10-Q 1 thr-20231231.htm 10-Q thr-20231231
00014890963/312024Q3false00014890962023-04-012023-12-3100014890962024-01-31xbrli:shares00014890962023-12-31iso4217:USD00014890962023-03-31iso4217:USDxbrli:shares00014890962023-10-012023-12-3100014890962022-10-012022-12-3100014890962022-04-012022-12-310001489096us-gaap:CommonStockMember2023-03-310001489096us-gaap:AdditionalPaidInCapitalMember2023-03-310001489096us-gaap:RetainedEarningsMember2023-03-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001489096us-gaap:CommonStockMemberthr:EmployeesMember2023-04-012023-06-300001489096srt:ExecutiveOfficerMemberus-gaap:CommonStockMember2023-04-012023-06-300001489096srt:DirectorMemberus-gaap:CommonStockMember2023-04-012023-06-300001489096us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-3000014890962023-04-012023-06-300001489096us-gaap:RetainedEarningsMember2023-04-012023-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001489096us-gaap:CommonStockMember2023-06-300001489096us-gaap:AdditionalPaidInCapitalMember2023-06-300001489096us-gaap:RetainedEarningsMember2023-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-3000014890962023-06-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2023-07-012023-09-300001489096srt:DirectorMemberus-gaap:CommonStockMember2023-07-012023-09-300001489096us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-3000014890962023-07-012023-09-300001489096us-gaap:RetainedEarningsMember2023-07-012023-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001489096us-gaap:CommonStockMember2023-07-012023-09-300001489096us-gaap:CommonStockMember2023-09-300001489096us-gaap:AdditionalPaidInCapitalMember2023-09-300001489096us-gaap:RetainedEarningsMember2023-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-3000014890962023-09-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2023-10-012023-12-310001489096srt:DirectorMemberus-gaap:CommonStockMember2023-10-012023-12-310001489096us-gaap:AdditionalPaidInCapitalMember2023-10-012023-12-310001489096us-gaap:RetainedEarningsMember2023-10-012023-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-012023-12-310001489096us-gaap:CommonStockMember2023-12-310001489096us-gaap:AdditionalPaidInCapitalMember2023-12-310001489096us-gaap:RetainedEarningsMember2023-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001489096us-gaap:CommonStockMember2022-03-310001489096us-gaap:AdditionalPaidInCapitalMember2022-03-310001489096us-gaap:RetainedEarningsMember2022-03-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100014890962022-03-310001489096us-gaap:CommonStockMemberthr:EmployeesMember2022-04-012022-06-300001489096srt:ExecutiveOfficerMemberus-gaap:CommonStockMember2022-04-012022-06-300001489096srt:DirectorMemberus-gaap:CommonStockMember2022-04-012022-06-300001489096us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000014890962022-04-012022-06-300001489096us-gaap:RetainedEarningsMember2022-04-012022-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001489096us-gaap:CommonStockMember2022-06-300001489096us-gaap:AdditionalPaidInCapitalMember2022-06-300001489096us-gaap:RetainedEarningsMember2022-06-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000014890962022-06-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2022-07-012022-09-300001489096srt:DirectorMemberus-gaap:CommonStockMember2022-07-012022-09-300001489096us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-3000014890962022-07-012022-09-300001489096us-gaap:RetainedEarningsMember2022-07-012022-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001489096us-gaap:CommonStockMember2022-09-300001489096us-gaap:AdditionalPaidInCapitalMember2022-09-300001489096us-gaap:RetainedEarningsMember2022-09-300001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-3000014890962022-09-300001489096us-gaap:CommonStockMemberthr:EmployeesMember2022-10-012022-12-310001489096srt:DirectorMemberus-gaap:CommonStockMember2022-10-012022-12-310001489096us-gaap:AdditionalPaidInCapitalMember2022-10-012022-12-310001489096us-gaap:RetainedEarningsMember2022-10-012022-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-012022-12-310001489096us-gaap:CommonStockMember2022-12-310001489096us-gaap:AdditionalPaidInCapitalMember2022-12-310001489096us-gaap:RetainedEarningsMember2022-12-310001489096us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-3100014890962022-12-310001489096us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-12-310001489096us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-03-310001489096us-gaap:OtherAssetsMember2023-12-310001489096us-gaap:OtherAssetsMember2023-03-310001489096thr:VaporPowerMember2023-12-29xbrli:pure0001489096thr:VaporPowerMember2023-12-292023-12-290001489096thr:VaporPowerMember2023-10-012023-12-310001489096thr:VaporPowerMember2022-12-310001489096thr:VaporPowerMembersrt:MinimumMemberus-gaap:CustomerRelationshipsMember2023-12-292023-12-290001489096thr:VaporPowerMembersrt:MaximumMemberus-gaap:CustomerRelationshipsMember2023-12-292023-12-290001489096thr:VaporPowerMemberus-gaap:CustomerRelationshipsMember2023-12-290001489096us-gaap:TrademarksMemberthr:VaporPowerMember2023-12-292023-12-290001489096us-gaap:TrademarksMemberthr:VaporPowerMember2023-12-290001489096us-gaap:DevelopedTechnologyRightsMemberthr:VaporPowerMember2023-12-292023-12-290001489096us-gaap:DevelopedTechnologyRightsMemberthr:VaporPowerMember2023-12-290001489096thr:VaporPowerMemberthr:CustomerRelationshipsBacklogMember2023-12-290001489096thr:VaporPowerMemberthr:CustomerRelationshipsBacklogMember2023-12-292023-12-290001489096thr:PowerblanketMember2022-05-310001489096thr:PowerblanketMember2022-05-312022-05-310001489096thr:PowerblanketMember2022-05-312023-06-300001489096thr:PowerblanketMember2022-05-312023-12-310001489096thr:PowerblanketMember2022-04-012023-03-310001489096thr:PowerblanketMember2023-04-012023-12-310001489096thr:PowerblanketMemberus-gaap:CustomerRelationshipsMember2022-05-312022-05-310001489096thr:PowerblanketMemberus-gaap:CustomerRelationshipsMember2022-05-310001489096us-gaap:TrademarksMemberthr:PowerblanketMember2022-05-312022-05-310001489096us-gaap:TrademarksMemberthr:PowerblanketMember2022-05-310001489096thr:ContractBasedMemberthr:PowerblanketMember2022-05-312022-05-310001489096thr:ContractBasedMemberthr:PowerblanketMember2022-05-310001489096us-gaap:DevelopedTechnologyRightsMemberthr:PowerblanketMember2022-05-312022-05-310001489096us-gaap:DevelopedTechnologyRightsMemberthr:PowerblanketMember2022-05-310001489096thr:VaporPowerMember2022-10-012022-12-310001489096thr:VaporPowerMember2023-04-012023-12-310001489096thr:VaporPowerMember2022-04-012022-12-310001489096thr:PowerblanketMember2022-04-012022-06-300001489096us-gaap:FairValueInputsLevel1Member2023-12-310001489096us-gaap:FairValueInputsLevel1Member2023-03-310001489096us-gaap:ForeignExchangeForwardMember2023-12-310001489096us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeForwardMember2023-12-310001489096us-gaap:ForeignExchangeForwardMember2023-03-310001489096us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeForwardMember2023-03-310001489096us-gaap:LongTermDebtMember2023-12-310001489096us-gaap:LongTermDebtMemberus-gaap:FairValueInputsLevel2Member2023-12-310001489096us-gaap:LongTermDebtMember2023-03-310001489096us-gaap:LongTermDebtMemberus-gaap:FairValueInputsLevel2Member2023-03-310001489096us-gaap:LoansPayableMember2023-12-310001489096us-gaap:FairValueInputsLevel2Memberus-gaap:LoansPayableMember2023-12-310001489096us-gaap:LoansPayableMember2023-03-310001489096us-gaap:FairValueInputsLevel2Memberus-gaap:LoansPayableMember2023-03-310001489096us-gaap:FairValueInputsLevel2Member2023-12-310001489096us-gaap:FairValueInputsLevel2Member2023-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:CAD2023-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:CAD2023-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:KRW2023-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:KRW2023-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:MXN2023-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:MXN2023-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:CNY2023-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:CNY2023-03-310001489096us-gaap:ForeignExchangeForwardMembercurrency:GBP2023-12-310001489096us-gaap:ForeignExchangeForwardMembercurrency:GBP2023-03-310001489096us-gaap:ForeignExchangeForwardMember2023-12-310001489096us-gaap:ForeignExchangeForwardMember2023-03-310001489096country:RU2023-10-012023-12-310001489096country:RU2023-04-012023-12-310001489096country:RU2022-04-012023-12-310001489096us-gaap:StockOptionMember2023-10-012023-12-310001489096us-gaap:StockOptionMember2022-10-012022-12-310001489096us-gaap:StockOptionMember2023-04-012023-12-310001489096us-gaap:StockOptionMember2022-04-012022-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2023-10-012023-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2022-10-012022-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2023-04-012023-12-310001489096us-gaap:RestrictedStockUnitsRSUMember2022-04-012022-12-310001489096thr:UnitedStatesSegmentMember2023-03-310001489096thr:CanadaSegmentMember2023-03-310001489096thr:EuropeSegmentMember2023-03-310001489096thr:AsiaSegmentMember2023-03-310001489096us-gaap:OperatingSegmentsMemberthr:UnitedStatesSegmentMember2023-04-012023-12-310001489096thr:CanadaSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-12-310001489096thr:EuropeSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-12-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-12-310001489096us-gaap:OperatingSegmentsMember2023-04-012023-12-310001489096thr:UnitedStatesSegmentMember2023-04-012023-12-310001489096thr:CanadaSegmentMember2023-04-012023-12-310001489096thr:EuropeSegmentMember2023-04-012023-12-310001489096thr:AsiaSegmentMember2023-04-012023-12-310001489096thr:UnitedStatesSegmentMember2023-12-310001489096thr:CanadaSegmentMember2023-12-310001489096thr:EuropeSegmentMember2023-12-310001489096thr:AsiaSegmentMember2023-12-310001489096us-gaap:ProductMember2023-12-310001489096us-gaap:ProductMember2023-03-310001489096us-gaap:TrademarksMember2023-12-310001489096us-gaap:TrademarksMember2023-03-310001489096us-gaap:DevelopedTechnologyRightsMember2023-12-310001489096us-gaap:DevelopedTechnologyRightsMember2023-03-310001489096us-gaap:CustomerRelationshipsMember2023-12-310001489096us-gaap:CustomerRelationshipsMember2023-03-310001489096us-gaap:CertificationMarksMember2023-12-310001489096us-gaap:CertificationMarksMember2023-03-310001489096us-gaap:OtherIntangibleAssetsMember2023-12-310001489096us-gaap:OtherIntangibleAssetsMember2023-03-310001489096thr:U.S.TermLoanFacilityDueSeptember2026Memberus-gaap:LoansPayableMember2023-12-310001489096thr:U.S.TermLoanFacilityDueSeptember2026Memberus-gaap:LoansPayableMember2023-03-310001489096us-gaap:LoansPayableMemberthr:CanadianTermLoanFacilityDueSeptember2026Member2023-12-310001489096us-gaap:LoansPayableMemberthr:CanadianTermLoanFacilityDueSeptember2026Member2023-03-310001489096thr:IncreamentalRateTermLoanDueSeptember2026Memberus-gaap:LoansPayableMember2023-12-310001489096thr:IncreamentalRateTermLoanDueSeptember2026Memberus-gaap:LoansPayableMember2023-03-310001489096us-gaap:RevolvingCreditFacilityMember2021-09-290001489096thr:A2023IncrementalUSTermLoanFacilityMember2021-09-290001489096us-gaap:LineOfCreditMember2021-09-29iso4217:CAD0001489096us-gaap:SecuredDebtMemberthr:A2023IncrementalUSTermLoanFacilityMember2023-12-290001489096thr:January12022ThroughOctober12022Memberus-gaap:LineOfCreditMember2021-09-290001489096thr:January12023ThroughOctober12024Memberus-gaap:LineOfCreditMember2021-09-290001489096thr:January12025ThroughJuly12026Memberus-gaap:LineOfCreditMember2021-09-290001489096srt:GuarantorSubsidiariesMemberthr:A2023IncrementalUSTermLoanFacilityMember2023-12-310001489096srt:GuarantorSubsidiariesMemberthr:A2023IncrementalUSTermLoanFacilityMember2023-04-012023-12-310001489096thr:CanadianTermLoanFacilityMembersrt:GuarantorSubsidiariesMember2023-12-310001489096thr:December312022AndEachFiscalQuarterThereafterMember2023-12-310001489096us-gaap:RevolvingCreditFacilityMember2023-12-310001489096thr:CanadianTermLoanFacilityMember2023-12-310001489096thr:USTermLoanFacilityMember2023-12-310001489096thr:A2023IncrementalUSTermLoanFacilityMember2023-12-310001489096country:USus-gaap:TransferredAtPointInTimeMember2023-10-012023-12-310001489096country:USus-gaap:TransferredOverTimeMember2023-10-012023-12-310001489096country:US2023-10-012023-12-310001489096country:USus-gaap:TransferredAtPointInTimeMember2022-10-012022-12-310001489096country:USus-gaap:TransferredOverTimeMember2022-10-012022-12-310001489096country:US2022-10-012022-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:CA2023-10-012023-12-310001489096us-gaap:TransferredOverTimeMembercountry:CA2023-10-012023-12-310001489096country:CA2023-10-012023-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:CA2022-10-012022-12-310001489096us-gaap:TransferredOverTimeMembercountry:CA2022-10-012022-12-310001489096country:CA2022-10-012022-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:EuropeMember2023-10-012023-12-310001489096us-gaap:TransferredOverTimeMembersrt:EuropeMember2023-10-012023-12-310001489096srt:EuropeMember2023-10-012023-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:EuropeMember2022-10-012022-12-310001489096us-gaap:TransferredOverTimeMembersrt:EuropeMember2022-10-012022-12-310001489096srt:EuropeMember2022-10-012022-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:AsiaMember2023-10-012023-12-310001489096us-gaap:TransferredOverTimeMembersrt:AsiaMember2023-10-012023-12-310001489096srt:AsiaMember2023-10-012023-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:AsiaMember2022-10-012022-12-310001489096us-gaap:TransferredOverTimeMembersrt:AsiaMember2022-10-012022-12-310001489096srt:AsiaMember2022-10-012022-12-310001489096us-gaap:TransferredAtPointInTimeMember2023-10-012023-12-310001489096us-gaap:TransferredOverTimeMember2023-10-012023-12-310001489096us-gaap:TransferredAtPointInTimeMember2022-10-012022-12-310001489096us-gaap:TransferredOverTimeMember2022-10-012022-12-310001489096country:USus-gaap:TransferredAtPointInTimeMember2023-04-012023-12-310001489096country:USus-gaap:TransferredOverTimeMember2023-04-012023-12-310001489096country:US2023-04-012023-12-310001489096country:USus-gaap:TransferredAtPointInTimeMember2022-04-012022-12-310001489096country:USus-gaap:TransferredOverTimeMember2022-04-012022-12-310001489096country:US2022-04-012022-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:CA2023-04-012023-12-310001489096us-gaap:TransferredOverTimeMembercountry:CA2023-04-012023-12-310001489096country:CA2023-04-012023-12-310001489096us-gaap:TransferredAtPointInTimeMembercountry:CA2022-04-012022-12-310001489096us-gaap:TransferredOverTimeMembercountry:CA2022-04-012022-12-310001489096country:CA2022-04-012022-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:EuropeMember2023-04-012023-12-310001489096us-gaap:TransferredOverTimeMembersrt:EuropeMember2023-04-012023-12-310001489096srt:EuropeMember2023-04-012023-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:EuropeMember2022-04-012022-12-310001489096us-gaap:TransferredOverTimeMembersrt:EuropeMember2022-04-012022-12-310001489096srt:EuropeMember2022-04-012022-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:AsiaMember2023-04-012023-12-310001489096us-gaap:TransferredOverTimeMembersrt:AsiaMember2023-04-012023-12-310001489096srt:AsiaMember2023-04-012023-12-310001489096us-gaap:TransferredAtPointInTimeMembersrt:AsiaMember2022-04-012022-12-310001489096us-gaap:TransferredOverTimeMembersrt:AsiaMember2022-04-012022-12-310001489096srt:AsiaMember2022-04-012022-12-310001489096us-gaap:TransferredAtPointInTimeMember2023-04-012023-12-310001489096us-gaap:TransferredOverTimeMember2023-04-012023-12-310001489096us-gaap:TransferredAtPointInTimeMember2022-04-012022-12-310001489096us-gaap:TransferredOverTimeMember2022-04-012022-12-3100014890962025-01-012023-12-31thr:segmentthr:country0001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2023-10-012023-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2022-10-012022-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:OperatingSegmentsMember2022-04-012022-12-310001489096us-gaap:OperatingSegmentsMemberthr:CanadaSegmentMember2023-10-012023-12-310001489096us-gaap:OperatingSegmentsMemberthr:CanadaSegmentMember2022-10-012022-12-310001489096us-gaap:OperatingSegmentsMemberthr:CanadaSegmentMember2023-04-012023-12-310001489096us-gaap:OperatingSegmentsMemberthr:CanadaSegmentMember2022-04-012022-12-310001489096thr:EuropeSegmentMemberus-gaap:OperatingSegmentsMember2023-10-012023-12-310001489096thr:EuropeSegmentMemberus-gaap:OperatingSegmentsMember2022-10-012022-12-310001489096thr:EuropeSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-12-310001489096thr:EuropeSegmentMemberus-gaap:OperatingSegmentsMember2022-04-012022-12-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2023-10-012023-12-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2022-10-012022-12-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-12-310001489096thr:AsiaSegmentMemberus-gaap:OperatingSegmentsMember2022-04-012022-12-310001489096us-gaap:OperatingSegmentsMember2023-10-012023-12-310001489096us-gaap:OperatingSegmentsMember2022-10-012022-12-310001489096us-gaap:OperatingSegmentsMember2022-04-012022-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:IntersegmentEliminationMember2023-10-012023-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:IntersegmentEliminationMember2022-10-012022-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:IntersegmentEliminationMember2023-04-012023-12-310001489096thr:UnitedStatesSegmentMemberus-gaap:IntersegmentEliminationMember2022-04-012022-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2023-10-012023-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2022-10-012022-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2023-04-012023-12-310001489096thr:CanadaSegmentMemberus-gaap:IntersegmentEliminationMember2022-04-012022-12-310001489096thr:EuropeSegmentMemberus-gaap:IntersegmentEliminationMember2023-10-012023-12-310001489096thr:EuropeSegmentMemberus-gaap:IntersegmentEliminationMember2022-10-012022-12-310001489096thr:EuropeSegmentMemberus-gaap:IntersegmentEliminationMember2023-04-012023-12-310001489096thr:EuropeSegmentMemberus-gaap:IntersegmentEliminationMember2022-04-012022-12-310001489096thr:AsiaSegmentMemberus-gaap:IntersegmentEliminationMember2023-10-012023-12-310001489096thr:AsiaSegmentMemberus-gaap:IntersegmentEliminationMember2022-10-012022-12-310001489096thr:AsiaSegmentMemberus-gaap:IntersegmentEliminationMember2023-04-012023-12-310001489096thr:AsiaSegmentMemberus-gaap:IntersegmentEliminationMember2022-04-012022-12-310001489096us-gaap:IntersegmentEliminationMember2023-10-012023-12-310001489096us-gaap:IntersegmentEliminationMember2022-10-012022-12-310001489096us-gaap:IntersegmentEliminationMember2023-04-012023-12-310001489096us-gaap:IntersegmentEliminationMember2022-04-012022-12-310001489096thr:UnitedStatesSegmentMember2023-10-012023-12-310001489096thr:UnitedStatesSegmentMember2022-10-012022-12-310001489096thr:UnitedStatesSegmentMember2023-04-012023-12-310001489096thr:UnitedStatesSegmentMember2022-04-012022-12-310001489096thr:CanadaSegmentMember2023-10-012023-12-310001489096thr:CanadaSegmentMember2022-10-012022-12-310001489096thr:CanadaSegmentMember2023-04-012023-12-310001489096thr:CanadaSegmentMember2022-04-012022-12-310001489096thr:EuropeSegmentMember2023-10-012023-12-310001489096thr:EuropeSegmentMember2022-10-012022-12-310001489096thr:EuropeSegmentMember2023-04-012023-12-310001489096thr:EuropeSegmentMember2022-04-012022-12-310001489096thr:AsiaSegmentMember2023-10-012023-12-310001489096thr:AsiaSegmentMember2022-10-012022-12-310001489096thr:AsiaSegmentMember2023-04-012023-12-310001489096thr:AsiaSegmentMember2022-04-012022-12-310001489096us-gaap:MaterialReconcilingItemsMember2023-10-012023-12-310001489096us-gaap:MaterialReconcilingItemsMember2022-10-012022-12-310001489096us-gaap:MaterialReconcilingItemsMember2023-04-012023-12-310001489096us-gaap:MaterialReconcilingItemsMember2022-04-012022-12-310001489096thr:UnitedStatesSegmentMember2023-12-310001489096thr:UnitedStatesSegmentMember2023-03-310001489096thr:CanadaSegmentMember2023-12-310001489096thr:CanadaSegmentMember2023-03-310001489096thr:EuropeSegmentMember2023-12-310001489096thr:EuropeSegmentMember2023-03-310001489096thr:AsiaSegmentMember2023-12-310001489096thr:AsiaSegmentMember2023-03-310001489096thr:UnitedStatesSegmentMember2023-10-012023-12-310001489096thr:UnitedStatesSegmentMember2022-10-012022-12-310001489096thr:UnitedStatesSegmentMember2022-04-012022-12-310001489096thr:CanadaSegmentMember2023-10-012023-12-310001489096thr:CanadaSegmentMember2022-10-012022-12-310001489096thr:CanadaSegmentMember2022-04-012022-12-310001489096thr:EuropeSegmentMember2023-10-012023-12-310001489096thr:EuropeSegmentMember2022-10-012022-12-310001489096thr:EuropeSegmentMember2022-04-012022-12-310001489096thr:AsiaSegmentMember2023-10-012023-12-310001489096thr:AsiaSegmentMember2022-10-012022-12-310001489096thr:AsiaSegmentMember2022-04-012022-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2023
 
