- First Quarter Revenue Established a Quarterly Record of $47.6
Million Which Benefitted From Project Timing
- Sales Growth Driven by Defense Market Which Increased 133%
Including Strength Across Defense Product Offerings
- Gross Margin Increased 440 Basis Points to 23.1% on Better Mix
of Higher Margin Projects, Better Pricing, and Improving
Execution
- Achieved Net Income of $2.6 Million; Earnings Per Diluted Share
Increased More Than 300% Over the Prior-Year Period to $0.25
- Received Orders of $67.9 Million in the Quarter, up $27.6
Million Year-Over-Year; Included $22 Million of Strategic
Investment and Follow-on Orders From Major Defense Customer
- Drove Record Backlog of $322.0 Million, up 24%
Year-Over-Year
- Raises Fiscal 2024 Guidance Based on Strong First Quarter
Performance
Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a
global leader in the design and manufacture of mission critical
fluid, power, heat transfer and vacuum technologies for the
defense, space, energy and process industries, today reported
financial results for its first quarter ended June 30, 2023 (“first
quarter fiscal 2024”).
Daniel J. Thoren, President and Chief Executive Officer,
commented, “We had a better-than-expected start to the year with
strong first quarter results. We had improved execution, utilized
our expanded capacity and are timely delivering to customer
requirements, even as schedules may shift. We also benefited in the
quarter from an unusually better mix of business and the timing of
projects flowing through production. Importantly, we continue to
strengthen our relationships with our defense customers, advance
opportunities in the space industry and are positioning the
business to serve the new energy markets with cryogenic solutions.
The investments we made to meet defense customers’ delivery
requirements have proven to be effective and was validated by the
$13.5 million strategic investment we received to expand our
capabilities and be ready to support future opportunities, if
selected. We have earned the position of being a key strategic
supplier to support the Naval Nuclear Propulsion Program.”
Separately, the Company announced today that it had received a
strategic investment by a customer to expand production
capabilities at its Batavia, New York facility.
He added, “While we delivered in the quarter, there is still
much work to do to get where we need to be as an organization. We
are making investments in infrastructure, information systems and
people. We are evolving the culture of the Company as well. I have
been excited to see how our teams are questioning and challenging
each other. Everyone is stepping up to own our future. While we
have made measurable progress these last two years, we will
continue to drive to advance our operations to deliver on our goals
to exceed $200 million in revenue and achieve low to mid-teen
adjusted EBITDA margins by fiscal 2027.”
First Quarter Fiscal 2024 Performance Review (All
comparisons are with the same prior-year period unless noted
otherwise.)
($ in millions except per share data)
Q1 FY24
Q1 FY23
Change
Net sales
$
47.6
$
36.1
$
11.5
Gross profit
$
11.0
$
6.7
$
4.3
Gross margin
23.1%
18.7%
Operating profit
$
3.7
$
1.0
$
2.7
Operating margin
7.7%
2.7%
Net income
$
2.6
$
0.7
$
1.9
Diluted earnings per share
$
0.25
$
0.06
$
0.19
Adjusted net income*
$
3.6
$
1.3
$
2.3
Adjusted diluted earnings per share
$
0.33
$
0.12
$
0.21
Adjusted EBITDA*
$
5.6
$
2.7
$
2.9
Adjusted EBITDA margin*
11.8%
7.6%
*Graham believes that adjusted EBITDA (defined as consolidated
net income before net interest expense, income taxes, depreciation,
amortization, other acquisition related expenses (income), and
other unusual/nonrecurring expenses), and adjusted EBITDA margin
(adjusted EBITDA as a percentage of net sales), which are non-GAAP
measures, help in the understanding of its operating performance.
