Slide 1: Sidoti Small-Cap Conference
G raham C orporation Sidoti Small-Cap Conference September 22, 2022 Daniel J. Thoren, President and Chief Executive Officer Christopher J. Thome, Vice President - Finance and Chief Financial Officer www.GrahamCorp.com
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation 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
Slide 3: Critical Equipment Supplier for Defense, Space, Energy & Process Industries
Critical Equipment Supplier for Defense, Space, Energy & Process Industries Our Mission: Build Better Companies to Deliver Superior Performance How We Do It: Our People Our Culture Our Structure Our Process Locations: Batavia, NY; Arvada, CO; Products: Condensers, ejectors, heat Ahmedabad, India; Su
Slide 4: A Different Company Today Expect More Positive Change
A Different Company Today Expect More Positive Change Great promise bringing our heat transfer and vacuum technology business together with our new fluid and power business gained through the Platform and strategic Barber- Barber-Nichols acquisition direction to deliver value for • Reduced dependenc
Slide 5: Corporate Strategies and Initiatives
Corporate Strategies and Initiatives Build better companies through regular strategic evaluation, business practices and smart investments Leverage board and industry connections for accelerating corporate entity structure and processes Advance strategic market offerings to full life cycle system le
Slide 6: Executing Four-Step Strategy
Executing Four-Step Strategy 1 2 3 4 Stabilize Improve Grow Mature Identify areas for process Roadmap to improve U.S. Navy, aftermarket and Full lifecycle product and system improvements operations with better international E/C markets strategy Strengthen structure to information flow and Leverage v
Slide 7: Strategy focused on continued development and growth
Strategy focused on continued development and growth 1 2 3 4 Nurture customer Validate Develop disruptive Invest and execute partnerships in customized products for to win production developing target solutions in new existing markets and service markets applications programs Over the long-term, goa
Slide 8: Deepening Presence in Defense and Space Industry
Deepening Presence in Defense and Space Industry • Highly specialized propulsion and ejection systems for a variety of undersea defense applications • Customized, highly engineered surface condensers for Naval Nuclear Propulsion Program • Serving the private space exploration market; Leader in speci
Slide 9: Strong Visibility: Current Defense Programs and Pipeline
Strong Visibility: Current Defense Programs and Pipeline CVN Carrier SSN Virginia Class Subs SSBN Columbia Class Subs Content Condensers, ejectors, heat exchangers, pumps and regulators Value $40 to $50 million / carrier $30 to $40 million / sub $30 to $40 million / sub U.S. Navy strategic ship budg
Slide 10: Large Energy & Petrochemical Installed Base and New Energy Opportunity
Large Energy & Petrochemical Installed Base and New Energy Opportunity • Leveraging installed base with improved lead management process; Domestic aftermarket budgets returning after industry and pandemic downturn • Expanding international presence into more price sensitive markets • Implemented Per
Slide 11: Growth Index
Visual: Growth Businesses with Strategies for Expanding Margins Graham Positioning Higher “New” BN Energy Space Growth Index BN DoD Operational Graham BN improvements Graham Navy Rebuilds Aftermarket Energy + Petchem. Petchem. Global Energy Global Upcycle GDP Lower competition Lower Differentiation
Slide 12: Q1 FY23: Diversified Revenue Sources and Improving Execution
Q1 FY23: Diversified Revenue Sources and Improving Execution ($ in millions, except per share data) Sales Adjusted EBITDA and Margin (1) $2.7 $39.7 $36.1 $0.4 7.6% 1.0% $20.2 (14.2%) 1.0% ($2.9) 6.7% Q1 FY22 Q4 FY22 Q1 FY23 Q1 22 Q4 22 Q1 23 Gross Margin Sales increased $15.9 million, or 79% over Q1
Slide 13: Financial Stability
Financial Stability ($ in millions) CAPITALIZATION June 30, March 31, $0.7 million cash used in operations for 2022 2022 inventory and project timing Cash and cash equivalents $12.9 $14.7 Debt down $1.3 million at quarter end Total debt 17.1 18.4 In compliance with debt covenants; expect to Stockhol
