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Graham Corporation Reports Record Revenue of $53.6 Million and Strong Margin Expansion in Second Quarter Fiscal 2025

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Graham (NYSE: GHM) reported record Q2 FY2025 revenue of $53.6 million, a 19% increase year-over-year. The company achieved significant margin expansion with gross margin improving 790 basis points to 23.9%, and net margin increasing to 6.1%. Net income per diluted share reached $0.30, while adjusted EBITDA margin expanded to 10.5%. Strong orders of $63.7 million led to a book-to-bill ratio of 1.2x and a record backlog of $407 million. The company maintains a strong balance sheet with no debt and $32.3 million in cash. Based on improved profitability, Graham raised its full-year guidance for gross margin and adjusted EBITDA.

Graham (NYSE: GHM) ha riportato un fatturato record per il secondo trimestre dell'anno fiscale 2025 di 53,6 milioni di dollari, con un incremento del 19% rispetto all'anno precedente. L'azienda ha ottenuto un'importante espansione del margine, con il margine lordo che è migliorato di 790 punti base, raggiungendo il 23,9%, e il margine netto che è aumentato al 6,1%. L'utile netto per azione diluita ha raggiunto 0,30 dollari, mentre il margine EBITDA rettificato si è espanso al 10,5%. Forti ordini per 63,7 milioni di dollari hanno portato a un rapporto book-to-bill di 1,2x e un portafoglio ordini record di 407 milioni di dollari. L'azienda mantiene un forte bilancio senza debiti e 32,3 milioni di dollari in contante. In base al miglioramento della redditività, Graham ha alzato le proprie previsioni per l'intero anno riguardo al margine lordo e all'EBITDA rettificato.

Graham (NYSE: GHM) reportó ingresos récord en el segundo trimestre del año fiscal 2025 de 53,6 millones de dólares, un aumento del 19% en comparación con el año anterior. La compañía logró una expansión significativa del margen, con el margen bruto mejorando en 790 puntos básicos hasta el 23,9%, y el margen neto aumentando al 6,1%. El ingreso neto por acción diluida alcanzó 0,30 dólares, mientras que el margen EBITDA ajustado se amplió al 10,5%. Fuertes órdenes de 63,7 millones de dólares llevaron a una relación de book-to-bill de 1,2x y un backlog récord de 407 millones de dólares. La empresa mantiene un sólido balance sin deudas y 32,3 millones de dólares en efectivo. Con base en la mejora de la rentabilidad, Graham elevó su guía para todo el año respecto al margen bruto y al EBITDA ajustado.

그래험 (NYSE: GHM)이 2025 회계연도 2분기 기록적인 매출 5,360만 달러를 보고했으며, 이는 전년 대비 19% 증가한 수치입니다. 이 회사는 총 마진이 790bp 개선되어 23.9%에 달하고, 순 마진이 6.1%로 증가하는 등 상당한 마진 확대를 달성했습니다. 희석 주당 순이익은 0.30달러에 도달했고, 조정 EBITDA 마진은 10.5%로 확장되었습니다. 6,370만 달러에 달하는 강력한 주문으로 인해 book-to-bill 비율은 1.2x, 기록적인 백로그는 4억 700만 달러에 이릅니다. 이 회사는 부채가 없고 현금으로 3,230만 달러를 보유한 건전한 재무 상태를 유지하고 있습니다. 개선된 수익성을 바탕으로 그래험은 총 마진과 조정 EBITDA에 대한 연간 전망을 상향 조정했습니다.

Graham (NYSE: GHM) a annoncé un chiffre d'affaires record de 53,6 millions de dollars pour le deuxième trimestre de l'exercice fiscal 2025, soit une hausse de 19 % par rapport à l'année précédente. L'entreprise a réalisé une expansion significative de la marge, avec une amélioration de la marge brute de 790 points de base à 23,9 %, et une augmentation de la marge nette à 6,1 %. Le bénéfice net par action diluée a atteint 0,30 dollar, tandis que la marge EBITDA ajustée s'est étendue à 10,5 %. Des commandes solides de 63,7 millions de dollars ont conduit à un ratio book-to-bill de 1,2x et un carnet de commandes record de 407 millions de dollars. L'entreprise maintient un bilan solide sans dettes et 32,3 millions de dollars en liquidités. Sur la base de l'amélioration de la rentabilité, Graham a rehaussé ses prévisions pour l'année entière concernant la marge brute et l'EBITDA ajusté.

