Circuit Operation : The heart of the circuit is the LM35 temperature sensor which is factory-calibrated in the Celsius (or Centigrade) scale with a linear Degree->Volt conversion function. The output voltage (at pin 2)  changes with temperature from 550mV (-55oC)  to  1500mV (150oC). This greatly simplifies the thermostat design as we only need to provide a precision voltage reference (TL431) and an accurate comparator (A1 of LM358) in order to construct a complete thermostat. The preset (VR1) & resistor (R3) form a variable voltage divider which sets a reference voltage (Vref) form 0V ~ 1.62V. The op-amp (A2) buffers the reference voltage so as to avoid loading the divider network (VR1 & R3).  The comparator (A1) compares the reference voltage  Vref set by VR1 with the output voltage of LM35 and decides whether to energize or de-energize the relay

Electronic Temperature Controlled Relay - [Link]