GRAHAM CORP false 0000716314 0000716314 2025-02-07 2025-02-07

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 7, 2025

 

 

Graham Corporation

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   001-08462   16-1194720

(State or other jurisdiction

of incorporation)

   (Commission
File Number)		   (IRS Employer
Identification No.)
20 Florence Avenue, Batavia, New York   14020
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (585) 343-2216

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Stock, par value $0.10 per share   GHM   NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02.

Results of Operations and Financial Condition.

On February 7, 2025, Graham Corporation (the “Company”) issued a press release describing its results of operations and financial condition for its third quarter ended December 31, 2024. The Company’s earnings press release is furnished to this Current Report on Form 8-K as Exhibit 99.1.

 

Item 7.01.

Regulation FD Disclosure.

On February 7, 2025, the Company will post on its website at www.grahamcorp.com supplemental data tables, furnished hereto as Exhibit 99.2, regarding historical sales, orders and backlog information.

The information furnished pursuant to these Items 2.02 and 7.01, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under such section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01.

Financial Statements and Exhibits.

 

  (d)

Exhibits.

 

Exhibit
No.

   

Description

99.1    Press Release dated February 7, 2025 describing the results of operations and financial condition for Graham Corporation’s third quarter ended December 31, 2024.
99.2    Supplemental Data Tables.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      Graham Corporation
Date: February 7, 2025     By:  

/s/ Christopher J. Thome

      Christopher J. Thome
      Vice President – Finance, Chief Financial Officer and Chief Accounting Officer

Exhibit 99.1

 

LOGO       News Release  

 

 

 

Graham Corporation ¨ 20 Florence Avenue ¨ Batavia, NY 14020

IMMEDIATE RELEASE  

GRAHAM CORPORATION REPORTS THIRD QUARTER FISCAL 2025 RESULTS

 

  •  

REVENUE INCREASED 7.3% TO $47.0 MILLION DRIVEN BY CONTINUED STRENGTH IN KEY END-MARKETS

 

  •  

GROSS PROFIT MARGIN IMPROVED 260 BASIS POINTS TO 24.8% OF SALES, NET MARGIN INCREASED 300 BASIS POINTS TO 3.4% OF SALES, AND ADJUSTED EBITDA MARGIN1 EXPANDED 180 BASIS POINTS TO 8.6% OF SALES

 

  •  

NET INCOME PER DILUTED SHARE INCREASED 600% TO $0.14 IN THE THIRD QUARTER; ADJUSTED NET INCOME PER DILUTED SHARE¹ INCREASED 38% TO $0.18

 

  •  

ORDERS OF $24.8 MILLION, DRIVEN BY DEMAND FROM DEFENSE, SPACE, AND AFTERMARKET; YTD BOOK-TO-BILL RATIO OF 1.0X AND A BACKLOG OF $385 MILLION2

 

  •  

STRONG BALANCE SHEET WITH NO DEBT, $30.0 MILLION IN CASH, AND ACCESS TO $43 MILLION UNDER ITS REVOLVING CREDIT FACILITY AT QUARTER END TO SUPPORT GROWTH INITIATIVES

 

  •  

REITERATED FULL YEAR GUIDANCE FOR SALES AND ADJUSTED EBITDA1

BATAVIA, NY, February 7, 2025 – 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 third quarter for the fiscal year ending March 31, 2025 (“fiscal 2025”).

“Our strong performance through the first three quarters of our fiscal year reflects continually improving execution across our business. Customer demand for our diversified product portfolio is robust, driving margin expansion through improved product mix and operational efficiency. The progress we have shown to date, coupled with advancing discussions on both new programs and expansions with existing customers, reinforces our confidence in achieving our long-term growth targets.” said Daniel J. Thoren, Chief Executive Officer.

Third Quarter Fiscal 2025 Performance Review

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

 

 

1 

Adjusted EBITDA margin, Adjusted Net Income per Diluted Share and Adjusted EBITDA are non-GAAP measures. See attached tables and other information for important disclosures regarding Graham’s use of these non-GAAP measures.

2 

Orders, 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.

