- Revenue grew 18% to $92 million for
fiscal 2019; loss per share was $0.03, adjusted EPS was
$0.51
- Backlog remains strong at $132
million; Fiscal 2019 book-to-bill ratio was 1.1x
- Expecting fiscal 2020 revenue
between $95 million and $100 million; represents 14% to 20% growth,
excluding commercial nuclear utility business which is for
sale
Graham Corporation (NYSE: GHM), a global business that designs,
manufactures and sells critical equipment for the oil refining,
petrochemical, power and defense industries, today reported
financial results for its fourth quarter and year ended March 31,
2019 (“fiscal 2019”).
Net sales in the fourth quarter of fiscal 2019 were $23.6
million, up 7% compared with the fourth quarter of the fiscal year
ended March 31, 2018 (“fiscal 2018”). Net loss in the fiscal 2019
fourth quarter was $4.6 million, or $0.46 loss per diluted share.
Excluding non-cash charges for goodwill and intangible and other
long-lived asset impairments, adjusted net income and adjusted EPS,
both of which are non-GAAP measures, for the fourth quarter of
fiscal 2019 were $0.8 million, and $0.08, respectively. Net income
and earnings per share (“EPS”) in the fiscal 2018 fourth quarter
were $0.8 million and $0.09, respectively. Excluding the impact of
the U.S. Tax Cuts and Jobs Act tax reform legislation passed in
December 2017, adjusted net income and adjusted EPS, both of which
are non-GAAP measures, for the fourth quarter of fiscal 2018 were
$0.6 million and $0.07, respectively. Refer to the Company’s
disclosures regarding the use of non-GAAP measures later in this
release.
Net sales for fiscal 2019 were $91.8 million, up 18% compared
with $77.5 million in fiscal 2018. Fiscal 2019 net loss was $0.3
million, or a loss of $0.03 per diluted share, compared with a net
loss of $9.8 million, or $1.01 per diluted share, in fiscal 2018.
Excluding unusual charges, adjusted net income for fiscal 2019 was
$5.0 million, or $0.51 per diluted share, compared with adjusted
net income of $1.8 million, or $0.18 per diluted share, in fiscal
2018, all on a non-GAAP basis. Refer to the Company’s disclosures
regarding the use of non-GAAP measures later in this release.
James R. Lines, Graham’s President and Chief Executive Officer,
commented, “We had solid revenue growth in the quarter and the
year, as expected. However, the mix of projects and performance of
our commercial nuclear utility business dampened gross margins
throughout the year. While disappointing, we remain focused on
solid execution and quality service for our customers, and strong
cost discipline to strengthen our earnings potential. Likewise, we
will continue to invest in our business in line with our strategy
to drive our long-term future.”
He added, “Our investments in personnel for our strategy are
affecting margins in the near term but remain important as we
identify and capture opportunities to achieve our growth and
profitability goals. We are encouraged by our solid order activity
and strong backlog, which give us confidence in a healthy outlook
for the coming fiscal year and beyond.”
Fourth Quarter Fiscal 2019 Sales Summary(See accompanying
financial tables for a breakdown of sales by industry and
region)
Consolidated net sales were up $1.4 million, or 7%, driven by
$3.8 million and $1.7 million increases in sales to the
chemical/petrochemical and refining industries, respectively. These
increases were partially offset by $2.8 million and $1.2 million of
lower sales to the Company’s other commercial, industrial and
defense markets, and the power industry, respectively.
From a geographic perspective, U.S. sales represented 70% of
consolidated sales in the fiscal 2019 fourth quarter compared with
66% in the fourth quarter of fiscal 2018. International sales were
30% of consolidated sales in the fiscal 2019 quarter, compared with
34% in the prior-year comparable period. U.S. based sales were
driven by the chemical/petrochemical and refining markets noted
above.
Fluctuations in Graham’s sales among geographic locations and
industries can vary measurably from quarter-to-quarter based on the
timing and magnitude of projects. Graham does not believe that such
quarter-to-quarter fluctuations are indicative of business trends,
which it believes are more apparent on a trailing twelve month
basis.
