Thermon Group Holdings, Inc.

Greetings and welcome to the Thurmond Group Holdings Incorporated Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Yvonne Salem, Vice President of FP&A and Investor Relations. Thank you. You may begin.

Thank you, Latonya. Good morning, and thank you for joining today's fiscal 2024 second quarter conference call. Earlier this morning, we issued an earnings press release, which has been filled with the SEC on form 8K, and it's also available on our investor relations section of our website. Additionally, the slides for this conference call can be found in our IR website under news and events, IR calendar, Earnings Conference Calls Q2 2024. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures in the tables at the end of the earnings . These non-GAAP measures should be considered in addition to and not as a substitute for measures of financial performance reported in accordance with GAAP. I would like to remind you that during this call, we may make certain forward-looking statements regarding our company. Please refer to our annual report and most recent quarterly reports filed with the SEC for more information regarding our forward-looking statements, including the risks and uncertainties that could impact our future results. Our actual results may differ materially from those contemplated by these forward-looking statements. And we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments, or otherwise, except as might be required by law. Now, I would like to introduce Bruce Sames, our President and Chief Executive Officer, for his opening remarks.

Well, thank you, Yvonne. And good morning, everyone, and thank you for joining us today. I'd like to begin today with a quick overview of ThermHolland for those of you who may be new to the story. We're a world leader in providing safe, reliable, and innovative mission-critical industrial process heating solutions to customers in 85 countries from facilities on four continents. Our technology is agnostic, and many of our solutions enable the energy transition through decarbonization and electrification. Our approximately 1,400 employees have a best-in-class safety record and are dedicated to creating long-term value for our stakeholders by executing our strategic plan, which I'll cover in more detail on the next slide. Turning now to slide four on thermal and strategic pillars. We're generating sustainable value by implementing our long-term strategy that is based on three pillars. Profitably growing our installed base. Second, decarbonization, digitization, and diversification. And third, disciplined capital allocation. We've developed a large global installed base over the last 69 years by providing our customers with mission-critical industrial process heating technology and solutions. These solutions typically represent less than 1% of the initial capital cost of a process facility, but are critical to ensuring safe, reliable, and efficient operations. This enables us to increase recurring revenues and realize growth across our traditional in-market verticals while expanding margins through operational excellence. In addition, we're driving growth through our long-term strategic initiatives of decarbonization, digitization and diversification. We are a key enabler of the energy transition through electrification and decarbonization of industrial heat. Our innovative solutions drive energy efficiency, facilitate a circular economy and help our customers achieve their sustainability goals. Through our digital solutions, we also help our customers to optimize maintenance through enhanced controls and monitoring. Our core technologies plus our decarbonization and digitization solutions are supporting our efforts to diversify our end markets with a goal of having approximately 70% of our revenues come from outside of the oil and gas by the end of fiscal 2026. Underpinning our first two strategic pillars is our commitment to a disciplined capital allocation strategy. Our strong balance sheet allows us to reinvest in our business to drive organic growth and positions us well to pursue inorganic growth through highly strategic bolt-on acquisitions that meet our financial objectives. On slide five, you can see that we're continuing to progress our end market diversification strategy with approximately 64% of our trailing 12-month revenue coming from diversified end markets. We've seen significant success in the food and beverage end market with revenue growth of 219% over the last year. We also continue to capture share in the rail and transit market where revenue was up 26% year-over-year, and in the commercial market, where revenue was up 16%. Of particular note is the 92% year-over-year growth in the renewables end market, which is also a testament to the ways that Thermon is enabling the energy transition. The expansion in the renewables market reflects increasing activity across alternative fuels, hydrogen, and ammonia. Additionally, we're well positioned to support our traditional end markets in upstream and downstream oil and midstream gas. Should the energy transition take longer and additional investments be needed to support demand, we are well positioned to meet their needs. Turning now to slide six on driving diversified order growth. Despite continued high oil and gas prices, orders from diversified end markets continue to outpace orders from the oil and gas sector. As of September 30th, approximately 74% of our year-to-date orders were from diversified end markets, up 33% year-over-year, while orders from oil and gas end markets were down 13% year-over-year. As I mentioned on the previous slide, about 64% of our trailing 12-month revenue is from diversified end markets compared to 74% of orders year-to-date, indicating that demand continues to accelerate across these diversified end markets. We're seeing increased demand for our solutions in rail and transit power and petrochemical end markets as well. Additionally, approximately 10% of our bookings year-to-date are related to decarbonization and electrification across a wide range of end markets. On slide seven, you can see two recent examples of how we're putting our decarbonization strategy into action. During the second quarter of fiscal 2024, 11% of incoming orders and 7% of revenues were related to decarbonization opportunities with our pipeline now growing to over 150 million. Here we have two exciting examples of emerging opportunities in the hydrogen economy. The first example details Thermont's contribution to the first comprehensive and scalable clean hydrogen energy complex in Canada. The project in Edmonton, Alberta is part of an accelerator program that supports Canada's 2030 greenhouse gas emission reductions target as well as their 2050 net zero emissions goals. Across this site, Thermon supplied a wide range of solutions across multiple product lines. We're supplying environmental heating products for the job site and unit heating. The energy complex requires Thermon electric heat tracing as well as immersion and circulation products from our process heating product lines. The completed system will also use digitization and predictive analytics through our Genesys network. After the facility is up and operational, the Thermont products and solutions will be fully powered by energy generated from the clean hydrogen power plant. This second example highlights our focus towards emerging decarbonization markets. In this case, Thermont provided a series of unique solutions for the production of sustainable aviation fuel. Thermon partnered with a refiner to provide a heating system to produce sustainable hydrogenated biofuels for commercial jets with the goal of reducing the overall emissions from aircraft. In addition to providing cleaner burning fuels, our customer wanted to reduce scope one emissions by implementing electric alternatives for heat inputs that would have traditionally been hydrocarbon fired. Additionally, the refinery needed electric options for more precise startup control and turndown to increase yield. To meet these goals, Thurmond developed an electric heating foundation to be used for all critical services and processes throughout the refining process. To support the future growth of the sustainable aviation fuel supply, we also standardized the design of our solutions and product mix to enable rapid future scalability. These two examples illustrate the breadth and depth of Thermod's electric heating solutions and our unmatched expertise in industrial process heating that make us uniquely positioned to provide the heating technology needed to enable the new hydrogen economy. Turning now to slide eight and our second quarter fiscal 2024 results. This quarter, the Thermon team generated record revenue of $123.7 million, an increase of 23% year-over-year, driven by strong growth in U.S., Europe, and Asia. We had double-digit growth in year-over-year revenue from OpEx activity associated with recurring maintenance. Our profitability continued to grow with adjusted EBITDA of 26.5% year-over-year, to 27.7 million. This was largely due to volume growth, price, and productivity. Adjusted EBITDA margins increased approximately 60 basis points, driven by leverage on our fixed cost base. Free cash flow improved by 1.9 million year-over-year due to improving DSOs. Adjusted EPS was 49 cents per share, an increase of 30% over the prior year period. Finally, our bookings grew an impressive 22% year over year, and the book to bill ratio was 0.94 times in the quarter. Year to date, our book to bill continues to be positive at one times, and bookings on a trailing 12 month basis are now 489 million. With that, I'd like to turn the call over to Kevin for a more in-depth review of our financial results. Kevin?