Cover Page
Cover Page - shares | 3 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Cover page. | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-35159 | |
Entity Registrant Name | THERMON GROUP HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-2228185 | |
Entity Address, Address Line One | 7171 Southwest Parkway | |
Entity Address, Address Line Two | Building 300 | |
Entity Address, Address Line Three | Suite 200 | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78735 | |
City Area Code | 512 | |
Local Phone Number | 690-0600 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 32,728,876 | |
Entity Central Index Key | 0001489096 | |
Current Fiscal Year End Date | --03-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Trading Symbol | THR | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 35,269 | $ 31,402 |
Accounts receivable, net of allowance for doubtful accounts of $1,210 and $987 as of June 30, 2019 and March 31, 2019, respectively | 98,542 | 105,323 |
Inventories, net | 69,689 | 64,890 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 23,646 | 26,454 |
Prepaid expenses and other current assets | 8,514 | 7,320 |
Income tax receivable | 4,946 | 4,389 |
Total current assets | 240,606 | 239,778 |
Property, plant and equipment, net | 74,948 | 74,955 |
Goodwill | 207,663 | 204,995 |
Intangible assets, net | 123,949 | 126,596 |
Operating | 14,435 | 0 |
Deferred income taxes | 3,883 | 3,829 |
Other long term assets | 5,742 | 5,609 |
Total assets | 671,226 | 655,762 |
Current liabilities: | ||
Accounts payable | 23,438 | 22,705 |
Accrued liabilities | 19,384 | 27,848 |
Current portion of long term debt | 2,500 | 2,500 |
Borrowings under revolving credit facility | 14,551 | 11,225 |
Contract liabilities | 6,344 | 6,814 |
Lease liabilities | 2,322 | 235 |
Income taxes payable | 1,402 | 1,961 |
Total current liabilities | 69,941 | 73,288 |
Long-term debt, net of current maturities and deferred debt issuance costs and debt discounts of $5,991 and $6,271 as of June 30, 2019 and March 31, 2019, respectively | 197,384 | 197,729 |
Deferred income taxes | 27,448 | 28,139 |
Non-current lease liabilities | 13,826 | 386 |
Other noncurrent liabilities | 7,485 | 7,271 |
Total liabilities | 316,084 | 306,813 |
Equity | ||
Common stock: $.001 par value; 150,000,000 authorized; 32,705,031 and 32,624,200 shares issued and outstanding at June 30, 2019 and March 31, 2019, respectively | 33 | 33 |
Preferred stock: $.001 par value; 10,000,000 authorized; no shares issued and outstanding | 0 | 0 |
Additional paid in capital | 223,022 | 223,040 |
Accumulated other comprehensive loss | (44,514) | (48,949) |
Retained earnings | 172,092 | 170,621 |
Total Thermon Group Holdings, Inc. shareholders' equity | 350,633 | 344,745 |
Non-controlling interests | 4,509 | 4,204 |
Total equity | 355,142 | 348,949 |
Total liabilities and equity | $ 671,226 | $ 655,762 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Depreciation and amortization | $ 40,784 | $ 38,414 |
Debt issuance costs, net | $ 5,991 | $ 6,271 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 32,705,031 | 32,624,200 |
Common stock, shares outstanding | 32,705,031 | 32,624,200 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury Stock, Shares | 0 | 0 |
Thermon Holding Corp. | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 1,210 | $ 987 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||
Sales | $ 91,712 | $ 88,902 |
Cost of sales | 54,570 | 49,173 |
Gross profit | 37,142 | 39,729 |
Operating expenses: | ||
Marketing, general and administrative and engineering | 27,718 | 25,712 |
Amortization of intangible assets | 4,433 | 5,777 |
Income from operations | 4,991 | 8,240 |
Other income/(expenses): | ||
Interest income | 51 | 75 |
Interest expense | (3,770) | (3,603) |
Other income/(expenses) | 233 | (118) |
Income before provision for income taxes | 1,505 | 4,594 |
Income tax expense | 44 | 1,216 |
Net income | 1,461 | 3,378 |
Income (loss) attributable to non-controlling interests | (10) | 336 |
Net income available to Thermon Group Holdings, Inc. | 1,471 | 3,042 |
Comprehensive income (loss): | ||
Net income available to Thermon Group Holdings, Inc. | 1,471 | 3,042 |
Foreign currency translation adjustment | 4,435 | (8,264) |
Comprehensive income (loss) | $ 5,906 | $ (5,222) |
Net Income per common share: | ||
Basic (in dollars per share) | $ 0.05 | $ 0.09 |
Diluted (in dollars per share) | $ 0.04 | $ 0.09 |
Weighted-average shares used in computing net income per common share: | ||
Basic (in shares) | 32,635,295 | 32,501,280 |
Diluted (in shares) | 33,051,923 | 32,935,832 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Equity Statement - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Non-controlling Interests | Accumulated Other Comprehensive Income (Loss) | EmployeesCommon Stock | Executive OfficerCommon Stock | DirectorCommon Stock |
Beginning balance (in shares) at Mar. 31, 2018 | 32,492,339,000 | ||||||||
Beginning balance at Mar. 31, 2018 | $ 340,853 | $ 32 | $ 222,622 | $ 148,812 | $ 5,928 | $ (36,541) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock in exercise of stock options (in shares) | 5,928,000 | ||||||||
Issuance of common stock in exercise of stock options | 82 | $ 1 | 81 | ||||||
Issuance of common stock (in shares) | 23,307,000 | 20,876,000 | 5,212,000 | ||||||
Stock compensation expense | 1,004 | 1,004 | |||||||
Repurchase of employee stock units on vesting | (398) | (398) | |||||||
Net income available to Thermon Group Holdings, Inc. | 3,042 | 3,042 | |||||||
Foreign currency translation adjustment | (8,264) | (8,264) | |||||||
Income attributable to non-controlling interests (loss) | 336 | 336 | |||||||
Ending balance (in shares) at Jun. 30, 2018 | 32,547,662,000 | ||||||||
Ending balance at Jun. 30, 2018 | $ 336,655 | $ 33 | 223,309 | 151,854 | 6,264 | (44,805) | |||
Beginning balance (in shares) at Mar. 31, 2019 | 32,624,200 | 32,624,200,000 | |||||||
Beginning balance at Mar. 31, 2019 | $ 348,949 | $ 33 | 223,040 | 170,621 | 4,204 | (48,949) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock in exercise of stock options (in shares) | 4,818,000 | ||||||||
Issuance of common stock in exercise of stock options | 62 | 62 | |||||||
Issuance of common stock (in shares) | 39,139,000 | 32,621,000 | 4,253,000 | ||||||
Stock compensation expense | 1,019 | 1,019 | |||||||
Repurchase of employee stock units on vesting | (784) | (784) | |||||||
Net income available to Thermon Group Holdings, Inc. | 1,471 | 1,471 | |||||||
Foreign currency translation adjustment | 4,435 | 4,435 | |||||||
Remeasurement of non-controlling interest | 0 | (315) | 315 | ||||||
Income attributable to non-controlling interests (loss) | $ (10) | (10) | |||||||
Ending balance (in shares) at Jun. 30, 2019 | 32,705,031 | 32,705,031,000 | |||||||
Ending balance at Jun. 30, 2019 | $ 355,142 | $ 33 | $ 223,022 | $ 172,092 | $ 4,509 | $ (44,514) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities | ||
Net income | $ 1,461 | $ 3,378 |
Adjustment to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 6,885 | 8,056 |
Amortization of deferred debt issuance costs | 296 | 318 |
Amortization of inventory step-up | 0 | 173 |
Stock compensation expense | 1,019 | 1,004 |
Deferred income taxes | (1,086) | 534 |
Release of reserve for uncertain tax positions | (447) | 0 |
Long term cross currency swap | 909 | (2,368) |
Remeasurement loss/(gain) on intercompany balances | (1,478) | 2,336 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 7,311 | 10,206 |
Inventories | (4,069) | (7,027) |
Contract assets | 2,372 | (6,827) |
Other current and non-current assets | (2,492) | (3,122) |
Accounts payable | 394 | 1,674 |
Accrued liabilities and non-current liabilities | (6,893) | (7,082) |
Income taxes payable and receivable | (783) | (5,493) |
Net cash provided by (used in) operating activities | 3,399 | (4,240) |
Investing activities | ||
Purchases of property, plant and equipment | (1,726) | (2,866) |
Sale of rental equipment | 126 | 81 |
Proceeds from the sale of investments | 0 | 819 |
Net cash used in investing activities | (1,600) | (1,966) |
Financing activities | ||
Proceeds from revolving credit facility | 10,000 | 9,549 |
Payments on long term debt and revolving credit facility | (7,494) | (4,625) |
Proceeds from exercise of stock options | 62 | 81 |
Repurchase of employee stock units on vesting | (784) | (398) |
Payments on finance leases | (27) | (62) |
Net cash provided by financing activities | 1,757 | 4,545 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 397 | (1,118) |
Cash, cash equivalents and restricted cash at beginning of period | 33,841 | |
Cash, cash equivalents and restricted cash at end of period | 37,794 | 33,548 |
Change in cash, cash equivalents and restricted cash | $ 3,953 | $ (2,779) |
Basis of Presentation and Accou
Basis of Presentation and Accounting Policy Information | 3 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Accounting Policy Information | Basis of Presentation and Accounting Policy Information Thermon Group Holdings, Inc. and its direct and indirect subsidiaries are referred to collectively as “we,” “our,” or the “Company” herein. We are a provider of highly engineered industrial process heating solutions for process industries. Our core thermal solutions product - also referred to as heat tracing - provides an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature and flow maintenance, environmental monitoring, and surface snow and ice melting. As a manufacturer, we offer a full suite of products (heating units, heating cables, tubing bundles and control systems) and services (design optimization, engineering, installation and maintenance services) required to deliver comprehensive solutions to complex projects. On October 30, 2017, we, through a wholly-owned subsidiary, consummated the acquisition of 100% of the equity interests of CCI Thermal Technologies Inc., which was amalgamated with such subsidiary immediately after the closing of the acquisition to form Thermon Heating Systems, Inc. ("THS"), an indirect, wholly-owned subsidiary of the Company. THS is engaged in industrial process heating, focused on the development and production of advanced heating and filtration solutions for industrial and hazardous area applications. In addition to our thermal solution offerings, we offer temporary power products that are designed to provide a safe and efficient means of supplying temporary electrical power distribution and lighting at energy infrastructure facilities for new construction and during maintenance and turnaround projects at operating facilities. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2019 . In our opinion, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring items) considered necessary to present fairly our financial position at June 30, 2019 and March 31, 2019 , and the results of our operations for the three months ended June 30, 2019 and 2018 . Use of Estimates Generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. While our management has based their assumptions and estimates on the facts and circumstances existing at June 30, 2019 , actual results could differ from those estimates and affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities and the corresponding revenues and expenses as of the date of the financial statements. The operating results for the three months ended June 30, 2019 are not necessarily indicative of the results that may be achieved for the fiscal year ending March 31, 2020 . Restricted Cash and Cash Equivalents The Company maintains restricted cash related to certain letter of credit guarantees and performance bonds securing performance obligations. The following table provides a reconciliation of cash, cash equivalents, restricted cash included in prepaid expenses and other current assets and restricted cash included in other long term assets reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows. June 30, 2019 2018 Cash and cash equivalents $ 35,269 $ 31,118 Restricted cash included in prepaid expenses and other current assets 1,698 1,743 Restricted cash included in other long term assets 827 687 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 37,794 $ 33,548 Amounts shown in restricted cash included in prepaid expenses and other current assets and other long term assets represent those required to be set aside by a contractual agreement, which contain cash deposits pledged as collateral on performance bonds and letters of credit. Amounts shown in restricted cash in other long term assets represent such agreements that require a commitment term longer than one year. Recent Accounting Pronouncements Leases - In February 2016, the FASB issued Accounting Standards Update 2016-02 “Leases” (“ASC Topic 842”), which provides guidance on the recognition, measurement, presentation and disclosure on leases. Under the standard, substantially all leases will be reported on the balance sheet as right-of-use assets and lease liabilities. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company adopted the amended guidance using the modified retrospective method as of April 1, 2019. Please refer to Note 3 "Leases" for further discussion, including the impact the adoption had on our condensed consolidated financial statements. Financial Instruments- In June 2016, the FASB issued Accounting Standards Update 2016-13 “Financial Instruments-Credit Losses” (“ASC Topic 326”), which amends the guidance on the impairment of financial instruments. The standard adds an impairment model, referred to as current expected credit loss, which is based on expected losses rather than incurred losses. The standard applies to most debt instruments, trade receivables, lease receivables, reinsurance receivables, financial guarantees and loan commitments. Under the guidance, companies are required to disclose credit quality indicators disaggregated by year of origination for a five-year period. