Thermon Group Holdings Inc (THR) 2024 Q1 法說會逐字稿

Greetings and welcome to the Thermon First Quarter 2024 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加賽盟 2024 年第一季財報電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。

At this time, I would like to hand the call over to Ivonne Salem, Vice President of FP&A and Investor Relations. Thank you. You may begin.

現在，我想將電話轉給 FP&A 和投資者關係副總裁 Ivonne Salem。謝謝。你可以開始了。

Thank you, Darren. Good morning and thank you for joining today's fiscal 2024 first quarter conference call. Earlier this morning, we issued an earnings press release, which has been filed with the SEC on Form 8-K and is also available on the Investor Relations section of our website. Additionally, the slides for this conference call can be found on our IR website under News and Events, IR Calendar, Earnings Conference Call Q1 2024.

謝謝你，達倫。早上好，感謝您參加今天的 2024 財年第一季電話會議。今天早些時候，我們發布了一份收益新聞稿，該新聞稿已以 8-K 表格的形式向 SEC 提交，也可在我們網站的投資者關係部分取得。此外，本次電話會議的幻燈片可以在我們的 IR 網站上的「新聞和活動」、「IR 日曆」、「2024 年第一季財報電話會議」下找到。

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 press release. 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.

在電話會議期間，我們將討論一些不符合公認會計原則的項目。我們已將這些項目與收益新聞稿末尾表格中最具可比性的公認會計準則衡量標準進行了核對。這些非公認會計原則衡量標準應作為根據公認會計原則報告的財務績效衡量標準的補充，而不是替代。

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 report 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 might 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 may be required by law.

我想提醒您，在這次電話會議中，我們可能會做出一些關於我們公司的前瞻性陳述。請參閱我們向美國證券交易委員會提交的年度報告和最近的季度報告，以了解有關我們前瞻性聲明的更多信息，包括可能影響我們未來業績的風險和不確定性。我們的實際結果可能與這些前瞻性陳述預期的結果有重大差異，我們沒有義務公開更新任何前瞻性陳述，無論是由於新資訊、未來發展或其他原因，除非法律。

Now I would like to introduce Bruce Thames, our President and Chief Executive Officer, for his opening remarks.

現在我想請我們的總裁兼執行長 Bruce Thames 致開幕詞。

Thank you, Ivonne. Good morning, everyone, and thank you for joining us today. I'll start today with a quick overview of Thermon. 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 4 continents. Our almost 1,400 employees have an industry-leading safety record and are dedicated to creating value for our customers and shareholders by executing our strategic long-term plan, which I'll cover in more detail on the next slide.

謝謝你，伊馮娜。大家早安，感謝您今天加入我們。今天我將首先快速概述 Thermon。我們是世界領導者，透過遍佈 4 大洲的工廠為 85 個國家的客戶提供安全、可靠且創新的任務關鍵型工業製程加熱解決方案。我們的近 1,400 名員工擁有領先業界的安全記錄，並致力於透過執行我們的長期策略計畫為我們的客戶和股東創造價值，我將在下一張投影片中詳細介紹該計畫。

In order to create long-term value for our shareholders, we're guided by our 3 strategic pillars: first, profitably growing our installed base; second, decarbonization, digitization, and diversification to drive additional growth; and third, disciplined capital allocation. As the global leader at the forefront of applying innovative process heating technology to solve critical thermal engineering problems for our customers, we benefit from a very large installed base. This enables us to capture recurring revenues and drive growth across our traditional end market verticals, while our culture of continuous improvement supports margin expansion.

為了為股東創造長期價值，我們以三大策略支柱為指導：首先，以獲利方式成長我們的安裝基礎；第二，脫碳、數位化、多角化驅動額外成長；第三，嚴格的資本配置。作為應用創新過程加熱技術為客戶解決關鍵熱工程問題前沿的全球領導者，我們受益於龐大的安裝基礎。這使我們能夠獲得經常性收入並推動傳統終端市場垂直領域的成長，同時我們的持續改善文化支持利潤率擴張。

In addition to capturing share across our traditional end markets, we're also pursuing 3 new areas to drive additional growth around decarbonization, digitization, and diversification. We're expanding our sales and marketing efforts in these areas that utilize our core heating technologies to diversify our end markets with a goal of having approximately 65% to 70% of our revenues come from end markets outside of oil and gas by the end of fiscal 2026.

除了搶佔傳統終端市場的份額外，我們還在探索 3 個新領域，以推動脫碳、數位化和多元化的進一步成長。我們正在這些領域擴大銷售和行銷力度，利用我們的核心加熱技術實現終端市場多元化，目標是到 2017 年底我們約 65% 至 70% 的收入來自石油和天然氣以外的終端市場。

Our digitization strategy is progressing well as we continue to expand our range of digital solutions that help our customers to optimize monitoring and maintenance across their facilities. We're also enabling the energy transition as we supply our customers with products and solutions that help them achieve their sustainability goals around electrification and decarbonization. Finally, our commitment to a disciplined capital allocation strategy underpins our first 2 strategic pillars. Our robust balance sheet enables us to drive organic growth through reinvestment in our business to meet our fiscal 2026 goals. We're also well positioned to pursue inorganic growth through highly-strategic bolt-on acquisitions that meet our financial objectives.

