Delaware | 27-2228185 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o |
Page | |
PART I — FINANCIAL INFORMATION | |
Thermon Group Holdings, Inc. and its Consolidated Subsidiaries | |
PART II — OTHER INFORMATION | |
EX-10.1 | |
EX-31.1 | |
EX-31.2 | |
EX-32.1 | |
EX-32.2 |
December 31, 2016 | March 31, 2016 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 42,022 | $ | 84,570 | |||
Investments | 36,972 | — | |||||
Accounts receivable, net of allowance for doubtful accounts of $562 and $656 as of December 31, 2016 and March 31, 2016, respectively | 58,166 | 58,493 | |||||
Inventories, net | 38,953 | 40,645 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 6,375 | 7,605 | |||||
Prepaid expenses and other current assets | 8,187 | 8,231 | |||||
Income tax receivable | 209 | 209 | |||||
Total current assets | 190,884 | 199,753 | |||||
Property, plant and equipment, net | 41,669 | 41,617 | |||||
Goodwill | 121,766 | 121,510 | |||||
Intangible assets, net | 88,661 | 103,998 | |||||
Deferred income taxes | 2,502 | 1,476 | |||||
Other long term assets | 390 | 323 | |||||
Total assets | $ | 445,872 | $ | 468,677 | |||
Liabilities | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 14,633 | $ | 19,458 | |||
Accrued liabilities | 10,347 | 18,238 | |||||
Current portion of long term debt | 18,563 | 13,500 | |||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 2,633 | 3,438 | |||||
Income taxes payable | 1,114 | 2,937 | |||||
Total current liabilities | 47,290 | 57,571 | |||||
Long-term debt, net of current maturities and deferred debt issuance costs of $609 and $888 as of December 31, 2016 and March 31, 2016, respectively | 65,203 | 80,112 | |||||
Deferred income taxes | 25,700 | 29,114 | |||||
Other non-current liabilities | 3,401 | 3,179 | |||||
Total liabilities | 141,594 | 169,976 | |||||
Equity | |||||||
Common stock: $.001 par value; 150,000,000 authorized; 32,337,359 and 32,222,720 shares issued and outstanding at December 31, 2016 and March 31, 2016, respectively | 32 | 32 | |||||
Preferred stock: $.001 par value; 10,000,000 authorized; no shares issued and outstanding | — | — | |||||
Additional paid in capital | 218,916 | 216,701 | |||||
Accumulated other comprehensive loss | (52,843 | ) | (44,569 | ) | |||
Retained earnings | 133,648 | 122,258 | |||||
Total Thermon Group Holdings, Inc. shareholders' equity | 299,753 | 294,422 | |||||
Non-controlling interests | 4,525 | 4,279 | |||||
Total equity | 304,278 | 298,701 | |||||
Total liabilities and equity | $ | 445,872 | $ | 468,677 |
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | Nine Months Ended December 31, 2016 | Nine Months Ended December 31, 2015 | ||||||||||||
Sales | $ | 64,340 | $ | 74,427 | $ | 196,548 | $ | 209,584 | |||||||
Cost of sales | 35,721 | 39,298 | 112,891 | 110,364 | |||||||||||
Gross profit | 28,619 | 35,129 | 83,657 | 99,220 | |||||||||||
Operating expenses: | |||||||||||||||
Marketing, general and administrative and engineering | 18,357 | 20,167 | 57,689 | 59,021 | |||||||||||
Amortization of intangible assets | 2,963 | 3,135 | 8,804 | 8,979 | |||||||||||
Income from operations | 7,299 | 11,827 | 17,164 | 31,220 | |||||||||||
Other income/(expenses): | |||||||||||||||
Interest income | 131 | 91 | 366 | 309 | |||||||||||
Interest expense | (862 | ) | (918 | ) | (2,671 | ) | (3,227 | ) | |||||||
Other income | (6 | ) | (377 | ) | (156 | ) | (664 | ) | |||||||
Income before provision for income taxes | 6,562 | 10,623 | 14,703 | 27,638 | |||||||||||
Income tax expense | 1,245 | 1,954 | 3,068 | 7,462 | |||||||||||
Net income | $ | 5,317 | $ | 8,669 | $ | 11,635 | $ | 20,176 | |||||||
Income (loss) attributable to non-controlling interests | (41 | ) | 189 | 245 | 371 | ||||||||||
Net income available to Thermon Group Holdings, Inc. | $ | 5,358 | $ | 8,480 | $ | 11,390 | $ | 19,805 | |||||||
Comprehensive income (loss): | |||||||||||||||
Net income available to Thermon Group Holdings, Inc. | $ | 5,358 | $ | 8,480 | $ | 11,390 | $ | 19,805 | |||||||
Foreign currency translation adjustment | (8,069 | ) | (6,047 | ) | (8,929 | ) | (13,337 | ) | |||||||
Derivative valuation, net of tax | 495 | 373 | 655 | 237 | |||||||||||
Comprehensive income (loss) | $ | (2,216 | ) | $ | 2,806 | $ | 3,116 | $ | 6,705 | ||||||
Net Income per common share: | |||||||||||||||
Basic | $ | 0.17 | $ | 0.26 | $ | 0.35 | $ | 0.62 | |||||||
Diluted | 0.16 | 0.26 | 0.35 | 0.61 | |||||||||||
Weighted-average shares used in computing net income per common share: | |||||||||||||||
Basic | 32,330,392 | 32,210,081 | 32,280,539 | 32,162,800 | |||||||||||
Diluted | 32,651,930 | 32,596,747 | 32,619,285 | 32,575,757 |
Nine Months Ended December 31, 2016 | Nine Months Ended December 31, 2015 | ||||||
Operating activities | |||||||
Net income | $ | 11,635 | $ | 20,176 | |||
Adjustment to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 13,202 | 12,971 | |||||
Amortization of deferred debt issuance costs | 298 | 629 | |||||
Stock compensation expense | 2,658 | 2,764 | |||||
Deferred income taxes | (2,794 | ) | (1,658 | ) | |||
Other | (621 | ) | 939 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (724 | ) | 10,806 | ||||
Inventories | 1,177 | (3,183 | ) | ||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 437 | (952 | ) | ||||
Other current and noncurrent assets | (52 | ) | (1,627 | ) | |||
Accounts payable | (4,168 | ) | 954 | ||||
Accrued liabilities and noncurrent liabilities | (6,161 | ) | (4,266 | ) | |||
Income taxes payable and receivable | (2,432 | ) | (2,505 | ) | |||
Net cash provided by operating activities | 12,455 | 35,048 | |||||
Investing activities | |||||||
Purchases of property, plant and equipment | (5,426 | ) | (9,464 | ) | |||
Sale of rental equipment at net book value | 312 | 1,726 | |||||
Proceeds from sale of property, plant and equipment | 811 | — | |||||
Cash paid for acquisitions (net of cash acquired) | — | (31,180 | ) | ||||
Purchases of investments | (36,972 | ) | — | ||||
Net cash used in investing activities | (41,275 | ) | (38,918 | ) | |||
Financing activities | |||||||
Proceeds from revolving credit facility | — | 5,000 | |||||
Payments on long term debt | (10,125 | ) | (10,125 | ) | |||
Issuance costs associated with revolving line of credit and long term debt | — | (341 | ) | ||||
Proceeds from exercise of stock options | 129 | 204 | |||||
Repurchase of employee stock units on vesting | (571 | ) | (1,265 | ) | |||
Benefit from excess tax deduction from option exercises | — | 133 | |||||
Lease financing | (156 | ) | (148 | ) | |||
Net cash used in financing activities | (10,723 | ) | (6,542 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (3,005 | ) | (4,261 | ) | |||
Change in cash and cash equivalents | (42,548 | ) | (14,673 | ) | |||
Cash and cash equivalents at beginning of period | 84,570 | 93,774 | |||||
Cash and cash equivalents at end of period | $ | 42,022 | $ | 79,101 |
• | 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. |
December 31, 2016 | March 31, 2016 | ||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | Valuation Technique | |||||||||||||
Financial Assets | |||||||||||||||||
Certificates of deposits with maturities greater than 90 days | $ | 36,972 | $ | 36,972 | $ | — | $ | — | Level 2 - Market Approach | ||||||||
Financial Liabilities | |||||||||||||||||
Outstanding principal amount of senior secured credit facility | $ | 84,375 | $ | 84,375 | $ | 94,500 | $ | 94,500 | Level 2 - Market Approach |
Notional amount of foreign currency forward contracts by currency | |||||||
December 31, 2016 | March 31, 2016 | ||||||
Russian Ruble | $ | 1,200 | $ | 1,237 | |||
Euro | 1,450 | 4,224 | |||||
Canadian Dollar | — | 534 | |||||
South Korean Won | 4,100 | 3,050 | |||||
Mexican Peso | 375 | 837 | |||||
Australian Dollar | 660 | 1,042 | |||||
Chinese Renminbi | — | 334 | |||||
Brazilian Real | — | 336 | |||||
South African Rand | — | 317 | |||||
Total notional amounts | $ | 7,785 | $ | 11,911 |
December 31, 2016 | March 31, 2016 | |||||||||||||
Fair Value | Fair Value | |||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||
Foreign currency forward contracts | $ | — | $ | 236 | $ | 5 | $ | 25 |
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | ||||||||||||||||||||||
Before Tax Amount | Tax Expense (Benefit) | Other Comprehensive loss, net | Before Tax Amount | Tax Expense (Benefit) | Other Comprehensive loss, net | ||||||||||||||||||
Unrealized loss at beginning of the period | $ | (1,023 | ) | $ | (358 | ) | $ | (665 | ) | $ | (956 | ) | $ | (335 | ) | $ | (621 | ) | |||||
Add: gain from change in fair value of cash flow hedge | 626 | 219 | 407 | 340 | 119 | 221 | |||||||||||||||||
Less: loss reclassified into earnings from effective hedge | (125 | ) | (44 | ) | (81 | ) | (222 | ) | (78 | ) | (144 | ) | |||||||||||
Less: ineffective portion of hedge transferred into earnings | (11 | ) | (4 | ) | (7 | ) | (11 | ) | (4 | ) | (7 | ) | |||||||||||
Unrealized loss at end of the period | $ | (261 | ) | $ | (91 | ) | $ | (170 | ) | $ | (383 | ) | $ | (134 | ) | $ | (249 | ) |
Nine Months Ended December 31, 2016 | Nine Months Ended December 31, 2015 | ||||||||||||||||||||||