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. We do not anticipate this will have a material impact to our consolidated financial statements. Intangibles- In January 2017, the FASB issued Accounting Standards Update 2017-04 “Intangibles - Goodwill and other” (“ASC Topic 350”) which amends and simplifies the accounting for goodwill impairment by eliminating step 2 of the goodwill impairment test. Under the amended guidance, goodwill impairment will be measured as the excess of the reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill for that reporting unit. The changes are effective for annual and interim periods beginning after December 15, 2019, and amendments should be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. We plan to adopt the amended guidance on April 1, 2020 for the fiscal year ending March 31, 2021. We do not anticipate this will have a material impact to our consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair Value . We measure fair value based on authoritative accounting guidance, which defines fair value, establishes a framework for measuring fair value and expands on required disclosures regarding fair value measurements. Inputs are referred to as assumptions that market participants would use in pricing the asset or liability. The uses of inputs in the valuation process are categorized into a three-level fair value hierarchy. • Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access. • Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Financial assets and liabilities with carrying amounts approximating fair value include cash, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities. At June 30, 2019 and March 31, 2019 , no assets or liabilities were valued using Level 3 criteria. Information about our short-term debt and long-term debt that is not measured at fair value is as follows: June 30, 2019 March 31, 2019 Carrying Value Fair Value Carrying Value Fair Value Valuation Technique Financial Liabilities Outstanding principal amount of senior secured credit facility $ 205,875 $ 205,875 $ 206,500 $ 206,500 Level 2 - Market Approach Outstanding borrowings from revolving line of credit $ 14,551 $ 14,551 $ 11,225 $ 11,225 Level 2 - Market Approach At June 30, 2019 and March 31, 2019 , the fair value of our variable rate term loan and revolving line of credit approximates its carrying value as we pay interest based on the current market rate. As the quoted price is only available for similar financial assets, the Company concluded the pricing is indirectly observable through dealers and has been classified as Level 2. Cross Currency Swap The Company has entered into a long term cross currency swap to hedge the currency rate fluctuations related to a $77,894 intercompany receivable from our wholly-owned Canadian subsidiary, Thermon Canada Inc., maturing on October 30, 2022. Periodic principal payments are to be settled twice annually with interest payments settled quarterly through the cross currency derivative contract. We do not designate the cross currency swap as a cash flow hedge under ASC 815. At June 30, 2019 , we recorded $328 of unrealized mark-to-market gains on the cross-currency swap which is reported as "Other non-current assets", in the condensed consolidated balance sheet. Cross currency swap contracts are measured on a recurring basis at fair value and are classified as Level 2 measurements. For the three months ended June 30, 2019 , the gain on the long-term cross currency swap derivative contract was offset by unrealized losses on the intercompany note of $1,607 for a net gain of $162 . Deferred Compensation Plan The Company provides a non-qualified deferred compensation plan for certain highly compensated employees where payroll contributions are made by the employees on a pre-tax basis. Included in “Other long-term assets” in the condensed consolidated balance sheet at June 30, 2019 and March 31, 2019 were $3,116 and $1,557 , respectively, of deferred compensation plan assets held by the Company. Deferred compensation plan assets (mutual funds) are measured at fair value on a recurring basis based on quoted market prices in active markets (Level 1). The Company has a corresponding liability to participants of $3,163 and $1,520 included in “Other long-term liabilities” in the condensed consolidated balance sheet at June 30, 2019 and March 31, 2019 , respectively. Deferred compensation expense (income) included in marketing, general and administrative and engineering were $103 and $3 for the three months ended June 30, 2019 and 2018 , respectively. Expenses and income from our deferred compensation plan were offset by unrealized gains and losses for the deferred compensation plan included in other expense on our condensed consolidated statements of comprehensive income. Our unrealized gains and losses on investments were gains of $95 and losses of $3 for the three months ended June 30, 2019 and 2018 , respectively. Trade Related Foreign Currency Forward Contracts We transact business in various foreign currencies and 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 foreign currency transaction gains or losses. These foreign currency exposures arise from intercompany transactions as well as third party accounts receivable or payable that are denominated in foreign currencies. Our forward contracts generally have terms of 30 days. We do not use forward contracts for trading purposes or designate these forward contracts as hedging instruments pursuant to ASC 815. We adjust the carrying amount of all contracts to their fair value at the end of each reporting period and unrealized gains and losses are included in our results of operations for that period. These gains and losses are designed to offset gains and losses resulting from settlement of receivables or payables by our foreign operations which are settled in currency other than the local transactional currency. The fair value is determined by quoted prices from active foreign currency markets (Level 2). The condensed consolidated balance sheets reflect unrealized gains within accounts receivable, net and unrealized losses within accrued liabilities. 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 June 30, 2019 and March 31, 2019 , the notional amounts of forward contracts were as follows: Notional amount of foreign currency forward contracts by currency June 30, 2019 March 31, 2019 Russian Ruble $ 1,128 $ — Canadian Dollar 4,000 1,500 South Korean Won 2,000 2,000 Mexican Peso 3,000 — Australian Dollar 700 900 Great Britain Pound 1,000 3,000 Total notional amounts $ 11,828 $ 7,400 The following table represents the fair value of our foreign currency forward contracts: June 30, 2019 March 31, 2019 Fair Value Fair Value Assets Liabilities Assets Liabilities Foreign currency forward contracts $ 31 $ 49 $ 8 $ 53 Foreign currency gains or losses related to our forward contracts in the accompanying condensed consolidated statements of operations and comprehensive income were losses of $42 and $95 in the three months ended June 30, 2019 and 2018 , respectively. Gains and losses from our forward contracts were offset by transaction gains or losses incurred with the settlement of transactions denominated in foreign currencies. For the three months ended June 30, 2019 and 2018 , our net foreign currency transactions were gains of $212 and losses of $75 , respectively. |
Leases
Leases | 3 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases In February 2016, the FASB issued Accounting Standard Update 2016-02 “Leases” (“ASC Topic 842”) that amends the accounting guidance on leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance leases or operating leases as determined pursuant to ASC Topic 842, with classification affecting the pattern of expense recognition in the income statement. The FASB also subsequently issued amendments to the standard, including providing an additional and optional transition method to adopt the new standard, described below, as well as certain practical expedients related to land easements and lessor accounting. ASC Topic 842 originally required the use of a modified retrospective approach reflecting the application of the standard to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with the option to elect certain practical expedients. A subsequent amendment to ASC Topic 842 provides an additional and optional transition method that allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (“ASC Topic 840”) if the optional transition method is elected. The new accounting standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. We adopted ASC Topic 842 effective April 1, 2019, using the optional transition method with no restatement of comparative periods. Therefore, the comparative information has not been adjusted and continues to be reported under ASC Topic 840. Our adoption of the new standard did not result in a cumulative effect adjustment to retained earnings. The Company adopted Accounting Standard Update 2016-02 and its amendments and applied the transition provisions as of April 1, 2019, which included recognizing a cumulative-effect adjustment to retained earnings as of that date. Prior year amounts were not recast under this transition approach and, therefore, prior year amounts are excluded from the leased properties footnote. The Company did not elect the package of practical expedients permitted under the transition guidance, which allows companies to carryforward historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term. The Company elected the practical expedient to combine lease and non-lease components for all asset classes. Description of Leases The significant majority of our lease obligations are for real property. We lease numerous facilities relating to our operations, primarily for office, manufacturing and warehouse facilities as well as both long term and short term employee housing. Leases for real property have terms ranging from month-to-month to ten years . We also lease various types of equipment, including vehicles, office equipment (such as copiers and postage machines), heavy warehouse equipment (such as fork lifts), heavy construction equipment (such as cranes), medium and light construction equipment used for customer project needs (such as pipe threading machines) and mobile offices and other general equipment that is normally associated with an office environment. Equipment leases generally have terms ranging from six months to five years . Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any significant leases that have not yet commenced but that create significant rights and obligations for us. We lease temporary power products produced by our Sumac division to our customers on a short term basis. Lease contracts associated with such rental of the temporary power products have historically been month-to-month contracts without purchase options. No lease contracts in which the Company was the lessor have had an initial term in excess of one year. As such, lease revenues for temporary power products recognized under ASC Topic 842 in the interim period did not materially differ from leases that would have been recorded under ASC Topic 840. Variable Lease Payments A majority of our lease agreements include fixed rental payments. Certain of our lease agreements include fixed rental payments that are adjusted periodically for changes in the Consumer Price Index (“CPI”). Payments based on a change in an index or a rate are not considered in the determination of lease payments for purposes of measuring the related lease liability. While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments are incurred. Options to extend or terminate leases Most of our real property leases include early termination options and/or one or more options to renew, with renewal terms that can extend the lease term for an additional one to five years or longer. The exercise of lease termination and renewal options is at our sole discretion. If it is reasonably certain that we will exercise such renewal options, the periods covered by such renewal options are included in the lease term and are recognized as part of our ROU assets and lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Discount Rate The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. A large concentration of the Company's operating lease liabilities are attributed to our United States and Latin America operations. Many of our Europe, Middle East and Africa (“EMEA”) operations and Asia-Pacific operations borrow funds from the debt facilities maintained by our U.S. operating subsidiary and establish intercompany balances to account for these loans. This practice is due to the more preferential rates available to our U.S. operating subsidiary and/or the ease with which funds can be drawn from the debt facilities already established within the United States. With this in mind the Company has utilized its U.S. credit facility rate as the worldwide incremental borrowing rate. The Company used incremental borrowing rates as of April 1, 2019 for operating leases that commenced prior to April 1, 2019 to establish the lease liabilities. For operating leases which commenced during the fiscal first quarter ended June 30, 2019 , rates applicable at or close to the time of the inception of the lease were used to establish the new lease's ROU liabilities. Lease Term and Discount Rate June 30, 2019 Weighted average remaining lease term Operating 6.9 Finance 2.6 Weighted average discount rate Operating 4.60 % Finance 7.89 % Supplemental balance sheet information related to leases was as follows: Assets Classification June 30, 2019 Operating Operating lease right-of-use assets $ 14,435 Finance Property, plant and equipment 453 Total right-of-use assets $ 14,888 Liabilities Current Operating Lease liabilities $ 2,104 Finance Lease liabilities 218 Non-current Operating Non-current lease liabilities 13,567 Finance Non-current lease liabilities 259 Total lease liabilities $ 16,148 Supplemental statement of operations information related to leases was as follows: Lease expense Classification Three Months Ended June 30, 2019 Operating lease expense Marketing, general and administrative and engineering $ 808 Finance lease expense: Amortization of ROU assets Marketing, general and administrative and engineering 59 Interest expense on finance lease liabilities Interest expense 13 Short-term lease expense Marketing, general and administrative and engineering 463 Net lease expense $ 1,343 Supplement statement of cash flows information related to leases was as follows: Cash paid for amounts included in the measurement of lease liabilities Three Months Ended June 30, 2019 Operating cash from operating leases $ 718 Operating cash flows from finance leases 10 Financing cash flows from finance leases 38 Future lease payments under non-cancellable operating leases as of June 30, 2019 were as follows: Future Lease Payments Operating Leases Finance Leases Twelve months ending June 30, 2020 $ 2,768 $ 248 2021 2,995 170 2022 2,841 59 2023 2,276 46 2024 1,349 9 Thereafter 5,990 — Total lease payments $ 18,219 $ 532 Less imputed interest (2,927 ) (55 ) Total lease liability $ 15,292 $ 477 |