Graham (NYSE: GHM) berichtete über einen Rekordumsatz von 53,6 Millionen Dollar im zweiten Quartal des Geschäftsjahres 2025, was einem Anstieg von 19% im Vergleich zum Vorjahr entspricht. Das Unternehmen erzielte eine signifikante Margenausweitung, mit einem Anstieg der Bruttomarge um 790 Basispunkte auf 23,9% und einer Nettomarge von 6,1%. Der Nettogewinn pro verwässerter Aktie erreichte 0,30 Dollar, während sich die angepasste EBITDA-Marge auf 10,5% erweiterte. Starke Bestellungen in Höhe von 63,7 Millionen Dollar führten zu einem Verhältnis von Buchungen zu Rechnungen von 1,2x und einem Rekordauftragsbestand von 407 Millionen Dollar. Das Unternehmen weist eine solide Bilanz ohne Schulden und 32,3 Millionen Dollar in bar auf. Aufgrund der verbesserten Rentabilität hob Graham die Prognose für das gesamte Jahr für Bruttomarge und angepasstes EBITDA an.

Positive
  • Record quarterly revenue of $53.6 million, up 19% YoY
  • Gross margin expanded 790 basis points to 23.9%
  • Net income increased 698% to $3.281 million
  • Strong order intake of $63.7 million with 1.2x book-to-bill ratio
  • Record backlog of $407 million
  • Debt-free balance sheet with $32.3 million cash
  • Raised full-year guidance for gross margin and adjusted EBITDA
Negative
  • SG&A expenses increased by $2.8 million
  • Aftermarket sales declined $1.5 million from prior year levels

Insights

Graham delivered an exceptional quarter with $53.6M in record revenue, up 19% year-over-year. The company's strategic transformation is yielding strong results, with significant margin improvements across the board. Gross margin expanded by 790 basis points to 23.9%, while net margin increased to 6.1%.

The robust order intake of $63.7M and book-to-bill ratio of 1.2x, coupled with a record backlog of $407M, indicates strong future growth potential. The company's debt-free balance sheet with $32.3M in cash provides significant financial flexibility. The raised guidance for gross margin and adjusted EBITDA reflects management's confidence in sustained profitability improvement.

The diversification strategy into defense and space markets is proving successful, with defense sales growing 23%. This shift toward higher-margin opportunities, combined with operational efficiencies, positions the company well for achieving its FY2027 target of low to mid-teen adjusted EBITDA margins.

  • Revenue increased 19% to $53.6 million, driven by strength across its markets
  • Margin expansion fueled by sales growth and execution: Gross margin improved 790 basis points to 23.9% of sales, net margin increased 520 basis points to 6.1% of sales, and adjusted EBITDA1 margin expanded 550 basis points to 10.5% of sales
  • Net income per diluted share was $0.30 in the second quarter; adjusted net income per diluted share¹ was $0.31
  • Strong orders of $63.7 million, driven by demand from defense, space, and refining, resulted in a book-to-bill ratio of 1.2x and a record backlog of $407 million1
  • Strong balance sheet with no debt, $32.3 million in cash, and access to $43 million under its revolving credit facility at quarter end to support growth initiatives
  • Raised full year guidance for gross margin and adjusted EBITDA¹ to reflect improved profitability

BATAVIA, N.Y.--(BUSINESS WIRE)-- Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries, today reported financial results for its second quarter for the fiscal year ending March 31, 2025 (“fiscal 2025”). Results for the quarter include the P3 Technologies, LLC (“P3”) acquisition, which closed on November 9, 2023.

“Our team’s efforts to diversify and strengthen the business over the past few years are clearly yielding results, as shown by our record second-quarter performance,” commented Daniel J. Thoren, President and Chief Executive Officer. “Strong sales growth in our markets, along with exceptional execution throughout the business, have driven meaningful margin expansion. Our strategic emphasis on higher-margin opportunities and operational efficiencies has been a key driver of this success.”

Mr. Thoren added, “We are also focused on recruiting and retaining top talent, and have initiatives to enhance our supply chain, which helps us to improve performance and manage our risk. These initiatives, along with our strengthened balance sheet, robust orders2, and growing backlog2, we believe positions us well to sustain growth and profitability for the next several years. Importantly, we have raised our full-year adjusted EBITDA guidance, keeping us firmly on track to achieve our FY2027 target of low to mid-teen adjusted EBITDA margins.”

