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What changed in Thermon Group Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Thermon Group Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+215 added−228 removedSource: 10-K (2025-05-22) vs 10-K (2024-05-29)

Top changes in Thermon Group Holdings, Inc.'s 2025 10-K

215 paragraphs added · 228 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+10 added−13 removed52 unchanged
Biggest changeOur San Marcos, Texas operation includes an electron cross-linking facility that is used to stabilize the resin material in our low-temperature self-regulating heating cables. Ownership of this operation allows us to have complete control of the manufacturing process, enhancing quality and reducing the lead time by about six weeks.
Biggest changeWe maintain a high level of operational efficiency and excellent quality standards in all our manufacturing facilities through the use of automated processes and rigorous quality control checkpoints and procedures. Our San Marcos, Texas operation includes an electron cross-linking facility that is used to stabilize the resin material in our low-temperature self-regulating heating cables.
Advanced control systems enable lower cost and reduced emissions at many of our end-user sites. Our controls and plant management software are built upon internet of things (IOT) technology that can be deployed locally within the secure plant environment. Our smart devices utilize the latest touch technology and industry leading intuitive user interfaces.
Advanced control systems enable lower cost and reduced emissions at many of our end-user sites. Our controls and plant management software are built upon the internet of things ("IOT") technology that can be deployed locally within the secure plant environment. Our smart devices utilize the latest touch technology and industry leading intuitive user interfaces.
In Canada, customers are serviced from the five manufacturing locations in Calgary, Edmonton, Fort McMurray, Orillia and Oakville. In Europe, customers are serviced from the central distribution center in the Netherlands. In Asia, safety stock of materials are kept in Yokohama, Japan; Seoul, Korea; Shanghai, China; Pune, India; and Melbourne, Australia. Safety stocks are also warehoused in Mexico City, Mexico.
In Canada, customers are serviced from the five manufacturing locations in Calgary, Edmonton, Fort McMurray, Oakville and Orillia. In Europe, customers are serviced from the central distribution center in the Netherlands. In Asia, safety stock of materials are kept in Yokohama, Japan; Seoul, Korea; Shanghai, China; Pune, India; and Melbourne, Australia. Safety stocks are also warehoused in Mexico City, Mexico.
To support the North American business, Thermon is audited quarterly by many nationally recognized test labs including but not limited to UL, CSA, FM, and ETL, to OSHA and Standards Council of Canada requirements. In addition, Thermon also pursues various regional and maritime certifications such as DNV, ABS, EAC, KOSHA and many more.
To support the North American business, Thermon is audited quarterly by many nationally recognized test labs including but not limited to UL, CSA, FM, and ETL, OSHA and Standards Council of Canada requirements. In addition, Thermon pursues various regional and maritime certifications such as DNV, ABS, EAC, KOSHA and many more.
This includes the global and growing market for liquefied natural gas (LNG) compression and regasification facilities, which has been accelerated by the war in Ukraine and the resulting need for Europe to reduce reliance on Russian oil and gas. • Oil.
This includes the global and growing market for liquefied natural gas (LNG) compression and regasification facilities, which has been accelerated by the war in Ukraine and the resulting need for Europe to reduce reliance on Russian oil and gas. • Commercial.
None of our customers represented more than 10% of total revenue in fiscal 2024, 2023, or 2022. Marketing Our direct sales force is focused on positioning us with major end-users and EPC companies during the development phase of large projects with the goal of providing reliable, cost-effective process heating solutions.
None of our customers represented more than 10% of total revenue in fiscal 2025, 2024, or 2023. Marketing Our direct sales force is focused on positioning us with major end-users and EPC companies during the development phase of large projects with the goal of providing reliable, cost-effective process heating solutions.
Process heating is required for high-temperature product maintenance, freeze protection and environmental regulation compliance in coal and gas facilities and for safety systems in nuclear facilities.
Heating is required for high-temperature product maintenance, freeze protection and environmental regulation compliance in coal and gas facilities and for safety systems in nuclear facilities.
Our Safety Record Any loss of life or serious injury in the workplace is unacceptable. We did not have any fatal incidents at any of our facilities or job sites in fiscal 2024. We primarily track two key safety indicators in monitoring our safety efforts, total recordable incident rate (“TRIR”) and lost-time incident rate (“LTIR”).
Our Safety Record Any loss of life or serious injury in the workplace is unacceptable. We did not have any fatal incidents at any of our facilities or job sites in fiscal 2025. We primarily track two key safety indicators in monitoring our safety efforts, total recordable incident rate (“TRIR”) and lost-time incident rate (“LTIR”).
For almost 70 years, we have served a diverse base of thousands of customers around the world in attractive and growing markets, including general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, energy transition/decarbonization, rail and transit, and other, which we refer to as our "key end markets." We offer a full suite of products (heating units, electrode and gas-fired boilers, heating cables, industrial heating blankets and related products, temporary power solutions and tubing bundles), services (engineering, installation and maintenance services) and software (design optimization and wireless and network control systems) required to deliver comprehensive solutions to some of the world's largest and most complex projects.
For 70 years, we have served a diverse base of thousands of customers around the world in attractive and growing markets, including general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other, which we refer to as our "key end markets." We offer a full suite of products (heating units, electrode and gas-fired boilers, heating cables, industrial heating blankets and related products, temporary power solutions and tubing bundles), services (engineering, installation and maintenance services) and software (design optimization and wireless and network control systems) required to deliver comprehensive solutions to some of the world's largest and most complex projects.
In addition, we could become subject to potential regulations concerning the emission of greenhouse gasses or the disclosure thereof, and while the effect of such future regulations cannot be determined at this time, they could require us to incur substantial costs in order to achieve and maintain compliance.
In addition, we could become subject to potential regulations concerning the emission of greenhouse gases or the disclosure thereof, and while the effect of such future regulations cannot be determined at this time, they could require us to incur substantial costs in order to achieve and maintain compliance.
Thermon aims to have inventory available close to the customer to fulfill urgent needs. Customers We serve a broad base of large multinational customers, many of which we have served for almost 70 years. We have a diversified revenue mix with thousands of customers.
Thermon aims to have inventory available close to the customer to fulfill urgent needs. Customers We serve a broad base of large multinational customers, many of which we have served for over 70 years. We have a diversified revenue mix with thousands of customers.
Users familiar with modern mobile phones and tablets find our latest controllers intuitive to learn and use because of the similarities. These technologies also form a platform for offering easy automatic upgrades and additional value-added services. We believe our control solutions are the most advanced, reliable and easy-to-use monitoring solutions in the marketplace.
Users familiar with smart phones and tablets find our latest controllers intuitive to learn and use because of the similarities. These technologies also form a platform for offering easy automatic upgrades and additional value-added services. We believe our control solutions are the most advanced, reliable and easy-to-use monitoring solutions in the marketplace.
The HCMC Committee maintains oversight over our strategic direction for various people-related business strategies, including our compensation and benefit programs, leadership succession planning, culture, diversity, equity and inclusion, and talent development programs. The Company’s management proactively manages our human capital and cares for our employees in a manner that is consistent with our values.
The HCMC Committee maintains oversight over our strategic direction for various people-related business strategies, including our compensation and benefit programs, leadership 7 succession planning, culture, diversity, and talent development programs. The Company’s management proactively manages our human capital and cares for our employees in a manner that is consistent with our values.
Process heating is in the production and transmission of gas in upstream, midstream, and downstream applications. Despite recent market volatility, gas markets have remained resilient over the last twelve months, especially as a feedstock for petrochemical plants, and represent a significant and growing addressable market for our value-added solutions.
Process heating and freeze protection is used in the production and transmission of gas in upstream, midstream, and downstream applications. Despite recent market volatility, gas markets have remained resilient over the last twelve months, especially as a feedstock for petrochemical plants, and represent a significant and growing addressable market for our value-added solutions.
Our heated blankets and related products are manufactured and shipped at our Salt Lake City, Utah facility, which also serves as our headquarters for the Powerblanket brand. 3 Our electric resistance, electrode and super critical coil tube boilers and steam generators are manufactured in our Chicago, Illinois or Morristown, Tennessee locations.
Our heated blankets and related products are manufactured and shipped at our Salt Lake City, Utah facility, which also serves as our headquarters for the Powerblanket brand. 3 Our electric resistance, electrode and supercritical coil tube boilers and steam generators are manufactured in our Chicago, Illinois or Morristown, Tennessee locations.
Markets 4 The major end markets that drive demand for process heating include general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, energy transition/decarbonization, rail and transit, and other. We believe there are attractive long-term trends in each of these end markets.
Markets 4 The major end markets that drive demand for process heating include general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other. We believe there are attractive long-term trends in each of these end markets.
The ability to process food and beverage safely, and the process of altering raw agricultural materials into products for intermediate or final consumption, is essential to our society. Thermon is proud to offer heating solutions for food and beverage processing applications. We offer safe, reliable products and services for food and beverage processing organizations. • Energy Transition/Decarbonization.
The ability to process food and beverage safely, and the process of altering raw agricultural materials into products for intermediate or final consumption, is essential to our society. Thermon is proud to offer heating solutions for food and beverage processing applications. We offer safe, reliable products and services for food and beverage processing organizations.
Process heating is required to safely clear and heat rail switches, melt snow and ice from platforms, and provide comfort heating and defrosting in rolling stock. With over 1.1 million kilometers of operational railway in the world, rail is still one of the most economical and safe solutions for passengers and products globally. • Commercial.
Heating is required to safely clear and heat rail switches, melt snow and ice from platforms, and provide comfort heating and defrosting in rolling stock. With over 1.1 million kilometers of operational railway in the world, rail is still one of the most economical and safe solutions for passengers and products globally. • Food and Beverage.
Process heating is required for hospitals, hospitality/lodging, universities and secondary education, and light industrial facilities to provide freeze protection, temperature regulation, process control, and supporting laboratory environments. The electrification of heating products and removal of combustion-based heating solutions in urban areas drives demand for our products. • Food and Beverage.
Heating is required for hospitals, hospitality/lodging, universities and secondary education, and light industrial facilities to provide freeze protection, temperature regulation, process control, and supporting laboratory environments. The electrification of heating products and removal of combustion-based heating solutions in urban areas drives demand for our products. • Power Generation.
The Orillia facility manufactures tubular heaters, including our mineral insulated ("MI") heating cable that is supplied to original equipment manufacturers, or "OEM," customers and other Thermon facilities. The Oakville location specializes in our engineered solutions and our Calgary facility fabricates electric heat trace circuits using the MI cable produced in Orillia.
The Orillia facility manufactures tubular heaters, including our mineral insulated ("MI") heating cable that is supplied to OEM customers and other Thermon facilities. The Oakville location specializes in our engineered solutions and our Calgary facility fabricates electric heat trace circuits using the MI cable produced in Orillia.
Our revenue derived from industrial process heating products typically experiences more pronounced seasonality than our legacy heat tracing business, with a noticeable increase in revenue and profitability typically beginning in the third fiscal quarter and continuing during the winter months through the end of the fourth fiscal quarter. 9
Our revenue derived from industrial process heating products typically experiences greater seasonality than our legacy heat tracing business, with a noticeable increase in revenue and profitability typically beginning in the third fiscal quarter and continuing during the winter months through the end of the fourth fiscal quarter.
Project services are important to our business model and growth strategy to secure contracts that both establish and enhance new and existing customer relationships. Our services are automated by custom software technology. We have invested over years to develop software that assists our experts in the design, specification, and automatic creation of CAD drawings.
Project services are important to our business model and growth strategy to secure contracts that both establish and enhance new and existing customer relationships. Our services are automated by custom software technology. We have developed software that assists our experts in the design, specification, and automatic creation of CAD drawings.
While our manufacturing locations are predominantly in North America, we operate an “in the region, for the region” strategy to diversify our supplier base, manage costs and hold inventory across our various sites. We employ a screening mechanism for conflict materials as part of our supplier approval and management processes.
While our manufacturing locations are predominantly in North America, we operate an “in country, for country” strategy to diversify our supplier base, manage costs and hold inventory across our various sites. We employ a screening mechanism for conflict materials as part of our supplier approval and management processes.
Our solution includes software automated engineering design services, industry leading heat tracing products, smart connected control and monitoring systems, construction services, and maintenance services. Applications include process temperature maintenance, freeze protection, vessel temperature maintenance, tank temperature maintenance, and foundation heating for energy, commercial, transportation, semi-conductor, data centers, and food & beverage industries.
Our solutions include software automated engineering design services, industry leading heat tracing products, smart connected control and monitoring systems, construction services, and maintenance services. Applications include process temperature maintenance, freeze protection, vessel temperature maintenance, tank temperature maintenance, and foundation heating for energy, commercial, transportation, semi-conductor, and food & beverage industries.
In addition, our products are increasingly being leveraged in energy transition markets as industry looks to electrification as a means of decarbonizing operations. The primary energy transition end markets and applications include, but are not limited to, biofuels, hydrogen, thermal energy storage, and carbon capture. • Chemical and Petrochemical.
In addition, our products are increasingly being leveraged in the energy transition as industry looks to electrification as a means of decarbonizing operations. The primary energy transition end markets and applications include, but are not limited to, biofuels, hydrogen, thermal energy storage, and carbon capture. • General Industrial and Other.
By delivering design drawings in conjunction with early project specifications, we can address our customer needs for design optimization studies, product selection assistance and computer-generated drawing packages. Often these are new facilities (which are discussed further below under the section "Customers"), but they may also include upgrades or expansions and maintenance projects where our existing customers are upgrading their facilities.
By delivering design drawings in conjunction with early project specifications, we can address our customer needs for design optimization studies, product selection assistance and computer-generated drawing packages. Often these are new facilities, but they may also include upgrades or expansions and maintenance projects where our existing customers are upgrading their facilities.
We believe that we are the second largest participant in the industrial electric heat tracing market and one of only a few solution providers with a comprehensive suite of products and services, global capabilities, and industry-leading controls technology, which includes our design software products. Our most significant competitor is the thermal management segment of nVent Electric plc (NYSE: NVT).
We believe that we are the second largest participant in the industrial electric heat tracing market and one of only a few solution providers with a comprehensive suite of products and services, global capabilities, and industry-leading controls technology, which includes our design software products. Our most significant competitor is Chemelex.
Current product development initiatives include polymer research and continued advancement of integrated control and monitoring systems. Software development activities include advanced heat tracing network monitoring communication software and engineering design software initiatives. Resources Our critical raw materials include polymers, graphite, copper and stainless steel.
Current product development initiatives include polymer research, computational fluid dynamics to enhance our heating solutions, and continued advancement of integrated control and monitoring systems. Software development activities include advanced heat tracing network monitoring communication software and engineering design software initiatives. Resources Our critical raw materials include polymers, graphite, copper and stainless steel.
The industrial process heating market, which includes industrial heat tracing, tends to be fairly fragmented with several smaller companies serving discrete local markets with limited offerings. Our competitors vary by end-market, but generally we view nVent Electric, NIBE, Watlow and Spirax Sarco as competitors in various areas across the spectrum of end-markets we serve.