Moreover, Graham’s credit facility also contains ratios based on
adjusted EBITDA as defined in the lending agreement. Graham also
believes that adjusted net income and adjusted diluted net income
per share, which excludes intangible amortization, other costs
related to the acquisition, and other unusual/nonrecurring (income)
expenses, provides a better representation of the cash earnings of
the Company. See the attached tables and other information on pages
10 and 11 for important disclosures regarding Graham’s use of
adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and
adjusted diluted net income (loss) per share, as well as the
reconciliation of net income to adjusted EBITDA, adjusted net
income, and adjusted diluted net income per share.
Net sales of $47.6 million increased 32%, or $11.5 million.
Growth in the defense market, as well as improvements in the
commercial aftermarket, more than offset softness in the refining
industry and declines in the space market. Aftermarket sales to the
refining and petrochemical markets were $9.2 million, up 49%. See
supplemental data for a further breakdown of sales by market and
region.
Compared with the prior year period, the 63% increase in gross
profit and 440 basis point expansion of gross margin reflected
higher margin projects, improved pricing, timing of material
receipts and improving execution.
Selling, general and administrative expense (“SG&A”),
inclusive of amortization, in the first quarter of fiscal 2024 was
$7.3 million, or 15% of sales, up $1.5 million over the prior-year
period. Approximately $0.9 million of the increase was attributable
to higher performance-based compensation expense, including $0.8
million related to the supplemental performance bonus payout to
Barber Nichols employees in connection with the 2021
acquisition.
Net income nearly tripled to $2.6 million, or $0.25 per diluted
share. On a non-GAAP basis, adjusted net income* and net income per
diluted share* were $3.6 million and $0.33, respectively, compared
with $1.3 million and $0.12 during the same period a year ago.
Cash Management and Balance Sheet
Cash generated from operations in the first quarter was $8.6
million. Cash and cash equivalents on June 30, 2023, were $24.7
million up from $18.3 million on March 31, 2023. Capital
expenditures for the first quarter of fiscal 2024 were $1.5
million.
Debt at quarter end was down $0.4 million to $11.3 million
compared with March 31, 2023. As of June 30, 2023, the Company was
in compliance with its lending agreement with a leverage ratio as
calculated in accordance with the terms of the credit facility of
1.6x. At June 30, 2023, the amount available under the revolving
credit facility was approximately $26 million to support organic
growth initiatives.
Orders and Backlog (See supplemental data filed with the
securities and Exchange Commission on Form 8-K and provided on the
Company’s website for a further breakdown of orders and backlog by
market) ($ in millions).
Q1 23 Q2 23 Q3 23
Q4 23 FY23 Q1 24 Orders
$
40.3
$
91.5
$
20.0
$
50.9
$
202.7
$
67.9
Backlog
$
260.7
$
313.3
$
293.7
$
301.7
$
301.7
$
322.0
Orders for the three-month period ended June 30, 2023, were up
$27.6 million, or 69%, to $67.9 million compared with $40.3 million
for the same period of fiscal 2023. Included in orders and backlog
is the $13.5 million strategic investment from a major defense
customer which the Company announced separately today. The purpose
of the investment is to expand its Batavia production capabilities
for complex defense components including delivering on $8.5 million
follow on orders received from that customer.
Aftermarket orders for the refining and petrochemical markets
were $7.9 million in the first quarter fiscal 2024, down from $10.1
million in the first quarter fiscal 2023 and lower than the $9.3
million in orders received in the fourth quarter of fiscal
2023.
Backlog for the quarter was $322.0 million, up 24% compared with
the prior-year period and up 7% compared with the end of the
trailing fourth quarter of fiscal 2023. Approximately 50% of orders
currently in backlog are expected to be converted to sales in the
next twelve months and another 25% to 30% is expected to convert to
sales over the following year. The majority of orders expected to
convert beyond twelve months are for the defense industry,
specifically the U.S. Navy.
Christopher J. Thome, Vice President and Chief Financial
Officer, noted, “The strategic investment we received from our
defense customer is recorded in backlog and represents pre-payment
on current and potential future orders. The cash investment will be
used to expand our capabilities and positions us to meet our
customer’s requirements and support the U.S. Navy’s shipbuilding
schedule.”