我們的數位化策略進展順利，我們不斷擴大數位解決方案的範圍，幫助我們的客戶優化其設施的監控和維護。我們也為客戶提供產品和解決方案，幫助他們實現電氣化和脫碳的永續發展目標，從而實現能源轉型。最後，我們對嚴格的資本配置策略的承諾支撐著我們的前兩個策略支柱。我們穩健的資產負債表使我們能夠透過業務再投資來推動有機成長，以實現 2026 財年的目標。我們還處於有利位置，可以透過滿足我們財務目標的高度策略性的補強收購來追求無機成長。

Turning now to Slide 5 on Thermon solutions for energy transition. This quarter we'd like to share with you some of the ways that Thermon's products and solutions enable the energy transition. On Slide 5, you can see the range of Thermon's current electric heating products that can be used in both green and blue ammonia applications. These include electric immersion heaters, electric heat tracing systems, and electrically-heated tubing bundles. Hydrogen is an important piece of the sustainable energy future, but it's difficult to transport via pipeline or other traditional means due to a phenomenon called hydrogen corrosion cracking or HCC. HCC can embrittle and weaken steel resulting in shorter asset life or unanticipated failures. By adding nitrogen to hydrogen, ammonia is created which is much easier to transport via pipeline or other means. As a result, ammonia plants are an important part of enabling the use of hydrogen as a sustainable energy source.

現在轉向投影片 5，了解 Thermon 能源轉型解決方案。本季我們想與您分享賽盟產品和解決方案實現能源轉型的一些方法。在投影片 5 上，您可以看到賽盟目前的電熱產品系列，可用於綠氨和藍氨應用。其中包括浸入式電暖器、電伴熱系統和電加熱管束。氫氣是永續能源未來的重要組成部分，但由於氫腐蝕裂縫或 HCC 現象，很難透過管道或其他傳統方式運輸。 HCC 會使鋼材脆化並削弱鋼材強度，從而縮短資產壽命或意外故障。透過將氮氣添加到氫氣中，產生氨，更容易透過管道或其他方式運輸。因此，合成氨工廠是使用氫作為永續能源的重要組成部分。

Green ammonia uses renewable energy such as wind or solar power to produce hydrogen via electrolysis. Blue ammonia is produced when natural gas is cracked to generate hydrogen and CO2, where the CO2 is then captured and sequestered. In either case, produced hydrogen is then combined with nitrogen to create ammonia. The global ammonia market is estimated to grow at a 5.8% compounded annual growth rate through 2032.

綠色氨利用風能或太陽能等再生能源透過電解生產氫氣。當天然氣裂解產生氫氣和二氧化碳時，會產生藍色氨，然後捕獲並封存二氧化碳。無論哪種情況，產生的氫氣都會與氮氣結合生成氨。預計到 2032 年，全球氨市場將以 5.8% 的複合年增長率成長。

Electric heaters play a crucial role in various stages of heating within ammonia plants. They're used to provide indirect heat at various stages of the process via heat transfer fluids, such as molten salt or hot oils. They can also be used to directly heat reactants or to provide process heating for ammonia synthesis. In addition to their environmental benefits, electric heaters can also provide cost savings for ammonia plants. They offer precise and efficient heating, reducing energy consumption, and minimizing downtime. With their compact size and easy installation, electric heaters also have a smaller footprint than traditional heating systems, allowing for more efficient use of space. Thermon's existing range of electric heating solutions, combined with our expertise in industrial process heating, make us an ideal partner for ammonia producers looking to improve their sustainability and efficiency.

電加熱器在合成氨廠加熱的各個階段中發揮著至關重要的作用。它們用於透過熔鹽或熱油等傳熱流體在製程的各個階段提供間接熱量。它們還可用於直接加熱反應物或為氨合成提供製程加熱。除了環境效益外，電加熱器還可以為合成氨廠節省成本。它們提供精確且高效的加熱，減少能源消耗，並最大限度地減少停機時間。電加熱器尺寸緊湊且易於安裝，與傳統加熱系統相比，佔地面積更小，可以更有效地利用空間。 Thermon 現有的電熱解決方案系列與我們在工業製程加熱方面的專業知識相結合，使我們成為尋求提高永續性和效率的氨生產商的理想合作夥伴。

Turning now to Slide 6 on new Thermon technology. Here we see the newest addition in our Caloritech immersion heater line called the Quantum Truflow Heater. Our investments in research and development have yielded this patent-pending design that represents a step change in heating technology. The design has been validated in partnership with an industry-leading heat transfer institute using advanced modeling software and lab testing to achieve optimal heat transfer and energy efficiency. The higher efficiency reduced overall size and lowered total cost of ownership to make conversion from traditional hydrocarbon heaters to electric even more economically compelling across a wide range of end market.

現在轉向幻燈片 6，了解 Thermon 新技術。在這裡，我們看到了 Caloritech 浸入式加熱器系列的最新產品，稱為 Quantum Truflow 加熱器。我們在研發方面的投資產生了這項正在申請專利的設計，它代表了加熱技術的一步變革。該設計已與業界領先的傳熱研究所合作使用先進的建模軟體和實驗室測試進行了驗證，以實現最佳的傳熱和能源效率。更高的效率減少了整體尺寸並降低了總擁有成本，使得從傳統碳氫化合物加熱器到電動加熱器的轉換在廣泛的終端市場上更具經濟吸引力。

Turning now to Slide 7. Thermon's Genesis Network and digital solutions provide our customers with full operational awareness and supervisory control over their heat trace systems using industry-leading wireless mesh technology that connects all heat trace controllers to the controller. This facilitates increased operational efficiency and reliability with fewer maintenance hours and lower total costs. Adoption continues to grow as customers recognize the significant benefits provided by the Genesis Network with 15% more new circuits added in the first quarter of fiscal 2024. Based on our pipeline of opportunities, we anticipate the number of circuits doubling this fiscal year.