Fourth Quarter Fiscal 2019 Operating Performance
Review
($ in millions except per share data)
Q4
FY19 Q4 FY18 Change Net sales $ 23.6 $ 22.2 $ 1.4
Gross profit $ 4.8 $ 5.0 $ (0.1 ) Gross margin 20.3 % 22.4 %
Operating (loss) profit $ (5.8 ) $ 0.7 $ (6.5 ) Operating margin
(24.7 %) 3.3 % Net (loss) income $ (4.6 ) $ 0.8 $ (5.4 ) Diluted
EPS $ (0.46 ) $ 0.09 $ (0.55 ) Non-GAAP financial measures:
Adjusted operating profit $ 0.6 $ 0.7 $ (0.1 ) Adjusted operating
margin 2.6 % 3.3 % Adjusted net income $ 0.8 $ 0.6 $ 0.2 Adjusted
diluted EPS $ 0.08 $ 0.07 $ 0.01 Adjusted EBITDA $ 1.4 $ 1.4 $ (0.0
) Adjusted EBITDA margin 5.8 % 6.3 %
Refer to pages 11 and 12 of this press release.
Graham believes that, when used in conjunction with measures
prepared in accordance with GAAP, adjusted operating profit,
adjusted operating margin (adjusted operating profit as a
percentage of sales), adjusted net income, adjusted diluted EPS,
adjusted EBITDA and adjusted EBITDA margin (adjusted EBITDA as a
percentage of sales), which are non-GAAP measures, help in the
understanding of its operating performance. Moreover, Graham’s
credit facility also contains ratios based on EBITDA. See the
attached tables for additional important disclosures regarding
Graham’s use of adjusted operating profit, adjusted operating
margin, adjusted net income, adjusted diluted EPS, adjusted EBITDA
and adjusted EBITDA margin as well as reconciliations of operating
(loss) profit to adjusted operating profit and reconciliations of
net (loss) income to adjusted net income and adjusted EBITDA. This
disclosure regarding Graham’s use of non-GAAP measures for the
fourth quarters also applies to fiscal year data reflected later in
this release.
The results for the fiscal 2019 and 2018 fourth quarters were
relatively comparable on a non-GAAP basis, with adjusted EPS of
$0.08 in the fiscal 2019 fourth quarter compared with $0.07 in the
fiscal 2018 fourth quarter. While gross margin was lower in the
fiscal 2019 quarter, net income benefited from higher interest and
other income.
Fourth quarter fiscal 2019 gross profit and margin were
unfavorably impacted by project mix, including the commercial
nuclear utility business.
Selling, general and administrative (“SG&A”) expenses were
$4.2 million in the fourth quarters of both fiscal 2019 and 2018.
SG&A as a percent of sales was approximately 18% and 19% in the
fourth quarters of fiscal 2019 and fiscal 2018, respectively.
Given ongoing challenges in the nuclear industry faced by
relatively small market participants, during the fourth quarter of
fiscal 2019 the Company decided to divest its commercial nuclear
utility business, Energy Steel. Upon evaluating the potential
market value of the Energy Steel business, Graham determined that
the intangible assets, goodwill, and other long-lived assets were
impaired. Accordingly, the Company recorded a $6.4 million
impairment charge, $5.3 million net of tax, in the fiscal 2019
fourth quarter.
Jeffrey Glajch, Graham’s Vice President and Chief Financial
Officer, noted, “While Energy Steel was successful in prior years,
the changes in the commercial nuclear utility industry over the
last several years have caused significant erosion of this
business. Accordingly, we have decided that it has more potential
with a different partner and we are in discussions to sell the
business.”
During the fourth quarter of fiscal 2019, Graham’s effective tax
rate was not meaningful due to the non-deductibility of the
goodwill portion of the commercial nuclear utility business write
down. The prior year’s fourth quarter effective tax rate benefited
from the impact of adopting the 2017 U.S. Tax Cuts and Jobs
Act.
Fourth quarter fiscal 2019 adjusted net income and adjusted
diluted EPS excluded $5.3 million of net-of-tax impairment charges.
Fourth quarter fiscal 2018 adjusted net income and adjusted diluted
EPS excluded a $0.2 million tax benefit for adoption of the new
federal tax rates as a result of the tax reform legislation adopted
in December 2017.
Adjusted EBITDA (defined as consolidated net (loss) income
before net interest income, income taxes, depreciation and
amortization, goodwill and other impairments and other charges
associated with the revaluation of the commercial nuclear utility
business, and a nonrecurring restructuring charge, where
applicable) was approximately the same during the fiscal 2019 and
fiscal 2018 fourth quarters.
