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Graham (NYSE:GHM) FY Conference Transcript
2026-02-12 20:07
Summary of Graham Corporation Conference Call Company Overview - **Company Name**: Graham Corporation - **Industry**: Defense, Energy, Process, and Space - **Core Products**: Mission-critical vacuum systems and heat transfer systems for various industries including petrochemical, refining, and defense [2][3] Key Points Business Model and Strategy - Graham has a diversified portfolio with a 50/50 split between defense and commercial sectors, providing stability and visibility with over two years of backlog [3][4] - The company has invested approximately $42 million in capital expenditures (CapEx) to enhance its operations, targeting a return on invested capital (ROIC) greater than 20% [4][12] - The defense segment accounts for about 60% of the portfolio, focusing on nuclear submarines and aircraft carriers, with 80% of work being sole source [4][5] Financial Performance - Revenue increased by 21% in the latest quarter, driven primarily by a 31% growth in the defense sector [22][23] - Adjusted EBITDA rose to $6 million, a 50% increase year-over-year, with a year-to-date increase of 30% [25] - The company aims for low- to mid-teen EBITDA margins (13%-15%) by fiscal year 2027 [26] Backlog and Growth - The backlog reached a record $516 million, with 85% related to defense contracts, providing long-term visibility for investments [28] - The book-to-bill ratio for the first nine months of the year is 1.6, indicating strong demand in defense and space sectors [27][29] Recent Developments - Graham recently acquired FlackTek for $35 million, enhancing its capabilities in mixing technology, which is expected to open new market opportunities [18][19] - The company is focusing on operational improvements, including a new Navy facility that will reduce product lead times from two years to one year [12][14] Market Dynamics - The company is experiencing sluggishness in its legacy energy and process business due to geopolitical tensions and lower gas prices, but is offsetting this with growth in defense and new energy sectors [27] - Graham is also exploring opportunities in space cooling, leveraging its cryogenics experience to meet increasing demand for power density in space applications [47][48] Cultural and Operational Changes - There is a cultural shift within the company towards a growth-oriented mindset, with improved employee engagement and a focus on continuous improvement [60][61] - The company is transitioning from a legacy ERP system to a modern one, which is expected to enhance operational efficiency [60] Additional Insights - The company is working on developing commercially available products that can command higher margins, moving away from the constraints of build-to-print contracts [39][40] - Graham's legacy business still constitutes a significant portion of revenue, but the company is positioning itself for future growth through innovation and market expansion [63][64] This summary encapsulates the key points discussed during the conference call, highlighting Graham Corporation's strategic direction, financial performance, and market opportunities.
Graham Corporation 2026 Q3 - Results - Earnings Call Presentation (NYSE:GHM) 2026-02-06
Seeking Alpha· 2026-02-06 18:01
Group 1 - The article does not provide any relevant content regarding company or industry insights [1]
Graham(GHM) - 2026 Q3 - Earnings Call Transcript
2026-02-06 17:02
Financial Data and Key Metrics Changes - Revenue increased by 21% to $56.7 million, driven by strong performance across end markets [4][15] - Adjusted EBITDA rose by 50% to $6 million, with an adjusted EBITDA margin of 10.7% [4][18] - Net income for the quarter was $0.25 per diluted share, and adjusted net income was $0.31 per diluted share [18] - Gross profit increased by 15% to $13.5 million, with a gross margin of 23.8% [16] Business Line Data and Key Metrics Changes - Sales to the defense market increased by $8.3 million, driven by project milestones and growth in existing programs [15] - Sales to the energy and process market increased by $2.1 million, or 13%, reflecting strength in aftermarket sales [15] - Aftermarket sales to energy and process and defense markets were $10.8 million, up 11% year-over-year [16] Market Data and Key Metrics Changes - Book-to-bill ratio was 1.3x, with backlog reaching a record $515.6 million, up 34% year-over-year [5][20] - Approximately 85% of backlog is attributable to the defense market, providing stability [20] - The company expects 35%-40% of backlog to convert to revenue over the next 12 months [5][20] Company Strategy and Development Direction - The acquisition of XDot Bearing Technologies enhances competitive positioning in high-speed rotating machinery [6] - FlackTek acquisition adds a third core technology platform, expected to bring advanced materials and processing capabilities [7][10] - The company is focused on organic investments and disciplined expansion to support long-term growth [14] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand in defense and energy markets, despite some slowing in large CapEx purchases due to macroeconomic factors [13][14] - The company remains confident in achieving long-term objectives of 8%-10% organic revenue growth and low to mid-teen adjusted EBITDA margins by fiscal 2027 [24] - Management emphasized disciplined execution and ongoing investments to enhance capabilities and customer relationships [14][15] Other Important Information - The company completed significant facility expansions, including a new Navy manufacturing facility and renovations in Colorado [12][13] - The integration of FlackTek is progressing well, with expectations for enhanced revenue visibility and customer retention [11] Q&A Session Summary Question: Demand in defense and CapEx plans - Management indicated that they are not surprised by the magnitude of CapEx increases and will continue to invest at a rate of 7%-10% of revenue [26][28] Question: M&A strategy and future acquisitions - Management stated that they will focus on investing in existing platforms but may consider additional acquisitions in the future [29][30] Question: Pursuing new work from the Navy - Management highlighted the applicability of their core competencies in pursuing new opportunities within the Navy [31][33] Question: Growth in existing defense programs - Management confirmed that they are winning additional scope on current projects through successful execution [37][39] Question: Book-to-bill ratio outlook - Management clarified that the long-term target of 1.1 for book-to-bill is not meant as guidance for fiscal 2026, as current performance exceeds this target [40][42] Question: Material receipts impact on gross margin - Management noted that material receipts are expected to normalize in future quarters, impacting gross margin [63][64] Question: Testing facilities activity - Management reported that the testing facilities are currently booked for specific programs, with ongoing discussions for future opportunities [73][75]
Graham(GHM) - 2026 Q3 - Earnings Call Transcript
2026-02-06 17:02
Financial Data and Key Metrics Changes - Revenue increased by 21% to $56.7 million, driven by strong performance across end markets [4][15] - Adjusted EBITDA rose by 50% to $6 million, with an adjusted EBITDA margin of 10.7% [4][18] - Net income for the quarter was $0.25 per diluted share, and adjusted net income was $0.31 per diluted share [18] - Gross profit increased by 15% to $13.5 million, with a gross margin of 23.8% [16] Business Line Data and Key Metrics Changes - Sales to the defense market increased by $8.3 million, driven by project milestones and growth in existing programs [15] - Sales to the energy and process market increased by $2.1 million, or 13%, reflecting strength in aftermarket sales [15] - Aftermarket sales to energy and process and defense markets were $10.8 million, up 11% year-over-year [16] Market Data and Key Metrics Changes - Book-to-bill ratio was 1.3 times, with backlog reaching a record $515.6 million, up 34% year-over-year [5][20] - Approximately 85% of backlog is attributable to the defense market, providing stability [20] - The company expects 35%-40% of backlog to convert to revenue over the next 12 months [20] Company Strategy and Development Direction - The acquisition of XDot Bearing Technologies enhances competitive positioning in high-speed rotating machinery [6] - FlackTek acquisition adds a third core technology platform, aligning with long-term goals of 50% defense and 50% commercial revenue mix [7][8] - The company is focused on disciplined investments to expand capabilities and deepen customer relationships [14] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand across core end markets, despite some slowing in large CapEx purchases due to macroeconomic factors [13][14] - The company remains confident in achieving long-term objectives of 8%-10% organic revenue growth and low to mid-teen adjusted EBITDA margins by fiscal 2027 [24] - Management emphasized the importance of disciplined execution and ongoing investments for future growth [14] Other Important Information - The company completed significant facility expansions, including a new Navy manufacturing facility and renovations in Colorado [12][13] - The company has a strong cash position of $22.3 million and robust operating cash flow of $4.8 million [21][22] - Tariff impacts are estimated to be between $1 million and $1.5 million for the full year, with minimal impact in the third quarter [17] Q&A Session Summary Question: Demand in defense and CapEx plans - Management indicated that the defense platform remains healthy, with ongoing investments to increase capacity and efficiency [27][28] Question: M&A strategy and future acquisitions - Management stated that while FlackTek