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Jun 30, 2025
Thermon Q1 2026 Earnings Report
Thermon reported its first quarter fiscal year 2026 results, with a decrease in revenue and adjusted EBITDA, but an increase in net income and gross margin.
Key Takeaways
Thermon Group Holdings, Inc. reported a revenue of $108.9 million for Q1 2026, a 5.4% decrease year-over-year, primarily due to reduced customer demand and delayed backlog conversion. Despite the revenue decline, the company achieved a net income of $8.6 million, a 1.2% increase, and an improved gross margin of 44.1%. Adjusted EBITDA decreased by 8.6% to $21.2 million. The company's backlog grew significantly by 27.1% to $252.2 million, and it maintained a strong net leverage ratio of 1.0x.
Revenue for Q1 2026 decreased by 5.4% to $108.9 million, attributed to market uncertainty from tariffs and delayed backlog conversion.
Net income increased by 1.2% to $8.6 million, and diluted EPS rose to $0.26, despite the revenue decline.
Gross margin improved to 44.1% from 43.8% in the prior year, driven by favorable revenue mix, cost control, and tariff mitigation.
Backlog significantly increased by 27.1% to $252.2 million, indicating future revenue potential, and the company maintained a healthy net leverage ratio of 1.0x.
Revenue by Segment
Forward Guidance
Thermon is confirming its full-year fiscal 2026 guidance, expecting revenue between $495 million and $535 million, Adjusted EBITDA between $104 million and $114 million, EPS between $1.35 and $1.57, and Adjusted EPS between $1.77 and $1.99.
Positive Outlook
- Actions taken to address backlog conversion issues are expected to enable revenue recognition in coming quarters.
- Successful execution of plans to mitigate tariff impacts and strategic margin improvement initiatives led to gross margin increase.
- Recovery in bookings cadence observed through the quarter and into July, indicating improving demand.
- Well-positioned to benefit from favorable secular demand trends driven by decarbonization, digitization, and diversification growth strategy.
- Strong bid pipeline growth (up 43%) driven by demand in key end markets like chemical/petrochemical, power/nuclear, LNG, and renewables.
Challenges Ahead
- First quarter backlog conversion fell short of expectations, delaying approximately $10 million in revenue.
- Broader macroeconomic environment remains difficult to predict due to trade uncertainty.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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