GHM

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 11:00 a.m. ET Investor Relations - Tom Cook President and Chief Executive Officer - Matthew Malone Chief Financial Officer - Christopher Thome Operator: Greetings. Welcome to the Graham Corporation Fiscal First Quarter 2027 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Tom Cook, Investor Relations. Thank you, Tom. You may begin. Tom Cook: Thank you, Dylan. Good morning, everyone. Welcome to Graham's First Quarter Fiscal 2027 Earnings Call. With me on the call today are Matt Malone, President and CEO, and Chris Thome, Chief Financial Officer. This morning, we released our first quarter fiscal 2027 financial results. Our earnings release and accompanying presentation to today's call are available on our website at ir.grahamcorp.com. You should be aware that we may make forward-looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release, as well as with other documents that are filed by the company with the Securities and Exchange Commission. You can find these documents on our website or at sec.gov. During today's call, we will also discuss non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides. We also use key performance indicators to help gauge the progress and performance of the company. These key performance metrics are ROIC, orders, backlog, and book-to-bill ratio. These are operational measures and a quantitative reconciliation of each is not required or provided. You can find a disclaimer regarding our use of KPIs at the back of today's presentation. So with that, if you'll please advance to Slide 3, I'll turn the call over to Matt to begin. Matt? Matthew Malone: Thank you, Tom, and good morning, everyone. We appreciate you joining us to review our first quarter fiscal 2027 results. I'm pleased with the start to fiscal year 2027 as we continue to execute on our strategic priorities and see significant momentum across the end markets we serve. Our first quarter results demonstrate the continued growth and durability of our platform. We delivered record first quarter revenue of $71.3 million, an increase of 29%, with growth across each of our businesses. Adjusted EBITDA increased 28% to $8.8 million, totaling a total of $95.9 million and backlog increased to another record of $557 million. These results reflect the strength of our diversified business model, strong demand for our mission-critical technologies, and disciplined execution across the organization. The benefits of these investments we have made over the last several years are beginning to bear fruit as well. We have expanded capacity, strengthened our engineering and manufacturing capabilities, invested in automation and advanced testing infrastructure, modernized our systems, and broadened our technology portfolio through the acquisitions of FlackTek and Xdot. Many of these investments are now operational and beginning to support higher production volumes, new program opportunities, and improved operational performance. On our fourth quarter earnings call and our Investor Day in June, we provided our guidance for fiscal 2027, calling for 18% revenue growth and 44% adjusted EBITDA growth. Our strong start to fiscal 2027 positions us well to achieve those targets. Additionally, we outlined how the investments are making combined with a favorable demand environment and our record backlog position Graham for sustained profitable growth. We introduced a 3-year financial framework targeting 8% to 10% organic revenue growth and adjusted EBITDA margins of 14% to 16% by fiscal year 2029. With our sights set on achieving top quartile performance over time, during the quarter, we continued to make significant progress towards these goals. Turning to our end markets on Slide 4 and starting with Defense. Demand remains very strong. Defense revenue increased 40% during the quarter, driven by timing of project milestones, new program activity, and continued growth across existing programs. Our performance reflects the strategic importance of the platforms we support, the durability of our customer relationships, and our ability to execute on highly complex mission-critical applications. Our naval business continues to benefit from increasing activity across the Columbia and Virginia-class submarine programs, as well as the MK48 Mod 7 Heavyweight Torpedo program. During the first quarter, we received approximately $61.8 million of new and follow-on Defense orders supporting these programs. Also, as we announced in our release last night, we secured a new contract to provide MK19 Mod 2 Air Turbine Pump Assemblies supporting submarine fleet spares, which when combined with the MK48 award in the first quarter, totaled approximately $43 million. These awards are a validation of the investments we have made to increase our capacity and technical capabilities. Our new Navy and X-ray facilities in Batavia are operational, our automated welding systems have been commissioned, and our assembly and test capabilities are increasingly supporting production. These investments improve throughput, enhance quality, and position us to meet increasing production requirements across critical Navy platforms for decades to come. Beyond our traditional Navy business, we continue to see attractive opportunities in next-generation Defense applications, including radar and directed energy systems. Our thermal management, cooling, power electronics, and turbomachinery technologies provide meaningful advantages in applications where customers require greater capability in increasingly compact systems. Several of these programs are transitioning from development to production and represent attractive multi-year growth opportunities. Moving to Space, momentum continues to build. Space revenue increased 86% during the quarter, reflecting new programs, the continued ramp of existing programs, and contributions from FlackTek. Orders totaled $14.4 million, representing a book-to-bill of 2.3x. Customers across both commercial and government-funded programs continue to advance from development and qualification into production. That progression is increasing demand for our highly engineered turbomachinery, cryogenic systems, pumps, motor controllers, and precision components. Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale. [Technical Difficulty] Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale. Our liquid nitrogen testing capabilities are operational and actively supporting customer programs. While our cryogenic testing facility in Florida expands our ability to validate increasingly complex products before delivery. These capabilities allow us to provide customers with more fully tested and integration-ready solutions, helping reduce program risk while deepening Graham's role as a critical technology partner. As launch cadence increases and commercial and government space infrastructure continues to mature, we believe Graham is well positioned to participate across launch vehicles, satellites, lunar exploration systems, and other critical Space platforms. Turning to Energy & Process, revenue increased 5% during the quarter. Continued strength in aftermarket activity and the addition of FlackTek helped offset ongoing pushouts in large capital projects within the refining and petrochemical markets. Aftermarket revenue across Energy & Process and Defense increased 20%, demonstrating the value of our installed base and the reoccurring demand associated with maintaining mission-critical equipment. With more than $1 billion of Graham's installed equipment around the world, we see a meaningful opportunity to expand lifecycle support, introduce new technologies into the install base, and deepen our customer relationships. Over time, growing our investment in aftermarket and reoccurring revenue streams should also support a more balanced business mix and improve profitability. Within New Energy, we continue to see increasing customer engagement across small modular nuclear reactors, cryogenic applications, and other emerging energy technologies. These markets remain relatively early in their commercialization, but activity continues to build and our engineering expertise and mission-critical product portfolio position Graham to benefit as these technologies advance. Turning now to FlackTek, integration continues to progress extremely well. FlackTek established advanced materials processing as Graham's 3rd core technology platform, alongside vacuum and heat transfer systems and turbomachinery. The business contributed $6.6 million of revenue and $13.3 million of orders during the quarter, representing a book-to-bill ratio of approximately 2x. The strength of FlackTek's first quarter bookings reflects healthy customer engagement and attractive growth characteristics of the business. FlackTek brings differentiated intellectual property, reoccurring revenue, and exposure to several markets where Graham has already had deep relationships. We remain particularly excited about the commercialization potential of the MEGA platform and the opportunity to introduce FlackTek's advanced materials processing solutions across our broader customer base. The teams are working well together, and we continue to add capabilities required to support growth. FlackTek remains an excellent example of our disciplined acquisition strategy, which is acquiring differentiated, engineer-led businesses that expand our addressable markets, strengthen our technology portfolio, and create opportunities for long-term profitable growth. Turning to the operational excellence and investments beginning on Slide 5. Our focus is increasingly moving from building capabilities to leveraging those capabilities. Over the last several years, we deliberately invested ahead of demand to expand capacity and capabilities, improve productivity, enhance quality, and broaden our product offerings. These investments include our Batavia Navy facility, automated welding, advanced X-ray systems, expanded assembly and testing capabilities in Colorado, cryogenic testing capabilities in Florida, and the modernization of our ERP systems. Many of these initiatives are now operational or approaching completion and are beginning to contribute to performance. Going forward, our focus is on increasing utilization, shortening production cycle times, improving throughput, and driving greater operational leverage as volume increases. We're also continuing to invest in the next phase of growth, including construction of a new 30,000-square-foot manufacturing facility on our Arvada campus. This additional capacity will support increasing customer demand and further strengthen our ability to scale production across our growing portfolio of turbomachinery applications. Importantly, we evaluate these investments through a disciplined capital allocation framework and target returns above our 20% ROIC hurdle rate. We believe the combination of higher volumes, improved business mix, automation, and continued operational execution provide the clear path to margin expansion outlined at our Investor Day. Graham's recent investments encompass manufacturing, testing, automation, and system modernization, which each evaluated against that