- Second quarter revenue of $22 million; EPS of $0.12
- Second quarter orders of $33 million
- Expecting fiscal 2020 book-to-bill ratio in excess of 1x;
backlog grew to $128 million at September 30
Graham Corporation (NYSE:GHM), a global business that designs,
manufactures and sells critical equipment for the oil refining,
petrochemical and defense industries, today reported financial
results for its second quarter and six months ended September 30,
2019. Graham’s current fiscal year ends March 31, 2020 (“fiscal
2020”).
Net sales in the second quarter of fiscal 2020 were $21.6
million compared with $21.4 million in the second quarter of the
fiscal year ended March 31, 2019 (“fiscal 2019”). This year’s
second quarter net income and earnings per share (“EPS”) were $1.2
million and $0.12, respectively. Last year’s second quarter net
income and EPS were $1.8 million and $0.19, respectively. Excluding
the commercial nuclear utility business which was divested in June
2019, adjusted net income and adjusted EPS in last year’s second
quarter, both of which are non-GAAP measures, were $2.4 million and
$0.24, respectively. The Company makes important disclosures
regarding its use of non-GAAP measures on the following page of
this release.
James R. Lines, Graham’s President and Chief Executive Officer,
commented, “Our second quarter results were in line with our
expectations and we believe we are on track for a strong second
half of fiscal 2020, for both revenue and profitability. New orders
were $33 million with approximately two-thirds from our global
crude oil refining end market.
“We are encouraged by these recent new orders and the building
pipeline of opportunities within this end market. Backlog expanded
to $128 million and importantly, commercial backlog has more than
tripled from its low water mark two years ago. We expect that
fiscal 2020 revenue and profit will expand markedly compared with
fiscal 2019 and also we believe that fiscal 2021 will offer further
expansion.”
Second Quarter Fiscal 2020 Sales Summary (See
accompanying financial tables for a breakdown of sales by industry
and region)
Consolidated net sales increased by $0.2 million in the second
quarter of fiscal 2020 compared with the prior-year quarter. Sales
to the chemical/petrochemical market were up $6.7 million to $10.5
million. This increase was partially offset by decreases of $1.8
million for the divested Energy Steel business as well as decreases
of $3.4 million and $1.5 million to the refining and other
commercial, industrial and defense markets, respectively.
From a geographic perspective, U.S. sales represented 73% of
consolidated sales in the fiscal 2020 second quarter compared with
70% in the second quarter of fiscal 2019. International sales were
27% of consolidated sales in the fiscal 2020 second quarter,
compared with 30% in the prior-year comparable period.
Fluctuations in Graham’s sales among geographic locations and
industries can vary measurably from quarter-to-quarter based on the
timing and magnitude of projects. Graham does not believe that such
quarter-to-quarter fluctuations are indicative of business trends,
which it believes are more apparent on a trailing twelve month
basis.
Second Quarter Fiscal 2020 Performance Review ($ in
millions except per share data)
Q2 FY20 Q2 FY19
Change Net sales
$
21.6
$
21.4
$
0.2
Gross profit
$
4.9
$
6.2
$
(1.3)
Gross margin
22.9%
29.0%
Operating profit
$
1.1
$
1.4
$
(0.3)
Operating margin
5.1%
6.8%
Net income
$
1.2
$
1.8
$
(0.6)
Diluted EPS
$
0.12
$
0.19
$
(0.07)
Non-GAAP financial measures: Adjusted
operating profit
$
1.1
$
2.1
$
(1.0)
Adjusted operating margin
5.1%
10.9%
Adjusted net income
$
1.2
$
2.4
$
(1.2)
Adjusted diluted EPS
$
0.12
$
0.24
$
(0.12)
Adjusted EBITDA
$
1.7
$
2.9
$
(1.2)
Adjusted EBITDA margin
7.8%
14.7%
Refer to pages 10 and 11 of this press release for
reconciliations to non-GAAP financial measures and other important
disclosures regarding Graham’s use of non-GAAP measures.