adds a third platform, future focus will be on investing in existing platforms before considering new acquisitions [29][30] Question: Pursuing new work from the Navy - Management highlighted the applicability of core competencies in pursuing new opportunities within the Navy [31][33] Question: Growth in existing defense programs - Management confirmed that they are winning additional scope on current projects, leading to increased opportunities [37][38] Question: Book-to-bill ratio outlook - Management reaffirmed that the long-term target for book-to-bill ratio remains at 1.1, despite current performance exceeding that [40][42] Question: Material receipts impact on gross margin - Management explained that material receipts are lumpy and expected to normalize in future quarters [63][64] Question: Testing facilities activity - Management reported that the testing facilities are currently booked for specific production programs, with ongoing discussions for future opportunities [75][76]
Graham(GHM) - 2026 Q3 - Earnings Call Transcript
2026-02-06 17:00
Financial Data and Key Metrics Changes - Revenue increased by 21% to $56.7 million, driven by strong performance across end markets [4][15] - Adjusted EBITDA rose by 50% to $6 million, with an adjusted EBITDA margin of 10.7% [4][16] - Net income for the quarter was $0.25 per diluted share, and adjusted net income was $0.31 per diluted share [16][18] - Gross profit increased by 15% to $13.5 million, with a gross margin of 23.8% [16] Business Line Data and Key Metrics Changes - Sales to the defense market increased by $8.3 million, driven by project milestones and growth in existing programs [15] - Sales to the energy and process market increased by $2.1 million, or 13%, reflecting strength in aftermarket sales [15] - Aftermarket sales to energy and process and defense markets were $10.8 million, up 11% year-over-year [16] Market Data and Key Metrics Changes - Book-to-bill ratio was 1.3 times, with backlog increasing to a record $515.6 million, up 34% year-over-year [5][19] - Approximately 85% of backlog is attributable to the defense market, providing stability [19] - The company expects 35%-40% of backlog to convert to revenue over the next 12 months [19] Company Strategy and Development Direction - The company completed the acquisition of XDot Bearing Technologies, enhancing its competitive position in high-speed rotating machinery [5] - The acquisition of FlackTek for $35 million adds advanced materials and processing as a third core technology platform [7][10] - Investments in capacity expansion and technology are ongoing, with a focus on efficiency and scalability [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand in defense and energy markets, despite some slowing in large CapEx purchases due to macroeconomic factors [13][14] - The company remains confident in achieving long-term objectives of 8%-10% organic revenue growth and low to mid-teen adjusted EBITDA margins by fiscal 2027 [23] - Management emphasized disciplined execution and the importance of ongoing investments to support future growth [14][15] Other Important Information - The company ended the quarter with $22.3 million in cash and strong operating cash flow of $4.8 million [20][21] - Capital expenditures totaled $2.8 million during the quarter, supporting capacity expansion initiatives [20] Q&A Session Summary Question: Demand in defense and CapEx plans - Management indicated that defense demand remains healthy, with ongoing investments to increase capacity and efficiency [27][29] Question: M&A strategy and future acquisitions - Management stated that while FlackTek adds a third platform, future focus will be on investing in existing platforms before considering new acquisitions [30][31] Question: Pursuing new work from the Navy - Management highlighted the applicability of their core competencies in pursuing new opportunities within Navy programs [33][34] Question: Growth in existing defense programs - Management confirmed that they are winning additional scope on current projects, leading to more opportunities [39][40] Question: Book-to-bill ratio outlook - Management reaffirmed that the long-term target for book-to-bill is 1.1, despite current performance exceeding that target [43][44] Question: Material receipts impact on gross margin - Management explained that material receipts are lumpy and expected to normalize in future quarters [65][66] Question: Testing facilities activity - Management reported that testing facilities are currently focused on existing backlog products, with healthy pipeline opportunities [75][76]
Graham(GHM) - 2026 Q3 - Earnings Call Presentation
2026-02-06 16:00
Third Quarter Fiscal 2026 Financial Results February 6, 2026 GRAHAM CORPORATION © 2025 GRAHAM CORPORATION, ALL RIGHTS RESERVED 1 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 Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as "expects," "future," ...