return threshold. These investments are needed in order to fulfill our backlog, which totaled $557 million at the end of the quarter. Importantly, the quality of our backlog remains strong. Many of the programs we support are long-cycle applications tied to critical customer priorities and extend over multiple years. Combined with our active pipeline, expanding capabilities, and continued momentum across our markets, this backlog gives us confidence in both our fiscal year 2027 outlook and the long-term framework which we presented in June. Beyond fiscal year 2027, our priorities remain clear. We will continue expanding our participation in attractive markets, commercializing our proprietary technologies, growing aftermarket and reoccurring revenue, investing in operational excellence, and pursuing disciplined acquisitions that complement our organic growth strategy. We believe Graham has entered an important new phase. The foundation has been built. Our backlog is at record levels. Our capabilities are expanding, and the investments we have made are beginning to contribute more meaningfully. With that, I'll turn the call over to Chris for a detailed review of our financial results. Chris? Christopher Thome: Thanks, Matt, and good morning, everyone. Apologies for the slight technical difficulties earlier, but it appears we're back on track. I'll begin my formal remarks on Slide 6. We are off to a strong start for fiscal 2027, delivering record first quarter revenue while continuing to execute against our long-term growth strategy. Our results reflect broad-based demand across our diversified end markets, disciplined execution, and initial contributions from our strategic investments. First quarter revenue increased 29% to a record $71.3 million. On an organic basis, revenue was up an impressive 17%. This growth reflects the strength of our diversified revenue base, including continued momentum across our Defense and Space businesses, as well as contributions from FlackTek, which added $6.6 million of revenue during the quarter. Defense revenue increased 40% year-over-year, primarily driven by the timing of project milestones, new program awards, and continued growth across existing programs. Space revenue increased 86% year-over-year, benefiting from new programs, the continued ramp of existing programs, and contributions from FlackTek. Within Energy & Process, revenue increased 5% from the prior year period, as continued strength in aftermarket demand and the addition of FlackTek helped offset ongoing pushouts in large capital project activity. Aftermarket sales across the Energy & Process and Defense markets remain strong, increasing 20% year-over-year. Similar to our sales, our gross profit for the quarter increased 21% to $17.8 million. However, as a percentage of sales, our gross profit margin decreased to 25% compared with 26.5% in the prior year period. The year-over-year decline in gross margin primarily reflects the mix of sales during the quarter, which included a higher level of Defense revenue and material receipts, which carry lower margin characteristics than many of our other businesses, and the tough comparable versus the prior year first quarter. It is noteworthy that versus the sequential fourth quarter of fiscal 2026, our gross margin percentage increased 230 basis points. Moving to Slide 8. Selling, general, and administrative expenses increased $3.2 million during the quarter, primarily due to acquisition and integration activities, incremental costs associated with FlackTek, and our continued investments in people, processes, and technology. Note that these incremental investments are being made in order to enable our future growth and accelerate the commercialization of Graham products and technologies, and are expected to amount to approximately $2.5 million in fiscal 2027. These increases were partially offset by lower costs associated with the Barber-Nichols performance bonus, which was no longer in effect during fiscal 2027. Net income for the first quarter was $3.9 million or $0.33 per diluted share, compared with $4.6 million or $0.42 per diluted share in the prior year period. However, on an adjusted basis, adjusted net income for the quarter increased to $5.7 million or $0.49 per diluted share, compared with $4.9 million or $0.45 per diluted share in the prior year, up 16% and 9% respectively. Similarly, adjusted EBITDA for the first quarter increased 28% to $8.8 million, representing an adjusted EBITDA margin of 12.3%, which was consistent with the prior year period. Overall, we believe these results demonstrate the resiliency of our business model and the effectiveness of our long-term strategy. We continue to successfully balance investments for future growth while maintaining disciplined execution and positioning the company to capitalize on significant opportunities ahead. Moving to Slide 9, orders remain strong during the quarter and continue to reinforce the favorable demand environment across our core markets. First quarter orders were $96 million, resulting in a book-to-bill ratio of 1.3x. This demonstrates the continued momentum we are seeing in our end markets and builds upon the 1.5x book-to-bill ratio for fiscal 2026. Order activity continued to reflect strong demand across our Defense business, including $61.8 million of new and follow-on orders supporting the U.S. Navy's Columbia and Virginia-class submarine programs, as well as the next option year for mission-critical hardware for the MK48 Mod 7 Heavyweight Torpedo. Space orders continued their strong momentum from the prior year, totaling $14.4 million for the quarter, representing a 2.3x book-to-bill ratio, while FlackTek generated $13.2 million of orders during the quarter, representing a 2x book-to-bill ratio. As a result, backlog increased to another record $557 million, up 15% from the prior year period, and is the sixth consecutive quarter of record backlog. We continue to expect approximately 35% to 40% of backlog to convert into revenue over the next 12 months and another 20% to 25% the following year, demonstrating the high visibility and stability of our business. Turning to Slide 10, our balance sheet remains exceptionally strong and provides significant flexibility to continue executing our strategic priorities. During the quarter, we strengthened our balance sheet through the previously announced $50 million strategic investment from accounts advised by T. Rowe Price and utilized approximately $13 million of the proceeds to repay our outstanding debt. Net cash used by operating activities during the quarter was $12.7 million. And primarily reflects the timing of billing and collections on accounts receivable, unbilled revenue and customer deposits, and the payment of fiscal 2026 bonuses during the quarter, which included the Barber-Nichols performance bonus. Capital expenditures during the quarter totaled $2.6 million and remain focused on capacity expansion, expanding capabilities, and productivity improvements. As a result, we ended the quarter with $27 million of cash on hand, no outstanding debt, and approximately $75 million of available capacity under our revolving credit facility, which provides us significant flexibility to execute our strategic, organic, and inorganic growth plans. Turning to guidance. Slide 11 outlines our outlook for fiscal 2027, which remains unchanged from last quarter. We continue to expect revenue to be in the range of $285 million to $295 million supported by our record backlog, favorable demand environment, a full year contribution from FlackTek, and continued execution across our businesses. We continue to expect gross margin to be between 24.5% and 25.5%, reflecting the benefits of operational improvements, automation investments, productivity initiatives, integration efforts, and an improved sales mix versus fiscal 2026. SG&A expense is expected to be between 16.5% and 17.5% of sales, and as mentioned earlier, includes approximately $2.5 million of incremental investments in people, processes, and technology to support our commercialization initiatives and future growth. Embedded within our outlook are approximately $5.5 million to $6.5 million of equity-based compensation, acquisition and integration costs, and ERP conversion costs. Based on these assumptions, we continue to expect adjusted EBITDA to be between $35 million and $40 million, representing an increase of 44% at the midpoint of that range and unchanged from last quarter. We also continue to expect our capital expenditures to be between $18 million and $22 million as we continue investing in strategic growth initiatives, expanded operational capabilities, and productivity-enhancing projects, including construction of a new 30,000-square-foot manufacturing facility in Arvada. Before I conclude, I'd like to briefly revisit the long-term financial framework we introduced at our Investor Day in June, shown on Slide 12. As we discussed then, our confidence in the outlook extends well beyond fiscal 2027, supported by our record backlog, strong demand across our Defense, Space, and Energy & Process markets, and the investments we have made over the past several years. We continue to expect organic revenue growth of approximately 8% to 10% annually over the next several years. At the same time, we believe we have a clear path to continued margin expansion through a combination of higher production volumes, a more balanced business mix, ongoing operational improvement initiatives, and continued leverage from our manufacturing and automation investments. We expect adjusted EBITDA margins to expand into the 14% to 16% range by fiscal 2029. Importantly, we do not view fiscal 2029 as the finish line. Our objective remains to build a best-in-class industrial technology company capable of delivering top quartile financial performance over time. Overall, we are pleased with our strong start to fiscal 2027. A record backlog, healthy demand across our end markets, disciplined execution, and strong balance sheet position us well to deliver another year of profitable growth while continuing to invest in long-term opportunities ahead. With that, operator, we are now ready for questions. Operator: [Operator Instructions] Our first question comes from Robert Brooks with Northland Capital. Robert Brooks: And just one of the things I wanted to unpack, the robust strength in the Space segment sales up 86% year-over-year, orders even stronger, 2.3 book-to-bill, I believe. So that would suggest to me that this is more than maybe just a timing benefit and something more structural occurring. Is my logic fair there? And just any color on specific drivers on the strength and expectations going forward? Christopher Thome: Yes, thanks, Bobby. The structural change began last year and you can see it through the strong order volume last year as well as the first quarter this year. Our Space business, just like our other businesses, the orders can be very lumpy. So we don't expect this level every quarter. But the current run rate of revenue for the quarter is the new norm. So you could expect that going forward. Robert Brooks: That's great to hear. And then just, like, specific projects