Fiscal 2024 Outlook
The Company has increased guidance for fiscal 2024 as
follows:
(as of August 7, 2023)
Updated Fiscal 2024
Guidance
Previous Guidance
Revenue:
$170 million to $180 million
$165 million to $175 million
Gross margin:
~18% to 19%
~17% to 18%
SG&A expense(1)
Unchanged
~15% to 16%
Adjusted EBITDA(2)
$11.5 million to $13.5
million
$10.5 million to $12.5
million
Effective tax rate
Unchanged
~22%-23%
Capital
expenditures(3)
$12.0 million to $13.5
million
$5.5 million - $7.0 million
(1)
Annual SG&A expense as a % of sales
includes approximately $2 million to $3 million of BN performance
bonus and approximately $0.5 million to $1.0 million of enterprise
resource planning system (“ERP”) conversion costs.
(2)
Annual adjusted EBITDA excludes
approximately $2 million to $3 million of BN performance bonus and
approximately $0.5 million to $1.0 million of ERP conversion costs.
See “Forward-Looking Non-GAAP Measures” below for additional
information about this non-GAAP measure.
(3)
The increase in capital expenditures
reflects the application of the strategic investment purchase order
received from a customer to expand production capabilities in the
Company’s Batavia operations
Webcast and Conference Call GHM’s management will host a
conference call and live webcast today at 11:00 a.m. Eastern Time
(“ET”) to review its financial condition and operating results, as
well as its strategy and outlook. The review will be accompanied by
a slide presentation, which will be made available immediately
prior to the conference call on GHM’s investor relations
website.
A question-and-answer session will follow the formal
presentation. GHM’s conference call can be accessed by calling
(201) 689-8560. Alternatively, the webcast can be monitored from
the events section of GHM’s investor relations website.
A telephonic replay will be available from 3:00 p.m. ET on the
day of the teleconference through Monday, August 21, 2023, at 11:59
p.m. ET. To listen to the archived call, dial (412) 317-6671 and
enter conference ID number 13739641 or access the webcast replay
via the Company’s website at ir.grahamcorp.com, where a transcript
will also be posted once available.
About Graham Corporation GHM is a global leader in the
design and manufacture of mission critical fluid, power, heat
transfer and vacuum technologies for the defense, space, energy,
and process industries. The Graham Manufacturing and
Barber-Nichols’ global brands are built upon world-renowned
engineering expertise in vacuum and heat transfer, cryogenic pumps,
and turbomachinery technologies, as well as its responsive and
flexible service and the unsurpassed quality customers have come to
expect from the Company’s products and systems.
Graham Corporation routinely posts news and other important
information on its website, grahamcorp.com, where additional
information on Graham Corporation and its businesses can be
found.
Safe Harbor Regarding Forward Looking Statements This
news release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are subject to risks, uncertainties
and assumptions and are identified by words such as “expects,”
“outlook,” “anticipates,” “believes,” “could,” “guidance,”
“should,” ”may”, “will,” “goals,” “plan” and other similar words.
All statements addressing operating performance, events, or
developments that Graham Corporation expects or anticipates will
occur in the future, including but not limited to, profitability of
future projects and the business, its ability to deliver to plan,
its ability to meet customers’ shipment and delivery expectations,
its ability to continue to strengthen relationships with customers
in the defense industry, its ability to position itself to take
advantage of the new energy market with cryogenic solutions,
expected expansion and growth opportunities within its domestic and
international markets, anticipated sales, revenues, adjusted
EBITDA, adjusted EBITDA margins, capital expenditures and SG&A
expenses, the timing of conversion of backlog to sales, orders,
market presence, profit margins, tax rates, foreign sales
operations, its ability to improve cost competitiveness and
productivity, customer preferences, changes in market conditions in
the industries in which it operates, changes in general economic
conditions and customer behavior, forecasts regarding the timing
and scope of the economic recovery in its markets, and its
acquisition and growth strategy, are forward-looking statements.