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 excluding Energy Steel), adjusted net income,
adjusted diluted EPS, adjusted EBITDA (defined as consolidated net
income before net interest income, income taxes, depreciation and
amortization, and the operating loss and loss on the sale of Energy
Steel) and adjusted EBITDA margin (adjusted EBITDA as a percentage
of sales excluding Energy Steel), 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
profit to adjusted operating profit and reconciliations of net
income to adjusted net income and adjusted EBITDA.
Graham divested of its commercial nuclear utility business,
Energy Steel, during the first quarter of fiscal 2020. There was no
impact on the financial results during the second quarter of fiscal
2020. However, during the second quarter of fiscal 2019, results of
this business included sales of $1.8 million, an operating loss of
$0.7 million and a net loss of $0.6 million.
Overall, fiscal 2020’s second quarter adjusted operating profit,
adjusted net income, and adjusted EBITDA were unfavorably impacted
by a lower gross margin compared with the prior-year second
quarter.
Fiscal 2020’s second quarter gross profit and margin were
unfavorably impacted by a varying mix of projects compared with the
second quarter of fiscal 2019, which was unusually strong.
Selling, general and administrative (“SG&A”) expenses
improved to $3.8 million in the second quarter of fiscal 2020,
compared with $4.8 million in the second quarter of fiscal 2019.
The prior-year quarter included $0.6 million for the divested
Energy Steel business. SG&A as a percent of sales was
approximately 18% and 22% in the second quarters of fiscal 2020 and
fiscal 2019, respectively.
During the second quarter of fiscal 2020 Graham had an effective
tax rate of 22%, compared with 9% in the second quarter of fiscal
2019. The low rate in the prior-year quarter reflected a cumulative
adjustment due to a reduction in the full year effective tax
rate.
First Half Fiscal 2020 Performance Review ($ in
millions except per share data)
YTD FY20 YTD FY19
Change Net sales
$
42.2
$
51.0
$
(8.8)
Gross profit
$
9.7
$
13.4
$
(3.7)
Gross margin
22.9%
26.2%
Operating profit
$
0.7
$
4.0
$
(3.3)
Operating margin
1.7%
7.8%
Net income
$
1.3
$
4.2
$
(2.9)
Diluted EPS
$
0.13
$
0.42
$
(0.29)
Non-GAAP financial measures: Adjusted
operating profit
$
1.8
$
5.2
$
(3.4)
Adjusted operating margin
4.5%
11.2%
Adjusted net income
$
2.2
$
5.1
$
(2.9)
Adjusted diluted EPS
$
0.22
$
0.52
$
(0.30)
Adjusted EBITDA
$
3.0
$
6.7
$
(3.7)
Adjusted EBITDA margin
7.3%
14.4%
Energy Steel’s results for the first half of fiscal 2020,
including the loss on sale, included sales of $1.3 million, an
operating loss of $1.1 million and a net loss of $0.9 million.
During the first half of fiscal 2019, results of this business
included sales of $4.7 million, an operating loss of $1.2 million
and a net loss of $1.0 million.
International sales were $12.1 million in the first half of
fiscal 2020 and represented 29% of total sales, compared with $22.5
million, or 44%, of sales in the same prior-year period. Sales to
the U.S. were $30.1 million, or 71%, of first half net sales in
fiscal 2020, compared with $28.5 million, or 56%, of fiscal 2019
first half net sales.
Overall, adjusted operating profit, adjusted net income and
adjusted EBITDA were unfavorably impacted by lower sales and a
lower gross margin compared with the first half of the prior fiscal
year.
The decrease in gross profit and margin were due to lower sales
volume and an unfavorable project mix. Excluding the results of
Energy Steel, gross margin was 24% and 29% for the first half of
fiscal 2020 and fiscal 2019, respectively.