Before Tax Amount | Tax Expense (Benefit) | Other Comprehensive loss, net | Before Tax Amount | Tax Expense (Benefit) | Other Comprehensive loss, net | ||||||||||||||||||
Unrealized loss at beginning of the period | $ | (1,269 | ) | $ | (444 | ) | $ | (825 | ) | $ | (746 | ) | $ | (261 | ) | $ | (485 | ) | |||||
Add: gain (loss) from change in fair value of cash flow hedge | 551 | 192 | 359 | (380 | ) | (133 | ) | (247 | ) | ||||||||||||||
Less: loss reclassified into earnings from effective hedge | (424 | ) | (149 | ) | (275 | ) | (710 | ) | (248 | ) | (462 | ) | |||||||||||
Less: ineffective portion of hedge transferred into earnings | (33 | ) | (12 | ) | (21 | ) | (33 | ) | (12 | ) | (21 | ) | |||||||||||
Unrealized loss at end of the period | $ | (261 | ) | $ | (91 | ) | $ | (170 | ) | $ | (383 | ) | $ | (134 | ) | $ | (249 | ) |
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | Nine Months Ended December 31, 2016 | Nine Months Ended December 31, 2015 | ||||||||||||
Basic net income per common share | |||||||||||||||
Net income available to Thermon Group Holdings, Inc. | $ | 5,358 | $ | 8,480 | $ | 11,390 | $ | 19,805 | |||||||
Weighted-average common shares outstanding | 32,330,392 | 32,210,081 | 32,280,539 | 32,162,800 | |||||||||||
Basic net income per common share | $ | 0.17 | $ | 0.26 | $ | 0.35 | $ | 0.62 |
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | Nine Months Ended December 31, 2016 | Nine Months Ended December 31, 2015 | ||||||||||||
Diluted net income per common share | |||||||||||||||
Net income available to Thermon Group Holdings, Inc. | $ | 5,358 | $ | 8,480 | $ | 11,390 | $ | 19,805 | |||||||
Weighted-average common shares outstanding | 32,330,392 | 32,210,081 | 32,280,539 | 32,162,800 | |||||||||||
Common share equivalents: | |||||||||||||||
Stock options | 222,152 | 230,490 | 224,291 | 248,639 | |||||||||||
Restricted and performance stock units | 99,386 | 156,176 | 114,455 | 164,318 | |||||||||||
Weighted average shares outstanding – dilutive (1) | 32,651,930 | 32,596,747 | 32,619,285 | 32,575,757 | |||||||||||
Diluted net income per common share | $ | 0.16 | $ | 0.26 | $ | 0.35 | $ | 0.61 |
December 31, 2016 | March 31, 2016 | ||||||
Raw materials | $ | 13,080 | $ | 13,322 | |||
Work in process | 1,695 | 3,065 | |||||
Finished goods | 25,575 | 25,545 | |||||
40,350 | 41,932 | ||||||
Valuation reserves | (1,397 | ) | (1,287 | ) | |||
Inventories, net | $ | 38,953 | $ | 40,645 |
Consideration to or on behalf of sellers at close | $ | 21,750 | |
Fair value of total consideration transferred | $ | 21,750 |
Assets acquired: | |||
Cash | $ | 1,526 | |
Accounts receivable | 3,723 | ||
Inventories | 474 | ||
Other current assets | 204 | ||
Property, plant and equipment | 119 | ||
Identifiable intangible assets | 9,026 | ||
Goodwill | 13,249 | ||
Total assets | 28,321 | ||
Liabilities assumed: | |||
Current liabilities | 2,203 | ||
Uncertain tax position liability | 1,119 | ||
Noncurrent deferred tax liability | 3,249 | ||
Total liabilities | 6,571 | ||
Total consideration | $ | 21,750 |
Amortization period | Gross Carrying Amount at December 31, 2016 | Accumulated Amortization | Net Carrying Amount at December 31, 2016 | Gross Carrying Amount March 31, 2016 | Accumulated Amortization | Net Carrying Amount at March 31, 2016 | |||||||||||||||||||
Customer relationships | 8 years | $ | 5,962 | $ | 1,056 | $ | 4,906 | $ | 10,720 | $ | 715 | $ | 10,005 | ||||||||||||
Trademark | 8 years | 1,820 | 322 | 1,498 | 1,820 | 152 | 1,668 | ||||||||||||||||||
Non-compete agreement | 3 years | 807 | 381 | 426 | $ | 807 | $ | 179 | $ | 628 | |||||||||||||||
Total | $ | 8,589 | $ | 1,759 | $ | 6,830 | $ | 13,347 | $ | 1,046 | $ | 12,301 |
Provisional Fair Value | Final Fair Value | ||||||
Customer relationships | $ | 10,720 | $ | 5,962 | |||
Goodwill | 10,204 | 13,249 | |||||
Noncurrent deferred tax liability | 4,962 | 3,249 |
Consideration to or on behalf of sellers at close | $ | 10,956 | |
Fair value of total consideration transferred | $ | 10,956 |
Assets acquired: | |||
Accounts receivable | $ | 1,693 | |
Inventories | 1,299 | ||
Other current assets | 33 | ||
Property, plant and equipment | 1,316 | ||
Identifiable intangible assets | 3,085 | ||
Goodwill | 7,992 | ||
Deferred tax asset | 111 | ||
Total assets | 15,529 | ||
Liabilities assumed: | |||
Current liabilities | 935 | ||
Total liabilities | 935 | ||
Non-controlling interests | 3,638 | ||
Total consideration | $ | 10,956 |
Amortization period | Gross Carrying Amount at December 31, 2016 | Accumulated Amortization | Net Carrying Amount at December 31, 2016 | Gross Carrying Amount March 31, 2016 | Accumulated Amortization | Net Carrying Amount at March 31, 2016 | |||||||||||||||||||
Customer relationships | 4 years | 2,526 | 1,105 | 1,421 | 2,612 | 653 | 1,959 | ||||||||||||||||||
Non-compete agreement | 2 years | 188 | 164 | 24 | 194 | 97 | 97 | ||||||||||||||||||
Total | $ | 2,714 | $ | 1,269 | $ | 1,445 | $ | 2,806 | $ | 750 | $ | 2,056 |
Gross Carrying Amount at December 31, 2016 | Accumulated Amortization | Net Carrying Amount at December 31, 2016 | Gross Carrying Amount March 31, 2016 | Accumulated Amortization | Net Carrying Amount at March 31, 2016 | |||||||||||||||||||
Trademarks | $ | 44,294 | $ | 450 | $ | 43,844 | $ | 45,234 | $ | 237 | $ | 44,997 | ||||||||||||
Developed technology | 9,734 | 3,305 | 6,429 | 9,950 | 2,988 | 6,962 | ||||||||||||||||||
Customer relationships | 99,197 | 61,697 | 37,500 | 105,720 | 54,913 | 50,807 | ||||||||||||||||||
Certification | 438 | — | 438 | 449 | — | 449 | ||||||||||||||||||
Other | 2,625 | 2,175 | 450 | 2,631 | 1,848 | 783 | ||||||||||||||||||
Total | $ | 156,288 | $ | 67,627 | $ | 88,661 | $ | 163,984 | $ | 59,986 | $ | 103,998 |
United States | Canada | Europe | Asia | Total | |||||||||||||||
Balance as of March 31, 2016 | $ | 48,971 | $ | 44,488 | $ | 19,427 | $ | 8,624 | $ | 121,510 | |||||||||
Adjustments to purchase price allocation | 3,045 | — | — | — | 3,045 | ||||||||||||||
Foreign currency translation impact | — | (1,458 | ) | (1,331 | ) | — | (2,789 | ) | |||||||||||
Balance as of December 31, 2016 | $ | 52,016 | $ | 43,030 | $ | 18,096 | $ | 8,624 | $ | 121,766 |
December 31, 2016 | March 31, 2016 | ||||||
Accrued employee compensation and related expenses | $ | 6,361 | $ | 6,906 | |||
Accrued employee compensation related to acquisition | — | 5,775 | |||||
Customer prepayment | 245 | 200 | |||||
Warranty reserve | 349 | 460 | |||||
Professional fees | 1,267 | 1,088 | |||||
Sales tax payable | 1,058 | 1,358 | |||||
Other | 1,067 | 2,451 | |||||
Total accrued current liabilities | $ | 10,347 | $ | 18,238 |
December 31, 2016 | March 31, 2016 | ||||||
Variable Rate Term Loan, due April 2019, net of deferred debt issuance costs of $609 and $888 as of December 31, 2016 and March 31, 2016, respectively | $ | 83,766 | $ | 93,612 | |||
Less current portion | (18,563 | ) | (13,500 | ) | |||
Total long-term debt | $ | 65,203 | $ | 80,112 |
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | Nine Months Ended December 31, 2016 | Nine Months Ended December 31, 2015 | ||||||||||||
Sales to External Customers: | |||||||||||||||
United States | $ | 28,945 | $ | 32,461 | $ | 88,937 | $ | 95,570 | |||||||
Canada | 9,126 | 16,013 | 32,286 | 41,715 | |||||||||||
Europe | 18,100 | 15,257 | 50,417 | 46,853 | |||||||||||
Asia | 8,169 | 10,696 | 24,908 | 25,446 | |||||||||||
$ | 64,340 | $ | 74,427 | $ | 196,548 | $ | 209,584 | ||||||||
Inter-Segment Sales: | |||||||||||||||
United States | 11,355 | 14,509 | $ | 35,090 | $ | 38,823 | |||||||||
Canada | 1,345 | 920 | 2,370 | 2,532 | |||||||||||
Europe | 267 | 809 | 1,273 | 1,551 | |||||||||||
Asia | 129 | 86 | 762 | 289 | |||||||||||
13,096 | 16,324 | $ | 39,495 | $ | 43,195 | ||||||||||
Depreciation Expense: | |||||||||||||||
United States | 905 | 843 | 2,656 | 2,281 | |||||||||||
Canada | 467 | 310 | 1,418 | 808 | |||||||||||
Europe | 74 | 95 | 216 | 211 | |||||||||||
Asia | 39 | 45 | 108 | 133 | |||||||||||
1,485 | 1,293 | $ | 4,398 | $ | 3,433 | ||||||||||
Amortization Expense: | |||||||||||||||
United States | 1,505 | 1,869 | $ | 4,355 | $ | 4,793 | |||||||||
Canada | 870 | 867 | 2,661 | 2,872 | |||||||||||
Europe | 322 | 352 | 990 | 1,076 | |||||||||||
Asia | 266 | 266 | 798 | 797 | |||||||||||
2,963 | 3,354 | $ | 8,804 | $ | 9,538 | ||||||||||
Income from operations: | |||||||||||||||
United States | $ | 3,848 | $ | 6,561 | $ | 4,311 | $ | 18,362 | |||||||
Canada (a) | 1,343 | 2,802 | 5,787 | 5,337 | |||||||||||
Europe | 2,344 | 2,047 | 6,908 | 7,207 | |||||||||||
Asia | 914 | 1,677 | 3,797 | 4,146 | |||||||||||
Unallocated: | |||||||||||||||
Stock compensation | (837 | ) | (890 | ) | (2,658 | ) | (2,764 | ) | |||||||
Public company costs | (313 | ) | (370 | ) | (981 | ) | (1,068 | ) | |||||||
$ | 7,299 | $ | 11,827 | $ | 17,164 | $ | 31,220 |
December 31, 2016 | March 31, 2016 | ||||||
Property, plant and equipment, net: | |||||||
United States | $ | 34,697 | $ | 34,528 | |||
Canada | 3,761 | 3,754 | |||||
Europe | 2,670 | 2,769 | |||||
Asia | 541 | 566 | |||||
$ | 41,669 | $ | 41,617 | ||||
Total Assets: | |||||||
United States | $ | 186,854 | $ | 196,400 | |||
