Industrial process heating solutions provider Thermon (NYSE:THR) announced better-than-expected revenue in Q3 CY2025, with sales up 14.9% year on year to $131.7 million. The company’s full-year revenue guidance of $516.5 million at the midpoint came in 2.1% above analysts’ estimates. Its non-GAAP profit of $0.55 per share was 51.7% above analysts’ consensus estimates.
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Thermon (THR) Q3 CY2025 Highlights:
- Revenue: $131.7 million vs analyst estimates of $119.4 million (14.9% year-on-year growth, 10.3% beat)
- Adjusted EPS: $0.55 vs analyst estimates of $0.36 (51.7% beat)
- Adjusted EBITDA: $30.61 million vs analyst estimates of $21.79 million (23.2% margin, 40.5% beat)
- The company slightly lifted its revenue guidance for the full year to $516.5 million at the midpoint from $515 million
- Management raised its full-year Adjusted EPS guidance to $2.08 at the midpoint, a 10.4% increase
- EBITDA guidance for the full year is $115.5 million at the midpoint, above analyst estimates of $105.4 million
- Operating Margin: 16.4%, up from 13.8% in the same quarter last year
- Free Cash Flow Margin: 3.3%, down from 5.8% in the same quarter last year
- Market Capitalization: $972.4 million
Company Overview
Creating the first packaged tracing systems, Thermon (NYSE:THR) is a leading provider of engineered industrial process heating solutions for process industries.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Thermon’s 10.3% annualized revenue growth over the last five years was solid. Its growth beat the average industrials company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Thermon’s recent performance shows its demand has slowed as its annualized revenue growth of 3.5% over the last two years was below its five-year trend. 
This quarter, Thermon reported year-on-year revenue growth of 14.9%, and its $131.7 million of revenue exceeded Wall Street’s estimates by 10.3%.
Looking ahead, sell-side analysts expect revenue to grow 3.4% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its newer products and services will not accelerate its top-line performance yet.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Thermon has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 14.4%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Thermon’s operating margin rose by 9.5 percentage points over the last five years, as its sales growth gave it immense operating leverage.
This quarter, Thermon generated an operating margin profit margin of 16.4%, up 2.6 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Thermon’s EPS grew at an astounding 46.6% compounded annual growth rate over the last five years, higher than its 10.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Thermon’s earnings to better understand the drivers of its performance. As we mentioned earlier, Thermon’s operating margin expanded by 9.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Thermon, its two-year annual EPS growth of 5.6% was lower than its five-year trend. We hope its growth can accelerate in the future.
In Q3, Thermon reported adjusted EPS of $0.55, up from $0.38 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.
Key Takeaways from Thermon’s Q3 Results
It was good to see Thermon beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 3.7% to $30.50 immediately following the results.
Thermon may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.