Thermon Group Holdings, Inc.THR
Thermon Group Holdings, Inc. Fair Value Disclosure
Fair Value Measurements
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 is categorized into a three-level fair value hierarchy.
•Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.
•Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.
Financial assets and liabilities with carrying amounts approximating fair value include cash, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities. At March 31, 2026 and 2025, no assets or liabilities were valued using Level 3 criteria, except as described in Note 2, "Acquisition."
Information about our financial assets and liabilities measured at fair value are as follows (our outstanding principal amount of the senior secured facility is reported at carrying value):
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | Valuation Technique | |||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||
| Deferred compensation plan assets | $ | 9,020 | $ | 9,020 | $ | 8,206 | $ | 8,206 | Level 1 - Market Approach | ||||||||||||||||||||
| Foreign currency contract forwards assets | — | — | 1 | 1 | Level 2 - Market Approach | ||||||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||
| Outstanding principal amount of senior secured credit facility | $ | 121,875 | $ | 121,266 | $ | 138,874 | $ | 138,180 | Level 2 - Market Approach | ||||||||||||||||||||
| Deferred compensation plan liabilities | 8,831 | 8,831 | 8,030 | 8,030 | Level 1 - Market Approach | ||||||||||||||||||||||||
| Foreign currency contract forwards liabilities | 209 | 209 | 491 | 491 | Level 2 - Market Approach | ||||||||||||||||||||||||
| Outstanding borrowings from revolving line of credit | 19,700 | 19,700 | — | — | Level 2 - Market Approach | ||||||||||||||||||||||||
Long-term Debt
At March 31, 2026 and 2025, 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.
Deferred Compensation Plan Assets
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. 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). Please refer to Note 13, "Employee Benefits" for further discussion.
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 fluctuations of certain foreign currencies. 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 typically arise from intercompany transactions. 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, Derivatives and Hedging. 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 intended to offset gains and losses resulting from settlement of payments received from our foreign operations which are settled in U.S. dollars. All outstanding foreign currency forward contracts are marked to market at the end of the period with unrealized gains and losses included in other expense. The fair value is determined by quoted prices from active foreign currency markets (Level 2). The consolidated balance sheets reflect unrealized gains within accounts receivable, net and unrealized losses within . 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 March 31, 2026 and 2025, the notional amounts of forward contracts as well as the related fair values were as follows:
| March 31, 2026 | March 31, 2025 | ||||||||||
| Euro | 10,353 | 10,280 | |||||||||
| Canadian Dollar | — | 2,000 | |||||||||
| South Korean Won | — | 2,500 | |||||||||
| Mexican Peso | — | 2,000 | |||||||||
| Total notional amounts | $ | 10,353 | $ | 16,780 | |||||||
Recognized foreign currency gains or losses related to our forward contracts in the accompanying consolidated statements of operations and comprehensive income were gains/(losses) of $(75), $(563) and $243 for fiscal 2026, 2025 and 2024, respectively. Gains and losses from our forward contracts are intended to be offset by transaction gains and losses from the settlement of transactions denominated in foreign currencies. The Company realized net foreign currency gains/(losses) of
$(707), $74, and $(205) for fiscal 2026, 2025, and 2024, respectively. Foreign currency gains and losses are recorded within in our consolidated statements of operations and comprehensive income.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 21, 2026 | Showing above |
| 2025 | May 22, 2025 | |
| 2024 | May 29, 2024 | |
| 2023 | May 25, 2023 | |
| 2022 | May 26, 2022 | |
| 2021 | May 27, 2021 | |
| 2020 | Jun 1, 2020 | |
| 2019 | Jun 12, 2019 | |
| 2018 | May 30, 2018 | |
| 2017 | May 30, 2017 | |
| 2016 | May 31, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.