Second Quarter Fiscal 2025 Performance Review

(All comparisons are with the same prior-year period unless noted otherwise.)

($ in thousands except per share data) Q2 FY25 Q2 FY24 $ Change % Change
Net sales

$

53,563

 

$

45,076

 

$

8,487

19%

Gross profit

$

12,799

 

$

7,191

 

$

5,608

78%

Gross margin

 

23.9

%

 

16.0

%

+790 bps

Operating profit

$

4,235

 

$

803

 

$

3,432

427%

Operating margin

 

7.9

%

 

1.8

%

+610 bps

Net income

$

3,281

 

$

411

 

$

2,870

698%

Net income margin

 

6.1

%

 

0.9

%

+520 bps

Net income per diluted share

$

0.30

 

$

0.04

 

$

0.26

650%

Adjusted net income*

$

3,414

 

$

754

 

$

2,660

353%

Adjusted net income per diluted share*

$

0.31

 

$

0.07

 

$

0.24

343%

Adjusted EBITDA*

$

5,615

 

$

2,242

 

$

3,373

150%

Adjusted EBITDA margin*

 

10.5

%

 

5.0

%

+550 bps

*Graham believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles, adjusted net income, adjusted net income per diluted share, adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP measures, help in the understanding of its operating performance. See attached tables and other information on pages 10 and 11 for important disclosures regarding Graham’s use of these non-GAAP measures.

Record quarterly net sales of $53.6 million increased 19%, or $8.5 million, and included $0.9 million of incremental sales from P3. Sales to the defense market grew by $5.8 million, or 23%, driven by the expansion of new defense programs, the ramp-up of existing programs, and the timing of key project milestones. Additionally, higher refining and chemical/petrochemical sales contributed $2.2 million to the growth, largely reflecting the timing of capital improvement projects. Aftermarket sales to the refining, chemical/petrochemical, and defense markets of $9.8 million remained strong but were $1.5 million lower than the prior year record levels. See supplemental data for a further breakdown of sales by market and region.

Gross margin expanded 790 basis points to 23.9%, driven by the leverage on higher volume, a favorable mix toward higher margin projects, improved pricing, and better execution. Additionally, gross profit for the quarter benefited $0.4 million, or approximately 80 basis points, due to the $2.1 million grant from the BlueForge Alliance. This grant is reimbursing the Company for the cost of its defense welder training programs in Batavia and related equipment. Graham expects to realize similar gross profit benefits from the grant over the next two quarters, or for the remainder of fiscal 2025.

Selling, general and administrative expense (“SG&A”), including amortization, totaled $9.2 million, or 17.1% of sales, up $2.8 million compared with the prior year. This increase reflects the Company’s continued investments in its operations, employees, and technology. Notable contributors to the increase included $0.4 million of incremental costs related to P3, $0.3 million increase in the supplemental performance bonus for Barber-Nichols employees2, $0.2 million for enterprise resource planning (“ERP”) conversion costs at the Batavia facility, and $0.2 million of incremental research and development expenses. The remainder of the increase in SG&A was primarily related to increased costs associated with the Company’s growth and various other initiatives.

Included in other operating income for the second quarter of fiscal 2025 was a $0.6 million reversal of a previously accrued contingent earnout liability for P3. The reversal was not due to any lost orders, but rather a delayed project that extended beyond the earnout period.

Cash Management and Balance Sheet

Cash provided by operating activities totaled $22.6 million for the six month period ending September 30, 2024, nearly double the amount from the comparable period in fiscal 2024. As of September 30, 2024, cash and cash equivalents were $32.3 million, up from $16.9 million at the end of fiscal 2024.

Capital expenditures of $6.5 million for the first six months of fiscal 2025 were focused on capacity expansion and productivity improvements. The Company increased its expected fiscal 2025 capital expenditures to be in the range of $13.0 million to $18.0 million from its previous expectations of $10.0 million to $15.0 million due to a land purchase in Arvada, CO, and plans to build a liquid hydrogen and oxygen testing facility to support future growth and customer needs.

The Company had no debt outstanding at September 30, 2024 with $43 million available on its senior secured revolving credit facility after taking into account outstanding letters of credit.