Because they are forward-looking, they should be evaluated in light
of important risk factors and uncertainties. These risk factors and
uncertainties are more fully described in Graham Corporation’s most
recent Annual Report filed with the Securities and Exchange
Commission (the “SEC”), included under the heading entitled “Risk
Factors”, and in other reports filed with the SEC.
Should one or more of these risks or uncertainties materialize
or should any of Graham Corporation’s underlying assumptions prove
incorrect, actual results may vary materially from those currently
anticipated. In addition, undue reliance should not be placed on
Graham Corporation’s forward-looking statements. Except as required
by law, Graham Corporation disclaims any obligation to update or
publicly announce any revisions to any of the forward-looking
statements contained in this news release.
Forward-Looking Non-GAAP Measures Forward-looking
adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures.
The Company is unable to present a quantitative reconciliation of
these forward-looking non-GAAP financial measures to their most
directly comparable forward-looking GAAP financial measures because
such information is not available, and management cannot reliably
predict the necessary components of such GAAP measures without
unreasonable effort largely because forecasting or predicting our
future operating results is subject to many factors out of our
control or not readily predictable. In addition, the Company
believes that such reconciliations would imply a degree of
precision that would be confusing or misleading to investors. The
unavailable information could have a significant impact on the
Company’s fiscal 2024 financial results. These non-GAAP financial
measures are preliminary estimates and are subject to risks and
uncertainties, including, among others, changes in connection with
purchase accounting, quarter-end, and year-end adjustments. Any
variation between the Company’s actual results and preliminary
financial estimates set forth above may be material.
Key Performance Indicators In addition to the foregoing
non-GAAP measures, management uses the following key performance
metrics to analyze and measure the Company’s financial performance
and results of operations: orders, and backlog. Management uses
orders and backlog as measures of current and future business and
financial performance, and these may not be comparable with
measures provided by other companies. Orders represent written
communications received from customers requesting the Company to
provide products and/or services. Backlog is defined as the total
dollar value of net orders received for which revenue has not yet
been recognized. Management believes tracking orders and backlog
are useful as it often times is a leading indicator of future
performance. In accordance with industry practice, contracts may
include provisions for cancellation, termination, or suspension at
the discretion of the customer.
Given that each of orders and backlog are operational measures
and that the Company's methodology for calculating orders and
backlog does not meet the definition of a non-GAAP measure, as that
term is defined by the U.S. Securities and Exchange Commission, a
quantitative reconciliation for each is not required or
provided.
FINANCIAL TABLES FOLLOW.
Graham Corporation
Consolidated Statements of
Operations - Unaudited
(Amounts in thousands, except per
share data)
Three Months Ended
June 30,
2023
2022
% Change
Net sales
$
47,569
$
36,075
32%
Cost of products sold
36,592
29,331
25%
Gross profit
10,977
6,744
63%
Gross margin
23.1%
18.7%
Other expenses and income:
Selling, general and administrative
7,019
5,485
28%
Selling, general and administrative – amortization
274
274
0%
Operating profit
3,684
985
274%
Operating margin
7.7%
2.7%
Other expense (income), net
93
(63)
N/A
Interest expense, net
185
157
18%
Income before provision for income taxes
3,406
891
282%
Provision for income taxes
766
215
256%
