Graham (GHM) Q2 2027 earnings summary

Executive summary

• Q2 FY27 net sales rose 6% YoY to $69.76 million; adjusted EBITDA increased 64% to $10.3 million, with a 14.8% margin.

• Gross margin expanded 650 bps to 28.2%; Defense and Space growth and FlackTek revenue supported results, offsetting weaker traditional Energy & Process sales.

• Backlog reached a record $561.276 million; FY27 sales and adjusted EBITDA guidance was reaffirmed.

Financial highlights

• Q2 gross profit increased 38% to $19.673 million; operating income rose 37% to $5.832 million.

• Net income rose 50% to $4.637 million and diluted EPS increased 39% to $0.39; adjusted net income was $6.170 million and adjusted diluted EPS was $0.52.

• H1 sales rose 16% to $141.102 million; adjusted EBITDA increased 45% to $19.053 million.

• SG&A, including intangible amortization, increased $3.4 million YoY, including $2.3 million of FlackTek costs and $0.7 million of acquisition and integration expenses.

Outlook and guidance

• FY27 net sales guidance remained $285 million-$295 million and adjusted EBITDA guidance $35 million-$40 million; midpoint growth implies 18% and 44%, respectively.

• Gross margin guidance increased to 25.0%-26.0% from 24.5%-25.5%; SG&A guidance increased to 17.5%-18.5% of sales.

• FY27 capex guidance decreased to $15 million-$20 million from $18 million-$22 million; tax-rate guidance remains 18%-20%.

• FY29 targets include 8%-10% annual organic revenue growth and 14%-16% adjusted EBITDA margin; Q3 is historically the lowest-revenue quarter.

• Gross margins were above normal in Q2 and are expected to normalize; FY27 guidance includes $2.5 million of incremental investment in people, processes and technology.