現在轉向幻燈片7。控制。這有助於提高營運效率和可靠性，同時減少維護時間和降低總成本。隨著客戶意識到Genesis Network 提供的顯著優勢，其採用率將持續成長，2024 財年第一季新增電路數量將增加15%。一番。

On Slide 8 you can see that we are continuing to progress our end market diversification strategy. Thermon's products and solutions can be used across a wide range of industries, and we're seeing growth across several of these sectors. During the quarter, our bookings from rail and transit were up by 39% year over year, commercial was up by 29%, and food and beverage was up 120%. Our order intake from high-tech sectors continue to grow as well with bookings from data centers up over 600% and bookings from semiconductor end market up over 90%, accelerated by the CHIPS Act. Importantly, we are also seeing growth in sectors related to the energy transition. Our bookings from electric power were up 489% and our bookings from biofuels and green diesel were up 89% during the quarter. We're encouraged by the steady incremental growth across these end markets as we capture additional market share.

在投影片 8 上，您可以看到我們正在繼續推動我們的終端市場多元化策略。 Thermon 的產品和解決方案可用於廣泛的行業，我們看到其中幾個行業的成長。本季度，我們的鐵路和交通預訂量年增 39%，商業預訂量較去年同期成長 29%，餐飲預訂量較去年同期成長 120%。我們來自高科技領域的訂單量持續成長，資料中心的訂單量成長了 600% 以上，半導體終端市場的訂單量成長了 90% 以上，CHIPS 法案加速了這一成長。重要的是，我們也看到與能源轉型相關的產業的成長。本季度，我們的電力訂單成長了 489%，生物燃料和綠色柴油訂單增加了 89%。隨著我們佔領更多的市場份額，這些終端市場的穩定增量成長令我們感到鼓舞。

On Slide 9, I'd like to once again highlight the progress we have made around our end market diversification strategy. This chart shows end market mix for the trailing 12-month period ending June 30th, 2023. Since last quarter, we've increased the percentage of our revenue that comes from, for example, the commercial and renewables end markets. CapEx spending in LNG and petrochemicals has been a significant growth driver as well. We're also seeing growing demand related to projects in the specialty chemicals and gases, particularly related to semiconductor fabrication. There's also a growing pipeline of opportunities around alternative fuels, such as biofuels, hydrogen and ammonia, and another round of investment to winterize and harden the U.S. power infrastructure across the south. Overall, with approximately 60% of our revenue generated from non-oil and gas end markets, we continue to make steady progress toward our goal of -- fiscal '26 diversification goals.

在投影片 9 上，我想再次強調我們在終端市場多元化策略方面的進展。此圖表顯示了截至 2023 年 6 月 30 日的過去 12 個月期間的終端市場組合。液化天然氣和石化產品的資本支出也是重要的成長動力。我們也看到與特種化學品和氣體項目相關的需求不斷增長，特別是與半導體製造相關的項目。圍繞生物燃料、氫和氨等替代燃料的機會也越來越多，以及另一輪旨在防凍和加固美國南部電力基礎設施的投資。總體而言，我們大約 60% 的收入來自非石油和天然氣終端市場，我們繼續朝著我們的目標——26 財年多元化目標穩步前進。

Turning now to Slide 10 and our first quarter fiscal 2024 results. The Thermon team achieved another quarter of outstanding performance. As a quick reminder, our business is highly seasonal with our first quarter typically being the weakest and the third and fourth quarters being the strongest due to colder weather in the northern hemisphere. As a result, year-over-year comparisons are more appropriate than sequential quarterly comparisons when measuring performance. We delivered record revenue of $106.9 million, up 12% year over year over a prior year record, largely due to healthy growth in North America and Asia Pacific.

現在轉向投影片 10 和我們 2024 財年第一季的業績。 Thermon團隊再創季度優異表現。快速提醒一下，我們的業務具有很強的季節性，第一季通常是最弱的，而由於北半球天氣寒冷，第三季和第四季是最強的。因此，在衡量績效時，與比比較比連續季度比較更合適。我們的營收達到創紀錄的 1.069 億美元，比上年同期成長 12%，主要歸功於北美和亞太地區的健康成長。

Importantly, we saw meaningful growth in year-over-year revenue from resilient maintenance or OpEx activity. We saw even stronger operating leverage with adjusted EBITDA of $22.1 million, up 33% year over year, driven by higher volume, price realization, and productivity gains. Free cash flow was negative in the quarter due to timing of certain payments after fiscal year end. Adjusted EPS was $0.40 per share, an increase of 58% over the prior year period. Finally, our book-to-bill ratio showed double-digit order growth at 1.12x, demonstrating continued strong demand from our customers.

重要的是，我們看到彈性維護或營運支出活動帶來的收入比去年同期顯著增長。在產量、價格實現和生產力提高的推動下，我們的營運槓桿更加強勁，調整後 EBITDA 為 2,210 萬美元，較去年同期成長 33%。由於某些付款的時間安排在財政年度結束後，該季度的自由現金流為負。調整後每股收益為 0.40 美元，比去年同期成長 58%。最後，我們的訂單出貨比顯示兩位數的訂單成長，達到 1.12 倍，這表明我們的客戶需求持續強勁。

With that, I'd like to turn the call over to Kevin Fox for a more in-depth review of our financial results. Kevin?

