Graham(US:GHM)2024-06-07 17:19Financial Data and Key Metrics Changes - The company achieved record revenue of $185.5 million for fiscal 2024, an increase of 18% compared to fiscal 2023 [12][27] - Net income for the fourth quarter was $1.3 million, compared to a net loss of $481,000 in the same quarter of the previous year [12] - Adjusted EBITDA for fiscal 2024 increased by 56% to $13.3 million, with a margin expansion of 180 basis points to 7.2% [13] Business Line Data and Key Metrics Changes - Sales to the defense market increased by 43% to $27.2 million in the fourth quarter [26] - Aftermarket sales rose by 22%, now including significant contributions from defense aftermarket sales [26][48] - The acquisition of P3 Technologies contributed approximately $1.2 million in incremental sales during the fourth quarter [26] Market Data and Key Metrics Changes - U.S. sales accounted for 86% of total revenue, reflecting the dominance of the U.S. defense business [10] - Orders for the petrochemical market increased by 55%, while space orders improved by 11% to $16.8 million [14] Company Strategy and Development Direction - The company plans to leverage patented technologies to expand into new energy markets and the medical industry [8] - A strategic investment of $13.5 million from a major defense customer will enhance production capabilities in Batavia, New York [8] - The company aims for 8% to 10% annualized organic revenue growth, targeting $240 million to $250 million in revenue for fiscal 2027 [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term financial goals, citing a nearly $400 million backlog and rising demand from the Navy [34] - The company anticipates continued gross margin expansion to a range of 22% to 23% for fiscal 2025 [15][97] - Management noted that the operational efficiency improvements and strategic investments are expected to drive competitive advantage [17] Other Important Information - The company eliminated its debt and refinanced for more flexibility and lower rates, enhancing financial stability [6] - Capital expenditures for fiscal 2025 are expected to be between $10 million to $15 million, focusing on capacity expansion and productivity improvements [30] Q&A Session Summary Question: Clarification on SG&A and Adjusted EBITDA guidance - Management acknowledged that SG&A as a percentage of revenue was higher than expected due to performance-based compensation and professional fees [45][54] - Adjusted EBITDA was impacted by changes in calculation methods, but on an apples-to-apples basis, it exceeded previous guidance [46] Question: Inclusion of defense aftermarket sales - Management explained that defense aftermarket sales have grown significantly and are now included in overall aftermarket sales figures [48] Question: Visibility on energy and defense side - Management indicated strong visibility in defense contracts and ongoing opportunities in energy, particularly in the Middle East and India [62] Question: Capacity and operational plans for new facility - The new facility in Batavia is expected to be operational by mid-2025, with parallel activities ongoing during construction [81] Question: Future growth opportunities in LNG and hydrogen markets - Management noted limited exposure to LNG but is focusing on hydrogen solutions as a long-term growth opportunity [73][94]