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 2 of 11

 

($ in thousands except per share data)    Q3 FY25     Q3 FY24     $Change      % Change  

Net sales

    $ 47,037     $ 43,818     $ 3,219        7 % 

Gross profit

    $ 11,686     $ 9,723     $ 1,963        20 % 

Gross margin

      24.8 %      22.2 %         +260  bps 

Operating profit

    $ 2,210     $ 911     $ 1,299        143 % 

Operating margin

      4.7 %      2.1 %         +260  bps 

Net income

    $ 1,588     $ 165     $ 1,423        862 % 

Net income margin

      3.4 %      0.4 %         +300  bps 

Net income per diluted share

    $ 0.14     $ 0.02     $ 0.12        600 % 

Adjusted net income*

    $ 1,966     $ 1,451     $ 515        35 % 

Adjusted net income per diluted share*

    $ 0.18     $ 0.13     $ 0.05        38 % 

Adjusted EBITDA*

    $ 4,027     $ 2,965     $ 1,062        36 % 

Adjusted EBITDA margin*

      8.6 %      6.8 %         +180  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 for important disclosures regarding Graham’s use of these non-GAAP measures.

Quarterly net sales of $47.0 million increased 7.3%, or $3.2 million. Sales to the defense market grew by $2.7 million, or 11.1% from the prior year period, driven by the addition of new defense programs, the ramp-up of existing programs, better execution, and the timing of key project milestones. Additionally, higher chemical/petrochemical sales contributed $2.7 million to growth, driven by increased sales of capital equipment. Aftermarket sales to the refining, chemical/petrochemical, and defense markets of $9.7 million remained strong and were 2.4% higher than the prior year. See supplemental data for a further breakdown of sales by market and region.

Gross profit for the quarter increased $2.0 million to $11.7 million compared to the prior-year period of $9.7 million. As a percentage of sales, gross profit margin increased 260 basis points to 24.8%, compared to the fiscal third quarter of 2024. This increase was driven by leverage on higher volume, better execution, and improved pricing, partially offset by higher incentive compensation compared to the prior year period.

Additionally, the third quarter of fiscal 2025 gross profit benefited $0.3 million from a $2.1 million grant received from the BlueForge Alliance earlier this fiscal year to reimburse Graham for the cost of the Company’s defense welder training programs in Batavia and related equipment. To date, the Company has received $1.5 million of funding under this grant. 

Selling, general and administrative expense (“SG&A”), including amortization, totaled $9.7 million, or 20.6% of sales, up $0.9 million compared with the prior year. This increase reflects the Company’s continued investments in its people, processes, and technology to drive long-term sustainable growth.

Included in other operating income for the third quarter of fiscal 2025 was a $0.2 million reversal of a previously accrued contingent earnout liability for P3. The reversal was due to delayed orders/projects that extended beyond the earnout period.

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 3 of 11

 

Cash Management and Balance Sheet

Cash provided by operating activities totaled $27.9 million for the nine-month period ending December 31, 2024, an increase of $8.4 million from the comparable period in fiscal 2024. As of December 31, 2024, cash and cash equivalents were $30.0 million, up from $16.9 million at the end of fiscal 2024.

Capital expenditures of $13.8 million for the first nine months of fiscal 2025 were focused on capacity expansion, increasing capabilities, and productivity improvements. The Company increased its expected fiscal 2025 capital expenditures to be in the range of $15.0 million to $19.0 million from its previous expectations of $13.0 million to $18.0 million due to a faster pace of execution on the capital projects in process. All major capital projects are on time and on budget.

The Company had no debt outstanding at December 31, 2024 with $43 million available on its 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      Q3 25      FY25  

Orders

    $ 36.5      $ 123.3      $ 40.8      $ 268.4      $ 55.8      $ 63.7      $ 24.8      $ 144.2  

Backlog

    $ 313.3      $ 399.2      $ 390.9      $ 390.9      $ 396.8      $ 407.0      $ 384.7      $ 384.7  

As expected, orders for the third quarter of fiscal 2025 declined to $24.8 million given the higher level of orders earlier in the fiscal year. Orders tend to be lumpy given the nature of our business (i.e. large capital projects) and in particular, orders to the defense industry, which span multiple years and are larger in size. Orders for the nine-month period ended December 31, 2024, were $144.2 million, resulting in a year-to-date book-to-bill ratio of 1.0x. After-market orders for the refining, petrochemical, and defense markets remained strong and totaled $13.0 million for the third quarter of fiscal 2025, an increase of 51% over the prior year.

