Core Viewpoint - Graham Corporation (NYSE: GHM) was highlighted for its strong performance at the beginning of the year, significantly outperforming other small-cap and industrial stocks [1] Group 1 - The company was noted for being in "dazzling form" at the start of the year [1] - Graham Corporation's performance was described as a "hefty margin" above its peers in the small-cap and industrial sectors [1]

Core Viewpoint - The article highlights Graham (GHM) as a promising growth stock, emphasizing its strong earnings growth, efficient asset utilization, and positive earnings estimate revisions, making it a solid choice for growth investors [2][10]. Earnings Growth - Graham has a historical EPS growth rate of 23.6%, with projected EPS growth of 154.8% this year, significantly outperforming the industry average of 10.7% [5]. Asset Utilization Ratio - The company has an asset utilization ratio (sales-to-total-assets ratio) of 0.81, indicating it generates $0.81 in sales for every dollar in assets, which is higher than the industry average of 0.75, showcasing better efficiency [6]. Sales Growth - Graham's sales are expected to grow by 11.8% this year, compared to the industry average of 3.2%, indicating strong sales growth potential [7]. Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Graham, with the Zacks Consensus Estimate for the current year increasing by 3.9% over the past month, suggesting favorable near-term stock price movements [8]. Overall Assessment - Graham has achieved a Growth Score of A and a Zacks Rank 1 (Strong Buy), indicating it is a potential outperformer and a strong candidate for growth investors [10].

Safe Harbor Statement Safe Harbor Regarding Forward Looking Statements G r a h a m C o r p o r a t i o n Third Quarter FY25 Teleconference February 7, 2025 Daniel J. Thoren, Chief Executive Officer Matthew J. Malone, President and Chief Operating Officer Christopher J. Thome, Vice President - Finance and Chief Financial Officer www.GrahamCorp.com This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securitie ...

Financial Data and Key Metrics Changes - Sales for the quarter totaled $47 million, a 7.3% increase over the prior year [22] - Gross margin improved by 260 basis points to 24.8% of sales, driven by higher sales volume and better execution [25] - Adjusted EBITDA increased 36% over the prior year, totaling $4 million, with an adjusted EBITDA margin of 8.6% [29][40] Business Line Data and Key Metrics Changes - The defense sector saw notable growth, with an 11% increase contributing to overall performance [8] - Aftermarket revenue increased by 2.4% over record levels from the previous year, indicating strong demand [23] - The company reported a significant backlog of $385 million, with 80% attributed to the defense business [38] Market Data and Key Metrics Changes - Orders for the quarter declined to $24.8 million, but the nine-month period saw orders totaling $144.2 million, maintaining a book-to-bill ratio of one [35][36] - The space backlog increased by 59% over the previous year, reflecting growing opportunities in that sector [39] Company Strategy and Development Direction - The company is focused on expanding its manufacturing capabilities, including a new facility in Batavia, expected to enhance naval defense work [19] - Strategic investments in R&D and operational excellence are prioritized to drive long-term growth [18][44] - The leadership transition plan aims to ensure continuity and leverage internal talent for future growth opportunities [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand environment, emphasizing the company's ability to capture additional opportunities [10] - The company is optimistic about ongoing discussions with customers regarding new programs and expansions, despite challenges in the shipbuilding market [54] - Management highlighted the importance of maintaining strong customer relationships and operational excellence to navigate market dynamics [18] Other Important Information - The effective tax rate for the quarter was 29%, with expectations for the full year to be between 20% and 22% [31] - Capital expenditures for the quarter totaled $7.3 million, with projections for the full year now expected to be between $15 million and $19 million [33][34] Q&A Session Summary Question: Challenges in the shipbuilding market and potential opportunities - Management indicated that customers are focused on maintaining production schedules and are not experiencing slowdowns, leading to positive discussions about future opportunities [52][54] Question: Strength in aftermarket revenue - The aftermarket growth is primarily driven by energy and chemical sectors, with increasing inquiries from international customers for new technology [56][58] Question: Ideal book-to-bill ratio - The company aims for a book-to-bill ratio of 1.1 to support 8% to 10% organic revenue growth, despite current lumpiness in order flow [67][68] Question: Supply chain and labor challenges - Management is optimistic about continued government funding for supplier development, which will support capacity expansion [72][73] Question: Exposure to potential supplemental defense budgets - The company is involved in strategic programs that may benefit from increased defense spending, but the impact of a continuing resolution is uncertain [81][82] Question: M&A activity - The company is actively pursuing M&A opportunities, focusing on engineered products with strong IP and technology moats [101]