Full Year Fiscal 2019 Review
($ in millions except per share data)
FY19 FY18 Change Net sales $ 91.8 $ 77.5 $
14.3 Gross profit $ 21.9 $ 17.0 $ 4.9 Gross margin 23.9 % 21.9 %
Operating loss $ (2.4 ) $ (13.9 ) $ 11.5 Operating margin (2.6 %)
(18.0 %) Net loss $ (0.3 ) $ (9.8 ) $ 9.5 Diluted EPS $ (0.03 ) $
(1.01 ) $ 0.98 Non-GAAP financial measures: Adjusted
operating profit $ 4.0 $ 1.5 $ 2.5 Adjusted operating margin 4.4 %
1.9 % Adjusted net income $ 5.0 $ 1.8 $ 3.2 Adjusted diluted EPS $
0.51 $ 0.18 $ 0.33 Adjusted EBITDA $ 7.1 $ 4.2 $ 2.9 Adjusted
EBITDA margin 7.7 % 5.4 %
Refer to pages 11 and 12 of this press release.
The improvement in operating loss, operating margin, net loss
and diluted EPS during fiscal 2019 compared with fiscal 2018 was
primarily driven by the change in impairment charges for goodwill
and intangible and other long-lived assets. Adjusted net income and
adjusted EPS exclude such charges as well as other items, resulting
in a $3.2 million and $0.33 improvement over the prior year,
respectively, driven by higher sales and improved operating
performance.
International sales grew 27% to $32.4 million in fiscal 2019 and
represented 35% of total sales, compared with $25.6 million, or 33%
of sales in the prior year. Sales to the U.S. grew 14% to $59.4
million, or 65% of fiscal 2019 net sales, compared with $51.9
million, or 67% of fiscal 2018 net sales.
The increase in gross profit and margin were driven by higher
volume stemming from the 18% increase in sales when compared with
the prior year, as well as ongoing improvement to backlog quality
and project mix, partially offset by higher production costs.
SG&A in fiscal 2019 was $17.9 million, up 13%, or $2.1
million. The increase in SG&A was primarily due to higher
compensation costs for new personnel, higher sales-related costs,
and higher performance-based compensation. As a percent of sales,
SG&A was 20% for both fiscal 2019 and 2018.
Similar to the fourth quarter, Graham’s effective tax rate for
fiscal 2019 was not meaningful due to the non-deductibility of the
goodwill portion of the commercial nuclear utility business write
down. Fiscal 2018 results were impacted by a $0.8 million favorable
adjustment to income taxes upon implementation of the 2017 U.S. Tax
Cuts and Jobs Act, which also had a beneficial impact on the fiscal
2019 overall effective tax rate.
Fiscal 2019 adjusted net income and adjusted diluted EPS
excluded $5.3 million of net-of-tax impairment charges. Fiscal 2018
adjusted net income and adjusted diluted EPS excluded $12.0 million
of net-of-tax impairment charges, $0.2 million of net-of-tax bad
debt charges associated with the revaluation of the Company’s
commercial nuclear utility business, $0.2 million for a net-of-tax
nonrecurring restructuring charge and a $0.8 million tax benefit
for adoption of the new federal tax rates as a result of the 2017
U.S. Tax Cuts and Jobs Act.
Adjusted EBITDA for fiscal 2019 benefited from higher revenue
and gross margin improvement, partially offset by investments in
SG&A.
Balance Sheet Strength Supports Growth
Cash, cash equivalents and investments at March 31, 2019 were
$77.8 million, up from $76.5 million at March 31, 2018.
Fiscal 2019 cash provided by operations was $7.9 million,
compared with $8.5 million in fiscal 2018. The decrease was
primarily the result of timing of changes in working capital,
partially offset by higher adjusted net income.
Capital expenditures were $2.1 million in fiscal 2019,
approximately the same level as the prior year. The Company expects
capital expenditures for fiscal 2020 to be between $2.5 million and
$2.8 million, the majority of which are expected to be used for
productivity enhancements.
Dividend payments were $3.8 million and $3.5 million in fiscal
2019 and fiscal 2018, respectively.
Graham had neither borrowings under its credit facility, nor any
long-term debt outstanding, at March 31, 2019.
Backlog Level Indicates Continued Growth
Backlog at the end of fiscal 2019 was $132.1 million, near its
record level of $133.6 million at the end of the third quarter, and
up 12% from $117.9 million at the end of the prior fiscal year.