The industrial process heating market, tends to be fairly fragmented with several smaller companies serving discrete local markets with limited offerings. Our competitors vary by end-market, but generally we view Chemelex, NIBE, Watlow and Spirax Group as competitors in various areas across the spectrum of end-markets we serve.
All our controllers and panels can be networked together via wired or wireless communication into a large control solution with capacity to manage over 30,000 heat trace circuits within the same customer facility. Our systems can be integrated with a plant’s central data management and control system.
All our controllers and panels can be networked together via wired or wireless communication into a large control solution with capacity to manage over 30,000 heat trace circuits within the same customer facility, including controls systems sold by other heat tracing Original Equipment Manufacturers ("OEMs"). Our systems can be integrated with a plant’s central data management and control system.
These laws are administered by, among others, the U.S. Department of Justice, the SEC, the Internal Revenue Service, or the "IRS," Customs and Border Protection, the Bureau of Industry and Security, or "BIS," the Office of Antiboycott Compliance, or "OAC," and the Office of Foreign Assets Control, or "OFAC," as well as the counterparts of these agencies in foreign countries.
Department of Justice, the SEC, the Internal Revenue 6 Service, or the "IRS," Customs and Border Protection, the Bureau of Industry and Security, or "BIS," the Office of Antiboycott Compliance, or "OAC," and the Office of Foreign Assets Control, or "OFAC," as well as the counterparts of these agencies in foreign countries.
Our diversity statistics include the following as of March 31, 2024 (based on self-reporting at the date of hire): 24.9% of our employees worldwide identify as female; 25.3% of our employees in the U.S. identify as female, and 51.9% of our employees in the U.S. identify as a racial or ethnic minority.
Our diversity statistics include the following as of March 31, 2025 (based on self-reporting at the date of hire): 23.8% of our employees worldwide identify as female; 23.0% of our employees in the U.S. identify as female, and 51.0% of our employees in the U.S. identify as a racial or ethnic minority.
Thermon Power Solutions is a product line that provides temporary power distribution and lighting products that are primarily fabricated at a facility in Fort McMurray, Alberta, Canada. Thermon transportation heating products are assembled at our facilities in Edmonton, Alberta and Denver, Colorado. We are also expanding assembly capabilities at our San Marcos, Texas facility.
Thermon Power Solutions is a product line that provides temporary power distribution and lighting products that are primarily fabricated at a facility in Fort McMurray, Alberta, Canada. Thermon transportation heating products are assembled at our facilities in Edmonton, Alberta.
At the heart of our culture are our core values of Care, Commit and Collaborate. Our board of directors provides important oversight on certain human capital matters through its Human Capital Management and Compensation Committee (the "HCMC Committee").
Our culture enables us to achieve our vision to be the world leader in industrial process heating. At the heart of our culture are our core values of Care, Commit and Collaborate. Our board of directors provides important oversight on certain human capital matters through its Human Capital Management and Compensation Committee (the "HCMC Committee").
We are focused on our culture, which is anchored in our core values and purpose. Our values are embedded in everything we do, including safety, hiring and promoting, goal setting, decision making and performance reviews.
Our values are embedded in everything we do, including safety, hiring and promoting, goal setting, decision making and performance reviews.
Segments We operate in four reportable segments based on four geographic countries or regions in which we operate: (i) United States and Latin America ("US-LAM"), (ii) Canada, (iii) Europe, Middle East and Africa ("EMEA") and (iv) Asia-Pacific 5 ("APAC"). Profitability within our segments is measured by operating income.
Segments We operate in four reportable segments based on four geographic countries or regions in which we operate: (i) United States and Latin America ("US-LAM"), (ii) Canada, (iii) Europe, Middle East and Africa ("EMEA") and (iv) Asia-Pacific ("APAC"). See Note 19, "Segment Information" for financial data relating to our four reportable geographic segments.
We also contracted with 163 contingent workers at March 31, 2024. Our 12-month rolling voluntary turnover rate as of March 31, 2024, was 12.7% compared to the 2023 U.S. manufacturing industry average of 22.3% according to the U.S. Bureau of Labor Statistics ("BLS") Job Openings and Labor Turnover Survey.
Our 12-month rolling voluntary turnover rate as of March 31, 2025, was 9.9% compared to the 2024 U.S. manufacturing industry average of 18.5% according to the U.S. Bureau of Labor Statistics ("BLS") Job Openings and Labor Turnover Survey.
See Note 19, "Segment Information" for financial data relating to our four reportable geographic segments. Competition The global industrial electric heat tracing industry is fragmented and consists of more than 30 companies, which typically only serve discrete local markets and provide a limited-service offering.
Competition 5 The global industrial electric heat tracing industry is fragmented and consists of more than 30 companies, which typically only serve discrete local markets and provide a limited-service offering.
Our primary distribution centers are located in San Marcos, Texas; Calgary, Alberta; and Pijnacker, the Netherlands. Inventory is typically shipped from these distribution centers directly to customers, the construction site or our regional sales agents or distributors.
We also manufacture electrical heaters and heating systems for a broad range of industrial end markets at our Cusago, Italy facility. Our primary distribution centers are located in San Marcos, Texas; Calgary, Alberta; and Pijnacker, the Netherlands. Inventory is typically shipped from these distribution centers directly to customers, the construction site or our regional sales agents or distributors.
Our fiscal year differs from the period covered by the BLS study, but we believe it is the best proxy to benchmark against. We remain committed to reducing our voluntary turnover. Approximately 0.3% of our global employees are covered by a collective bargaining agreement.
Our fiscal year differs from the period covered by the BLS study, but we believe it is the best proxy to benchmark against. Approximately 0.3% of our global employees are covered by a collective bargaining agreement. We have not experienced any union-related work stoppages in the past and we believe that our working relationship with our employees is positive.
Government Contracts We do not have any material portion of our business that may be subject to renegotiation of profits or termination of contracts or subcontracts at the U.S. government's election. 6 Government Regulation Due to the international scope of our operations, we are subject to complex U.S. and foreign laws governing, among others, anti-corruption matters, export controls, economic sanctions, anti-boycott rules, currency exchange controls and transfer pricing rules.
Government Regulation Due to the international scope of our operations, we are subject to complex U.S. and foreign laws governing, among others, anti-corruption matters, export controls, economic sanctions, anti-boycott rules, currency exchange controls and transfer pricing rules. These laws are administered by, among others, the U.S.
We continue to expand our impact with employee equity through enhanced market-aligned annual awards, as well as consideration of strategic roles to add to the annual program. Employee Retention 8 Thermon’s global voluntary turnover in fiscal 2024 was down 27% from the prior year.
We continue to expand our impact with employee equity through enhanced market-aligned annual awards, as well as consideration of strategic roles to add to the annual program. 9
Process heating is used to facilitate the exploration, production, processing, transportation and distribution of oil and oil-based energy products in upstream, midstream, and downstream oil applications. While the demand forecast for oil can be unpredictable, we have a sizable installed base that provides recurring revenue, especially in the downstream refining market. • Power Generation.
While the demand forecast for oil can be unpredictable, we have a sizable installed base that provides recurring revenue, especially in the downstream refining market. • Chemical and Petrochemical. Process heating is required for temperature maintenance and freeze protection in a variety of chemical processing applications.
We have locations in 14 countries, and our employees operate across cultures, functions, unique languages, and time zones to solve the technical and logistical challenges presented by a worldwide customer base.
Diversity We believe in the benefits of an inclusive workforce, where diverse backgrounds are represented, engaged, and empowered to inspire innovative ideas and decisions. We have locations in 17 countries, and our employees operate across cultures, functions, unique languages, and time zones to solve the technical and logistical challenges presented by a worldwide customer base.
To support the international business, Thermon is audited annually by an Ex Certification Body such as DEKRA, and we hold a Quality Assurance Notification and Quality Assurance Report to IEC/ISO 80079-34.
In order to support the design and development of industrial products rated for operation in potentially hazardous environments, Thermon holds quality system approvals which employ the appropriate oversight requirements. To support the international business, Thermon is audited annually by an Ex Certification Body such as DEKRA, and we hold a Quality Assurance Notification and Quality Assurance Report to IEC/ISO 80079-34.
Benefits vary by country and region, but our U.S. and Canadian employees have a retirement plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, flexible work schedules (where appropriate), employee assistance programs, tuition assistance, and scholarship programs for children and grandchildren of employees.
Benefits vary by country and region, but our U.S. and Canadian employees have a retirement plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, flexible work schedules (where appropriate), employee assistance programs, tuition assistance, and scholarship programs for children and grandchildren of employees. 8 In addition to our broad-based programs, we use targeted equity-based grants with vesting conditions to facilitate retention of key personnel, particularly those with critical domain expertise necessary to deliver on the long-term strategic initiatives of the Company.
Seasonality Demand for our products depends in large part upon the level of capital and maintenance expenditures by many of our customers and end-users, in particular those customers in the oil, gas, refining, chemical processing and transportation markets. These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns.
See the section titled Item 1A, "Risk Factors" for additional information on government regulation that could impact our business. Seasonality Demand for our products depends in large part upon the level of capital and maintenance expenditures by many of our customers and end-users, in particular those customers in the oil, gas, refining, chemical processing and transportation markets.
The success and growth of our business depend on our ability to attract, develop, incent and retain a diverse population of talented, qualified and highly skilled employees at all levels of our organization, including our executive officers, and across our global workforce. Our culture enables us to achieve our vision to be the world leader in industrial process heating.
Human Capital Management We believe that our people are one of our most important investments and greatest assets. The success and growth of our business depend on our ability to attract, develop, incentivize and retain a diverse population of talented, qualified and highly skilled employees at all levels of our organization, including our executive officers, and across our global workforce.
We use a robust performance management by objective process that identifies goals and reinforces the Company's values through an evaluation process twice per year. Furthermore, the ‘Level Up’ job structure for direct labor employees yielded a number of promotions which is key to the upskilling of our workforce and aided in the retention of our workforce.
Furthermore, the ‘Level Up’ job structure for direct labor employees yielded a number of promotions which is key to the upskilling of our workforce and aided in the retention of our workforce. We are focused on our culture, which is anchored in our core values and purpose.
Most of our heat tracing products are manufactured in our facility in San Marcos, Texas, including flexible heating cables, control systems and tubing bundles. Process heating products are primarily manufactured at our Canadian facilities. We have smaller manufacturing locations in Salt Lake City, Utah, the Netherlands, and we have small assembly operations in Pune, India and Houston, Texas.
Most of our heat tracing products are manufactured in our facility in San Marcos, Texas, including flexible heating cables, control systems and tubing bundles. Process heating products are primarily manufactured at our Canadian facilities, which include: Calgary, Edmonton, Fort McMurray, Oakville, and Orillia.
In addition, quarterly revenues for the heat tracing business are impacted by the significance and timing of large projects that may occur at any given time. Our quarterly operating results may fluctuate based on the cyclical pattern of industries to which we provide heat tracing solutions and the seasonality of demand for our heat tracing products.
These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns. In addition, quarterly revenues for the heat tracing business are impacted by the significance and timing of large projects that may occur at any given time.
TRIR and LTIR are calculated as the Company’s number of recordable injuries/loss time, respectively, experienced by employees during the fiscal year multiplied by 200,000 divided by the number of man hours worked during the fiscal year. In addition to TRIR and LTIR, we also measure total near miss and hazard ID reporting as well as case management metrics.
Our TRIR remained constant at 0.2 in fiscal 2025 and 2024, and our LTIR remained at 0.0 in both fiscal 2025 and 2024. TRIR and LTIR are calculated as the Company’s number of recordable injuries/lost time, respectively, experienced by employees during the fiscal year multiplied by 200,000 divided by the number of man hours worked during the fiscal year.
Some of the base heating cable that is produced in San Marcos is shipped to our different sites to reduce lead time and to satisfy local content requirements. Pre-insulated tubing products are manufactured in our facilities in San Marcos, Texas and Pijnacker, the Netherlands and are primarily made to the individual customer’s specifications.
Pre-insulated tubing bundles are manufactured in our facilities in San Marcos, Texas and Pijnacker, the Netherlands and are primarily made to the individual customer’s specifications.
Regulatory and societal pressures and cost competitiveness are increasingly leading our customers to invest in decarbonization technologies that help reduce their carbon emissions. Electrification of process heating is a trend we are benefiting from across all of our existing end markets noted herein, and the adoption of new technologies is providing additional opportunities in new end markets.
Electrification of process heating is a trend we are benefiting from across all of our existing end markets, and the adoption of new technologies is providing additional opportunities in new end markets. Examples include, but are not limited to, biofuels, hydrogen, thermal energy storage, and carbon capture.
Revenue diversification is a key long-term strategic initiative for the business. We believe that we have established our credibility as a reliable provider of high-quality process heating products. In addition, we believe that our registered trademarks in the U.S. and numerous additional brand names are recognized globally, giving us excellent brand recognition.
Revenue diversification is a key long-term strategic initiative for the business. As of March 31, 2025, over 70% of our revenue was derived from non-oil-and-gas end markets. We believe that we have established our credibility as a reliable provider of high-quality process heating products.
Most of our heat tracing customers perform preventative maintenance prior to the winter season, typically making our second and third fiscal quarters the largest for related revenue. However, revenues from projects are not seasonal and depend on the capital spending environment and project timing.
Our quarterly operating results may fluctuate based on the cyclical pattern of industries to which we provide heat tracing solutions and the seasonality of demand for our heat tracing products. Most of our heat tracing customers perform preventative maintenance prior to the winter season, typically making our second and third fiscal quarters the largest for related revenue.
We continually test our products through a quality control process to demonstrate they can withstand harsh operating environments. They are subjected to various tests, including heat output, thermal stability and long-term aging, with the goal of producing products capable of performing at or beyond the expectations of our customers.
They are subjected to various tests, including heat output, thermal stability and long-term aging, with the goal of producing products capable of performing at or beyond the expectations of our customers. All products are further tested and certified for global use by various approval agencies, such as UL, CSA, FM, and ETL, to meet industry leading international standards.
Standards and Certifications Thermon’s research and development practices ensure our product designs are validated to market requirements and verified to comply with applicable industry standards. We actively participate in the growth and development of the domestic and international electrical standards established in the countries in which we sell products.
In addition, we believe that our registered trademarks in the U.S. and numerous additional brand names are recognized globally, giving us excellent brand recognition. Standards and Certifications Thermon’s research and development practices ensure our product designs are validated to market requirements and verified to comply with applicable industry standards.
We serve a growing number of other markets where we add value for customers, such as mining and mineral processing, maritime/shipbuilding, semiconductors, pharmaceutical and biotechnology, food and beverage, data centers, and renewables. Our ability to provide technology design, such as wireless network controls and design software is an increasing factor in our customers' decision to purchase our products.
We serve a growing number of other markets where we add value for customers, such as mining and mineral processing, maritime/shipbuilding, semiconductors, pharmaceutical and biotechnology, and renewables. • Oil. Process heating and freeze protection is used to facilitate the exploration, production, processing, transportation and distribution of oil and oil-based energy products in upstream, midstream, and downstream oil applications.