or is it just as simple as like more things getting shot up into Space that opens up more opportunities for you? Just what maybe end market wise is driving that higher floor going forward? Christopher Thome: Yes, as we've said for the last several quarters, it's just that some of the development programs that we've been on for the last year or so have started to hit production volumes and are ramping up. So that's really just the continuation of those programs. Robert Brooks: Got it. And one of my key takeaways from the Investor Day in June was a much deeper appreciation for FlackTek's technology. And I even had the FlackTek face myself as Matt showed me the demonstration for me. So I just wanted to ask, 8 months into your ownership, any specific wins you'd call out that came about from either you introducing a legacy Graham customer to FlackTek or just from broadly having the infrastructure benefit of being under a larger company like Graham? Just color there. Matthew Malone: Yes, I mean, you can see from our book-to-bill at FlackTek, they can feel the support of Graham and what I'll say is the integration has gone extremely well. The leader of that business, Matt Gross, has done a great job and the staff has really stepped up and become really engaged in the path forward. With that being said, I can talk high level on a few examples. They happen to be at Barber-Nichols as we speak right now because there's quite a few applications that are directly applicable. But Bobby, we're seeing a lot of opportunity on, I'll say advanced Space applications, specifically adhesives for critical components that provide reentry and other sort of examples. The short of it is, they really are changing the game versus bladed mixing. So you got to see it in person at the Investor Day, I recall, and we're seeing that across a bunch of different end markets. I would say Aerospace and Defense and Space specifically are where we're seeing the most opportunity right now. Robert Brooks: Congrats on another terrific quarter. Matthew Malone: Thanks, Bobby. Operator: Our next question comes from Russell Stanley with Beacon Securities. Russell Stanley: Congrats on the quarter and another strong quarter for orders. You noted obviously the contributions from the submarine programs to orders in the quarter. Last week, we saw the big awards go to General Dynamics and Huntington Ingalls. I'm just wondering to what extent those orders from last week were already in your backlog or what the implications are for those orders for the pipeline for additional orders out of those programs for you? Matthew Malone: Yes, so, Russell, obviously, it's a mix of all the above, some of them in, some of them not. The reality for us is it's just more of a confirmation of how strategic these programs are long term. We continue to feel the tailwinds and the desire to accelerate submarine production, and we think we're well positioned. So with that, our investments that we put in place have been well received, and we continue to see not only the need for us to execute our backlog, but also the pipeline remains strong. So I'll keep it high level there. Russell Stanley: Understood. Maybe if I can follow up on one of your remarks, I think from the June call, Matt, you talked a bit about munitions. We're seeing, honestly, a lot of headlines around shortages on that front. Wondering if you can talk about what you're seeing now and the opportunity set there and how much of a tailwind that might be for Graham? Matthew Malone: Yes. Missiles had not been a conventional market for Graham. Specifically torpedoes were the area that we played and we've seen that demand across the MK48 platform, which of course we've just published yet another year-over-year follow-on order. So we're continuing to see opportunity in the torpedo space. FlackTek really is the business that opened our eyes to the missile production side, and obviously there's been quite a bit of publicity about the MEGA being involved in some critical developments on the missile, specifically the solid rocket motors. What I will say is as we've learned that business through FlackTek, we are seeing opportunities more broadly across Graham. I can't talk in too much detail but most specifically around Barber-Nichols with rotating machines etc. So I'll keep it kind of high level but our early entry into missiles was through FlackTek and we're seeing some broader opportunity. Russell Stanley: That's great. Maybe one more for me and I'll get back in the queue on gross margins. You talked about the year-over-year drivers, but on the quarter-over-quarter lift, 230 bps, was that largely scale economies on a strong top line, or can you talk to the other drivers behind that? Sorry, if I missed it earlier, but I'd love to hear more color there. Christopher Thome: Yes. As we mentioned on our fourth quarter call, Russ, we had some impacts from initial purchase accounting adjustments for FlackTek in the fourth quarter. But largely, if you look at our margin, quarter-over-quarter and all the variances, it directly correlates with the mix of Defense. So you know we had about 58% of our revenue this quarter was in Defense versus 60% in the fourth quarter, but versus 53% last year. So it really is directly correlated to the Defense, as you know, which is a lower margin business versus our commercial portfolios, which is why we want to get closer to that 50-50 mix as time goes on. Operator: [Operator Instructions] Our next question comes from Christopher Glynn with Oppenheimer & Co. Christopher Glynn: So the -- I'm just curious about some of the mix developments in Defense orders. I think this year's orders included follow-ons with the subs, but also some new orders. I think some new design applications are indicated there. And the big chunk last year, I think, was all follow-on orders. So just curious about the idea of diversification and expansion of the revenue sources or even the order sources relative to the main sub and torpedo programs. Matthew Malone: Yes, it's a good question. Still the lion's share, of course, is in the submarine platforms, most strategically, or most specifically the Virginia and Columbia class subs. We continue to see healthy demand there. And while there's tailwinds, obviously, we're going to continue to step up. I think a few things of note that I'll go into more detail as it pertains specifically to Aerospace and Defense. The first is, some of these solicitations are competitive and they allow for healthier margins. So we're winning not only the sole source opportunities, Chris, but we're also today winning opportunities where we did have -- we had competitors. With that, more broadly, we continue to see programs like we mentioned at our Investor Day specifically around radar and laser platforms where we're doing the thermal management or cooling solutions. We are seeing those programs move from -- into production. And so we're seeing some diversification there. What's nice about a program like that is we bring the intellectual property to the table and that is, I'll say, a commercially available product that we use in Defense. So we're able to, I'll just say charge market-bearing prices on those programs rather than go through certified cost and pricing. So the diversification is coming in a few areas. Another area where we're feeling growth and feeling potential is around the torpedo space. I can't get into much detail there, but obviously we provide the MK48 and we're seeing opportunity for continued growth and diversification. So the lion's share is in the submarine and aircraft carrier. That's sole sourced and under TINA cost and pricing. And then the other up-and-comings we've seen the ability to differentiate and get higher margin. Christopher Glynn: And on the aftermarket, nice growth there, healthy run rates, I think above what it's averaged recently. So I'm curious if that's just kind of good concentration of activity in the period relative to the baseline, or if you're starting to see a little bend upward in the traction of your strategic emphasis to build out the aftermarket. Christopher Thome: I would just really characterize it, Chris, as it continues to be strong. As you know, Graham has over $1 billion installed base across the globe, and even though the refiners and the OEMs aren't investing in large capital projects, they are investing in the facilities and maintaining them and running them at peak capacity. So we continue to see aftermarket strong. We expect it to continue. Our book-to-bill for aftermarket was 1.1 during the quarter. And it was up, as you saw, 20% year-over-year. A lot of that growth though was driven by our Defense aftermarket. So we do still have some opportunity there as well on the Defense side. Matthew Malone: Yes, and I just want to add one thing. I think it's important. It's about 96% utilization in refineries in North America. So a typical, what is 75% at 96%. And so these refineries are operating at capacity. And what you see when that happens is 2 things. One is they're only doing maintenance when they must. And so with Graham's installed base, we're well positioned to serve that. The second is they're only willing to take any downtime when there's pretty significant increases in either efficiency or utilization. And so some of the programs that we're seeking there and have been winning and executing have been around revamps, which is us providing improved performance within existing facilities. So I would just characterize it as emergency aftermarket of our install base as well as improved efficiency. But these facilities today are full speed ahead. Christopher Glynn: And last one for me, I think, for Chris. Chris, anything, we start with a baseline of guidance. Curious if there's anything cadence-wise we should consider across 2Q to 4Q versus, say, a prorating sort of thought through the quarters? Christopher Thome: Yes. As you know, our business tends to be cyclical in our fiscal third quarter due to the 2 holidays in that quarter. We are a direct labor-driven business. So if our direct labor is off during the holidays, it does impact our revenue for the quarter. So between the 3 quarters, we typically -- or actually the 4 quarters of the year, typically the third quarter is the lowest. But outside of that, there isn't much other cyclicality in our business. Operator: Our next question is from Robert Brooks with Northland Capital. Robert Brooks: I just wanted to jump back on. On the awards yesterday, it kind of, reading through it, it seems like they've, or an expansion of wallet share on the MK48s and the MK19s? Or just, am I reading that right? Could you just help clarify my understanding there because it seems like you're expanding the wallet share. Is that more of a follow-on? Just trying to help me understand that better. Matthew Malone: Yep. So simply put, MK48 is a sole sourced award and that is a follow-on, so it's another option year. So that is not additional scope. It's actually just the incremental year. On the other program that we announced, that was a competitive solicitation and it was a good win for the Barber-Nichols team. So I'll keep it as sort of high level as that, but it is an expansion of scope to support fleet maintenance and fleet spares. Robert Brooks: Got it. And maybe just sticking with the expansion of scope, are there any particular technologies that you're bringing to the table that you think can be -- that can drive expansion of scopes on projects that you're currently serving? Just wanted, maybe a good place to end there. Matthew Malone: Yes. So I'll start with the one that often gets overlooked. Just execution, period. Taking in work with the critical capabilities in welding that we have, as well as rotating machines, and we take in orders and we deliver on time and on quality. And when you do that, you get more work because as you read, the Navy does not have that currently with its supply chain. The other areas I mentioned, I'll just reiterate, we are seeing additional opportunity on the torpedo side and on the cooling for the radar and laser platforms. Operator: We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Matt Malone, CEO, for closing comments. Matthew Malone: Thank you, Dylan. Overall, we are pleased with our strong start to fiscal year 2027. With that said, we recognize there is still significant work ahead and we will always focus on continuing improvement. Our first quarter fiscal results represent another step forward for the objectives that we outlined at our Investor Day. We remain focused on disciplined execution, profitable growth, and getting better every day as we work towards becoming a top quartile performer and creating enduring value for our customers and shareholders. As always, please reach out with any questions. Thank you, everyone, for joining and your interest in Graham. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Graham, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Graham wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. 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Interested in Graham Corporation? Here are five stocks we like better. Record first-quarter performance: Graham’s fiscal Q1 2027 revenue rose 29% year over year to $71.3 million, with organic growth of 17%, $96 million in orders and a record $557 million backlog. Management maintained its full-year revenue outlook of $285 million to $295 million and adjusted EBITDA outlook of $35 million to $40 million. Defense and space led growth: Defense revenue increased 40%, supported by approximately $61.8 million in submarine and torpedo-program orders, while space revenue surged 86% and achieved a 2.3-times book-to-bill ratio. New facilities and testing capabilities are being expanded to support rising production demand. FlackTek expands opportunities while margins remain pressured: The acquisition contributed $6.6 million in revenue and $13.3 million in orders, opening opportunities in aerospace, defense and space. Adjusted EBITDA rose 28% to $8.8 million, although gross margin fell to 25% because of sales mix and acquisition-related investments. 2 Consumer packaged goods companies to start your morning right Graham (NYSE:GHM) reported record fiscal first-quarter 2027 revenue, rising 29% year over year to $71.3 million, as growth in its defense, space, energy and process businesses was supplemented by contributions from FlackTek. Organic revenue increased 17%, while first-quarter orders totaled $96 million and backlog reached a record $557 million. “We are off to a strong start for fiscal 2027,” Chief Financial Officer Chris Thome said, citing broad-based demand, execution and contributions from strategic investments. The company maintained its full-year outlook, including revenue of $285 million to $295 million and adjusted EBITDA of $35 million to $40 million. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Mitigate Risk in Your Portfolio with These 2 Stocks Defense revenue increased 40% from the prior-year period, driven by the timing of project milestones, new program activity and growth in existing programs. The company received about $61.8 million in new and follow-on defense orders supporting the U.S. Navy’s Columbia-class and Virginia-class submarine programs, as well as the MK48 Mod 7 heavyweight torpedo program. During the quarter, Graham also secured a contract for MK19 Mod 2 air turbine pump assemblies supporting submarine fleet spares. Chief Executive Officer Matt Malone said the MK48 award represented a follow-on option year, while the MK19 work was a competitively won expansion of scope supporting fleet maintenance and spares. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Malone said Graham’s newer Navy and X-ray facilities in Batavia are operational, automated welding systems have been commissioned, and assembly and testing capabilities are increasingly supporting production. He said the investments are intended to improve throughput and quality as production requirements rise for Navy platforms. Space revenue rose 86% year over year, reflecting new programs, ramps in existing programs and FlackTek’s contribution. Space orders were $14.4 million, producing a 2.3-times book-to-bill ratio. Thome said the company does not expect that order level every quarter because space orders can be “very lumpy,” but characterized the quarter’s revenue run rate as “the new norm” going forward. → No Hangover: Revisiting Microsoft One Week After Earnings The company said development programs have begun moving into production volumes, increasing demand for turbomachinery, cryogenic systems, pumps, motor controllers and precision components. Graham’s liquid nitrogen testing capabilities are now operational, while a cryogenic testing facility in Florida expands its ability to validate more complex products before delivery. FlackTek, acquired by Graham, contributed $6.6 million in first-quarter revenue and approximately $13.3 million in orders, equating to a book-to-bill ratio of about 2 times. Malone said integration of the advanced materials processing business has progressed well and that FlackTek establishes a third core technology platform alongside Graham’s vacuum and heat-transfer systems and turbomachinery operations. Management pointed to opportunities for FlackTek’s MEGA platform in aerospace, defense and space applications, including adhesives used in critical components. Malone said the business initially broadened Graham’s view of opportunities related to missile production, particularly solid rocket motors, and has also led to broader potential applications across the company. Graham said it continues to evaluate investments and acquisitions under a capital-allocation framework targeting returns above a 20% return-on-invested-capital hurdle rate. The company is also constructing a new 30,000-square-foot manufacturing facility at its Arvada campus to support demand across its turbomachinery portfolio. First-quarter gross profit rose 21% to $17.8 million, though gross margin declined to 25% from 26.5% a year earlier. Thome said the year-over-year decline reflected sales mix, including a higher proportion of lower-margin defense revenue and material receipts, as well as a difficult comparison with the prior-year first quarter. Gross margin improved 230 basis points from the fiscal fourth quarter. Selling, general and administrative expense increased $3.2 million, primarily due to acquisition and integration activity, FlackTek-related costs and investments in people, processes and technology. The company expects incremental commercialization and growth-support investments to total about $2.5 million during fiscal 2027. Net income was $3.9 million, or $0.33 per diluted share, compared with $4.6 million, or $0.42 per diluted share, in the prior-year quarter. Adjusted net income increased to $5.7 million, or $0.49 per diluted share, from $4.9 million, or $0.45 per diluted share. Adjusted EBITDA climbed 28% to $8.8 million, with a 12.3% adjusted EBITDA margin, unchanged from a year earlier. Aftermarket sales across the energy and process and defense markets increased 20%. Management said the company has more than $1 billion of installed equipment globally and sees potential to expand lifecycle support and recurring revenue. Energy and process revenue rose 5%, with aftermarket demand and FlackTek helping offset continued delays in larger refining and petrochemical capital projects. Graham ended the quarter with $27 million in cash, no outstanding debt and roughly $75 million of available capacity under its revolving credit facility. During the quarter, the company received a previously announced $50 million strategic investment from accounts advised by T. Rowe Price and used about $13 million of the proceeds to repay debt. For fiscal 2027, Graham continues to project gross margin of 24.5% to 25.5%, SG&A expense of 16.5% to 17.5% of sales, and capital expenditures of $18 million to $22 million. The company also reiterated its longer-term framework for organic annual revenue growth of approximately 8% to 10% and adjusted EBITDA margins of 14% to 16% by fiscal 2029. Graham Corporation (NYSE: GHM) is a U.S.-based industrial engineering company that designs, manufactures and services vacuum and heat transfer equipment. Its core offerings include liquid ring vacuum pumps, surface condensers, heat exchangers and custom-engineered vacuum systems. These products play a critical role in energy-intensive industries, where reliable removal of non-condensable gases and efficient heat exchange are vital to process performance. The company's technologies find application across a range of end markets, including power generation, petrochemical, oil and gas, LNG, and semiconductor manufacturing. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Graham Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record first quarter revenue of $71.3 million, up 29% year-over-year, with growth across all businesses. Record backlog of $557 million, marking the sixth consecutive quarter of record backlog, providing high revenue visibility. Strong defense demand with revenue up 40%, supported by new orders for submarine programs and the MK48 torpedo, including a new competitive win for the MK-19 air turbine pump. Space revenue surged 86% year-over-year, with a book-to-bill ratio of 2.3 times, driven by programs transitioning from development to production. FlackTech integration is progressing well, contributing $6.6 million in revenue and a 2 times book-to-bill ratio, with strong potential for cross-selling opportunities. Gross margin decreased to 25% from 26.5% in the prior year, primarily due to a higher mix of lower-margin defense revenue and material receipts. Net income declined to $3.9 million, or $0.33 per diluted share, from $4.6 million, or $0.42 per diluted share, in the prior year period. Energy and process revenue growth was only 5%, as continued strength in aftermarket was offset by ongoing pushouts in large capital projects. SG&A expenses increased by $3.2 million due to acquisition and integration activities, incremental costs from FlackTech, and investments in people and technology. Net cash used by operating activities was $12.7 million, reflecting timing of billings, collections, and the payment of fiscal 2026 bonuses. Warning! GuruFocus has detected 2 Warning Sign with GHM. Is GHM fairly valued? Test your thesis with our free DCF calculator. Q: The space segment saw sales up 86% year-over-year with an even stronger 2.3x book-to-bill ratio. Is this more than just a timing benefit and something more structural? What are the specific drivers and expectations going forward? A: Matt Malone (President and CEO) confirmed the structural change began last year, driven by strong order volume. While orders can be lumpy, the current revenue run rate is the norm. The growth is driven by development programs that have transitioned into production volumes and are now ramping up. Q: Can you provide color on the robust defense orders, which included follow-ons for submarines and torpedoes, but also new competitive wins like the MK-19 air turbine pump assemblies? Is this an expansion of wallet share? A: Matt Malone (President and CEO) clarified that the Mark 48 award is a sole-sourced follow-on option year, not additional scope. However, the MK-19 award was a competitive solicitation win for the Barber-Nichols team, representing an expansion of scope to support fleet maintenance and spares. This demonstrates the company's ability to win competitive bids, which often carry healthier margins than sole-source contracts. Q: Given the recent large awards to General Dynamics and Huntington Ingalls for submarine programs, to what extent were those orders already in your backlog, and what are the implications for the pipeline? A: Matt Malone (President and CEO) stated it is a mix of both, but the awards are a confirmation of the strategic importance and long-term nature of these programs. The company continues to feel tailwinds from the desire to accelerate submarine production and is well-positioned with its investments. The pipeline remains strong beyond the record backlog. Q: Gross margin declined year-over-year but increased 230 basis points sequentially. Was the sequential improvement driven by scale economies on a strong top-line, or other drivers? A: Chris Dome (Chief Financial Officer) explained that the sequential improvement correlates directly with the mix of defense revenue. Defense was 58% of revenue in Q1 versus 60% in Q4 and 53% in the prior year. Defense is a lower-margin business compared to commercial portfolios, which is why the company aims to get closer to a 50/50 mix over time. Q: The aftermarket saw strong growth of 20% year-over-year. Is this just a good concentration of activity, or are you starting to see traction from your strategic emphasis on building out the aftermarket? A: Matt Malone (President and CEO) noted that aftermarket strength continues, driven by a $1 billion installed base and refineries operating at 96% utilization. This forces customers to perform only necessary maintenance and seek efficiency improvements. While the growth was partly driven by defense aftermarket, the company sees significant opportunity to expand lifecycle support and introduce new technologies into the install base. Q: Can you elaborate on the diversification of defense revenue sources beyond the main submarine and torpedo programs? A: Matt Malone (President and CEO) stated that while submarines remain the lion's share, the company is seeing diversification in areas like radar and laser platforms for thermal management and cooling solutions. These programs are moving into production and, because Graham brings proprietary IP, they can charge market-bearing prices rather than going through certified cost and pricing, leading to higher margins. Q: Eight months into owning FlackTech, can you call out any specific wins from introducing legacy Graham customers to the technology or from the benefits of being under a larger company? A: Matt Malone (President and CEO) highlighted that the integration has gone extremely well, with a strong book-to-bill ratio. They are seeing significant opportunities in advanced space applications, specifically adhesives for critical components. The "mega" platform is changing the game versus bladed mixing, with the most opportunity currently in aerospace, defense, and space markets. Q: Are there any specific technologies you are bringing to the table that can drive expansion of scope on current projects? A: Matt Malone (President and CEO) emphasized that execution itself is often overlooked. By delivering on time and with quality, Graham earns more work, especially given the Navy's current supply chain challenges. Additionally, they are seeing opportunities for growth and diversification in the torpedo space and in cooling solutions for radar and laser platforms. Q: Regarding the strong orders, is there any cadence we should consider across Q2 to Q4 versus a pro-rated thought through the quarters? A: Chris Dome (Chief Financial Officer) noted that the business is cyclical, with the fiscal third quarter typically being the lowest due to the two holidays impacting direct labor. Outside of that, there isn't much other cyclicality in the business. Q: You mentioned seeing headlines around munitions shortages. Can you talk about what you are seeing now and the opportunities for Graham? A: Matt Malone (President and CEO) explained that missiles were not a conventional market for Graham, but FlackTech opened their eyes to the missile production side, specifically solid rocket motors. Through FlackTech, they are seeing broader opportunities across Graham, particularly around Barber-Nichols with rotating machines, though he kept details high-level. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Graham (GHM) came out with quarterly earnings of $0.49 per share, beating the Zacks Consensus Estimate of $0.4 per share. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +22.50%. A quarter ago, it was expected that this maker of vacuum and heat-transfer equipment would post earnings of $0.3 per share when it actually produced earnings of $0.33, delivering a surprise of +10%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Graham, which belongs to the Zacks Manufacturing - General Industrial industry, posted revenues of $71.34 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 6.99%. This compares to year-ago revenues of $55.49 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Graham shares have added about 62.7% since the beginning of the year versus the S&P 500's gain of 12.8%. While Graham has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Graham was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.50 on $74.78 million in revenues for the coming quarter and $1.89 on $288.41 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - General Industrial is currently in the top 25% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Helios Technologies (HLIO), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This maker of screw-in hydraulic cartridge valves and manifolds is expected to post quarterly earnings of $0.80 per share in its upcoming report, which represents a year-over-year change of +35.6%. The consensus EPS estimate for the quarter has been revised 4.1% higher over the last 30 days to the current level. Helios Technologies' revenues are expected to be $230.36 million, up 8.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Graham Corporation (GHM) : Free Stock Analysis Report Helios Technologies, Inc (HLIO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

First Quarter Fiscal 2027 Highlights: Record net sales of $71.3 million, increased 29% compared to the prior year reflecting strength of diversified revenue base Gross profit increased 21% to $17.8 million; Gross profit margin was 25.0% Net income per diluted share was $0.33; Adjusted net income per diluted share(1) was $0.49 Adjusted EBITDA (1) increased 28% to $8.8 million; Adjusted EBITDA margin(1) was 12.3% Orders (2) were $95.9 million; Book-to-Bill (2) ratio of 1.3x and record backlog (2) of $557.2 million Strengthened balance sheet with $27.0 million in cash and no outstanding debt following $50.0 million stock issuance and repayment of $13.0 million of debt during the quarter Reaffirming full year fiscal 2027 guidance BATAVIA, N.Y., August 06, 2026--(BUSINESS WIRE)--Graham Corporation (NYSE: GHM) ("GHM" or the "Company"), a global leader in the design and manufacture of mission critical fluid, power, heat transfer, vacuum, and advanced mixing technologies for the Defense, Space, and Energy & Process industries, today reported financial results for its first quarter for the fiscal year ending March 31, 2027 ("fiscal 2027"). Graham’s President and Chief Executive Officer, Matthew J. Malone stated, "Our first quarter results reflect continued disciplined execution and give us confidence as we look ahead to the remainder of fiscal 2027. Our revenue growth was across all of our business units, and bookings remained strong, which we believe, along with our record backlog, positions us well to achieve our long-term growth and profitability goals." Mr. Malone continued, "At our Investor Day in June 2026, we introduced our three-year financial framework as we enter our next phase of growth which reflects the favorable tailwinds we see across our end markets. As we execute against our strategy, we remain focused on converting these opportunities into profitable growth, expanding margins and delivering long-term value for our shareholders." First Quarter Fiscal 2027 Performance Review(All comparisons are with the same prior-year period unless noted otherwise.) Net sales for the first quarter of fiscal 2027 were $71.3 million, up $15.9 million, or 29%, compared with the first quarter of fiscal 2026, reflecting the strength of our diversified revenue base, as well as the acquisition of FlackTek, which added $6.6 million to revenue during the quarter. The increase for the quarter was across multiple markets, including an $11.8 million, or 40%, increase in sales to the Defense market, primarily due to the timing of project milestones, as well as new programs and growth in existing programs. Sales to the Space market increased $2.9 million, or 86%, over the prior year first quarter, due to new programs and the ramp up of existing programs, as well as the FlackTek acquisition. Sales to the Energy & Process markets increased $1,098, or 5%, as increases in Aftermarket sales are partially offset by push outs on large capital project activity. Aftermarket sales to the Energy & Process and Defense markets of $9.7 million remained strong, increasing 20% over the first quarter of the prior year. Gross profit for the first quarter of fiscal 2027 was $17.8 million or 25.0% of sales, compared with $14.7 million, or 26.5% of sales, in the prior-year period. The 150-basis point decline in gross profit margin reflects the mix of sales in the first quarter of fiscal 2027, and in particular, a higher level of Defense sales and material receipts, which carry a lower profit margin. Selling, general and administrative expense ("SG&A"), including intangible amortization, for the first quarter of fiscal 2027 increased $3.2 million or 33%, over the prior year first quarter. Acquisition and integration expenses contributed $0.6 million of the increase compared to the prior year first quarter. Additionally, incremental SG&A from the acquisition of FlackTek accounted for $1.8 million of the increase. The