Excluding the commercial nuclear utility business which is held for
sale, backlog at the end of fiscal 2019 was $124.1 million.
The Company believes that its backlog mix by industry highlights
the success of its diversification strategy to increase sales to
the U.S. Navy. Backlog by industry at March 31, 2019 was
approximately:
- 49% for U.S. Navy projects
- 22% for refinery projects
- 19% for chemical/petrochemical
projects
- 7% for power projects, including
commercial nuclear utility (of which 89% is for the business held
for sale)
- 3% for other industrial
applications
The expected timing for the Company’s backlog to convert to
sales is as follows:
- Within next 12 months: 55% to 60%
- Within 12 to 24 months: 10% to 15%
- Beyond 24 months: 25% to 35%
Orders were $21.6 million in the fourth quarter of fiscal 2019,
driven by the refining and chemical/petrochemical industries in
North America. In the fiscal 2019 fourth quarter, orders from U.S.
and international customers were nearly evenly split with $11.1
million from the U.S and $10.5 million from international markets.
This compares with total orders of $43.5 million in the fourth
quarter of fiscal 2018, of which 81% were from the U.S. and 19%
were from international markets. The fiscal 2018 fourth quarter
orders included $24.5 million, or 56% of the total, from other
commercial, industrial and defense markets, which includes the U.S.
Navy.
Orders for fiscal 2019 were $101.2 million, compared with $112.2
million in fiscal 2018. Excluding orders from the Company’s other
commercial, industrial and defense markets which benefited from
significant U.S. Navy orders in fiscal 2018, orders from the
Company’s other markets increased by $15.9 million in fiscal 2019,
driven by orders from the chemical/petrochemical industry which
were up $20.8 million. Orders from U.S. customers were $62.2
million, or 61% of the total, and orders from international markets
were $39 million, or 39% of the total, in fiscal 2019.
Approximately 35% of international orders were from the Middle
East, 27% were from Canada and 27% were from Asia. In fiscal 2018,
69% of orders were from U.S. customers and 31% were international.
The fiscal 2019 book-to-bill ratio was 1.1x.
Graham expects that the balance between domestic and
international orders, as well as orders by industry, will continue
to be variable between quarters.
Introducing FY 2020 Guidance
Graham is also announcing its fiscal 2020 guidance, as
follows:
- Revenue anticipated to be between $95
million and $100 million, excluding the commercial nuclear utility
business which is held for sale. For fiscal 2019, consolidated
revenue excluding that business was $83.5 million.
- Gross margin expected to be between 23%
and 24%
- SG&A expense expected to be between
$17 million and $18 million
- Effective tax rate anticipated to be
approximately 20%
Mr. Lines concluded, “I believe that the energy cycle continues
to show signs of recovery, which is embedded in our fiscal 2020
expectation for 14% to 20% revenue growth for our ongoing business.
Our strong pipeline of projects combined with the Navy work
currently in backlog provides us solid confidence in our outlook
for the year. Additionally, we remain very active in the pursuit of
strategic opportunities to put our capital to work and complement
our organic growth initiatives.”
Webcast and Conference Call
Graham’s management will host a conference call and live webcast
today at 11:00 a.m. Eastern Time to review its financial condition
and operating results for the fourth quarter and full year fiscal
2019, 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 Graham’s website at
www.graham-mfg.com under the heading “Investor Relations.” A
question-and-answer session will follow the formal
presentation.
Graham’s conference call can be accessed by calling (201)
689-8560. Alternatively, the webcast can be monitored on Graham’s
website at www.graham-mfg.com under the heading “Investor
Relations.”
A telephonic replay will be available from 2:00 p.m. ET today
through Thursday, June 6, 2019. To listen to the archived call,
dial (412) 317-6671 and enter conference ID number 13689951. A
transcript of the call will be placed on Graham’s website, once
available.
ABOUT GRAHAM CORPORATION
Graham is a global business that designs, manufactures and sells
critical equipment for the energy, defense and
chemical/petrochemical industries. Energy markets include oil
refining, cogeneration, and alternative power. For the defense
industry, the Company’s equipment is used in nuclear propulsion
power systems for the U.S. Navy. Graham’s global brand is built
upon world-renowned engineering expertise in vacuum and heat
transfer technology, responsive and flexible service and
unsurpassed quality. Graham designs and manufactures
custom-engineered ejectors, vacuum pumping systems, surface
condensers and vacuum systems. Graham’s equipment can also be found
in other diverse applications such as metal refining, pulp and
paper processing, water heating, refrigeration, desalination, food
processing, pharmaceutical, heating, ventilating and air
conditioning. Graham’s reach spans the globe and its equipment is
installed in facilities from North and South America to Europe,
Asia, Africa and the Middle East.