These aid in accident prevention, which we believe is critical to incident avoidance and supports our superior safety rating in the industry. Workforce Breakdown At March 31, 2024, we employed 1,416 employees, of which 41.4% were located in the US-LAM region, 38.8% in Canada, 7.6% located in EMEA, and 12.2% located in APAC.
Workforce Breakdown At March 31, 2025, we employed 1,568 employees, of which 43.9% were located in the US-LAM region, 32.8% in Canada, 11.2% located in EMEA, and 12.1% located in APAC. We also contracted with 227 contingent workers at March 31, 2025.
The quantities we consume of these materials are insignificant compared to the global production and usage.
The quantities we consume of these materials are insignificant compared to the global production and usage. Government Contracts We do not have any material portion of our business that may be subject to renegotiation of profits or termination of contracts or subcontracts at the U.S. government's election.
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Additionally, due to our recent acquisition of Vapor Power, we have manufacturing locations in Chicago, Illinois and Morristown, Tennessee. We maintain a high level of operational efficiency and excellent quality standards in all our manufacturing facilities through the use of automated processes and rigorous quality control checkpoints and procedures.
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We have other various manufacturing locations in Salt Lake City, Utah; Chicago, Illinois; Morristown, Tennessee; Pijnacker, the Netherlands; and Cusago, Italy. We have assembly locations in Pune, India and Houston, Texas.
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This includes both solutions for rail car heating and rail track heating.
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Ownership of this operation allows us to have complete control of the manufacturing process, enhancing quality and reducing lead time. Some of the base heating cable that is produced in San Marcos is shipped to our different sites to reduce lead time and to satisfy local content requirements.
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All products are further tested and certified for global use by various approval agencies, such as UL, CSA, FM, and ETL, to meet industry leading international standards. In order to support the design and development of industrial products rated for operation in potentially hazardous environments, Thermon holds quality system approvals which employ the appropriate oversight requirements.
Added
We have expanded assembly capabilities at our San Marcos, Texas facility to include solutions for rail car heating and rail track heating.
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Process heating is required for temperature maintenance and freeze protection in a variety of chemical processing applications.
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We actively participate in the growth and development of the domestic and international electrical standards established in the countries in which we sell products. We continually test our products through a quality control process to demonstrate they can withstand harsh operating environments.
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Examples include, but are not limited to, biofuels, hydrogen, thermal energy storage, and carbon capture. The primary drivers for our existing products are the direct electrification of carbon-intensive products, the reduction of greenhouse gas emissions, and more competitive total installed cost. • General Industries and Other.
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Our ability to provide technology design, such as wireless network controls and design software, is an increasing factor in our customers' decision to purchase our products. Additionally, regulatory and societal pressures and cost competitiveness are increasingly leading our customers to invest in decarbonization technologies that help reduce their carbon emissions.
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See the section titled Item 1A, "Risk Factors" for additional information on government regulation that could impact our business. Human Capital Management We believe that our people are one of our most important investments and greatest assets.
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We have existing products that are able to address the demand stemming from these new end markets. Further, data centers are considered critical infrastructure and process heating is required in the commissioning, operation, and maintenance of these facilities for applications including load bank testing and freeze protection.
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Our TRIR decreased from 0.4 in fiscal 2023 to 0.2 in 7 fiscal 2024 and our LTIR decreased from 0.1 to 0.0 in the same periods.
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The rapid build out of data centers globally driven by advancements in artificial intelligence serves as the underlying demand driver in this end-market.
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We have not experienced any union-related work stoppages in the past and we believe that our working relationship with our employees is positive. Diversity, Equity, and Inclusion We believe in the benefits of an inclusive workforce, where diverse backgrounds are represented, engaged, and empowered to inspire innovative ideas and decisions.
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However, revenues from projects are not seasonal and depend on the capital spending environment and project timing. Our operating expenses remain relatively consistent with some variability, primarily related to sales commissions and related compensation as well as investments to further our global strategy of diversification, digitization, and decarbonization.
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In fiscal 2024, we continued to include diversity metrics in the short-term incentive payments for Vice Presidents and above. These metrics are specific to our U.S. and Canadian salaried workforce and include increasing diversity in candidate interview slates; decreasing new hire turnover of diverse talents; and increasing overall diversity.
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In addition to TRIR and LTIR, we also measure total near miss and hazard ID reporting as well as case management metrics. These aid in accident prevention, which we believe is critical to incident avoidance and supports our superior safety rating in the industry.
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We know we have more to do when it comes to increasing the representation of historically underrepresented groups within our global workforce, and we are taking action to ensure Thermon is an employer of choice for diverse candidates. Talent Development The Company supports and invests in talent development and provides continuing education opportunities and professional development for our employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe cannot guarantee that we would be able to (i) take any of these actions or that these actions would permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements, which may impose significant operating and financial restrictions on us and could adversely affect our ability to finance our future operations or capital needs; (ii) obtain standby letters of credit, bank guarantees or performance bonds required to bid on or secure certain customer contracts; (iii) make strategic acquisitions or investments or enter into alliances; (iv) withstand a future downturn in our business or the economy in general; (v) engage in business activities, including future opportunities, that may be in our interest; and (vi) plan for or react to market conditions or otherwise execute our business strategies.
Biggest changeWe cannot guarantee that we would be able to (i) take any of these actions or that these actions would permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements, which may impose significant operating and financial restrictions on us and could adversely affect our ability to finance our future operations or capital needs; (ii) obtain standby letters of credit, bank guarantees or performance bonds required to bid on or secure certain customer contracts; (iii) make strategic acquisitions or investments or enter into alliances; (iv) withstand a future downturn in our business or the economy in general; (v) engage in business activities, including future opportunities, that may be in our interest; and (vi) plan for or react to market conditions or otherwise execute our business strategies. 12 If we cannot make scheduled payments on our debt, or if we breach any of the covenants in our debt agreements, we will be in default under such agreements and, as a result, our debt holders could declare all outstanding principal and interest to be due and payable, the lenders under our credit facility could terminate their commitments to lend us money and foreclose against the assets securing our borrowings, and we could be forced into bankruptcy or liquidation.
As a result of changes to government administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, significant increases in tariffs on goods imported into the U.S., Canada or the European Union, particularly tariffs on products manufactured in China and Mexico, among other possible changes.
As a result of changes to government administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, significant increases in tariffs on goods imported into the U.S., Canada or the European Union, particularly tariffs on products manufactured in China, Canada, and Mexico, among other possible changes.
Conducting business outside the U.S. subjects us to additional risks that may impact our revenues, profitability or cash flows or increase our liabilities, including the following: • changes in a specific country's or region's political, social or economic conditions, particularly in emerging markets; 10 • changes in trade relations between the U.S., Canada or Europe and foreign countries in which our customers and suppliers operate, including protectionist measures such as tariffs, import or export licensing requirements and trade sanctions; • restrictions on our ability to own or operate subsidiaries in, expand in and, if necessary, repatriate cash from, foreign jurisdictions; • exchange controls and currency restrictions; • the burden of complying with numerous and potentially conflicting legal requirements; • potentially negative consequences from changes in U.S. and foreign tax laws; • difficulty in staffing and managing (including ensuring compliance with internal policies and controls) geographically widespread operations; • different regulatory regimes controlling the protection of our intellectual property; • difficulty in the enforcement of contractual obligations in non-U.S. jurisdictions and the collection of accounts receivable from foreign accounts; and • transportation delays or interruptions.
Conducting business outside the U.S. subjects us to additional risks that may impact our revenues, profitability or cash flows or increase our liabilities, including the following: • changes in a specific country's or region's political, social or economic conditions, particularly in emerging markets; • changes in trade relations between the U.S., Canada, China or Europe and foreign countries in which our customers and suppliers operate, including protectionist measures such as tariffs, import or export licensing requirements and trade sanctions; • restrictions on our ability to own or operate subsidiaries in, expand in and, if necessary, repatriate cash from, foreign jurisdictions; • exchange controls and currency restrictions; • the burden of complying with numerous and potentially conflicting legal requirements; • potentially negative consequences from changes in U.S. and foreign tax laws; • difficulty in staffing and managing (including ensuring compliance with internal policies and controls) geographically widespread operations; 10 • different regulatory regimes controlling the protection of our intellectual property; • difficulty in the enforcement of contractual obligations in non-U.S. jurisdictions and the collection of accounts receivable from foreign accounts; and • transportation delays or interruptions.
If we were to experience a breach of our systems and were unable to protect sensitive data, such a breach could, among other things: 15 • risk exposing our confidential manufacturing processes and other trade secreted information that may lead to new and increased entrants and competitors in our business or cause other damage to the business; • expose our customers' facilities and projects to increased safety and security risk; • materially damage business partner and customer relationships; • impact our reputation in the markets in which we compete for business; • adversely impact our financial results and expose us to potential risk of loss or litigation; and/or • require us to incur substantial costs or require us to change our business practices.
If we were to experience a breach of our systems and were unable to protect sensitive data, such a breach could, among other things: • risk exposing our confidential manufacturing processes and other trade secreted information that may lead to new and increased entrants and competitors in our business or cause other damage to the business; • expose our customers' facilities and projects to increased safety and security risk; • materially damage business partner and customer relationships; • impact our reputation in the markets in which we compete for business; • adversely impact our financial results and expose us to potential risk of loss or litigation; and/or • require us to incur substantial costs or require us to change our business practices.
If operations at any of our manufacturing facilities were to be disrupted as a result of significant equipment failures, natural disasters, pandemics, power outages, fires, explosions, terrorism, adverse weather conditions, labor disputes or other reasons, we may be unable to fill customer orders and meet customer demand for our products, which could adversely affect our financial performance and results of operations.
If operations at any of our manufacturing facilities were to be disrupted as a result of significant equipment failures, natural disasters, pandemics, power outages, fires, explosions, terrorism, adverse weather conditions, labor disputes or other 15 reasons, we may be unable to fill customer orders and meet customer demand for our products, which could adversely affect our financial performance and results of operations.
Laws or regulations incentivizing or mandating the use of alternative energy sources such as wind power and solar energy have also been enacted in certain jurisdictions. Additionally, numerous large cities globally and several countries have adopted programs to mandate or incentivize the conversion from internal combustion engine powered vehicles to electric-powered vehicles and placed restrictions on non-public transportation.
Laws or regulations incentivizing or mandating the use of alternative energy sources such as wind power and solar energy have also been enacted in certain jurisdictions. 18 Additionally, numerous large cities globally and several countries have adopted programs to mandate or incentivize the conversion from internal combustion engine powered vehicles to electric-powered vehicles and placed restrictions on non-public transportation.
We may not achieve some or all of the expected benefits of our operational initiatives. In order to align our operational resources with our business strategies, operate more efficiently and control costs, we may periodically announce plans to restructure certain of our operations, such as consolidation of manufacturing facilities, transitions to cost-competitive regions and product line rationalizations.
We may not achieve some or all of the expected benefits of our operational initiatives. 16 In order to align our operational resources with our business strategies, operate more efficiently and control costs, we may periodically announce plans to restructure certain of our operations, such as consolidation of manufacturing facilities, transitions to cost-competitive regions and product line rationalizations.
Recent years have seen 17 a substantial increase in the global enforcement of anti-corruption laws, with more frequent voluntary self-disclosures by companies, aggressive investigations and enforcement proceedings by both the DOJ and the SEC resulting in record fines and penalties, increased enforcement activity by non-U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals.
Recent years have seen a substantial increase in the global enforcement of anti-corruption laws, with more frequent voluntary self-disclosures by companies, aggressive investigations and enforcement proceedings by both the DOJ and the SEC resulting in record fines and penalties, increased enforcement activity by non-U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals.
Any provision of our second amended and restated certificate of incorporation or amended and restated bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our 20 stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
Any provision of our second amended and restated certificate of incorporation or amended and restated bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, 18 renewal and revocation by issuing authorities. From time to time, we could be subject to requests for information, notices of violation, and/or investigations initiated by environmental regulatory agencies relating to our operations and properties.
Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities. From time to time, we could be subject to requests for information, notices of violation, and/or investigations initiated by environmental regulatory agencies relating to our operations and properties.
In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management.
In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel 17 investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management.
Our competitors may develop products that are superior to our products, develop methods of more efficiently and effectively providing products and services, adapt more quickly than we do to new technologies or evolving customer requirements, or attempt to compete based primarily on price, localized expertise and local relationships.
Our competitors may develop products that are superior to our products, 11 develop methods of more efficiently and effectively providing products and services, adapt more quickly than we do to new technologies or evolving customer requirements, or attempt to compete based primarily on price, localized expertise and local relationships.
Such shortages or disruptions could be caused by factors beyond the control of our subcontractors, our suppliers or us, including inclement weather, natural disasters, conflicts, increased demand, problems in production or distribution, disruptions in third party logistics or transportation systems or the inability of our subcontractors or suppliers to obtain credit.
Such shortages or disruptions could be caused by factors beyond the control of our subcontractors, our suppliers or us, including inclement weather, natural disasters, conflicts, tariffs, increased demand, problems in production or distribution, disruptions in third party logistics or transportation systems or the inability of our subcontractors or suppliers to obtain credit.
In addition, during fiscal 2021 and 2022, precautionary measures instituted by government authorities in certain markets and sanitization procedures adopted to protect our employees in response to the COVID-19 pandemic have required us to temporarily suspend operations at certain of our manufacturing facilities.
In addition, during fiscal 2021 and 2022, precautionary measures instituted by government authorities in certain markets and sanitization procedures adopted to protect our employees in response to the COVID-19 pandemic required us to temporarily suspend operations at certain of our manufacturing facilities.
We rely significantly on maintaining the confidentiality of our trade secrets and other information related to our operations. Accordingly, we require all employees to sign a nondisclosure agreement to protect our trade secrets, business strategy and other proprietary information.
We rely significantly on maintaining the confidentiality of our trade secrets and other information related to our operations. Accordingly, we require all employees to sign a nondisclosure agreement to protect our 14 trade secrets, business strategy and other proprietary information.
Factors that might cause our operating results to vary from quarter to quarter include, but are not limited to: • general economic conditions and cyclicality in the end markets we serve; • the effects of the ongoing COVID-19 pandemic or other global pandemics, conflicts, or catastrophes; • future growth of energy and chemical processing capital investments; • a material disruption at any of our manufacturing facilities; • delays in our customers' projects for which our products are a component; 19 • the timing of completion of large projects; • costs associated with regulatory compliance; • competition from various other sources providing similar heat tracing products and services, or other alternative technologies, to customers; and • the seasonality of demand for maintenance orders, which is typically highest during our second and third fiscal quarters.
Factors that might cause our operating results to vary from quarter to quarter include, but are not limited to: • general economic conditions and cyclicality in the end markets we serve; • the effects of the ongoing COVID-19 pandemic or other global pandemics, conflicts, changes in U.S. or international trade policy or catastrophes; • future growth of energy and chemical processing capital investments; • a material disruption at any of our manufacturing facilities; • delays in our customers' projects for which our products are a component; • the timing of completion of large projects; • costs associated with regulatory compliance; • competition from various other sources providing similar heat tracing products and services, or other alternative technologies, to customers; and • the seasonality of demand for maintenance orders, which is typically highest during our second and third fiscal quarters.
