Thermon Group (NYSE:THR) reported what management described as a record third quarter for fiscal 2026, with the company posting its highest revenue, profitability, and bookings to date. On its earnings call, executives pointed to strengthening order trends, improving large project activity, and growing interest in new product platforms tied to data centers and electrification.
Record quarter driven by revenue growth and margin execution
Chief Executive Officer Bruce Thames said third quarter revenue rose 10% year-over-year, while adjusted EBITDA increased 12%. He highlighted third quarter adjusted EBITDA margin of “just over 24%,” with trailing 12-month adjusted EBITDA margin “nearly 23%.” Thames credited the company’s “Thermon Business System” initiatives and margin priorities for the profitability gains.
In the question-and-answer session, management discussed the sustainability of gross margins above 46% for a second consecutive quarter, despite an increase in large project activity that has historically carried lower margins. Thames said margin improvement has been supported by productivity and efficiency gains, price realization, and operating leverage. He also noted that current project mix is “largely design and supply” with less turnkey field labor and third-party materials than in the past. However, he cautioned that the third fiscal quarter is typically the company’s seasonal peak for gross margin, with margins normally easing in the fourth quarter and first quarter before rebuilding.
Bookings momentum and growing pipeline
Management emphasized order strength as a key highlight. Thames said third quarter orders increased 14% year-over-year, producing a book-to-bill ratio of about 1.1x. The total bid pipeline was up 8% at quarter end, with “nearly 80%” tied to diversified end markets.
Large project orders were up about 60% year-over-year, which management attributed to LNG activity, midstream gas processing, and a large sustainable aviation fuels (SAF) project in Asia. Thames said these orders help expand Thermon’s installed base but tend to have longer execution timelines, with conversion expected to begin in fiscal 2027.
The power sector was another area highlighted. Thames said the company’s pipeline of opportunities in power has grown to $180 million, up 58% year-over-year, with more than 60% of opportunities in the U.S. market. He framed this as early stages of what appears to be a larger capital expenditure cycle.
Schott added that backlog increased 10% year-over-year, supported by the positive book-to-bill ratio and “favorable project timing,” even as Thermon delivered record quarterly revenue.
Data center liquid load banks: shipping, commissioning, and expanding capacity
Chief Operating Officer Tom Cerovski provided an update on Thermon’s liquid load bank solutions for liquid-cooled data centers, a market the company has tied to increased AI-driven infrastructure investment. Cerovski said Thermon shipped the first 20 units of its newest designed liquid load bank solutions during the quarter and began installation and commissioning. He noted the company moved from development to shipping in six months.
Quoting activity “remains robust,” according to Cerovski, with the quote log doubling sequentially to $60 million. He said Thermon expects a “significant ramp in orders” and is expanding production capacity, describing the opportunity as multi-year.
In response to an analyst question about prior market size estimates for liquid load banks, management said it had not updated its estimates and would “stay consistent” with prior communications, while reiterating that the market backdrop is robust and visibility is improving through the growing quote log.
Thermon also described a broadening set of customer relationships in the data center ecosystem. Cerovski said the company is engaging with rental companies, firms that specialize in data center commissioning and compliance testing, and end users—some of whom may install load banks permanently as part of their infrastructure.
Medium voltage heaters: early orders, rising pipeline, and a capacity buildout
Alongside data center products, Thermon highlighted medium voltage heaters as another organic growth platform. Cerovski described medium voltage heaters as operating at higher voltages than traditional process heaters, with benefits including higher efficiencies, higher power densities, smaller footprints, and lower installation costs with less auxiliary equipment. He also tied demand to electrification and decarbonization trends.
Cerovski said Thermon’s pipeline for medium voltage heaters has expanded to more than $150 million. The company has secured its third order and ended the quarter with medium voltage heater backlog of more than $11 million. Cerovski said Thermon is quoting opportunities and “selling manufacturing slots” into fiscal 2027 and fiscal 2028, while scaling manufacturing processes across its global footprint to increase capacity.
Management stressed competitive barriers to entry in medium voltage heaters, including engineering complexity and international certifications requiring extensive testing and compliance reviews.
Thames also discussed the company’s FATI acquisition, saying it has performed “exceptionally well.” He said Thermon is making capital investments to scale capacity in Milan, including plans to support medium voltage heater production in Europe for Europe and the Eastern Hemisphere. Thames said that in less than 18 months Thermon has “essentially doubled that business” and expects it to double again over the next two to three years, driven by electrification demand and medium voltage heater opportunities.
Cash flow, liquidity, and updated fiscal 2026 guidance
Schott said Thermon generated $13.1 million of free cash flow in the third quarter, up from $8.4 million last year, and reported year-to-date free cash flow of $25.7 million compared with $23.9 million in the prior-year period. Capital expenditures were $4.9 million, up from $1.4 million, reflecting investment to support liquid load bank and medium voltage heater initiatives.
The company ended the quarter with net debt of $96.3 million and a net leverage ratio of 0.8x. Schott said Thermon had $141 million in total cash and available liquidity at quarter end. The company did not repurchase shares during the quarter; cumulative repurchases since the beginning of fiscal 2025 totaled 36.04% of shares outstanding, with $38.5 million remaining under its authorization.
Based on performance through the first three quarters and what management described as continued momentum, Thermon raised its full-year fiscal 2026 guidance. The company now expects:
- Revenue: $516 million to $526 million
- Adjusted EBITDA: $114 million to $120 million
Management said the guidance assumes current tariff structures remain in place and that any future tariff announcements do not have a notable positive or negative impact on input costs or customer sentiment, while improved business trends are sustained.
About Thermon Group (NYSE:THR)
Thermon Group, Inc (NYSE: THR) is a global provider of engineered thermal solutions designed to maintain process temperatures, prevent freezing and improve energy efficiency across industrial, commercial and power generation applications. The company specializes in the design, manufacture, installation and service of heat tracing systems, insulation and protective coatings for pipelines, tanks, vessels and other critical equipment.
Thermon’s core offerings include electric heat tracing, steam tracing, custom-engineered control panels, monitoring systems and advanced sensor technologies.
