On August 7, 2024, Graham Corp (GHM, Financial) released its 8-K filing for the first quarter of fiscal year 2025, ending June 30, 2024. Graham Corporation designs and manufactures mission-critical fluid, power, heat transfer, and vacuum technologies for the defense, space, energy, and process industries. The company also services and sells spare parts for its equipment.
Financial Highlights
Graham Corp (GHM, Financial) reported a 12% increase in net income to $3.0 million, with an expanded gross margin of 24.8% for the first quarter of fiscal 2025. This performance exceeded analyst estimates of $0.04 earnings per share and $44.50 million in revenue, with actual earnings per share at $0.27 and revenue at $49.95 million.
Performance and Challenges
Graham Corp (GHM, Financial) achieved record quarterly net sales of $50.0 million, a 5% increase from the prior year, driven by a $6.3 million increase in defense market sales. However, operating profit decreased by 12% to $3.2 million due to higher selling, general, and administrative expenses, which rose by 26% to $8.8 million. These expenses included investments in operations, employees, and technology, as well as costs related to the P3 Technologies acquisition.
Key Financial Metrics
| Metric | Q1 FY25 | Q1 FY24 | % Change |
|---|---|---|---|
| Net Sales | $49.95M | $47.57M | 5% |
| Gross Profit | $12.37M | $10.98M | 13% |
| Gross Margin | 24.8% | 23.1% | +170 bps |
| Operating Profit | $3.22M | $3.68M | -12% |
| Net Income | $2.97M | $2.64M | 12% |
| Net Income per Diluted Share | $0.27 | $0.25 | 8% |
Cash Management and Balance Sheet
Cash provided by operating activities was $8.7 million for the first quarter of fiscal 2025. Cash and cash equivalents increased to $21.6 million from $16.9 million at the end of March 2024. The company had no debt outstanding as of June 30, 2024, with $29 million available on its senior secured revolving credit facility.
Orders and Backlog
Orders for the quarter totaled $55.8 million, resulting in a book-to-bill ratio of 1.1x. Defense orders represented 51% of total orders, including significant contracts with the U.S. Navy. The backlog at the end of the quarter was $396.8 million, up 23% from the prior-year period.
Outlook
Graham Corp (GHM, Financial) reaffirmed its fiscal 2025 guidance, projecting net sales between $200 million and $210 million, with a gross margin of 22% to 23%. The company expects SG&A expenses to be 16.5% to 17.5% of sales and adjusted EBITDA between $16.5 million and $19.5 million.
“We are delivering consistent improvement, solid growth, and strengthening profitability,” commented Daniel J. Thoren, President and Chief Executive Officer. “These are exciting times at Graham Corp. We are steadily advancing our plan, delivering on our targets, and are strategically positioning for continued growth.”
For more detailed financial information, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from Graham Corp for further details.