SG&A in the first half of fiscal 2020 was $8.4 million, down
10% or $1.0 million. Excluding Energy Steel, SG&A was down $0.3
million. As a percent of sales, SG&A was 20% in the first half
of fiscal 2020 compared with 18% in the same prior-year period.
Balance Sheet Remains Strong
Cash, cash equivalents and investments at September 30, 2019
were $73.8 million, up from $72.6 million at June 30, 2019 and down
from $77.8 million at March 31, 2019.
Cash used by operations in the first half of fiscal 2020 was
$1.9 million, compared with cash provided by operations of $5.1
million in the first half of fiscal 2019. The decrease was
primarily the result of lower net income and the timing of changes
in working capital.
Capital expenditures were $0.7 million in the first half of
fiscal 2020 compared with $0.4 million in the first half of fiscal
2019. The Company continues to expect 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 $2.1 million and $1.9 million in the
first half of fiscal 2020 and fiscal 2019, respectively.
Graham had neither borrowings under its credit facility, nor any
long-term debt outstanding, at September 30, 2019.
Backlog and Orders Impacted by Timing
Backlog at the end of the second quarter of fiscal 2020 was
$127.8 million, up from $117.2 million at the end of the trailing
quarter. The increase primarily relates to the refining business,
partially offset by a decrease in backlog for the
chemical/petrochemical business.
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 September 30, 2019 was
approximately:
- 48% for U.S. Navy projects
- 32% for refinery projects
- 16% for chemical/petrochemical projects
- 4% for power projects and other industrial applications
The expected timing for the Company’s backlog to convert to
sales is as follows:
55% to 60%
10% to 15%
25% to 35%
Orders were $32.6 million in the second quarter of fiscal
2020, relatively comparable with the prior-year second quarter. The
global refining industry contributed a $7.4 million increase which
was offset by $5.2 million and $1.9 million decreases in orders
from the chemical/petrochemical and other commercial, industrial
and defense markets. Orders in the fiscal 2019 quarter included
$2.3 million for the recently divested Energy Steel business. In
the fiscal 2020 second quarter, orders from U.S. customers were
$10.8 million, or 33% of total orders, and orders from
international markets were $21.8 million, or 67%. This compares
with 58% from the U.S. and 42% from international markets in the
second quarter of fiscal 2019.
The comparison of orders in the first half of fiscal 2020 versus
the same prior-year period is impacted by timing. Excluding Energy
Steel, orders in the first half of fiscal 2020 were $44.6 million,
compared with $50.1 million in the first half of fiscal 2019 on the
same basis. The Company continues to expect that it will achieve a
fiscal 2020 book-to-bill ratio in excess of 1x.
Graham believes that the balance between domestic and
international orders, as well as orders by industry, will continue
to be variable between quarters.
Reaffirming FY 2020 Guidance
Based on its near-term order outlook, Graham is reaffirming its
fiscal 2020 guidance which excludes the divested Energy Steel
business, as follows:
- Revenue anticipated to be between $100 million and $105
million. For fiscal 2019, consolidated revenue excluding Energy
Steel was $83.5 million.
- Gross margin expectations between 24% and 26%
- SG&A expense expected to be between $17 million and $18
million
- Effective tax rate anticipated to be approximately 20%
Mr. Lines concluded, “Our team has been very deliberate in the
execution of our strategies to strengthen our growth and
profitability. These actions include continuing to expand our
revenue from the U.S. Navy as well as our large global installed
base, and leveraging our supply chain for growth with minimal fixed
cost investments. We have been undertaking several initiatives to
execute each strategy, which we believe are driving activity in our
bidding pipeline and positioning Graham to continue to
differentiate ourselves. We believe that execution of these
strategies, both organically and inorganically, will create an even
stronger, less cyclical Graham in the long term.”
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 second quarter and first six months
of fiscal 2020, 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 Wednesday, November 6, 2019. To listen to the archived
call, dial (412) 317-6671 and enter conference ID number 13694762.