Graham routinely posts news and other important information on
its website, www.graham-mfg.com, where additional comprehensive
information on Graham Corporation and its subsidiaries 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,”
“estimates,” “confidence,” “projects,” “typically,” “outlook,”
“anticipates,” “believes,” “appears,” “could,” “opportunities,”
“seeking,” “plans,” “aim,” “pursuit,” “look towards” 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,
expected expansion and growth opportunities within its domestic and
international markets, anticipated revenue, the timing of
conversion of backlog to sales, market presence, profit margins,
tax rates, foreign sales operations, its ability to improve cost
competitiveness, customer preferences, changes in market conditions
in the industries in which it operates, changes in commodities
prices, the effect on its business of volatility in commodities
prices, changes in general economic conditions and customer
behavior, forecasts regarding the timing and scope of the economic
recovery in its markets, its acquisition and growth strategy and
the expected performance of Energy Steel & Supply Co. and its
operations in China and other international locations, 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, included under the
heading entitled “Risk Factors.”
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.
FINANCIAL TABLES FOLLOW.
Graham Corporation Fourth Quarter Fiscal 2019
Consolidated Statements of Operations
(Amounts in thousands, except per share
data)
Three Months Ended Year Ended
March 31, March 31,
2019 2018 % Change 2019 2018
% Change Net sales $ 23,641
$ 22,178 7 %
$ 91,831 $
77,534 18 % Cost of products sold 18,843
17,218 9 % 69,922 60,559
15 % Gross profit 4,798 4,960 (3 %) 21,909 16,975 29 % Gross margin
20.3 % 22.4 % 23.9 % 21.9 % Other expenses and income:
Selling, general and administrative 4,123 4,171 (1 %) 17,641 15,533
14 % Selling, general and administrative – amortization 59 59 0 %
237 236 0 % Goodwill and other impairments 6,449 - N/A 6,449 14,816
(56 %) Restructuring charge - - N/A
- 316 (100 %)
Operating (loss)
profit (5,833 ) 730
N/A
(2,418 ) (13,926 )
(83 %) Operating margin (24.7 %) 3.3 % (2.6 %) (18.0 %)
Other income (205 ) (120 ) N/A (823 ) (478 ) 72 % Interest income
(418 ) (151 ) 177 % (1,462 ) (606 ) 141 % Interest expense 4
4 0 % 12 12 0 %
(Loss) income before provision for income taxes (5,214 ) 997 N/A
(145 ) (12,854 ) (99 %) (Benefit) provision for income taxes
(661 ) 164 N/A 163 (3,010 ) N/A
Net (loss) income $ (4,553 ) $
833 N/A
$ (308 ) $
(9,844 ) (97 %) Per share data: Basic: Net
(loss) income $ (0.46 ) $ 0.09 N/A $ (0.03 ) $ (1.01 ) (97
%) Diluted: Net (loss) income $ (0.46 ) $ 0.09 N/A $ (0.03 )
$ (1.01 ) (97 %) Weighted average common shares outstanding:
Basic 9,837 9,772 9,823 9,764 Diluted 9,837 9,781 9,823 9,764
Dividends declared per share $ 0.10 $ 0.09 $
0.39 $ 0.36 N/A: Not Applicable
Graham Corporation Fourth Quarter Fiscal
2019 Consolidated Balance Sheets
(Amounts in thousands, except per share
data)
March 31, 2019 2018 Assets
Current assets: Cash and cash equivalents $ 15,021 $ 40,456
Investments 62,732 36,023 Trade accounts receivable, net of
allowances ($33 and $339 at March 31, 2019 and 2018, respectively)
17,582 17,026 Unbilled revenue 7,522 8,079 Inventories 24,670
11,566 Prepaid expenses and other current assets 1,333 772 Income
taxes receivable 1,073 1,478 Assets held for sale 4,850
- Total current assets 134,783 115,400
Property, plant and equipment, net 17,071 17,052 Prepaid pension
asset 4,267 4,369 Goodwill - 1,222 Permits - 1,700 Other intangible
assets, net - 3,388 Other assets 149 202
Total assets $ 156,270 $
143,333 Liabilities and stockholders’ equity
Current liabilities: Current portion of capital lease obligations $
51 $ 88 Accounts payable 12,405 16,151 Accrued compensation 5,126
4,958 Accrued expenses and other current liabilities 2,933 2,885
Customer deposits 30,847 13,213 Liabilities held for sale
3,525 - Total current liabilities 54,887
37,295 Capital lease obligations 95 55 Deferred income tax
liability 1,056 1,427 Accrued pension liability 662 565 Accrued
