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 ...

Financial Data and Key Metrics Changes - The company achieved record sales of $50 million for Q1 2025, representing a 5% increase or $2.4 million over the prior year, including $1.6 million from P3 Technologies [10] - Net income for the first quarter was $3 million, a 12% increase compared to $2.6 million for the same period in 2024, translating to $0.27 per share [12] - Adjusted net income increased by 20% to $3.6 million, equating to $0.33 per share [12] - Gross margin reached 24.8%, an expansion of 170 basis points over the prior year [11] - Adjusted EBITDA was $5.1 million for the first quarter, representing a 10.3% margin [13] Business Line Data and Key Metrics Changes - Sales to the defense market reached $29.1 million, marking a 28% increase and setting a new quarterly record [10] - Refining sales increased by 20% to $8.2 million [10] - Aftermarket sales were down compared to record levels of the prior year but remained robust overall [11] Market Data and Key Metrics Changes - U.S. sales accounted for 82% of total revenue this quarter, reflecting the size and scope of the domestic defense business [11] - The backlog has been consistently around $400 million for the past three quarters, with a 23% year-over-year increase [16] - Defense backlog increased by 29% or $74.5 million, while chemical and petrochemical backlog rose by 82% or $10.5 million [16] Company Strategy and Development Direction - The company is expanding its defense business, which has reduced economic sensitivity, with a total backlog nearing $400 million [5] - A new 29,000 square foot facility in Batavia, New York, is set to enhance capacity and production efficiencies, particularly for U.S. Navy commitments [6] - The company is involved in a net-zero carbon emissions project for an ethylene cracker site in North America, aiming to minimize carbon emissions [7] - The focus on developing full lifecycle product opportunities ensures the company remains a trusted partner throughout the operational lifespan of customers' facilities [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic positioning for sustained growth and achieving long-term financial goals for fiscal 2027 [21] - The company anticipates revenue for fiscal 2025 to be between $200 million and $210 million, indicating top-line growth of 11% over fiscal 2024 [17] - The effective tax rate for the full year is expected to be between 20% to 22% [12] Other Important Information - The company generated strong cash flow of $8.7 million, maintaining a strong balance sheet with $21.6 million in cash and no debt [14] - Capital expenditures for the quarter were $3 million, with expectations for fiscal 2025 CapEx to be between $10 million to $15 million [14] Q&A Session Summary Question: Details on the air turbine pump program - The air turbine pump program was a competitive bid, with the company's extensive experience in similar programs positioning it favorably [22][23] Question: Update on aftermarket database project - The company has developed a comprehensive database of equipment installations and is working on automating updates to improve sales efforts [24][25] Question: Status of the facility expansion - The groundbreaking for the facility was delayed from July to August due to typical project timelines, but confidence in the overall schedule remains high [26] Question: Labor force increase efforts - The workforce increased by 23% during the quarter, with ongoing recruitment efforts supported by the BlueForge grant [27][28] Question: Capacity issues related to new contracts - Current programs fit well within long-term capacity plans, with necessary investments being made to support new contracts [30][31] Question: Pipeline of opportunities post-P3 acquisition - The P3 acquisition has opened up new opportunities, particularly in space programs, with a strong pipeline of projects being pursued [32][33] Question: Gross margin outlook - The company expects some lower-margin work in the pipeline but overall gross margin guidance remains stable [34]