Leases | Leases In February 2016, the FASB issued Accounting Standard Update 2016-02 “Leases” (“ASC Topic 842”) that amends the accounting guidance on leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance leases or operating leases as determined pursuant to ASC Topic 842, with classification affecting the pattern of expense recognition in the income statement. The FASB also subsequently issued amendments to the standard, including providing an additional and optional transition method to adopt the new standard, described below, as well as certain practical expedients related to land easements and lessor accounting. ASC Topic 842 originally required the use of a modified retrospective approach reflecting the application of the standard to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with the option to elect certain practical expedients. A subsequent amendment to ASC Topic 842 provides an additional and optional transition method that allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (“ASC Topic 840”) if the optional transition method is elected. The new accounting standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. We adopted ASC Topic 842 effective April 1, 2019, using the optional transition method with no restatement of comparative periods. Therefore, the comparative information has not been adjusted and continues to be reported under ASC Topic 840. Our adoption of the new standard did not result in a cumulative effect adjustment to retained earnings. The Company adopted Accounting Standard Update 2016-02 and its amendments and applied the transition provisions as of April 1, 2019, which included recognizing a cumulative-effect adjustment to retained earnings as of that date. Prior year amounts were not recast under this transition approach and, therefore, prior year amounts are excluded from the leased properties footnote. The Company did not elect the package of practical expedients permitted under the transition guidance, which allows companies to carryforward historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term. The Company elected the practical expedient to combine lease and non-lease components for all asset classes. Description of Leases The significant majority of our lease obligations are for real property. We lease numerous facilities relating to our operations, primarily for office, manufacturing and warehouse facilities as well as both long term and short term employee housing. Leases for real property have terms ranging from month-to-month to ten years . We also lease various types of equipment, including vehicles, office equipment (such as copiers and postage machines), heavy warehouse equipment (such as fork lifts), heavy construction equipment (such as cranes), medium and light construction equipment used for customer project needs (such as pipe threading machines) and mobile offices and other general equipment that is normally associated with an office environment. Equipment leases generally have terms ranging from six months to five years . Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We do not have any significant leases that have not yet commenced but that create significant rights and obligations for us. We lease temporary power products produced by our Sumac division to our customers on a short term basis. Lease contracts associated with such rental of the temporary power products have historically been month-to-month contracts without purchase options. No lease contracts in which the Company was the lessor have had an initial term in excess of one year. As such, lease revenues for temporary power products recognized under ASC Topic 842 in the interim period did not materially differ from leases that would have been recorded under ASC Topic 840. Variable Lease Payments A majority of our lease agreements include fixed rental payments. Certain of our lease agreements include fixed rental payments that are adjusted periodically for changes in the Consumer Price Index (“CPI”). Payments based on a change in an index or a rate are not considered in the determination of lease payments for purposes of measuring the related lease liability. While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments are incurred. Options to extend or terminate leases Most of our real property leases include early termination options and/or one or more options to renew, with renewal terms that can extend the lease term for an additional one to five years or longer. The exercise of lease termination and renewal options is at our sole discretion. If it is reasonably certain that we will exercise such renewal options, the periods covered by such renewal options are included in the lease term and are recognized as part of our ROU assets and lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Discount Rate The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. A large concentration of the Company's operating lease liabilities are attributed to our United States and Latin America operations. Many of our Europe, Middle East and Africa (“EMEA”) operations and Asia-Pacific operations borrow funds from the debt facilities maintained by our U.S. operating subsidiary and establish intercompany balances to account for these loans. This practice is due to the more preferential rates available to our U.S. operating subsidiary and/or the ease with which funds can be drawn from the debt facilities already established within the United States. With this in mind the Company has utilized its U.S. credit facility rate as the worldwide incremental borrowing rate. The Company used incremental borrowing rates as of April 1, 2019 for operating leases that commenced prior to April 1, 2019 to establish the lease liabilities. For operating leases which commenced during the fiscal first quarter ended June 30, 2019 , rates applicable at or close to the time of the inception of the lease were used to establish the new lease's ROU liabilities. Lease Term and Discount Rate June 30, 2019 Weighted average remaining lease term Operating 6.9 Finance 2.6 Weighted average discount rate Operating 4.60 % Finance 7.89 % Supplemental balance sheet information related to leases was as follows: Assets Classification June 30, 2019 Operating Operating lease right-of-use assets $ 14,435 Finance Property, plant and equipment 453 Total right-of-use assets $ 14,888 Liabilities Current Operating Lease liabilities $ 2,104 Finance Lease liabilities 218 Non-current Operating Non-current lease liabilities 13,567 Finance Non-current lease liabilities 259 Total lease liabilities $ 16,148 Supplemental statement of operations information related to leases was as follows: Lease expense Classification Three Months Ended June 30, 2019 Operating lease expense Marketing, general and administrative and engineering $ 808 Finance lease expense: Amortization of ROU assets Marketing, general and administrative and engineering 59 Interest expense on finance lease liabilities Interest expense 13 Short-term lease expense Marketing, general and administrative and engineering 463 Net lease expense $ 1,343 Supplement statement of cash flows information related to leases was as follows: Cash paid for amounts included in the measurement of lease liabilities Three Months Ended June 30, 2019 Operating cash from operating leases $ 718 Operating cash flows from finance leases 10 Financing cash flows from finance leases 38 Future lease payments under non-cancellable operating leases as of June 30, 2019 were as follows: Future Lease Payments Operating Leases Finance Leases Twelve months ending June 30, 2020 $ 2,768 $ 248 2021 2,995 170 2022 2,841 59 2023 2,276 46 2024 1,349 9 Thereafter 5,990 — Total lease payments $ 18,219 $ 532 Less imputed interest (2,927 ) (55 ) Total lease liability $ 15,292 $ 477 |
Net Income per Common Share
Net Income per Common Share | 3 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Income per Common Share | Net Income per Common Share Basic net income per common share is computed by dividing net income available to Thermon Group Holdings, Inc. by the weighted average number of common shares outstanding during each period. Diluted net income per common share is computed by dividing net income available to Thermon Group Holdings, Inc. by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The number of common share equivalents, which includes options and both restricted and performance stock units, is computed using the treasury stock method. With regard to the performance stock units, we assumed that the associated performance targets will be met at the target level of performance for purposes of calculating diluted net income per common share. The reconciliations of the denominators used to calculate basic and diluted net income per common share for the three months ended June 30, 2019 and 2018 , respectively, are as follows: Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Basic net income per common share Net income available to Thermon Group Holdings, Inc. $ 1,471 $ 3,042 Weighted-average common shares outstanding 32,635,295 32,501,280 Basic net income per common share $ 0.05 $ 0.09 Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Diluted net income per common share Net income available to Thermon Group Holdings, Inc. $ 1,471 $ 3,042 Weighted-average common shares outstanding 32,635,295 32,501,280 Common share equivalents: Stock options 208,220 215,037 Restricted and performance stock units 208,408 219,515 Weighted average shares outstanding – dilutive (1) 33,051,923 32,935,832 Diluted net income per common share $ 0.04 $ 0.09 (1) For the three months ended June 30, 2019 and 2018 , 13,074 and 5,767 equity awards, respectively, were not included in the calculation of diluted net income per common share, as they would have had an anti-dilutive effect. |
Inventories
Inventories | 3 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following: June 30, March 31, Raw materials $ 35,619 $ 32,892 Work in process 6,120 5,696 Finished goods 30,246 28,501 71,985 67,089 Valuation reserves (2,296 ) (2,199 ) Inventories, net $ 69,689 $ 64,890 |
Goodwill
Goodwill | 3 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill The carrying amount of goodwill by operating segment as of June 30, 2019 is as follows: United States and Latin America Canada Europe, Middle East and Africa Asia-Pacific Total Balance as of March 31, 2019 $ 62,725 $ 114,382 $ 19,264 $ 8,624 $ 204,995 Foreign currency translation impact — 2,412 256 — 2,668 Balance as of June 30, 2019 $ 62,725 $ 116,794 $ 19,520 $ 8,624 $ 207,663 Goodwill is tested for impairment on an annual basis and between annual tests if indicators of potential impairment exist. We perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If required, we also perform a quantitative analysis using the income approach, based on discounted future cash flows, which are derived from internal forecasts and economic expectations, and the market approach based on market multiples of guideline public companies. The most significant inputs in the Company's quantitative goodwill impairment tests are projected financial information, the weighted average cost of capital and market multiples for similar transactions. Our annual impairment test is performed during the fourth quarter of our fiscal year. No triggering events were identified during the three month period ended June 30, 2019 which indicated the fair value of any of our reporting units was less than its carrying amount. Our total intangible assets consisted of the following: Gross Carrying Amount at June 30, 2019 Accumulated Amortization Net Carrying Amount at June 30, 2019 Gross Carrying Amount at March 31, 2019 Accumulated Amortization Net Carrying Amount at March 31, 2019 Products $ 63,658 $ 10,610 $ 53,045 $ 62,343 $ 8,832 $ 53,511 Trademarks 45,201 1,126 44,075 44,819 1,052 43,767 Developed technology 9,850 4,535 5,315 9,854 4,464 5,390 Customer relationships 109,193 88,128 21,065 110,802 87,319 23,483 Certifications 449 — 449 445 — 445 Other — — — 5,742 5,742 — Total $ 228,351 $ 104,399 $ 123,949 $ 234,005 $ 107,409 $ 126,596 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued current liabilities consisted of the following: June 30, March 31, Accrued employee compensation and related expenses $ 8,089 $ 18,109 Accrued interest 991 1,172 Customer prepayment 877 783 Warranty reserve 431 365 Professional fees 2,572 2,326 Sales tax payable 3,319 2,185 Other 3,105 2,908 Total accrued current liabilities $ 19,384 $ 27,848 |
Short-Term Revolving Credit Fac
Short-Term Revolving Credit Facilities | 3 Months Ended |
Jun. 30, 2019 | |
Short-term Debt [Abstract] | |
