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]

Efficiency level measures a company's capability to transform available input into output and is often considered an important parameter for gauging its potential to make profits. A company with a high efficiency level is expected to provide stellar returns as it is believed to be positively correlated with price performance. However, at times, it becomes difficult to measure the efficiency level of a company. This is why one must consider the popular efficiency ratios listed below while selecting stocks. T ...