Graham (GHM) Q3 Earnings and Revenues Beat Estimates
ZACKS· 2026-02-06 13:36
分组1 - Graham reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.17 per share, and showing an increase from $0.18 per share a year ago, resulting in an earnings surprise of +78.88% [1] - The company achieved revenues of $56.7 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 10.37%, compared to $47.04 million in the same quarter last year [2] - Graham has outperformed the S&P 500, with shares increasing by about 14.8% since the beginning of the year, while the S&P 500 has declined by 0.7% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $63.49 million, and for the current fiscal year, it is $1.29 on revenues of $236.2 million [7] - The Manufacturing - General Industrial industry, to which Graham belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]
Graham(GHM) - 2026 Q3 - Quarterly Report
2026-02-06 12:30
Financial Performance - Net sales for Q3 fiscal 2026 were $56,701, up 21% compared to Q3 fiscal 2025, with a 31% increase in sales to the Defense industry[78]. - Gross profit for Q3 fiscal 2026 was $13,469, a 15% increase from Q3 fiscal 2025, but gross profit margin declined by 100 basis points to 23.8%[81]. - Net income for Q3 fiscal 2026 was $2,845, or $0.25 per diluted share, compared to $1,588, or $0.14 per diluted share in Q3 fiscal 2025[81]. - Adjusted net income for the first nine months of fiscal 2026 was $11,881 million, up from $8,965 million in the same period of fiscal 2025, representing a 32.4% increase[117]. - Adjusted net income per diluted share increased to $1.07 for the first nine months of fiscal 2026, compared to $0.81 for the same period in fiscal 2025, a rise of 32.1%[118]. - Net sales for the first nine months of fiscal 2026 were $178,215 million, compared to $150,551 million in the prior year, reflecting an 18.4% growth[117]. - Adjusted EBITDA for the first nine months of fiscal 2026 was $19,177 million, up from $14,779 million in the same period of fiscal 2025, marking a 29.5% increase[117]. - Adjusted EBITDA for fiscal 2026 is expected to be between $24,000 and $28,000, reflecting an increase from the previous estimate of $22,000 to $28,000[134]. Orders and Backlog - Orders booked in Q3 fiscal 2026 increased to $71,671 from $24,786 in Q3 fiscal 2025, resulting in a record backlog of $515,633[81]. - Total orders for the third quarter of fiscal 2026 were $71,671, representing a 1.3x book-to-bill ratio, while total orders for the first nine months were $280,769, or 1.6x net sales for the period[131]. - Backlog increased by $15,561 (3%) during the quarter and $103,298 (25%) for the first nine months of fiscal 2026, reaching $515,633 at December 31, 2025[131]. - Total backlog at December 31, 2025, was $515,633, a 34% increase from the prior year, with 35% to 40% expected to be recognized as revenue within one year[132]. - Defense market orders increased by 73% year-over-year to $203,565 for the first nine months, while Space market orders rose by 132% to $22,711[131]. Cash and Liquidity - Cash and cash equivalents at December 31, 2025, were $22,254, up from $21,577 at March 31, 2025[81]. - The company's working capital increased to $9,145 million as of December 31, 2025, compared to $5,222 million at March 31, 2025, indicating improved liquidity[119]. - The company entered into a five-year revolving credit facility with a $50,000 million line of credit, with $6,971 million in letters of credit outstanding as of December 31, 2025[123]. - The effective tax rate for the third quarter of fiscal 2026 was 11%, a decrease from 29% in the same quarter of fiscal 2025[109]. - The company anticipates cash tax savings of approximately $8,000 over the next two years due to new tax provisions[108]. Market Trends and Expectations - The company anticipates strong demand in the Defense industry due to increased defense budgets and geopolitical tensions[86]. - The company expects long-term growth in alternative and clean energy opportunities, particularly in hydrogen production and small modular reactors[89]. - The NextGen™ steam ejector nozzle is projected to have a total market opportunity exceeding $50,000 over the next 5 to 10 years[90]. - Sales to the Energy & Process market increased by $9,786 or 19% for the first nine months of fiscal 2026, driven by increased sales in China[101]. - The company aims for 8% to 10% average annualized organic revenue growth and adjusted EBITDA margins in the low to mid-teens by fiscal 2027[135]. Acquisitions - The acquisition of FlackTek added approximately $30,000 in annualized revenue and enhances revenue visibility and durability[76]. - The acquisition of Xdot is expected to be slightly accretive to fiscal 2026 net income, with annual sales of approximately $1,000[75]. Expenses and Capital Expenditures - SG&A expenses for the third quarter of fiscal 2026 increased by $868, representing 18.6% of sales, down from 20.6% in the prior year[104]. - Capital expenditures for the first nine months of fiscal 2026 were $13,328 million, slightly down from $13,800 million in the same period of fiscal 2025[120]. - The company expects capital expenditures for fiscal 2026 to be between $15,000 million and $18,000 million, with approximately two-thirds allocated to growth initiatives[121]. International Sales and Tariffs - International sales accounted for 16% of total sales in the first nine months of fiscal 2026, with foreign currency fluctuations increasing cash balances by $141[145]. - The company anticipates a tariff impact of approximately $1,000 to $1,500 for the full year compared to the prior year, due to increased costs in raw materials and supply chain[147]. Debt and Interest Rates - The company reported no variable rate debt outstanding on its Revolving Credit Facility[150]. - There are no interest rate derivatives outstanding as of the reporting date[150]. - Additional information about the company's outstanding debt can be found in Note 13 of the Condensed Consolidated Financial Statements[150].