說到這裡，我想將電話轉給凱文福克斯，讓他對我們的財務表現進行更深入的審查。凱文？

Thank you, Bruce, and good morning to all. Turning to our Q1 fiscal 2024 financial performance on Slide 11. Performance this quarter was once again outstanding as the global Thermon team continues to successfully execute our plan. Customer demand remained strong in the quarter. We reached $120 million in incoming orders, up 16% year over year. Book to bill was a very robust 1.12x. Spending remains strong across the U.S. and Latin America, and we continue to see signs of a rebound in Asia Pacific. In terms of our end market orders, we saw the most growth in the power sector during the quarter with customer demands expanding across the renewables, food and beverage, and commercial end markets. Trailing 12-month orders reached $475 million, which we believe supports our raised full year revenue guidance.

謝謝你，布魯斯，祝大家早安。轉向幻燈片 11 中我們的 2024 年第一季財務業績。本季客戶需求依然強勁。我們的新訂單達到 1.2 億美元，年增 16%。訂單出貨比達到了非常強勁的 1.12 倍。美國和拉丁美洲的支出依然強勁，我們繼續看到亞太地區出現反彈的跡象。就我們的終端市場訂單而言，本季電力產業成長最快，客戶需求在再生能源、食品和飲料以及商業終端市場不斷擴大。過去 12 個月的訂單達到 4.75 億美元，我們相信這支持了我們上調的全年收入指引。

Revenue in the first quarter was $107 million, a year-over-year increase of 12%, primarily driven by midstream and downstream oil activity across the U.S. and Latin America. The renewables, food and beverage, and power end markets also contributed to revenue growth in the quarter. Revenue from large projects was $27 million, up 21% versus prior year, while revenue from small projects and maintenance and repairs totaled $80 million, up 9%. On a trailing 12-month basis, 77% of our revenues were derived from customer OpEx spending and that is indicative of our business shifting away from more volatile capital budgets.

第一季營收為 1.07 億美元，年成長 12%，主要受到美國和拉丁美洲中下游石油活動的推動。再生能源、食品和飲料以及電力終端市場也為本季的收入成長做出了貢獻。大型專案的收入為 2,700 萬美元，比上年增長 21%，而小型專案以及維護和維修的收入總計 8,000 萬美元，成長 9%。在過去 12 個月的基礎上，我們 77% 的收入來自客戶營運支出，這表明我們的業務正在擺脫波動性更大的資本預算。

Adjusted EBITDA for the first quarter was $22 million, up 33% year over year with adjusted EBITDA margin expansion of approximately 330 basis points. On a trailing 12-month basis, adjusted EBITDA was $99 million, or 21.8% of revenue, representing a year-over-year increase of 48%. As we take a step back and think about the evolution of adjusted EBITDA over the past few years, it is important to acknowledge the contribution of our process heating business largely through the acquisition of CCI Thermal in December 2017 to that growth. The THS business recently crossed the $100 million revenue threshold on a trailing 12-month basis. Profitability is slightly better than the overall company average and important data point as we consider the adjacent growth markets that we believe will be a key contributor to the earnings power of this business in the years and decades to come.

第一季調整後 EBITDA 為 2,200 萬美元，年增 33%，調整後 EBITDA 利潤率擴大約 330 個基點。以過去 12 個月計算，調整後 EBITDA 為 9,900 萬美元，佔營收的 21.8%，年增 48%。當我們退一步思考過去幾年調整後 EBITDA 的演變時，重要的是要承認我們的流程加熱業務主要透過 2017 年 12 月收購 CCI Thermal 對此成長做出的貢獻。 THS 業務最近連續 12 個月突破了 1 億美元的營收門檻。獲利能力略好於公司整體平均水準和重要數據點，因為我們認為鄰近的成長市場將在未來幾年和幾十年內成為該業務獲利能力的關鍵貢獻者。

Last, but certainly not least, is that the THS business is providing a return on capital 250 basis points over our current cost of capital, demonstrating the team's ability to create meaningful shareholder value through a disciplined long-term focus on driving inorganic growth. Adjusted diluted earnings per share was $0.40 in the quarter, a year-over-year increase of 58%. A quick modeling note. We are currently estimating a $0.21 per share impact from amortization expense in fiscal year 2024. As you can see by these results, we continue to drive our business forward, delivering meaningful, profitable growth despite the complex operating environment.

最後但並非最不重要的一點是，THS 業務的資本回報率比我們當前的資本成本高出250 個基點，這表明該團隊有能力透過嚴格的長期專注於推動無機成長來創造有意義的股東價值。該季度調整後攤薄每股收益為 0.40 美元，年增 58%。快速建模筆記。我們目前估計2024 財年攤銷費用對每股的影響為0.21 美元。增長。

On Slide 12, we will cover the updated balance sheet. Our net debt to adjusted EBITDA ratio was 0.8x in the current quarter as compared to 1.7x in the previous year as we've both paid down debt and significantly grown EBITDA over that time period. Total debt at the end of June was down 25% to $114 million. Working capital was $156 million in the quarter, an increase of approximately 10%, primarily due to the combination of strategic inventory and seasonality. Working capital as a percentage of trailing 12-month sales was lower coming in at 34.6% at the end of the quarter, mainly driven by improved collections activity.