postretirement benefits 604 642
Total liabilities 57,304
39,984 Stockholders’ equity: Preferred stock,
$1.00 par value, 500 shares authorized - - Common stock, $.10 par
value, 25,500 shares authorized
10,650 and 10,579 shares issued and 9,843
and 9,772 sharesoutstanding at March 31, 2019 and 2018,
respectively 1,065 1,058 Capital in excess of par value 25,277
23,826 Retained earnings 93,847 99,011 Accumulated other
comprehensive loss (8,833 ) (8,250 ) Treasury stock (807 shares at
each of March 31, 2019 and 2018) (12,390 ) (12,296 )
Total stockholders’ equity 98,966
103,349 Total liabilities and stockholders’
equity $ 156,270 $ 143,333
Graham Corporation Fourth Quarter
Fiscal 2019 Consolidated Statements of Cash Flows
(Amounts in thousands)
Year Ended March 31, 2019 2018
Operating activities: Net (loss) income $ (308 ) $ (9,844 )
Adjustments to reconcile net (loss) income
to net cash provided byoperating activities:
Depreciation 1,968 1,986 Amortization 237 236 Amortization of
unrecognized prior service cost and actuarial losses 875 1,050
Goodwill and other impairments 6,449 14,816 Stock-based
compensation expense 1,069 577 Loss on disposal or sale of
property, plant and equipment 30 26 Deferred income taxes (159 )
(3,088 ) (Increase) decrease in operating assets: Accounts
receivable (1,227 ) (5,472 ) Unbilled revenue (2,519 ) 7,866
Inventories (2,068 ) (2,311 ) Income taxes receivable/payable 396
(1,794 ) Prepaid expenses and other current and non-current assets
(576 ) (176 ) Prepaid pension asset (1,181 ) (1,009 ) Increase
(decrease) in operating liabilities: Accounts payable (2,572 )
5,757 Accrued compensation, accrued expenses and other current and
non-current liabilities 1,118 (954 ) Customer deposits 6,328 792
Long-term portion of accrued compensation, accrued pension
liability and accrued postretirement benefits 57
53
Net cash provided by operating activities
7,917 8,511
Investing activities: Purchase of property, plant and
equipment (2,138 ) (2,051 ) Proceeds from disposal of property,
plant and equipment - 6 Purchase of investments (115,342 ) (54,023
) Redemption of investments at maturity 88,633
52,000
Net cash used by investing activities
(28,847 ) (4,068 )
Financing activities: Principal repayments on capital lease
obligations (97 ) (107 ) Issuance of common stock 307 - Dividends
paid (3,834 ) (3,517 ) Purchase of treasury stock (146 ) (119 )
Excess tax deficiency (benefit) on stock awards -
-
Net cash used by financing activities
(3,770 ) (3,743 ) Effect of
exchange rate changes on cash (183 ) 282 Net
(decrease) increase in cash and cash equivalents, including cash
classified within current assets held for sale (24,883 ) 982 Less:
Net increase in cash classified within current assets held for sale
(552 ) - Net (decrease) increase in cash and
cash equivalents (25,435 ) 982 Cash and cash equivalents at
beginning of year 40,456 39,474 Cash
and cash equivalents at end of year $ 15,021 $ 40,456
Graham Corporation Fourth
Quarter Fiscal 2019 Adjusted Net Income Reconciliation –
Unaudited
(Amounts in thousands, except per share
data)
Three Months Ended Year Ended March
31, March 31, 2019 2018 2019
2018
Per Diluted Share
Per Diluted Share
Per Diluted Share
Per Diluted Share
Net (loss) income $ (4,553 ) $ (0.46 ) $ 833 $ 0.09 $ (308 )
$ (0.03 ) $ (9,844 ) $ (1.01 ) + Restructuring charge - - - - - -
316 0.03 + Goodwill and other impairments 6,449 0.66 - - 6,449 0.66
14,816 1.52
+ Bad debt charge oncommercial nuclear
utilitybusiness
- - - - - - 280 0.03 - Tax effect of above (1,129 ) (0.12 ) - -
(1,129 ) (0.12 ) (2,981 ) (0.31 ) - Impact of new tax law -
- (209 ) (0.02 )
- - (786 )
(0.08 )
Adjusted net income $ 767 $ 0.08
$ 624 $ 0.07 $ 5,012 $
0.51 $ 1,801 $ 0.18
Non-GAAP Financial Measure:
Adjusted net income is defined as GAAP net
income excluding a nonrecurring restructuring charge, goodwill and
other impairments, a charge associated with the revaluation of the
commercial nuclear utility business and the impact of the new tax
law in fiscal 2018. Adjusted net income is not a measure 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 net
income 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.