Graham(GHM) - 2026 Q3 - Quarterly Results
2026-02-06 11:45
Financial Performance - Revenue increased 21% to $56.7 million compared to $47.0 million in the prior year[5]. - Gross profit rose 15% to $13.5 million, with a gross profit margin of 23.8%, down 100 basis points from the previous year[5][9]. - Net income per diluted share increased 79% to $0.25, while adjusted net income per diluted share rose 72% to $0.31[5][7]. - Net income for the quarter was $2.8 million, a significant 79% increase from $1.6 million in the same quarter last year, with diluted earnings per share rising to $0.25[37]. - Net income for the nine months ended December 31, 2025, increased to $10,530,000 from $7,835,000 in 2024, representing a growth of 34.4%[41]. - The net income margin improved to 5.9% for the nine months ended December 31, 2025, compared to 5.2% in 2024[43]. - Adjusted net income for the nine months ended December 31, 2025, was $11,881,000, an increase of 32.5% from $8,965,000 in 2024[45]. Sales and Orders - Orders totaled $71.7 million with a book-to-bill ratio of 1.3x, contributing to a record backlog of $515.6 million, a 34% increase year-over-year[5][16]. - Net sales for the third quarter of fiscal 2026 reached $56.7 million, a 21% increase compared to $47.0 million in the same quarter of the previous year[37]. - Net sales for the nine months ended December 31, 2025, reached $178,215,000, a 18.4% increase compared to $150,551,000 in 2024[43]. Operating Performance - Adjusted EBITDA increased 50% to $6.0 million, with an adjusted EBITDA margin of 10.7%[5][7]. - Operating income increased by 41% to $3.1 million, up from $2.2 million in the prior year, resulting in an operating margin of 5.5%[37]. - Adjusted EBITDA for the nine months ended December 31, 2025, rose to $19,177,000, up 29.5% from $14,779,000 in 2024[43]. Cash Flow and Financial Position - Cash provided by operating activities was $4.8 million for the quarter, with cash and cash equivalents totaling $22.3 million[11]. - Cash and cash equivalents increased to $22.3 million from $21.6 million at the end of the previous quarter[39]. - Cash and cash equivalents at the end of the period were $22,254,000, down from $30,046,000 at the end of the same period in 2024[41]. - Net cash provided by operating activities for the nine months ended December 31, 2025, was $16,084,000, a decrease from $27,873,000 in 2024[41]. - Total assets grew to $292.9 million, up from $264.1 million, indicating a strong financial position[39]. Expenses and Costs - SG&A expenses increased to $10.6 million, representing 18.6% of sales, a decrease of 200 basis points compared to the prior year[10]. - The company incurred approximately $7.0 million to $8.0 million in supplemental performance bonuses and other costs included in SG&A expenses[25]. - The company incurred acquisition and integration expenses of $157,000 for the nine months ended December 31, 2025, compared to a net income of $(900,000) in 2024[45]. Backlog and Industry Focus - Approximately 85% of the backlog as of December 31, 2025, was related to the Defense industry, providing stability and visibility to the business[16]. - Total backlog at the end of the quarter was not specified, but management emphasizes tracking orders and backlog as leading indicators of future performance[32]. - The company reported a book-to-bill ratio as a measure of growth prospects, although specific numbers were not provided[33]. Acquisition - The recent acquisition of FlackTek for $35.0 million enhances Graham's technology portfolio, focusing on advanced mixing and materials processing[17][18].
Graham Corporation (GHM) Presents at Oppenheimer Winter Industrials Summit - Slideshow (NYSE:GHM) 2025-12-16
Seeking Alpha· 2025-12-16 23:06
Group 1 - The article does not provide any relevant content regarding the company or industry [1]