Canada | 133,693 | 145,301 | |||||
Europe | 75,897 | 76,754 | |||||
Asia | 49,428 | 50,222 | |||||
$ | 445,872 | $ | 468,677 |
• | Timing of Greenfield projects. Our results of operations in recent years have been impacted by the various construction phases of large Greenfield projects. On our large Greenfield projects, we are typically designated as the heat tracing provider of choice by the project owner. We then engage with multiple contractors to address incorporating various heat tracing solutions throughout the overall project. Our largest Greenfield projects may generate revenue for several quarters. In the early stages of a Greenfield project, our revenues are typically realized from the provision of engineering services. In the middle stages, or the material requirements phase, we typically experience the greatest demand for our heat tracing cable, at which point our revenues tend to accelerate. Revenues tend to decrease gradually in the final stages of a project and are generally derived from installation services and demand for electrical panels and other miscellaneous electronic components used in the final installation of heat tracing cable, which we frequently outsource from third-party manufacturers. Therefore, we typically provide a mix of products and services during each phase of a Greenfield project, and our margins fluctuate accordingly. |
• | Cyclicality of end-users' markets. Demand for our products and services depends in large part upon the level of capital and maintenance expenditures of our customers and end users, in particular those in the energy, chemical processing and power generation industries, and firms that design and construct facilities for these industries. These customers' expenditures historically have been cyclical in nature and vulnerable to economic downturns. Greenfield projects, and in particular large Greenfield projects (i.e., new facility construction projects generating in excess of $5 million in annual sales), historically have been a substantial source of revenue growth in recent years, and Greenfield revenues tend to be more cyclical than MRO/UE revenues. In recent years we have experienced particular cyclicality in the capital spending for new facilities in Canada, Eastern Europe and the Middle East. During fiscal year 2016, we experienced a 54% year-over-year revenue decline in our Canadian operations (excluding revenue contributed from the acquired Sumac business), where the decline in the price of oil resulted in the postponement or suspension of a number of significant upstream exploration and production projects. In YTD 2017, our Canadian operations, excluding Sumac, experienced a further revenue decline of 21% as compared to YTD 2016. A sustained decrease in capital and maintenance spending or in new facility construction by our customers could have a material adverse effect on the demand for our products and services and our business, financial condition and results of operations. |
• | Acquisition strategy. We have begun executing on a strategy to grow the Company through the acquisition of businesses that are either in the heat tracing solutions industry or provide complementary products and solutions for the markets and customers we serve. |
◦ | On March 2, 2015, we acquired substantially all of the operating assets and assumed certain operating liabilities of Unitemp located in Cape Town, South Africa. Prior to the acquisition, Unitemp was a distributor of our thermal solutions for the South African market. In addition, Unitemp offers heating, sensing, portable instruments, monitoring and control solutions to industrial customers throughout Sub-Saharan Africa. |
◦ | On April 1, 2015, we acquired a 75% controlling interest in the business previously operated by Sumac. Based in Fort McMurray, Alberta, Canada, Sumac is a designer and fabricator of temporary electrical power distribution equipment that is used in hazardous-location and general purpose areas within industrial facilities. |
◦ | On July 31, 2015, we acquired 100% of the capital stock of IPI. IPI is an insulation contractor located in Port Neches, Texas serving the refining, petrochemical, power and energy, marine, and pulp and paper industries in the United States, with a significant presence in the Texas and Louisiana Gulf Coast region. |
• | Impact of product mix. Typically, both Greenfield and MRO/UE customers require our products as well as our engineering and construction services. The level of service and construction needs will affect the profit margin for each type of revenue. We tend to experience lower margins from our design optimization, engineering, installation and maintenance services than we do from sales of our heating cable, tubing bundle and control system products. We also tend to experience lower margins from our outsourced products, such as electrical switch gears and transformers, than we do from our manufactured products. Accordingly, our results of operations are impacted by our mix of products and services. |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Greenfield | 33 | % | 38 | % | 38 | % | 37 | % | |||
MRO/UE | 67 | % | 62 | % | 62 | % | 63 | % |
• | Large and growing installed base. Customers typically use the incumbent heat tracing provider for MRO/UE projects to avoid complications and compatibility problems associated with switching providers. With the significant Greenfield activity we have experienced in recent years, our installed base has continued to grow, and we expect that such installed base will continue to generate ongoing high margin MRO/UE revenues. For YTD 2017 and YTD 2016, MRO/UE sales comprised approximately 62% and 63% of our consolidated revenues, respectively. |
• | Seasonality of MRO/UE revenues. Revenues realized from MRO/UE orders tend to be less cyclical than Greenfield projects and more consistent quarter over quarter, although MRO/UE revenues are impacted by seasonal factors. MRO/UE revenues are typically highest during the second and third fiscal quarters, as most of our customers perform preventative maintenance prior to the winter season. |
Three Months Ended December 31, | Increase/ (Decrease) | |||||||||||||
(dollars in thousands) | ||||||||||||||
2016 | 2015 | $ | % | |||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||
Sales | $ | 64,340 | $ | 74,427 | $ | (10,087 | ) | (14 | )% | |||||
Cost of sales | 35,721 | 39,298 | (3,577 | ) | (9 | )% | ||||||||
Gross profit | $ | 28,619 | $ | 35,129 | $ | (6,510 | ) | (19 | )% | |||||
Gross margin % | 44.5 | % | 47.2 | % | ||||||||||
Operating expenses: | ||||||||||||||
Marketing, general and administrative and engineering | $ | 17,520 | $ | 18,007 | $ | (487 | ) | (3 | )% | |||||
Acquisition related contingent consideration accounted for as compensation (1) | — | 1,270 | (1,270 | ) | (100 | )% | ||||||||
Stock compensation expense | 837 | 890 | (53 | ) | (6 | )% | ||||||||
Amortization of intangible assets | 2,963 | 3,135 | (172 | ) | (5 | )% | ||||||||
Income from operations | $ | 7,299 | $ | 11,827 | $ | (4,528 | ) | (38 | )% | |||||
Interest expense, net: | ||||||||||||||
Interest income | 131 | 91 | 40 | 44 | % | |||||||||
Interest expense | (765 | ) | (811 | ) | 46 | (6 | )% | |||||||
Amortization of debt costs | (97 | ) | (107 | ) | 10 | (9 | )% | |||||||
Interest expense, net | (731 | ) | (827 | ) | 96 | (12 | )% | |||||||
Other expense | (6 | ) | (377 | ) | 371 | (98 | )% | |||||||
Income before provision for income taxes | $ | 6,562 | $ | 10,623 | $ | (4,061 | ) | (38 | )% | |||||
Income tax expense | 1,245 | 1,954 | (709 | ) | (36 | )% | ||||||||
Net income | $ | 5,317 | $ | 8,669 | $ | (3,352 | ) | (39 | )% | |||||
Income (loss) attributable to non-controlling interests (2) | (41 | ) | 189 | $ | (230 | ) | (122 | )% | ||||||
Net income available to Thermon Group Holdings, Inc. | $ | 5,358 | $ | 8,480 | $ | (3,122 | ) | (37 | )% |
Nine Months Ended December 31, | Increase/ (Decrease) | |||||||||||||
(dollars in thousands) | ||||||||||||||
2016 | 2015 | $ | % | |||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||
Sales | $ | 196,548 | $ | 209,584 | $ | (13,036 | ) | (6 | )% | |||||
Cost of sales | 112,891 | 110,364 | 2,527 | 2 | % | |||||||||
Gross profit | $ | 83,657 | $ | 99,220 | $ | (15,563 | ) | (16 | )% | |||||
Gross margin % | 42.6 | % | 47.3 | % | ||||||||||
Operating expenses: | ||||||||||||||
Marketing, general and administrative and engineering | $ | 55,031 | $ | 52,321 | $ | 2,710 | 5 | % | ||||||
Acquisition related contingent consideration accounted for as compensation (1) | — | 3,936 | (3,936 | ) | (100 | )% | ||||||||
Stock compensation expense | 2,658 | 2,764 | (106 | ) | (4 | )% | ||||||||
Amortization of intangible assets | 8,804 | 8,979 | (175 | ) | (2 | )% | ||||||||
Income from operations | $ | 17,164 | $ | 31,220 | $ | (14,056 | ) | (45 | )% | |||||
Interest expense, net: | ||||||||||||||
Interest income | 366 | 309 | 57 | 18 | % | |||||||||
Interest expense | (2,372 | ) | (2,598 | ) | 226 | (9 | )% | |||||||
Accelerated amortization of debt costs | — | (302 | ) | 302 | (100 | )% | ||||||||
Amortization of debt costs | (299 | ) | (327 | ) | 28 | (9 | )% | |||||||