Orders, Backlog, and Book-to-Bill Ratio

See supplemental data filed with the Securities and Exchange Commission on Form 8-K and provided on the Company’s website for a further breakdown of orders and backlog by market. See “Key Performance Indicators” below for important disclosures regarding Graham’s use of these metrics.

(in millions)

Q2 24   Q3 24   Q4 24   FY24   Q1 25   Q2 25   YTD FY25
Orders

$

36.5

 

$

123.3

 

$

40.8

 

$

268.4

 

$

55.8

 

$

63.7

 

$

119.4

Backlog

$

313.3

 

$

399.2

 

$

390.9

 

$

390.9

 

$

396.8

 

$

407.0

 

$

407.0

Orders for the three-month period ended September 30, 2024, were $63.7 million, resulting in a book-to-bill ratio of 1.2x. Defense orders represented 48% of total orders and included a contract to supply the MK19 air turbine pump for the torpedo ejection system on the Columbia-class submarine. Space orders, which can fluctuate due to the timing of projects, saw a meaningful increase to $13.5 million, which included a contract for the cryogenic recirculation pump that provides thermal conditioning for upper stage engines on launch vehicles in space. Refining orders totaled $10.6 million and were driven by continued strength in aftermarket demand and the timing of new capital projects.

Backlog at quarter end reached a record $407.0 million, up 30% over the prior-year period and up 3% sequentially. Approximately 35% to 45% of orders currently in backlog are expected to be converted to sales in the next twelve months and another 30% to 40% is expected to convert to sales over the following year. The majority of orders expected to convert beyond twelve months are for the defense industry, specifically the U.S. Navy.

Fiscal 2025 Outlook

The Company’s outlook for 2025 was updated as follows:

(as of November 8, 2024)

Updated Fiscal 2025 Guidance

Previous Guidance

Net Sales

$200 million to $210 million

$200 million to $210 million

Gross Margin

23% to 24% of sales

22% to 23% of sales

SG&A expense (including amortization)(1)

17.0% to 18.0% of sales

16.5% to 17.5% of sales

Adjusted EBITDA(2)

$18.0 million to $21.0 million

$16.5 million to $19.5 million

Effective Tax Rate

20% to 22%

20% to 22%

Capital Expenditures

$13.0 million to $18.0 million

$10.0 million to $15.0 million

(1)

Includes approximately $6.5 million to $7.5 million of BN supplemental performance bonus, equity-based compensation, and ERP conversion costs included in SG&A expense.

(2)

Excludes net interest expense, income taxes, depreciation, and amortization from net income, as well as approximately $2.0 million to $3.0 million of equity-based compensation and ERP conversion costs included in SG&A expense and approximately $0.7 million of acquisition and integration income, net.

Webcast and Conference Call

GHM’s management will host a conference call and live webcast on November 8, 2024 at 11:00 a.m. Eastern Time (“ET”) to review its financial results as well as its strategy and outlook. The review will be accompanied by a slide presentation, which will be made available immediately prior to the conference call on GHM’s investor relations website.

A question-and-answer session will follow the formal presentation. GHM’s conference call can be accessed by calling (201) 689-8560. Alternatively, the webcast can be monitored from the events section of GHM’s investor relations website.

A telephonic replay will be available from 3:00 p.m. ET today through Friday, November 15, 2024. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13749103 or access the webcast replay via the Company’s website at ir.grahamcorp.com, where a transcript will also be posted once available.

About Graham Corporation

Graham is a global leader in the design and manufacture of mission critical fluid, power, heat transfer and vacuum technologies for the defense, space, energy, and process industries. Graham Corporation and its family of global brands are built upon world-renowned engineering expertise in vacuum and heat transfer, cryogenic pumps, and turbomachinery technologies, as well as its responsive and flexible service and the unsurpassed quality customers have come to expect from the Company’s products and systems. Graham Corporation routinely posts news and other important information on its website, grahamcorp.com, where additional information on Graham Corporation and its businesses can be found.