OR
 
       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
 
Commission File Number: 001-35159
 
 
THERMON GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware27-2228185
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
7171 Southwest Parkway, Building 300, Suite 200, Austin, Texas 78735
(Address of principal executive offices) (zip code)
 
(512690-0600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareTHRNew York Stock Exchange

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of January 31, 2024, the registrant had 33,714,736 shares of common stock, par value $0.001 per share, outstanding.
 



THERMON GROUP HOLDINGS, INC.
 
QUARTERLY REPORT
FOR THE QUARTER ENDED DECEMBER 31, 2023
 
TABLE OF CONTENTS
 Page
PART I — FINANCIAL INFORMATION 
 
PART II — OTHER INFORMATION 
 
i


PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
1


Thermon Group Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
 December 31, 2023March 31,
2023
(Unaudited)
Assets  
Current assets:  
Cash and cash equivalents$55,396 $35,635 
Accounts receivable, net of allowances of $1,913 and $2,682 as of December 31, 2023 and March 31, 2023, respectively
120,624 97,627 
Inventories, net96,299 82,132 
Contract assets19,397 16,272 
Prepaid expenses and other current assets16,363 16,138 
Income tax receivable1,648 3,138 
Total current assets$309,727 $250,942 
Property, plant and equipment, net of depreciation and amortization of $72,193 and $67,450 as of December 31, 2023 and March 31, 2023, respectively
67,932 63,288 
Goodwill268,538 219,612 
Intangible assets, net133,247 93,970 
Operating lease right-of-use assets14,482 13,570 
Deferred income taxes1,072 688 
Other non-current assets10,090 7,559 
Total assets$805,088 $649,629 
Liabilities  
Current liabilities:  
Accounts payable$26,611 $27,330 
Accrued liabilities40,392 39,364 
Current portion of long-term debt15,945 10,222 
Borrowings under revolving credit facility32,500 14,500 
Contract liabilities15,414 8,483 
Lease liabilities3,429 3,364 
Income taxes payable5,448 6,809 
Total current liabilities$139,739 $110,072 
Long-term debt, net163,954 87,710 
Deferred income taxes10,835 12,084 
Non-current lease liabilities13,368 12,479 
Other non-current liabilities9,767 8,296 
Total liabilities$337,663 $230,641 
Commitments and contingencies (Note 10)
 Equity
Common stock: $0.001 par value; 150,000,000 authorized; 33,711,599 and 33,508,076 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively
$34 $33 
Preferred stock: $0.001 par value; 10,000,000 authorized; no shares issued and outstanding
  
Additional paid in capital242,111 239,860 
Accumulated other comprehensive loss(53,421)(58,100)
Retained earnings 278,701 237,195 
Total equity$467,425 $418,988 
Total liabilities and equity$805,088 $649,629 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
2


Thermon Group Holdings, Inc. 
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(Dollars in thousands, except share and per share data)
 
Three Months Ended December 31, 2023Three Months Ended December 31, 2022Nine Months Ended December 31, 2023Nine Months Ended December 31, 2022
Sales$136,427 $122,110 $366,975 $318,109 
Cost of sales79,017 71,660 207,798 184,508 
Gross profit57,410 50,450 159,177 133,601 
Operating expenses:
Selling, general and administrative expenses31,853 30,889 90,997 83,046 
Deferred compensation plan expense/(income)651 464 677 (499)
Amortization of intangible assets2,121 2,367 6,735 7,072 
Restructuring and other charges1,336 2,668 2,221 2,668 
Income from operations21,449 14,062 58,547 41,314 
Other income/(expenses):
Interest expense, net(1,754)(1,877)(5,263)(4,120)
Other income/(expense)653 659 727 (592)
Income before provision for income taxes20,348 12,844 54,011 36,602 
Income tax expense4,511 4,419 12,506 10,637 
Net income$15,837 $8,425 $41,505 $25,965 
Comprehensive income:
Net income$15,837 $8,425 $41,505 $25,965 
Foreign currency translation adjustment8,072 5,403 4,684 (17,560)
Other miscellaneous income(69)(75)(5)43 
Comprehensive income$23,840 $13,753 $46,184 $8,448 
Net income per common share:
Basic$0.47 $0.25 $1.22 $0.78 
Diluted$0.46 $0.25 $1.21 $0.77 
Weighted-average shares used in computing net income per common share:
Basic33,703,845 33,493,540 33,946,201 33,457,048 
Diluted34,201,525 33,879,733 34,324,573 33,756,218 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
3