remaining increase primarily reflects investments the Company is making in its people, processes, and technology, which we expect to be approximately $2.5 million of incremental costs for fiscal 2027, partially offset by a reduction in costs related to the Barber-Nichols Performance Bonus, which is no longer in effect in fiscal 2027. During the first quarter of fiscal 2026, the Company recorded $1.1 million related to the Barber-Nichols Performance Bonus, inclusive of applicable payroll taxes and no corresponding expense was recorded in the first quarter of fiscal 2027. Cash Management and Balance Sheet Cash and cash equivalents as of June 30, 2026, were $27.0 million, compared with $6.6 million in the previous quarter. During the quarter, the Company strengthened its balance sheet through a $50.0 million investment from accounts advised by T. Rowe Price, of which $13.0 million of the proceeds were used for debt repayment, with the remaining proceeds expected to fund future organic and inorganic growth opportunities. Net cash used by operating activities was $12.7 million during the first quarter of fiscal 2027, primarily due to the timing of billing and collection of accounts receivable and unbilled revenue and customer deposits, as well as the payment of fiscal 2026 bonuses, including the Barber-Nichols Performance Bonus, during the quarter. Capital expenditures, net for the first quarter of fiscal 2027 were $2.6 million, focused on capacity expansion, increasing capabilities, and productivity improvements. The Company had no debt outstanding as of June 30, 2026, with $74.5 million available on its revolving credit facility after taking into account outstanding letters of credit. Orders, Backlog, and Book-to-Bill Ratio See supplemental data filed with the Securities and Exchange Commission on Form 8-K and provided on the Company’s website for a further breakdown of orders and backlog by market. See "Key Performance Indicators" below for important disclosures regarding Graham’s use of these metrics ($ in millions). Orders for the first quarter of fiscal 2027 were $95.9 million, compared with $125.9 million in the prior year first quarter, which included $86.5 million of follow-on orders to support the U.S. Navy’s Virginia Class Submarine program. Order activity in the quarter continued to reflect strong demand in the Defense market, including approximately $61.8 million of new and follow-on orders to support the U.S. Navy’s Columbia and Virginia Class Submarine programs, as well as to provide mission-critical hardware for the MK48 Mod 7 Heavyweight Torpedo. Space market orders totaled $14.4 million, or 2.3x net Space sales for the quarter. Total Aftermarket orders for the Energy & Process and Defense markets increased 5% to $10.9 million and FlackTek contributed $13.2 million to orders during the quarter or 2.0x net FlackTek sales. Note that our 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 can be significantly larger in size. Backlog at quarter end was a record $557.2 million, a 15% increase over the prior-year period, driven by strong bookings in the Defense and Space markets, and contributions from the FlackTek acquisition. For the quarter, the Company achieved a book-to-bill ratio of 1.3x, continuing momentum from a book-to-bill ratio of 1.5x in FY 2026. Approximately 35% to 40% of orders currently in backlog are expected to be converted to sales in the next twelve months, another 20% to 25% are expected to convert to sales within one to two years, and the remaining beyond two years. Approximately 84% of our backlog as of June 30, 2026, was to the Defense industry, which provides stability and visibility for future revenue. Fiscal 2027 Outlook Graham’s Chief Financial Officer, Christopher J. Thome, said, "Our first quarter results reflect the discipline we have applied across the business, and we enter fiscal 2027 with a stronger, more flexible balance sheet and no outstanding debt. This financial flexibility supports our ability to continue investing in both organic and inorganic growth while maintaining the operating discipline that has defined our performance." Mr. Thome continued, "With our first quarter results in line with our expectations, we are reaffirming our full year fiscal 2027 guidance. We remain focused on converting our record backlog into profitable growth as we execute throughout the remainder of the year." Webcast and Conference Call GHM’s management will host a conference call and live webcast on August 6, 2026, 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 (877) 407-0784, or (201) 689-8560 (International). 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 Thursday, August 13, 2026. To listen to the archived call, dial (844) 512-2921 and enter conference ID number 13761669, 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, vacuum, and advanced mixing technologies for the Defense, Space, Energy & Process industries. Graham Corporation and its family of global brands are built upon world-renowned engineering expertise, proprietary 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 "continue," "estimate," "expects," "focus," "future," "opportunities," "outlook," "believes," "could," "guidance," "may", "will," "plan," "strategy," and other similar words. All statements addressing operating performance, events, or developments that Graham Corporation expects or anticipates will occur in the future, including but not limited to, profitability of future projects and the business, its ability to deliver to plan, its ability to continue to strengthen relationships with customers in the Defense industry, its ability to secure future projects and applications, expected expansion and growth opportunities, anticipated sales, revenues, adjusted EBITDA, adjusted EBITDA margins, capital expenditures and SG&A expenses, the timing of conversion of backlog to sales, orders, market presence, profit margins, tax rates, foreign sales operations, customer preferences, changes in market conditions in the industries in which it operates, changes in general economic conditions and customer behavior, forecasts regarding the timing and scope of the economic recovery in its markets, and its acquisition and growth strategy, are forward-looking statements. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Graham Corporation’s most recent Annual Report filed with the Securities and Exchange Commission (the "SEC"), included under the heading entitled "Risk Factors", and in other reports filed with the SEC. Should one or more of these risks or uncertainties materialize or should any of Graham Corporation’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on Graham Corporation’s forward-looking statements. Except as required by law, Graham Corporation disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this news release. Non-GAAP Financial Measures Adjusted EBITDA is defined as consolidated net income (loss) before net interest expense, income taxes, depreciation, amortization, other acquisition related expenses, equity-based compensation, ERP implementation costs, 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. 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 definitive agreements with customers 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. Total backlog can include both funded and unfunded orders under government contracts. 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. Acquisition and integration expense (income), net are incremental costs that are directly related to, and as a result of, acquisition and integration related activity and the subsequent accounting for any contingent earn-out liabilities. These costs (income) may include, among other things, professional, consulting, travel expenses, 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805783838/en/ Contacts For more information, contact:Christopher J. ThomeVice President - Finance and CFOPhone: (585) 343-2216Tom CookInvestor Relations(203) [email protected]

Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at Graham Corporation (NYSE:GHM) and its peers. Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings. The 13 engineered components and systems stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was 3.7% above. Luckily, engineered components and systems stocks have performed well with share prices up 10% on average since the latest earnings results. Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors. Graham Corporation reported revenues of $67.08 million, up 13% year on year. This print exceeded analysts’ expectations by 11.9%. Overall, it was a very strong quarter for the company with full-year revenue guidance exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates. Graham’s President and Chief Executive Officer, Matthew J. Malone stated, “Fiscal 2026 was another year of strong execution and continued momentum across Graham. We delivered record annual revenue, orders, and backlog, as well as a 1.5x book-to-bill ratio, reflecting sustained demand across our core end markets and the strength of our diversified business model. During the year, we continued executing on strategic initiatives to drive sustainable long-term value creation including investments focused on capability and capacity expansion, operational excellence, and next generation technology, which are expected to deliver returns on invested capital above 20%.” Graham Corporation pulled off the highest full-year guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 4% since reporting and currently trades at $102.84. Read why we think that Graham Corporation is one of the best engineered components and systems stocks, our full report is free. Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally. Arrow Electronics reported revenues of $9.47 billion, up 39% year on year, outperforming analysts’ expectations by 12.9%. The business had an incredible quarter with EPS guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates. Arrow Electronics delivered the biggest analyst estimate beat, highest guidance raise, and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 5.3% since reporting. It currently trades at $202.03. Is now the time to buy Arrow Electronics? Access our full analysis of the earnings results here, it’s free. Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets. Worthington reported revenues of $371.5 million, up 16.9% year on year, falling short of analysts’ expectations by 4%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates. Worthington delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 8.3% since the results and currently trades at $53.84. Read our full analysis of Worthington’s results here. Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries. Enpro reported revenues of $303 million, up 10.9% year on year. This print met analysts’ expectations. It was a strong quarter as it also produced full-year EBITDA guidance exceeding analysts’ expectations and a decent beat of analysts’ EBITDA estimates. The stock is up 12.6% since reporting and currently trades at $325.93. Read our full, actionable report on Enpro here, it’s free. Headquartered in Milwaukee, Regal Rexnord (NYSE:RRX) provides power transmission and industrial automation products. Regal Rexnord reported revenues of $1.48 billion, up 4.3% year on year. This number surpassed analysts’ expectations by 3%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ organic revenue estimates and a narrow beat of analysts’ EBITDA estimates. The stock is down 9.9% since reporting and currently trades at $208.54. Read our full, actionable report on Regal Rexnord here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Graham Corporation GHM used its fourth-quarter call to make a forward-looking case centered on backlog, capacity investments and the FlackTek acquisition rather than on quarterly margin pressure. Management framed fiscal 2026 as a year that expanded the company’s platform for longer-term growth. That message mattered because fiscal 2027 guidance called for another step up in revenues and adjusted EBITDA even as the latest quarter showed a lower gross margin and softer earnings mix. The fourth-quarter adjusted EPS of $0.33 beat the Zacks Consensus Estimate of $0.30, with an average surprise of 9.09%. Revenues of $67.08 million exceeded the $60 million estimate, the average revenue surprise being 11.58%. Graham Corporation price-consensus-eps-surprise-chart | Graham Corporation Quote Gross margin fell to 22.7% from 27.0%, and adjusted EBITDA margin slipped to 10.2% from 12.9%. Management attributed the pressure largely to the mix, including more lower-margin Defense work, lower aftermarket volume and FlackTek purchase accounting effects. Thome said some of those pressures should ease. He indicated FlackTek margins should improve as volume rises, while fiscal 2027 gross margin is expected between 24.5% and 25.5%. Still, SG&A is projected at 16.5% to 17.5% of sales as the company continues to invest in people, technology and commercialization. Cash flow drew scrutiny in Q&A. Thome said cash conversion can remain lumpy because of contract timing and customer deposit patterns, and he also pointed to about $4 million of fourth-quarter outflow tied to transaction bonuses assumed in the FlackTek deal. President and CEO Matthew Malone said the core investment case rests on visibility. Fiscal 2026 ended with record orders of $359.4 million, a 1.5 book-to-bill ratio and a backlog of $532.6 million, up 29% from the prior year. Management said roughly 35% to 40% of that backlog should convert to revenues over the next 12 months. That set up fiscal 2027 guidance for revenues of $285 million to $295 million and adjusted EBITDA of $35 million to $40 million. CFO Christopher Thome said the outlook reflects another year of meaningful growth and stays aligned with Graham’s long-term profitability goals. Management tied that confidence to a stronger balance sheet as well. The company noted a $50 million investment from accounts advised by T. Rowe Price early in fiscal 2027, with $13 million used to repay debt and the balance available for growth initiatives. Malone’s prepared remarks pointed first to Defense, where demand remained strong across naval platforms and where recent capacity additions are now supporting production. He highlighted automated welding, 3D inspection and X-ray capabilities at Batavia, along with an overhaul site and liquid nitrogen test facility at Arvada. On the call, management described Defense wins less as isolated program additions and more as proof that Graham’s technology is moving into higher-value applications such as radar platforms, directed-energy laser work and other compact power-dense systems. That framing suggested a broader content opportunity as military programs mature into production. Space was described as the next leg of acceleration. Malone said customers are moving from development and qualification into higher-rate production, while Q&A commentary pointed to rising launch cadence, more providers and a widening set of payload opportunities. Orders in Space rose 76% year over year in fiscal 2026, according to the press release. FlackTek was a major strategic topic. Malone said the deal establishes advanced mixing and materials processing as Graham’s third core technology platform alongside vacuum and heat transfer and turbomachinery. He also said the early integration work is on track and customer engagement is strong. The acquisition contributed $2.8 million to fourth-quarter revenues, and management said it broadens the company’s reach across Defense, Energy and Process, and Space. Malone emphasized the long-term commercialization strategy more than near-term cost synergies, signaling that growth from adoption is the bigger near-term objective. During Q&A, Malone also said acquisition appetite remains intact. He said Graham now has a healthy pipeline of targets but will stay disciplined and selective, especially because its organic opportunity set remains strong. Analysts pressed management on whether recent order strength marked a steadier run rate. Thome answered that quarterly orders can still be volatile, but said diversification across markets is making the business more stable than before. Questions also focused on whether Defense and Space could carry growth together. Malone said Graham follows end-market tailwinds and is continuing to invest where demand is strongest, while keeping exposure to the Energy and Process aftermarket and new energy opportunities, such as small modular reactor work. Another important exchange centered on FlackTek integration and deal activity. Malone’s tone was confident on integration progress and equally clear that M&A has not gone on pause, though he repeatedly stressed discipline and fit. The closing tone of the call was notably expansionary. Malone and Thome returned repeatedly to capacity additions, automation, test infrastructure and commercialization as the building blocks for future growth rather than as one-time projects. That leaves Graham exiting fiscal 2026 with a message centered on execution against backlog, Defense and Space scaling, and a broader technology portfolio after FlackTek. The near-term margin tradeoff was acknowledged, but management’s posture stayed focused on operating leverage over time. GHM carries a Zacks Rank #2 (Buy). Under the Zacks framework, which points to favorable earnings estimate revision trends, the best combinations historically come from Zacks Rank #1 (Strong Buy) or #2 stocks paired with Style Scores of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here. Here, the Style Scores are less supportive, with Value at F, Growth at D, Momentum at D and a VGM Score of F. Zacks says weaker Style Scores can limit near-term upside even when the rank is favorable, and the rank itself can change as estimate revisions adjust after the quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Graham Corporation (GHM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Wrapping up Q4 earnings, we look at the numbers and key takeaways for the engineered components and systems stocks, including Graham Corporation (NYSE:GHM) and its peers. Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings. The 13 engineered components and systems stocks we track reported a strong Q4. As a group, revenues beat analysts’ consensus estimates by 4.1% while next quarter’s revenue guidance was in line. Luckily, engineered components and systems stocks have performed well with share prices up 10.9% on average since the latest earnings results. Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors. Graham Corporation reported revenues of $56.7 million, up 20.5% year on year. This print exceeded analysts’ expectations by 8.3%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS and EBITDA estimates. Graham’s President and Chief Executive Officer, Matthew J. Malone stated, “Our third quarter results reflect continued strong, disciplined execution across the organization as we progress through the back half of fiscal 2026. Revenue growth and profitability were driven by solid performance across our end markets and supported by a record backlog, which provides meaningful visibility into future demand. Activity in our Defense market remains robust, while the Energy & Process and Space markets continue to perform in line with our expectations.” Graham Corporation delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 45.5% since reporting and currently trades at $107.31. Read why we think that Graham Corporation is one of the best engineered components and systems stocks, our full report is free. Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally. Arrow Electronics reported revenues of $9.47 billion, up 39% year on year, outperforming analysts’ expectations by 12.9%. The business had an incredible quarter with EPS guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates. Arrow Electronics achieved the biggest analyst estimate beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 13.6% since reporting. It currently trades at $218. Is now the time to buy Arrow Electronics? Access our full analysis of the earnings results here, it’s free. A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE:ESE) is a provider of engineered components for the aerospace, defense, and utility sectors. ESCO reported revenues of $309.3 million, up 33.5% year on year, falling short of analysts’ expectations by 3.4%. It was a softer quarter as it posted a significant miss of analysts’ revenue and adjusted operating income estimates. ESCO delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 10.4% since the results and currently trades at $298.25. Read our full analysis of ESCO’s results here. Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components. Park-Ohio reported revenues of $421 million, up 3.8% year on year. This number topped analysts’ expectations by 1.7%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ revenue estimates. The stock is up 5.8% since reporting and currently trades at $32. Read our full, actionable report on Park-Ohio here, it’s free. Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE:MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries. Mayville Engineering reported revenues of $144.8 million, up 6.8% year on year. This result beat analysts’ expectations by 3.7%. It was an exceptional quarter as it also logged a beat of analysts’ EPS and EBITDA estimates. Mayville Engineering pulled off the highest full-year guidance raise among its peers. The stock is up 48% since reporting and currently trades at $33.68. Read our full, actionable report on Mayville Engineering here, it’s free. Late in 2025 into early 2026, there was hand-wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure? These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. Spring 2026 came, and the focus shifted abruptly from technological disruption to geopolitical risk. The US’ conflict with Iran became the dominant driver of market psychology, and when geopolitics takes center stage, the script changes quickly. Investors stop debating growth rates and start worrying about oil supply, inflation, and global stability. Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. StockStory’s analyst team — all seasoned professional investors — uses quantitative analysis and automation to deliver market-beating insights faster and with higher quality.