These factors could be exacerbated by the impact of geopolitical instability or pandemics. This may reduce the profit we realize or result in a loss on a project for which the services or materials were needed or, if the product is unavailable, prevent us from accepting orders.
These factors could be exacerbated by the impact of geopolitical instability, trade policy changes or pandemics. This may reduce the profit we realize or result in a loss on a project for which the services or materials were needed or, if the product is unavailable, prevent us from accepting orders.
These factors include, but are not limited to: • quarterly fluctuations in our operating results; • changes in investors' and analysts' perception of the business risks and conditions of our business or our competitors; • our ability to meet the earnings estimates and other performance expectations of financial analysts or investors; • unfavorable commentary or downgrades of our stock by equity research analysts; • the emergence of new sales channels in which we are unable to compete effectively; • disruption to our operations; • fluctuations in the stock prices of our peer companies or in stock markets in general; and • general economic or political conditions, including the effects of the COVID-19 pandemic.
These factors include, but are not limited to: • quarterly fluctuations in our operating results; • changes in investors' and analysts' perception of the business risks and conditions of our business or our competitors; • our ability to meet the earnings estimates and other performance expectations of financial analysts or investors; 19 • unfavorable commentary or downgrades of our stock by equity research analysts; • the emergence of new sales channels in which we are unable to compete effectively; • disruption to our operations; • fluctuations in the stock prices of our peer companies or in stock markets in general; and • general economic or political conditions, including the effects of global trade policies.
Our revenue from major projects depends in part on the level of capital expenditures in our principal end markets, including the general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, energy transition/decarbonization, rail and transit, and other industries.
Our revenue from major projects depends in part on the level of capital expenditures in our principal end markets, including the general industrial, chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other industries.
If we are unable to continue operating successfully in one or more foreign countries, it may have an adverse effect on our business and financial condition. For fiscal 2024, approximately 51% of our revenues were generated outside of the U.S., and approximately 17% of our revenues were generated outside of North America.
If we are unable to continue operating successfully in one or more foreign countries, it may have an adverse effect on our business and financial condition. For fiscal 2025, approximately 49% of our revenues were generated outside of the U.S., and approximately 17% of our revenues were generated outside of North America.
This may occur for various reasons, including errors in estimates or bidding, changes in availability and cost of labor and raw materials and unforeseen technical and logistical challenges, including with managing our geographically widespread operations and use of third party subcontractors, suppliers and manufacturers in many countries.
This may occur for various reasons, including errors in estimates or bidding, changes in availability and cost of labor and raw materials, including those caused by tariffs, and unforeseen technical and logistical challenges, including with managing our geographically widespread operations and use of third party subcontractors, suppliers and manufacturers in many countries.
Accordingly, our gross margins are impacted by our mix of products and services. Although our product mix varies from period to period due to a variety of factors, during fiscal year ended March 31, 2024, revenue recognized over time accounted for approximately 39% of our total revenue.
Accordingly, our gross margins are impacted by our mix of products and services. Although our product mix varies from period to period due to a variety of factors, during fiscal year ended March 31, 2025, revenue recognized over time accounted for approximately 29% of our total revenue.
During fiscal 2023, the value of the U.S. Dollar overall strengthened in relation to the principal non-U.S. currencies from which we derive revenue, which negatively impacted revenue by $15.1 million. Any further appreciation in the U.S. Dollar relative to such non-U.S. currencies could continue to have a significant negative impact on our results of operations in future periods.
During fiscal 2024, the value of the U.S. Dollar overall strengthened in relation to the principal non-U.S. currencies from which we derive revenue, which negatively impacted revenue by $4.3 million. Any further appreciation in the U.S. Dollar relative to such non-U.S. currencies could continue to have a significant negative impact on our results of operations in future periods.
In particular, significant fluctuations in the Canadian Dollar, the Euro or the Pound Sterling against the U.S. Dollar could adversely affect our results of operations. During fiscal 2024, the value of the U.S. Dollar overall strengthened in relation to the principal non-U.S. currencies from which we derive revenue, which negatively impacted revenue by $4.3 million.
In particular, significant fluctuations in the Canadian Dollar, the Euro or the Pound Sterling against the U.S. Dollar could adversely affect our results of operations. During fiscal 2025, the value of the U.S. Dollar overall strengthened in relation to the principal non-U.S. currencies from which we derive revenue, which negatively impacted revenue by $1.0 million.
The dollar amount of backlog as of March 31, 2024, was $186.1 million. The timing of our recognition of revenue out of our backlog is subject to a variety of factors that may cause delays, many of which, including fluctuations in our customers' delivery schedules, are beyond our control and difficult to forecast.
The dollar amount of backlog as of March 31, 2025, was $240.3 million. The timing of our recognition of revenue out of our backlog is subject to a variety of factors that may cause delays, many of which, including fluctuations in our customers' delivery schedules, are beyond our control and difficult to forecast.
We test goodwill and indefinite-life intangible assets for impairment on an annual basis, and more frequently if circumstances warrant, by comparing the estimated fair value of each of our reporting units to their respective carrying values. As of March 31, 2024, our goodwill and other intangible assets balance was $397.9 million, which represented 52% of our total assets.
We test goodwill and indefinite-life intangible assets for impairment on an annual basis, and more frequently if circumstances warrant, by comparing the estimated fair value of each of our reporting units to their respective carrying values. As of March 31, 2025, our goodwill and other intangible assets balance was $379.6 million, which represented 50% of our total assets.
Volatility in currency exchange rates may adversely affect our financial condition, results of operations or cash flows. We may not be able to effectively manage our exchange rate and/or currency transaction risks. Volatility in currency exchange rates may decrease our revenue and profitability, adversely affect our liquidity and impair our financial condition.
Volatility in currency exchange rates may adversely affect our financial condition, results of operations or cash flows. We may not be able to effectively manage our exchange rate and/or currency transaction risks.
The market price of our common stock may fluctuate significantly, and this may make it difficult for holders to resell our common stock when they want or at prices that they find attractive. The price of our common stock on the NYSE constantly changes. We expect that the market price of our common stock will continue to fluctuate.
The market price of our common stock may fluctuate significantly, and this may make it difficult for holders to resell our common stock when they want or at prices that they find attractive. The price of our common stock on the New York Stock Exchange ("NYSE") constantly changes.
In addition, many of our customer contracts, including fixed-price contracts, contain liquidated damages and warranty provisions for which we are responsible in the event that we fail to perform our obligations thereunder in a timely manner or our products or services fail to perform, in accordance with the agreed terms, conditions and standards. 16 We extend credit to customers in conjunction with our performance under fixed-price contracts which subjects us to potential credit risks.
In addition, many of our customer contracts, including fixed-price contracts, contain liquidated damages and warranty provisions for which we are responsible in the event that we fail to perform our obligations thereunder in a timely manner or our products or services fail to perform, in accordance with the agreed terms, conditions and standards.
Please refer to the section entitled "Forward-Looking Statements." Risks Related to Our Business and Industry Macroeconomic and Industry Risks The markets we serve are subject to general economic conditions and cyclical demand, which could harm our business and lead to significant shifts in our results of operations from quarter to quarter that make it difficult to project long-term performance.
The markets we serve are subject to general economic conditions and cyclical demand, which could harm our business and lead to significant shifts in our results of operations from quarter to quarter that make it difficult to project long-term performance.
The market price of our common stock may fluctuate as a result of a variety of factors, many of which are beyond our control.
We expect that the market price of our common stock will continue to fluctuate. The market price of our common stock may fluctuate as a result of a variety of factors, many of which are beyond our control.
Competition for qualified management and key technical and sales personnel in our industry is intense. Our ability to successfully operate and grow our global business and implement our strategies is largely dependent on the efforts, abilities and services of our senior management and other key employees.
Our ability to successfully operate and grow our global business and implement our strategies is largely dependent on the efforts, abilities and services of our senior management and other key employees.
We typically agree to allow our customers to defer payment on projects until certain milestones have been met or until the projects are substantially completed, and customers typically withhold some portion of amounts due to us as retainage.
We extend credit to customers in conjunction with our performance under fixed-price contracts which subjects us to potential credit risks. We typically agree to allow our customers to defer payment on projects until certain milestones have been met or until the projects are substantially completed, and customers typically withhold some portion of amounts due to us as retainage.
These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns. Prolonged periods of little or no economic growth could result in lower demand for our products and a negative impact on our results of operations and cash flows.
Prolonged periods of little or no economic growth could result in lower demand for our products and a negative impact on our results of operations and cash flows.
While we have entered into hedging instruments to manage our exchange rate risk as it relates to certain intercompany balances with certain of our foreign subsidiaries, these hedging activities do not eliminate exchange rate risk, nor do they reduce risk associated with total foreign sales.
Volatility in currency exchange rates may decrease our revenue and profitability, adversely affect our liquidity and impair our financial condition. 13 While we have entered into hedging instruments to manage our exchange rate risk as it relates to certain intercompany balances with certain of our foreign subsidiaries, these hedging activities do not eliminate exchange rate risk, nor do they reduce risk associated with total foreign sales.
In addition, this historically cyclical demand may lead to significant shifts in our results of operations from quarter to quarter, which limits our ability to make accurate long-term predictions about our future performance. Suspensions and delays in large capital projects, especially in the United States and Canada, have adversely affected our results of operations in recent years.
In addition, this historically cyclical demand may lead to significant shifts in our results of operations from quarter to quarter, which limits our ability to make accurate long-term predictions about our future performance.
Our debt agreements impose certain operating and financial restrictions, with which failure to comply could result in an event of default that could adversely affect our results of operations. 12 At March 31, 2024, we had $172.5 million of outstanding indebtedness.
Our current or future indebtedness could impair our financial condition and reduce the funds available to us for other purposes. Our debt agreements impose certain operating and financial restrictions, with which failure to comply could result in an event of default that could adversely affect our results of operations. At March 31, 2025, we had $138.4 million of outstanding indebtedness.
We carry insurance against many potential liabilities, but our management of risk may leave us exposed to unidentified or unanticipated risks. 13 Although we maintain insurance policies with respect to our related exposures, including certain casualty, property and business interruption programs, these policies contain deductibles, self-insured retentions and limits of coverage.
Although we maintain insurance policies with respect to our related exposures, including certain casualty, property and business interruption programs, these policies contain deductibles, self-insured retentions and limits of coverage.
Business Risks If we are unable to successfully develop and improve our products and successfully implement new technologies in the markets that we serve and develop solutions for diversified new markets, our business and results of operations could be adversely affected. 11 Our future success will depend upon our continued investment in research and development of new products, improvement and enhancement of our existing product offerings and our ability to continue to achieve new technological advances in the process heating industry.
Business Risks If we are unable to successfully develop and improve our products and successfully implement new technologies in the markets that we serve and develop solutions for diversified new markets, our business and results of operations could be adversely affected.
If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price contracts, we could experience losses on these contracts.
If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price contracts, we could experience losses on these contracts. Rapid price increases caused by changes in U.S. or international trade policy or tariffs may limit our ability to accurately estimate costs for our fixed-price contract bids.
Any acquisitions or investments may ultimately harm our business or financial condition if they are unsuccessful and any acquisitions or investments ultimately result in impairment charges.
Any acquisitions or investments may ultimately harm our business or financial condition if they are unsuccessful and any acquisitions or investments ultimately result in impairment charges. We carry insurance against many potential liabilities, but our management of risk may leave us exposed to unidentified or unanticipated risks.
We are subject to numerous environmental and health and safety laws and regulations, as well as potential environmental liabilities, which may require us to make substantial expenditures.
We have experienced immaterial employee theft in the past, and we cannot assure you that we can ensure our employees compliance with our internal control policies and procedures. We are subject to numerous environmental and health and safety laws and regulations, as well as potential environmental liabilities, which may require us to make substantial expenditures.
Long-term declines in projected future cash flows could result in future goodwill and other intangible asset impairments.
Long-term declines in projected future cash flows could result in future goodwill and other intangible asset impairments. Because of the significance of our goodwill and other intangible assets, any future impairment of these assets could have a material adverse effect on our financial results.
Because of the significance of our goodwill and other intangible assets, any future impairment of these assets could have a material adverse effect on our financial results. 14 If we lose our senior management or other key employees or cannot successfully execute succession plans, our business may be adversely affected.
If we lose our senior management or other key employees or cannot successfully execute succession plans, our business may be adversely affected. Competition for qualified management and key technical and sales personnel in our industry is intense.
We have experienced immaterial employee theft in the past, and we cannot assure you that we can ensure our employees compliance with our internal control policies and procedures. Changes in government administrative policy, including changes to existing trade agreements and government sanctions, could have a material adverse effect on us.
Uncertainty over and changes in government administrative policy, including changes to existing trade agreements and government sanctions, including the recently enacted tariffs on trade between the U.S. and other countries, could have a material adverse effect on our business, results of operations and financial condition.
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Some statements in this annual report, including statements in the following risk factors, constitute forward-looking statements.
Added
Some statements in this annual report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled "Forward-Looking Statements." Risks Related to Our Business and Industry Macroeconomic and Industry Risks Suspensions and delays in large capital projects, especially in the United States and Canada, have adversely affected our results of operations in recent years.
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The outbreak of a global pandemic, such as the pandemic caused by the novel strain of coronavirus (COVID-19) and its variants, and the measures taken in response thereto could have an adverse effect on our business, results of operations and financial condition.
Added
The demand for large capital projects may be further constrained by the uncertainty caused by the recent changes in United States trade policy.
Removed
Our business, financial condition, results of operations and cash flows may be adversely affected if a global pandemic, including the COVID-19 pandemic and its variants, interferes with the ability of our employees, vendors and customers to perform our and their respective responsibilities and obligations relative to the conduct of our business.
Added
Trade restrictions, including withdrawal from or modification of existing trade agreements, negotiation of new trade agreements and imposition of new (and retaliatory) tariffs, including the recently announced and potentially contemplated tariffs by the new U.S. presidential administration, against certain countries or covering certain products, could increase our costs and impair our ability to expand the business.
Removed
The COVID-19 pandemic has caused significant volatility in the global economy.
Added
Based on our manufacturing practices and locations, there can be no assurance that any future executive or legislative action in the U.S. or other countries relating to trade regulation would not adversely affect our business, operations and financial results.
Removed
Public health problems resulting from COVID-19 and safety measures instituted by governments and businesses to mitigate its spread, including travel restrictions and quarantines, have contributed to a general slowdown in the global economy, adversely impacted the businesses of our customers, suppliers and distribution partners, and disrupted our operations, and may continue to do so on an ongoing basis.
Added
These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns. In addition, these customers expenditures may be further constrained by the uncertainty caused by the recent changes in United States trade policy.