Because adjusted net income is a non-GAAP measure and is thus
susceptible to varying calculations, adjusted net income, as
presented, may not be directly comparable to other similarly titled
measures used by other companies.
Graham Corporation Fourth Quarter Fiscal 2019
Adjusted Operating Profit Reconciliation—Unaudited
(Amounts in thousands)
Three Months Ended Year Ended
March 31, March 31, 2019 2018
2019 2018 Operating (loss) profit
$ (5,833 ) $ 730 $
(2,418 ) $ (13,926 ) +
Restructuring charge - - - 316 + Goodwill and other impairments
6,449 - 6,449 14,816
+ Bad debt charge oncommercial nuclear
utilitybusiness
- - - 280
Adjusted operating profit $ 616
$ 730 $ 4,031 $
1,486 Adjusted operating margin % 2.6 % 3.3 % 4.4 %
1.9 %
Non-GAAP Financial Measure:
Adjusted operating profit is defined as consolidated operating
profit before a nonrecurring restructuring charge, goodwill and
other impairments, and a charge associated with the revaluation of
the commercial nuclear utility business. Adjusted operating margin
is Adjusted operating profit divided by sales. Adjusted operating
profit and Adjusted operating 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
operating profit and Adjusted operating margin are important for
investors and other readers of Graham's financial statements, as
they are used as analytical indicators by Graham's management to
better understand operating performance. Because Adjusted operating
profit and Adjusted operating margin are non-GAAP measures and are
thus susceptible to varying calculations, Adjusted operating profit
and Adjusted operating margin, as presented, may not be directly
comparable to other similarly titled measures used by other
companies.
Graham Corporation Fourth Quarter Fiscal 2019
Adjusted EBITDA Reconciliation – Unaudited
(Amounts in thousands)
Three Months Ended Year Ended March
31, March 31, 2019 2018 2019
2018 Net (loss) income $ (4,553
) $ 833 $ (308 ) $
(9,844 ) + Net interest income (414 ) (147 ) (1,450 )
(594 ) + Income taxes (661 ) 164 163 (3,010 ) + Depreciation &
amortization 558 555 2,205 2,222 + Restructuring charge - - - 316 +
Goodwill and other impairments 6,449 - 6,449 14,816
+ Bad debt charge oncommercial nuclear
utilitybusiness
- - - 280
Adjusted EBITDA $ 1,379 $
1,405 $ 7,059 $
4,186 Adjusted EBITDA margin % 5.8 % 6.3 % 7.7 % 5.4
%
Non-GAAP Financial Measure:
Adjusted EBITDA is defined as consolidated net income before
interest expense and income, income taxes, depreciation and
amortization, a nonrecurring restructuring charge, goodwill and
other impairments, and a charge associated with the revaluation of
the commercial nuclear utility business. Adjusted EBITDA margin is
adjusted EBITDA divided by 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 are important for investors and other readers of
Graham's financial statements, as they are used as analytical
indicators by Graham's management to better understand operating
performance. Graham’s credit facility also contains ratios based on
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.