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, 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 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.
Graham Corporation
Second Quarter Fiscal
2020
Consolidated Statements of
Income - Unaudited
(Amounts in thousands, except per
share data)
Three Months Ended
Six Months Ended
September 30,
September 30,
2019
2018
% Change
2019
2018
% Change
Net sales
$
21,643
$
21,441
1
%
$
42,236
$
50,992
(17
%)
Cost of products sold
16,695
15,214
10
%
32,574
37,623
(13
%)
Gross profit
4,948
6,227
(21
%)
9,662
13,369
(28
%)
Gross margin
22.9
%
29.0
%
22.9
%
26.2
%
Other expenses and income:
Selling, general and administrative
3,847
4,718
(18
%)
8,403
9,269
(9
%)
Selling, general and administrative – amortization
-
60
(100
%)
11
119
(91
%)
Other expense
-
-
NA
523
-
NA
Operating profit
1,101
1,449
(24
%)
725
3,981
(82
%)
Operating margin
5.1
%
6.8
%
1.7
%
7.8
%
Other income
(87
)
(206
)
(58
%)
(174
)
(412
)
(58
%)
Interest income
(363
)
(351
)
3
%
(762
)
(640
)
19
%
Interest expense
4
1
NA
7
3
NA Income before provision for income taxes
1,547
2,005
(23
%)
1,654
5,030
(67
%)
Provision for income taxes
342
178
92
%
367
880
(58
%)
Net income
$
1,205
$
1,827
(34
%)
$
1,287
$
4,150
(69
%)
Per share data: Basic:
Net income
$
0.12
$
0.19
(37
%)
$
0.13
$
0.42
(69
%)
Diluted: Net income
$
0.12
$
0.19
(37
%)
$
0.13
$
0.42
(69
%)
Weighted average common shares outstanding:
Basic
9,883
9,832
9,869
9,810
Diluted
9,885
9,848
9,872
9,826
Dividends declared per share
$
0.11
$
0.10
$
0.21
$
0.19
N/A: Not Applicable
Graham Corporation
Second Quarter Fiscal
2020
Consolidated Balance Sheets -
Unaudited
(Amounts in thousands, except per
share data)
September 30,
March 31,
2019
2019
Assets Current assets: Cash and cash equivalents
$
11,882
$
15,021
Investments
61,914
62,732
Trade accounts receivable, net of allowances ($26 and $33 at
September 30 and March 31, 2019, respectively)
12,120
17,582
Unbilled revenue
13,036
7,522
Inventories
23,597
24,670
Prepaid expenses and other current assets
1,165
1,333
Income taxes receivable
840
1,073
Assets held for sale
-
4,850
Total current assets
124,554
134,783
Property, plant and equipment, net
16,761
17,071
Prepaid pension asset
4,702
4,267
Operating lease assets
312
-
Other assets
135
149
Total assets
$
146,464
$
156,270
Liabilities and stockholders’ equity Current
liabilities: Current portion of capital lease obligations
$
50
$
51
Accounts payable
7,617
12,405
Accrued compensation
5,273
5,126
Accrued expenses and other current liabilities
2,443
2,933
Customer deposits
29,609
30,847
Operating lease liabilities
148
-
Liabilities held for sale
-
3,525
Total current liabilities
45,140
54,887
Capital lease obligations
71
95
Operating lease liabilities
157
-
Deferred income tax liability
1,283
1,056
Accrued pension liability
704
662
Accrued postretirement benefits
614
604
Total liabilities
47,969
57,304
Stockholders’ equity: Preferred stock, $1.00
par value, 500 shares authorized
-
-
Common stock, $.10 par value, 25,500 shares authorized, 10,699 and
10,650 shares issued and 9,883 and 9,843 shares outstanding at
September 30 and March 31, 2019, respectively outstanding at
September 30 and March 31, 2019, respectively
1,070
1,065
Capital in excess of par value
25,714
25,277
Retained earnings
92,979
93,847