Thermon Group Holdings, Inc.
Condensed Consolidated Statements of Equity (Unaudited)
(Dollars in thousands)
Common Stock OutstandingCommon StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total
Balances at March 31, 202333,508,076 $33 $239,860 $237,195 $(58,100)$418,988 
Issuance of common stock as deferred compensation to employees73,345 — — — — — 
Issuance of common stock as deferred compensation to executive officers93,826 — — — — — 
Issuance of common stock as deferred compensation to directors5,718 — — — — — 
Stock compensation expense— — 1,238 — — 1,238 
Repurchase of employee stock units on vesting— — (1,685)— — (1,685)
Net income— — — 10,938 — 10,938 
Foreign currency translation adjustment— — — — 4,457 4,457 
Other— — — — 13 13 
Balances at June 30, 202333,680,965 $33 $239,413 $248,133 $(53,630)$433,949 
Issuance of common stock as deferred compensation to employees2,550 — — — — — 
Issuance of common stock as deferred compensation to directors7,197 — — — — — 
Stock compensation expense— — 1,450 — — 1,450 
Repurchase of employee stock units on vesting— — (30)— — (30)
Net income— — — 14,730 — 14,730 
Foreign currency translation adjustment— — — — (7,845)(7,845)
Other— 1 — — 51 52 
Balances at September 30, 202333,690,712 $34 $240,833 $262,863 $(61,424)$442,306 
Issuance of common stock as deferred compensation to employees14,839 — — — — — 
Issuance of common stock as deferred compensation to directors6,048 — — — — — 
Stock compensation expense— — 1,444 — — 1,444 
Repurchase of employee stock units on vesting— — (165)— — (165)
Net income— — — 15,837 — 15,837 
Foreign currency translation adjustment— — — — 8,072 8,072 
Other— — (1)1 (69)(69)
Balances at December 31, 202333,711,599 $34 $242,111 $278,701 $(53,421)$467,425 
4


Common Stock OutstandingCommon StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total
Balances at March 31, 202233,364,722 $33 $234,549 $203,528 $(38,906)$399,204 
Issuance of common stock as deferred compensation to employees30,352 — — — — — 
Issuance of common stock as deferred compensation to executive officers64,294 — — — — — 
Issuance of common stock as deferred compensation to directors8,766 — — — — — 
Stock compensation expense— — 1,193 — — 1,193 
Repurchase of employee stock units on vesting— — (552)— — (552)
Net income— — — 6,556 — 6,556 
Foreign currency translation adjustment— — — — (5,152)(5,152)
Other— — — 1 2 3 
Balances at June 30, 202233,468,134 $33 $235,190 $210,085 $(44,056)$401,252 
Issuance of common stock as deferred compensation to employees5,544 — — — — — 
Issuance of common stock as deferred compensation to directors9,930 — — — — — 
Stock compensation expense— — 1,251 — — 1,251 
Repurchase of employee stock units on vesting— — (34)— — (34)
Net income— — — 10,984 — 10,984 
Foreign currency translation adjustment— — — — (17,811)(17,811)
Other— — — — 116 116 
Balances at September 30, 202233,483,608 $33 $236,407 $221,069 $(61,751)$395,758 
Issuance of common stock as deferred compensation to employees512 — — — — — 
Issuance of common stock as deferred compensation to directors11,167 — — — — — 
Stock compensation expense— — 1,994 — — 1,994 
Repurchase of employee stock units on vesting— — (2)— — (2)
Net income— — — 8,425 — 8,425 
Foreign currency translation adjustment— — — — 5,403 5,403 
Other— — — 1 (75)(74)
Balances at December 31, 202233,495,287 $33 $238,399 $229,495 $(56,423)$411,504 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

5


Thermon Group Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands) 
 Nine Months Ended December 31, 2023Nine Months Ended December 31, 2022
Operating activities  
Net income$41,505 $25,965 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization13,075 14,557 
Amortization of deferred debt issuance costs236 230 
Impairment of property, plant, and equipment 367 
Stock compensation expense4,132 4,438 
Deferred income taxes(1,817)(4,186)
Reserve for uncertain tax positions, net 36 
Remeasurement (gain)/loss on intercompany balances(836)134 
Changes in operating assets and liabilities:0
Accounts receivable(12,305)1,145 
Inventories(5,329)(18,047)
Contract assets and liabilities(3,343)4,447 
Other current and non-current assets(2,914)(695)
Accounts payable(1,793)(4,066)
Accrued liabilities and non-current liabilities(2,103)1,433 
Income taxes payable and receivable80 5,847 
Net cash provided by operating activities$28,588 $31,605 
Investing activities  
Purchases of property, plant and equipment(7,882)(5,173)
Sale of rental equipment75 163 
Cash paid for acquisitions, net of cash acquired(100,472)(35,299)
Net cash used in investing activities$(108,279)$(40,309)
Financing activities  
Proceeds from revolving credit facility18,000 34,500 
Payments on revolving credit facility (10,000)
Proceeds from long-term debt100,000  
Payments on long-term debt(17,778)(17,121)
Issuance costs associated with revolving line of credit and long term debt(659) 
Repurchase of employee stock units on vesting(1,880)(588)
Payments on finance leases(145)(62)
Net cash provided by financing activities$97,538 $6,729 
Less: Net change in cash balances classified as assets held-for-sale849  
Effect of exchange rate changes on cash, cash equivalents and restricted cash51 (754)
Change in cash, cash equivalents and restricted cash18,747 (2,729)
Cash, cash equivalents and restricted cash at beginning of period38,520 43,931 
Cash, cash equivalents and restricted cash at end of period$57,267 $41,202 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
6


Thermon Group Holdings, Inc.
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in thousands, except share and per share data)
 
1. Basis of Presentation
Thermon Group Holdings, Inc. and its direct and indirect subsidiaries are referred to collectively as “we,” “our,” or the “Company” herein. We are one of the largest providers of highly engineered industrial process heating solutions for process industries. We offer a full suite of products (heating units, electrode and gas-fired boilers, heating cables, industrial heating blankets and related products, temporary power solutions and tubing bundles), services (engineering, installation and maintenance services) and software (design optimization and wireless and network control systems) required to deliver comprehensive solutions to some of the world's largest and most complex projects.
Our condensed consolidated financial statements are prepared in conformity with generally accepted accounting principles in the United States ("GAAP") and the requirements of the United States Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, the accompanying condensed consolidated financial statements do not include all disclosures required for full annual financial statements and should be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2023 ("fiscal 2023"). In our opinion, the accompanying condensed consolidated financial statements reflect all adjustments considered necessary to present fairly our financial position at December 31, 2023 and March 31, 2023, and the results of our operations for the three and nine months ended December 31, 2023 and 2022.
Use of Estimates
Generally accepted accounting principles 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 management has based its assumptions and estimates on the facts and circumstances existing at December 31, 2023, 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, 2023, are not necessarily indicative of the results that may be achieved for fiscal 2024.
Restricted Cash and Cash Equivalents
    The Company maintains restricted cash related to certain letter of credit guarantees and performance bonds securing performance obligations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash included in prepaid expenses and other current assets and restricted cash included in other non-current assets reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows.
December 31, 2023March 31, 2023
Cash and cash equivalents$55,396 $35,635 
Restricted cash included in prepaid expenses and other current assets1,871 2,859 
Restricted cash included in other non-current assets 26 
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows$57,267 $38,520 
    Amounts shown in restricted cash included in prepaid expenses and other current assets and other non-current assets represent those required to be set aside by a contractual agreement, which generally contain cash deposits pledged as collateral on performance bonds and letters of credit. Amounts shown in restricted cash in other non-current assets represent such agreements that require a commitment term longer than one year.
Recent Accounting Pronouncements
Income taxes - In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 enhances annual income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations. The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid. This ASU will be effective in our fiscal year ended March 31, 2026 for our annual report on Form 10-K. We are still evaluating its impact to our consolidated financial statements.
7


