Graham (GHM) investor relations material

Executive summary

• Revenue grew 23% year-over-year to $66.0 million in Q2 FY26, driven by strong demand and execution across Defense, Energy & Process, and Space markets, with Defense sales up 32% and Energy & Process up 11%.

• Record backlog reached $500.1 million, up 23% year-over-year, with Q2 orders of $83.2 million and a book-to-bill ratio of 1.3x.

• Adjusted EBITDA increased 12% to $6.3 million, with margin at 9.5% for the quarter and 10.8% year-to-date.

• Major investments in advanced manufacturing, automation, and testing facilities are underway, supporting growth in Defense and Space markets.

• Acquisition of Xdot Bearing Technologies expands advanced rotating machinery capabilities and is expected to be slightly accretive to FY26 net income.

Financial highlights

• Gross profit increased 12% to $14.3 million, though gross margin declined 220 bps to 21.7% due to mix and tariffs.

• Net income for Q2 FY26 was $3.1 million ($0.28 per diluted share), with adjusted net income per diluted share at $0.31, flat year-over-year.

• Orders totaled $83.2 million, including a $25.5 million defense contract and $22 million in space/aerospace orders.

• Cash and cash equivalents were $20.6 million at quarter-end, with no debt and $44.7 million available on the revolver.

• Capital expenditures for the quarter were $4.1 million, focused on capacity expansion and technology upgrades.

Outlook and guidance

• Full-year FY26 revenue guidance is $225–$235 million, with gross margin expected at 24.5%–25.5% and adjusted EBITDA at $22–$28 million.

• Capital expenditures forecasted at $15–$18 million; effective tax rate expected between 20% and 22%.

• Fiscal 2027 targets: 8%–10% organic revenue growth and low to mid-teen adjusted EBITDA margins.

• Guidance includes Xdot acquisition, which is not material to annual outlook.

• Tariff impact for FY26 estimated at $2.0–$4.0 million.