Subsequent to the end of the fiscal year, Thermon completed the redemption of its 9.5% senior secured notes on May 20, 2013. The redemption was financed with a new $135 million term loan with a LIBOR based floating variable interest rate, which is currently 2.75%. At current interest rates, the Company expects its interest expense to be reduced by approximately $7.5 million per year, or $0.23 per share, pre-tax. Total cash savings over the next four years (the remaining life of the notes) are expected to be approximately $30 million. The term loan will mature in 2018.
Adjustments to net income in fiscal 2012 and 2013 are due to the effects of optional redemptions of long-term debt, the refinancing of our revolving line of credit and cost associated with our initial public offering, shelf registration and secondary offering of common stock. See the tables titled "Reconciliation of Net Income to Adjusted EBITDA excluding management fees and Return on Equity" and "Reconciliation of Net Income to Adjusted Net Income and EPS" for additional details.
Conference Call and Webcast Information
Thermon's senior management team, including Rodney Bingham, President and Chief Executive Officer, and Jay Peterson, Chief Financial Officer, will discuss fiscal 2013 results during a conference call today at 10:00 a.m. (Central Standard Time), which will be simultaneously webcast on Thermon's Investor Relations website located at http://ir.thermon.com. Investment community professionals interested in participating in the question-and-answer session may access the call by dialing (877) 312-5421 from within the United States/Canada and (253) 237-1121 from outside of the United States/Canada. A replay of the webcast will be available on Thermon's Investor Relations website beginning two hours after the conclusion of the call.
Through its global network, Thermon provides highly engineered thermal solutions, known as heat tracing, for process industries, including energy, chemical processing and power generation. Thermon's products provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature maintenance, environmental monitoring and surface snow and ice melting. Thermon is headquartered in San Marcos, Texas. For more information, please visit www.thermon.com.
Non-GAAP Financial Measures
Disclosure in this release to "Adjusted EPS," "Adjusted EBITDA excluding management fees," "Adjusted net income", "Free cash flow per share" and "Return on equity" which are "non-GAAP financial measures" as defined under the rules of the Securities and Exchange Commission (the "SEC"), are intended as supplemental measures of our financial performance that are not required by, or presented in accordance with, U.S. generally accepted accounting principles ("GAAP"). "Adjusted net income" and "Adjusted earnings per share (or EPS)" represents net income before certain transaction expenses and expenses related to debt redemptions and refinancing of our revolving line of credit, per fully-diluted common share. "Adjusted EBITDA excluding management fees" represents net income before interest expense (net of interest income), income tax expense, depreciation and amortization expense and other non-cash charges such as stock-based compensation expense, transaction expenses related to our initial public offering, shelf registration and secondary offering, and other transactions not associated with our ongoing operations, such as the loss on retirement of debt, as adjusted to further exclude management and termination fees paid to our former private equity sponsors. "Return on equity" represents "Adjusted EBITDA excluding management fees" for the three month period ended March 31, 2013 that is multiplied times four to represent a full year's results, divided by the average of total shareholders' equity at March 31, 2013 and December 31, 2012. We believe that the average equity properly accounts for net income that occurred during the three months ended March 31, 2013. "Free cash flow per share" represents cash provided by operations less cash used for the purchase of property plant and equipment. The resultant cash provided or used is then divided by the fully diluted common shares outstanding.
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