Graham(US:GHM)2023-08-07 16:54Financial Data and Key Metrics Changes - Revenue grew 32% to a quarterly record of $47.6 million, with gross margin expanding to 23% and earnings per diluted share increasing over 4x to $0.25 [21][24] - Adjusted EBITDA grew to $5.6 million or 11.8% of sales, compared to $2.7 million or 7.6% of sales in the same period last year [25] - Debt decreased by $400,000 to $11.3 million, with a leverage ratio of 1.6x as of June 30, 2023 [26] Business Line Data and Key Metrics Changes - Defense revenue reached $22.8 million, a 133% increase year-over-year, while commercial aftermarket sales were $9.2 million, up 49% [40] - The backlog increased by 24% year-over-year to a record $322 million, with defense backlog up 31% [27] Market Data and Key Metrics Changes - U.S. sales accounted for 80% of total revenue, up 35% year-over-year, primarily driven by growth in defense [40] - Orders for the quarter totaled $67.9 million, up 69% year-over-year, resulting in a book-to-bill ratio of 1.4x [43] Company Strategy and Development Direction - The company is focusing on diversification across various sectors including space, new energy, cryogenics, refining, petrochemicals, and defense [29] - A major strategic investment from a defense customer aims to expand capabilities in support of the U.S. Navy's shipbuilding plan [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the development of a culture of openness and growth within the team, emphasizing the importance of adaptability [23] - The company expects to achieve low to mid-teen adjusted EBITDA margins by 2027, driven by improved processes and better pricing [28] Other Important Information - Cash and cash equivalents increased by 35% to $24.7 million, with cash generated from operations in the first quarter amounting to $8.6 million [42] - Capital expenditures for the first quarter were $1.5 million, with expectations for total CapEx in fiscal 2024 to range between $12 million and $13.5 million [63] Q&A Session Summary Question: Clarification on strategic investment and its impact - Management clarified that the strategic investment includes various machinery and tools, and it will flow through revenue over the next 8 to 10 years [67][68] Question: Insights on pricing and market conditions - Management noted that better pricing is being observed across several markets, particularly in the aftermarket and refining sectors [62][84] Question: Update on labor needs and workforce growth - The company has increased its labor force by 44 people since last year and plans to grow it by another 8% to support revenue growth [82]