Interest expense, net | (2,305 | ) | (2,918 | ) | 613 | (21 | )% | |||||||
Other expense | (156 | ) | (664 | ) | 508 | (77 | )% | |||||||
Income before provision for income taxes | $ | 14,703 | $ | 27,638 | $ | (12,935 | ) | (47 | )% | |||||
Income tax expense | 3,068 | 7,462 | (4,394 | ) | (59 | )% | ||||||||
Net income | $ | 11,635 | $ | 20,176 | $ | (8,541 | ) | (42 | )% | |||||
Income attributable to non-controlling interests (2) | 245 | 371 | (126 | ) | (34 | )% | ||||||||
Net income available to Thermon Group Holdings, Inc. | $ | 11,390 | $ | 19,805 | $ | (8,415 | ) | (42 | )% |
Payment due by period | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
TOTAL | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | ||||||||||||||||
Variable rate term loan(1) | $ | 84,375 | $ | 18,563 | $ | 65,812 | $ | — | $ | — | ||||||||||
Interest payments on variable rate term loan(2) | 4,920 | 2,416 | 2,504 | — | — | |||||||||||||||
Operating lease obligations(3) | 8,672 | 3,020 | 3,066 | 1,943 | 643 | |||||||||||||||
Information technology services agreements(4) | 1,065 | 1,014 | 51 | — | — | |||||||||||||||
Total | $ | 99,032 | $ | 25,013 | $ | 71,433 | $ | 1,943 | $ | 643 |
(1) | Consists of monthly scheduled principal payments under our credit facility of $1.1 million through March 31, 2017, increasing in April 2017 to $1.7 million through maturity with a lump-sum payment of $40.5 million due in April 2019. |
THERMON GROUP HOLDINGS, INC. (registrant) | |||
Date: February 8, 2017 | By: | /s/ Jay Peterson | |
Name: | Jay Peterson | ||
Title: | Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit Number | Description | |
31.1 | Certification of Bruce Thames, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
31.2 | Certification of Jay Peterson, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
32.1 | Certification of Bruce Thames, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
32.2 | Certification of Jay Peterson, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
101 | Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Cash Flows and (iv) Notes to Condensed Consolidated Financial Statements * |
1. | I have reviewed this Quarterly Report on Form 10-Q of Thermon Group Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 8, 2017 | ||
By: | /s/ Bruce Thames | |
Name: | Bruce Thames | |
Title: | President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Thermon Group Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 8, 2017 | ||
By: | /s/ Jay Peterson | |
Name: | Jay Peterson | |
Title: | Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 8, 2017 | ||
By: | /s/ Bruce Thames | |
Name: | Bruce Thames | |
Title: | President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 8, 2017 | ||
By: | /s/ Jay Peterson | |
Name: | Jay Peterson | |
Title: | Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Feb. 06, 2017 |
|
Entity Listings [Line Items] | ||
Entity Registrant Name | Thermon Group Holdings, Inc. | |
Entity Central Index Key | 0001489096 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2016 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 32,342,259 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Debt issuance costs, net | $ 609 | $ 888 |
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 | 32,337,359 | 32,222,720 |
Common stock, shares outstanding | 32,337,359 | 32,222,720 |
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) | $ 562 | $ 656 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Sales | $ 64,340 | $ 74,427 | $ 196,548 | $ 209,584 |
Cost of sales | 35,721 | 39,298 | 112,891 | 110,364 |
Gross profit | 28,619 | 35,129 | 83,657 | 99,220 |
Operating expenses: | ||||
Marketing, general and administrative and engineering | 18,357 | 20,167 | 57,689 | 59,021 |
Amortization of intangible assets | 2,963 | 3,135 | 8,804 | 8,979 |
Income from operations | 7,299 | 11,827 | 17,164 | 31,220 |
Other income/(expenses): | ||||
Interest income | 131 | 91 | 366 | 309 |
Interest expense | (862) | (918) | (2,671) | (3,227) |
Other income | (6) | (377) | (156) | (664) |
Income before provision for income taxes | 6,562 | 10,623 | 14,703 | 27,638 |
Income tax expense | 1,245 | 1,954 | 3,068 | 7,462 |
Net income | 5,317 | 8,669 | 11,635 | 20,176 |
Income (loss) attributable to non-controlling interests | (41) | 189 | 245 | 371 |
Net income available to Thermon Group Holdings, Inc. | 5,358 | 8,480 | 11,390 | 19,805 |
Comprehensive income (loss): | ||||
Net income available to Thermon Group Holdings, Inc. | 5,358 | 8,480 | 11,390 | 19,805 |
Foreign currency translation adjustment | (8,069) | (6,047) | (8,929) | (13,337) |
Derivative valuation, net of tax | 495 | 373 | 655 | 237 |
Comprehensive income (loss) | $ (2,216) | $ 2,806 | $ 3,116 | $ 6,705 |
Net Income per common share: | ||||
Basic (in dollars per share) | $ 0.17 | $ 0.26 | $ 0.35 | $ 0.62 |
Diluted (in dollars per share) | $ 0.16 | $ 0.26 | $ 0.35 | $ 0.61 |
Weighted-average shares used in computing net income per common share: | ||||
Basic (in shares) | 32,330,392 | 32,210,081 | 32,280,539 | 32,162,800 |
Diluted (in shares) | 32,651,930 | 32,596,747 | 32,619,285 | 32,575,757 |
Basis of Presentation and Accounting Policy Information |
9 Months Ended |
---|---|
Dec. 31, 2016 | |
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 thermal solutions for process industries. Our thermal solutions, also referred to as heat tracing, provide 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 provide a suite of products (heating cables, tubing bundles and control systems) and services (design optimization, engineering, installation and maintenance services) required to deliver comprehensive solutions to complex projects. 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 year ended March 31, 2016. 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 December 31, 2016 and March 31, 2016, and the results of our operations for the three and nine months ended December 31, 2016 and 2015. 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 December 31, 2016, 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 and nine months ended December 31, 2016 are not necessarily indicative of the results that may be achieved for the fiscal year ending March 31, 2017. Reclassifications Certain reclassifications have been made within these consolidated financial statements to conform prior periods to current year presentation. Recent Accounting Pronouncements Revenue Recognition - In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers” (Topic 606), which amends the existing revenue recognition requirements and guidance. Under the new guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company will adopt the standard on April 1, 2018. We have not selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. Stock Compensation - In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-09 “Compensation-Stock Compensation” (Topic 718), which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. Additionally, cash flows related to excess tax benefits will no longer be separately classified as a financing activity and will be included as an operating activity on the consolidated statements of cash flows. The guidance allows for an accounting policy election to account for forfeitures as they occur. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the requirements of the standard and have not yet determined its impact on our consolidated financial statements. Inventory- In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-11 “Simplifying the Measurement of Inventory” (Topic 330). Under the new guidance, inventory is measured at the lower of cost and net realizable value, and the new guidance eliminates the use of replacement cost and net realizable value less a normal profit margin as techniques to value inventory. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new guidance will be applied prospectively for annual periods and interim periods within fiscal years beginning after December 15, 2016. We do not anticipate the adoption of this standard will have a material impact on our consolidated financial statements. Financial Instruments- In January 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-01 “Financial Instruments-Overall” (Subtopic 825-10), which amends the guidance on the classification and measurement of financial instruments. The amendment requires all equity investments to be measured at fair value with changes in the fair value recognized through earnings. The amendment also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the credit risk when an entity has elected the fair value option. The guidance eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017. Early adoption is permitted for certain provisions of the accounting standards update. Upon adoption of the standard, an entity will be required to make a cumulative-effect adjustment to retained earnings as of the beginning of such reporting period. We are currently evaluating when to adopt this standard. Upon adoption, we do not anticipate this standard will have a material impact on our consolidated financial statements. Leases - In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02 “Leases” (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. We are currently evaluating the requirements of the standard and have not yet determined its impact on our consolidated financial statements. Financial Instruments- In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13 “Financial Instruments-Credit Losses” (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. Statement of Cash Flows- In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-15 “Statement of Cash Flows” (Topic 230), which amends Topic 230 of the accounting standards codification (ASC) to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The standard addresses eight types of cash flows, some of which we believe could or will impact our financial statements upon adoption, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and proceeds from the settlement of insurance claims. Under the guidance, cash payments for debt prepayment or extinguishment costs must be classified as cash outflows from financing activities. Contingent consideration payments that were not made soon after a business combination must be separated and classified in operating and financing activities. Cash payments up to the amount of the contingent consideration liability recognized as of the acquisition dates, including any measurement-period adjustments, should be classified in financing activities, while any excess cash payments should be classified in operating activities. Cash proceeds from the settlement of insurance claims should be classified on the basis of the nature of the loss. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted for all entities. Entities must apply the guidance retrospectively to all periods presented but may be applied prospectively if retrospective application would be impracticable. We do not anticipate this will have a material impact to our consolidated financial statements. |
Fair Value Measurements |
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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.
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 December 31, 2016 and March 31, 2016, no assets or liabilities were valued using Level 3 criteria. Information about our investments and long-term debt that is not measured at fair value is as follows:
At December 31, 2016 and March 31, 2016, the fair value of our variable rate term loan 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. Investments During the three months ended December 31, 2016, the Company transferred certain cash deposits to term deposit accounts at several foreign financial institutions with whom we have an established relationship. Maturities on these deposits are greater than 90 days and less than one year and accordingly are classified as investments. The Company concluded that since the interest rates for these term deposits are based on the quoted rates from the various financial institutions that the pricing is indirectly observable and has been classified as a Level 2 market approach. 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 intended to be 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 fair value). 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 December 31, 2016 and March 31, 2016, the notional amounts of forward contracts were as follows:
The following table represents the fair value of our foreign currency forward contracts:
Foreign currency gains or losses related to our forward contracts in the accompanying condensed consolidated statements of operations and comprehensive income (loss) was a loss of $476 and a gain of $245 in the three months ended December 31, 2016 and 2015, respectively, and losses of $622 and $415 for the nine months ended December 31, 2016 and 2015, 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 December 31, 2016 and 2015, our net foreign currency losses were $34 and $357 and losses of $432 and $614 for the nine months ended December 31, 2016 and 2015, respectively. All outstanding foreign currency forward contracts are marked to market at the end of the period with unrealized gains and losses included in other income and expense, within our condensed consolidated statements of operations. Interest Rate Swaps The Company has entered into two interest rate swap contracts to reduce the exposure to interest rate fluctuations associated with its variable rate term loan. Under the swap agreements, we pay a fixed amount and receive or make payments based on a variable rate. The Company designated the interest rate swap contracts as cash flow hedges pursuant to ASC 815. The Company formally documents all relationships between the hedging instrument and hedged item, its risk management objective and strategy, as well as counterparty creditworthiness. At each reporting period our interest rate swap contracts are adjusted to fair value based on dealer quotes, which consider forward yield curves and volatility levels (Level 2 fair value). Unrealized gains, representing derivative assets, are reported within accounts receivable, net and unrealized losses, representing derivative liabilities, are reported within accrued liabilities on the accompanying condensed consolidated balance sheets. As of December 31, 2016 and March 31, 2016, the fair values of the interest rate swap contracts were unrealized losses of $204 and $1,178, respectively. The change in fair value of the derivative instruments is recorded in accumulated other comprehensive income (loss) to the extent the derivative instruments are deemed effective. Ineffectiveness is measured based on the changes in fair value of the interest rate swap contracts and the change in fair value of the hypothetical derivative and is recognized in earnings in the period in which ineffectiveness is realized. Based on the criteria established by ASC 815, the interest rate swap contracts are deemed to be highly effective. Any realized gains or losses resulting from the interest rate swap contract are recognized within interest expense. Gains and losses from our interest rate swap contract are offset by changes in the variable interest rate on our term loan. During the three months ended December 31, 2016, our interest rate on outstanding principal amounts averaged approximately 3.21%. As of December 31, 2016, 100% of our interest payments on our variable rate term loan are hedged through its maturity in April 2019. The following table summarizes the aggregate unrealized loss in accumulated other comprehensive loss, and the losses reclassified into earnings for the three months ended December 31, 2016 and 2015:
The following table summarizes the aggregate unrealized loss in accumulated other comprehensive loss, and the losses reclassified into earnings for the nine months ended December 31, 2016 and 2015:
Transfers out of accumulated other comprehensive loss During the three and nine months ended December 31, 2016 and 2015, there were no transfers out of accumulated other comprehensive loss except for realized losses from our interest rate swap contract presented in the preceding tables, which were recorded within interest expense in our statements of operations and comprehensive income (loss). |
Earnings and Net Income (Loss) per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings and Net Income (Loss) 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 target number of shares would be issued within the calculation of 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 and nine months ended December 31, 2016 and 2015, respectively, are as follows:
(1) For the three and nine months ended December 31, 2016, 45,140 and 44,368 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. For the three and nine months ended December 31, 2015, 69,224 and 48,232 equity awards were not included in the calculation of diluted net income per common share as they would have had an anti-dilutive effect. |
Inventories |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following:
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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Acquisitions, Goodwill and Other Intangible Assets Industrial Process Insulators (“IPI”) Transaction On July 31, 2015, a wholly owned indirect subsidiary of the Company acquired 100% of the capital stock of Industrial Process Insulators (“IPI”) for $21,750, subject to a customary working capital adjustment. The results of IPI's operations have been included in the consolidated financial statements since that date. IPI is an insulation contractor serving the refining, petrochemical, power and energy, marine and pulp and paper industries in the United States, with a significant presence in the Texas and Louisiana Gulf Coast region. Prior to the acquisition, IPI was formerly a customer and subcontractor to the Company for the past 17 years. The acquisition is expected to enhance our turn-key product offerings and strengthen our presence and relationships in the Gulf Coast region as IPI serves many of the same end-markets as those served by our core thermal solutions business. We recognized $13,249 in goodwill associated with the IPI acquisition.