Removed
For example, precautionary measures instituted by government authorities and sanitization procedures adopted to protect our employees in response to the COVID-19 pandemic required us to temporarily suspend operations at certain of our sales offices and manufacturing facilities during the initial onset of the COVID-19 pandemic in 2020.
Added
Our future success will depend upon our continued investment in research and development of new products, improvement and enhancement of our existing product offerings and our ability to continue to achieve new technological advances in the process heating industry.
Removed
Changes in our operations around the world in response to a global pandemic or employee illnesses resulting therefrom may result in inefficiencies or delays, including delays in sales and product development efforts, delays to our strategic plans, and additional costs related to business continuity initiatives, that cannot be fully mitigated through succession planning, employees working remotely or teleconferencing technologies.
Removed
In addition, changes in the operations of our suppliers in response to a pandemic may also result in disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements such as raw materials or other finished product components, transportation, workforce or other manufacturing and distribution capability.
Removed
Finally, a pandemic could negatively affect our internal controls over financial reporting as a portion of our workforce is required to work from home, potentially requiring new processes, procedures, and controls. An economic downturn due to a global pandemic has in the past resulted, and could in the future result in reduced demand for our products and services.
Removed
The severity and longevity of such pandemic may cause customers to suspend their decisions on using our products and/or services and give rise to significant changes in regional and global economic conditions that could delay or interfere with the capital spending of our customers, which could have a material impact on our consolidated business, results of operations and financial condition in our fiscal year ending March 31, 2024 and beyond.
Removed
A global pandemic could also have the effect of heightening other risks described elsewhere in these Risk Factors.
Removed
Our current or future indebtedness could impair our financial condition and reduce the funds available to us for other purposes.
Removed
If we cannot make scheduled payments on our debt, or if we breach any of the covenants in our debt agreements, we will be in default under such agreements and, as a result, our debt holders could declare all outstanding principal and interest to be due and payable, the lenders under our credit facility could terminate their commitments to lend us money and foreclose against the assets securing our borrowings, and we could be forced into bankruptcy or liquidation.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company's cybersecurity risk management program is subject to periodic review and updates. The Company's Board of Directors is responsible for overseeing the Company's cybersecurity risk management program through the Audit Committee.
Biggest changeOur VP, Information Technology, who leads the information technology department, has over 15 years of experience with information security and information technology matters. The Company's cybersecurity risk management program is subject to periodic review and updates. The Company's Board of Directors is responsible for overseeing the Company's cybersecurity risk management program through the Audit Committee.
Despite our cybersecurity risk management program and the associated controls, and those of our third-party providers, we may be vulnerable to cyber-attacks, computer viruses, security breaches, ransomware attacks, inadvertent or malicious employee actions, program failures, and other risks that could materially impact our financial condition, results of operations and cash flows.
Despite our cybersecurity risk management program and the associated controls, and those of our third-party providers, we may be vulnerable to cyber-attacks, computer viruses, security breaches, ransomware attacks, inadvertent or malicious employee actions, program failures, and other risks that could materially impact our financial condition, results of operations and/or cash flows.
The Board receives quarterly reports on the Company's cybersecurity risk profile and the effectiveness of the Company's cybersecurity risk management program. 21 During the past year, there have been no material risks from cybersecurity threats or prior cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations, or financial condition.
The Board receives quarterly reports on the Company's cybersecurity risk profile and the effectiveness of the Company's cybersecurity risk management program. During the past year, there have been no material risks from cybersecurity threats or prior cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations, or financial condition.
ITEM 1C. CYBERSECURITY Risk Management Thermon’s cybersecurity risk management system is a comprehensive framework that helps the Company identify, assess, and mitigate known cybersecurity risks. The system is designed to protect the confidentiality, integrity, and availability of the Company's information assets. The system includes a risk assessment process that identifies and assesses the Company's cybersecurity risks.
ITEM 1C. CYBERSECURITY Risk Management 20 Thermon’s cybersecurity risk management system is a comprehensive framework that helps the Company identify, assess, and mitigate known cybersecurity risks. The system is designed to protect the confidentiality, integrity, and availability of the Company's information assets. The system includes a risk assessment process that identifies and assesses the Company's cybersecurity risks.
The risk assessment process is based on the security principles set forth in the National Institutes of Standards and Technology Common Industry Format Cybersecurity Framework and includes the following steps: • Identification of assets • Identification of threats • Identification of vulnerabilities • Assessment of risk The system is primarily implemented by the Company's cybersecurity team.
The risk assessment process is based on the security principles set forth in the National Institutes of Standards and Technology ("NIST") Cybersecurity Framework and includes the following steps: • Identification of assets • Identification of threats • Identification of vulnerabilities • Assessment of risk The system is primarily implemented by the Company's cybersecurity team.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeAll our manufacturing facilities are registered to International Organization for Standardization (ISO) 9001 quality standards, except for Morristown, Tennessee and Chicago, Illinois. These locations were acquired through our recent acquisition and are in the process to be certified. We believe that our production facilities are suitable for their purpose and are adequate to support our businesses.
Biggest changeAll our manufacturing facilities are registered to International Organization for Standardization (ISO) 9001 quality standards, except for 21 Morristown, Tennessee and Chicago, Illinois, which are in the process to be certified. We believe that our production facilities are suitable for their purpose and are adequate to support our businesses.
All our reportable segments utilize our San Marcos, Texas facilities. In addition, we have offices and/or manufacturing and assembly locations in Chicago, Illinois, Morristown, Tennessee, Houston, Texas, Denver, Colorado, Salt Lake City, Utah, Canada, the Netherlands, France, United Kingdom, Germany, Mexico, China, Korea, Japan, India, Australia, and Bahrain.
All our reportable segments utilize our San Marcos, Texas facilities. In addition, we have offices and/or manufacturing and assembly locations in Chicago, Illinois, Morristown, Tennessee, Houston, Texas, Salt Lake City, Utah, Canada, the Netherlands, France, Italy, United Kingdom, Germany, Mexico, China, Korea, Japan, India, Australia, and Bahrain.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−0 removed9 unchanged
Biggest changeThe Repurchase Program does not include a specific timetable or price targets and may be suspended or terminated at any time.
Biggest changeOn May 22, 2025, the Company announced that the board of directors had authorized an additional $24.4 million. The Repurchase Program does not include a specific timetable or price targets, except for the expiration of the Repurchase Program by March 15, 2027, and may be suspended or terminated at any time.
The plotted points in the line graph are based on the closing price on the last trading date of the period. The values assume an initial investment of $100 was made in our common stock and the respective indexes on March 31, 2019 (the last day of our fiscal 2019), and assumes the reinvestment of dividends, as applicable.
The plotted points in the line graph are based on the closing price on the last trading date of the period. The values assume an initial investment of $100 was made in our common stock and the respective indexes on March 31, 2020 (the last day of our fiscal 2020), and assumes the reinvestment of dividends, as applicable.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common stock of the Company trades on the NYSE under the symbol "THR." On May 28, 2024, the closing sale price of our common stock, as reported by the NYSE, was $34.88.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common stock of the Company trades on the NYSE under the symbol "THR." On May 21, 2025, the closing sale price of our common stock, as reported by the NYSE, was $29.12.
The objective of the Repurchase Program is to offset dilution related to the Equity Compensation Plan discussed in Note 16, "Stock-Based Compensation" to our consolidated financial statements included elsewhere in this annual report. During fiscal 2024, we purchased 8,018 shares at a weighted average price of $31.20.
The primary objective of the Repurchase Program is to offset dilution related to the Equity Compensation Plan discussed in Note 16, "Stock-Based Compensation" to our consolidated financial statements included elsewhere in this annual report. During fiscal 2025, we purchased 694,025 shares at a weighted average price of $28.99.
As of May 28, 2024, there were approximately 15 holders of our common stock of record.
As of May 21, 2025, there were approximately 15 holders of our common stock of record.
As of March 31, 2024, we have $49.8 million of remaining unused and authorized availability under the Repurchase Program. We record shares of common stock repurchased at cost as treasury stock, resulting in a reduction of stockholders’ equity in the consolidated balance sheets. Recent Sales of Unregistered Securities None. 24
As of March 31, 2025, we have $29.6 million of remaining unused and authorized availability under the Repurchase Program. We record shares of common stock repurchased at cost as treasury stock, resulting in a reduction of stockholders’ equity in the consolidated balance sheets.
March 31, 2019 March 31, 2020 March 31, 2021 March 31, 2022 March 31, 2023 March 31, 2024 Thermon Group Holdings, Inc. $ 100.00 $ 61.49 $ 79.52 $ 66.10 $ 101.67 $ 133.50 iShares Russell 2000 Index $ 100.00 $ 76.13 $ 148.31 $ 139.20 $ 122.89 $ 147.14 S&P 600 SmallCap 600 Energy $ 100.00 $ 20.27 $ 59.11 $ 94.17 $ 86.83 $ 104.66 The information in this "Stock Performance" section shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
March 31, 2020 March 31, 2021 March 31, 2022 March 31, 2023 March 31, 2024 March 31, 2025 Thermon Group Holdings, Inc. $ 100.00 $ 129.33 $ 107.50 $ 165.36 $ 217.12 $ 184.80 iShares Russell 2000 Index $ 100.00 $ 194.80 $ 182.83 $ 161.41 $ 192.61 $ 184.97 S&P 600 SmallCap 600 Energy $ 100.00 $ 291.61 $ 464.60 $ 428.36 $ 516.37 $ 387.98 The information in this "Stock Performance" section shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act.
Added
Information relating to the Company’s purchases of its common stock during the three months ended March 31, 2025 is as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Announced Plans or Programs January 2025 22,856 $ 28.87 22,856 February 2025 155,842 29.51 155,842 March 2025 304,471 29.02 304,471 Total 483,169 $ 28.77 483,169 Recent Sales of Unregistered Securities None. 24

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

46 edited+14 added−17 removed45 unchanged
Biggest changeNote that our calculation of Adjusted EPS, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow may not be comparable to similarly titled measures reported by other companies. 33 The following table reconciles net income to Adjusted EBITDA for the periods presented: Year Ended March 31, (Dollars in thousands) 2024 2023 2022 Net income $ 51,588 $ 33,666 $ 20,092 Interest expense, net 8,845 5,871 5,815 Income tax expense 16,086 15,567 8,333 Depreciation and amortization 18,837 19,231 20,205 EBITDA (non-GAAP) $ 95,356 $ 74,335 $ 54,445 Stock-based compensation 5,754 5,954 3,803 Transaction-related costs 2,107 335 — Restructuring and other charges/(income) 984 3,693 (414) Impairment and other charges — 8,945 — Loss on debt extinguishment — — 2,569 Canadian Emergency Wage Subsidy — — (1,952) Adjusted EBITDA (non-GAAP) $ 104,201 $ 93,262 $ 58,451 The following table reconciles net income to Adjusted Net Income and Adjusted EPS for the periods presented: Year ended March 31, (Dollars in thousands, except per share data) 2024 2023 2022 Net income $ 51,588 $ 33,666 $ 20,092 Tax expense for impact of rate reduction in foreign jurisdictions — — 505 Withholding tax on dividend related to debt amendment — — 301 Amortization of intangible assets 10,158 9,447 8,790 Transaction-related costs 2,107 335 — Restructuring and other charges/(income) 984 3,693 (414) Impairment and other charges — 8,945 — Loss on debt extinguishment — — 2,569 Canadian Emergency Wage Subsidy — — (1,952) Tax effect of financial adjustments (2,947) (3,307) (1,999) Adjusted net income (non-GAAP) $ 61,890 $ 52,779 $ 27,892 Adjusted-fully diluted earnings per common share (non-GAAP) $ 1.82 $ 1.56 $ 0.83 Fully-diluted common shares - (thousands) 34,067 33,746 33,515
Biggest changeNote that our calculation of Adjusted EPS, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow may not be comparable to similarly titled measures reported by other companies. 33 The following table reconciles net income to Adjusted EBITDA for the periods presented: Year Ended March 31, (Dollars in thousands) 2025 2024 2023 Net income $ 53,515 $ 51,588 $ 33,666 Interest expense, net 10,325 8,845 5,871 Income tax expense 16,604 16,086 15,567 Depreciation and amortization 22,339 18,837 19,231 EBITDA (non-GAAP) $ 102,783 $ 95,356 $ 74,335 Stock-based compensation 5,244 5,754 5,954 Transaction-related costs 355 2,107 335 Restructuring and other charges/(income) 1 292 984 3,693 ERP implementation-related costs 557 — — Impairment and other charges — — 8,945 Adjusted EBITDA (non-GAAP) $ 109,231 $ 104,201 $ 93,262 (1) - Includes $0.6 million of restructuring charges recorded in Cost of sales.
Our revenues are derived from providing customers with a full suite of innovative and reliable process heating solutions, including advanced heating and filtration solutions for industrial and hazardous area applications. Revenue recognized at a point in time based on when control transitions to the customer is generally related to our product sales.
Revenue. Our revenues are derived from providing customers with a full suite of innovative and reliable process heating solutions, including advanced heating and filtration solutions for industrial and hazardous area applications. Revenue recognized at a point in time based on when control transitions to the customer is generally related to our product sales.
We recognize revenue related to such projects in a systematic way that reflects the transfer of goods or services, or a combination of goods and services, to the customer. 25 We believe that our pipeline of planned projects, in addition to our backlog of signed purchase orders, provides us with visibility into our future revenue.
We recognize revenue related to such projects in a systematic way that reflects the transfer of goods or services, or a combination of goods and services, to the customer. We believe that our pipeline of planned projects, in addition to our backlog of signed purchase orders, provides us with visibility into our future revenue.
For revenue recognized under fixed fee contracts, we measure the costs incurred that contribute towards the satisfaction of our performance obligation as a percentage of the total cost of production (the “cost-to-cost method”), and we recognize a proportionate amount of contract revenue, as the cost-to-cost method appropriately depicts performance towards satisfaction of the performance obligation.
For revenue recognized under fixed fee contracts, we measure the costs incurred that contribute towards the satisfaction of our performance obligation as a percentage of the estimated total cost of production (the “cost-to-cost method”), and we recognize a proportionate amount of contract revenue, as the cost-to-cost method appropriately depicts performance towards satisfaction of the performance obligation.
As of March 31, 2024, management believes that adequate reserves have been established for any probable and reasonably estimable losses. Expenses related to litigation reduce operating income. We do not believe that the outcome of any of these proceedings or disputes would have a significant adverse effect on our financial position, long-term results of operations, or cash flows.
As of March 31, 2025, management believes that adequate reserves have been established for any probable and reasonably estimable losses. Expenses related to litigation reduce operating income. We do not believe that the outcome of any of these proceedings or disputes would have a significant adverse effect on our financial position, long-term results of operations, or cash flows.
We will encounter periods where we may be above or below this range, due to, for example, inventory buildup for anticipated seasonal demand in fall and winter months, related cash receipts from credit sales in months that follow, debt maturities, restructuring activities, larger capital investments, severe and/or protracted economic downturns, acquisitions, or some combination of the above activities.