Safe Harbor Regarding Forward Looking Statements

This news release 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,” “outlook,” “anticipates,” “believes,” “could,” “guidance,” ”may”, “will,” “plan” and other similar words. All statements addressing operating performance, events, or developments that Graham Corporation expects or anticipates will occur in the future, including but not limited to, profitability of future projects and the business, its ability to deliver to plan, its ability to continue to strengthen relationships with customers in the defense industry, its ability to secure future projects and applications, expected expansion and growth opportunities, anticipated sales, revenues, adjusted EBITDA, adjusted EBITDA margins, capital expenditures and SG&A expenses, the timing of conversion of backlog to sales, orders, market presence, profit margins, tax rates, foreign sales operations, customer preferences, changes in market conditions in the industries in which it operates, changes in general economic conditions and customer behavior, forecasts regarding the timing and scope of the economic recovery in its markets, and its acquisition and growth strategy, are forward-looking statements. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Graham Corporation’s most recent Annual Report filed with the Securities and Exchange Commission (the “SEC”), included under the heading entitled “Risk Factors”, and in other reports filed with the SEC.

Should one or more of these risks or uncertainties materialize or should any of Graham Corporation’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on Graham Corporation’s forward-looking statements. Except as required by law, Graham Corporation disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this news release.

Non-GAAP Financial Measures

Adjusted EBITDA is defined as consolidated net income (loss) before net interest expense, income taxes, depreciation, amortization, other acquisition related expenses, and other unusual/nonrecurring expenses. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of sales. Adjusted EBITDA and Adjusted EBITDA margin are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Graham believes that providing non-GAAP information, such as Adjusted EBITDA and Adjusted EBITDA margin, is important for investors and other readers of Graham's financial statements, as it is used as an analytical indicator by Graham's management to better understand operating performance. Moreover, Graham’s credit facility also contains ratios based on Adjusted EBITDA. Because Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures and are thus susceptible to varying calculations, Adjusted EBITDA, and Adjusted EBITDA margin, as presented, may not be directly comparable to other similarly titled measures used by other companies.

Adjusted net income and adjusted net income per diluted share are defined as net income and net income per diluted share as reported, adjusted for certain items and at a normalized tax rate. Adjusted net income and adjusted net income per diluted share are not measures determined in accordance with GAAP, and may not be comparable to the measures as used by other companies. Nevertheless, Graham believes that providing non-GAAP information, such as adjusted net income and adjusted net income per diluted share, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current fiscal year's net income and net income per diluted share to the historical periods' net income and net income per diluted share. Graham also believes that adjusted net income per share, which adds back intangible amortization expense related to acquisitions, provides a better representation of the cash earnings of the Company.

Forward-Looking Non-GAAP Measures

Forward-looking adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures. The Company is unable to present a quantitative reconciliation of these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort largely because forecasting or predicting our future operating results is subject to many factors out of our control or not readily predictable. In addition, the Company believes that such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the Company’s fiscal 2025 financial results. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with purchase accounting, quarter-end, and year-end adjustments. Any variation between the Company’s actual results and preliminary financial estimates set forth above may be material.

Key Performance Indicators

In addition to the foregoing non-GAAP measures, management uses the following key performance metrics to analyze and measure the Company’s financial performance and results of operations: orders, backlog, and book-to-bill ratio. Management uses orders and backlog as measures of current and future business and financial performance, and these may not be comparable with measures provided by other companies. Orders represent written communications received from customers requesting the Company to provide products and/or services. Backlog is defined as the total dollar value of net orders received for which revenue has not yet been recognized. Management believes tracking orders and backlog are useful as they often times are leading indicators of future performance. In accordance with industry practice, contracts may include provisions for cancellation, termination, or suspension at the discretion of the customer.

The book-to-bill ratio is an operational measure that management uses to track the growth prospects of the Company. The Company calculates the book-to-bill ratio for a given period as net orders divided by net sales.

Given that each of orders, backlog, and book-to-bill ratio are operational measures and that the Company's methodology for calculating orders, backlog and book-to-bill ratio does not meet the definition of a non-GAAP measure, as that term is defined by the U.S. Securities and Exchange Commission, a quantitative reconciliation for each is not required or provided.

FINANCIAL TABLES FOLLOW.