The following table summarizes the fair value of the assets and liabilities assumed:
The fair value of accounts receivable represents IPI's gross outstanding receivables as of the acquisition date, all of which were fully collected. Our identifiable intangible assets at December 31, 2016 and March 31, 2016 that were related to the IPI transaction consisted of the following:
The weighted average useful life of acquired finite lived intangible assets related to the IPI transaction is 7.2 years. During the nine months ended December 31, 2016, we finalized our provisional purchase accounting for the IPI transaction. The table below summarizes our provisional estimates of the fair value of assets and liabilities assumed as well as the final fair value of assets and liabilities assumed:
We determined the useful lives of our customer relationships were 8 years, where we originally estimated the useful life to be 10 years. As a result of the change in the estimated fair value and useful life of our customer relationships, we recorded a cumulative reduction of amortization of intangible asset expense of $299 during the nine months ended December 31, 2016. At December 31, 2016, approximately $4,006 of the purchase price was held in escrow to secure the sellers' indemnification obligations in the event of any breaches of representations and warranties contained in the definitive agreements. Sumac Transaction On April 1, 2015, Thermon Canada, Inc. (“TCI”), a wholly owned indirect subsidiary of the Company, acquired a 75% controlling interest in the business previously operated by Sumac Fabrication Company Limited (“Sumac”) for $10,956, (based on the Canadian Dollar to U.S. Dollar exchange rate on April 1, 2015) in cash, plus a non-interest bearing note (“performance based note”) with a principal amount of $5,905 (based on the Canadian Dollar to U.S. Dollar exchange rate on April 1, 2015) that matured on April 1, 2016, with the actual amount payable at maturity ranging from zero up to a maximum of $7,500 Canadian Dollars, subject to the achievement of certain performance metrics during the 12 month period ended April 1, 2016. During the nine months ended December 31, 2016, we paid Sumac's principals $5,805 to satisfy all of the Company's obligations under the performance based note. Sumac is located in Fort McMurray, Alberta, Canada. Sumac's line of products and solutions 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. Sumac products include power distribution panels, master/slave sub-panels, power cords and lighting fixtures. Sumac products are sold to end-users operating in many of the same markets as our core thermal solutions, including heavy industrial settings, oil and gas refining and upgrading, power generation plants, petrochemical production facilities and mining operations. We believe we will be able to leverage our existing global sales force to further expand the reach of Sumac's product offerings. At the acquisition date, we recognized $7,992 of goodwill in connection with the Sumac acquisition that we expect will be partially deductible for Canadian taxation purposes.
The following table summarizes the fair value of the assets and liabilities assumed:
The fair value of accounts receivable represents Sumac's gross outstanding receivables as of the acquisition date, all of which were fully collected. Our identifiable intangible assets at December 31, 2016 and March 31, 2016 that were related to the Sumac transaction consisted of the following:
The weighted average useful life of acquired finite lived intangible assets related to Sumac transaction is 3.6 years. At December 31, 2016, approximately $531 of the purchase price was held in escrow to secure the sellers' indemnification obligations in the event of any breaches of representations and warranties contained in the definitive agreements. Our total intangible assets consisted of the following (including Sumac and IPI):
Goodwill The carrying amount of goodwill by operating segment as of December 31, 2016 is as follows:
The excess purchase price over the fair value of assets acquired is recorded as goodwill. 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. In addition to the qualitative analysis, 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 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. During the year ended March 31, 2016, revenue from our Canadian operations (excluding our Sumac acquisition) decreased by approximately 54% as compared to the year ended March 31, 2015. During the nine months ended December 31, 2016, we experienced a further revenue decline of 21% as compared to the nine months ended December 31, 2015. We consider the recent decline in our Canadian business, which management believes is attributable to lower oil prices and the reduction of capital investments in the Canadian oil sands region, to be an indicator of potential asset impairments in our Canadian reporting unit. The goodwill balance in the Canadian reporting unit at December 31, 2016 is $43,030 and the net intangible assets are $24,485. As of December 31, 2016, we determined it was more likely than not that there is no impairment of goodwill or other intangible assets, based on our prior quantitative tests performed during the year ended March 31, 2016, which concluded the fair value of the reporting unit was in excess of the carrying value. The results of the Canadian reporting unit for the nine months ended December 31, 2016 are lower than our cash flow forecasts that were made at the beginning of our fiscal year. The decline in revenue was partially mitigated by operating cost reductions. Changes in estimates and assumptions used to determine whether impairment exists or future declines in actual and forecasted operating results and/or market conditions in Canada, especially in energy markets, could indicate a need to reevaluate the fair value of our Canadian reporting unit and may ultimately result in an impairment to goodwill and/or indefinite-lived intangible assets of our Canadian reporting unit in future periods. |
Accrued Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued Liabilities Accrued current liabilities consisted of the following:
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Short-Term Revolving Lines of Credit |
9 Months Ended |
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Dec. 31, 2016 | |
Short-term Debt [Abstract] | |
Short-Term Revolving Credit Facilities | Short-Term Revolving Credit Facilities The Company’s subsidiary in the Netherlands has a revolving credit facility in the amount of Euro 4,000 (equivalent to $4,215 at December 31, 2016). The facility is collateralized by such subsidiary's receivables, inventory, equipment, furniture and real estate. No amounts were outstanding under this facility at December 31, 2016 or March 31, 2016. The Company’s subsidiary in India has a revolving credit facility in the amount of 80,000 Rupees (equivalent to $1,177 at December 31, 2016). The facility is collateralized by such subsidiary's receivables, inventory, real estate, a letter of credit and cash. No amounts were outstanding under this facility at December 31, 2016 or March 31, 2016. The Company’s subsidiary in Australia has a revolving credit facility in the amount of $325 Australian Dollars (equivalent to $235 at December 31, 2016). The facility is collateralized by such subsidiary's real estate. No amounts were outstanding under this facility at December 31, 2016 or March 31, 2016. The Company’s subsidiary in Japan has a revolving credit facility in the amount of 45,000 Japanese Yen (equivalent to $386 at December 31, 2016). No amounts were outstanding under this facility at December 31, 2016 or March 31, 2016. Under the Company’s senior secured revolving credit facility described below in Note 8, “Long-Term Debt,” there were no outstanding borrowings at December 31, 2016 or March 31, 2016. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following:
Senior Secured Credit Facility In April 2013, we entered into an amended and restated credit agreement that provided for a $135,000 variable rate term loan and $60,000 senior secured asset-based revolving credit facility, which we refer to collectively as our “credit facility.” We have entered into two amendments to our credit facility, most recently in August 2015 (the “Amendment”). The maturity date of our credit facility is April 19, 2019. Under the Amendment, the fixed portion of our interest rate, which is dictated by our leverage ratio, was reduced by 0.25% and our fee on undrawn amounts on our senior secured revolving credit facility was reduced by 0.05%. The maximum leverage ratio permitted for each fiscal quarter remained at 2.75 to 1.0. In connection with the Amendment, we incurred $341 of fees, which were deferred and are recognized as interest expense over the life of the credit facility. Under our credit facility, in no case shall availability exceed commitments thereunder. Any credit facility borrowings will bear interest, at our option, at a rate equal to either (i) a base rate determined by reference to the greatest of (a) JPMorgan Chase Bank's prime rate in New York City, (b) the federal funds effective rate in effect on such day plus ½ of 1% and (c) the adjusted LIBOR rate for a one month interest period on such day plus 1%, in each case plus an applicable margin dictated by our leverage ratio, or (ii) the LIBOR rate, plus an applicable margin dictated by our leverage ratio. Borrowings denominated in Canadian Dollars under the Canadian sub-facility bear interest at our option, at a rate equal to either (i) a base rate determined by reference to the greater of (a) JPMorgan Chase Bank, Toronto branch's prime rate and (b) the sum of (x) the yearly interest rate to which the one-month Canadian deposit offered rate is equivalent plus (y) 1.0%, in each case plus an applicable margin dictated by our leverage ratio, or (ii) a Canadian deposit offered rate determined by the sum of (a) the annual rate of interest determined with reference to the arithmetic average of the discount rate quotations of all institutions listed in respect of the relevant period for Canadian dollar-denominated bankers' acceptances plus (b) 0.10% per annum, plus an applicable margin dictated by our leverage ratio. In addition to paying interest on outstanding borrowings under our credit facility, we are currently required to pay a 0.30% per annum commitment fee to the lenders in respect of the unutilized commitments thereunder, which commitment fee could change based on our leverage ratio, and letter of credit fees equal to the LIBOR margin or the Canadian deposit offered rate, as applicable, on the undrawn amount of all outstanding letters of credit, in addition to a 0.125% annual fronting fee. At December 31, 2016, we had no outstanding borrowings under our senior secured revolving credit facility. The interest rate on outstanding borrowings as of December 31, 2016 was 2.81%. As of December 31, 2016, we had $58,177 of capacity available under our senior secured revolving credit facility after taking into account the borrowing base 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 of December 31, 2016, our interest rate was 2.81%. The term loan includes monthly principal payments of $1,125 through March 31, 2017, increasing to $1,688 through the maturity date. The remaining $40,500 is due in April 2019. Interest rate swaps. The Company entered into two interest rate swap contracts to reduce the exposure to interest rate fluctuations associated with its variable rate secured term loan interest payments. Under the interest rate swap agreements, we pay a fixed amount and receive payments based on a variable interest rate. Under the terms of the Amendment and our interest rate swaps, our interest rate on outstanding principal amounts averaged approximately 3.21% during the three months ended December 31, 2016. As of December 31, 2016, 100% of our interest payments on our variable rate secured term loan are hedged through its maturity in April 2019. Guarantees; security. The obligations under our credit facility are guaranteed on a senior secured basis by each of our existing and future domestic restricted subsidiaries, including Thermon Industries, Inc., the U.S. borrower under our credit facility. The obligations under our credit facility are secured by a first priority perfected security interest in substantially all of our assets, subject to certain exceptions, permitted liens and encumbrances reasonably acceptable to the administrative agent under our credit facility. Restrictive covenants. The credit facility contains various restrictive covenants that, among other things, restrict or limit our ability to (subject to certain negotiated exceptions): incur additional indebtedness or issue disqualified capital stock unless certain financial tests are satisfied; pay dividends, redeem subordinated debt or make other restricted payments; make certain investments or acquisitions; issue stock of subsidiaries; grant or permit certain liens on our assets; enter into certain transactions with affiliates; merge, consolidate or transfer substantially all of our assets; incur dividend or other payment restrictions affecting certain of our subsidiaries; transfer or sell assets, including capital stock of our subsidiaries; and change the business we conduct. As of December 31, 2016, we were in compliance with all financial covenants of the credit facility. |