在投影片 12 中，我們將介紹更新後的資產負債表。本季我們的淨債務與調整後 EBITDA 的比率為 0.8 倍，而前一年為 1.7 倍，因為我們在這段時間內償還了債務，並且 EBITDA 顯著增長。 6 月底的總債務下降 25%，至 1.14 億美元。本季營運資本為 1.56 億美元，成長約 10%，主要是由於戰略庫存和季節性的結合。本季末，營運資本佔過去 12 個月銷售額的百分比較低，為 34.6%，主要是由於收款活動改善所致。

Turning to cash flow. Net income in the first quarter was $11 million, up 67% year over year. CapEx spend was $2.8 million and free cash flow was negative $1.9 million, reflecting our typically weakest cash quarter due to the timing of certain payments and our ongoing investments for strategic growth, particularly around incremental capacity for our process heating business. We ended the quarter with cash at $33 million, and this represented a year-over-year decrease of 17% as we are improving our global cash management practices. While the broader macroenvironment remains uncertain, we are pleased with our strong start to fiscal 2024. We continue to see strong growth trends across our regions, end markets, and financial metrics. As we move ahead through fiscal 2024, we will continue to achieve positive results, diligently control costs, and create long-term value for our shareholders. Finally, I would like to thank the entire Thermon team for their hard work, which enabled us to deliver such strong first quarter results.

轉向現金流。第一季淨利為1,100萬美元，較去年同期成長67%。資本支出為280 萬美元，自由現金流為負190 萬美元，反映出我們通常最疲軟的現金季度，原因是某些付款的時間安排以及我們對戰略增長的持續投資，特別是圍繞我們的過程加熱業務的增量產能。本季結束時，我們的現金為 3,300 萬美元，年減 17%，因為我們正在改善全球現金管理實務。儘管更廣泛的宏觀環境仍然不確定，但我們對 2024 財年的強勁開局感到滿意。展望2024財年，我們將持續取得正面成果，努力控製成本，為股東創造長期價值。最後，我要感謝整個賽盟團隊的辛勤工作，使我們能夠取得如此強勁的第一季業績。

And with that, I'll turn it back over to Bruce.

有了這個，我會把它轉回給布魯斯。

All right. Thank you, Kevin. I'd like to turn now to Slide 13. We're raising our full year revenue and earnings guidance for fiscal 2024. As we look ahead to the coming quarters, we're conscious of the ongoing macroeconomic volatility even as we continue to see growth across our business. At this time, we're raising the lower end of our revenue guidance from $455 million to $462 million, and increasing the upper range to $488 million for the full year, which at the midpoint represents approximately 8% top line growth over fiscal 2023.

好的。謝謝你，凱文。我現在想轉向幻燈片 13。目前，我們將全年營收指引的下限從 4.55 億美元提高到 4.62 億美元，並將全年營收指引的上限提高到 4.88 億美元，中位數意味著比 2023 財年的營收成長約 8%。

GAAP EPS is now expected to be in the range of $1.48 per share to $1.62 per share, which represents 55% year-over-year growth at the midpoint. Adjusted EPS guidance has also been raised to $1.69 to $1.83 per share. We'll continue to evaluate this outlook as we progress through our fiscal year. We expect to continue to generate significant free cash flow through the year to maintain a strong balance sheet, giving us the flexibility to reinvest in our business and evaluate bolt-on M&A opportunities.

目前，GAAP 每股盈餘預計在每股 1.48 美元至 1.62 美元之間，相當於中點年增 55%。調整後每股盈餘指引也上調至每股 1.69 美元至 1.83 美元。隨著本財年的進展，我們將繼續評估這一前景。我們預計全年將繼續產生大量自由現金流，以維持強勁的資產負債表，使我們能夠靈活地對業務進行再投資並評估補充併購機會。

On Slide 14, you can see more details about our capital allocation priorities. As our top priority, we are committed to maintaining a healthy balance sheet across economic cycles with a leverage target of 1.5x to 2x under normal conditions. Our next priority is to fuel organic growth in our business by reinvesting in people, technology, and continuous improvement. These investments enable us to pursue our 3 strategic initiatives of decarbonization, digitization, and diversification.

在投影片 14 上，您可以看到有關我們資本配置優先事項的更多詳細資訊。作為我們的首要任務，我們致力於在整個經濟週期中保持健康的資產負債表，正常情況下槓桿目標為 1.5 倍至 2 倍。我們的下一個優先事項是透過對人員、技術和持續改進的再投資來推動業務的有機成長。這些投資使我們能夠實施脫碳、數位化和多元化三大策略措施。

We also pursue inorganic growth by continually evaluating M&A opportunities. Our focus is on bolt-on acquisitions that meet our strategic and financial criteria, and we have a healthy pipeline of opportunities. Finally, we continue to evaluate opportunities to return capital to our shareholders when appropriate.

我們也透過不斷評估併購機會來追求無機成長。我們的重點是符合我們的策略和財務標準的補強收購，並且我們擁有良好的機會管道。最後，我們繼續評估在適當的時候向股東返還資本的機會。

As we wrap up today on Slide 15, we want to reiterate that Thermon is a leading global brand, providing safe, reliable, and innovative mission critical process heating solutions serving high-value diversified end markets with high barriers to entry. Our team relentlessly pursues operational excellence in order to deliver innovative products and differentiated solutions that create value for our customers. We believe that our large global installed base with longstanding customers across a variety of end markets is a significant competitive advantage, resulting in a resilient aftermarket franchise that generates high-margin recurring revenue. Our products and solutions are aligned with key long-term secular trends such as the energy transition, increasing environmental regulations, and growth in chemical demand.