Graham Corporation

Consolidated Statements of Operations - Unaudited

(Amounts in thousands, except per share data)

 
Three Months Ended Six Months Ended
September 30, September 30,
 

 

2024

 

 

2023

 

% Change

 

2024

 

 

2023

 

% Change
Net sales

$

53,563

 

$

45,076

 

19%

$

103,514

 

$

92,645

 

12%

Cost of products sold

 

40,764

 

 

37,885

 

8%

 

78,347

 

 

74,477

 

5%

Gross profit

 

12,799

 

 

7,191

 

78%

 

25,167

 

 

18,168

 

39%

Gross margin

 

23.9

%

 

16.0

%

 

 

24.3

%

 

19.6

%

 

 

 

Operating expenses and income:

 

 

Selling, general and administrative

 

8,723

 

 

6,115

 

43%

 

17,561

 

 

13,134

 

34%

Selling, general and administrative – amortization

 

437

 

 

273

 

60%

 

873

 

 

547

 

60%

Other operating income

 

(596

)

 

-

 

NA

 

(726

)

 

-

 

NA

Operating profit

 

4,235

 

 

803

 

427%

 

7,459

 

 

4,487

 

66%

Operating margin

 

7.9

%

 

1.8

%

 

 

7.2

%

 

4.8

%

 

 

 

Other expense, net

 

91

 

 

94

 

(3%)

 

182

 

 

187

 

(3%)

Interest (income) expense, net

 

(153

)

 

55

 

NA

 

(314

)

 

240

 

NA

Income before provision for income taxes

 

4,297

 

 

654

 

557%

 

7,591

 

 

4,060

 

87%

Provision for income taxes

 

1,016

 

 

243

 

318%

 

1,344

 

 

1,009

 

33%

Net income

$

3,281

 

$

411

 

698%

$

6,247

 

$

3,051

 

105%

 

 

Per share data:

 

 

Basic:

 

 

Net income

$

0.30

 

$

0.04

 

650%

$

0.57

 

$

0.29

 

97%

Diluted:

 

 

Net income

$

0.30

 

$

0.04

 

650%

$

0.57

 

$

0.28

 

104%

 
Weighted average common shares outstanding:
Basic

 

10,887

 

 

10,699

 

 

10,875

 

 

10,675

 

Diluted

 

11,024

 

 

10,810

 

 

10,995

 

 

10,761

 

 
NA: Not Applicable

Graham Corporation

Consolidated Balance Sheets – Unaudited

(Amounts in thousands, except per share data)

 
September 30, March 31,

 

2024

 

 

2024

 

Assets
Current assets:
Cash and cash equivalents

$

32,318

 

$

16,939

 

Trade accounts receivable, net of allowances ($56 and $79 at September 30, and March 31, 2024, respectively)

 

29,083

 

 

44,400

 

Unbilled revenue

 

40,730

 

 

28,015

 

Inventories

 

31,536

 

 

33,410

 

Prepaid expenses and other current assets

 

4,414

 

 

3,561

 

Income taxes receivable

 

124

 

 

-

 

Total current assets

 

138,205

 

 

126,325

 

Property, plant and equipment, net

 

36,602

 

 

32,080

 

Prepaid pension asset

 

6,513

 

 

6,396

 

Operating lease assets

 

6,757

 

 

7,306

 

Goodwill

 

25,520

 

 

25,520

 

Customer relationships, net

 

13,729

 

 

14,299

 

Technology and technical know-how, net

 

10,688

 

 

11,065

 

Other intangible assets, net

 

7,019

 

 

7,181

 

Deferred income tax asset

 

2,883

 

 

2,983

 

Other assets

 

1,614

 

 

724

 

Total assets

$

249,530

 

$

233,879

 

 
Liabilities and stockholders’ equity
Current liabilities:
Current portion of finance lease obligations

$

20

 

$

20

 

Accounts payable

 

21,887

 

 

20,788

 

Accrued compensation

 

13,097

 

 

16,800

 

Accrued expenses and other current liabilities

 

5,102

 

 

6,666

 

Customer deposits

 

86,483

 

 

71,987

 

Operating lease liabilities

 

1,142

 

 

1,237

 

Income taxes payable

 

77

 

 

715

 

Total current liabilities

 

127,808

 

 

118,213

 

Finance lease obligations

 

57

 

 

65

 

Operating lease liabilities

 

5,922

 

 

6,449

 

Accrued pension and postretirement benefit liabilities

 

1,258

 

 

1,254

 

Other long-term liabilities

 

2,011

 

 

2,332

 

Total liabilities

 

137,056

 

 

128,313

 

 
Stockholders’ equity:
Preferred stock, $1.00 par value, 500 shares authorized

 

-

 

 

-

 

Common stock, $0.10 par value, 25,500 shares authorized, 11,064 and 10,993 shares issued and 10,890 and 10,850 shares outstanding at September 30 and March 31, 2024, respectively

 

1,106

 

 

1,099

 

Capital in excess of par value

 

33,120

 

 

32,015

 