Segment Reporting - In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. This update enhances segment reporting under ASC 280 - Segment Reporting by requiring registrants to disclose: significant segment expenses regularly provided to the chief operating decision maker ("CODM") and included within the reported measure(s) of a segment’s profit or loss, how the CODM uses the reported measure(s) of a segment’s profit or loss to assess segment performance and decide how to allocate resources, and the amount and composition of other segment items, which reconciles segment revenue, less significant expenses, to the reported measure(s) of a segment’s profit or loss, and the CODM's title and position. This ASU will be effective in our fiscal year ended March 31, 2025 for our annual report on Form 10-K and in interim periods thereafter. We are still evaluating the impact of this ASU on our consolidated financial statements.
Business Combinations - In October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in ASC 606. Under this "ASC 606 approach," the acquirer applies the revenue model as if it had originated the contracts. This is a departure from the previous requirement to measure contract assets and contract liabilities at fair value. The ASU is effective for all public business entities in annual and interim periods starting after December 15, 2022, and early adoption was permitted. We adopted this standard on April 1, 2023, and applied it accordingly to our recent acquisition.
2. Acquisitions
Vapor Power
On January 2, 2024, we announced our acquisition (the "Vapor Power Acquisition") of 100% of the issued and outstanding equity interests of Vapor Power International, LLC and its affiliates, (“Vapor Power”), a leading provider of high-quality industrial process heating solutions, including electric, electrode and gas fired boilers. The acquisition was consummated on December 29, 2023 (the "Vapor Power Acquisition Date") and the seller was Stone Pointe, LLC. We plan to integrate Vapor Power into our United States and Latin America ("US-LAM") reportable segment.
The total purchase price for Vapor Power was $107,523, with cash acquired of $7,051, for a net closing purchase price of $100,472. The total purchase price is based on customary adjustments for cash acquired, preliminary working capital adjustments, outstanding indebtedness, and transaction expenses. The Vapor Power acquisition was funded with cash on hand, the existing revolving credit facility, and an expanded term loan amended on December 29, 2023 in connection with the transaction. We have not recognized any material operating income or expenses related to Vapor in Interim 2024.
Acquisition Costs
In accordance with GAAP, costs to complete an acquisition are expensed as incurred. Total acquisition costs recognized in the Vapor Power acquisition were approximately $1,527, all recognized in the quarter ended December 31, 2023. These fees represent legal, advisory, and other professional fees paid by the Company to complete the acquisition and are reflected in "Selling, general and administrative expenses" in our condensed consolidated statement of operations and comprehensive income.
Preliminary Purchase Price Allocation
We have accounted for the Vapor Power acquisition according to the business combinations guidance found in ASC 805, Business Combinations, henceforth referred to as acquisition accounting. Acquisition accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. We used primarily Level 2 and 3 inputs to allocate the purchase price to the major categories of assets and liabilities shown below. For valuing the customer-related intangible assets, we used a common income-based approach called the multi-period excess earnings method; for the marketing-related and developed technology intangible assets, we used a relief-from-royalty method. The carrying values of inventories and property, plant, and equipment, and leases were adjusted to fair value, while the carrying value of any other asset or liability acquired approximated the respective fair value at time of closing.
The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information and is subject to change within the measurement period (up to one year from the Vapor Power Acquisition Date) as additional information concerning final asset and liability valuations is obtained. The fair value of the acquired intangible assets at December 31, 2022, of $45,911, was provisional pending receipt of the final valuation report for those assets from a third-party valuation expert. Additionally, we are still evaluating Vapor Power's customer contracts and related revenue recognition policies, and as such, the value of contract assets and/or contract liabilities is subject to change. During the measurement period, if new information is obtained about facts and circumstances that existed as of the Vapor Power Acquisition Date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date, we will revise the preliminary purchase price allocation. The effect of any measurement period adjustments to the estimated fair values will be reflected in future updates to our purchase price allocation. Goodwill will be deductible for tax purposes and generally represents expected synergies from the combination of efforts of the acquired business and the Company.
8


Preliminary Purchase Price Allocation - Vapor Power
Amortization Period (years)Fair Value
Cash$7,051 
Accounts receivable9,208 
Inventories8,640 
Other current assets776
Property, plant and equipment2,436 
Operating lease right-of-use assets2,700 
Intangibles:
Customer relationships(1)
2 - 15
24,343 
Trademarks107,879 
Developed technology1513,689 
Goodwill46,143 
Total fair value of assets acquired$122,865 
Current liabilities(12,793)
Operating lease liability(2,549)
Total fair value of liabilities acquired$(15,342)
Total purchase price$107,523 
(1) Included in the customer relationships intangible assets is $5,536 related to customer backlog with an estimated useful life of 2 years.
Powerblanket
On May 31, 2022, (the "Powerblanket Acquisition Date"), Thermon Holding Corp., as buyer, acquired 100% of the issued and outstanding equity interests of Powerblanket (“Powerblanket”) from Glacier Capital LLC, as seller (the "Powerblanket Acquisition"). Powerblanket is a leading North American supplier of heated blankets built upon patented heat spreading technology. The Powerblanket Acquisition increases our exposure to growing industrial and commercial end-markets through its freeze protection, temperature control and flow assurance solutions. We have integrated Powerblanket into our US-LAM reportable segment.
The initial purchase price for the Powerblanket Acquisition was $35,000, subject to an adjustment for net working capital acquired at closing. Subsequent to the Powerblanket Acquisition Date, and commensurate with the purchase agreement, we increased the purchase price by $299 for net working capital acquired. We financed the Powerblanket Acquisition through the use of our Revolving Credit Facility as well as cash on hand. Powerblanket's revenue structure does not result in material contract assets or liabilities.
Acquisition Costs
In accordance with GAAP, costs incurred to complete an acquisition are expensed as incurred. Total acquisition costs, which represent transaction costs, legal fees, and third-party professional fees were $278, of which $126 were recognized in fiscal 2023. No costs related to the Powerblanket Acquisition have been recognized in fiscal 2024. Acquisition costs are reflected in "Selling, general and administrative expenses" in our condensed consolidated statement of operations and comprehensive income.
Purchase Price Allocation
We have accounted for the Powerblanket Acquisition in accordance with acquisition accounting. We primarily used Level 2 and Level 3 inputs to allocate the purchase price to the major categories of assets and liabilities shown below. For valuing the customer relationships intangible asset, we used a common income-based approach called the multi-period excess earnings method; for the trademarks and developed technology intangible assets, we used a relief-from-royalty method; and for the contract-based intangible asset, we used the with and without method. The carrying values of inventories, property, plant and equipment as well as leased assets approximated their respective fair values at the time of closing.
9


Purchase Price Allocation - Powerblanket
Amortization Period (years)Fair Value
Accounts receivable$1,267 
Inventories3,545 
Other current assets290 
Property, plant and equipment391 
Other non-current assets954 
Intangibles:
Customer relationships9.83,301 
Trademarks9.83,397 
Contract-based5.01,280 
Developed technology15.85,189 
Goodwill18,620 
Total fair value of assets acquired$38,234 
Accounts payable(1,098)
Accrued liabilities(637)
Other liabilities(1,200)
Total fair value of liabilities acquired$(2,935)
Total purchase price$35,299 
Unaudited Pro Forma Financial Information
The following unaudited pro forma results of operations assume that both acquisitions mentioned above occurred at the beginning of the periods presented. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the Vapor Power Acquisition and Powerblanket Acquisition had occurred at the beginning of the periods presented, nor are they indicative of future results of operations. The pro forma results presented below are adjusted for the removal of Vapor Power Acquisition and other related costs of $5,912 and $217, in the three months ended December 31, 2023 and 2022, respectively, and $6,346 and $650 in the nine months ended December 31, 2023 and 2022, respectively. Also, the pro forma results presented below are adjusted for the removal of Powerblanket Acquisition and other related costs of $126, which were incurred in our first fiscal quarter ended June 30, 2022.
Three Months Ended December 31, 2023Three Months Ended December 31, 2022Nine Months Ended December 31, 2023Nine Months Ended December 31, 2022
Sales$154,927 $135,030 $407,434 $348,390 
Net income20,072 12,207 48,145 30,386 
3. 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 use of inputs in the valuation process are categorized into a three-level fair value hierarchy.
Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.
Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. 
Financial assets and liabilities with carrying amounts approximating fair value include cash and cash equivalents, 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, 2023 and March 31, 2023, no
10