Short-Term Revolving Credit Facilities | Short-Term Revolving Credit Facilities Under the Company’s senior secured revolving credit facility described below in Note 9, “Long-Term Debt,” the Company had $14,551 and $11,225 in outstanding borrowings at June 30, 2019 and March 31, 2019 , respectively. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: June 30, March 31, Variable Rate Term Loan, due October 2024, net of deferred debt issuance costs and debt discounts of $5,991 and $6,271 as of June 30, 2019 and March 31, 2019, respectively $ 199,884 $ 200,229 Less current portion (2,500 ) (2,500 ) Total long-term debt $ 197,384 $ 197,729 Senior Secured Credit Facility On October 30, 2017, the Company, as a credit party and a guarantor, Thermon Holding Corp. (the “US Borrower”) and Thermon Canada Inc. (the “Canadian Borrower” and together with the US Borrower, the “Borrowers”), as borrowers, entered into a credit agreement with several banks and other financial institutions or entities from time to time (the “Lenders”) and JPMorgan Chase Bank, N.A. as administrative agent (the “Agent”), that provides for a $250,000 seven-year term loan B facility (the “term loan B facility”) made available to the US Borrower and a $60,000 five -year senior secured revolving credit facility made available to the US Borrower and the Canadian Borrower (the “revolving credit facility” and together with the term loan B facility, the “credit facility”). The proceeds of the term loan B facility were used to (1) pay in full $70,875 principal and interest on a previously issued term loan due April 2019; (2) repay $6,000 in unpaid principal and interest on the US Borrower's revolving line of credit; (3) to fund approximately $201,900 CAD of the purchase price of the THS acquisition and certain related real estate assets for approximately $164,900 ; and (4) pay certain transaction fees and expenses in connection with the THS acquisition and the credit facility. Interest rates and fees. The US Borrower will have the option to pay interest on the term loan B facility at a base rate, plus an applicable margin, or at a rate based on LIBOR, (subject to a floor of 1.00% ), plus an applicable margin. The applicable margin for base rate loans is 275 basis points and the applicable margin for LIBOR loans is 375 basis points. The US Borrower may borrow revolving loans in US dollars and the Canadian Borrower may also borrow revolving loans in Canadian dollars. Borrowings under the revolving credit facility (a) made in US dollars will bear interest at a rate equal to a base rate, plus an applicable margin of 225 basis points or at a rate based on LIBOR, plus an applicable margin of 325 basis points and (b) made in Canadian dollars will bear interest at a rate equal to a Canadian base rate, plus an applicable margin of 225 basis points or at a rate based on Canadian Dollar Offered Rate, plus an applicable margin of 325 basis points; provided that, following the completion of the fiscal quarter ending March 31, 2018, the applicable margins in each case will be determined based on a leverage-based performance grid, as set forth in the credit agreement. In addition to paying interest on outstanding principal under the revolving credit facility, the US Borrower is required to pay a commitment fee in respect of unutilized revolving commitments of 0.50% per annum based on a leverage-based performance grid. Maturity and repayment. The revolving credit facility terminates on October 28, 2022. The scheduled maturity date of the term loan facility is October 30, 2024. Commencing on April 1, 2018, the term loan B facility began amortizing in equal quarterly installments of 0.25% of the $250,000 term loan B facility, with the payment of the balance at maturity. The US Borrower will be able to voluntarily prepay the principal of the term loan B facility without penalty or premium (subject to breakage fees) at any time in whole or in part after April 30, 2018. The US Borrower is required to repay the term loan B facility with certain asset sale and insurance proceeds, certain debt proceeds and, commencing for the fiscal year ending March 31, 2019, 50% of excess cash flow (reducing to 25% if the Company’s leverage ratio is less than 4.0 to 1.0 but greater than or equal to 3.5 to 1.0 , and reducing to 0% if the Company’s leverage ratio is less than 3.5 to 1.0 ). Commencing April 1, 2018, the Company will be required to make quarterly principal payments of the term B loan facility of $625 through July 31, 2024. The remaining balance will be due at maturity of the term loan B facility on October 30, 2024. Accordion. The credit facility allows for incremental term loans and incremental revolving commitments in an amount not to exceed $30,000 and an unlimited additional amount that would not cause the consolidated secured leverage ratio to exceed 4.0 to 1.0 (or, if less, the maximum consolidated leverage ratio permitted by the revolving credit facility on such date). At June 30, 2019 , we had $14,551 in outstanding borrowings under our revolving credit facility. The interest rate on outstanding revolving credit facility borrowings on the US Borrower line of credit and the Canadian Borrower line of credit on June 30, 2019 was 4.93% and 4.56% , respectively. As of June 30, 2019 , we had $41,390 of available borrowing capacity under our revolving credit facility after taking into account the borrowing base, outstanding borrowings and letters of credit outstanding. The variable rate term loan bears interest at the LIBOR rate plus an applicable margin dictated by our leverage ratio (as described above). Guarantees; security. The term loan is guaranteed by the Company and all of the Company's current and future wholly-owned domestic material subsidiaries (the “US Subsidiary Guarantors”), subject to certain exceptions. Obligations of the US Borrower under the revolving credit facility are guaranteed by the Company and the US Subsidiary Guarantors. The obligations of the Canadian Borrower under the revolving credit facility are guaranteed by the Company, the US Borrower, the US Subsidiary Guarantors and each of the wholly owned Canadian material subsidiaries of the Canadian Borrower, subject to certain exceptions. The term loan B facility and the obligations of the US Borrower under the revolving credit facility are secured by a first lien on all of the Company’s assets and the assets of the US Subsidiary Guarantors, including 100% of the capital stock of the US Subsidiary Guarantors and 65% of the capital stock of the first tier material foreign subsidiaries of the Company, the US Borrower and the US Subsidiary Guarantors, subject to certain exceptions. The obligations of the Canadian Borrower under the revolving credit facility are secured by a first lien on all of the Company's assets, the US Subsidiary Guarantors' assets, the Canadian Borrower’s assets and the assets of the material Canadian subsidiaries of the Canadian Borrower, including 100% of the capital stock of the Canadian Borrower’s material Canadian subsidiaries. Financial covenants. The term loan is not subject to any financial covenants. The revolving credit facility requires the Company, on a consolidated basis, to maintain certain financial covenant ratios. The Company must maintain a consolidated leverage ratio on the last day of the following periods: 5.5 : 1.0 for December 31, 2017 through September 30, 2018; 5.0 : 1.0 for December 31, 2018 through September 30, 2019; 4.5 : 1.0 for December 31, 2019 through September 30, 2020; and 3.75 : 1.0 for December 31, 2020 and each fiscal quarter thereafter. In addition, on the last day of any period of four fiscal quarters, the Company must maintain a consolidated fixed charge coverage ratio of not less than 1.25 : 1.0 . As of June 30, 2019 , we were in compliance with all financial covenants of the credit facility. Restrictive covenants. The credit agreement governing our facility contains various restrictive covenants that, among other things, restrict or limit our ability to (subject to certain negotiated exceptions): incur additional indebtedness; grant liens; make fundamental changes; sell assets; make restricted payments; enter into sales and leasebacks; make investments; prepay certain indebtedness; enter into transactions with affiliates; and enter into restrictive agreements. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related Party Transactions In connection with the Sumac Fabrication Co. Ltd. ("Sumac") transaction, one of the former Sumac principals (the "Minority Shareholder") retained 25% of the ownership of the entities holding the Sumac business unit. This individual is employed by the Company and serves as the general manager of the Sumac business unit. During the fiscal year ended March 31, 2017, this individual, together with the two other former principals of Sumac, who are not employed by the Company, were paid $5,805 in the aggregate in full satisfaction of the Company's obligations under the $5,905 non-interest bearing performance-based note issued in connection with the Sumac transaction. On April 2, 2018, the Minority Shareholder provided the Company notice that he was exercising his option to sell one-half ( 12.5% ) of his remaining equity interest in the entities holding the Sumac business unit to the Company, and such sale was completed and effective as of July 20, 2018. The terms of the April 2015 Sumac purchase agreement prescribed a valuation formula for such a sale based on Sumac's financial results for the 12 months ended March 31, 2018. During the first quarter of the fiscal year ended March 31, 2019, the Company paid $5,665 to purchase the 12.5% non-controlling interest. Similarly, on April 2, 2019, the Minority Shareholder provided the Company notice in order to exercise his option to sell the entirety of his remaining equity interest ( 12.5% of the entities holding the Sumac business unit) to the Company. The terms of the April 2015 Sumac purchase agreement prescribed a valuation formula for such a sale based on Sumac’s financial results for the fiscal year ended March 31, 2019. The Company paid $4,509 to purchase the remaining 12.5% non-controlling interest on August 1, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies At June 30, 2019 , the Company had in place letter of credit guarantees and performance bonds securing performance obligations of the Company. These arrangements totaled approximately $19,303 . Of this amount, $2,525 is secured by cash deposits at the Company’s financial institutions and an additional $4,058 represents a reduction of the available amount of the Company's short-term and long-term revolving lines of credit. Our Indian subsidiary also has $5,267 in customs bonds outstanding to secure the Company's customs and duties obligations in India. We are involved in various legal and administrative proceedings that arise from time to time in the ordinary course of doing business. Some of these proceedings may result in fines, penalties or judgments being assessed against us, which may adversely affect our financial results. In addition, from time to time, we are involved in various disputes, which may or may not be settled prior to legal proceedings being instituted and which may result in losses in excess of accrued liabilities, if any, relating to such unresolved disputes. Expenses related to litigation and other such proceedings or disputes reduce operating income. As of June 30, 2019 , management believes that adequate reserves have been established for any probable and reasonably estimable losses. 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. It is possible, however, that charges related to these matters could be significant to our results of operations or cash flows in any one accounting period. The Company has no outstanding legal matters outside of matters arising in the ordinary course of business. We can give no assurances we will prevail in any of these matters. |
Stock-Based Compensation Expens
Stock-Based Compensation Expense | 3 Months Ended |
Jun. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Expense | Stock-Based Compensation Expense Our board of directors has adopted and the shareholders have approved two stock option award plans. The 2010 Thermon Group Holdings, Inc. Restricted Stock and Stock Option Plan (“2010 Plan”) was approved on July 28, 2010. The 2010 Plan authorized the issuance of 2,767,171 stock options or restricted shares (on a post-stock split basis). On April 8, 2011, the board of directors approved the Thermon Group Holdings, Inc. 2011 Long-Term Incentive Plan (“2011 LTIP”). The 2011 LTIP made available 2,893,341 shares of the Company’s common stock that may be awarded to employees, directors or non-employee contractors as compensation in the form of stock options, restricted stock awards or restricted stock units. At June 30, 2019 , there were 324,568 options outstanding. For the three months ended June 30, 2019 and 2018 , stock compensation expense was $1,019 and $1,004 , respectively. During the three months ended June 30, 2019 , 105,726 restricted stock units were issued to our employees with an aggregate grant date fair value as determined by the closing price of our stock on the respective grant dates of $2,324 . The awards will be expensed on a straight-line basis over the three -year service period. At each anniversary of the restricted stock units' grant date, a proportionate number of stock units will become vested for the employees and the shares will become issued and outstanding. We maintain a plan to issue our directors awards of fully vested common stock every three months for a total award over a 12 month period of approximately $360 . During the three months ended June 30, 2019 , 3,654 fully vested common shares were issued in the aggregate to our directors. The aggregate grant date fair value as determined by the closing price of our common stock on the grant date was $90 for the three months ended June 30, 2019 . The fair value of the awards is expensed on each grant date. During the three months ended June 30, 2019 , a target amount of 26,147 performance stock units were issued to certain members of our senior management that had a total grant date fair value of $915 . The performance indicator for these performance stock units is based on the market performance of our stock price, from the date of grant through March 31, 2022, relative to the market