Backlog at quarter end was $384.7 million, down 3.6% over the prior-year period and down 5.5% sequentially. Approximately 45% to 50% of orders currently in backlog are expected to be converted to sales in the next twelve months and another 35% to 40% are expected to convert to sales within one to two years. 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 February 7, 2025)

    Updated Fiscal 2025 Guidance   Previous Guidance

Net Sales

    $200 million to $210 million   $200 million to $210 million

Gross Margin

    24% to 25% of sales   23% to 24% of sales

SG&A expense (including amortization)(1)

    18% to 19% of sales   17% to 18% of sales

Adjusted EBITDA(2)

    $18 million to $21 million   $18 million to $21 million

Effective Tax Rate

    20% to 22%   20% to 22%

Capital Expenditures

    $15.0 million to $19.0 million   $13.0 million to $18.0 million

 

 

 

(1) 

Includes approximately $6.5 million to $7.5 million of Barber-Nichols supplemental performance bonus, equity-based compensation, and enterprise resource planning (“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 $0.9 million of acquisition and integration income, net.

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 4 of 11

 

Webcast and Conference Call

GHM’s management will host a conference call and live webcast on February 7, 2025 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, February 14, 2025. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13750971 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.

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 5 of 11

 

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.

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 6 of 11

 

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.

 

For more information, contact:   
Christopher J. Thome    Tom Cook
Vice President - Finance and CFO    Investor Relations
Phone: (585) 343-2216    (203) 682-8250
   Tom.Cook@icrinc.com

Source: Graham Corporation

FINANCIAL TABLES FOLLOW.

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 7 of 11

 

Graham Corporation

Consolidated Statements of Operations - Unaudited

(Amounts in thousands, except per share data)

 

     Three Months Ended     Nine Months Ended  
   December 31,     December 31,  
     2024     2023     % Change     2024     2023     % Change  

Net sales

    $ 47,037     $ 43,818       7 %    $ 150,551     $ 136,463       10 % 

Cost of products sold

      35,351       34,095       4 %      113,698       108,572       5 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Gross profit

      11,686       9,723       20 %      36,853       27,891       32 % 

Gross margin

      24.8 %      22.2 %        24.5 %      20.4 %   

Operating expenses and income:

             

Selling, general and administrative

      9,260       8,429       10 %      26,821       21,563       24 % 

Selling, general and administrative – amortization

      436       383       14 %      1,309       930       41 % 

Other operating income

      (220 )      —        NA       (946 )      —        NA  
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating profit

      2,210       911       143 %      9,669       5,398       79 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating margin

      4.7 %      2.1 %        6.4 %      4.0 %   

Loss on extinguishment of debt

      —        726       (100 %)      —        726       (100 %) 

Other expense, net

      91       93       (2 %)      273       280       (3 %) 

Interest (income) expense, net

      (128 )      37       NA       (442 )      277       NA  
  

 

 

    

 

 

      

 

 

    

 

 

    

Income before provision (benefit) for income taxes

      2,247       55       NA       9,838       4,115       139 % 

Provision (benefit) for income taxes

      659       (110 )      NA       2,003       899       123 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Net income

    $ 1,588     $ 165       862 %    $ 7,835     $ 3,216       144 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Per share data:

             

Basic:

             

Net income

    $ 0.15     $ 0.02       650 %    $ 0.72     $ 0.30       140 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Diluted:

             

Net income

    $ 0.14     $ 0.02       600 %    $ 0.71     $ 0.30       137 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

Weighted average common shares outstanding:

             

Basic

      10,890       10,775         10,880       10,709    

Diluted

      11,057       10,920         11,016       10,792    

NA: Not Applicable

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 8 of 11

 

Graham Corporation

Consolidated Balance Sheets – Unaudited

(Amounts in thousands, except per share data)

 

     December 31,     March 31,  
     2024     2024  

Assets

     

Current assets:

     

Cash and cash equivalents

    $ 30,046     $ 16,939  

Trade accounts receivable, net of allowances ($402 and $79 at December 31, and March 31, 2024, respectively)

      34,951       44,400  

Unbilled revenue

      37,777       28,015  

Inventories

      39,026       33,410  

Prepaid expenses and other current assets

      3,866       3,561  

Income taxes receivable

      46       —   
  

 

 

    

 

 

  

