Strategic Focus on High-Margin Revenue Mix and Tariff Mitigation
Thermon's strategic shift toward higher-margin OpEx revenues across diverse end markets has contributed to a 30 basis point gross margin improvement despite volume declines.
Tariff mitigation measures, including prebuying materials, sourcing shifts, and price increases, began to take effect late in Q1, supporting margin expansion.
Management emphasized that operational discipline and proactive tariff strategies are key to maintaining profitability amid global trade uncertainties.
While revenue was impacted by delays, the company expects these to translate into future revenue recognition, indicating a focus on long-term margin stability.
Adjusted earnings per share rose 25% to $1.60 in Q3 2025.
Adjusted EBIT margins increased from 19.3% to 21.1% year-over-year in Q3, driven by favorable price, mix, and leverage effects.
ESCO Technologies reported strong Q3 2025 financial results with reported sales growth of nearly 27% and organic sales growth of 11%, excluding the Maritime acquisition impact.
Test segment delivered 21% sales growth in Q3 and 15.4% adjusted EBIT growth, though margins declined slightly due to mix and tariff impacts.
The Aerospace & Defense segment showed 56% reported sales growth and 14% organic growth, with a 560 basis point margin increase and record backlog of $832 million.
Utility Solutions Group had flattish sales growth of 2% but strong order growth of 5.5%, with some margin pressure due to timing issues at Doble.
Year-to-date results show double-digit adjusted EBIT margin improvement and over 24% adjusted EPS growth.
Record Sales, EBITDA, and EPS Achieved in Fiscal 2025
Applied Industrial Technologies achieved new records for sales, EBITDA, and EPS in fiscal 2025, demonstrating strong operational resilience.
Full year EPS growth of 4% exceeded initial guidance, highlighting effective management despite a muted demand environment.
Gross margins expanded nearly 50 basis points, surpassing 30% for the first time in the company's history, indicating margin improvement.
The company generated over $465 million of free cash flow, a 34% increase, enabling significant capital deployment including acquisitions and share buybacks.
The strategic acquisition of Hydradyne, its largest in 6 years, contributed over 400 basis points of inorganic growth and was a key driver of the record performance.
Dafinchi