price performance of a pre-determined peer group of companies. Since the performance indicator is market-based, we used a Monte-Carlo valuation model to calculate the probable outcome of the performance measure to arrive at the fair value. The requisite service period required to earn the awards is through March 31, 2022. We will expense the fair value of the performance stock units over the service period on a straight-line basis whether or not the stock price performance condition is met. At the end of the performance period, the performance stock units will be evaluated with the requisite number of shares being issued. The possible number of shares that could be issued ranges from zero to 52,294 in the aggregate. Shares that are not awarded at the measurement date will be forfeited. In addition to the market-based performance stock units issued to certain members of senior management, we also granted these individuals, during the three months ended June 30, 2019 , a target amount of 62,319 performance stock units based on the Company's Adjusted EBITDA performance over a three -year period ending March 31, 2022. The total grant date fair value, as determined by the closing price of our common stock on the date of the grant, was $1,370 . At each reporting period, we will estimate how many awards senior management may achieve and adjust our stock compensation expense accordingly. At the end of the performance period, the performance stock units will be evaluated with the requisite number of shares issued. The possible number of shares that could be issued under such performance stock units ranges from zero to 124,638 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer | Revenue from Contracts with Customers On April 1, 2018, we adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” ("ASC Topic 606") using the modified retrospective method and applying ASC Topic 606 to all revenue contracts with customers which were not completed as of the date of adoption. Results for reporting periods beginning after April 1, 2018 are presented under ASC Topic 606. In accordance with the modified retrospective approach, prior period amounts were not adjusted and are reported under Accounting Standards Codification Topic 605, “Revenue Recognition” (“ASC Topic 605”). As a result of the adoption, the cumulative impact to our retained earnings at April 1, 2018 was immaterial. Additionally, revenues recognized under ASC Topic 606 in the interim period and YTD period did not materially differ from revenues that would have been recorded under ASC Topic 605. We expect the impact of the adoption of the new standard to continue to be immaterial to revenues and net income on an ongoing basis. For purposes of calculating the cumulative transition adjustment the amended guidance has been applied to all contracts at the initial application date. The core principle of the new standard is to recognize revenue that reflects the consideration the Company expects to receive for goods or services when or as the promised goods or services are transferred to customers. ASC Topic 606 requires more judgment than previous guidance, as management will need to consider the terms of the contract and all relevant facts and circumstances when applying the revenue recognition standard. Management performs the following five steps when applying the revenue recognition standard: (i) identify each contract with customers, (ii) identify each performance obligation in the contracts with customers, (iii) estimate the transaction price (including any variable consideration), (iv) allocate the transaction price to each performance obligation and (v) recognize revenue as each performance obligation is satisfied. Description of product and service offerings and revenue recognition policies We principally provide a (i) suite of products (heating units, heating cables, tubing bundles and control systems) and (ii) services including design optimization, engineering, installation and maintenance services required to deliver comprehensive solutions to complex projects. The performance obligations associated with our products sales are generally recognized at a point in time. Where products and services are provided together under a time and materials contract, the performance obligations are satisfied over time. We also provide fixed-fee turnkey solutions consisting of products and services under which the related performance obligations are satisfied over time. In addition, we offer temporary power products that are designed to provide a safe and efficient means of supplying temporary electrical power distribution and lighting at energy infrastructure facilities for new construction and during maintenance and turnaround projects at operating facilities. Revenues associated with the rental of the temporary power products have historically been less than 5% of our total revenues are recognized under ASC Topic 842, "Leases". Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for transferring such goods or providing such services. We account for a contract when a customer provides us with a firm purchase order or other contract that identifies the goods or services to be provided, the payment terms for those services, and when collectability of the consideration due is probable. Generally, our payment terms do not exceed 30 days. Performance obligations A performance obligation is a promise to provide the customer with a good or service. At contract inception, the Company will assess the goods or services promised in the contract with a customer and shall identify as a performance obligation each promise to transfer to the customer either: (i) a good or service (or a bundle of goods or services) or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. For contracts with multiple performance obligations, standalone selling price is generally readily observable. Revenue from products transferred to customers at a point in time is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control upon shipment. Revenue from products transferred to customers at a point in time accounted for approximately 56.1% and 64.0% of our revenue for the three months ended June 30, 2019 and 2018, respectively. Our revenues that are recognized over time include (i) products and services which are billed on a time and materials basis, and (ii) fixed fee contracts for complex turnkey solutions. Revenue from products and services transferred to customers over time accounted for approximately 43.9% and 36.0% of our revenue for the three months ended June 30, 2019 and 2018, respectively. 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, or fixed fee projects, offer our customers a comprehensive solution for heat tracing from the initial planning stage through engineering/design, commissioning, manufacture, installation and final proof-of-performance and acceptance testing. Turnkey services also include project planning, product supply, system integration, commissioning and on-going maintenance. Turnkey solutions, containing multiple deliverables, are customer specific and do not have an alternative use and present an unconditional right to payment, and thus are treated as a single performance obligation with revenues recognized over time as work progresses. For revenue recognized under fixed fee turnkey contracts, we measure the costs incurred that contribute towards the satisfaction of our performance obligation as a percentage of the total estimated 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. Changes to the original cost estimates 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 resulted in significant adjustments to our results of operations. At June 30, 2019 , revenues associated with our open performance obligations totaled $111,479 , representing our combined backlog and deferred revenue. Within this amount, approximately $13,562 will be earned as revenue in excess of one year. We expect to recognize the remaining revenues associated with unsatisfied or partially satisfied performance obligations within 12 months. Pricing and sales incentives Pricing is established at or prior to the time of sale with our customers and we record sales at the agreed-upon net selling price. Generally, we do not enter into sales contracts with customers that offer sales discounts or incentives. Optional exemptions, practical expedients and policy elections We expense incremental costs of obtaining a contract when incurred because the amortization period would be less than one year. The Company has elected to treat shipping and handling activities as a cost of fulfillment rather than a separate performance obligation. The Company has elected to exclude all sales and other similar taxes from the transaction price. Accordingly, the Company presents all collections from customers for sales and other similar taxes on a net basis, rather than having to assess whether the Company is acting as an agent or a principal in each taxing jurisdiction. The Company adopted ASC Topic 606 as of April 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. For contracts that were modified before the effective date, the Company utilized the practical expedient to consider the aggregate effect of all modifications when identifying performance obligations and allocating transaction price. Contract Assets and Liabilities Contract assets and liabilities are presented on our condensed consolidated balance sheet. Contract assets consist of unbilled amounts resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. In addition, contract assets contain labor and material costs incurred under our time and material service contracts that have not been billed to the customer. Contract liabilities represent deferred revenue from advanced customer payments or billings in excess of costs incurred or revenue earned. The Company invoices customers pursuant to the terms of the related contract. Invoiced amounts are applied to individual contracts and an associated amount is either classified as a contract asset or contract liability depending on whether the revenue associated with the amounts billed had been earned (contract asset) or not (contract liability). As of June 30, 2019 and March 31, 2019 , contract assets were $23,646 and $26,454 , respectively. The $2,808 decrease in contract assets from March 31, 2019 to June 30, 2019 was primarily the result of an increase in billings to customers under our long-term contracts within our United States and Latin America segment. There were no impairment losses recognized on our contract assets for the three months ended June 30, 2019 and 2018. As of June 30, 2019 and March 31, 2019 , contract liabilities were $6,344 and $6,814 , respectively. The majority of contract liabilities at March 31, 2019 was recognized in revenue as of June 30, 2019 . Disaggregation of Revenue We disaggregate our revenue from contracts with customers by geographic location, revenues recognized at point in time and revenues recognized over time as we believe these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregation of revenues from contracts with customers for the three months ended June 30, 2019 and 2018 is as follows: Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Revenues recognized at point in time Revenues recognized over time Total Revenues recognized at point in time Revenues recognized over time Total United States and Latin America $ 14,816 $ 25,611 $ 40,427 $ 14,819 $ 16,810 $ 31,629 Canada 22,844 4,408 27,252 23,360 5,268 28,628 Europe, Middle East and Africa 9,054 4,285 13,339 12,652 8,151 20,803 Asia-Pacific 4,700 5,994 10,694 6,065 1,777 7,842 Total revenues $ 51,414 $ 40,298 $ 91,712 $ 56,896 $ 32,006 $ 88,902 |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective income tax was 2.9% and 26.4% for the three months ended June 30, 2019 and 2018 , respectively. The effective income tax rate represents the weighted average of the estimated tax expense over our global income before tax. During the three months ended June 30, 2019, discrete tax adjustments reduced our tax expense by $551 and thereby reduced our effective tax rate. As of June 30, 2019 , we have established a long-term liability for uncertain tax positions in the amount of $690 . During the three months ended June 30, 2019, we released reserves for certain tax positions totaling $462 . During the three months ended June 30, 2019 , the Company recognized accrued interest and penalties of $16 as income tax expense related to our current uncertain tax positions. As of June 30, 2019 , the tax years for the fiscal years ended March31, 2014 through March 31, 2018 remain open to examination by the major taxing jurisdictions to which we are subject. |
Segment Information