Financial Performance - Net sales for Q3 fiscal 2025 were $47,037, up 7% compared to Q3 fiscal 2024, with an 11% increase in defense industry sales and a 64% increase in chemical/petrochemical market sales[76] - Gross profit for Q3 fiscal 2025 was $11,686, with a gross profit margin of 24.8%, reflecting a 260 basis point improvement over the same period in fiscal 2024[76] - Net income for Q3 fiscal 2025 was $1,588, or $0.14 per diluted share, compared to net income of $165, or $0.02 per diluted share, in Q3 fiscal 2024[76] - For the first nine months of fiscal 2025, net sales increased by $14,088 million, or 10%, compared to the same period in fiscal 2024[93] - Net income for the three months ended December 31, 2024, was $1,588 million, representing a significant increase from $165 million in the same period of 2023[106] - Adjusted net income for the first nine months of fiscal 2025 was $8,965 million, up from $5,188 million in the first nine months of fiscal 2024[107] Orders and Backlog - Orders booked in Q3 fiscal 2025 decreased to $24,786 from $123,267 in Q3 fiscal 2024, primarily due to a record level of orders in the prior year[76] - Backlog was $384,701 at December 31, 2024, down from $390,868 at March 31, 2024, mainly due to the timing of orders in the defense market[76] - Total orders for the third quarter of fiscal 2025 decreased to $24,786 million, down 80% from $123,267 million in the prior year[121] - The backlog as of December 31, 2024, was $384,701 million, a decrease of 4% from $399,244 million in the prior year[123] - The company expects to recognize revenue on approximately 45% to 50% of the backlog within one year and 35% to 40% in one to two years[123] - Orders to the U.S. represented 76% of total orders for the first nine months of fiscal 2025, down from 88% in the prior year[122] Cash and Capital Expenditures - Cash and cash equivalents increased to $30,046 at December 31, 2024, compared to $16,939 at March 31, 2024, driven by cash provided by operating activities of $27,873[76] - Capital expenditures for the first nine months of fiscal 2025 were $13,800 million, significantly higher than $5,193 million in the comparable period of fiscal 2024[111] - The company expects fiscal 2025 capital expenditures to be in the range of $15,000 to $19,000 million, up from previous expectations of $10,000 to $15,000 million[111] - Capital expenditures for fiscal 2025 are projected to be between $15,000 to $19,000 million, up from previous guidance of $13,000 to $18,000 million[124] Market Outlook - The company expects strong demand for defense equipment due to defense budget plans and increased geopolitical tensions[82] - The company anticipates continued growth in alternative and clean energy markets, particularly in hydrogen production and geothermal power generation[87] - The NextGen steam ejector nozzle is projected to have a market opportunity exceeding $50 million over the next 5 to 10 years[85] - The company anticipates achieving 8% to 10% average annualized organic revenue growth by fiscal 2027[125] Expenses and Financial Ratios - SG&A expenses increased by $884 million in the third quarter of fiscal 2025 compared to the same quarter in fiscal 2024, driven by higher personnel costs and research and development investments[96] - Net interest income for the first nine months of fiscal 2025 was $442 million, compared to net interest expense of $277 million in the same period of fiscal 2024[98] - The effective tax rate for the first nine months of fiscal 2025 was 20%, a decrease from 22% in the same period of fiscal 2024[99] - The book-to-bill ratio is used to track growth prospects, calculated as net orders divided by net sales[119] Risk Factors - The company is facing significant cost inflation in labor, raw materials, tariffs, and supply chain costs due to increased demand and global supply chain disruptions[139] - Geopolitical events, including the Russia-Ukraine war and the Israel-Hamas conflict, may further increase supply chain costs and affect business operations[139] - Foreign currency exchange rate fluctuations decreased cash balances by $39 million primarily due to the strengthening of the U.S. dollar[135] Dividends and Debt - The company did not pay any dividends during the first nine months of fiscal 2025 and has no intention to pay dividends for the foreseeable future[115] - The company had no borrowings on its new $50,000 million revolving credit facility as of December 31, 2024, with $7,202 million in letters of credit outstanding[113] - As of December 31, 2024, the company had no variable rate debt outstanding on its New Revolving Credit Facility[140] - The company evaluates the use of interest rate derivatives to manage exposure to interest rate movements as part of its risk management activities[140]