Total current assets

      145,712       126,325  

Property, plant and equipment, net

      44,133       32,080  

Prepaid pension asset

      6,571       6,396  

Operating lease assets

      6,433       7,306  

Goodwill

      25,520       25,520  

Customer relationships, net

      13,444       14,299  

Technology and technical know-how, net

      10,499       11,065  

Other intangible assets, net

      6,939       7,181  

Deferred income tax asset

      2,928       2,983  

Other assets

      2,071       724  
  

 

 

    

 

 

  

Total assets

    $ 264,250     $ 233,879  
  

 

 

    

 

 

  

Liabilities and stockholders’ equity

     

Current liabilities:

     

Current portion of finance lease obligations

    $ 21     $ 20  

Accounts payable

      25,390       20,788  

Accrued compensation

      16,695       16,800  

Accrued expenses and other current liabilities

      4,645       6,666  

Customer deposits

      92,971       71,987  

Operating lease liabilities

      1,138       1,237  

Income taxes payable

      65       715  
  

 

 

    

 

 

  

Total current liabilities

      140,925       118,213  

Finance lease obligations

      51       65  

Operating lease liabilities

      5,630       6,449  

Accrued pension and postretirement benefit liabilities

      1,257       1,254  

Other long-term liabilities

      1,956       2,332  
  

 

 

    

 

 

  

Total liabilities

      149,819       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 December 31 and March 31, 2024, respectively

      1,106       1,099  

Capital in excess of par value

      33,546       32,015  

Retained earnings

      89,834       81,999  

Accumulated other comprehensive loss

      (6,667 )      (7,013 ) 

Treasury stock (174 and 143 shares at December 31, and March 31, 2024, respectively

      (3,388 )      (2,534 ) 
  

 

 

    

 

 

  

Total stockholders’ equity

      114,431       105,566  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 264,250     $ 233,879  
  

 

 

    

 

 

  

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 9 of 11

 

Graham Corporation

Consolidated Statements of Cash Flows – Unaudited

(Amounts in thousands)

 

     Nine Months Ended  
     December 31,  
     2024     2023  

Operating activities:

     

Net income

    $ 7,835     $ 3,216  

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

     

Depreciation

      2,712       2,375  

Amortization of intangible assets

      1,663       1,487  

Amortization of actuarial losses

      586       632  

Amortization of debt issuance costs

      —        131  

Equity-based compensation expense

      1,204       1,002  

Loss on extinguishment of debt

      —        726  

Change in fair value of contingent consideration

      (946 )      —   

Deferred income taxes

      (91 )      935  

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

     

Accounts receivable

      9,394       (11,335 ) 

Unbilled revenue

      (9,879 )      11,213  

Inventories

      (5,628 )      (4,357 ) 

Prepaid expenses and other current and non-current assets

      (1,665 )      (1,526 ) 

Income taxes receivable

      (46 )      (459 ) 

Operating lease assets

      965       894  

Prepaid pension asset

      (175 )      (215 ) 

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

     

Accounts payable

      3,914       (3,949 ) 

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

      (1,380 )      2,948  

Customer deposits

      21,000       16,590  

Operating lease liabilities

      (948 )      (825 ) 

Income taxes payable

      (646 )      —   

Long-term portion of accrued compensation, accrued pension, and postretirement benefit liabilities

      4       —   
  

 

 

    

 

 

  

Net cash provided by operating activities

      27,873       19,483  
  

 

 

    

 

 

  

Investing activities:

     

Purchase of property, plant and equipment

      (13,800 )      (5,193 ) 

Proceeds from disposal of property, plant and equipment

      —        38  

Acquisition of P3 Technologies, LLC

      (170 )      (6,812 ) 
  

 

 

    

 

 

  

Net cash used by investing activities

      (13,970 )      (11,967 ) 
  

 

 

    

 

 

  

Financing activities:

     

Borrowings of short-term debt obligations

      —        13,000  

Principal repayments on debt

      —        (22,522 ) 

Payment of debt exit costs

      —        (752 ) 

Repayments on finance lease obligations

      (237 )      (224 ) 

Issuance of common stock

      334       225  

Payment of debt issuance costs

      —        (241 ) 

Purchase of treasury stock

      (854 )      (57 ) 
  

 

 

    

 

 

  

Net cash used by financing activities

      (757 )      (10,571 ) 
  

 

 

    

 

 

  

Effect of exchange rate changes on cash

      (39 )      (39 ) 
  

 

 

    

 

 

  