Segment Information | 3 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information 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"). Within our four reportable segments, our core products and services are focused on thermal solutions primarily related to the electrical heat tracing industry. Each of our reportable segments serves a similar class of customers, including engineering, procurement and construction companies, international and regional oil and gas companies, commercial sub-contractors, electrical component distributors and direct sales to existing plant or industrial applications. Profitability within our segments is measured by operating income. Profitability can vary in each of our reportable segments based on the competitive environment within the region, the level of corporate overhead, such as the salaries of our senior executives, and the level of research and development and marketing activities in the region, as well as the mix of products and services. Since March 2015, we acquired THS, Unitemp, IPI and Sumac. THS (formerly known as CCI) develops and produces advanced industrial heating and filtration solutions for industrial and hazardous area applications that closely align with Thermon's core business and serves similar end markets in North America. As such, we have elected to report THS's operations through our US-LAM and Canada reportable segments. Both Unitemp and IPI offer thermal solutions and have been included in our EMEA and US-LAM reportable segments, respectively. Sumac provides temporary power products that differ from our core thermal solutions business. As we anticipate that our full year operating results from Sumac will comprise less than 10% of our total sales and operating income, Sumac has been aggregated in our Canada segment. For purposes of this note, revenue is attributed to individual countries or regions on the basis of the physical location and jurisdiction of organization of the subsidiary that invoices the material and services. Total sales to external customers, inter-segment sales, depreciation expense, amortization expense, income from operations, property, plant and equipment, net and total assets for each of our four reportable segments are as follows: Three Months Ended June 30, 2019 Three Months Ended Sales to External Customers: United States and Latin America $ 40,427 $ 31,629 Canada 27,252 28,628 Europe, Middle East and Africa 13,339 20,803 Asia-Pacific 10,694 7,842 $ 91,712 $ 88,902 Inter-Segment Sales: United States and Latin America $ 9,741 $ 11,929 Canada 1,124 1,053 Europe, Middle East and Africa 561 1,105 Asia-Pacific 288 145 $ 11,714 $ 14,232 Depreciation Expense: United States and Latin America $ 1,499 $ 1,120 Canada 760 1,010 Europe, Middle East and Africa 139 109 Asia-Pacific 54 40 $ 2,452 $ 2,279 Amortization Expense: United States and Latin America $ 1,438 $ 1,505 Canada 2,402 3,649 Europe, Middle East and Africa 327 357 Asia-Pacific 266 266 $ 4,433 $ 5,777 Income (loss) from operations: United States and Latin America $ 1,003 $ 2,736 Canada 3,495 3,285 Europe, Middle East and Africa 357 2,648 Asia-Pacific 1,570 896 Unallocated: Stock compensation (1,019 ) (1,004 ) Public company costs (415 ) (321 ) $ 4,991 $ 8,240 June 30, 2019 March 31, 2019 Property, plant and equipment, net: United States and Latin America $ 40,500 $ 40,691 Canada 30,129 30,045 Europe, Middle East and Africa 3,647 3,497 Asia-Pacific 672 722 $ 74,948 $ 74,955 Total Assets: United States and Latin America $ 245,454 $ 230,149 Canada 304,828 298,233 Europe, Middle East and Africa 86,077 84,214 Asia-Pacific 34,867 43,166 $ 671,226 $ 655,762 Capital expenditures by geographic area were as follows: Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Capital Expenditures: United States and Latin America $ 1,162 $ 1,521 Canada 388 1,211 Europe, Middle East and Africa 169 118 Asia-Pacific 7 16 $ 1,726 $ 2,866 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 2, 2019, the Minority Shareholder provided the Company notice in order to exercise his option to sell the entirety of his remaining equity interest ( 12.5% of the entities holding the Sumac business unit) to the Company. The terms of the April 2015 Sumac purchase agreement prescribed a valuation formula for such a sale based on Sumac’s financial results for the fiscal year ended March 31, 2019. The Company paid $4,509 to purchase the remaining 12.5% non-controlling interest on August 1, 2019. |
Basis of Presentation and Acc_2
Basis of Presentation and Accounting Policy Information (Policies) | 3 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of Estimates Generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. While our management has based their assumptions and estimates on the facts and circumstances existing at June 30, 2019 , actual results could differ from those estimates and affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities and the corresponding revenues and expenses as of the date of the financial statements. The operating results for the three months ended June 30, 2019 are not necessarily indicative of the results that may be achieved for the fiscal year ending March 31, 2020 . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Leases - In February 2016, the FASB issued Accounting Standards Update 2016-02 “Leases” (“ASC Topic 842”), which provides guidance on the recognition, measurement, presentation and disclosure on leases. Under the standard, substantially all leases will be reported on the balance sheet as right-of-use assets and lease liabilities. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company adopted the amended guidance using the modified retrospective method as of April 1, 2019. Please refer to Note 3 "Leases" for further discussion, including the impact the adoption had on our condensed consolidated financial statements. Financial Instruments- In June 2016, the FASB issued Accounting Standards Update 2016-13 “Financial Instruments-Credit Losses” (“ASC Topic 326”), which amends the guidance on the impairment of financial instruments. The standard adds an impairment model, referred to as current expected credit loss, which is based on expected losses rather than incurred losses. The standard applies to most debt instruments, trade receivables, lease receivables, reinsurance receivables, financial guarantees and loan commitments. Under the guidance, companies are required to disclose credit quality indicators disaggregated by year of origination for a five-year period. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. We do not anticipate this will have a material impact to our consolidated financial statements. Intangibles- In January 2017, the FASB issued Accounting Standards Update 2017-04 “Intangibles - Goodwill and other” (“ASC Topic 350”) which amends and simplifies the accounting for goodwill impairment by eliminating step 2 of the goodwill impairment test. Under the amended guidance, goodwill impairment will be measured as the excess of the reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill for that reporting unit. The changes are effective for annual and interim periods beginning after December 15, 2019, and amendments should be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. We plan to adopt the amended guidance on April 1, 2020 for the fiscal year ending March 31, 2021. We do not anticipate this will have a material impact to our consolidated financial statements. |
Basis of Presentation and Acc_3
Basis of Presentation and Accounting Policy Information Table (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, restricted cash included in prepaid expenses and other current assets and restricted cash included in other long term assets reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows. June 30, 2019 2018 Cash and cash equivalents $ 35,269 $ 31,118 Restricted cash included in prepaid expenses and other current assets 1,698 1,743 Restricted cash included in other long term assets 827 687 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 37,794 $ 33,548 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of long-term debt that is not measured at fair value | Information about our short-term debt and long-term debt that is not measured at fair value is as follows: June 30, 2019 March 31, 2019 Carrying Value Fair Value Carrying Value Fair Value Valuation Technique Financial Liabilities Outstanding principal amount of senior secured credit facility $ 205,875 $ 205,875 $ 206,500 $ 206,500 Level 2 - Market Approach Outstanding borrowings from revolving line of credit $ 14,551 $ 14,551 $ 11,225 $ 11,225 Level 2 - Market Approach |
Schedule of notional amounts of forward contracts held in foreign currencies | As of June 30, 2019 and March 31, 2019 , the notional amounts of forward contracts were as follows: Notional amount of foreign currency forward contracts by currency June 30, 2019 March 31, 2019 Russian Ruble $ 1,128 $ — Canadian Dollar 4,000 1,500 South Korean Won 2,000 2,000 Mexican Peso 3,000 — Australian Dollar 700 900 Great Britain Pound 1,000 3,000 Total notional amounts $ 11,828 $ 7,400 |
Schedule of fair value of foreign currency forward contracts | The following table represents the fair value of our foreign currency forward contracts: June 30, 2019 March 31, 2019 Fair Value Fair Value Assets Liabilities Assets Liabilities Foreign currency forward contracts $ 31 $ 49 $ 8 $ 53 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lease Information | Supplemental statement of operations information related to leases was as follows: Lease expense Classification Three Months Ended June 30, 2019 Operating lease expense Marketing, general and administrative and engineering $ 808 Finance lease expense: Amortization of ROU assets Marketing, general and administrative and engineering 59 Interest expense on finance lease liabilities Interest expense 13 Short-term lease expense Marketing, general and administrative and engineering 463 Net lease expense $ 1,343 Supplement statement of cash flows information related to leases was as follows: Cash paid for amounts included in the measurement of lease liabilities Three Months Ended June 30, 2019 Operating cash from operating leases $ 718 Operating cash flows from finance leases 10 Financing cash flows from finance leases 38 Lease Term and Discount Rate June 30, 2019 Weighted average remaining lease term Operating 6.9 Finance 2.6 Weighted average discount rate Operating 4.60 % Finance 7.89 % |
Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows: Assets Classification June 30, 2019 Operating Operating lease right-of-use assets $ 14,435 Finance Property, plant and equipment 453 Total right-of-use assets $ 14,888 Liabilities Current Operating Lease liabilities $ 2,104 Finance Lease liabilities 218 Non-current Operating Non-current lease liabilities 13,567 Finance Non-current lease liabilities 259 Total lease liabilities $ 16,148 |
Future Lease Payments Under Non-Cancellable Operating Leases | Future lease payments under non-cancellable operating leases as of June 30, 2019 were as follows: Future Lease Payments Operating Leases Finance Leases Twelve months ending June 30, 2020 $ 2,768 $ 248 2021 2,995 170 2022 2,841 59 2023 2,276 46 2024 1,349 9 Thereafter 5,990 — Total lease payments $ 18,219 $ 532 Less imputed interest (2,927 ) (55 ) Total lease liability $ 15,292 $ 477 |
Future Lease Payments Under Finance Leases | Future lease payments under non-cancellable operating leases as of June 30, 2019 were as follows: Future Lease Payments Operating Leases Finance Leases Twelve months ending June 30, 2020 $ 2,768 $ 248 2021 2,995 170 2022 2,841 59 2023 2,276 46 2024 1,349 9 Thereafter 5,990 — Total lease payments $ 18,219 $ 532 Less imputed interest (2,927 ) (55 ) Total lease liability $ 15,292 $ 477 |
Earnings and Net Income (Loss)
Earnings and Net Income (Loss) per Common Share (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the denominators used to calculate basic EPS and diluted EPS | The reconciliations of the denominators used to calculate basic and diluted net income per common share for the three months ended June 30, 2019 and 2018 , respectively, are as follows: Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Basic net income per common share Net income available to Thermon Group Holdings, Inc. $ 1,471 $ 3,042 Weighted-average common shares outstanding 32,635,295 32,501,280 Basic net income per common share $ 0.05 $ 0.09 Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Diluted net income per common share Net income available to Thermon Group Holdings, Inc. $ 1,471 $ 3,042 Weighted-average common shares outstanding 32,635,295 32,501,280 Common share equivalents: Stock options 208,220 215,037 Restricted and performance stock units 208,408 219,515 Weighted average shares outstanding – dilutive (1) 33,051,923 32,935,832 Diluted net income per common share $ 0.04 $ 0.09 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consisted of the following: June 30, March 31, Raw materials $ 35,619 $ 32,892 Work in process 6,120 5,696 Finished goods 30,246 28,501 71,985 67,089 Valuation reserves (2,296 ) (2,199 ) Inventories, net $ 69,689 $ 64,890 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying amount of goodwill | The carrying amount of goodwill by operating segment as of June 30, 2019 is as follows: United States and Latin America Canada Europe, Middle East and Africa Asia-Pacific Total Balance as of March 31, 2019 $ 62,725 $ 114,382 $ 19,264 $ 8,624 $ 204,995 Foreign currency translation impact — 2,412 256 — 2,668 Balance as of June 30, 2019 $ 62,725 $ 116,794 $ 19,520 $ 8,624 $ 207,663 |
