Graham (GHM) Q2 2025 earnings summary

Executive summary

• Achieved record quarterly revenue of $53.6 million, up 19% year-over-year, with strong growth in defense (+23%), space (+23%), and chemical/petrochemical (+24%) segments, and significant margin expansion.

• Gross margin improved by 790 basis points to 23.9%, with adjusted EBITDA margin expanding by 550 basis points to 10.5% of sales.

• Net income rose to $3.3 million, a 698% increase year-over-year, with adjusted net income up 353% to $3.4 million.

• Orders reached $63.7 million, driving a book-to-bill ratio of 1.2x; backlog hit a record $407 million, up 30% year-over-year.

• Raised full-year guidance for gross margin and adjusted EBITDA, targeting low to mid-teen EBITDA margins by fiscal 2027.

Financial highlights

• Q2 FY25 net sales were $53.6 million (+19% YoY); gross profit rose 78% to $12.8 million (23.9% margin).

• Adjusted EBITDA for Q2 FY25 was $5.6 million (10.5% margin), up 150% year-over-year.

• Net income margin was 6.1% in Q2 FY25, up from 0.9% in Q2 FY24.

• Cash and cash equivalents more than doubled to $32.3 million since March 2024, with no debt and $43 million available on revolving credit facility.

• Orders for the quarter totaled $63.7 million, with defense and space sectors as key contributors.

Outlook and guidance

• Fiscal 2025 net sales expected at $200 million–$210 million, reflecting 11% top-line growth at the midpoint.

• Gross margin guidance raised to 23%–24% of sales; adjusted EBITDA guidance increased to $18 million–$21 million (9.5% margin at midpoint).

• SG&A expense forecasted at 17%–18% of sales; capital expenditures raised to $13 million–$18 million.

• Effective tax rate projected at 20%–22% for FY2025.

• Targeting low to mid-teen adjusted EBITDA margins by fiscal 2027.