Net increase (decrease) in cash and cash equivalents

      13,107       (3,094 ) 

Cash and cash equivalents at beginning of period

      16,939       18,257  
  

 

 

    

 

 

  

Cash and cash equivalents at end of period

    $ 30,046     $ 15,163  
  

 

 

    

 

 

  

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 10 of 11

 

Graham Corporation

Adjusted EBITDA Reconciliation

(Unaudited, $ in thousands)

 

     Three Months Ended     Nine Months Ended  
     December 31,     December 31,  
     2024     2023     2024     2023  

Net income

    $ 1,588     $ 165     $ 7,835     $ 3,216  

Acquisition & integration (income) expense

      (220 )      274       (900 )      274  

Debt amendment costs

      —        744       —        744  

ERP Implementation costs

      157       56       704       56  

Net interest (income) expense

      (128 )      37       (442 )      277  

Income tax expense (benefit)

      659       (110 )      2,003       899  

Equity-based compensation expense

      426       377       1,204       1,002  

Depreciation & amortization

      1,545       1,422       4,375       3,862  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA(1)

    $ 4,027     $ 2,965     $ 14,779     $ 10,330  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net sales

    $ 47,037     $ 43,818     $ 150,551     $ 136,463  

Net income margin

      3.4 %      0.4 %      5.2 %      2.4 % 

Adjusted EBITDA margin

      8.6 %      6.8 %      9.8 %      7.6 % 

 

(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 $3.2 million for the third quarter and first nine months of fiscal 2025, respectively, and $1.3 million and $2.8 million for the third quarter and first nine months of fiscal 2024, respectively, and will be completed at the end of fiscal year 2026. 

Graham Corporation Reports Third Quarter Fiscal 2025 Results

February 7, 2025

Page 11 of 11

 

Graham Corporation

Adjusted Net Income and

Adjusted Net Income per Diluted Share Reconciliation

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

 

     Three Months Ended     Nine Months Ended  
     December 31,     December 31,  
     2024     2023     2024     2023  

Net income

    $ 1,588     $ 165     $ 7,835       $3,216  

Acquisition & integration (income) expense

      (220 )      274       (900 )      274  

Amortization of intangible assets

      554       596       1,663       1,487  

Debt amendment costs

      —        744       —        744  

ERP Implementation costs

      157       56       704       56  

Normalized tax rate(1)

      (113 )      (384 )      (337 )      (589 ) 
  

 

 

    

 

 

    

 

 

    

Adjusted net income(2)

    $ 1,966     $ 1,451     $ 8,965       $5,188  
  

 

 

    

 

 

    

 

 

    

GAAP net income per diluted share

    $ 0.14     $ 0.02     $ 0.71     $ 0.30  

Adjusted net income per diluted share(2)

    $ 0.18     $ 0.13     $ 0.81       $0.48  

Diluted weighted average common shares outstanding

      11,057       10,920       11,016       10,792  

 

(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 performance bonus expense, net-of-tax, was $0.8 million and $2.5 million for the third quarter and first nine months of fiscal 2025, respectively, and $1.0 million and $2.2 million for the third quarter and first nine months of fiscal 2024, respectively, and will be completed at the end of fiscal year 2026.

Acquisition and integration (income) expense are incremental costs that are directly related to and as a result of the P3 acquisition. These costs (income) may include, among other things, professional, consulting and other fees, system integration costs, and contingent consideration fair value adjustments. ERP implementation costs primarily relate to consulting costs (training, data conversion, and project management) incurred in connection with the ERP system being implemented throughout our Batavia, New York facility in order to enhance efficiency and productivity and are not expected to recur once the project is completed. Debt amendment costs consist of accelerated write-offs of unamortized deferred debt issuance costs and discounts, prepayment penalties and attorney fees in connection with the amendment of our credit facility in October 2023.