assets or liabilities were valued using Level 3 criteria, except for those acquired in our acquisitions of Powerblanket and Vapor Power, as discussed in Note 2, "Acquisitions." 
Information about our financial assets and liabilities is as follows:
 December 31, 2023March 31, 2023 
 Carrying
Value
Fair ValueCarrying
Value
Fair ValueValuation Technique
Financial Assets:    
Deferred compensation plan assets$7,790 $7,790 $6,350$6,350Level 1 - Active Markets
Foreign currency contract forwards assets177 177 6060Level 2 - Market Approach
Financial Liabilities: 
Outstanding borrowings from revolving line of credit$32,500 $32,500 $14,500 $14,500 Level 2 - Market Approach
Outstanding principal amount of senior secured credit facility180,840 180,388 98,361 98,115 Level 2 - Market Approach
Deferred compensation plan liabilities7,080 7,080 5,671 5,671 Level 1 - Active Markets
Foreign currency contract forwards liabilities  26 26 Level 2 - Market Approach
At December 31, 2023 and March 31, 2023, the fair value of our long-term debt is based on market quotes available for issuance of debt with similar terms. 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.
Additionally, we acquired certain assets and liabilities as disclosed in Note 2, "Acquisitions" at fair value according to acquisition accounting.
Deferred Compensation Plan
    The Company provides a non-qualified deferred compensation plan for certain highly compensated employees where payroll contributions are made by the employees on a pre-tax basis. Included in “Other non-current assets” in the condensed consolidated balance sheets at December 31, 2023 and March 31, 2023 were $7,790 and $6,350, respectively, of deferred compensation plan assets held by the Company. Deferred compensation plan assets (mutual funds) are measured at fair value on a recurring basis based on quoted market prices in active markets (Level 1). The Company has a corresponding liability to participants of $7,080 and $5,671 included in “Other non-current liabilities” in the condensed consolidated balance sheets at December 31, 2023 and March 31, 2023, respectively. Deferred compensation plan expense/(income) is included as such in the condensed consolidated statement of operations, and therefore is excluded from "Selling, general and administrative expenses." Deferred compensation plan expense/(income) was $651 and $464 for the three months ended December 31, 2023 and 2022, respectively, and $677 and $(499) for the nine months ended December 31, 2023 and 2022, respectively. Expenses and income from our deferred compensation plan were offset by unrealized gains and losses for the deferred compensation plan included in "Other income/expense" on our condensed consolidated statements of operations and comprehensive income. Our unrealized (gains) and losses on investments were $(659) and $(484), respectively, for the three months ended December 31, 2023 and 2022, respectively, and $(709) and $450 for the nine months ended December 31, 2023 and 2022, respectively.
Trade Related Foreign Currency Forward Contracts
We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to address the risk associated with the effects of certain foreign currency exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts to mitigate foreign currency transaction gains or losses. These foreign currency exposures arise from intercompany transactions as well as third party accounts receivable or payable that are denominated in foreign currencies. Our forward contracts generally have terms of 30 days. We do not use forward contracts for trading purposes or designate these forward contracts as hedging instruments pursuant to ASC 815. We adjust the carrying amount of all contracts to their fair value at the end of each reporting period and unrealized gains and losses are included in "Other income/(expense)" on our condensed consolidated statements of operations and comprehensive income. 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 amounts for such forward contracts on our condensed consolidated balance sheets are either classified as accounts receivable, net or accrued
11


liabilities depending on whether the forward contract is in a gain (accounts receivable, net) or loss (accrued liabilities) position. 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, 2023 and March 31, 2023, the notional amounts of forward contracts were as follows:
Notional amount of foreign currency forward contracts by currency
December 31, 2023March 31, 2023
Canadian Dollar$3,000 $4,500 
South Korean Won 1,500 
Mexican Peso3,000  
Chinese Renminbi 500 
Great Britain Pound 500 
Total notional amounts$6,000 $7,000 
In the three and nine months ended December 31, 2023 and 2022, foreign currency gains or losses related to our forward contracts in the accompanying condensed consolidated statements of operations and comprehensive income were gains of $213 and $102, respectively, and a gain of $242 and a loss of $(510), 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. In the three and nine months ended December 31, 2023 and 2022, our net foreign currency transactions resulted in a loss of $(8) and a gain of $193, respectively, and losses of $(21) and $(140), respectively.
4. Restructuring and Other Charges/(Income)
Fiscal 2024 charges/(income)
As a result of the continued impact of the Russo-Ukrainian war, including the sanctions related thereto, the Company commenced a strategic assessment of its operations in its Russian subsidiary. On January 31, 2023, our board of directors authorized the Company to withdraw from its operations in the Russian Federation (the “Russia Exit”), through a planned disposition of its Russian subsidiary. In fiscal 2023, we moved the assets related to our Russian subsidiary into a separate asset group deemed as "assets held-for-sale," and wrote down the related net assets to a nominal value. In the three and nine months ended December 31, 2023, pursuant to requirements to remeasure the assets-held-for-sale, we recognized total charges related to the Russia Exit of $1,336 and $2,221, respectively, recorded to "Restructuring and other charges/(income)" on our condensed consolidated statement of operations and comprehensive income. This brings the total charge from fiscal 2023 and fiscal 2024 associated with the Russia Exit to $14,859, excluding transaction costs.
All charges described above were recorded in our Europe, Middle East and Africa ("EMEA") reportable segment.
5. 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, 2023 and 2022, respectively, are as follows:
 Three Months Ended December 31, 2023 Three Months Ended December 31, 2022Nine Months Ended December 31, 2023Nine Months Ended December 31, 2022
Basic net income per common share  
Net income$15,837 $8,425 $41,505 $25,965 
Weighted-average common shares outstanding33,703,845 33,493,540 33,946,201 33,457,048 
Basic net income per common share$0.47 $0.25 $1.22 $0.78 
12


Three Months Ended December 31, 2023Three Months Ended December 31, 2022Nine Months Ended December 31, 2023Nine Months Ended December 31, 2022
Diluted net income per common share  
Net income$15,837 $8,425 $41,505 $25,965 
Weighted-average common shares outstanding33,703,845 33,493,540 33,946,201 33,457,048 
Common share equivalents:
Stock options33,602 7,858 28,156 2,545 
Restricted and performance stock units464,078 378,335 350,216 296,625 
Weighted average shares outstanding – dilutive (1)
34,201,525 33,879,733 34,324,573 33,756,218 
Diluted net income per common share$0.46 $0.25 $1.21 $0.77 
(1) For the three months ended December 31, 2023 and 2022, zero and 28,499, 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 nine months ended December 31, 2023 and 2022, 1,275 and 39,517 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.
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 assume that the associated performance targets will be met at the target level of performance for purposes of calculating diluted net income per common share until such time that it is probable that actual performance will be above or below target.
6. Inventories
Inventories consisted of the following:
December 31, 2023March 31,
2023
Raw materials$65,471 $53,845 
Work in process5,194 5,338 
Finished goods32,217 29,511 
102,882 88,694 
Valuation reserves(6,583)(6,562)
Inventories, net$96,299 $82,132 

7. Goodwill and Other Intangible Assets
The carrying amount of goodwill by operating segment as of December 31, 2023, is as follows:
 United States and Latin AmericaCanadaEurope, Middle East and AfricaAsia-PacificTotal
Balance as of March 31, 2023$81,345 $112,945 $18,679 $6,643 $219,612 
Goodwill acquired(1)
46,143    46,143 
Foreign currency translation impact 2,622 274 (113)2,783 
Balance as of December 31, 2023$127,488 $115,567 $18,953 $6,530 $268,538 
(1) Refer to Note 2, "Acquisitions," for more information on the goodwill acquired through our recent acquisition of Vapor Power.
Goodwill is tested for impairment on an annual basis and between annual tests if indicators of potential impairment exist. We perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If required, we also perform a quantitative analysis using the income approach, based on discounted future cash flows, which are derived from internal forecasts and economic expectations, and the market approach, which is based on market multiples of guideline public companies. The most significant inputs in the Company's quantitative goodwill impairment tests are projected financial information, the weighted average cost of capital and market multiples for similar transactions. Our annual impairment test is performed during the fourth quarter of our fiscal year. To date, there have been no indicators of impairment.
Our total intangible assets consisted of the following:
13


Gross Carrying Amount at December 31, 2023Accumulated AmortizationNet Carrying Amount at December 31, 2023Gross Carrying Amount at March 31, 2023Accumulated AmortizationNet Carrying Amount at March 31, 2023
Products$62,989 $(38,843)$24,146 $61,560 $(33,344)$28,216 
Trademarks54,733 (2,367)52,366 47,427 (2,031)45,396 
Developed technology28,420 (7,035)21,385 14,862 (6,520)8,342 
Customer relationships138,665 (104,623)34,042 113,259 (102,743)10,516 
Certifications435 — 435 441 — 441 
Other1,278 (405)873 1,280 (221)1,059 
Total$286,520 $(153,273)$133,247 $238,829 $(144,859)$93,970 

