Graham Corporation's Fourth Quarter Fiscal Year 2024 Financial Results

Today's Date: June 10, 2024

Company Overview

Graham Corp (Ticker: GHM), listed on the NYSE, operates in the Industrials sector and is part of the Industrial - Machinery industry. This report covers the fiscal results for the year ending March 31, 2024.

Click here to access the full report filed with the SEC.

Executive Summary

During the fourth quarter of fiscal year 2024, Graham Corporation demonstrated exceptional financial performance, driven by strategic execution and strong relationships, particularly with the U.S. Navy. Highlights include achieving record revenue and orders, a significant improvement in profitability, strong cash flow, and elimination of debt, which collectively endorse the company's strategic growth initiatives.

Financial Highlights

Quarterly Performance

For Q4 FY2024, Graham Corporation reported sales of $49.1M, representing a quarterly record, up 14% year-over-year. This included $1.2M from the recent acquisition of P3 Technologies. Gross margin expanded by 930 basis points to 25.9%, driven by higher volume, improved pricing on defense contracts, and better absorption rates.

Net income for the quarter was $1.3M, or $0.12 per share, transitioning from a net loss of $481K in Q4 FY2023. On an adjusted basis, net income per share was $0.15.

Full-Year Performance

For the full year of FY2024, Graham Corporation achieved record sales of $185.5M, an 18% increase over the prior year. This growth primarily originated from defense and aftermarket demand. The gross margin for FY2024 was 21.9%, a 570 basis point increase from FY2023. Net income significantly improved to $4.6M from $367K in FY2023, translating to $0.42 per share and $0.63 per share on an adjusted basis.

Key Performance Metrics

EBITDA for Q4 FY2024 was $3M, doubling from the prior-year period, while FY2024 EBITDA increased 56% to $13.3M. Adjusted EBITDA margin for FY2024 was 7.2%, in line with the company’s target to achieve a low-to-mid-teen EBITDA margin by FY2027.

Operational Highlights

Key drivers of Graham Corporation's success have been its strategic initiatives, particularly its strong relationship with the U.S. Navy, which has led to significant orders for its naval nuclear propulsion program. Additionally, the acquisition of P3 Technologies has expanded Graham's technological capabilities and market reach, notably in space, defense, and new energy markets.

CapEx and Future Investments

In FY2024, Graham invested $9.2M in capital expenditures, focusing on capacity expansion, productivity improvements, and ERP implementation. The company plans to invest between $10M to $15M in FY2025, with approximately half dedicated to expanding the Batavia, NY facility to meet Navy demands.

Financial Outlook

Looking forward to FY2025, Graham Corporation expects revenue between $200M and $210M, indicating an 11% growth at the midpoint. Gross margin is projected to further expand to 22-23%, while adjusted EBITDA is anticipated to be in the range of $16.5M to $19.5M, representing a nearly 35% increase at the midpoint and implying an adjusted EBITDA margin of 9%.

Conclusion

Graham Corporation’s strong performance in FY2024 underlines the effectiveness of its strategic initiatives focused on growth, profitability, and sustainable shareholder value. The company is well-positioned to achieve its long-term financial goals through continuous improvement, strategic investments, and solid customer relationships.