Graham (GHM) Oppenheimer 21st Annual Industrial Growth Virtual Conference summary

Strategic transformation and growth

• Over the past five years, there has been a significant turnaround in profitability, backlog growth, and operational agility, driven by leadership changes and a renewed focus on growth and reinvestment in high-ROIC opportunities.

• Diversification into defense markets and the acquisition of Barber-Nichols in 2021 provided innovation, entrepreneurial leadership, and a strong defense portfolio, supporting a three-year strategic plan executed with high reliability.

• Operational excellence and continuous improvement have been prioritized, resulting in 8%-10% organic growth and positioning for further expansion.

• Completed a transformation from stabilization to an 'Improve to Growth' phase, emphasizing proprietary technology, strong customer relationships, and a diversified global footprint.

• Three-year plan targets 8–10% organic revenue CAGR and >14% ROIC, with incremental margin expansion and selective M&A.

Defense sector revitalization and expansion

• Investments in talent, technology, and automated equipment have transformed defense operations, reducing lead times and improving quality and on-time delivery.

• Strategic customers, including the U.S. Navy, have provided nearly $20 million in grants, enabling capability upgrades and expansion of product offerings.

• Facility expansions are underway, including a new 40,000 sq ft site in Arvada, Colorado, with infrastructure designed for dual commercial and defense use.

• Defense segment is embedded on long-cycle strategic platforms, with over 80% sole-source content and a revenue CAGR of 24% since FY22.

• Growth is supported by acceleration of shipbuilding schedules and additional content opportunities, with further vectors in torpedoes and undersea vehicles.

Innovation, integration, and margin expansion

• The integration of Barber-Nichols brought analytical and empirical innovation cycles together, enhancing R&D and product development across business units.

• New test facilities enable full product lifecycle validation, reducing time-to-market and supporting margin expansion by retaining IP and moving expensive processes in-house.

• Margin improvement is expected to be gradual, with a step change in fiscal 2026 as the Barber-Nichols earn-out ends, targeting 13%-15% adjusted EBITDA margins.

• FY22–FY26 revenue CAGR of 19% and adjusted EBITDA CAGR of 45%, with margins expanding to 10.6%.

• Long-term targets include $340–350M revenue, 14–16% adjusted EBITDA margin, and >20% ROIC by FY29.