8. Accrued Liabilities
Accrued current liabilities consisted of the following:
 December 31, 2023March 31,
2023
Accrued employee compensation and related expenses$19,726 $17,709 
Accrued interest112 414 
Customer prepayments87 89 
Warranty reserves1,200 758 
Professional fees3,541 2,696 
Sales taxes payable4,347 4,301 
Accrued litigation payable(1)
3,869 5,880 
Other(2)
7,510 7,517 
Total accrued current liabilities$40,392 $39,364 
(1) - The Company has insurance receivables recorded to Prepaid expenses and other current assets on our condensed consolidated balance sheets relating to and materially offsetting the accrued litigation payable noted above.
(2) - Other includes approximately $3,384 of non-cash, foreign currency translation impacts related to the Russia Exit. Once the disposition of our Russian affiliate is complete, this balance will be offset against accumulated other comprehensive loss on our condensed consolidated balance sheets.
9. Debt
Long-term debt consisted of the following:
 December 31, 2023March 31,
2023
U.S. Term Loan Facility due September 2026, net of deferred debt issuance costs of $252 and $335 as of December 31, 2023, and March 31, 2023, respectively
$68,747 $73,165 
Canadian Term Loan Facility due September 2026, net of deferred debt issuance costs of $29 and $94 as of December 31, 2023, and March 31, 2023, respectively
11,811 24,767 
Incremental Term Loan A due September 2026, net of deferred debt issuance costs of $659 and zero of December 31, 2023, and March 31, 2023, respectively
99,341  
Less current portion(15,945)(10,222)
 Total long-term debt$163,954 $87,710 
Senior Secured Credit Facilities
On September 29, 2021, Thermon Group Holdings, Inc. as a credit party and a guarantor, Thermon Holding Corp. (the “US Borrower”) and Thermon Canada Inc. (the “Canadian Borrower” and together with the US Borrower, the “Borrowers”), entered into an Amended and Restated Credit Agreement with several banks and other financial institutions or entities from time to time and JPMorgan Chase Bank, N.A., as Administrative Agent, ("the Agent") which was further amended on November 19, 2021, and March 7, 2023.
The Credit Agreement is an amendment and restatement of that certain Credit Agreement dated October 30, 2017, by and among Borrowers, the lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent (the “Prior Credit Agreement”), and provides for the following credit facilities described below (collectively, the “Facilities”).
14


Revolving Credit Facility: A USD $100,000 five-year secured revolving credit facility made available to the U.S. Borrower. The Revolving Credit Facility includes sub-limits for letters of credit and swing-line loans (the “Revolving Credit Facility”).
U.S. Term Loan Facility: A USD $80,000 five-year secured term loan A (the “U.S. Term Loan”) made available to the U.S. Borrower (the “U.S. Term Loan Facility”); and
Canadian Term Loan Facility: A CAD $76,182 five-year term loan A (the “Canadian Term Loan” and, together with the U.S. Term Loan, the “Term Loans”) made available to the Canadian Borrower (the “Canadian Term Loan Facility,” and together with the U.S. Term Loan Facility, the “Term Loan Facilities”).
Proceeds of the Facilities were used at closing to repay and refinance the Borrowers’ existing indebtedness under the Prior Credit Agreement and pay all interest, fees and expenses related thereto, and thereafter are expected to be used for working capital and general corporate purposes.
On December 29, 2023, the Company and the Borrowers entered into an Amendment No. 3 to Credit Agreement, Amendment No. 2 to the Guarantee and Collateral Agreement and Amendment No. 2 to the Canadian Guarantee and Collateral Agreement (collectively, the “Amendment”) with the Lenders and the Agent.
The Amendment provides for, among other things, changes to the Credit Agreement to (a) provide the US Borrower with a new incremental term loan facility as further described below (the “2023 Incremental U.S. Term Loan Facility”), (b) reset the accordion feature in the Credit Agreement for the incurrence of additional incremental term loans and incremental revolving commitments to an amount not to exceed USD $100.0 million, (c) permit the Canadian Borrower to borrow under the existing Revolver Facility (as defined in the Credit Agreement) in Canadian dollars, (d) permit Letters of Credit (as defined in the Credit Agreement) to be issued for the account of the Canadian Borrower, (e) replace the Canadian Dollar Offered Rate with the Canadian Overnight Repo Rate Average as the benchmark rate applicable to Term Benchmark Loans (each as defined in the Credit Agreement) denominated in Canadian dollars and implementing corresponding technical changes, and (f) expand the definitions of “Specified Cash Management Agreement” and “Specified Swap Agreement” (each as defined in the Credit Agreement) to provide for the inclusion of obligations arising under Swap Agreements (as defined in the Credit Agreement) and cash management agreements between any subsidiary of the US Borrower to be included in the Obligations (as defined in the Credit Agreement) that are secured and guaranteed under the Loan Documents (as defined in the Credit Agreement).
Certain principal terms of the 2023 Incremental U.S. Term Loan Facility are as follows:
A USD $100.0 million secured term loan A made available to the US Borrower on substantially the same terms as the existing U.S. Term A Loans (as defined in the Credit Agreement), but with a pricing increase across the grid of 0.375% above the pricing applicable to the existing U.S. Term A Loans.
Loans made to the US Borrower under the 2023 Incremental U.S. Term Loan Facility (the “2023 Incremental U.S. Term Loans”) shall rank pari passu in right of payment and security with the existing U.S. Term A Loans and shall be secured and guaranteed under the Loan Documents on a pro rata basis with the existing U.S. Term A Loans.
The 2023 Incremental U.S. Term Loans shall mature on September 29, 2026 (same as the existing U.S. Term A Loans) and shall amortize with installment payments due on the first day of each fiscal quarter (commencing with the fiscal quarter commencing on April 1, 2024) with the same percentage of principal being due on each payment date as the percentage of principal of the existing U.S. Term A Loans due on such date.
Proceeds of the 2023 Incremental U.S. Term Loans were used at the closing of the transactions contemplated by the Amendment to (a) finance the Vapor Acquisition (as defined in the Amendment), (b) refinance certain indebtedness of the Target (as defined in the Amendment), and (c) pay fees and expenses incurred by the US Borrower in connection with the foregoing.
The Amendment also provides for certain conforming changes relating to the expanded definitions of Specified Cash Management Agreement and Specified Swap Agreement in the Credit Agreement to (x) the Guarantee and Collateral Agreement, dated as of October 30, 2017, by and among the Company, the US Borrower and the Agent (the “US Security Agreement”) and (y) the Canadian Guarantee and Collateral Agreement, dated as of October 30, 2017, by and between the Canadian Borrower and the Agent (the “Canadian Security Agreement”, and together with the US Security Agreement, the “Security Agreements”), and also provides for changes in each Security Agreement to the waterfall for application of proceeds of collateral set forth therein so that Obligations (as defined in such Security Agreement) arising under Specified Cash Management Agreements and Specified Swap Agreements (other than indemnities, fees and similar obligations and liabilities) are paid pro rata with principal Obligations arising under Loans, Reimbursement Obligations and the cash collateralization of Letters of Credit (each as defined in such Security Agreement).
15


The foregoing summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 10-Q and incorporated herein by reference.
Maturity and Repayment
Each of the Facilities terminates on September 29, 2026. Each of the Term Loans will amortize as set forth in the table below, with payments on the first day of each January, April, July and October, with the balance of each Term Loan Facility due at maturity.
Installment DatesOriginal Principal Amount
January 1, 2022 through October 1, 20221.25 %
January 1, 2023 through October 1, 20241.88 %
January 1, 2025 through July 1, 20262.50 %
Guarantees
The U.S. Term Loan and 2023 Incremental U.S. Term Loan Facility and the obligations of the U.S. Borrower under the Revolving Credit Facility are guaranteed by the Company and all of the U.S. Borrower’s current and future wholly owned domestic material subsidiaries (the “U.S. Subsidiary Guarantors”), subject to certain exceptions. The Canadian Term Loan is guaranteed by the Company, the U.S. Borrower, the U.S. Subsidiary Guarantors and each of the wholly owned Canadian material subsidiaries of the Canadian Borrower, subject to certain exceptions.
Security
The U.S. Term Loan and 2023 Incremental U.S. Term Loan Facility and the obligations of the U.S. Borrower under the Revolving Credit Facility are secured by a first lien on all of the assets of the Company, the U.S. Borrower and the U.S. Subsidiary Guarantors, including 100% of the capital stock of the U.S. Subsidiary Guarantors and 65% of the capital stock of the first tier material foreign subsidiaries of the Company, the U.S. Borrower and the U.S. Subsidiary Guarantors, subject to certain exceptions. The Canadian Term Loan is secured by a first lien on all of the assets of the Company, the U.S. Borrower, the U.S. Subsidiary Guarantors, the Canadian Borrower and the material Canadian subsidiaries of the Canadian Borrower, including 100% of the capital stock of the Canadian Borrower’s material Canadian subsidiaries.
Financial Covenants
In connection with the Credit Agreement, the Company is required, on a consolidated basis, to maintain certain financial covenant ratios. On the last day of any period of four fiscal quarters ending during a period set forth below, the Company must maintain a consolidated leverage ratio that does not exceed the ratios for such period set forth below (each of which ratios may be increased by 0.50:1.00 for each of the four fiscal quarters following certain acquisitions at the election of the U.S. Borrower):
Fiscal Quarter EndingConsolidated Leverage Ratio
December 31, 2022, and each fiscal quarter thereafter
3.50:1.00
In addition, on the last day of any period of four fiscal quarters ending on or after September 30, 2021, the Company must maintain a consolidated fixed charge coverage ratio of not less than 1.25:1.00. As of December 31, 2023, we were in compliance with all financial covenants of the Credit Agreement.
Other Covenants
The Credit Agreement contains restrictive covenants (in each case, subject to certain exclusions) that limit, among other things, the ability of the Company and its subsidiaries (including the Borrowers) to incur additional indebtedness, grant liens, make fundamental changes, sell assets, make restricted payments, enter into sales and leasebacks, make investments, prepay certain indebtedness, enter into transactions with affiliates, and enter into restrictive agreements.
The covenants are subject to various baskets and materiality thresholds, with certain of the baskets to the restrictions on the repayment of subordinated or unsecured indebtedness, restricted payments and investments being available only when the Company’s pro forma leverage ratios are less than a certain level.
The Credit Agreement contains certain customary representations and warranties, affirmative covenants and events of default, including, among other things, payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, judgment defaults, actual or asserted
16