Net income
$
2,640
$
676
291%
Per share data:
Basic:
Net income
$
0.25
$
0.06
317%
Diluted:
Net income
$
0.25
$
0.06
317%
Weighted average common shares outstanding:
Basic
10,653
10,610
Diluted
10,719
10,630
N/A: Not Applicable
Graham Corporation
Consolidated Balance Sheets –
Unaudited
(Amounts in thousands, except per
share data)
June 30,
March 31,
2023
2023
Assets Current assets: Cash and cash
equivalents
$
24,662
$
18,257
Trade accounts receivable, net of allowances ($1,878 and $1,841
at June 30 and March 31, 2023, respectively)
29,544
24,000
Unbilled revenue
34,467
39,684
Inventories
25,490
26,293
Prepaid expenses and other current assets
2,675
1,534
Income taxes receivable
509
302
Total current assets
117,347
110,070
Property, plant and equipment, net
25,910
25,523
Prepaid pension asset
6,179
6,107
Operating lease assets
8,071
8,237
Goodwill
23,523
23,523
Customer relationships, net
10,571
10,718
Technology and technical know-how, net
9,048
9,174
Other intangible assets, net
7,438
7,610
Deferred income tax asset
1,792
2,798
Other assets
149
158
Total assets
$
210,028
$
203,918
Liabilities and stockholders’ equity
Current liabilities: Current portion of long-term debt
$
2,000
$
2,000
Current portion of finance lease obligations
26
29
Accounts payable
15,085
20,222
Accrued compensation
10,334
10,401
Accrued expenses and other current liabilities
5,706
6,434
Customer deposits
56,016
46,042
Operating lease liabilities
1,114
1,022
Income taxes payable
62
16
Total current liabilities
90,343
86,166
Long-term debt
9,303
9,744
Finance lease obligations
77
85
Operating lease liabilities
7,278
7,498
Deferred income tax liability
1
108
Accrued pension and postretirement benefit liabilities
1,337
1,342
Other long-term liabilities
1,968
2,042
Total liabilities
110,307
106,985
Stockholders’ equity: Preferred stock,
$1.00 par value, 500 shares authorized
-
-
Common stock, $0.10 par value, 25,500 shares authorized,
10,818 and 10,774 shares issued and 10,675 and 10,635 shares
outstanding at June 30 and March 31, 2023, respectively
1,082
1,075
Capital in excess of par value
28,641
28,061
Retained earnings
80,083
77,443
Accumulated other comprehensive loss
(7,551
)
(7,463
)
Treasury stock (143 and 138 shares at June 30 and March 31, 2023,
respectively)
(2,534
)
(2,183
)
Total stockholders’ equity
99,721
96,933
Total liabilities and stockholders’ equity
$
210,028
$
203,918
Graham Corporation
Consolidated Statements of
Cash Flows – Unaudited
(Amounts in thousands)
Three Months Ended
June 30,
2023
2022
Operating activities: Net income
$
2,640
$
676
Adjustments to reconcile net income to net cash provided (used) by
operating activities: Depreciation
793
856
Amortization
446
619
Amortization of actuarial losses
211
168
Amortization of debt issuance costs
59
34
Equity-based compensation expense
293
114
Deferred income taxes
855
225
(Increase) decrease in operating assets: Accounts receivable
(5,769
)
(34
)
Unbilled revenue
5,171
(2,580
)
Inventories
780
(930
)
Prepaid expenses and other current and non-current assets
(1,065
)
(745
)
Income taxes receivable
(159
)
(6
)
Operating lease assets
293
467
Prepaid pension asset
(72
)
(163
)
Increase (decrease) in operating liabilities: Accounts payable
(4,745
)
3,016
Accrued compensation, accrued expenses and other current and
non-current liabilities
(868
)
(878
)
Customer deposits
10,002
(504
)
Operating lease liabilities
(256
)
(431
)
Long-term portion of accrued compensation, accrued pension
liability and accrued postretirement benefits
(6
)
(593
)
Net cash provided (used) by operating activities
8,603
(689
)
Investing activities: Purchase of property, plant and
equipment
(1,499
)
(284
)
Net cash used by investing activities
(1,499
)
(284
)
Financing activities: Principal repayments on debt
(500
)
(2,500
)
Proceeds from the issuance of debt
-
2,000
Principal repayments on finance lease obligations
(11
)
(6
)
Repayments on lease financing obligations
(74
)
(67
)
Payment of debt issuance costs
-
(122
)
Purchase of treasury stock