We will encounter periods where we may be above or below this range, due to, for example, inventory buildup for anticipated seasonal demand in fall and winter months, related cash receipts from credit sales in months that follow, debt maturities, restructuring activities, larger capital investments, severe and/or protracted economic downturns, acquisitions, share repurchases, or some combination of the above activities.
Free Cash Flow is one measure management uses internally to assess liquidity. Our calculation may not be comparable to similarly titled measures reported by other companies. See further discussion of Non-GAAP Financial Measures below. Year Ended March 31, 2024 ("fiscal 2024") Compared to the Year Ended March 31, 2023 ("fiscal 2023") Net cash provided by/(used in) operating activities.
Free Cash Flow is one measure management uses internally to assess liquidity. Our calculation may not be comparable to similarly titled measures reported by other companies. See further discussion of Non-GAAP Financial Measures below. Year Ended March 31, 2025 ("fiscal 2025") Compared to the Year Ended March 31, 2024 ("fiscal 2024") Net cash provided by/(used in) operating activities.
Projects which do not require installation and maintenance services are smaller in size and representative of maintenance, repairs and small upgrades necessary to improve efficiency and uptime. These small projects are typically tied to our customers operating expense budgets, are generally less than $0.5 million in total revenue, and have relatively higher profit margins.
Projects that do not require installation and maintenance services are smaller in size and representative of maintenance, repairs and small upgrades necessary to improve efficiency and uptime. These small projects are typically tied to our customers operating expense budgets, are generally less than $0.5 million in total revenue, and have relatively higher profit margins.
The discussions in this section contain forward-looking statements that involve risks and uncertainties, including, but not limited to, those described in Item 1A, "Risk Factors." Actual results could differ materially from those discussed below. Please refer to the section entitled "Forward-Looking Statements." Overview For a complete overview of our business, please refer to Item 1. "Business" disclosed within this document.
The discussions in this section contain forward-looking statements that involve risks and uncertainties, including, but not limited to, those described in Item 1A, "Risk Factors." Actual results could differ materially from those discussed below. Please refer to the section entitled "Forward-Looking Statements." Overview For a complete overview of our business, please refer to Item 1.
Our selling, general, and administrative expenses ("SG&A") are primarily comprised of compensation and related expenses for sales, marketing, pre-sales engineering and administrative personnel, as well as other sales related expenses and other expenses related to research and development, insurance, professional fees, the global integrated business information system, and provisions for credit losses. Key drivers affecting our results of operations.
Our selling, general, and administrative expenses ("SG&A") are primarily comprised of compensation and related expenses for sales, marketing, pre-sales engineering and administrative personnel, as well as other sales related expenses and other expenses related to research and development, insurance, professional fees, the global integrated business information systems, and provisions for credit losses. 25 Key drivers affecting our results of operations.
"Adjusted Net Income" and "Adjusted fully diluted earnings per share" ("Adjusted EPS") represents net income attributable to Thermon before costs related to acceleration of unamortized debt costs, the tax benefit from income tax rate reductions in certain foreign jurisdictions, withholding tax on dividend related to the debt amendment, amortization of intangible assets, transaction-related costs, the income tax effect on any non-tax adjustments, costs associated with our restructuring and other income/(charges), other impairment charges/(income), loss on debt extinguishment, and income related to the Canadian Emergency Wage Subsidy, per fully-diluted common share in the case of Adjusted EPS.
"Adjusted Net Income" and "Adjusted fully diluted earnings per share" ("Adjusted EPS") represents net income attributable to Thermon before costs related to acceleration of unamortized debt costs, the tax benefit from income tax rate reductions in certain foreign jurisdictions, withholding tax on dividend related to the debt amendment, amortization of intangible assets, transaction-related costs, the income tax effect on any non-tax adjustments, costs associated with our restructuring and other income/(charges), other impairment charges/(income), and loss on debt extinguishment, per fully-diluted common share in the case of Adjusted EPS.
We believe that, based on our current level of operations and related cash flows, plus cash on hand and available borrowings under our revolving credit facility, we will be able to meet our liquidity needs for the next 12 months and the foreseeable future. We expect our capital expenditures to approximate 2.5% to 3.0% of revenue in fiscal 2025.
We believe that, based on our current level of operations and related cash flows, plus cash on hand and available borrowings under our revolving credit facility, we will be able to meet our liquidity needs for the next 12 months and the foreseeable future. We expect our capital expenditures to approximate 2% to 3% of revenue in fiscal 2026.
Our results of operations and financial condition are affected by numerous factors, including those described under the caption “Risk Factors” in Item 1A of this Annual Report on Form 10-K. These factors include the following: • Impact of product mix. Typically, our customers require our products as well as our engineering and construction services.
Our results of operations and financial condition are affected by numerous factors, including those described under the caption “Risk Factors” in Item 1A of this annual report. These factors include the following: • Impact of product mix. Typically, our customers require our products as well as our engineering and construction services.
On March 31, 2024, we had in place standby letters of credit, bank guarantees and performance bonds totaling $13.3 million to back our various customer contracts. In addition, our Indian subsidiary also has $4.4 million in customs bonds outstanding. Refer to Note 15, "Commitments and Contingencies" for more information on our letters of credit and bank guarantees.
On March 31, 2025, we had in place standby letters of credit, bank guarantees and performance bonds totaling $13.2 million to back our various customer contracts. In addition, our Indian subsidiary also has $4.2 million in customs bonds outstanding. Refer to Note 15, "Commitments and Contingencies" for more information on our letters of credit and bank guarantees.
Year Ended March 31, 2023 ("fiscal 2023") Compared to the Year Ended March 31, 2022 ("fiscal 2022") See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 filed with the SEC on May 25, 2023 for a discussion of net cash provided by operating activities, net cash used in investing activities and net cash provided by (used in) financing activities in fiscal 2023 as compared to fiscal 2022. 32 Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
Year Ended March 31, 2024 ("fiscal 2024") Compared to the Year Ended March 31, 2023 ("fiscal 2023") See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 filed with the SEC on May 29, 2024 for a discussion of net cash provided by operating activities, net cash used in investing activities and net cash provided by (used in) financing activities in fiscal 2024 as compared to fiscal 2023. 32 Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements not already disclosed.
The Company continues to manage its working capital requirements effectively through optimizing inventory levels, doing business with creditworthy customers, and extending payments terms with its supplier base. Share repurchases On March 15, 2024, we announced the authorization from our board of directors to execute a share repurchase program of up to $50.0 million (the "Repurchase Program").
The Company continues to manage its working capital requirements effectively through optimizing inventory levels, doing business with creditworthy customers, and extending payments terms with its supplier base. Share repurchases In fiscal 2024, we announced the authorization from our board of directors to execute a share repurchase program of up to $50.0 million (the "Repurchase Program").
For our time and materials service contracts, we recognize revenues as the products and services are provided over the term of the contract and have determined that the stated rate for installation services and products is representative of the stand-alone selling price for those services and products. Our turnkey projects and certain other projects.
For our time and materials service contracts, we recognize revenues as the products and services are provided over the term of the contract and have determined that the stated rate for installation services and products is representative of the stand-alone selling price for those services and products.
Liquidity and Capital Resources 30 Our primary sources of liquidity are cash flows from operations and funds available under our revolving credit facility. Our primary liquidity needs are to finance our working capital, capital expenditures, debt service needs and potential future acquisitions. Cash and cash equivalents. At March 31, 2024, we had $48.6 million in cash and cash equivalents.
Liquidity and Capital Resources 30 Our primary sources of liquidity are cash flows from operations and funds available under our revolving credit facility. Our primary liquidity needs are to finance our working capital, capital expenditures, debt service, share repurchases and potential future acquisitions. Cash and cash equivalents. At March 31, 2025, we had $39.5 million in cash and cash equivalents.
We estimate that Point in time and Over time revenues have each made the following contribution as a percentage of total revenue in the periods listed: 26 Year-Ended March 31, 2024 Year-Ended March 31, 2023 Year-Ended March 31, 2022 Point in time 61 % 63 % 60 % Over time: 39 % 37 % 40 % Small projects 15 % 15 % 16 % Large projects 24 % 22 % 24 % Our Over time revenue includes (i) products and services which are billed on a time and materials basis, and (ii) fixed fee contracts for complex turnkey and other solutions such as engineered products.
We estimate that Point in time and Over time revenues have each contributed the following as a percentage of total revenue in the periods listed: Year-Ended March 31, 2025 Year-Ended March 31, 2024 Year-Ended March 31, 2023 Point in time 71 % 61 % 63 % Over time: 29 % 39 % 37 % Small projects 14 % 15 % 15 % Large projects 15 % 24 % 22 % Our Over time revenue includes (i) products and services which are billed on a time and materials basis, and (ii) fixed fee contracts for complex turnkey and other solutions such as some engineered products.
Fiscal Year Ended March 31, Increase/(Decrease) (Dollars in thousands) 2024 2023 $ % Consolidated Statements of Operations Data: Sales $ 494,629 $ 440,590 $ 54,039 12 % Cost of sales 283,065 255,465 27,600 11 % Gross profit 211,564 185,125 26,439 14 % Operating expenses: Selling, general and administrative expenses 123,820 117,003 6,817 6 % Deferred compensation plan expense/(income) 1,231 (208) 1,439 (692) % Amortization of intangible assets 10,158 9,447 711 8 % Restructuring and other charges/(income) 984 3,693 (2,709) (73) % Income from operations 75,371 55,190 20,181 37 % Other income/(expenses): Interest expense, net (8,845) (5,871) (2,974) 51 % Other income/(expense) 1,148 (86) 1,234 (1435) % Income before provision for income taxes 67,674 49,233 18,441 37 % Income tax expense 16,086 15,567 519 3 % Net income $ 51,588 $ 33,666 $ 17,922 53 % As a percent of sales: Gross profit 42.8 % 42.0 % 80 bps Selling, general and administrative expenses 25.0 % 26.6 % -160 bps Income from operations 15.2 % 12.5 % 270 bps Net income 10.4 % 7.6 % 280 bps Effective tax rate 23.8 % 31.6 % Year Ended March 31, 2024 ("fiscal 2024") Compared to the Year Ended March 31, 2023 ("fiscal 2023") Revenues.
The change in net income is explained by the changes noted in the sections above. 29 Consolidated Statements of Operations Data: Fiscal Year Ended March 31, Change (Dollars in thousands) 2024 2023 $ % Sales $ 494,629 $ 440,590 $ 54,039 12 % Cost of sales 283,065 255,465 27,600 11 % Gross profit 211,564 185,125 26,439 14 % Operating expenses: Selling, general and administrative expenses 123,820 117,003 6,817 6 % Deferred compensation plan expense/(income) 1,231 (208) 1,439 (692) % Amortization of intangible assets 10,158 9,447 711 8 % Restructuring and other charges/(income) 984 3,693 (2,709) (73) % Income from operations 75,371 55,190 20,181 37 % Other income/(expenses): Interest expense, net (8,845) (5,871) (2,974) 51 % Other income/(expense) 1,148 (86) 1,234 (1435) % Income before provision for income taxes 67,674 49,233 18,441 37 % Income tax expense 16,086 15,567 519 3 % Net income $ 51,588 $ 33,666 $ 17,922 53 % As a percent of sales: Gross profit 42.8 % 42.0 % 80 bps Selling, general and administrative expenses 25.0 % 26.6 % -160 bps Income from operations 15.2 % 12.5 % 270 bps Net income 10.4 % 7.6 % 280 bps Effective tax rate 23.8 % 31.6 % Year Ended March 31, 2024 ("fiscal 2024") Compared to the Year Ended March 31, 2023 ("fiscal 2023") See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed with the SEC on May 29, 2024 for a discussion of the results of operations in fiscal 2024 as compared to fiscal 2023.
Additionally, we will be required to pay $14.6 million in principal payments and approximately $11.4 million in interest payments on our long-term debt in the next 12 months. Our estimate of interest expense above was derived from our variable interest rates at March 31, 2024, and is subject to change.
Additionally, we will be required to pay $18.0 million in principal payments and approximately $7.5 million in interest payments on our long-term debt in the next 12 months. Our estimate of interest expense above was derived from our variable interest rates at March 31, 2025, and is subject to change.
Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of prevailing market conditions and other factors. Refer to Note 16, "Stock-Based Compensation" for more information.
Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of prevailing market conditions and other factors. Refer to Note 6, "Net Income per Common Share" for more information.
See further details Note 12, "Long-Term Debt." We also have payment commitments of $7.7 million, mostly related to long-term information technology contracts, of which $6.7 million are due within the next 12 months. 31 Year Ended March 31, (Dollars in thousands) 2024 2023 2022 Total cash provided by/(used in): Operating activities $ 65,955 $ 57,714 $ 28,754 Investing activities (109,522) (44,555) (4,531) Financing activities 56,533 (13,465) (22,658) Free Cash Flow (1) Cash provided by operating activities $ 65,955 $ 57,714 $ 28,754 Less: Cash used for purchases of property, plant, and equipment (11,016) (9,453) (5,220) Plus: Sales of rental equipment 99 197 689 Plus: Proceeds from sale of property, plant, and equipment $ 840 $ — $ — Free Cash Flow $ 55,878 $ 48,458 $ 24,223 (1) "Free Cash Flow" is a non-GAAP financial measure, which we define as net cash provided by operating activities less cash used for the purchase of property, plant, and equipment, net of sales of rental equipment and proceeds from sales of land and buildings.
See further details Note 12, "Long-Term Debt." We also have payment commitments of $1.4 million, mostly related to long-term information technology contracts, of which $0.5 million are due within the next 12 months. 31 Selected Cash Flow Data: Year Ended March 31, (Dollars in thousands) 2025 2024 2023 Total cash provided by/(used in): Operating activities $ 63,118 $ 65,955 $ 57,714 Investing activities (14,970) (109,522) (44,555) Financing activities (56,419) 56,533 (13,465) Free Cash Flow (1) Cash provided by operating activities $ 63,118 $ 65,955 $ 57,714 Less: Cash used for purchases of property, plant, and equipment (10,249) (11,016) (9,453) Plus: Sales of rental equipment 65 99 197 Free Cash Flow $ 52,934 $ 55,038 $ 48,458 (1) "Free Cash Flow" is a non-GAAP financial measure, which we define as net cash provided by operating activities less cash used for the purchase of property, plant, and equipment, net of sales of rental equipment and proceeds from sales of land and buildings.
Point in time revenue represents goods transferred to customers at a point in time and is recognized when obligations under the terms of the contract with the customer are satisfied; generally this occurs with the transfer of control upon shipment. • Cyclicality of end users' markets.
Reviews of estimates have not generally resulted in significant adjustments to our results of operations. 26 Point in time revenue represents goods transferred to customers at a point in time and is recognized when obligations under the terms of the contract with the customer are satisfied; generally this occurs with the transfer of control upon shipment. • Cyclicality of end users' markets.
As of March 31, 2024, we had $166.6 million of outstanding principal on our term loan facilities, net of deferred debt issuance costs.
As of March 31, 2025, we had $138.4 million of outstanding principal on our term loan facilities, net of deferred debt issuance costs.