Graham Corporation Fourth Quarter Fiscal 2019
Additional Information –
Unaudited
ORDER & BACKLOG TREND ($ in millions)
Q118 Q218 Q318 Q418 FY2018
Q119 Q219 Q319 Q419 FY2019
Total Total Total
Total Total Total
Total Total Total
Total Orders $ 11.1 $ 17.1 $
40.5 $ 43.5 $ 112.2 $ 22.0
$ 34.4 $ 23.2 $ 21.6 $ 101.2
Backlog $ 72.9 $ 73.0 $ 96.2
$ 117.9 $ 117.9 $ 114.9 $
127.8 $ 133.7 $ 132.1 $ 132.1
SALES BY INDUSTRY FY 2019 ($ in millions)
FY 2019 Q1 % of Q2 % of
Q3 % of Q4 % of FY2019 %
of 6/30/18 Total
9/30/18 Total
12/31/18
Total 3/31/19 Total
Total Refining $ 19.8 67
% $ 9.7 45 % $ 6.6 39 %
$ 9.6 41 % $ 45.6 50 %
Chemical/Petrochemical
$ 3.0 10 % $ 3.8 18 %
$ 2.9 17 % $ 7.4 31 %
$ 17.1 18 % Power $ 3.1
10 % $ 2.1 10 % $ 2.7 15
% $ 2.0 8 % $ 9.9 11 %
Other Commercial,Industrial and
Defense
$ 3.7 13 % $ 5.8 27 %
$ 5.0 29 % $ 4.6 20 %
$ 19.1 21 % Total $ 29.6
$ 21.4 $ 17.2 $
23.6 $ 91.8
SALES BY INDUSTRY FY 2018 ($ in millions)
FY
2018 Q1 % of Q2 % of Q3 %
of Q4 % of FY2018 % of
6/30/17 Total 9/30/17
Total 12/31/17 Total
3/31/18 Total Total
Refining $ 3.6 18 % $ 4.7
28 % $ 5.4 31 % $ 7.9 35
% $ 21.6 28 %
Chemical/Petrochemical
$ 7.2 34 % $ 5.7 33 %
$ 4.2 24 % $ 3.6 16 %
$ 20.7 27 % Power $ 4.0
19 % $ 1.9 11 % $ 1.7 10
% $ 3.2 14 % $ 10.8 14 %
Other Commercial,Industrial and
Defense
$ 6.1 29 % $ 4.9 28 %
$ 6.0 35 % $ 7.4 35 %
$ 24.4 32 % Total $ 20.9
$ 17.2 $ 17.3 $
22.1 $ 77.5
Graham Corporation Fourth Quarter Fiscal 2019
Additional Information – Unaudited
(Continued)
SALES BY REGION FY 2019
($ in millions)
FY
2019 Q1 % of Q2 % of Q3 %
of Q4 % of FY2019 % of
6/30/18 Total 9/30/18
Total 12/31/18 Total
3/31/19 Total
Total United States $ 13.5 46 % $ 15.0
70 % $ 14.3 83 % $ 16.6 70 %
$ 59.4 65 % Middle East $ 0.4 1 %
$ 0.5 2 % $ 0.8 5 % $ 0.9
4 % $ 2.6 3 % Asia $ 2.7 9 % $
1.9 9 % $ 1.0 6 % $ 4.7 20 %
$ 10.2 11 % Other $ 13.0 44 % $
4.0 19 % $ 1.1 7 % $ 1.4 6 %
$ 19.6 21 % Total $ 29.6
$ 21.4 $ 17.2 $ 23.6
$ 91.8
SALES BY
REGION FY 2018 ($ in millions)
FY 2018 Q1
% of Q2 % of Q3 % of Q4
% of FY2018 % of 6/30/17
Total 9/30/17 Total
12/31/17 Total 3/31/18
Total Total United States $ 14.8
71 % $ 11.1 65 % $ 11.3 65 %
$ 14.7 66 % $ 51.9 67 % Middle East
$ 0.9 4 % $ 1.0 6 % $ 1.0
6 % $ 0.9 4 % $ 3.8 5 % Asia $
3.4 16 % $ 2.6 15 % $ 2.3 13 %
$ 1.9 9 % $ 10.2 13 % Other $
1.8 9 % $ 2.5 14 % $ 2.7 16 %
$ 4.6 21 % $ 11.6 15 % Total $
20.9 $ 17.2 $ 17.3
$ 22.1 $ 77.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190530005261/en/
For more information:Jeffrey F. GlajchVice
President – Finance and CFOPhone: (585)
343-2216jglajch@graham-mfg.com
Deborah K. Pawlowski / Karen L. HowardKei Advisors
LLCPhone: (716) 843-3908 / (716) 843-3942dpawlowski@keiadvisors.com
/ khoward@keiadvisors.com
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