###

Exhibit 99.2

Graham Corporation

Q3 FY 2025

Supplemental Information - Unaudited

($in thousands)

 

SALES BY MARKET   FY 2024     FY 2025    

 

     Q3 25 vs Q3 24     Q3 25 vs Q2 25     FYTD25 vs FYTD24  
    Q1     % of     Q2     % of     Q3     % of     Q4     % of     YTD     % of     Q1     % of     Q2     % of     Q3     % of     YTD     % of                                            
    2024     Total     2024     Total     2024     Total     2024     Total     2024     Total     2025     Total     2025     Total     2025     Total     2025     Total           Variance     Variance     Variance  

Refining

   $ 6,867       14%     $ 7,289       16%     $ 7,638       17%     $ 7,293       15%     $ 29,087       16%     $ 8,242       17%     $ 8,416       16%     $ 6,418       14%     $ 23,076       15%       $ (1,220 )      -16%     $ (1,998 )      -24%     $ 1,282       6%  

Chemical/Petrochemical

     6,041       13%       4,365       10%       4,130       9%       6,357       13%       20,893       11%       4,783       10%       5,422       10%       6,791       14%       16,996       11%         2,661       64%       1,369       25%       2,460       17%  

Space

     4,822       10%       2,775       6%       2,931       7%       2,754       6%       13,282       7%       3,947       8%       3,416       6%       3,821       8%       11,184       7%         890       30%       405       12%       656       6%  

Defense

     22,817       48%       25,118       56%       24,330       56%       27,228       55%       99,493       54%       29,094       58%       30,897       58%       27,023       57%       87,014       58%         2,693       11%       (3,874 )      -13%       14,749       20%  

Other

     7,022       15%       5,529       12%       4,789       11%       5,438       11%       22,778       12%       3,885       8%       5,412       10%       2,984       6%       12,281       8%         (1,805 )      -38%       (2,428 )      -45%       (5,059 )      -29%  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

        

 

 

      

 

 

      

 

 

    
  $ 47,569       100%     $ 45,076       100%     $ 43,818       100%     $ 49,070       100%     $ 185,533       100%     $ 49,951       100%     $ 53,563       100%     $ 47,037       100%     $ 150,551       100%       $ 3,219       7%     $ (6,526 )      -12%     $ 14,088       10%  
 
SALES BY REGION   FY 2024     FY 2025    

 

     Q3 25 vs Q3 24     Q3 25 vs Q2 25     FYTD25 vs FYTD24  
    Q1     % of     Q2     % of     Q3     % of     Q4     % of     YTD     % of     Q1     % of     Q2     % of     Q3     % of     YTD     % of                          
    2024     Total     2024     Total     2024     Total     2024     Total     2024     Total     2025     Total     2025     Total     2025     Total     2025     Total           Variance     Variance     Variance  

United States

   $ 38,141       80%     $ 38,604       86%     $ 36,822       84%     $ 42,341       86%     $ 155,908       84%     $ 40,930       82%     $ 45,460       85%     $ 39,675       84%     $ 126,065       84%       $ 2,853       8%     $ (5,785 )      -13%     $ 12,498       11%  

Middle East

     1,049       2%       669       1%       501       1%       348       1%       2,567       1%       983       2%       794       1%       1,551       3%       3,328       2%         1,050       210%       757       95%       1,109       50%  

Asia

     5,902       12%       2,979       7%       4,017       9%       2,245       5%       15,143       8%       5,304       11%       4,274       8%       2,273       5%       11,851       8%         (1,744 )      -43%       (2,001 )      -47%       (1,047 )      -8%  

Other

     2,477       5%       2,824       6%       2,478       6%       4,136       8%       11,915       6%       2,734       5%       3,035       6%       3,538       8%       9,307       6%         1,060       43%       503       17%       1,528       20%  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

        

 

 

      

 

 

      

 

 

    
  $ 47,569       100%     $ 45,076       100%     $ 43,818       100%     $ 49,070       100%     $ 185,533       100%     $ 49,951       100%     $ 53,563       100%     $ 47,037       100%     $ 150,551       100%       $ 3,219       7%     $ (6,526 )      -12%     $ 14,088       10%  
 
ORDERS BY MARKET   FY 2024     FY 2025    

 

     Q3 25 vs Q3 24     Q3 25 vs Q2 25     FYTD25 vs FYTD24  
    Q1     % of     Q2     % of     Q3     % of     Q4     % of     YTD     % of     Q1     % of     Q2     % of     Q3     % of     YTD     % of                          
    2024     Total     2024     Total     2024     Total     2024     Total     2024     Total     2025     Total     2025     Total     2025     Total     2025     Total           Variance     Variance     Variance  

Refining

   $ 14,321       21%     $ 4,086       11%     $ 5,372       4%     $ 9,466       23%     $ 33,245       12%     $ 6,906       12%     $ 10,628       17%     $ 5,867       24%     $ 23,401       16%       $ 495       9%     $ (4,761 )      -45%     $ (378 )      -2%  