Accumulated other comprehensive loss
(8,667
)
(8,833
)
Treasury stock (816 and 807 shares at September 30 and March 31,
2019, respectively)
(12,601
)
(12,390
)
Total stockholders’ equity
98,495
98,966
Total liabilities and stockholders’ equity
$
146,464
$
156,270
Graham Corporation
Second Quarter Fiscal
2020
Consolidated Statements of
Cash Flows – Unaudited
(Amounts in thousands)
Six Months Ended
September 30,
2019
2018
Operating activities: Net income
$
1,287
$
4,150
Adjustments to reconcile net income to net cash (used) provided by
operating activities: Depreciation
980
980
Amortization
11
119
Amortization of unrecognized prior service cost and actuarial
losses
498
437
Equity-based compensation expense
412
534
Loss on disposal or sale of property, plant and equipment
-
30
Loss on sale of Energy Steel
87
-
Deferred income taxes
119
207
(Increase) decrease in operating assets: Accounts receivable
5,287
2,656
Unbilled revenue
(5,514
)
(5,276
)
Inventories
990
3,652
Prepaid expenses and other current and non-current assets
109
(679
)
Income taxes receivable
233
(303
)
Operating lease assets
138
-
Prepaid pension asset
(435
)
(576
)
Increase (decrease) in operating liabilities: Accounts payable
(4,721
)
(6,097
)
Accrued compensation, accrued expenses and other current and
non-current liabilities
(268
)
1,086
Customer deposits
(1,116
)
4,096
Operating lease liabilities
(64
)
-
Long-term portion of accrued compensation, accrued pension
liability and accrued postretirement benefits
52
59
Net cash (used) provided by operating activities
(1,915
)
5,075
Investing activities: Purchase of property, plant and
equipment
(679
)
(367
)
Proceeds from the sale of Energy Steel
602
-
Purchase of investments
(82,414
)
(64,611
)
Redemption of investments at maturity
83,232
45,023
Net cash provided (used) by investing activities
741
(19,955
)
Financing activities: Principal repayments on capital
lease obligations
(25
)
(52
)
Issuance of common stock
-
171
Dividends paid
(2,075
)
(1,868
)
Purchase of treasury stock
(230
)
(146
)
Net cash used by financing activities
(2,330
)
(1,895
)
Effect of exchange rate changes on cash
(187
)
(303
)
Net decrease in cash and cash equivalents, including cash
classified within current assets held for sale
(3,691
)
(17,078
)
Plus: Net decrease in cash classified within current assets held
for sale
552
-
Net decrease in cash and cash equivalents
(3,139
)
(17,078
)
Cash and cash equivalents at beginning of period
15,021
40,456
Cash and cash equivalents at end of period
$
11,882
$
23,378
Graham Corporation
Second Quarter Fiscal
2020
Adjusted Net Income
Reconciliation - Unaudited
(Amounts in thousands, except per
share data)
Three Months Ended
Six Months Ended
September 30,
September 30,
2019
2018
2019
2018
Per Diluted Share
Per Diluted Share
Per Diluted Share
Per Diluted Share
Net income
$
1,205
$
0.12
$
1,827
$
0.19
$
1,287
$
0.13
$
4,150
$
0.42
+ Loss on sale of commercial nuclear utility business
-
-
-
-
87
0.01
-
-
+ Operating loss of commercial nuclear utility business
-
-
683
0.07
1,016
0.10
1,181
0.12
- Tax effect of above
-
-
(120
)
(0.02
)
(203
)
(0.02
)
(219
)
(0.02
)
Adjusted net income
$
1,205
$
0.12
$
2,390
$
0.24
$
2,187
$
0.22
$
5,112
$
0.52
Non-GAAP Financial Measure:
Adjusted net income is defined as GAAP net income excluding the