Changes to the original cost amount may be required during the life of the contract and such estimates are reviewed on a regular basis. Sales and gross profits are adjusted using the cumulative catch-up method for revisions in estimated contract costs. Reviews of estimates have not generally resulted in significant adjustments to our results of operations.
Changes to the original cost estimate may be required during the life of the contract and such estimates are reviewed on a regular basis. Sales and gross profits are adjusted using the cumulative catch-up method for revisions in estimated contract costs.
We manage our global cash requirements by maintaining cash and cash equivalents at various financial institutions throughout the world where we operate. Approximately $17.0 million, or 35%, of these amounts were held in domestic accounts with various institutions and approximately $31.6 million, or 65%, of these amounts were held in accounts outside of the U.S. with various financial institutions.
We manage our global cash requirements by maintaining cash and cash equivalents at various financial institutions throughout the world where we operate. Approximately $14.4 million, or 36%, of these amounts were held in domestic accounts with various institutions and approximately $25.1 million, or 64%, of these amounts were held in accounts outside of the U.S. with various financial institutions.
"Adjusted EBITDA" represents net income attributable to Thermon before interest expense (net of interest income), income tax expense, depreciation and amortization expense, stock-based compensation expense, impairment and other charges/(income), loss on debt extinguishment, costs associated with our restructuring and other income/(charges), and income related to the Canadian Emergency Wage Subsidy.
"Adjusted EBITDA" represents net income attributable to Thermon before interest expense (net of interest income), income tax expense, depreciation and amortization expense, stock-based compensation expense, impairment and other charges/(income), loss on debt extinguishment, transaction-related costs, expenses associated with our restructuring and other income/(charges), and expenses related to our Enterprise Resource Planning ("ERP") system implementation.
At March 31, 2024, we had $5.0 million outstanding borrowings under our revolving credit facility and $92.7 million of available capacity thereunder, after taking into account the borrowing base and letters of credit outstanding, which totaled $7.3 million.
At March 31, 2025, we had zero outstanding borrowings under our revolving credit facility and $97.9 million of available capacity thereunder, after taking into account the borrowing base and letters of credit outstanding, which totaled $2.1 million.
The change in deferred compensation plan activity is primarily attributable to market fluctuations in the underlying balances owed to employees. This compensation plan expense/(income) is materially offset in other income/(expense) where the Company records market gains/(losses) on related investment assets. Restructuring and other charges/(income) .
The change in deferred compensation plan activity is primarily attributable to market fluctuations in the underlying balances owed to employees. This compensation plan expense/(income) is materially offset in Other income/(expense) where the Company records market gains/(losses) on related investment assets. Amortization of intangible assets. The increase of amortization is due to adding certain intangible assets through our recent acquisitions.
Net cash provided by operating activities increased in fiscal 2024 versus fiscal 2023. The increase is mostly attributable to the $17.9 million increase in net income, partially offset by greater investments in our working capital and other accounts resulting in the net increase of $11.5 million in fiscal 2024 relative to fiscal 2023. Net cash provided by/(used in) investing activities.
Net cash provided by operating activities decreased in fiscal 2025 versus fiscal 2024. The decrease is mostly attributable to greater investments in our working capital of $8.4 million, partially offset by an increase in net income and other accounts of $5.6 million. Net cash provided by/(used in) investing activities.
As of March 31, 2024, we have $49.8 million of remaining unused and authorized availability under the Repurchase Program. The Repurchase Program does not include a specific timetable or price targets and may be suspended or terminated at any time.
This increases the total unused and authorized availability under the Company's Repurchase Program to $50.0 million. The Repurchase Program does not include a specific timetable or price targets and may be suspended or terminated at any time.
Free Cash Flow totaled $55.9 million for fiscal 2024 as compared to $48.5 million for fiscal 2023, an increase comparatively, primarily due to higher cash flows from operations.
Free Cash Flow totaled $52.9 million for fiscal 2025 as compared to $55.0 million for fiscal 2024, a decrease primarily due to lower cash flows from operations.
See Note 12, "Long-Term Debt," for additional information. Other income/(expense). The change in other income/(expense) primarily relates to market fluctuations in the underlying investments associated with our non-qualified deferred compensation plan. These unrealized gains and losses on investments were materially offset by deferred compensation plan expense/(income) as noted above. Income taxes.
This was partially offset by a lower average interest rate in fiscal 2025 (6.4% versus 6.8% in fiscal 2024). See Note 12, "Long-Term Debt," for additional information. Other income/(expense). The change in other income/(expense) primarily relates to market fluctuations in the underlying investments associated with our non-qualified deferred compensation plan.
Our backlog at March 31, 2024 was $186.1 million, including $39.4 million related to recently-acquired Vapor Power, as compared to $163.3 million at March 31, 2023.
Our backlog at March 31, 2025 was $240.3 million as compared to $186.1 million at March 31, 2024.
The increase in SG&A is due in part to investments to advance our decarbonization, diversification and digitization strategies as well as variable costs associated with increased sales activity, such 28 as sales commissions as well as salaries and benefits. SG&A as a percentage of Sales decreased by -160 bps based on disciplined cost management relative to our growth.
The increase in SG&A is due in part to investments to advance our decarbonization, diversification and digitization strategies as well as increased headcount related to our recent acquisitions, sales commissions, and other salaries and benefits. SG&A as a percentage of sales increased by 100 bps related to the above. Deferred compensation plan expense/(income).
The comparative increase in the source of cash in financing activities is mostly attributable to the borrowings related to our acquisition of Vapor Power. We borrowed an incremental $105 million through an incremental term loan and revolving credit facility borrowings. In fiscal 2023, we borrowed $32.5 million to purchase Powerblanket. Refer to Note 12, "Long-Term Debt" for more information.
The change in cash flow from financing activities is mostly attributable to the borrowings related to our acquisition of Vapor Power in fiscal 2024. We borrowed an incremental $105 million through an incremental term loan and revolving credit facility borrowings. In fiscal 2025, by contrast, we financed the F.A.T.I. acquisition with cash on hand.
This improvement was primarily driven by higher profitability in our Over time sales. Fiscal 2024 gross margin was supported by customer price increases and operational efficiencies, though tempered by inflationary pressures on costs.
Our Point-in-time sales generally carry stronger margins relative to our Over time sales and constituted a greater percentage of our revenue in fiscal 2025 relative to fiscal 2024. Fiscal 2024 gross margin was supported by customer price increases and operational efficiencies, though tempered by inflationary pressures on costs. 28 Selling, general and administrative expenses.
Separately, revenue was negatively affected in fiscal 2024 by foreign exchange rate impacts of approximately $4.3 million, though this is partially offset by similar effects within cost of sales. Point-in-time sales grew $23.3 million and Over time sales grew $30.7 million compared to fiscal 2023.
Our F.A.T.I. entity, acquired in October 2024, contributed $6.6 million. Refer to Note 2, "Acquisitions" for more information. Separately, revenue was negatively affected in fiscal 2025 by foreign exchange rate impacts of approximately $1.0 million, though this is partially offset by similar effects within cost of sales. Gross profit.
Our sales mix in fiscal 2024 was 61% Point in time sales and 39% Over time sales as compared to 63% Point in time sales and 37% Over time sales in fiscal 2023. Gross profit. Gross profit increased in fiscal 2024 versus fiscal 2023 on greater sales volume and higher gross profit margin, which increased 80 bps.
Gross profit increased in fiscal 2025 versus fiscal 2024 on greater sales volume and higher gross profit margin, which increased 190 bps. This improvement in margin was primarily driven by a more favorable product mix.
Income tax expense was $16.1 million or 23.8% on pretax income of $67.7 million in fiscal 2024 as compared to income tax expense of $15.6 million on a pretax income of $49.2 million in fiscal 2023. Our losses with regard to the Russia Exit in fiscal 2023, totaling $12.6 million, had no significant tax benefit.
These unrealized gains and losses on investments were materially offset by deferred compensation plan expense/(income) as noted above. Income taxes. Income tax expense was $16.6 million, or 23.7%, on pretax income of $70.1 million in fiscal 2025 as compared to income tax expense of $16.1 million, or 23.8%, on a pretax income of $67.7 million in fiscal 2024.
The comparative increase in the use of cash in fiscal 2024 versus fiscal 2023 relates to the acquisition of Vapor Power in December 2023. Refer to Note 2, "Acquisitions" for more information. Additionally, we increased capital expenditures by $1.5 million in fiscal 2024 versus fiscal 2023. Net cash provided by/(used in) financing activities.
The comparative decrease in the use of cash in fiscal 2025 versus fiscal 2024 relates to our recent acquisitions. The Vapor Power acquisition in fiscal 2024 was much larger than the F.A.T.I. acquisition in fiscal 2025. Refer to Note 2, "Acquisitions" for more information.
We integrated Vapor Power into our US-LAM reportable segment. On March 15, 2024, we announced the authorization of a share repurchase program by the Company’s board of directors of up to $50 million of the Company’s outstanding shares of common stock, exclusive of any fees, commissions or other expenses related to such repurchases.
As of March 31, 2025, we have $29.6 million of remaining unused and authorized availability under the Repurchase Program. On May 22, 2025, the Company announced that the board of directors had authorized an additional $24.4 million for the repurchase of the Company's outstanding shares of common stock, exclusive of any fees, commissions or other expenses related to such repurchases.
Excluding the tax effect of the Russia Exit, our effective tax rate would have been 25.1% in fiscal 2023. See Note 18, “Income Taxes,” for further information. Net income.
Tax expense in fiscal 2025 included a $1.0 million, or 1.4%, reduction associated with the release of an uncertain tax position. See Note 18, “Income Taxes,” for further information. Net income.
Revenue increased in fiscal 2024 compared to fiscal 2023 due to growth across all reportable segments, especially in US-LAM. Our US-LAM revenue increased $47.1 million, or 23%. Revenue in our APAC segment increased $3.4 million, or 10% and revenue in our EMEA segment grew $2.1 million, or 5%. Last, Canada revenue increased $1.4 million, or 1%.
Revenue in our APAC segment increased $0.2 million, or 1% and revenue in our EMEA segment was flat compared to fiscal 2024 on a reported basis, with F.A.T.I. contributing $6.6 million in fiscal 2025. Our US-LAM revenue decreased $0.3 million.
Restructuring and other charges/(income) mainly represent charges associated with the Russia Exit which primarily impacted fiscal 2023 as we moved the associated assets into assets held-for-sale at that time with lesser related charges in fiscal 2024. Refer to Note 14, "Restructuring and Other Charges/(Income)" for additional details. Interest expense, net. Interest expense, net increased compared to fiscal 2023.
The sale of our Denver facility land and building resulted in a gain of $3.0 million, which almost entirely offset the costs incurred for the reduction in force and facility consolidation. In fiscal 2024, the Russia Exit (as defined below) primarily contributed to the charges. Refer to Note 14, "Restructuring and Other Charges/(Income)" for additional details. Interest expense, net.
Removed
As a result of the continued impact of the Russo-Ukrainian war, including the sanctions related thereto, the Company commenced a strategic assessment of its operations in the Russian Federation, and, on January 31, 2023, our board of directors authorized the Company to withdraw from its operations in the Russian Federation (the “Russia Exit”), through a planned disposition of its Russian subsidiary.
Added
"Business" disclosed above in this annual report. Recent Developments. We are currently integrating the operations of Fabbrica Apparecchiature Termoelettriche Industriali – F.A.T.I. – S.r.l. ("F.A.T.I."), our recent acquisition, which was consummated on October 2, 2024.
Removed
We completed the Russia Exit in fiscal 2024 and incurred cumulative charges totaling $13.6 million, of which $1.0 million was recognized in fiscal 2024. We are currently integrating the operations of Vapor Power International, LLC ("Vapor Power"), our recent acquisition, which was consummated on December 29, 2023.
Added
F.A.T.I., based in Italy, is a leading designer and manufacturer of electrical heaters and heating systems for a broad range of industrial end markets, including oil and gas, pharmaceutical, renewables, nuclear and HVAC.
Removed
Vapor Power is a leading provider of high-quality industrial process heating solutions, including electric, electrode and gas fired boilers. We purchased Vapor Power for $107.5 million in cash, which was funded with cash on hand, borrowings under our existing revolving credit facility, and an increased term loan (which was amended on December 29, 2023 in connection with the acquisition).
Added
Since its founding nearly 80 years ago, F.A.T.I. has built a high-quality portfolio of technologically advanced and reliable solutions for the industrial electric heating market that are available in over 30 countries around the globe.
Removed
We initiated purchases pursuant to this program in our fourth fiscal quarter. On April 8, 2024, we enacted certain cost-cutting measures, including a reduction-in-force plan that affected approximately 68 employees across our US-LAM and Canada reportable segments.
Added
The initial purchase price was €12.5 million, or approximately $13.8 million, with cash acquired of $2.3 million, for a net closing purchase price of $11.5 million. In fiscal 2025, we adjusted the purchase price for excess cash acquired to €13.3 million, or approximately $14.7 million.
Removed
Pursuant to the foregoing, we are also moving certain operations and equipment from our Denver, Colorado location to San Marcos, Texas, where we have an existing manufacturing and back-office presence. In connection with this plan, the Company expects to incur approximately $2.8 to $3.5 million in restructuring charges mostly during the first quarter of fiscal 2025.
Added
The initial purchase price is still subject to customary adjustments, including liabilities such as warranty reserves. The purchase was funded with cash on hand, and includes F.A.T.I.'s manufacturing facility in Milan, which enhances our global production capabilities. The F.A.T.I. acquisition will strengthen our market position worldwide. We have integrated F.A.T.I. into our Europe, Middle East, and Africa ("EMEA") reportable segment.
Removed
The Company continues to invest in our three long-term strategic initiatives where we see opportunities for growth.
Added
Consolidated Statements of Operations Data: Fiscal Year Ended March 31, Change (Dollars in thousands) 2025 2024 $ % Sales $ 498,207 $ 494,629 $ 3,578 1 % Cost of sales 275,311 283,065 (7,754) (3) % Gross profit 222,896 211,564 11,332 5 % Operating expenses: Selling, general and administrative expenses 129,307 123,820 5,487 4 % Deferred compensation plan expense/(income) 452 1,231 (779) (63) % Amortization of intangible assets 13,681 10,158 3,523 35 % Restructuring and other charges/(income) (301) 984 (1,285) (131) % Income from operations 79,757 75,371 4,386 6 % Other income/(expenses): Interest expense, net (10,325) (8,845) (1,480) 17 % Other income/(expense) 687 1,148 (461) (40) % Income before provision for income taxes 70,119 67,674 2,445 4 % Income tax expense 16,604 16,086 518 3 % Net income $ 53,515 $ 51,588 $ 1,927 4 % As a percent of sales: Gross profit 44.7 % 42.8 % 190 bps Selling, general and administrative expenses 26.0 % 25.0 % 100 bps Income from operations 16.0 % 15.2 % 80 bps Net income 10.7 % 10.4 % 30 bps Effective tax rate 23.7 % 23.8 % -10 bps Year Ended March 31, 2025 ("fiscal 2025") Compared to the Year Ended March 31, 2024 ("fiscal 2024") Revenues.
