Thermon Group Q2 Earnings Beat Ests
Thermon Group Holdings, Inc. (THR) reported its financial results for the second quarter of the fiscal year 2014 (ended Sep 30, 2013) on Nov 7, 2013. Adjusted earnings per share in the quarter came in at 30 cents, up 15.4% year over year and above the Zacks Consensus Estimate of 27 cents.
Revenue
Thermon Group generated revenues of $72.8 million, up 7.3% year over year. The increase can be attributed to healthy performance in the United States and Canada. Revenues in Europe also stabilized in the quarter.
Margins
Cost of sales in the second quarter 2014 increased 6.3% year over year and represented 51.4% of total revenue; down from 51.9% in the year-ago quarter. Gross margin increased 50 basis points year over year to 48.6% on the back of favorable product mix.
Marketing, general and administrative and engineering expenses of Thermon group, as a percentage of total revenue, stood at 24.2%. Operating margin in the quarter was 19.9%, down from 22.6% in the year-ago quarter.
Balance Sheet
Exiting the fiscal second quarter 2014, cash and cash equivalents of Thermon Group were $53.4 million, up 17.6% sequentially. Long-term debt, net of current portion decreased 2.8% to $114.8 million.
Cash Flow
Thermon Group’s net cash flow generation from operating activities were down 19.1% year over year totaling at $10.9 million. Capital spending on purchase of property, plant and equipment was $0.85 million, down 47.4% from that spent in the year-ago quarter. Free cash flow in the quarter went down 15.3% to $10.0 million.
Outlook: For the fiscal year 2014, management of Thermon Group expects mid-single digit revenue growth.
Thermon Group currently has a $823.7 million market capitalization and carries a Zacks Rank #2 (Buy). Other stocks to watch out for in the industry are Xylem Inc. (XYL), with a Zacks Rank #1 (Strong Buy) while Nordson Corporation (NDSN) and Flowserve Corp. (FLS), each come with a Zacks Rank #2 (Buy).
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