking statements contained in this release ultimately prove to be accurate. See also the section captioned "Risk Factors" in our quarterly report regarding the additional factors that have impacted or may impact our business and operations. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statements. We do not intend to update these statements unless we are required to do so under applicable securities laws.
| Thermon Holding Corp. | ||||||
| Condensed Consolidated Statement of Operations | ||||||
| (Dollars in Thousands) | ||||||
|
Three Months Ended June 30, |
Three Months Ended March 31, |
Year Ended March 31, |
||||
| Combined (1) 2010 | Predecessor 2009 | Predecessor 2010 | Predecessor 2009 | Predecessor 2010 | Predecessor 2009 | |
| (Unaudited) | (Unaudited) | |||||
| Sales | $ 50,576 | $ 50,812 | $ 49,808 | $ 44,531 | $ 192,713 | $ 202,755 |
| Cost of sales | 26,749 | 27,975 | 27,435 | 22,476 | 101,401 | 105,456 |
| Purchase accounting non-cash charges | 5,041 | -- | -- | -- | -- | -- |
| Gross profit | 18,786 | 22,837 | 22,373 | 22,055 | 91,312 | 97,299 |
| Gross Margin % | 37% | 45% | 45% | 50% | 47% | 48% |
| Marketing, general and administrative and engineering expense | 12,813 | 10,578 | 13,572 | 12,179 | 47,343 | 49,807 |
| Amortization of other intangible assets | 5,341 | 589 | 624 | 448 | 2,426 | 6,627 |
| Income from operations | 632 | 11,670 | 8,177 | 9,428 | 41,543 | 40,865 |
| Interest expense, net | (12,066) | (2,063) | (1,835) | (1,791) | (7,351) | (9,531) |
| Miscellaneous income/(expense) | (19,339) | (5) | (405) | (439) | (1,286) | (3,138) |
| Income (loss) before provision for income taxes | (30,773) | 9,602 | 5,937 | 7,198 | 32,906 | 28,196 |
| Income tax (expense) benefit | 18,333 | (4,359) | (1,725) | 1,458 | (13,966) | (1,795) |
| Net income (loss) | $ (12,440) | $ 5,243 | $ 4,212 | $ 8,656 | $ 18,940 | $ 26,401 |
| (1) The CHS Acquisition established a new basis of accounting that primarily affected inventory, intangible assets, goodwill, taxes, debt and equity. This resulted in additional amortization expense, interest expense and tax expense for the period from May 1, 2010 through June 30, 2010 as compared to the period from April 1, 2010 through April 30, 2010 and, as a result, the results for the two combined periods are not comparable. However, we believe that combining the two periods into a single period for comparative purposes gives the most clarity for the users of this financial information. | ||||||
| Thermon Holding Corp. | ||
| Condensed Consolidated Balance Sheet | ||
| (Dollars in Thousands) | ||
|
June 30, 2010 Successor (Unaudited) |
March 31, 2010 Predecessor |
|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 8,908 | $ 30,147 |
| Accounts receivable, net | 45,857 | 41,882 |
| Notes receivable and other | 342 | 3 |
| Inventories, net | 26,473 | 22,835 |
| Costs and estimated earnings in excess of billings on uncompleted contracts | 1,906 | 1,636 |
| Income taxes receivable | 3,376 | 1,368 |
| Prepaid expenses and other current assets | 7,225 | 4,331 |
| Deferred income taxes | 1,390 | 1,428 |
| Total current assets | 95,477 | 103,630 |
| Property, plant and equipment, net | 22,589 | 22,750 |
| Goodwill | 129,626 | 42,013 |
| Intangible assets, net | 134,385 | 50,137 |
| Debt issuance costs, net | 13,399 | 2,586 |
| $ 395,476 | $ 221,116 | |
| Liabilities and shareholder's/members' equity | ||
| Current liabilities: | ||
| Accounts payable | $ 13,323 | $ 9,397 |
| Accrued liabilities | 12,213 | 13,505 |
| Obligations in settlement of merger transaction | 6,600 | -- |
| Billings in excess of costs and estimated earnings on uncompleted contracts | 964 | 1,035 |
| Income taxes payable | 235 | 2,158 |
| Deferred income taxes | -- | 138 |
| Total current liabilities | 33,335 | 26,233 |
| Long-term debt, net of current maturities | 212,751 | 109,249 |
| Deferred income taxes | 42,137 | 30,005 |
| Other noncurrent liabilities | 1,279 | 555 |
| Shareholders' / Members' equity | 105,974 | 55,074 |
| $ 395,476 | $ 221,116 | |
| Thermon Holding Corp. | ||||||
| Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | ||||||
| (unaudited, dollars in thousands) | ||||||
|
Three Months Ended June 30, |
Three Months Ended March 31, |
Year Ended March 31, |
||||
| Combined (1) 2010 | Predecessor 2009 | Predecessor 2010 | Predecessor 2009 | Predecessor 2010 | Predecessor 2009 | |
| Non-GAAP Financial Measures: | ||||||
| Gross profit - GAAP Basis | $ 18,786 | $ 22,837 | $ 22,373 | $ 22,055 | $ 91,312 | $ 97,299 |
| Add back - inventory amortization | 5,041 | -- | -- | -- | -- | -- |
| Adjusted gross margin - Non GAAP | 23,827 | 22,837 | 22,373 | 22,055 | 91,312 | 97,299 |
| Non-GAAP Gross Margin % | 47% | 45% | 45% | 50% | 47% | 48% |
| EBITDA Calculation: | ||||||
| Net Income (loss) | $ (12,440) | $ 5,243 | $ 4,212 | $ 8,656 | $ 18,940 | $ 26,401 |
| Add (deduct): | ||||||
| Interest expense, net | 12,066 | 2,063 | 1,835 | 1,791 | 7,351 | 9,531 |
| Income tax (expense) benefit | (18,333) | 4,359 | 1,725 | (1,458) | 13,966 | 1,795 |
| Depreciation and amortization | 10,909 | 1,062 | 1,201 | 423 | 4,424 | 8,497 |
| EBITDA - Non GAAP basis | $ (7,798) | $ 12,727 | $ 8,973 | $ 9,412 | $ 44,681 | $ 46,224 |
| EBITDA - Non GAAP basis | $ (7,798) | $ 12,727 | $ 8,973 | $ 9,412 | $ 44,681 | $ 46,224 |
| Transaction expense | 20,016 | -- | 309 | -- | 309 | 1,273 |
| Adjusted EBITDA - Non GAAP basis | $ 12,218 | $ 12,727 | $ 9,282 | $ 9,412 | $ 44,990 | $ 47,497 |
| (1) The CHS Acquisition established a new basis of accounting that primarily affected inventory, intangible assets, goodwill, taxes, debt and equity. This resulted in additional amortization expense, interest expense and tax expense for the period from May 1, 2010 through June 30, 2010 as compared to the period from April 1, 2010 through April 30, 2010 and, as a result, the results for the two combined periods are not comparable. However, we believe that combining the two periods into a single period for comparative purposes gives the most clarity for the users of this financial information. | ||||||