Graham Corporation · NYSE:GHM
Graham — Investor Day (June 2022)
26 slides from Graham's investor day presentation, Jun 9, 2022
Slide 1: Strategy Briefing
Graham Corporation Strategy Briefing June 9, 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 and Non-GAAP
Safe Harbor and Non-GAAP 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 assumptio
Slide 3: Our Mission
Our Mission Build Better Companies to Deliver Superior Performance
Slide 4: Vision & Competitive Advantage
Vision & Competitive Advantage Build a group of related engineered product companies that operate independently yet collaborate to win bigger business, leverage best practices, share services across companies, and provide career paths for key employees so that each member company can remain focused
Slide 5: Strategic Planning Process
Strategic Planning Process Determine Position Build the Plan - Strategic Issues - Action items - Industry & Market Data - Accountability (Organization, Departments - Voice of Customer and Individuals) - Employee Input - Metrics / KPIs - SWOT Analysis Develop Strategy - Budget Manage Performance - Vi
Slide 6: 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-Nichols acquisition direction to deliver value for • Reduced dependence on h
Slide 7: Added Critical Talent and Enhanced Structure
Added Critical Talent and Board of Directors Enhanced Structure Appointed two new directors in March 2022 with significant defense industry knowledge Daniel J. Thoren Reorganization and alignment of President and Chief Executive Officer key management positions • Joined GHM Jun 2021 • Over 30 years
Slide 8: 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 9: Expect High Single Digit Growth and Expanded Margins
Expect High Single Digit Growth and Expanded Margins Growth Drivers: Barber-Nichols opportunities, building legacy Navy business and steady commercial business Expect to deliver low double digit to mid-teens adjusted EBITDA margins¹ ~$200 $135-$150 $122.8 10%-15% $90.6 $97.5 5.6% 5.2% 3.3% FY 2020 F
Slide 10: Capital Allocation Priorities
Capital Allocation Priorities Organic Growth Move beyond current challenges 1 • New Navy programs • E&C up-cycle and global expansion Demonstrate earnings power and cash • New product development, other growth initiatives generation Debt Reduction 2 • Goal of ≤ 2.5x net debt / adjusted EBITDA1 Gener
Slide 11: Growth Index
Visual: Growth Businesses with Strategies for Expanding Margins Graham Positioning Higher “New” BN Energy Space Growth Index BN DoD Graha Operational m improvements BN Graham Navy Rebuilds Aftermarket Energy + Petchem. Global Energy Global Upcycle GDP Lower competition Lower Differentiation + Higher
Slide 12: Graham Operating Company Overview: Founded 1936
• Founded: 1936 • Locations: Batavia, New York; Ahmedabad, India; Suzhou, China • Employees: 328 • Campus: 415,000 ft2 Competitive Advantages People Technical SMEs Architecture Int’l Offices, R&D, Fab Facilities, Installed Base Processes Quality, Weld, Service, Training Culture Problem Solving, Serv
Slide 13: Defense, Chemical/Petrochemical, Petroleum Refining
Defense Ejector Systems, Condensers, Heat Exchangers Chemical/Petrochemical Steam Surface Condensers, Ejector Systems, Liquid Ring Pumps, Heat Transfer Products Petroleum Refining Ejector Systems, Process Vacuum Condensers, Liquid Ring Pumps 13
Slide 14: Industry & Market Expectations: U.S. Navy
Industry & Market Expectations U.S. Navy strategic ship budgets and build plans remain strong • Virginia Submarine: 2/year through 2049 • Columbia Submarine: 1/year after the first two boats for 12 total • Ford Aircraft Carrier: 1 every 4 years, 10 planned, 2 complete • SSN(X) next gen attack submar
Slide 15: Expected Energy / Petrochem Market Trends
Industry & Market Data 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
Slide 16: 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 information flow and Strengthen structure to Leverage v
Slide 17: Barber-Nichols Overview: Founded 1966
• Founded: 1966 • Location: Arvada, Colorado • Employees: 170 • Campus: 96,000 ft2 – Added a 43,000 ft2 state-of-the-art manufacturing facility January 2021 Competitive Advantages People Relationship driven technical SMEs Architecture Measured diverse growth, Integrated Design/Mfg/Assy/Test/OH Proce
Slide 18: Defense, Space, Advanced Energy
Defense Pumps, Blowers, Turbines, Generators, Electronics Space Fuel & Coolant Pumps, Rocket Turbopumps, Cooling Fans, High Altitude Blowers, Fuel Cell Blowers Advanced Energy Turbine/Generators, Fuel Cell Blowers & Pumps, Research Power Systems ORC & SCO2 Fluid & Thermal Management Liquid/Vapor/SC
Slide 19: Space and Defense Industry: Markets Expected to Continue Growth
Space and Defense Industry: Markets Expected to Continue Growth Space Thermal Management Systems - Defense 19
Slide 20: New Energy Industry: Market Expected to Grow Significantly
New Energy Industry: Market Expected to Grow Significantly Hydrogen Clean Energy Technologies 20
Slide 21: 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 22: Our Commitment to Sustainability
Our Commitment to Sustainability https://www.grahamcorp.com/sustainability 22
Slide 23: Transforming to Drive Value for All Stakeholders
Transforming to Drive Value for All Stakeholders New platform for 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 execution:
Slide 24: Questions and Answer Session
Questions and Answer Session Questions may be submitted through the webinar portal - Or - To ask in person dial 1-201-689-8560, where an operator will place you in the question queue. Please mute the audio on the webinar if asking questions on the conference line.
Slide 25: Supplemental Information
Supplemental Information www.GrahamCorp.com
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Year Ended March 31, 2022 2021 2020 Net (loss) income $ (8,773) $ 2,374 $ 1,872 Acquisition related inventory step-up expense 95 - - Acquisition & integration costs 562 - - Change in fair value of contingent consideration (1,900) - - CEO and CFO transition costs 1,182