Graham(GHM)2025-06-09 12:30Financial Performance - Net sales for fiscal 2025 were 24,363 or 13% compared to fiscal 2024, with 52,861, reflecting a gross profit margin of 25.2%, which is a 330 basis point improvement over fiscal 2024[158]. - Net income for fiscal 2025 was 4,556 in fiscal 2024, with diluted income per share rising to 0.42[158]. - SG&A expenses for fiscal 2025 increased by 38,888, driven by investments in personnel, processes, and technology[158]. - The effective tax rate for fiscal 2025 was 21%, up from 18% in fiscal 2024, primarily due to higher pre-tax income[179]. - Net cash provided by operating activities for fiscal 2025 was 28,120 million in fiscal 2024, primarily due to lower cash from accounts receivable[187]. - As of March 31, 2025, stockholders' equity increased to 105,566 in the prior year[197]. Backlog and Orders - The company reported a funded and unfunded backlog of 390.9 million as of March 31, 2024, indicating a year-over-year increase of approximately 5.5%[24]. - Backlog at March 31, 2025, was 390,868 at March 31, 2024, with approximately 83% of the backlog related to the Defense industry[158]. - Total orders for fiscal 2025 were 268,447 in fiscal 2024, primarily due to record orders in the previous year[201]. - The book-to-bill ratio for fiscal 2025 was 1.1x, indicating a healthy order intake relative to sales[202]. - Significant orders in fiscal 2025 included a 2,200 strategic investment from a major Defense customer[203]. Market Segmentation - Domestic sales accounted for approximately 81% of total sales in fiscal 2025, with sales to the Defense industry representing 58% of total sales[23]. - In fiscal 2025, sales to the Defense industry accounted for approximately 58% of total sales, up from 25% in fiscal 2021[40]. - Sales to the Energy & Process markets represented approximately 35% of revenue in fiscal 2025, down from 75% in fiscal 2021[40]. - The Defense market accounted for 58% of net sales in fiscal 2025, with sales increasing by 73,287, while the Space market increased by 11% to 4,039 million in fiscal 2025, with $1,124 million not customer funded[41]. - The company expects R&D spend not funded by customers to increase to 1% to 2% of revenue in the future[41]. Environmental and Regulatory Factors - Environmental costs are not expected to have a material adverse effect on financial performance, although future liabilities cannot be assured[39]. - U.S. government contracts are subject to extensive regulations, and failure to comply may result in financial penalties or contract termination[64]. - The company is subject to export, import, and sanctions laws, and failure to comply could result in fines and regulatory actions[67]. - Climate change regulations may influence customers' investment decisions, potentially reducing demand for the company's products[73]. Workforce and Talent Management - The company maintains a highly skilled workforce and invests in employee development through various training programs[27]. - The company is dependent on a skilled workforce, facing challenges such as labor shortages and increased competition for talent, which could lead to higher operational costs[128]. - The company may experience difficulties in retaining key management and technical personnel due to intense competition in the industry[107]. Cybersecurity and Technology - Cybersecurity threats pose risks to the company's information systems, potentially leading to financial loss and reputational damage[112]. - The company has developed a comprehensive cybersecurity risk management program to protect critical systems and information, overseen by its Audit Committee[135]. - The implementation of a new enterprise resource planning (ERP) system is scheduled to go live in fiscal 2026, with potential risks including operational disruptions and inefficiencies[115].