Retained earnings

 

88,246

 

 

81,999

 

Accumulated other comprehensive loss

 

(6,610

)

 

(7,013

)

Treasury stock (174 and 143 shares at September 30, and March 31, 2024, respectively)

 

(3,388

)

 

(2,534

)

Total stockholders’ equity

 

112,474

 

 

105,566

 

Total liabilities and stockholders’ equity

$

249,530

 

$

233,879

 

Graham Corporation

Consolidated Statements of Cash Flows – Unaudited

(Amounts in thousands)

 
Six Months Ended
September 30,

 

2024

 

 

2023

 

Operating activities:
Net income

$

6,247

 

$

3,051

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation

 

1,721

 

 

1,549

 

Amortization

 

1,109

 

 

891

 

Amortization of unrecognized prior service cost and actuarial losses

 

391

 

 

421

 

Amortization of debt issuance costs

 

-

 

 

119

 

Equity-based compensation expense

 

778

 

 

625

 

Change in fair value of contingent consideration

 

(726

)

 

-

 

Deferred income taxes

 

2

 

 

1,162

 

(Increase) decrease in operating assets, net of acquisitions:
Accounts receivable

 

15,387

 

 

(4,947

)

Unbilled revenue

 

(12,746

)

 

4,620

 

Inventories

 

1,886

 

 

(734

)

Prepaid expenses and other current and non-current assets

 

(1,738

)

 

(1,343

)

Income taxes receivable

 

(124

)

 

(489

)

Operating lease assets

 

643

 

 

589

 

Prepaid pension asset

 

(117

)

 

(144

)

Increase (decrease) in operating liabilities, net of acquisitions:
Accounts payable

 

1,505

 

 

(6,451

)

Accrued compensation, accrued expenses and other current and non-current liabilities

 

(4,801

)

 

5

 

Customer deposits

 

14,485

 

 

13,503

 

Operating lease liabilities

 

(623

)

 

(529

)

Income taxes payable

 

(634

)

 

-

 

Long-term portion of accrued compensation, accrued pension liability and accrued postretirement benefits

 

4

 

 

-

 

Net cash provided by operating activities

 

22,649

 

 

11,898

 

Investing activities:
Purchase of property, plant and equipment

 

(6,464

)

 

(3,312

)

Proceeds from disposal of property, plant and equipment

 

-

 

 

38

 

Acquisition of P3 Technologies, LLC

 

(170

)

 

-

 

Net cash used by investing activities

 

(6,634

)

 

(3,274

)

Financing activities:
Principal repayments on debt

 

-

 

 

(1,020

)

Principal repayments on finance lease obligations

 

(157

)

 

(147

)

Issuance of common stock

 

334

 

 

225

 

Purchase of treasury stock

 

(854

)

 

(57

)

Net cash used by financing activities

 

(677

)

 

(999

)

Effect of exchange rate changes on cash

 

41

 

 

(82

)

Net increase in cash and cash equivalents

 

15,379

 

 

7,543

 

Cash and cash equivalents at beginning of period

 

16,939

 

 

18,257

 

Cash and cash equivalents at end of period

$

32,318

 

$

25,800

 

Graham Corporation

Adjusted EBITDA Reconciliation

(Unaudited, $ in thousands)

 
Three Months Ended Six Months Ended
September 30, September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income

$

3,281

 

$

411

 

$

6,247

 

$

3,051

 

Acquisition & integration income

 

(587

)

 

-

 

 

(680

)

 

-

 

ERP Implementation costs

 

205

 

 

-

 

 

547

 

 

-

 

Net interest (income) expense

 

(153

)

 

55

 

 

(314

)

 

240

 

Income tax expense

 

1,016

 

 

243

 

 

1,344

 

 

1,009

 

Equity-based compensation expense

 

434

 

 

332

 

 

778

 

 

625

 

Depreciation & amortization

 

1,419

 

 

1,201

 

 

2,830

 

 

2,440

 

Adjusted EBITDA(1)

$

5,615

 

$

2,242

 

$

10,752

 

$

7,365

 

 
Net sales

$

53,563

 

$

45,076

 

$

103,514

 

$

92,645

 

 
Net income margin

 

6.1

%

 

0.9

%

 

6.0

%

 

3.3

%

Adjusted EBITDA margin

 

10.5

%

 

5.0

%

 

10.4

%

 

7.9

%

(1) Beginning in the fourth quarter of fiscal 2024, Adjusted EBITDA no longer excludes the Barber-Nichols supplemental performance bonus, but now excludes the impact of non-cash equity-based compensation expense in order to be more consistent with market practice. Prior period results have been adjusted to reflect these changes on a comparable basis. The Barber-Nichols supplemental performance bonus expense was $1.1 million and $2.2 million for the second quarter and first six months of fiscal 2025, respectively, and $0.8 million and $1.6 million for the second quarter and first six months of fiscal 2024, respectively, and will be completed at the end of fiscal year 2026.