(57
)
(22
)
Net cash used by financing activities
(642
)
(717
)
Effect of exchange rate changes on cash
(57
)
(146
)
Net increase (decrease) in cash and cash equivalents
6,405
(1,836
)
Cash and cash equivalents at beginning of period
18,257
14,741
Cash and cash equivalents at end of period
$
24,662
$
12,905
Graham Corporation
Adjusted EBITDA
Reconciliation
(Unaudited, $ in thousands,
except per share amounts)
Three Months Ended
June 30,
2023
2022
Net income
$
2,640
$
676
Acquisition & integration costs
-
54
Barber-Nichols performance bonus
767
-
Debt amendment costs
-
153
Net interest expense (income)
185
157
Income taxes
766
215
Depreciation & amortization
1,239
1,475
Adjusted EBITDA
$
5,597
$
2,730
Adjusted EBITDA margin %
11.8%
7.6%
Adjusted Net Income (Loss) and
Adjusted Diluted Earnings (Loss) per Share Reconciliation
(Unaudited, $ in thousands,
except per share amounts)
Three Months Ended
June 30,
2023
2022
Net income
$
2,640
$
676
Acquisition & integration costs
-
54
Amortization of intangible assets
446
619
Barber-Nichols performance bonus
767
-
Debt amendment costs
-
153
Normalized tax rate(1)
(279
)
(173
)
Adjusted net income
$
3,574
$
1,329
GAAP diluted net income per share
$
0.25
$
0.06
Adjusted diluted earnings per share
$
0.33
$
0.12
Diluted weighted average common shares outstanding
10,719
10,630
(1) Applies a normalized tax rate to non-GAAP adjustments, which
are pre-tax, based upon the full year expected effective tax rate.
Non-GAAP Financial Measures Adjusted EBITDA is defined as
consolidated net income (loss) before net interest expense, income
taxes, depreciation, amortization, other acquisition related
expenses, and other unusual/nonrecurring expenses. Adjusted EBITDA
margin is defined as Adjusted EBITDA as a percentage of sales.
Adjusted EBITDA and Adjusted EBITDA margin are not measures
determined in accordance with generally accepted accounting
principles in the United States, commonly known as GAAP.
Nevertheless, Graham believes that providing non-GAAP information,
such as Adjusted EBITDA and Adjusted EBITDA margin, is important
for investors and other readers of Graham's financial statements,
as it is used as an analytical indicator by Graham's management to
better understand operating performance. Moreover, Graham’s credit
facility also contains ratios based on EBITDA. Because Adjusted
EBITDA and Adjusted EBITDA margin are non-GAAP measures and are
thus susceptible to varying calculations, Adjusted EBITDA, and
Adjusted EBITDA margin, as presented, may not be directly
comparable to other similarly titled measures used by other
companies.
Adjusted net income (loss) and adjusted diluted earnings (loss)
per share are defined as net income (loss) and diluted earnings
(loss) per share as reported, adjusted for certain items and at a
normalized tax rate. Adjusted net income (loss) and adjusted
diluted earnings (loss) per share are not measures determined in
accordance with GAAP, and may not be comparable to the measures as
used by other companies. Nevertheless, Graham believes that
providing non-GAAP information, such as adjusted net income and
adjusted diluted earnings (loss) per share, is important for
investors and other readers of the Company’s financial statements
and assists in understanding the comparison of the current
quarter’s and current fiscal year's net income (loss) and diluted
earnings (loss) per share to the historical periods' net income
(loss) and diluted earnings (loss) per share. Graham also believes
that adjusted earnings (loss) per share, which adds back intangible
amortization expense related to acquisitions, provides a better
representation of the cash earnings of the Company.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230807071224/en/
Christopher J. Thome Vice President - Finance and CFO (585)
343-2216
Deborah K. Pawlowski Kei Advisors LLC (716) 843-3908
dpawlowski@keiadvisors.com
Graham (NYSE:GHM)
過去 株価チャート
から 4 2024 まで 5 2024
Graham (NYSE:GHM)
過去 株価チャート
から 5 2023 まで 5 2024