Financial Performance - Net sales for the first quarter of fiscal 2025 were $49,951, an increase of $2,382 or 5% compared to $47,569 for the first quarter of fiscal 2024[47] - Gross profit for the first quarter of fiscal 2025 was $12,368, with a gross profit margin of 24.8%, reflecting a 170 basis point improvement over the prior year[47] - Net income for the first quarter of fiscal 2025 was $2,966, or $0.27 per diluted share, compared to $2,640, or $0.25 per diluted share for the same period last year[48] - Net sales for the first quarter of fiscal 2025 were $49,951 million, an increase of $2,382 million or 5% compared to $47,569 million in the first quarter of fiscal 2024, with $1,578 million of this increase attributed to the acquisition of P3[58] - Gross profit for the first quarter of fiscal 2025 was $12,368 million, with a gross profit margin of 24.8%, reflecting a 170 basis point improvement over the prior year[58] - Net income for the first quarter of fiscal 2025 was $2,966 million, compared to $2,640 million in the first quarter of fiscal 2024, with adjusted net income of $3,584 million versus $2,983 million in the prior year[60] - The effective tax rate for the first quarter of fiscal 2025 was 10.0%, down from 22.5% in the first quarter of fiscal 2024, primarily due to a discrete tax benefit[60] Sales and Orders - Sales to the defense industry increased by $6,277 or 28%, primarily due to better execution, improved pricing, and increased direct labor[47] - Orders booked in the first quarter of fiscal 2025 were $55,767, representing 112% of net sales for the quarter, with a backlog of $396,775 at June 30, 2024[48] - Total orders for the first quarter of fiscal 2025 were $55,767, representing 112% of net sales for the quarter, with a backlog increase of $5,907 to $396,775[74] - The company reported a 23% increase in backlog compared to the prior year, with defense orders constituting 83% of total backlog[75] - Orders from the U.S. represented 65% of total orders in the first quarter of fiscal 2025, down from 77% in the prior year[74] Cash and Capital Expenditures - Cash and cash equivalents increased to $21,611 at June 30, 2024, up from $16,939 at March 31, 2024, primarily due to cash provided by operating activities[48] - Capital expenditures for the first quarter of fiscal 2025 were $2,978 million, up from $1,499 million in the comparable period of fiscal 2024, primarily for machinery and equipment[67] - The company expects capital expenditures for fiscal 2025 to be approximately $10,000 million to $15,000 million, with half being discretionary and the other half related to defense expansion at the Batavia facility[67] - The company entered into a new five-year revolving credit facility with Wells Fargo, providing a $35,000 million line of credit, which can increase to $50,000 million upon satisfying specified covenants[68] Market Focus and Growth Opportunities - The defense market comprised 83% of the total backlog at June 30, 2024, indicating a strong focus on defense-related projects[56] - The company expects continued growth in alternative and clean energy opportunities, particularly in hydrogen production and geothermal power generation[54] - The company expects to recognize revenue on approximately 35% to 45% of the backlog within one year, and 25% to 30% in one to two years[75] - The company has made significant progress towards achieving fiscal 2027 goals of 8% to 10% average annualized organic revenue growth[77] Risks and Challenges - The company faces significant cost inflation in labor, raw materials, and supply chain costs due to global supply chain disruptions and geopolitical events[88] - Geopolitical events, such as the 2022 Russian invasion of Ukraine and the Israel-Hamas war, may lead to increased supply chain costs and heightened inflation[88] - The impact of geopolitical tensions on operations and liquidity could be material, but the extent cannot be determined at this time[88] Other Financial Information - The company did not pay any dividends during the three months ended June 30, 2024, and has no intention to pay dividends in the foreseeable future[70] - As of June 30, 2024, the company maintained a consolidated total leverage ratio of 0.6x, well below the maximum requirement of 3.50:1.00[69] - The company has no off-balance sheet arrangements other than letters of credit incurred in the ordinary course of business[71] - Foreign currency purchases accounted for approximately 7% of the cost of products sold in the first three months of fiscal 2025[87] - The company has not utilized forward foreign currency exchange contracts as of June 30, 2024, and March 31, 2024[87] - The company has limited exposure to foreign currency purchases, mitigating potential risks from unfavorable currency changes[87] - The company evaluates the use of interest rate derivatives to manage exposure to interest rate movements[89] - As of June 30, 2024, the company had no variable rate debt outstanding on its New Revolving Credit Facility[89] - The company may borrow funds under its New Revolving Credit Facility, which bears interest at a variable rate, to fund strategic growth objectives[89] Sales Distribution - Domestic sales as a percentage of net sales increased to 82% in the first quarter of fiscal 2025, compared to 80% in the first quarter of fiscal 2024[58] - International consolidated sales accounted for 18% of total sales in the first three months of fiscal 2025[86]

The question now becomes: Are penny stocks undervalued, or are speculators dominating trading volume? Without further ado, here are three undervalued penny stocks to consider. Graham Corporation (NYSE:GHM) operates in the engineering field, emphasizing the design and development of high-level solutions for participants in the defense, space, and energy industries. Zomedica (ZOM) Zomedica (NYSE:ZOM) is a veterinary health company operating in pet pharmaceuticals' design, development, and commercialization. A ...