Revenue and Sales Performance - Revenue increased by 7.3% to $47.0 million, driven by strong demand in key end-markets[5] - Net sales for the three months ended December 31, 2024, were $47,037,000, representing a 7% increase compared to $43,818,000 for the same period in 2023[35] - The company reported a 10% increase in net sales for the nine months ended December 31, 2024, totaling $150,551,000 compared to $136,463,000 in the prior year[35] - Net sales for Q3 2024 were $47,037 million, an increase of 7% from $43,818 million in Q3 2023[41] Profitability and Margins - Gross profit margin improved by 260 basis points to 24.8% of sales, with net margin increasing by 300 basis points to 3.4% of sales[5] - Gross profit increased by 20% to $11,686,000 for the three months ended December 31, 2024, compared to $9,723,000 in the prior year[35] - Operating profit for the three months ended December 31, 2024, was $2,210,000, a significant increase of 143% from $911,000 in the same period last year[35] - Adjusted EBITDA for Q3 2024 reached $4,027 million, up 36% from $2,965 million in Q3 2023, with an adjusted EBITDA margin of 8.6% compared to 6.8% last year[41] Net Income and Earnings Per Share - Net income per diluted share increased by 600% to $0.14, while adjusted net income per diluted share rose by 38% to $0.18[5] - Net income for the three months ended December 31, 2024, was $1,588,000, an increase of 862% compared to $165,000 in the prior year[35] - Adjusted net income for Q3 2024 was $1,966 million, compared to $1,451 million in Q3 2023, reflecting a growth of 36%[43] - GAAP net income per diluted share for Q3 2024 was $0.14, up from $0.02 in Q3 2023[43] Orders and Backlog - Orders totaled $24.8 million, with a year-to-date book-to-bill ratio of 1.0x and a backlog of $385 million[5] - Backlog at quarter end was $384.7 million, down 3.6% year-over-year, with 45% to 50% expected to convert to sales in the next twelve months[17] - The book-to-bill ratio is used to track growth prospects, calculated as net orders divided by net sales[31] - The company believes tracking orders and backlog are useful as they often serve as leading indicators of future performance[30] Cash and Capital Expenditures - Cash and cash equivalents were $30.0 million, up from $16.9 million at the end of fiscal 2024[12] - Cash and cash equivalents increased to $30,046,000 as of December 31, 2024, from $16,939,000 at the end of March 2024[37] - Capital expenditures for the first nine months of fiscal 2025 were $13.8 million, with an increase in expected capital expenditures to $15.0 million to $19.0 million[13] Operating Expenses - SG&A expenses totaled $9.7 million, or 20.6% of sales, reflecting continued investments in people, processes, and technology[10] - Operating expenses increased by 24% for the nine months ended December 31, 2024, totaling $26,821,000 compared to $21,563,000 in the previous year[35] Guidance and Future Outlook - The company reiterated full-year guidance for net sales between $200 million to $210 million and adjusted EBITDA between $18 million to $21 million[19] - The company plans to complete the Barber-Nichols performance bonus expense by the end of fiscal year 2026, with expenses of $0.8 million for Q3 2025[44]

Core Insights - Steven Cress is a key figure in quantitative strategy and market data at Seeking Alpha, contributing to the development of the platform's quantitative stock rating system and analytical tools [1][2][3] - The Seeking Alpha Quant Rating system aims to interpret data for investors, providing insights that save time and enhance investment decision-making [1][2] - Cress has a strong background in investment research, having founded CressCap Investment Research and Cress Capital Management, and previously worked at Morgan Stanley and Northern Trust [3][4] Company Overview - Seeking Alpha utilizes a data-driven approach to investment research, focusing on removing emotional biases and simplifying complex analyses through algorithms and technologies [2] - The platform offers a daily updated grading system for stock trading recommendations, aimed at long-term investors [2] Experience and Expertise - Steven Cress has over 30 years of experience in equity research, quantitative strategies, and portfolio management, positioning him as an expert in various investment topics [4]

G r a h a m C o r p o r a t i o n Second Quarter FY25 Teleconference November 8, 2024 Daniel J. Thoren, President and Chief Executive Officer Matthew Malone, Vice President and General Manager - Barber-Nichols Christopher J. Thome, Vice President - Finance and Chief Financial Officer www.GrahamCorp.com Safe Harbor Statement Safe Harbor Regarding Forward Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Se ...