當我們今天結束投影片 15 時，我們想重申賽盟是一個全球領先品牌，提供安全、可靠和創新的關鍵任務流程加熱解決方案，服務於進入壁壘較高的高價值多元化終端市場。我們的團隊不懈地追求卓越運營，以提供創新產品和差異化解決方案，為客戶創造價值。我們相信，我們在各個終端市場擁有龐大的全球安裝基礎和長期客戶，這是一個顯著的競爭優勢，從而形成有彈性的售後市場特許經營權，從而產生高利潤的經常性收入。我們的產品和解決方案符合關鍵的長期長期趨勢，例如能源轉型、日益嚴格的環境法規以及化學品需求的成長。

We believe that we are well positioned to capitalize on enormous opportunities associated with the energy transition and decarbonization through the electrification of industrial heat and to help our customers meet their own sustainability goals. Our strong and flexible balance sheet with low leverage and high gross margins as well as our capital-light business model has enabled Thermon to remain resilient across economic cycles and continue to provide significant optionality.

我們相信，我們有能力透過工業熱能電氣化來利用與能源轉型和脫碳相關的巨大機遇，並幫助我們的客戶實現自己的永續發展目標。我們強大而靈活的資產負債表、低槓桿率和高毛利率以及輕資本的商業模式使賽盟能夠在整個經濟週期中保持彈性，並繼續提供重要的選擇權。

I'd like to end today by thanking the entire Thermon team for their outstanding performance this quarter and dedication to our culture of continuous improvement and to meeting our customers' needs. As we look ahead to the balance of fiscal 2024 and beyond, I'm excited to see what we will achieve together and I'm confident we will continue to deliver profitable growth and value for our shareholders.

在今天結束時，我要感謝整個 Thermon 團隊在本季度的出色表現以及對我們持續改進文化和滿足客戶需求的奉獻。當我們展望 2024 財年及以後的平衡時，我很高興看到我們將共同取得的成就，我相信我們將繼續為股東帶來獲利成長和價值。

Darren, I'd like to turn the call back. Over to you, so that we can now take some questions.

達倫，我想回電。現在請您回答一些問題。

(Operator Instructions) Our first questions come from the line of Brian Drab with William Blair.

（操作員說明）我們的第一個問題來自 Brian Drab 和 William Blair 的線路。

This is Tyler Hutin on for Brian. Congrats on the solid results, by the way. Orders and backlog are looking really healthy. And just starting out, I want to know just what factors went into your full year guidance raise and then just any general comments that you have on the view of the balance of the year.

我是泰勒胡廷 (Tyler Hutin) 替補布萊恩 (Brian) 發言。順便說一句，祝賀取得了紮實的成果。訂單和積壓訂單看起來非常健康。首先，我想知道您的全年指引上漲是由哪些因素引起的，然後是您對今年餘額的看法的一般性評論。

So as we look at the order intake and where we are, I think a key thing that we anchor on is our trailing 12-month orders sitting right at $475 million, and that's at the midpoint of our guide. And I think then as you kind of turn and look to the EPS side of the guidance, we're looking at margins and backlog and a lot of our continuous improvement efforts as well as just what we've seen as moderation of some of the input costs, they give us confidence that we have earnings power going forward.

因此，當我們查看訂單量和當前情況時，我認為我們關注的一個關鍵因素是我們過去 12 個月的訂單量正好達到 4.75 億美元，而這正是我們指南的中點。我認為，當你轉向並關注指南的每股收益方面時，我們正在考慮利潤率和積壓以及我們的許多持續改進努力，以及我們所看到的一些調整投入成本，它們讓我們相信我們未來有盈利能力。

Got it. And then just moving some more of end market commentary. I think it'd be good to hear any update that you have on your renewables opportunity. Do you have any comment on what the annual revenue opportunity could be and how that's been trending?

知道了。然後只是轉移一些終端市場評論。我認為很高興聽到您有關可再生能源機會的任何更新。您對年度收入機會可能是什麼以及其趨勢有何評論？

Yes. So we're developing and improving our ability to track these types of opportunities, but we continue to see nice growth. In fact, within the quarter, we booked somewhere north of $8 million in those opportunities, and so we continue to see the opportunities grow there and the pipeline continue to grow. And we'll provide updates on those opportunities as well as the incoming order rates on a go-forward basis. So overall, we continue to see investments that are moving in the direction of these new opportunities, and certainly, some of the new product launches, like we referred to as the Quantum Heater, improves our ability to be able to provide differentiated solutions in this space and win share.

是的。因此，我們正在發展和提高追蹤此類機會的能力，但我們繼續看到良好的成長。事實上，在本季度內，我們在這些機會中預訂了超過 800 萬美元的資金，因此我們繼續看到這些機會正在成長，管道也持續成長。我們將提供有關這些機會的最新資訊以及未來的訂單率。因此，總的來說，我們繼續看到朝著這些新機會方向發展的投資，當然，一些新產品的推出，例如我們所說的量子加熱器，提高了我們在這個領域提供差異化解決方案的能力。

And Tyler, this is Kevin. Maybe just to build on Bruce's response as well. It's not just the revenue growth on the top of the funnel that we like, but when we look at the profitability on the decarbonization initiative in particular, that profitability is quite strong, generally above the company average as well. So it's something I think as we look at the earnings power of the business, we feel pretty confident about the profitability with those revenues as well.

泰勒，這是凱文。也許只是為了以布魯斯的回應為基礎。我們不僅喜歡漏斗頂部的收入成長，而且當我們特別關注脫碳計畫的獲利能力時，我們發現獲利能力相當強勁，通常也高於公司平均水平。因此，我認為，當我們審視該業務的獲利能力時，我們對這些收入的獲利能力也非常有信心。

Great. Yes, above $8 million sounds like a great quarter for that end market. And I'm just wondering, as your pipeline grows, what goes into transitioning the opportunities into wins for those end markets.

