THR

• Bruce Thames highlighted record-breaking results, strategic initiatives, order trends (14% y/y increase), large project growth (60% y/y increase in large project orders), and business outlook.
• Thomas Cerovski discussed data center liquid load banks (shipped first units, quote log doubled to $60 million) and medium voltage heaters (pipeline over $150 million, barriers to entry in the market).
• Jan Schott reviewed third-quarter financial results (revenue up 10%, adjusted EBITDA up 12%, gross margin 46.6%), geography performance, balance sheet (working capital $190 million, free cash flow $13.1 million), and liquidity.

• Raised full-year 2026 revenue guidance to a range of $516 million to $526 million (5% growth at midpoint).
• Raised adjusted EBITDA guidance to a range of $114 million to $120 million (7% growth at midpoint).

Third-quarter revenues were up 10% from the previous year, with adjusted EBITDA increasing by 12%. Adjusted EBITDA margin was just over 24% for the quarter. Orders in the third quarter increased by 14% year over year, resulting in a book-to-bill ratio of approximately 1.1 times. Backlog increased 10%. By geography, US Lam had a 10% year-over-year increase, Canada 1%, EMEA 37%, and APAC 9%. Product segments: Data center liquid load banks saw shipping of first units and a doubled quote log to $60 million. Medium voltage heaters pipeline expanded to over $150 million.

Q: Congratulations on the great results... How is the 46%+ gross margin sustainable despite increasing large project activity?

A: Bruce Thames discussed the Thermon business system driving productivity, price increases, operating leverage, and project mix shifting towards design and supply with less field labor/content.

Q: Another question on the liquid load banks... Any update on market size assumptions?

A: Thomas Cerovski stated quote log has doubled to $60 million, but management estimates of market size remain consistent with previous communications.

Q: On the CapEx guidance... Will CapEx be higher as ramping for growth in 2027 and 2028?

A: Bruce Thames mentioned CapEx expected to be closer to 3% range next year for scaling manufacturing of liquid load banks and medium voltage heaters.

Q: Going back to gross margins... Are margins better than years ago?

A: Bruce Thames said project margins are healthy, not necessarily above historical large CapEx cycles but improved due to mix and market conditions.

Q: Fati acquisition... How is Fati performing and what's ahead for 2027?

A: Bruce Thames said Fati has performed exceptionally well, with plans to scale capacity in Milan, double the business over 2-3 years, and leverage manufacturing capacity for growth in electrification and medium voltage heaters.