operating loss and loss on the sale of the commercial nuclear
utility business. 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
Second Quarter Fiscal
2020
Adjusted Operating Profit
Reconciliation - Unaudited
(Amounts in thousands)
Three Months Ended
Six Months Ended
September 30,
September 30,
2019
2018
2019
2018
Operating profit
$
1,101
$
1,449
$
725
$
3,981
+ Loss on sale of commercial nuclear utility business
-
-
87
-
+ Operating loss of commercial nuclear utility business
-
683
1,016
1,181
Adjusted operating profit
$
1,101
$
2,132
$
1,828
$
5,162
Adjusted operating margin %
5.1
%
10.9
%
4.5
%
11.2
%
Non-GAAP Financial Measure:
Adjusted operating profit is defined as consolidated operating
profit before the operating loss and loss on the sale of the
commercial nuclear utility business. Adjusted operating margin is
Adjusted operating profit divided by sales excluding sales of the
commercial nuclear utility business. 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
Second Quarter Fiscal
2020
Adjusted EBITDA Reconciliation
- Unaudited
(Amounts in thousands)
Three Months Ended
Six Months Ended
September 30,
September 30,
2019
2018
2019
2018
Net income
$
1,205
$
1,827
$
1,287
$
4,150
+ Net interest income
(359
)
(350
)
(755
)
(637
)
+ Income taxes
342
178
367
880
+ Depreciation & amortization
490
550
991
1,099
+ Loss on sale of commercial nuclear utility business
-
-
87
-
+ Operating loss of commercial nuclear utility business
-
683
1,016
1,181
Adjusted EBITDA
$
1,678
$
2,888
$
2,993
$
6,673
Adjusted EBITDA margin %
7.8
%
14.7
%
7.3
%
14.4
%
Non-GAAP Financial Measure:
Adjusted EBITDA is defined as consolidated net income before
interest expense and income, income taxes, depreciation and
amortization, and the operating loss and loss on the sale of the
commercial nuclear utility business. Adjusted EBITDA margin is
adjusted EBITDA divided by sales excluding sales of the commercial
nuclear utility business. 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
Second Quarter Fiscal
2020
Additional Information -
Unaudited
ORDER & BACKLOG TREND ($ in millions)
Q119
Q219
Q319
Q419
FY2019
Q120
Q220
Total
Total
Total
Total
Total
Total
Total
Orders
$
22.0
$
34.4
$
23.2
$
21.6
$
101.2
$
15.1
$
32.6
Backlog
$
114.9
$
127.8
$
133.7
$
132.1
$
132.1
$
117.2
$
127.8
SALES BY INDUSTRY FY 2020 ($ in millions)
FY 2020
Q1
% of
Q2
% of
6/30/19
Total
9/30/19
Total
Refining
$
7.5
36
%
$
6.3
29
%
Chemical/ Petrochemical
$
7.1
35
%
$
10.5
48
%
Power
$
1.4
7
%
$
0.5
3
%
Other Commercial, Industrial and Defense
$
4.6
22
%
$
4.3
20
%
Total
$
20.6
$
21.6
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
Graham Corporation
Second Quarter Fiscal
2020
Additional Information -
Unaudited
(Continued)
SALES BY REGION FY 2020 ($ in millions)
FY
2020
Q1
% of
Q2
% of
6/30/19
Total
9/30/19
Total
United States
$
14.4
70
%
$
15.7
73
%
Middle East
$
0.8
4
%
$
0.5
2
%
Asia
$
3.2
16
%
$
1.0
5
%
Other
$
2.2
10
%
$
4.4
20
%
Total
$
20.6
$
21.6
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191030005072/en/
Jeffrey F. Glajch Vice President – Finance and CFO Phone:
(585) 343-2216 jglajch@graham-mfg.com
Deborah K. Pawlowski / Karen L. Howard Kei Advisors LLC
Phone: (716) 843-3908 / (716) 843-3942 dpawlowski@keiadvisors.com /
khoward@keiadvisors.com
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