Removed
First, we expect to diversify our revenues into adjacent markets like commercial, food & beverage, transportation and other non-oil and gas industries where we can continue to differentiate our offerings through quality, safety and customer service, while also aligning Thermon’s strategy around the energy transition toward a more sustainable global economy.
Added
Revenue increased in fiscal 2025 compared to fiscal 2024 primarily due to the contribution from our acquisitions of $47.9 million on a reported basis, with Vapor Power adding $41.3 million to the growth. Our Canada revenue increased $3.7 million, or 2%.
Removed
Second, we anticipate a multi-decades investment trend to emerge based on the rapidly increasing desire for industrial customers to electrify equipment to reduce their carbon footprint, which represents an opportunity for the Company.
Added
Particularly strong demand related to our Point-in-time sales contributed to the total growth, partially offset by a marked weakness in our Over time sales as we experienced a slowdown in demand for our large projects associated with the overall macro-economic uncertainty. Point-in-time sales grew $52.5 million and Over time sales declined $48.9 million compared to fiscal 2024.
Removed
Thermon's process heating expertise will be a key factor in a successful, sustainable transition, and we expect to invest in additional resources to quickly respond to changing customer demand.
Added
Our sales mix in fiscal 2025 was 71% Point-in-time sales and 29% Over time sales as compared to 61% Point-in-time sales and 39% Over time sales in fiscal 2024. Our Vapor Power entity, acquired in December 2023, contributed $52.2 million in revenues in fiscal 2025 as compared to a partial year of revenue in fiscal 2024 of $10.9 million.
Removed
Finally, we will continue expanding our technology-enabled maintenance solutions, like our Genesis Network, which helps our customers more efficiently and safely monitor and maintain their heating systems by utilizing our software, analytics, hardware and process heating maintenance expert services.
Added
Refer to Note 2, "Acquisitions." Restructuring and other charges/(income) . In the first quarter of fiscal 2025, we enacted a reduction-in-force as well as the closure of our Denver manufacturing facility as part of consolidating our overall manufacturing footprint.
Removed
Our efforts to diversify the business's end markets is starting to show early signs of success through increased customer engagement in diversified end markets such as chemical and petrochemical, rail and transit, food & beverage, commercial and power.
Added
Interest expense, net increased compared to fiscal 2024 primarily due to a higher average debt balance. We borrowed additional funds at the end of fiscal 2024 to help fund the Vapor Power acquisition. As a result our average outstanding principal balance in fiscal 2025 was $156.8 million versus $127.5 million in fiscal 2024.
Removed
Additionally, we are continuing to receive orders from key customers related to our Genesis Network technology, which helps our customers more efficiently and safely monitor and maintain their heating systems by utilizing our software, analytics, hardware and process heating maintenance expert services. In short, we are benefiting from the increasing global demand for our solutions. Revenue.
Added
Additionally, we decreased capital expenditures by $9.5 million in fiscal 2025 versus fiscal 2024 and received $5.8 million in proceeds from the sale of our Denver property in fiscal 2025. Net cash provided by/(used in) financing activities.
Removed
Strong demand in both our products and project sales contributed to the revenue increase during fiscal 2024. Moreover, we experienced growth in our diversified end-markets, in particular power, chemical & petrochemical, food and beverage, and commercial. Of note, Vapor Power (which we acquired in December 2023) contributed $10.9 million to our overall revenue growth in fiscal 2024.
Added
Refer to Note 12, "Long-Term Debt" for more information. Additionally, we repurchased $20.1 million in our own shares in fiscal 2025 versus just $0.3 million in fiscal 2024.
Removed
Fiscal 2023 was impacted in part by greater charges associated with the Russia Exit in our EMEA segment that impacted cost of sales in addition to incremental costs associated from global supply chain challenges present at that time. Selling, general and administrative expenses.
Added
The following table reconciles net income to Adjusted Net Income and Adjusted EPS for the periods presented: Year ended March 31, (Dollars in thousands, except per share data) 2025 2024 2023 Net income $ 53,515 $ 51,588 $ 33,666 Amortization of intangible assets 13,681 10,158 9,447 Transaction-related costs 355 2,107 335 Restructuring and other charges/(income) 1 292 984 3,693 ERP implementation-related costs 557 — — Impairment and other charges — — 8,945 Tax benefit from the release of uncertain tax position reserve (1,046) — — Tax effect of adjustments (3,582) (2,947) (3,307) Adjusted net income (non-GAAP) $ 63,772 $ 61,890 $ 52,779 Adjusted fully diluted earnings per common share (non-GAAP) $ 1.87 $ 1.82 $ 1.56 Fully-diluted common shares - (thousands) 34,058 34,067 33,746 (1) - Includes $0.6 million of restructuring charges recorded in Cost of sales.
Removed
Fiscal 2023 was affected in part by the Russia Exit, which negatively impacted SG&A by $4.6 million in fiscal 2023. Amortization of intangible assets. The increase of amortization is due to adding certain intangible assets through our acquisition of Vapor Power on December 29, 2023. Refer to Note 2, "Acquisitions." Deferred compensation plan expense/(income).
Removed
Although we paid down approximately $58 million in total debt, our average debt balance and average interest rate increased during the year. Debt increased as we financed the acquisition of Vapor Power and our variable interest rate was relatively higher throughout fiscal 2024. Specifically, our average interest rate for fiscal 2024 was 6.59% versus 3.94% in fiscal 2023.
Removed
The change in net income is explained by the changes noted in the sections above. 29 Fiscal Year Ended March 31, Increase/(Decrease) (Dollars in thousands) 2023 2022 $ % Consolidated Statements of Operations Data: Sales $ 440,590 $ 355,674 $ 84,916 24 % Cost of sales 255,465 215,556 39,909 19 % Gross profit 185,125 140,118 45,007 32 % Operating expenses: Selling, general and administrative expenses 117,003 93,054 23,949 26 % Deferred compensation plan expense/(income) (208) 283 (491) (173) % Amortization of intangible assets 9,447 8,790 657 7 % Restructuring and other charges/(income) 3,693 (414) 4,107 (992) % Income from operations 55,190 38,405 16,785 44 % Other income/(expenses): Interest expense, net (5,871) (5,815) (56) 1 % Other income/(expense) (86) (4,165) 4,079 (98) % Income before provision for income taxes 49,233 28,425 20,808 73 % Income tax expense 15,567 8,333 7,234 87 % Net income $ 33,666 $ 20,092 $ 13,574 68 % As a percent of sales: Gross profit 42.0 % 39.4 % 260 bps Selling, general and administrative expenses 26.6 % 26.2 % 40 bps Income from operations 12.5 % 10.8 % 170 bps Net income 7.6 % 5.6 % 200 bps Effective tax rate 31.6 % 29.3 % Year Ended March 31, 2023 ("fiscal 2023") Compared to the Year Ended March 31, 2022 ("fiscal 2022") See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, filed with the SEC on May 25, 2023 for a discussion of the results of operations in fiscal 2023 as compared to fiscal 2022.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

18 edited+0 added−1 removed9 unchanged
Biggest changeThe effect of foreign currency translation were losses of $0.8 million in fiscal 2024 and $19.2 million in fiscal 2023. In fiscal 2023, we were primarily impacted by the appreciation of the Canadian Dollar relative to the U.S. dollar. Currency translation gains or losses are reported as part of comprehensive income or loss in our accompanying consolidated financial statements.
Biggest changeThe effect of foreign currency translation were losses of $15.5 million in fiscal 2025 and $0.8 million in fiscal 2024. Currency translation gains or losses are reported as part of comprehensive income or loss in our accompanying consolidated financial statements. Foreign currency risks related to intercompany notes. Refer to Note 3, "Fair Value Measurements" for more information.
These foreign currency exposures typically arise from intercompany transactions. Our forward contracts generally have terms of 30 days or less. We do not use forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging .
These foreign currency exposures typically arise from intercompany transactions. Our forward contracts generally 34 have terms of 30 days or less. We do not use forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging .
We have established a program that primarily utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts, to mitigate the possibility of foreign currency transaction gains 34 or losses.
We have established a program that primarily utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts, to mitigate the possibility of foreign currency transaction gains or losses.
Historically, the costs of our primary raw materials have been stable and readily available from multiple suppliers. Typically, we have been able to pass on raw material cost increases to our customers.
Historically, the costs of our primary raw materials have been stable and readily available from multiple suppliers. Typically, we have been able to pass on raw material cost increases to 35 our customers.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our primary market risk exposures include the effect of fluctuations in foreign exchange rates, interest rates and commodity prices. Foreign currency risk relating to operations. We transact business globally and are subject to risks associated with fluctuating foreign exchange rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our primary market risk exposures include the effect of fluctuations in foreign exchange rates, interest rates and commodity prices. Foreign currency risk related to operations. We transact business globally and are subject to risks associated with fluctuating foreign exchange rates.
During fiscal 2024, our largest exposures to foreign exchange rates consisted primarily of the Canadian Dollar and the Euro against the U.S. dollar. The market risk related to the foreign currency exchange rates is measured by estimating the potential impact of a 10% change in the value of the U.S. dollar relative to the local currency exchange rates.
During fiscal 2025, our largest exposures to foreign exchange rates consisted primarily of the Canadian Dollar and the Euro against the U.S. dollar. The market risk related to the foreign currency exchange rates is measured by estimating the potential impact of a 10% change in the value of the U.S. dollar relative to the local currency exchange rates.
We cannot provide any assurance, however, that we may be able to pass along such cost increases to our customers or source sufficient amounts of key components on commercially reasonable terms or at all in the future, and if we are unable to do so, our results of operations may be adversely affected. 36
We cannot provide any assurance, however, that we may be able to pass along such cost increases, including the impact of tariffs, to our customers or source sufficient amounts of key components on commercially reasonable terms or at all in the future, and if we are unable to do so, our results of operations may be adversely affected. 36
Our ultimate realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature. As of March 31, 2024 and 2023, the notional amounts of forward contracts we held to buy U.S. dollars in exchange for other major international currencies were $7.0 million and $7.0 million, respectively.
Our ultimate realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature. As of March 31, 2025 and 2024, the notional amounts of forward contracts we held to buy U.S. dollars in exchange for other major international currencies were $16.8 million and $7.0 million, respectively.
Based on the outstanding borrowings, a one percent change in the interest rate would result in a $1.7 million increase or decrease in our annual interest expense. 35 Commodity price risk. We use various commodity-based raw materials in our manufacturing processes.
Based on the outstanding borrowings, a one percent change in the interest rate would result in a $1.4 million increase or decrease in our annual interest expense. Commodity price risk. We use various commodity-based raw materials in our manufacturing processes.
Approximately 51% of our fiscal 2024 consolidated revenues were generated by sales from our non-U.S. subsidiaries. Our non-U.S. subsidiaries generally sell their products and services in the local currency, but obtain a significant amount of their products from our manufacturing facilities located elsewhere, primarily the U.S., Canada and Europe.
Approximately 49% of our fiscal 2025 consolidated revenues were generated by sales from our non-U.S. subsidiaries. Our non-U.S. subsidiaries generally sell their products and services in the local currency, but obtain a significant amount of their products from our manufacturing facilities located elsewhere, primarily the U.S., Canada and Europe.
The rates used to perform this analysis were based on a weighted average of the market rates in effect during the relevant period. A 10% appreciation of the U.S. dollar relative to the Canadian Dollar would result in a net decrease in net income of $1.9 million for fiscal 2024.
The rates used to perform this analysis were based on a weighted average of the market rates in effect during the relevant period. A 10% appreciation of the U.S. dollar relative to the Canadian Dollar would result in a net decrease in net income of $2.9 million for fiscal 2025.
Conversely, a 10% depreciation of the U.S. dollar relative to the Euro would result in a net increase in net income of $0.3 million for fiscal 2024. The geographic areas outside the U.S. in which we operate are generally not considered to be highly inflationary.
Conversely, a 10% depreciation of the U.S. dollar relative to the Euro would result in a net increase in net income of $0.5 million for fiscal 2025. The geographic areas outside the U.S. in which we operate are generally not considered to be highly inflationary.
Net of forward contracts, the impact of foreign currency transactions on our consolidated statements of operations were losses of $0.2 million and losses of $0.1 million in fiscal 2024 and fiscal 2023, respectively.
Net of forward contracts, the impact of foreign currency transactions on our consolidated statements of operations were gains of $0.1 million and losses of $0.2 million in fiscal 2025 and fiscal 2024, respectively.
In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations. In fiscal 2024, we estimate that our sales were negatively impacted by $4.3 million when compared to foreign exchange translation rates that were in effect in fiscal 2023.
In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations. In fiscal 2025, we estimate that our sales were negatively impacted by $1.0 million when compared to foreign exchange translation rates that were in effect in fiscal 2024.
Conversely, a 10% depreciation of the U.S. dollar relative to the Canadian Dollar would result in a net increase in net income of $2.3 million for fiscal 2024. A 10% appreciation of the U.S. dollar relative to the Euro would result in a net decrease in net income of $0.2 million for fiscal 2024.
Conversely, a 10% depreciation of the U.S. dollar relative to the Canadian Dollar would result in a net increase in net income of $3.6 million for fiscal 2025. A 10% appreciation of the U.S. dollar relative to the Euro would result in a net decrease in net income of $0.4 million for fiscal 2025.
As of March 31, 2024, we had $5.0 million outstanding principal under our revolving credit facility. As of March 31, 2024, we had $167.5 million of outstanding principal under our variable rate SOFR-based term loan A credit facilities.
As of March 31, 2025, we had zero outstanding principal under our revolving credit facility. As of March 31, 2025, we had $138.9 million of outstanding principal under our variable rate SOFR-based term loan A credit facilities.
Interest rate risk and foreign currency risk relating to debt. Borrowings under both our variable rate term loan A credit facility and revolving credit facility incur interest expense that is variable in relation to the SOFR rate.
Also, refer to Item 1A, "Risk Factors" for further discussion regarding our risk as it relates to foreign currency. Interest rate risk and foreign currency risk relating to debt. Borrowings under both our variable rate term loan A credit facility and revolving credit facility incur interest expense that is variable in relation to the SOFR rate.
The interest rate for borrowings under our term loan A credit facility was 7.05% for the U.S. term loan, 7.06% for the U.S. revolving credit facility, and 7.18% for the 2023 incremental U.S. term loan Facility as of March 31, 2024.
The interest rate for borrowings under our term loan A credit facility was 5.66% for the U.S. term loan and 6.04% for the 2023 incremental U.S. Term Loan Facility as of March 31, 2025.
Removed
Foreign currency risks related to intercompany notes. The Company exited a cross currency swap during fiscal 2022 and did not have a similar arrangements in fiscal 2023 and fiscal 2024. Refer to Note 3, "Fair Value Measurements" for more information. Also, refer to Item 1A, "Risk Factors" for further discussion regarding our risk as it relates to foreign currency.

Other THR 10-K year-over-year comparisons