On June 7, 2024, Graham Corp (GHM, Financial) released its 8-K filing reporting financial results for the fourth quarter and fiscal year ended March 31, 2024. The company, a global leader in the design and manufacture of mission-critical fluid, power, heat transfer, and vacuum technologies, achieved record revenue and expanded margins, driven by robust performance in the defense sector and strategic acquisitions.
Company Overview
Graham Corporation manufactures and sells critical equipment for the energy, defense, and chemical/petrochemical industries, with a strong emphasis on the United States. Its suite of products includes ejectors, surface condensers, turbopumps, compressors, and liquid vacuum pumps. For the defense industry, its equipment is used in nuclear propulsion power systems for the U.S. Navy. For the chemical and petrochemical industries, its equipment is used in fertilizer, ethylene, methanol, and downstream chemical facilities. The company derives key revenue from the sale of heat transfer equipment and operates both domestically and internationally.
Fiscal 2024 Performance Highlights
Graham Corp reported record net sales of $185.5 million for fiscal 2024, an 18% increase from the previous year. This growth was primarily driven by a 52% increase in defense sales, which totaled $99.5 million. The acquisition of P3 Technologies contributed $2.2 million to the fiscal year's revenue.
Gross profit for the year was $40.6 million, up 60% from fiscal 2023, with a gross margin improvement of 570 basis points to 21.9%. Operating profit surged to $6.9 million, a significant increase from $1.3 million in the prior year, reflecting a 454% growth. Net income for fiscal 2024 was $4.6 million, or $0.42 per diluted share, compared to $0.4 million, or $0.03 per diluted share, in fiscal 2023.
Fourth Quarter Performance
In the fourth quarter, Graham Corp achieved net sales of $49.1 million, a 14% increase from the same period last year. The defense market sales increased by 43%, contributing significantly to this growth. The gross margin for the quarter expanded by 930 basis points to 25.9%, driven by higher volume, improved absorption, and better pricing on defense contracts.
| Metric | Q4 FY24 | Q4 FY23 | Change | % Change |
|---|---|---|---|---|
| Net Sales | $49,070 | $43,027 | $6,043 | 14% |
| Gross Profit | $12,694 | $7,157 | $5,537 | 77% |
| Net Income | $1,340 | $(481) | $1,821 | NA |
| Net Income per Diluted Share | $0.12 | $(0.05) | $0.17 | NA |
Strategic Initiatives and Financial Management
Graham Corp's strategic initiatives included the acquisition of P3 Technologies and significant investments in its operations and workforce. The company also received a $13.5 million strategic investment from a major defense customer to expand its Batavia, N.Y. production capabilities. This investment is expected to support the U.S. Navy’s shipbuilding schedule.
Cash provided by operating activities was $28.1 million, up from $13.9 million in the prior fiscal year, reflecting higher net income and improved working capital management. The company paid off $12.5 million of debt, resulting in zero debt outstanding as of March 31, 2024.
Outlook for Fiscal 2025
Looking ahead, Graham Corp has provided guidance for fiscal 2025, with expected net sales between $200 million and $210 million and a gross margin of 22% to 23%. The company anticipates adjusted EBITDA between $16.5 million and $19.5 million, with capital expenditures ranging from $10 million to $15 million.
Graham Corp's management remains confident in the company's growth prospects, supported by a robust backlog of nearly $400 million and increasing demand from the Navy for accelerated work and expanded scope.
"Steady execution on our plan set two years ago has brought significant progress," commented Daniel J. Thoren, President and Chief Executive Officer. "Over the past year, we achieved record revenue and orders, and enhanced profitability and cash flow management."
For more detailed financial information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Graham Corp for further details.