Slide 14: Strength and Breadth of Orders Across Both Segments
Strength and Breadth of Orders Across Both Segments ($ in millions) ORDERS TTM 6/30/2022 ORDERS : $163.4 MILLION Space $68.0 11% Other 13% Defense 44% Chem/Petrochem $45.6 $40.3 15% Refining $31.4 $11.3 17% $23.7 $20.9 $12.4 $2.8 $2.4 Orders – Represented By a Strong and Diversified Base $29.0 $22.4
Slide 15: Strong Defense Backlog
Strong Defense Backlog ($ in millions) TOTAL BACKLOG (1) Q1 FY23 : BY INDUSTRY Chem/Petrochem 5% $272.6 Space 6% $256.5 $260.7 Other 4% $235.9 $233.2 Defense 74% Refining 11% $210.1 $193.2 $194.8 $188.5 $181.3 Breadth Provides Longer- Longer-Term Visibility $67.5 40% - 50% expected to convert within
Slide 16: Graham Fiscal 2023 Guidance
Graham Fiscal 2023 Guidance(1) Revenue: $135 million to $150 million Gross margin: 16% to 17% SG&A: 15% to 16% of sales Adjusted EBITDA(2): $6.5 million to $9.5 million, adjusted EBITDA margin(2) of approximately 5% to 6% (1) FY2023 guidance as of July 29, 2022 The revenue, gross margin, SG&A, adjus
Slide 17: Long-term Goals: Expect High Single Digit Growth and Expanded Margins
Long-term Goals: Expect High Single Digit Growth and Expanded Margins Growth Drivers: Barber- Barber-Nichols opportunities, building legacy Navy business and steady commercial business Expect to deliver low double digit to mid- mid-teens adjusted EBITDA margins¹ ~$200 $135- $135-$150 $122.8 10%- 10%
Slide 18: Transforming to Drive Value for All Stakeholders
Transforming to Drive Value for All Stakeholders New platform for growth: growth BN provides growing, solid margin business with highly engineered turbomachinery solutions for more diverse markets that provides platform for scalability Capitalize on investment in U.S. Navy business with improved exe
Slide 19: For More Information
G raham C orporation For More Information: Christopher J. Thome Deborah K. Pawlowski Vice President - Finance, CFO and CAO Kei Advisors LLC Phone: (585) 343-2216 Phone: (716) 843-3908 dpawlowski@keiadvisors.com www.GrahamCorp.com
Slide 20: Supplemental Information
=65HM Supplemental Information
Slide 21: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited, $ in thousands) Three Mont hs Ended Year Ended June 30, March 31, 2022 2021 2022 2021 Net income (loss) $ 676 $ (3,126) $ (8,773) $ 2,374 Acquisition related inventory step-up expense - - 95 - Acquisition & integration costs 54 169 562 - Change in fair valu
Slide 22: Adjusted Net Income and Adjusted Diluted EPS Reconciliations
Adjusted Net Income and Adjusted Diluted EPS Reconciliations (Unaudited, $ in thousands) Three Months Ended Year Ended June 30, March 31, 2022 2021 2022 2021 Net (loss) income $ 676 $ (3,126) $ (8,773) $ 2,374 Acquisition related inventory step-up expense - - 95 - Acquisition & integration costs 54
Slide 23: Expected Energy / Petrochem Market Trends
Expected Energy / Petrochem Market Trends • Oil demand could peak in 2029, depends on scenario • India refinery capacity grows at 4% CAGR and doubles petrochemical capacity by 2025 • China E&C growth slowing • Petrochemical market setting up for next big buildout (5 year lead time) • Asian & Indian
Slide 24: Space & Defense Industry Markets Expected to Continue Growth
Space & Defense Industry Markets Expected to Continue Growth Space Thermal Management Systems - Defense 24
Slide 25: New Energy Markets Expected to Grow Significantly
New Energy Markets Expected to Grow Significantly Hydrogen Clean Energy Technologies 25
Slide 26: Competition
Competition North American Market Competitors International Market Competitors Naval Nuclear Propulsion DC Fabricators; Joseph Oat; PCC; Edwards, Ltd.; Gardner Denver, Inc.; Program/Defense Triumph Aerospace; Xylem Refining vacuum distillation GEA Wiegand GmbH; Korting Hannover AG Croll Reynolds Com
Slide 27: Representative List of Customers
Representative List of Customers Aerojet Rocketdyne Cummins Jacobs Engineering Group Oak Ridge National Inc. Laboratory Air Liquide DuPont Kairos Power Raytheon Technologies Applied Research Laboratory Dow Chemical Koch Fertilizer ENID LLC Roush Aramco General Atomics Lockheed Martin SAIC Bechtel Pl