failure of any guaranty or security documents to be in full force and effect and change of control. If such an event of default occurs, the Agent will be entitled to take various actions, including the termination of the commitment for the Revolving Credit Facility, the acceleration of amounts due under the Credit Agreement and certain other actions that a secured creditor is customarily permitted to take following a default.
    At December 31, 2023, we had $32,500 in outstanding borrowings under the Revolving Credit Facility. We had $64,892 of available borrowing capacity thereunder after taking into account the borrowing base and $2,607 of outstanding letters of credit and the outstanding borrowings under the Revolving Credit Facility as of December 31, 2023. The Term Loans bear interest at the Secured Overnight Financing Rate ("SOFR"), or Canadian Overnight Repo Rate Average ("CORRA"), as applicable, in each case plus an applicable margin dictated by our leverage ratio (as described above). The interest rates on the Term Loan Facilities on December 31, 2023 were 6.59% for the Canadian Term Loan Facility, 6.71% for the U.S. Term Loan Facility, 7.21% for the 2023 Incremental U.S. Term Loan Facility, and 6.71% for the U.S. Revolving Credit Facility. Interest expense has been presented net of interest income on our condensed consolidated statements of operations and comprehensive income.
10. Commitments and Contingencies
Legal Proceedings and Other Contingencies
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. As of December 31, 2023, we have established an estimated liability associated with the aforementioned disputes. Expenses related to litigation reduce operating income. We do not believe that the outcome of any of these proceedings or disputes would have a significant adverse effect on our financial position, long-term results of operations, or cash flows. It is possible, however, that charges related to these matters could be significant to our results of operations or cash flows in any one reporting period. Refer to Note 8, "Accrued Liabilities" for more information regarding our accruals related to these proceedings.
In January 2020, the Company received service of process in a class action application in the Superior Court of Quebec, Montreal, Canada related to certain heating elements previously manufactured by Thermon Heating Systems and incorporated into certain portable construction heaters sold by certain manufacturers. The Company has reached an agreement with the plaintiff and other defendants to resolve this matter without admitting to any liability, and we recently obtained approval of the same by the Superior Court. The settlement did not have a material impact on the Company’s consolidated financial position or results of operations and will be paid with no material impact on cash flows.
Letters of Credit and Bank Guarantees
At December 31, 2023, the Company had in place letter of credit guarantees and performance bonds securing certain performance obligations of the Company. These arrangements totaled $12,818. Of this amount, $687 is secured by cash deposits at the Company’s financial institutions and an additional $2,607 represents a reduction of the available amount of the Company's revolving credit facility. In addition to the arrangements totaling $12,818, our Indian subsidiary also has $4,356 in non-collateralized customs bonds outstanding to secure the Company's customs and duties obligations in India.
11. Revenue
Disaggregation of Revenue
We disaggregate our revenue from contracts with customers by geographic location, as well as revenues recognized at point in time and revenues recognized over time, as we believe these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
Revenue recognized at a point-in-time based on when control transfers to the customer is generally related to our product sales. Point-in-time revenue does not typically require engineering or installation services. Revenue recognized over time occurs on our projects where usually in addition to materials, engineering or installation services, or a combination of the two, are also required. We recognize revenue related to such projects in a systematic way that reflects the transfer of goods or services, or a combination of goods and services, to the customer.
Disaggregation of revenues from contracts with customers for the three and nine months ended December 31, 2023 and 2022 is as follows:
17


Three Months Ended December 31, 2023Three Months Ended December 31, 2022
Revenues recognized at point in timeRevenues recognized over timeTotalRevenues recognized at point in timeRevenues recognized over timeTotal
United States and Latin America$39,881 $32,823 $72,704 $34,762 $24,988 $59,750 
Canada30,659 10,455 41,114 32,725 10,446 43,171 
Europe, Middle East and Africa7,366 5,119 12,485 6,643 4,582 11,225 
Asia-Pacific7,606 2,518 10,124 4,268 3,696 7,964 
Total revenues$85,512 $50,915 $136,427 $78,398 $43,712 $122,110 
Nine months ended December 31, 2023Nine months ended December 31, 2022
Revenues recognized at point in timeRevenues recognized over timeTotalRevenues recognized at point in timeRevenues recognized over timeTotal
United States and Latin America$101,515 $88,482 $189,997 $82,627 $70,150 $152,777 
Canada80,806 31,780 112,586 83,512 26,638 110,150 
Europe, Middle East and Africa20,577 14,996 35,573 17,811 12,993 30,804 
Asia-Pacific20,393 8,426 28,819 15,565 8,813 24,378 
Total revenues$223,291 $143,684 $366,975 $199,515 $118,594 $318,109 
Performance Obligations
    At December 31, 2023, revenues to be recorded associated with our open performance obligations totaled $158,823. Within this amount, approximately $13,588 will be earned as revenue in excess of one year. We expect to recognize the remaining revenues associated with unsatisfied or partially satisfied performance obligations within the next 12 months.
Contract Assets and Liabilities
    As of December 31, 2023 and March 31, 2023, contract assets were $19,397 and $16,272, respectively. As of December 31, 2023 and March 31, 2023, contract liabilities were $15,414 and $8,483, respectively. We typically recognize revenue associated with our contract liabilities within 12 months.
12. Income Taxes
Our effective income tax rate was 23.2% and 29.1% for the nine months ended December 31, 2023 and 2022, respectively. The Company recorded a discrete tax benefit of $426 in the nine months ended December 31, 2023, and a discrete tax expense of $680 related to various matters in the nine months ended December 31, 2022. The discrete tax items for both periods include realized stock compensation and the foreign exchange impact of certain deferred tax matters.
As of December 31, 2023, we have established a long-term liability for uncertain tax positions in the amount of $1,023. As of December 31, 2023, the tax years for the fiscal years ended March 31, 2018 through March 31, 2023, remain open to examination by the major taxing jurisdictions.
13. Segment Information
We maintain four reportable segments based on four geographic countries or regions in which we operate: (i) United States and Latin America ("US-LAM"), (ii) Canada, (iii) Europe, Middle East and Africa ("EMEA") and (iv) Asia-Pacific ("APAC"). Within our four reportable segments, our core products and services are focused on the following markets: chemical and petrochemical, oil, gas, power generation, commercial, food and beverage, rail and transit, and other, which we refer to as our "key end markets." We offer a full suite of products (heating units, heating cables, industrial heating blankets and related products, temporary power solutions and tubing bundles), services (engineering, installation and maintenance services) and software (design optimization and wireless and network control systems) required to deliver comprehensive solutions to some of the world's largest and most complex projects. 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. 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.
18


    Total sales to external customers, inter-segment sales, depreciation expense, amortization expense, income from operations, property, plant and equipment, net and total assets for each of our four reportable segments are as follows:
Three Months Ended December 31, 2023Three Months Ended December 31, 2022Nine Months Ended December 31, 2023Nine Months Ended December 31, 2022
Sales to External Customers:  
United States and Latin America$72,704 $59,750 $189,997 $152,777 
Canada41,114 43,171 112,586 110,150 
Europe, Middle East and Africa12,485 11,225 35,573 30,804 
Asia-Pacific10,124 7,964 28,819 24,378 
 $136,427 $122,110 $366,975 $318,109 
Inter-Segment Sales:
United States and Latin America$10,439 $10,041 $30,089 $32,783 
Canada4,254 5,386 12,837 12,042 
Europe, Middle East and Africa392 279 1,067 935 
Asia-Pacific1,102 749 2,635 1,561 
$16,187 $16,455 $46,628 $47,321 
Depreciation Expense:
United States and Latin America$1,159 $1,113 $3,323 $3,700 
Canada912 1,096 2,760 3,396 
Europe, Middle East and Africa41 94 139 283 
Asia-Pacific40 35 118 106 
$2,152 $2,338 $6,340 $7,485 
Amortization Expense:
United States and Latin America$367 $588 $1,427 $1,587 
Canada1,720 1,724 5,208 5,354 
Europe, Middle East and Africa22 21 66 62 
Asia-Pacific12 34 34 69 
$2,121 $2,367 $6,735 $7,072