偉大的。是的，超過 800 萬美元聽起來對於終端市場來說是一個不錯的季度。我只是想知道，隨著您的管道的增長，如何將機會轉化為這些終端市場的勝利。

Yes. So I think some of the wins are just timing, but certainly on the competitive front, we've done a lot. New technology, we're launching that, to give us a differentiated position. But a lot of what we're doing is making investments in capacity because, quite frankly. the industry is pretty supply constrained at this time, and so we're making some pretty sizable investments, which is why our CapEx is up. Over a typical year, we're up 3.5%, 4% of revenue, and a lot of that is really being directed towards growing our capacity and reducing lead times in the marketplace. So we see all of those as really ways in which we can win and convert.

是的。所以我認為一些勝利只是時機，但當然在競爭方面，我們已經做了很多。我們正在推出新技術，以賦予我們差異化的地位。但坦白說，我們正在做的很多事情都是對產能進行投資。目前該行業的供應相當有限，因此我們正在進行一些相當大的投資，這就是我們的資本支出上升的原因。在典型的一年中，我們的收入成長了 3.5%、4%，其中很大一部分實際上是用於提高我們的產能和縮短市場交貨時間。因此，我們認為所有這些都是我們能夠獲勝和轉化的真正方式。

And Tyler, technology is agnostic at the end of the day. So if you think about the sales cycle, if you will, the front end of our business understands that technology really well. And so it's really just applying that to end markets and making sure we're putting those leads in front of the right people to get them converted. So yes, there's not a huge investment on that technology side. It's more on the capacity side, as Bruce alluded to, so we can meet the demand in the market.

泰勒，技術歸根結底是不可知的。因此，如果你考慮銷售週期，如果你願意的話，我們業務的前端非常了解該技術。因此，這實際上只是將其應用於終端市場，並確保我們將這些潛在客戶放在合適的人面前以實現轉換。所以，是的，在技術方面並沒有巨大的投資。正如布魯斯所提到的，更多的是在容量方面，這樣我們就可以滿足市場的需求。

And 1 last comment about that. Really the key differentiator we have in the marketplace is in our technical competence particularly around electrification and being able to work with customers on applications that have traditionally been hydrocarbon fired and converting those to a very different heating process, electrical heating. And we have not only the technical knowledge and competence, but also all of the software tools and the capabilities to be able to help them make that transition successfully. So I think those are the key things that are driving our ability to win in this space.

最後有 1 則評論。事實上，我們在市場上的關鍵區別在於我們的技術能力，特別是在電氣化方面，以及能夠與客戶合作開發傳統上碳氫化合物燃燒的應用，並將其轉換為一種非常不同的加熱工藝，即電加熱。我們不僅擁有技術知識和能力，還擁有所有能夠幫助他們成功過渡的軟體工具和能力。所以我認為這些是推動我們在這個領域獲勝的關鍵因素。

Yes, that sounds great. Just moving on from the renewables end market and just finishing my last question just being besides renewables, what end markets and geographies are you seeing the most unexpected upside?

是的，聽起來很棒。剛從再生能源終端市場開始，剛完成我的最後一個問題，除了再生能源之外，您還看到哪些終端市場和地區有最意想不到的好處？

The U.S., we expected to see growth, but it was really quite strong in this first quarter. And we're seeing some recovery in Asia as well, which I would say it was expected. But as we look at the bookings, I think it's important not to be lost that bookings this year were up 16% over prior year. Now if you go back to our prior year, that was a record in incoming orders as well and that was up 43% over the prior year. So we just look at the bookings growth, it's pretty significant, and that's not to be lost. And so we're seeing a lot of activity and investments in the U.S. Particularly we've had some nice petrochemical wins. There's a lot of LNG opportunities. Just as a reminder, we're a little later cycle, so we have won some of those, but we see additional opportunities in the pipeline for both. And then certainly the opportunities that we've seen around renewables, whether that's carbon capture and storage or the ammonia and hydrogen that we've highlighted today, those are driving additional upside and growth above and beyond what we would traditionally see in our space.

美國，我們預計會看到成長，但第一季的成長確實相當強勁。我們也看到亞洲出現了一些復甦，我想說這是預料之中的。但當我們查看預訂量時，我認為不要忘記今年的預訂量比去年增加了 16%，這一點很重要。現在，如果您回顧上一年，您會發現收到的訂單數量也創下了紀錄，比前一年增長了 43%。因此，我們只關注預訂量的成長，這是相當顯著的，這是不容忽視的。因此，我們在美國看到了大量的活動和投資，特別是我們在石化領域取得了一些不錯的勝利。液化天然氣有很多機會。提醒一下，我們的週期稍晚一些，所以我們已經贏得了其中一些，但我們在這兩個方面都看到了更多機會。當然，我們在再生能源方面看到的機會，無論是碳捕獲和儲存，還是我們今天強調的氨和氫，這些都在推動超越我們傳統領域看到的額外上升和成長。

Got it. And that's all I have for today. Congrats on the quarter again and solid work.

知道了。這就是我今天的全部內容。再次恭喜本季工作順利。

(Operator Instructions) Our next questions come from the line of Jon Braatz with Kansas City Capital.

（操作員說明）我們的下一個問題來自堪薩斯城資本公司的喬恩‧布拉茨（Jon Braatz）。

Just a point of clarification. I think, in the press release, you mentioned that organic growth was 11%. But if I'm not mistaken, last year you had $7 million -- about $8.5 million from a combination of a large -- completion of a large contract and some revenue from Russia. Am I correct in that?