Schedule of intangible assets | Our total intangible assets consisted of the following: Gross Carrying Amount at June 30, 2019 Accumulated Amortization Net Carrying Amount at June 30, 2019 Gross Carrying Amount at March 31, 2019 Accumulated Amortization Net Carrying Amount at March 31, 2019 Products $ 63,658 $ 10,610 $ 53,045 $ 62,343 $ 8,832 $ 53,511 Trademarks 45,201 1,126 44,075 44,819 1,052 43,767 Developed technology 9,850 4,535 5,315 9,854 4,464 5,390 Customer relationships 109,193 88,128 21,065 110,802 87,319 23,483 Certifications 449 — 449 445 — 445 Other — — — 5,742 5,742 — Total $ 228,351 $ 104,399 $ 123,949 $ 234,005 $ 107,409 $ 126,596 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued current liabilities | Accrued current liabilities consisted of the following: June 30, March 31, Accrued employee compensation and related expenses $ 8,089 $ 18,109 Accrued interest 991 1,172 Customer prepayment 877 783 Warranty reserve 431 365 Professional fees 2,572 2,326 Sales tax payable 3,319 2,185 Other 3,105 2,908 Total accrued current liabilities $ 19,384 $ 27,848 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of the following: June 30, March 31, Variable Rate Term Loan, due October 2024, net of deferred debt issuance costs and debt discounts of $5,991 and $6,271 as of June 30, 2019 and March 31, 2019, respectively $ 199,884 $ 200,229 Less current portion (2,500 ) (2,500 ) Total long-term debt $ 197,384 $ 197,729 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenues | Disaggregation of revenues from contracts with customers for the three months ended June 30, 2019 and 2018 is as follows: Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Revenues recognized at point in time Revenues recognized over time Total Revenues recognized at point in time Revenues recognized over time Total United States and Latin America $ 14,816 $ 25,611 $ 40,427 $ 14,819 $ 16,810 $ 31,629 Canada 22,844 4,408 27,252 23,360 5,268 28,628 Europe, Middle East and Africa 9,054 4,285 13,339 12,652 8,151 20,803 Asia-Pacific 4,700 5,994 10,694 6,065 1,777 7,842 Total revenues $ 51,414 $ 40,298 $ 91,712 $ 56,896 $ 32,006 $ 88,902 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Total sales and operating income classified by major geographic area in which the company operates | Total sales to external customers, inter-segment sales, depreciation expense, amortization expense, income from operations, property, plant and equipment, net and total assets for each of our four reportable segments are as follows: Three Months Ended June 30, 2019 Three Months Ended Sales to External Customers: United States and Latin America $ 40,427 $ 31,629 Canada 27,252 28,628 Europe, Middle East and Africa 13,339 20,803 Asia-Pacific 10,694 7,842 $ 91,712 $ 88,902 Inter-Segment Sales: United States and Latin America $ 9,741 $ 11,929 Canada 1,124 1,053 Europe, Middle East and Africa 561 1,105 Asia-Pacific 288 145 $ 11,714 $ 14,232 Depreciation Expense: United States and Latin America $ 1,499 $ 1,120 Canada 760 1,010 Europe, Middle East and Africa 139 109 Asia-Pacific 54 40 $ 2,452 $ 2,279 Amortization Expense: United States and Latin America $ 1,438 $ 1,505 Canada 2,402 3,649 Europe, Middle East and Africa 327 357 Asia-Pacific 266 266 $ 4,433 $ 5,777 Income (loss) from operations: United States and Latin America $ 1,003 $ 2,736 Canada 3,495 3,285 Europe, Middle East and Africa 357 2,648 Asia-Pacific 1,570 896 Unallocated: Stock compensation (1,019 ) (1,004 ) Public company costs (415 ) (321 ) $ 4,991 $ 8,240 June 30, 2019 March 31, 2019 Property, plant and equipment, net: United States and Latin America $ 40,500 $ 40,691 Canada 30,129 30,045 Europe, Middle East and Africa 3,647 3,497 Asia-Pacific 672 722 $ 74,948 $ 74,955 Total Assets: United States and Latin America $ 245,454 $ 230,149 Canada 304,828 298,233 Europe, Middle East and Africa 86,077 84,214 Asia-Pacific 34,867 43,166 $ 671,226 $ 655,762 |
Basis of Presentation and Acc_4
Basis of Presentation and Accounting Policy Information (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Sep. 30, 2017 | Mar. 31, 2017 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cash and cash equivalents | $ 35,269 | $ 31,402 | $ 31,118 | ||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | 37,794 | $ 33,841 | 33,548 | $ 33,548 | $ 36,327 |
Prepaid Expenses and Other Current Assets | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | 1,698 | 1,743 | |||
Other Assets | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 827 | $ 687 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Level 2 - Market Approach - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Loans Payable | ||
Financial Liabilities, Long-term debt | ||
Long-term debt, Carrying Value | $ 205,875 | $ 206,500 |
Long-term debt, Fair Value | 205,875 | 206,500 |
Revolving credit facility | ||
Financial Liabilities, Long-term debt | ||
Long-term debt, Carrying Value | 14,551 | 11,225 |
Long-term debt, Fair Value | $ 14,551 | $ 11,225 |
Fair Value Measurements - Forei
Fair Value Measurements - Foreign Exchange Contracts by Currency (Details) - Foreign Exchange Forward Contracts - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Derivative [Line Items] | ||
Notional amount | $ 11,828 | $ 7,400 |
Russian Ruble | ||
Derivative [Line Items] | ||
Notional amount | 1,128 | 0 |
Canadian Dollar | ||
Derivative [Line Items] | ||
Notional amount | 4,000 | 1,500 |
South Korean Won | ||
Derivative [Line Items] | ||
Notional amount | 2,000 | 2,000 |
Mexican Peso | ||
Derivative [Line Items] | ||
Notional amount | 3,000 | 0 |
Australian Dollar | ||
Derivative [Line Items] | ||
Notional amount | 700 | 900 |
Great Britain Pound | ||
Derivative [Line Items] | ||
Notional amount | $ 1,000 | $ 3,000 |
Fair Value Measurements - For_2
Fair Value Measurements - Foreign Exchange Contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Maximum term of forward contracts | 30 days | ||
Net Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | $ (212) | $ (75) | |
Foreign Exchange Forward Contracts | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Foreign exchange contract forwards, assets | 31 | $ 8 | |
Foreign exchange contract forwards, liabilities | 49 | $ 53 | |
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net | $ (42) | $ (95) |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements - Cross Currency Swaps (Details) | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Fair Value Disclosures [Abstract] | |
Intercompany receivable | $ 77,894,000 |
Derivative [Line Items] | |
Unrealized gain on intercompany note | 1,607,000 |
Cross Currency Swap | |
Derivative [Line Items] | |
Loss on long-term derivative contract | (328) |
Net gain | $ 162,000 |
Fair Value Measurements (Deferr
Fair Value Measurements (Deferred compensation plan) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |||
Plan assets | $ 3,116 | $ 1,557 | |
Deferred compensation liability | 3,163 | $ 1,520 | |
Deferred compensation expense (income) | 103 | $ 3 | |
Unrealized gain (loss) | $ 95 | $ 3 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 3 Months Ended |
Jun. 30, 2019 | |
Minimum | Equipment | |
Lessee, Lease, Description [Line Items] | |
Lease term | 6 months |
Minimum | Land and Building | |
Lessee, Lease, Description [Line Items] | |
Lease term | 1 month |
Lease renewal term | 1 year |
Maximum | Equipment | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Maximum | Land and Building | |
Lessee, Lease, Description [Line Items] | |
Lease term | 10 years |
Lease renewal term | 5 years |
Leases - Lease Term and Discoun
Leases - Lease Term and Discount Rate (Details) | Jun. 30, 2019 |
Weighted average remaining lease term | |
Operating | 6 years 10 months 24 days |
Finance | 2 years 7 months 6 days |
Weighted average discount rate | |
Operating | 4.60% |
Finance | 7.89% |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Assets | ||
Operating | $ 14,435 | $ 0 |
Finance | 453 | |
Total right-of-use assets | 14,888 | |
Current | ||
Operating | 2,104 | |
Finance | 218 | |
Non-current | ||
Operating | 13,567 | |
Finance | 259 | |
Total lease liabilities | $ 16,148 |
Leases - Supplemental Statement
Leases - Supplemental Statement of Operations Information (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Finance lease expense: | |
Net lease expense | $ 1,343 |
Marketing, general and administrative and engineering | |
Lessee, Lease, Description [Line Items] | |
Operating lease expense | 808 |
Finance lease expense: | |
Amortization of ROU assets | 59 |
Short-term lease expense | 463 |
Interest expense | |
Finance lease expense: | |
Interest expense on finance lease liabilities | $ 13 |
Leases - Supplemental Stateme_2
Leases - Supplemental Statement Of Cash Flows Information (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash outflows from operation leases | $ 718 |
Operating cash flows from operation leases | 10 |
Financing cash flows from leases | $ 38 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Operating Leases | |
2020 | $ 2,768 |
2021 | 2,995 |
2022 | 2,841 |
2023 | 2,276 |
2024 | 1,349 |
Thereafter | 5,990 |
Total lease payments | 18,219 |
Less imputed interest | (2,927) |
Total lease liability | 15,292 |
Finance Leases | |
2020 | 248 |
2021 | 170 |
2022 | 59 |
2023 | 46 |
2024 | 9 |
Thereafter | 0 |
Total lease payments | 532 |
Less imputed interest | (55) |
Total lease liability | $ 477 |
Earnings and Net Income (Loss_2
Earnings and Net Income (Loss) per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Basic net income (loss) per common share | ||
Net income available to Thermon Group Holdings, Inc. | $ 1,471 | $ 3,042 |
Weighted-average common shares outstanding (in shares) | 32,635,295 | 32,501,280 |
Basic net income (loss) per common share (in dollars per share) | $ 0.05 | $ 0.09 |
Diluted net income (loss) per common share | ||
Net income available to Thermon Group Holdings, Inc. | $ 1,471 | $ 3,042 |
Weighted-average common shares outstanding (in shares) | 32,635,295 | 32,501,280 |
Diluted (in shares) | 33,051,923 | 32,935,832 |
Diluted net income (loss) per common share (in dollars per share) | $ 0.04 | $ 0.09 |
Equity Option | ||
Diluted net income (loss) per common share | ||
Weighted average number of diluted shares outstanding adjustment (in shares) | 208,220 | 215,037 |
Restricted Stock Units | ||
Diluted net income (loss) per common share | ||
Weighted average number of diluted shares outstanding adjustment (in shares) | 208,408 | 219,515 |
Stock Compensation Plan | ||
Diluted net income (loss) per common share | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 13,074 | 5,767 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 35,619 | $ 32,892 |
Work in process | 6,120 | 5,696 |
Finished goods | 30,246 | 28,501 |
Inventories, gross | 71,985 | 67,089 |
Valuation reserves | (2,296) | (2,199) |
Inventories, net | $ 69,689 | $ 64,890 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Goodwill | |
Balance at the beginning of the period | $ 204,995 |
Balance at the end of the period | 207,663 |
Operating Segments | |
Goodwill | |
Balance at the beginning of the period | 204,995 |
Foreign currency translation impact | 2,668 |
Balance at the end of the period | 207,663 |
Operating Segments | United States and Latin America | |
Goodwill | |
Balance at the beginning of the period | 62,725 |
Foreign currency translation impact | 0 |
Balance at the end of the period | 62,725 |
Operating Segments | Canada | |
Goodwill | |
Balance at the beginning of the period | 114,382 |
Foreign currency translation impact | 2,412 |
Balance at the end of the period | 116,794 |
Operating Segments | Europe, Middle East and Africa | |
Goodwill | |
Balance at the beginning of the period | 19,264 |
Foreign currency translation impact | 256 |
Balance at the end of the period | 19,520 |
Operating Segments | Asia-Pacific | |
Goodwill | |
Balance at the beginning of the period | 8,624 |
Foreign currency translation impact | 0 |
Balance at the end of the period | $ 8,624 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, accumulated amortization | $ 104,399 | $ 107,409 |
Intangible assets, gross | 228,351 | 234,005 |
Intangible assets, net | 123,949 | 126,596 |
Certifications | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets (excluding goodwill) | 449 | 445 |
Products | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 63,658 | 62,343 |
Finite-lived intangible assets, accumulated amortization | 10,610 | 8,832 |
Finite-lived intangible assets, net carrying amount | 53,045 | 53,511 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 45,201 | 44,819 |
Finite-lived intangible assets, accumulated amortization | 1,126 | 1,052 |
Finite-lived intangible assets, net carrying amount | 44,075 | 43,767 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 9,850 | 9,854 |
Finite-lived intangible assets, accumulated amortization | 4,535 | 4,464 |
Finite-lived intangible assets, net carrying amount | 5,315 | 5,390 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 109,193 | 110,802 |
Finite-lived intangible assets, accumulated amortization | 88,128 | 87,319 |
Finite-lived intangible assets, net carrying amount | 21,065 | 23,483 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 0 | 5,742 |
Finite-lived intangible assets, accumulated amortization | 0 | 5,742 |
Finite-lived intangible assets, net carrying amount | $ 0 | $ 0 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued employee compensation and related expenses | $ 8,089 | $ 18,109 |
Accrued interest | 991 | 1,172 |
Customer prepayment | 877 | 783 |
Warranty reserve | 431 | 365 |
Professional fees | 2,572 | 2,326 |
Sales tax payable | 3,319 | 2,185 |
Other | 3,105 | 2,908 |
Total accrued current liabilities | $ 19,384 | $ 27,848 |
Short-Term Revolving Lines of C
Short-Term Revolving Lines of Credit (Details) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Short-Term Revolving Lines of Credit | ||
Outstanding borrowings | $ 14,551,000 | $ 11,225,000 |
Netherlands | ||
Short-Term Revolving Lines of Credit | ||
Outstanding borrowings | 0 | |
India | ||
Short-Term Revolving Lines of Credit | ||
Outstanding borrowings | 0 | |
Australia | ||
Short-Term Revolving Lines of Credit | ||
Outstanding borrowings | 0 | |
Revolving credit facility | ||
Short-Term Revolving Lines of Credit | ||
Outstanding borrowings | $ 0 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Thousands | Dec. 31, 2020 | Oct. 30, 2017CAD ($) | Oct. 30, 2017USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 31, 2019USD ($) | Apr. 01, 2018 |
Debt Instrument [Line Items] | ||||||||||
Less current portion | $ (2,500,000) | $ (2,500,000) | ||||||||
Long-term debt, net of current maturities and deferred debt issuance costs and debt discounts of $5,991 and $6,271 as of June 30, 2019 and March 31, 2019, respectively | 197,384,000 | 197,729,000 | ||||||||
Debt issuance costs | 7,263,000 | 7,967,000 | ||||||||
Debt issuance costs, net | 5,991,000 | 6,271,000 | ||||||||
Repayments of long-term debt | 7,494,000 | $ 4,625,000 | ||||||||
Maximum leverage ratio to secure additional borrowing | 4 | 4 | ||||||||
Outstanding borrowings | 14,551,000 | 11,225,000 | ||||||||
Loans Payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, face amount | 5,905,000 | |||||||||
Revolving credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Outstanding borrowings | 14,551,000 | |||||||||
Capacity available under credit facility | 41,390,000 | |||||||||
Through March 31, 2019 | Loans Payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of notes payable | 625 | |||||||||
Revolving credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Outstanding borrowings | 0 | |||||||||
Revolving credit facility | Line of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, face amount | $ 60,000,000 | |||||||||
