Graham(GHM)2024-08-07 12:00Financial Performance - Net sales for the first quarter of fiscal 2025 were 2,382 or 5% compared to 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 0.27 per diluted share, compared to 0.25 per diluted share for the same period last year[48] - Net sales for the first quarter of fiscal 2025 were 2,382 million or 5% compared to 1,578 million of this increase attributed to the acquisition of P3[58] - Gross profit for the first quarter of fiscal 2025 was 2,966 million, compared to 3,584 million versus 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 396,775 at June 30, 2024[48] - Total orders for the first quarter of fiscal 2025 were 5,907 to 21,611 at June 30, 2024, up from 2,978 million, up from 10,000 million to 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]