Graham (GHM) investor relations material

Executive summary

• Revenue grew 11% year-over-year to $55.5M, driven by strong energy, process, and defense markets, with aftermarket sales up 33%.

• Net income increased 55% to $4.6M ($0.42 per diluted share); adjusted net income per diluted share was $0.45, up 36%.

• Adjusted EBITDA rose 33% to $6.8M, with margin at 12.3%; gross margin improved 170 bps to 26.5%.

• Record backlog reached $482.9M, up 22% year-over-year, with a book-to-bill ratio of 2.3x, mainly from large defense contracts.

• Major Navy contracts and strategic investments in manufacturing, R&D, and workforce training support future growth.

Financial highlights

• Gross profit rose 19% to $14.7M; operating income up 54% to $5.0M; gross margin expanded to 26.5%.

• Adjusted EBITDA margin improved to 12.3%; net income margin increased to 8.3%.

• Orders totaled $125.9M, up 126% year-over-year, with $86.5M for Virginia class submarines; aftermarket orders up 16%.

• Ended quarter with $10.8M cash, no debt, and $44.3M available on revolver; capex was $7M, focused on capacity and productivity.

• SG&A expenses rose to $9.8M, but as a percent of sales declined to 17.7%.

Outlook and guidance

• Fiscal 2026 guidance reiterated: net sales of $225M–$235M, gross margin 24.5%–25.5%, adjusted EBITDA $22M–$28M, capex $15M–$18M.

• Guidance assumes stable operations, supply chain access, and no major disruptions.

• Long-term targets: 8–10% organic revenue growth per year and low to mid-teen adjusted EBITDA margins.

• Backlog expected to convert 35–40% to revenue within one year.

• SG&A guidance: 17.5%–18.5% of sales; tax rate 20%–22%.