Repayments of lines of credit | $ 6,000,000 | |||||||||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 201,900 | |||||||||
Line of credit facility, commitment fee percentage | 0.50% | 0.50% | ||||||||
Maximum leverage ratio | 5.5 | |||||||||
Debt covenant, coverage ratio | 1.25 | 1.25 | ||||||||
Revolving credit facility | Base Rate | Line of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 2.25% | 2.25% | ||||||||
Revolving credit facility | London Interbank Offered Rate (LIBOR) | Line of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 3.25% | 3.25% | ||||||||
Revolving credit facility | Canadian Base Rate [Member] | Line of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 2.25% | 2.25% | ||||||||
Revolving credit facility | CDOR | Line of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 3.25% | 3.25% | ||||||||
Variable Rate Term Loan due October 2024 | Loans Payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Variable Rate Term Loans | 199,884,000 | $ 200,229,000 | ||||||||
Debt issuance costs, net | 9,089,000 | |||||||||
Variable Rate Term Loan due April 2019 | Loans Payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt issuance costs, net | $ 524,000 | |||||||||
Variable Rate Senior Secured Term Loan B | Secured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, face amount | $ 250,000,000 | |||||||||
Variable interest rate floor | 1.00% | |||||||||
Quarterly amortization of debt, percent | 0.25% | |||||||||
Repayment requirement, percentage of excess cash flow | 50.00% | |||||||||
Reduced repayment requirement, percentage of excess cash flow | 25.00% | |||||||||
Additional borrowing capacity | $ 30,000,000 | |||||||||
Debt Instrument, Debt Covenant, Maximum Leverage Ratio Requirement For Reduced Repayment | 4 | |||||||||
Debt Instrument, Debt Covenant, Minimum Leverage Ratio Requirement For Reduced Repayment | 3.5 | |||||||||
Debt Instrument, Debt Covenant, Minimum Repayment Requirement, Percentage of Excess Cash Flow | 0.00% | |||||||||
Debt Instrument, Debt Covenant, Maximum Leverage Ratio Requirement For Minimum Repayment | 3.5 | |||||||||
Variable Rate Senior Secured Term Loan B | Secured Debt | Subsidiary Stock | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Guarantor obligations, percentage | 100.00% | 100.00% | ||||||||
Variable Rate Senior Secured Term Loan B | Secured Debt | Stock of First Tier Material Foreign Subsidiaries, US Borrower, and US Subsidiary | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Guarantor obligations, percentage | 65.00% | 65.00% | ||||||||
Variable Rate Senior Secured Term Loan B | Base Rate | Secured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 2.75% | 2.75% | ||||||||
Variable Rate Senior Secured Term Loan B | London Interbank Offered Rate (LIBOR) | Secured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable rate | 3.75% | 3.75% | ||||||||
Term Loan A due April 2019 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of long-term debt | $ 70,875,000 | |||||||||
Thermon Heating Systems Inc. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt proceeds used as consideration for business acquisition | $ 164,900,000 | |||||||||
Scenario, Forecast [Member] | Revolving credit facility | Line of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum leverage ratio | 3.75 | 4.5 | 5 | |||||||
US Borrower | Revolving credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate at period end (as a percent) | 4.93% | |||||||||
Canadian Borrower | Revolving credit facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate at period end (as a percent) | 4.56% |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | Aug. 01, 2019 | Apr. 02, 2018 | Mar. 31, 2017 | Apr. 02, 2019 | Mar. 31, 2019 | Apr. 01, 2015 |
Related Party Transaction [Line Items] | ||||||
Noncontrolling Interest, ownership by noncontrolling owners (percent) | 12.50% | |||||
Payments for purchase of equity | $ 5,665 | |||||
SUMAC Former Principal | ||||||
Related Party Transaction [Line Items] | ||||||
Noncontrolling Interest, ownership by noncontrolling owners (percent) | 25.00% | |||||
Non-interest Bearing Performance Based Note | ||||||
Related Party Transaction [Line Items] | ||||||
Debt Instrument, face amount | $ 5,905,000 | |||||
Payments to Related Party | SUMAC Former Principal | ||||||
Related Party Transaction [Line Items] | ||||||
Related party transaction, amounts of transaction | $ 5,805,000 | |||||
Sumac Business | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership percentage | 12.50% | |||||
Sumac Business | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership interest percentage | 12.50% | |||||
Subsequent Event | ||||||
Related Party Transaction [Line Items] | ||||||
Payments to acquire equity interest | $ 4,509,000 | |||||
Subsequent Event | Sumac Business | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership interest percentage | 12.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Totaled arrangements under letter of credit guarantees and performance bonds securing performance obligations | $ 19,303 |
Guarantee obligations secured by cash deposits | 2,525 |
Guarantee obligations represented by a reduction of the available amount of the company's short term and long term revolving lines of credit | 4,058 |
Indian custom bonds outstanding | $ 5,267 |
Stock-Based Compensation Expe_2
Stock-Based Compensation Expense (Details) $ in Thousands | 3 Months Ended | 49 Months Ended | |||
Jun. 30, 2019USD ($)shares | Jun. 30, 2018USD ($) | Jun. 30, 2014plan | Apr. 08, 2011shares | Jul. 28, 2010shares | |
Stock-Based Compensation Expense | |||||
Number of stock option award plans | plan | 2 | ||||
Options outstanding (in shares) | 324,568 | ||||
Stock compensation expense | $ | $ 1,019 | $ 1,004 | |||
Restricted Stock and Stock Option Plan | |||||
Stock-Based Compensation Expense | |||||
Maximum number of shares of the company's common stock that may be awarded | 2,767,171 | ||||
2011 Long-term Incentive Plan | |||||
Stock-Based Compensation Expense | |||||
Maximum number of shares of the company's common stock that may be awarded | 2,893,341 | ||||
Restricted Stock Units | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 105,726 | ||||
Stock Issued During Period, Value, Restricted Stock Award, Gross | $ | $ 2,324 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 3 years | ||||
Common Stock | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 3,654 | ||||
Stock Issued During Period, Value, Restricted Stock Award, Gross | $ | $ 90 | ||||
Share-based compensation arrangement by share-based payment award, fair value of shares authorized amount | $ | $ 360 | ||||
Performance Shares | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 26,147 | ||||
Stock Issued During Period, Value, Restricted Stock Award, Gross | $ | $ 915 | ||||
Minimum | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Possible Number of Performance Shares to be Granted | 0 | ||||
Maximum | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Possible Number of Performance Shares to be Granted | 52,294 | ||||
Management | Performance Shares | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 62,319 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Fair Value | $ | $ 1,370 | ||||
Management | Minimum | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Possible Number of Performance Shares to be Granted | 0 | ||||
Management | Maximum | Performance Shares | |||||
Stock-Based Compensation Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Possible Number of Performance Shares to be Granted | 124,638 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Costs in Excess of Billings, Current | $ 23,646 | $ 26,454 | |
Sales | 91,712 | $ 88,902 | |
Cost of sales | (54,570) | (49,173) | |
Increase in contract assets | (2,808) | ||
Contract liabilities | 6,344 | $ 6,814 | |
Revenues recognized at point in time | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Sales | $ 51,414 | $ 56,896 | |
Percentage of total revenue | 56.10% | 64.00% | |
Revenues recognized over time | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Sales | $ 40,298 | $ 32,006 | |
Percentage of total revenue | 43.90% | 36.00% |
Revenue from Contracts with C_4
Revenue from Contracts with Customers Revenue from Contracts with Customers - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Total activity | $ (2,808) | |
Contract liabilities | $ (6,344) | $ (6,814) |
Revenue from Contracts with C_5
Revenue from Contracts with Customers Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 91,712 | $ 88,902 |
Revenues recognized at point in time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 51,414 | 56,896 |
Revenues recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 40,298 | 32,006 |
United States and Latin America | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 40,427 | 31,629 |
United States and Latin America | Revenues recognized at point in time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 14,816 | 14,819 |
United States and Latin America | Revenues recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 25,611 | 16,810 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 27,252 | 28,628 |
Canada | Revenues recognized at point in time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 22,844 | 23,360 |
Canada | Revenues recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 4,408 | 5,268 |
Europe, Middle East and Africa | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 13,339 | 20,803 |
Europe, Middle East and Africa | Revenues recognized at point in time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 9,054 | 12,652 |
Europe, Middle East and Africa | Revenues recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 4,285 | 8,151 |
Asia-Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 10,694 | 7,842 |
Asia-Pacific | Revenues recognized at point in time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 4,700 | 6,065 |
Asia-Pacific | Revenues recognized over time | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 5,994 | $ 1,777 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Performance Obligation (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 13,562 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 111,479 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 2.90% | 26.40% | |
Decrease in tax expense from tax adjustments | $ 551 | ||
Liability for uncertain tax positions | $ 690 | ||
Reserves released | $ 462 | ||
Interest and penalties accrued | $ 16 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2019USD ($)segmentGeographic_Region | Jun. 30, 2018USD ($) | Mar. 31, 2019USD ($) | |
Sales by geographic area: | |||
Number of Reportable Segments | segment | 4 | ||
Number of Operating Segments | Geographic_Region | 4 | ||
Sales | $ 91,712 | $ 88,902 | |
Depreciation | 2,452 | 2,279 | |
Amortization of intangible assets | 4,433 | 5,777 | |
Operating income | |||
Operating income (loss) | 4,991 | 8,240 | |
Stock compensation expense | 1,019 | 1,004 | |
Property, plant and equipment, net | 74,948 | $ 74,955 | |
Assets | 671,226 | 655,762 | |
Operating Segments | |||
Sales by geographic area: | |||
Sales | 91,712 | 88,902 | |
Intersegment Eliminations | |||
Sales by geographic area: | |||
Sales | 11,714 | 14,232 | |
Segment Reconciling Items | |||
Operating income | |||
Stock compensation expense | (1,019) | (1,004) | |
Public company costs | (415) | (321) | |
United States and Latin America | |||
Sales by geographic area: | |||
Depreciation | 1,499 | 1,120 | |
Amortization of intangible assets | 1,438 | 1,505 | |
Operating income | |||
Operating income (loss) | 1,003 | 2,736 | |
Property, plant and equipment, net | 40,500 | 40,691 | |
Assets | 245,454 | 230,149 | |
United States and Latin America | Operating Segments | |||
Sales by geographic area: | |||
Sales | 40,427 | 31,629 | |
United States and Latin America | Intersegment Eliminations | |||
Sales by geographic area: | |||
Sales | 9,741 | 11,929 | |
Canada | |||
Sales by geographic area: | |||
Depreciation | 760 | 1,010 | |
Amortization of intangible assets | 2,402 | 3,649 | |
Operating income | |||
Operating income (loss) | 3,495 | 3,285 | |
Property, plant and equipment, net | 30,129 | 30,045 | |
Assets | 304,828 | 298,233 | |
Canada | Operating Segments | |||
Sales by geographic area: | |||
Sales | 27,252 | 28,628 | |
Canada | Intersegment Eliminations | |||
Sales by geographic area: | |||
Sales | 1,124 | 1,053 | |
Europe, Middle East and Africa | |||
Sales by geographic area: | |||
Depreciation | 139 | 109 | |
Amortization of intangible assets | 327 | 357 | |
Operating income | |||
Operating income (loss) | 357 | 2,648 | |
Property, plant and equipment, net | 3,647 | 3,497 | |
Assets | 86,077 | 84,214 | |
Europe, Middle East and Africa | Operating Segments | |||
Sales by geographic area: | |||
Sales | 13,339 | 20,803 | |
Europe, Middle East and Africa | Intersegment Eliminations | |||
Sales by geographic area: | |||
Sales | 561 | 1,105 | |
Asia-Pacific | |||
Sales by geographic area: | |||
Depreciation | 54 | 40 | |
Amortization of intangible assets | 266 | 266 | |
Operating income | |||
Operating income (loss) | 1,570 | 896 | |
Property, plant and equipment, net | 672 | 722 | |
Assets | 34,867 | $ 43,166 | |
Asia-Pacific | Operating Segments | |||
Sales by geographic area: | |||
Sales | 10,694 | 7,842 | |
Asia-Pacific | Intersegment Eliminations | |||
Sales by geographic area: | |||
Sales | $ 288 | $ 145 | |
Sumac Fabrication Company Limited | |||
Sales by geographic area: | |||
Expected sales and operating income as a percentage of total sales and operating income, less than | 10.00% |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ in Thousands | Aug. 01, 2019 | Apr. 02, 2019 |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Payments to acquire equity interest | $ 4,509 | |
Sumac Business | ||
Subsequent Event [Line Items] | ||
Ownership interest percentage | 12.50% | |
Sumac Business | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Ownership interest percentage | 12.50% |