Financial Data and Key Metrics Changes - The company reported record revenue of $53.6 million, a 19% increase compared to the previous year, indicating robust demand across markets [8][22] - Gross margin improved by 790 basis points to nearly 24% of sales, while adjusted EBITDA margin expanded by 550 basis points to 10.5% of sales, reflecting significant margin expansion [9][28] - GAAP net income for the quarter reached $3.3 million, a substantial increase from $0.4 million in the same period last year, translating to $0.30 per diluted share [26] - Adjusted net income grew by 353% to $3.4 million or $0.31 per diluted share [26] Business Line Data and Key Metrics Changes - Sales to the defense market reached $30.9 million, a 23% increase over the prior year, driven by new defense programs and project milestones [23] - Aftermarket sales remained strong despite a decline compared to last year's record levels, underscoring the resilience of the aftermarket business [24] - Refining orders totaled $10.6 million, driven by ongoing strength in aftermarket orders, which totaled $13 million for the quarter, up 11% year-over-year [35] Market Data and Key Metrics Changes - The company reported a record backlog of $407 million, a 30% year-over-year increase, with defense backlog increasing by 31% [36] - Space backlog surged by 150%, while chemical and petrochemical backlog rose by 58% [36] Company Strategy and Development Direction - The company launched the NextGen steam ejector nozzle, with an estimated market opportunity exceeding $50 million over the next five to ten years [11][12] - A land purchase in Arvada, Colorado, was made to support growth initiatives, and plans for a new cryogenic propellant testing facility were announced [13][19] - The company raised its full-year guidance for gross margin and adjusted EBITDA, aiming for low- to mid-teen EBITDA margins by fiscal 2027 [14][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain challenges in Navy ship and submarine production but noted that this environment presents opportunities to capture additional work [15] - The company expects stable or slightly growing defense budgets and sees potential changes in energy markets with the new administration [46][47] Other Important Information - The company reported cash flow from operations of $13.9 million for the quarter, with a strong balance sheet of $32.3 million in cash and no debt [31] - Capital expenditures for the quarter totaled $3.5 million, with expectations to increase fiscal 2025 capital expenditure to $13 million to $18 million [33] Q&A Session Summary Question: Insights on the space segment and backlog growth - Management noted continued opportunities in the space sector, particularly in value-added space assets, despite market consolidation [42][44] Question: Potential growth due to the change in administration - Management expressed confidence in stable defense budgets and highlighted the company's diversified market mix to navigate potential changes [46][48] Question: Impact of supply chain issues on business - Management indicated that the Navy is actively supporting the supply chain and exploring opportunities to accelerate schedules, which could benefit the company [50][51] Question: Future acquisition strategy - Management stated that acquisitions are part of the long-term strategic plan, but the company is growing organically and will be opportunistic regarding acquisitions [56] Question: Details on the NextGen nozzle opportunity - Management confirmed that the identified market opportunity is based on existing installations and ongoing R&D efforts to expand the product's applicability [59][60]

Core Insights - Investors prioritize companies with consistent profitability, measured effectively by net profit margin, which reflects operational efficiency and management quality [1][2] Company Analysis - **Willdan Group, Inc. (WLDN)**: Provides professional technical and consulting services, currently holds a Zacks Rank of 1 and a VGM Score of B. The 2024 earnings estimate has been revised upward by $0.23 to $2.10 per share, with an average surprise of 82.2% over the last four quarters [7][8] - **Limbach Holdings, Inc. (LMB)**: Engages in building systems engineering and construction, also holds a Zacks Rank of 1 and a VGM Score of B. The 2024 earnings estimate has increased by $0.06 to $2.43 per share, with an average surprise of 67.9% [9] - **Graham Corporation (GHM)**: Designs and builds vacuum and heat transfer equipment, currently has a Zacks Rank of 1 and a VGM Score of B. The fiscal 2025 earnings estimate has risen by $0.14 to $0.95 per share, with an average surprise of 133.3% [10] - **Centrus Energy Corporation (LEU)**: Supplies enriched uranium fuel for nuclear power plants, holds a Zacks Rank of 1 and a VGM Score of B. The 2024 earnings estimate has been revised upward by $0.45 to $3.06 per share, with an average surprise of 107.1% [11] Investment Strategy - A healthy net profit margin and solid EPS growth are critical for maximizing returns. Additional screening parameters include a net margin greater than or equal to 0%, positive EPS growth, and high broker ratings [5][6]