Related-Party Transactions |
9 Months Ended |
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Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions In connection with the Sumac transaction, one of the former Sumac principals retained 25% of the ownership of the Sumac business unit. This individual is employed by the Company and serves as the general manager of the Sumac business unit. During the nine months ended December 31, 2016, 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. |
Commitments and Contingencies |
9 Months Ended |
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Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies At December 31, 2016, the Company had in place letter of credit guarantees and performance bonds securing performance obligations of the Company. These arrangements totaled approximately $9,983. Of this amount, $1,418 is secured by cash deposits at the Company’s financial institutions and an additional $1,823 represents a reduction of the available amount of the Company's short and long term revolving lines of credit. Included in prepaid expenses and other current assets at December 31, 2016 and March 31, 2016 was approximately $1,418 and $1,408, respectively, of cash deposits pledged as collateral on performance bonds and letters of credit. Our Indian subsidiary also has $5,342 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 December 31, 2016, 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 Expense |
9 Months Ended |
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Dec. 31, 2016 | |
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 December 31, 2016, there were 407,998 options outstanding. For the three months ended December 31, 2016 and 2015, stock compensation expense was $837 and $890, respectively, and $2,658 and $2,764 for the nine months ended December 31, 2016 and 2015, respectively. During the nine months ended December 31, 2016, 121,520 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 $2,255. 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 twelve-month period of approximately $385. During the three and nine months ended December 31, 2016, 4,788 and 14,924 fully vested common shares, respectively, were issued to our directors. The aggregate grant date fair value as determined by the closing price of our common stock on the grant date was $96 and $287 for the three and nine months ended December 31, 2016, respectively. The fair value of the awards is expensed on each grant date. During the nine months ended December 31, 2016, a target amount of 15,141 performance stock units were issued to certain members of our senior management that had a total grant date fair value of $300. 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, 2019, 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, 2019. 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 30,282 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 nine months ended December 31, 2016, a target amount of 32,345 performance stock units based on the Company's Adjusted EBITDA performance over a three-year period ending March 31, 2019. The total grant date fair value, as determined by the closing price of our common stock on the date of the grant, was $600. 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 64,690, in the aggregate. Shares that are not awarded after the end of the measurement period will be forfeited. |
Income Taxes |
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Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the nine month periods ended December 31, 2016 and 2015, the Company recorded tax expense of $3,068 on pre-tax income of $14,703 and tax expense of $7,462 on pre-tax income of $27,638, respectively. The Company had discrete tax items during the respective reporting periods. During the nine months ended December 31, 2016, the Company had a $379 discrete tax benefit related to the release of deferred tax liabilities that were associated with the final purchase price accounting of its Unitemp acquisition. Since the purchase price was finalized during the year ended March 31, 2016, the tax benefit was recorded as an out-of-period correction. During the nine months ended December 31, 2015, the Company accrued an additional deferred tax liability of $455 due to an increase in the provincial tax rate in Alberta, Canada. The deferred tax liability relates primarily to amortizing and indefinite life intangible assets allocated to our Canadian subsidiary. Our anticipated annual effective tax rate before discrete events is approximately 24.2% and has been applied to our consolidated pre-tax income for the nine months ended December 31, 2016. For the nine months ended December 31, 2015, our tax provision reflected an annual effective tax rate before discrete events of 29.9%. We have adopted a permanent reinvestment position whereby we expect to reinvest our foreign earnings for most of our foreign subsidiaries and do not expect to repatriate future earnings. As a result of the adoption of a permanent reinvestment position, we do not accrue a tax liability in anticipation of future dividends from most of our foreign subsidiaries. The estimated annual effective tax rate for the fiscal year ending March 31, 2017 reflects the estimated taxable earnings of our various foreign subsidiaries and the applicable local tax rates, after accounting for certain permanent differences, such as non-deductible compensation expense. As of December 31, 2016, we have established a long-term liability for uncertain tax positions in the amount of $522, all of which is related to the IPI acquisition. During the three months ended December 31, 2016 and 2015, we reduced our liabilities for uncertain tax positions in the amount of $176 and $1,281, respectively, as a portion of our uncertain tax positions related to periods which are no longer subject to audit. During the nine months ended December 31, 2016, the Company recognized related accrued interest and penalties of $38 as income tax expense related to our current uncertain tax positions. As of December 31, 2016, the tax years for fiscal 2013 through fiscal 2016 remain open to examination by the major taxing jurisdictions to which we are subject. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We operate in four reportable segments based on four geographic countries or regions in which we operate: the United States, Canada, Europe and Asia. Within our four reportable segments, our primary 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 (“EPC”) 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. Over the last 23 months, we acquired Unitemp, IPI and Sumac. Both Unitemp and IPI offer thermal solutions and have been included in our Europe and United States 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:
(a) During the three and nine months ended December 31, 2015, the Canadian segment's operating income was negatively impacted by $1,270 and $3,936 due to acquisition related contingent consideration accounted for as compensation. As part of the Sumac transaction, we issued the sellers a $5,905 non-interest bearing note that matured on April 1, 2016. The terms of the performance-based note assume the continued employment of Sumac's principals, and as a result, the performance note payment was accounted for as compensation expense. The performance note was settled during the nine months ended December 31, 2016. |
Basis of Presentation and Accounting Policy Information (Policies) |
9 Months Ended |
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Dec. 31, 2016 | |
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 December 31, 2016, 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 and nine months ended December 31, 2016 are not necessarily indicative of the results that may be achieved for the fiscal year ending March 31, 2017. |
Reclassifications | Reclassifications Certain reclassifications have been made within these consolidated financial statements to conform prior periods to current year presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue Recognition - In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers” (Topic 606), which amends the existing revenue recognition requirements and guidance. Under the new guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company will adopt the standard on April 1, 2018. We have not selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. Stock Compensation - In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-09 “Compensation-Stock Compensation” (Topic 718), which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. Additionally, cash flows related to excess tax benefits will no longer be separately classified as a financing activity and will be included as an operating activity on the consolidated statements of cash flows. The guidance allows for an accounting policy election to account for forfeitures as they occur. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the requirements of the standard and have not yet determined its impact on our consolidated financial statements. Inventory- In July 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-11 “Simplifying the Measurement of Inventory” (Topic 330). Under the new guidance, inventory is measured at the lower of cost and net realizable value, and the new guidance eliminates the use of replacement cost and net realizable value less a normal profit margin as techniques to value inventory. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new guidance will be applied prospectively for annual periods and interim periods within fiscal years beginning after December 15, 2016. We do not anticipate the adoption of this standard will have a material impact on our consolidated financial statements. Financial Instruments- In January 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-01 “Financial Instruments-Overall” (Subtopic 825-10), which amends the guidance on the classification and measurement of financial instruments. The amendment requires all equity investments to be measured at fair value with changes in the fair value recognized through earnings. The amendment also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the credit risk when an entity has elected the fair value option. The guidance eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017. Early adoption is permitted for certain provisions of the accounting standards update. Upon adoption of the standard, an entity will be required to make a cumulative-effect adjustment to retained earnings as of the beginning of such reporting period. We are currently evaluating when to adopt this standard. Upon adoption, we do not anticipate this standard will have a material impact on our consolidated financial statements. Leases - In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02 “Leases” (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. We are currently evaluating the requirements of the standard and have not yet determined its impact on our consolidated financial statements. Financial Instruments- In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13 “Financial Instruments-Credit Losses” (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. Statement of Cash Flows- In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-15 “Statement of Cash Flows” (Topic 230), which amends Topic 230 of the accounting standards codification (ASC) to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The standard addresses eight types of cash flows, some of which we believe could or will impact our financial statements upon adoption, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and proceeds from the settlement of insurance claims. Under the guidance, cash payments for debt prepayment or extinguishment costs must be classified as cash outflows from financing activities. Contingent consideration payments that were not made soon after a business combination must be separated and classified in operating and financing activities. Cash payments up to the amount of the contingent consideration liability recognized as of the acquisition dates, including any measurement-period adjustments, should be classified in financing activities, while any excess cash payments should be classified in operating activities. Cash proceeds from the settlement of insurance claims should be classified on the basis of the nature of the loss. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted for all entities. Entities must apply the guidance retrospectively to all periods presented but may be applied prospectively if retrospective application would be impracticable. We do not anticipate this will have a material impact to our consolidated financial statements. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt that is not measured at fair value | Information about our investments and long-term debt that is not measured at fair value is as follows:
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Schedule of notional amounts of forward contracts held in foreign currencies | As of December 31, 2016 and March 31, 2016, the notional amounts of forward contracts were as follows:
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Schedule of fair value of foreign currency forward contracts | The following table represents the fair value of our foreign currency forward contracts:
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Schedule of unrealized gain (loss) in accumulated other comprehensive loss | The following table summarizes the aggregate unrealized loss in accumulated other comprehensive loss, and the losses reclassified into earnings for the three months ended December 31, 2016 and 2015:
The following table summarizes the aggregate unrealized loss in accumulated other comprehensive loss, and the losses reclassified into earnings for the nine months ended December 31, 2016 and 2015:
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Earnings and Net Income (Loss) per Common Share (Tables) |
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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 and nine months ended December 31, 2016 and 2015, respectively, are as follows:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current | Inventories consisted of the following:
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Goodwill (Tables) |
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Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition |
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of the assets and liabilities assumed:
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Schedule of Intangible Assets | Our total intangible assets consisted of the following (including Sumac and IPI):
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Schedule of carrying amount of goodwill | The carrying amount of goodwill by operating segment as of December 31, 2016 is as follows:
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Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | During the nine months ended December 31, 2016, we finalized our provisional purchase accounting for the IPI transaction. The table below summarizes our provisional estimates of the fair value of assets and liabilities assumed as well as the final fair value of assets and liabilities assumed:
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of the assets and liabilities assumed:
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Schedule of Intangible Assets | Our identifiable intangible assets at December 31, 2016 and March 31, 2016 that were related to the IPI transaction consisted of the following:
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Sumac Fabrication Company Limited | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | Our identifiable intangible assets at December 31, 2016 and March 31, 2016 that were related to the Sumac transaction consisted of the following:
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Accrued Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued current liabilities | Accrued current liabilities consisted of the following:
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt consisted of the following:
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Segment Information (Tables) |
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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:
|
Fair Value Measurements (Details) - Level 2 - Market Approach - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Financial Assets | ||
Certificates of deposits with maturities greater than 90 days, Carrying Value | $ 36,972 | $ 0 |
Certificates of deposits with maturities greater than 90 days, Fair Value | 36,972 | 0 |
Loans Payable | ||
Financial Liabilities, Long-term debt | ||
Long-term debt, Carrying Value | 84,375 | 94,500 |
Long-term debt, Fair Value | $ 84,375 | $ 94,500 |
Fair Value Measurements - Foreign Exchange Contracts by Currency (Details) - Foreign Exchange Forward Contracts - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Derivatives [Line Items] | ||
Notional amount | $ 7,785 | $ 11,911 |
Russian Ruble | ||
Derivatives [Line Items] | ||
Notional amount | 1,200 | 1,237 |
Euro | ||
Derivatives [Line Items] | ||
Notional amount | 1,450 | 4,224 |
Canadian Dollar | ||
Derivatives [Line Items] | ||
Notional amount | 0 | 534 |
South Korean Won | ||
Derivatives [Line Items] | ||
Notional amount | 4,100 | 3,050 |
Mexican Peso | ||
Derivatives [Line Items] | ||
Notional amount | 375 | 837 |
Australian Dollar | ||
Derivatives [Line Items] | ||
Notional amount | 660 | 1,042 |
Chinese Renminbi | ||
Derivatives [Line Items] | ||
Notional amount | 0 | 334 |
Brazilian Real | ||
Derivatives [Line Items] | ||
Notional amount | 0 | 336 |
South African Rand | ||
Derivatives [Line Items] | ||
Notional amount | $ 0 | $ 317 |
Fair Value Measurements - Foreign Exchange Contracts (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2016 |
|
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 | $ (34) | $ (357) | $ (432) | $ (614) | |
Foreign Exchange Forward Contracts | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Foreign exchange contract forwards, assets | 0 | 0 | $ 5 | ||
Foreign exchange contract forwards, liabilities | 236 | 236 | $ 25 | ||
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net | $ (476) | $ 245 | $ (622) | $ (415) |
Fair Value Measurements - Swap (Details) - Interest Rate Swap - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash Flow Hedges Derivative Instruments at Fair Value, Net | $ (204) | $ (1,178) |
Revolving credit facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative, fixed interest rate | 3.21% | |
Interest payments, percent hedged | 100.00% |
Inventories (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 13,080 | $ 13,322 |
Work in process | 1,695 | 3,065 |
Finished goods | 25,575 | 25,545 |
Inventories, gross | 40,350 | 41,932 |
Valuation reserves | (1,397) | (1,287) |
Inventories, net | $ 38,953 | $ 40,645 |
Goodwill and Other Intangible Assets - Acquisition Consideration (Details) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2015 |
Apr. 01, 2015 |
Dec. 31, 2016 |
Mar. 31, 2016 |
|
Business Acquisition [Line Items] | ||||
Goodwill | $ 121,766 | $ 121,510 | ||
Industrial Process Insulators, Inc. | ||||
Business Acquisition [Line Items] | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | |||
Goodwill | $ 13,249 | $ 13,249 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years 1 month 28 days | |||
Consideration to or on behalf of sellers at close | 21,750 | |||
Fair value of total consideration transferred | $ 21,750 | |||
Sumac Fabrication Company Limited | ||||
Business Acquisition [Line Items] | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 75.00% | |||
Goodwill | $ 7,992 | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years 7 months 6 days | |||
Consideration to or on behalf of sellers at close | 10,956 | |||
Fair value of total consideration transferred | $ 10,956 |
Goodwill and Other Intangible Assets - Provisional Estimates and Final Estimates of Fair Value of Assets and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
Jul. 31, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 121,766 | $ 121,510 | |
Industrial Process Insulators, Inc. | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | $ 9,026 | ||
Goodwill | 13,249 | 13,249 | |
Noncurrent deferred tax liability | 3,249 | 3,249 | |
Customer Relationships | Industrial Process Insulators, Inc. | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | $ 5,962 | ||
Previously Reported | Industrial Process Insulators, Inc. | |||
Business Acquisition [Line Items] | |||
Goodwill | 10,204 | ||
Noncurrent deferred tax liability | 4,962 | ||
Previously Reported | Customer Relationships | Industrial Process Insulators, Inc. | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets | $ 10,720 |
Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued employee compensation and related expenses | $ 6,361 | $ 6,906 |
Accrued employee compensation related to acquisition | 0 | 5,775 |
Customer prepayment | 245 | 200 |
Warranty reserve | 349 | 460 |
Professional fees | 1,267 | 1,088 |
Sales tax payable | 1,058 | 1,358 |
Other | 1,067 | 2,451 |
Total accrued current liabilities | $ 10,347 | $ 18,238 |
Related-Party Transactions (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Apr. 01, 2015 |
|
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 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Mar. 31, 2016 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Totaled arrangements under letter of credit guarantees and performance bonds securing performance obligations | $ 9,983 | |
Guarantee obligations secured by cash deposits | 1,418 | |
Guarantee obligations represented by a reduction of the available amount of the company's short term and long term revolving lines of credit | 1,823 | |
Cash deposits pledged as collateral on performance bonds and letters of credit | 1,418 | $ 1,408 |
Indian Custom Bonds Outstanding | $ 5,342 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Examination [Line Items] | ||||
Income tax expense | $ 1,245,000 | $ 1,954,000 | $ 3,068,000 | $ 7,462,000 |
Pre-tax income (loss) | 6,562,000 | 10,623,000 | 14,703,000 | 27,638,000 |
Decrease of deferred tax liability | $ (379,000) | $ (455,000) | ||
Annual effective tax rate before discrete events | 24.20% | 29.90% | ||
Long-term liability for uncertain tax positions | 522,000 | $ 522,000 | ||
Decrease in liability for uncertain tax positions | $ 176,000 | $ 1,281,000 | ||
Interest and penalties accrued as income tax expense | $ 38,000 |
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