Chemical/Petrochemical

     10,863       16%       4,242       12%       5,803       5%       2,841       7%       23,749       9%       16,614       30%       3,827       6%       3,969       16%       24,410       17%         (1,834 )      -32%       142       4%       3,502       17%  

Space

     4,606       7%       3,049       8%       6,086       5%       3,084       8%       16,825       6%       1,354       2%       13,538       21%       3,235       13%       18,126       13%         (2,851 )      -47%       (10,303 )      -76%       4,385       32%  

Defense

     32,958       49%       20,844       57%       103,233       84%       20,375       50%       177,410       66%       28,617       51%       30,507       48%       6,723       27%       65,847       46%         (96,510 )      -93%       (23,784 )      -78%       (91,188 )      -58%  

Other

     5,185       8%       4,243       12%       2,773       2%       5,017       12%       17,218       6%       2,276       4%       5,178       8%       4,992       20%       12,446       9%         2,219       80%       (186 )      -4%       245       2%  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

        

 

 

      

 

 

      

 

 

    
  $ 67,933       100%     $ 36,464       100%     $ 123,267       100%     $ 40,783       100%     $ 268,447       100%     $ 55,767       100%     $ 63,678       100%     $ 24,786       100%     $ 144,230       100%       $ (98,481 )      -80%     $ (38,892 )      -61%     $ (83,434 )      -37%  
 
BACKLOG BY MARKET   FY 2024     FY 2025     Q3 25 vs Q3 24     Q3 25 vs Q2 25              
    Q1     % of     Q2     % of     Q3     % of     Q4     % of     YTD     % of     Q1     % of     Q2     % of     Q3     % of     YTD     % of                    
    2024     Total     2024     Total     2024     Total     2024     Total     2024     Total     2025     Total     2025     Total     2025     Total     2025     Total           Variance     Variance  

Refining

   $ 33,264       10%     $ 29,116       9%     $ 27,428       7%     $ 29,526       8%     $ 29,526       8%     $ 28,219       7%     $ 30,653       8%     $ 30,010       8%     $ 30,010       8%       $ 2,582       9%     $ (643 )      -2%  

Chemical/Petrochemical

     12,794       4%       13,705       4%       14,815       4%       11,276       3%       11,276       3%       23,302       6%       21,633       5%       18,717       5%       18,717       5%         3,902       26%       (2,916 )      -13%  

Space

     8,675       3%       7,263       2%       11,059       3%       10,651       3%       10,651       3%       8,058       2%       18,180       4%       17,594       5%       17,594       5%         6,535       59%       (586 )      -3%  

Defense

     253,358       79%       250,732       80%       334,455       84%       328,389       84%       328,389       84%       327,827       83%       327,438       80%       307,138       80%       307,138       80%         (27,317 )      -8%       (20,300 )      -6%  

Other

     13,912       4.3%       12,527       4%       11,487       3%       11,026       3%       11,026       3%       9,369       2%       9,105       2%       11,242       3%       11,242       3%         (245 )      -2%       2,137       23%  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

      

 

 

        

 

 

      

 

 

    
  $ 322,003       100%     $ 313,343       100%     $ 399,244       100%     $ 390,868       100%     $ 390,868       100%     $ 396,775       100%     $ 407,009       100%     $ 384,701       100%     $ 384,701       100%       $ (14,543 )      -4%     $ (22,308 )      -5%  

BOOK-TO-BILL RATIO

     1.4         0.8         2.8         0.8         1.4         1.1         1.2         0.5         1.0              
v3.25.0.1
Document and Entity Information
Feb. 07, 2025
Cover [Abstract]  
Entity Registrant Name GRAHAM CORP
Amendment Flag false
Entity Central Index Key 0000716314
Document Type 8-K
Document Period End Date Feb. 07, 2025
Entity Incorporation State Country Code DE
Entity File Number 001-08462
Entity Tax Identification Number 16-1194720
Entity Address, Address Line One 20 Florence Avenue
Entity Address, City or Town Batavia
Entity Address, State or Province NY
Entity Address, Postal Zip Code 14020
City Area Code (585)
Local Phone Number 343-2216
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $0.10 per share
Trading Symbol GHM
Security Exchange Name NYSE
Entity Emerging Growth Company false
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