Interested in Graham Corporation? Here are five stocks we like better. Graham reported record fiscal 2026 results, with revenue of $245 million, orders of $359 million, and backlog of $533 million. Fourth-quarter revenue also hit a record $67.1 million, driven by defense strength, improving space demand, and the FlackTek acquisition. Margins were pressured in the quarter by a higher mix of defense revenue, lower aftermarket sales, tariff impacts, and acquisition-related amortization. Even so, full-year adjusted EBITDA rose 16% to $26 million, and adjusted net income increased 14%. Management issued upbeat fiscal 2027 guidance, calling for revenue of $285 million to $295 million and adjusted EBITDA of $35 million to $40 million. The outlook is supported by strong backlog, continued defense and space demand, and a full year of FlackTek contribution. 2 Consumer packaged goods companies to start your morning right Graham (NYSE:GHM) reported record fiscal 2026 revenue, orders and backlog, with management pointing to strong demand in defense, improving momentum in space and contributions from recent acquisitions as the company enters fiscal 2027. On the company’s fiscal fourth-quarter earnings call, President and CEO Matt Malone said Graham delivered annual revenue of $245 million, record orders of $359 million and record backlog of $533 million. The company’s book-to-bill ratio for the year was 1.5 times. → Samsara Just Answered The AI Question—Is Wall Street Ready To Listen? Mitigate Risk in Your Portfolio with These 2 Stocks “The foundation is strong, momentum is building, and we are just getting started,” Malone said. He added that the results reflected Graham’s diversified business model and long-term demand across its core markets. Chief Financial Officer Chris Thome said fourth-quarter revenue rose 13% to a record $67.1 million. Growth was driven by continued strength in defense, building momentum in space and new energy programs, and a contribution from the recently acquired FlackTek business. → IREN's 800MW Bet Flips the AI Power Switch Defense revenue benefited from execution on key naval programs, capacity expansion and continued demand. Space revenue increased 14% year over year as existing programs began to ramp. Energy and process revenue was consistent with the year-earlier period, as aftermarket demand, new energy activity and $2.8 million in FlackTek sales offset softness in large capital projects in global refining and petrochemical markets. For the full fiscal year, revenue rose 17% to $245 million. Thome said defense revenue increased 21%, supported by new program wins, growth on existing programs, expanded capabilities and a higher level of material receipts. Energy and process revenue increased 14% for the year. → Tesla’s EV Rebound Leaves Rivian and Lucid Facing a Tougher Investor Test Fourth-quarter gross profit was $15.3 million, representing a gross margin of 22.7%, down from 27% in the prior-year period. Thome attributed the decline primarily to a sales mix with a higher proportion of defense revenue, which carries greater material content and lower margin characteristics, as well as lower aftermarket sales compared with the prior year. He also said FlackTek results were affected by purchase accounting amortization, which is expected to be lower going forward, with margins expected to improve as volume increases. Full-year gross profit increased 9% to $57.8 million, while gross margin declined to 23.5% from 25.2% in fiscal 2025. Thome said margins were affected by a higher mix of defense revenue and material receipts, incremental tariff impacts and the absence of a BlueForge Alliance Welder Training Grant benefit that helped fiscal 2025 results. Fourth-quarter net income was $2 million, or $0.18 per diluted share, compared with $4.4 million, or $0.40 per diluted share, in the prior-year period. Adjusted net income was $3.7 million, or $0.33 per diluted share, compared with $4.8 million, or $0.43 per diluted share, a year earlier. For the full year, net income was $12.5 million, or $1.12 per diluted share, compared with $12.2 million, or $1.11 per diluted share, in fiscal 2025. Adjusted net income rose 14% to $15.6 million, or $1.40 per diluted share. Adjusted EBITDA increased 16% to $26 million, with an adjusted EBITDA margin of 10.6%, consistent with the prior year. Orders in the fourth quarter were $78.7 million, producing a book-to-bill ratio of 1.2 times. Full-year orders reached $359 million, and backlog rose 29% year over year to $533 million. Management said defense demand remains strong, supported by naval programs, fleet modernization initiatives and submarine production requirements. Malone highlighted Graham’s new Navy facility in Batavia, New York, which is operational and includes automated welding systems and vertically integrated X-ray capabilities. In response to an analyst question, Thome cautioned that orders can still be volatile because of the size and timing of contracts, though he said Graham’s diversification has made order flow more stable. Malone also said Graham is seeing defense opportunities beyond naval programs, including directed energy laser platforms and radar systems where the company supplies cooling pumps and motor controllers. He said several programs that had been in development for years are moving toward production. Space orders grew sharply during fiscal 2026, according to management. Malone said demand is coming from both new and existing customers, including launch providers and systems tied to satellites, astronaut equipment and lunar landers. Thome added that FlackTek brings a space business that is expected to support fiscal 2027 growth. Graham acquired FlackTek at the end of January. Malone said the acquisition establishes advanced mixing and materials processing as Graham’s third core platform, alongside vacuum and heat transfer and turbomachinery. He said integration is progressing according to plan, with a focus on commercialization of FlackTek’s technology and broader market adoption. Malone said Graham remains active in reviewing potential acquisitions but will continue to take a disciplined and selective approach. The company also completed the acquisition of Xdot during fiscal 2026. Thome said $27 million of cash was deployed for the Xdot and FlackTek acquisitions, funded by operating cash flow and borrowing capacity under the company’s $80 million revolving credit facility. After year-end, Graham received a $50 million strategic investment from accounts advised by T. Rowe Price. Thome said the company used about $13 million of the proceeds to repay outstanding debt and expects to use the remainder for organic and inorganic growth initiatives. He said Graham currently has more than $100 million of available liquidity. For fiscal 2027, Graham expects revenue of $285 million to $295 million, representing 18% growth at the midpoint. The company guided for gross margin of 24.5% to 25.5% and adjusted EBITDA of $35 million to $40 million. Thome said the outlook is supported by record backlog, strong demand, a full year of FlackTek and continued execution across the business. Graham expects about 35% to 40% of its backlog to convert to revenue over the next 12 months. SG&A expense is expected to be 16.5% to 17.5% of sales, including approximately $2.5 million of incremental investments in people, technology and commercialization initiatives. Capital expenditures are projected at $18 million to $22 million, including construction of a new 30,000-square-foot manufacturing facility at the company’s Arvada, Colorado campus. Malone said Graham plans to provide an updated long-term outlook at its Analyst and Investor Day on June 18 in New York City. Graham Corporation (NYSE: GHM) is a U.S.-based industrial engineering company that designs, manufactures and services vacuum and heat transfer equipment. Its core offerings include liquid ring vacuum pumps, surface condensers, heat exchangers and custom-engineered vacuum systems. These products play a critical role in energy-intensive industries, where reliable removal of non-condensable gases and efficient heat exchange are vital to process performance. The company's technologies find application across a range of end markets, including power generation, petrochemical, oil and gas, LNG, and semiconductor manufacturing. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Graham Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for June 2026.