Graham Corporation · NYSE:GHM
Graham — NobleCon 19 (December 2023)
26 slides from Graham's conference presentation, Dec 4, 2023
Slide 1: NobleCon 19
Graham Corporation NobleCon 19 December 4 and 5, 2023 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 Safe Harbor Regarding Forward Looking Statements 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
Slide 3: Build Better Companies to Deliver Superior Performance
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; Jupiter, FL; Products: Condensers, ejectors, heat Ahmedab
Slide 4: Building a Better Business: Plan Delivers Compounding Growth
Building a Better Business: Plan Delivers Compounding Growth Growing backlog with stronger margins Winning new business with better pricing Improving execution reduces costs and drives productivity Established strategic supplier to U.S. Navy with a variety of solutions Focused on growth both organic
Slide 5: Strategy to Drive Steady Growth and Stronger Profitability
Strategy to Drive Steady Growth and Stronger Profitability • Focused on markets where product and technology Targeted Markets differentiation matters: critical equipment for critical applications Operational • Invest in process optimization including digital & automated tools Excellence Elite Team w
Slide 6: Proven Critical Supplier for U.S. Navy
Proven Critical Supplier for U.S. Navy • Long-term U.S. Navy contracts drive visibility and Secured Contracts recurring revenue • Secured $13.5 million strategic investment from Strategic defense customer in support of the Naval Nuclear Investment Propulsion Program Advantage over • Sole supplier wi
Slide 7: Growth Potential of U.S. Navy Projects
Growth Potential of U.S. Navy Projects Build Timeline¹ GHM Future Build Plan¹ (based on current plan) Revenue Potential2 2 Completed 1 every 2 Under Construction $40M - $50M/Ship four years ~$400M ~$1.0 to 8 Remaining Expected completion by FY2055 CVN Ford Class Carrier 22 Completed 2 per year ~$300
Slide 8: Further Revenue Diversification: Opportunities in Space
Further Revenue Diversification: Opportunities in Space • Launch vehicle, satellite and backpack applications • Critical supplier with key commercial players in Space • NASA contract for blowers and pumps for jet propulsion backpack • Key solutions: fluid movement for launch vehicles including • roc
Slide 9: Driving New Energy Opportunities
Driving New Energy Opportunities While Leveraging Large Energy & Petrochem Installed Base • Developing “New Energy” opportunities: hydrogen; solar; small modular nuclear • Leveraging installed base with improved lead management process; Domestic aftermarket budgets returning after industry and pande
Slide 10: Growth Index
Visual: Growth Businesses with Strategies for Expanding Margins Graham Positioning Higher BN “New” Space Growth Index Energy BN DoD Operational Graham improvements BN Navy Rebuilds Graham Aftermarket Energy + Petchem. Energy Global Upcycle GDP Lower Global competition Lower Higher Differentiation +
Slide 11: Acquired P3 Technologies: Adds differentiated propulsion, power and fluid flow technologies
Acquired P3 Technologies: Adds differentiated propulsion, power and fluid flow technologies Investment Highlights and Strategic Rationale Expect growth synergy opportunities by augmenting turbomachinery 1 technologies, engineering team and manufacturing capabilities Established 2017 out of Jupiter,
Slide 12: Demonstrating Steady Progress Through Solid Execution
Demonstrating Steady Progress Through Solid Execution ($ in millions, except per share data) SALES ADJUSTED EBITDA AND MARGIN(1) ($ in millions) ($ in millions) $47.6 $5.6 $45.1 $43.0 $39.9 $38.1 $2.7 $2.2 $1.5 $1.2 2.9% 11.8% 6.0% 4.0% 5.6% Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q2 FY23 Q3 FY23 Q4
Slide 13: Diversified Revenue Base & Strong Defense Backlog
Diversified Revenue Base & Strong Defense Backlog TOTAL BACKLOG (1) BACKLOG (1) BY INDUSTRY ($ in millions) Space 2% Other 4% $313.3 $322.0 $313.3 $293.7 $301.7 Chem/ Petrochem 4% Defense 80% Refining 9% Q2 FY24 ORDERS : $36.5 MILLION $248.7 $253.4 Q2 FY24 Space $234.5 $243.6 $250.7 8% Refining Book
Slide 14: Maintaining Fiscal 2024 Outlook; On Track to Achieve FY27 Goals
Maintaining Fiscal 2024 Outlook(1) ; On Track to Achieve FY27 Goals FY27 Strategic Goals: • >$200 million in revenue Revenue: $170 million to $180 million • Represents ~8% to 10% annualized growth per year • Low to mid-teen adjusted EBITDA margin(3) Gross margin: ~18% to 19% FY24 Guidance(1) • Impli
Slide 15: For More Information
Graham Corporation 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 16: Supplemental Information
=6HM Supplemental Information
Slide 17: Disclaimer Regarding Key Performance Metrics
Disclaimer Regarding Key Performance Metrics 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, backlog, and book-to-bill ratio.
Slide 18: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Months Ended Six Months Ended September 30, September 30, 2023 2022 2023 2022 Net income (loss) $ 411 $ (196) $ 3,051 $ 480 Acquisition & integration costs - - - 54 Barber-Nichols performance bonus 802 - 1,569 - Debt amendment costs - 41 - 194 Net interest expens
Slide 19: Adjusted Net Income and Adjusted Diluted EPS Reconciliation
Adjusted Net Income and Adjusted Diluted EPS Reconciliation Three Months Ended Six Months Ended September 30, September 30, 2023 2022 2023 2022 Net income (loss) $ 411 $ (196) $ 3,051 $ 480 Acquisition & integration costs - - - 54 Amortization of intangible assets 445 619 891 1,238 Barber-Nichols pe
Slide 20: Orders History and Trend
Orders History and Trend ($ in millions) QUARTERLY ORDER(1) TREND YEARLY ORDER (1) TREND $91.5 $202.7 $175.3 $67.9 $143.9 $121.6 $50.8 $33.0 $36.5 $80.0 $63.2 $116.7 $89.6 $8.6 $69.2 $69.6 $28.0 $20.0 $20.8 $7.8 $12.2 $21.9 $22.8 $34.9 $15.6 $71.4 $52.4 $80.7 $86.0 $85.7 Q2 FY23 Q3 FY23 Q4 FY23 Q1 F
Slide 21: 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 22: Space & Defense Industry Markets Expected to Continue Growth
Space & Defense Industry Markets Expected to Continue Growth Space Thermal Management Systems - Defense 22
Slide 23: New Energy Markets Expected to Grow Significantly
New Energy Markets Expected to Grow Significantly Hydrogen Clean Energy Technologies 23
Slide 24: 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 25: Representative List of Customers
Representative List of Customers Aerojet Rocketdyne China State-owned Refiners Jacobs Engineering Group Inc. Northrop Grumman Air Liquide Cummins Kairos Power Oak Ridge National Laboratory Applied Research Laboratory at Pennsylvania State DuPont Koch Fertilizer ENID LLC Raytheon Technologies Univers
Slide 26: NobleCon 19
Graham Corporation NobleCon 19 December 4 and 5, 2023 Daniel J. Thoren, President and Chief Executive Officer Christopher J. Thome, Vice President - Finance and Chief Financial Officer www.GrahamCorp.com