Graham Corporation

Adjusted Net Income and

Adjusted Net Income per Diluted Share Reconciliation

(Unaudited, $ in thousands, except per share amounts)

 
Three Months Ended Six Months Ended
September 30, September 30,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income

$

3,281

 

$

411

 

$

6,247

 

$

3,051

 

Acquisition & integration income

 

(587

)

 

-

 

 

(680

)

 

-

 

Amortization of intangible assets

 

555

 

 

445

 

 

1,109

 

 

891

 

ERP Implementation costs

 

205

 

 

-

 

 

547

 

 

-

 

Normalized tax rate(1)

 

(40

)

 

(102

)

 

(224

)

 

(205

)

Adjusted net income(2)

$

3,414

 

$

754

 

$

6,999

 

$

3,737

 

GAAP net income per diluted share

$

0.30

 

$

0.04

 

$

0.57

 

$

0.28

 

Adjusted net income per diluted share(2)

$

0.31

 

$

0.07

 

$

0.64

 

$

0.35

 

Diluted weighted average common shares outstanding

 

11,024

 

 

10,810

 

 

10,995

 

 

10,761

 

(1) Applies a normalized tax rate to non-GAAP adjustments, which are pre-tax, based upon the statutory tax rate.
(2) Beginning in the fourth quarter of fiscal 2024, Adjusted Net Income no longer excludes the Barber-Nichols supplemental performance bonus. Prior period results have been adjusted to reflect this change on a comparable basis. The Barber-Nichols supplemental performance bonus expense, net-of-tax, was $0.8 million and $1.7 million for the second quarter and first six months of fiscal 2025, respectively, and $0.6 million and $1.2 million for the second quarter and first six months of fiscal 2024, respectively, and will be completed at the end of fiscal year 2026.

Acquisition and Integration (Income) Costs are incremental costs that are directly related to the P3 acquisition. These costs (income) may include, among other things, professional, consulting and other fees, system integration costs, and fair value adjustments relating to contingent consideration. ERP Implementation Costs relate to consulting costs incurred in connection with the new ERP system being implemented throughout our Batavia, N.Y. facility and are not expected to recur once the project is completed.

___________________________

1Adjusted EBITDA margin, Adjusted Net Income per Diluted Share and Adjusted EBITDA are non-GAAP measures. See attached tables and other information on pages 10 and 11 for important disclosures regarding Graham’s use of these non-GAAP measures.
2Orders, backlog and book-to-bill ratio are key performance metrics. See “Key Performance Indicators” below for important disclosures regarding Graham’s use of these metrics.
3Supplemental performance bonus is related to the 2021 acquisition of Barber Nichols, LLC. The Barber-Nichols performance bonus expense will be completed at the end of fiscal year 2026.

For more information:

Christopher J. Thome

Vice President - Finance and CFO

Phone: (585) 343-2216

Deborah K. Pawlowski / Craig P. Mychajluk

Alliance Advisors IR

716-843-3908 / 716-843-3832

dpawlowski@allianceadvisors.com

cmychajluk@allianceadvisors.com

Source: Graham Corporation

FAQ

What was Graham 's (GHM) revenue in Q2 FY2025?

Graham reported record revenue of $53.6 million in Q2 FY2025, representing a 19% increase year-over-year.

What is Graham 's (GHM) current backlog value?

Graham 's backlog reached a record $407 million at the end of Q2 FY2025, up 30% over the prior-year period.

What is Graham 's (GHM) cash position as of Q2 FY2025?

Graham had $32.3 million in cash and cash equivalents with no debt, plus access to $43 million under its revolving credit facility.

What is Graham 's (GHM) updated gross margin guidance for FY2025?

Graham raised its FY2025 gross margin guidance to 23% to 24% of sales, up from the previous guidance of 22% to 23%.

Graham Corporation

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