Thermon Group Holdings (THR) reported QQ3 2025 revenue of $134.4 million, down 1.5% year over year, as large-capital-ex expenditure (CapEx) projects remained pressurized even as OpEx-revenue and short-cycle work provided resilience. Management emphasized a pivot to a more stable, margin-rich mix driven by OpEx revenue and a growing installed base, which supported an adjusted EBITDA margin of 23.7% (quarter) and an overall EBITDA trajectory that surpassed prior-year levels despite a small top-line decline. Backlog grew meaningfully, reaching approximately $235.6 million at quarter-end, up 48% versus the prior year, with organic backlog up 9% excluding Vapor Power and ThoughtView acquisitions. The company generated $8.5 million of quarterly free cash flow, and year-to-date free cash flow reached about $24 million, enabling debt paydown and a net leverage of roughly 1.1x. Thermon also reinforced a disciplined capital allocation approach, including a $6.2 million share repurchase and roughly $43 million remaining under a $50 million program.
Management maintained full-year 2025 guidance: revenue of $495–$515 million, adjusted EBITDA of $105–$110 million, and adjusted EPS of $1.77–$1.89. Tariffs remain an uncertain variable not baked into guidance, with management noting the importance of being close to customers and a multi-market footprint to hedge against trade frictions. Looking ahead, Thermon outlined a strategic path toward FY26 targets (roughly $600–$700 million in revenue, ~24% adjusted EBITDA margin, and at least 70% of revenue from diverse markets), acknowledging external macro and M&A timing as key variables.
Overall, Thermon’s QQ3 performance reinforces a constructive investment thesis: (1) a higher-margin, recurring-revenue backbone via OpEx-centric sales and MRO exposure; (2) a robust backlog with improving visibility amid broad-based order momentum; (3) a strong balance sheet with ample liquidity and low leverage; and (4) a compelling growth narrative supported by secular themes (onshoring, electrification, decarbonization) and data-center cooling opportunities. Investors should monitor tariff dynamics, large-capex cycle recovery, capacity execution on Vapor Power/ThoughtView, and progress toward the FY26 diversification targets.