只是澄清一點。我想，您在新聞稿中提到有機成長是 11%。但如果我沒記錯的話，去年你有 700 萬美元——大約 850 萬美元，來自完成一份大合約和來自俄羅斯的一些收入。我的說法正確嗎？

Yes. So, Jon, maybe to rewind it back a year. We had about a little over $7 million from that large onetime project that would be in the organic number. The acquisition was about $1 million of revenue and then Russia was about $1 million as well, so a few pieces on each side of the line there to factor in.

是的。所以，喬恩，也許可以把時間倒回一年前。我們從那個大型一次性專案中獲得了大約 700 萬美元多一點的資金，這將計入有機數字中。此次收購的收入約為 100 萬美元，俄羅斯的收入也約為 100 萬美元，因此兩邊都有一些需要考慮的因素。

Okay. So ex those items, Kevin, it looks like you're, what I would call it, adjusted organic growth rate was near 20%. Do you look at it that way?

好的。所以，除了這些項目之外，凱文，看起來像你的，我所說的，調整後的有機成長率接近 20%。你是這樣看的嗎？

That's about right, Jon.

差不多是這樣，喬恩。

Okay. So it looked from that -- using that as a reference point, going forward into the next 3 quarters, you're looking obviously for a little bit of a moderation from that. Was there something in the first quarter that was unexpected or somewhat transitory in nature if you want to call it that?

好的。因此，從這一點來看——以此為參考點，進入接下來的三個季度，你顯然會尋求一些適度的調整。第一季是否有一些出乎意料的事情，或者如果你想這麼說的話，本質上有些短暫的事情？

Yes, Jon, this is Bruce. No, not really, and I'll tell you the incoming order rate was quite positive. So that actually gives us some confidence going into the year. It's early, and certainly, we like to get a couple of quarters under our belt before we call the full year. I'll tell you, though, it certainly gives us confidence and I'll point you back to the midpoint of our revenue guide being that $475 million, which is right on our trailing 12-month incoming order rate. So I'd point to that.

是的，喬恩，這是布魯斯。不，不是真的，我會告訴你，收到的訂單率非常積極。所以這實際上給了我們對今年的一些信心。現在還為時過早，當然，我們希望在宣布全年之前先了解幾個季度的情況。不過，我會告訴你，這確實給了我們信心，我會向你指出我們收入指南的中點，即 4.75 億美元，這正好符合我們過去 12 個月的新訂單率。所以我想指出這一點。

And then it was a modest move certainly in the EPS guidance, but I think it's important to note that we see some strength in margins and backlog and, quite frankly, a lot of our continuous improvement efforts that we began probably in the fourth quarter of '22 are really beginning to yield some very positive results and give us some performance and productivity gains. So that would be how I would frame our views, but there was nothing just onetime in the first quarter, and we're cautiously optimistic about the balance of the year.

然後，這在每股收益指引中肯定是一個溫和的舉措，但我認為重要的是要注意，我們看到利潤率和積壓的一些實力，而且坦率地說，我們可能在第四季度開始的許多持續改進努力'22 確實開始產生一些非常積極的成果，並為我們帶來了一些性能和生產力的提升。這就是我將如何建立我們的觀點，但第一季沒有什麼，我們對今年的剩餘時間持謹慎樂觀態度。

Okay, that's fair. Kevin, the operating expenses were quite heavy in this quarter. And obviously, you're investing in resources, personnel, and infrastructure to reach these new markets. But let's say as we look forward, maybe even a year from now, let's say, does that spending begin to moderate? Do we just see that buildup this year and then maybe some easing next year?

好吧，這很公平。凱文，這個季度的營運費用相當大。顯然，您正在投資資源、人員和基礎設施來進入這些新市場。但假設我們展望未來，甚至可能一年後，假設支出會開始放緩嗎？我們是否會看到今年的成長，然後明年可能會有所緩解？

Yes, Jon, I think you're thinking about it the right way. If you look at the SG&A line, call it, maybe close to $4 million, that's primarily driven by the resources that you're alluding to. And I think as the business continues to grow, we look at that on a TTM basis as a percentage of revenue, and targeting that in the, call it, mid-to-low 20s is where we're really going for as we think about the model of getting this business to 23%, 24%, potentially 25% of EBITDA. Given the historical gross margins of the business, that's a pretty easy math problem to back solve for what we're shooting for over time. So I think the way you're thinking about it is right. Will that investment decelerate as the business continues to scale? That's absolutely the plan.

是的，喬恩，我認為你的想法是正確的。如果你看一下 SG&A 線，可能接近 400 萬美元，這主要是由你提到的資源驅動的。我認為，隨著業務的不斷增長，我們會在 TTM 的基礎上將其視為收入的百分比，並將其目標定為 20 多歲左右，這才是我們真正的目標。 23%、24%、可能25% 的模型。考慮到該業務的歷史毛利率，這是一個非常簡單的數學問題，可以幫助解決我們隨著時間的推移所追求的目標。所以我認為你的想法是正確的。隨著業務規模的不斷擴大，投資是否會放緩？這絕對是計劃。

Thank you. There are no further questions at this time. I would now like to turn the floor back over to Bruce Thames for closing comments.

謝謝。目前沒有其他問題。我現在想請布魯斯泰晤士 (Bruce Thames) 發表結束評論。

All right, Darren. Thank you. And thank you all for joining here today. Appreciate your interest in Thermon, and enjoy the rest of your day.

好吧，達倫。謝謝。感謝大家今天來到這裡。感謝您對 Thermon 的興趣，祝您有個愉快的一天。

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day.

謝謝。今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與，祝您有個愉快的一天。