Graham Corporation · NYSE:GHM
Graham — Southwest IDEAS Conference 2024
29 slides from Graham's conference presentation, Nov 21, 2024
Slide 1: Southwest IDEAS Conference
Graham Corporation Southwest IDEAS Conference November 21, 2024 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: 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; Jupiter, FL; Products: Condensers, ejectors, heat Ahmedab
Slide 4: Steady Execution Drives Growth and Diversified Revenue Mix
Steady Execution Drives Growth and Diversified Revenue Mix Refining 16% FY 2021 Revenue: $97.5 Million Chem/Petrochem 11% Defense Other 9% 57% Space 6% 22.2% Defense 25% Other 10% Refining 41% Chem/Petrochem 25% TTM Q2 FY 2025 Revenue: $196.4 Million 4
Slide 5: Advancing Toward Long-Term Goals with Strategic Actions
Advancing Toward Long-Term Goals with Strategic Actions Engaging with customers to develop full life-cycle mission critical product opportunities Operational Excellence to drive competitive positioning Expanded capital and R&D programs to support growth initiatives; targeted ROIC >20% Engaging stake
Slide 6: 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 ~$1.2 to 6 Remaining Expected completion by FY2058 CVN Ford Class Carrier 24 Completed 2 per year ~$300
Slide 7: Proven Critical Supplier for U.S. Navy
Proven Critical Supplier for U.S. Navy • Long-term U.S. Navy contracts drive visibility and recurring Secured Contracts revenue • $13.5M investment from defense customer to expand capacity Strategic Investments • $2.1M BlueForge Alliance grant to expand welder training program and equipment Advantag
Slide 8: Further Revenue Diversification: Opportunities in Space
Further Revenue Diversification: Opportunities in Space Launch vehicle, satellite, and backpack applications Critical supplier with key commercial players in Space NASA contract for blowers and pumps for jet propulsion backpack Key solutions: fluid movement for launch vehicles including • Rocket eng
Slide 9: Driving New Energy Opportunities
Driving New Energy Opportunities While Leveraging Large Energy & Petrochemical Installed Base Developing “New Energy” opportunities: hydrogen; solar; small modular nuclear; geothermal with lithium extraction Leveraging installed base with improved lead management process; domestic aftermarket budget
Slide 10: Growth Businesses with Strategies for Expanding Margins
Growth Businesses with Strategies for Expanding Margins GHM Market Positioning Higher Space BN Defense Growth Index Target Market Growth Drivers: • Targeting growing end markets and applications New Energy • Increasing market share and market penetration • Innovative new products and solutions GM De
Slide 11: M&A Criteria for Core Growth Targets
M&A Criteria for Core Growth Targets Opportunistic acquisition strategy to supplement 8-10% annual organic growth expectations TARGET PROFILE PRODUCT/OPERATIONS & FINANCIALS Company Type: Product Alignment: U.S. based, privately held, independently operated Complementary to GHM turbomachinery, heat
Slide 12: Record Revenue
Record Revenue ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q2 FY25 sales up $8.5 million or 19% + 24% Chemical/Petrochemical $53.6 $49.1 $50.0 + 23% Defense $45.1 $43.8 + 23% Space + 15% Refining - 14% Aftermarket Q2 FY25 Revenue impacts Q2 FY24 Q3 FY24
Slide 13: Strong Gross Profit and Margin Expansion
Strong Gross Profit and Margin Expansion ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q2 FY25 gross profit increased $5.6 million or 78% Margin expanded 790 bps to 23.9% $12.7 $12.4 $12.8 $9.7 Q2 FY25 gross margin impacts $7.2 + $0.4 million, or ~80 bps,
Slide 14: Strengthened Earnings Power
Strengthened Earnings Power ($ in millions; except per share data; narrative compared with prior-year period unless otherwise noted) NET INCOME PER DILUTED SHARE AND NET INCOME PER DILUTED SHARE AND ADJUSTED NET INCOME PER DILUTED SHARE(1) - QUARTERS ADJUSTED NET INCOME PER DILUTED SHARE(1) - YEARS
Slide 15: Strategic Execution Yields Stronger Adjusted EBITDA and Margin
Strategic Execution Yields Stronger Adjusted EBITDA and Margin(1) ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q2 FY25 Adjusted EBITDA increased $3.4 million or 150% • Margin expanded 550 bps to 10.5% $5.6 $5.1 Quarterly SG&A, inclusive of amortization,
Slide 16: Financial Flexibility to Drive Strategic Initiatives
Financial Flexibility to Drive Strategic Initiatives ($ in millions) CAPITALIZATION No debt with strong free cash flow September 30, March 31, $43 million available on revolving credit facility, taking 2024 2024 into account outstanding letters of credit Cash and cash equivalents $32.3 $16.9 CapEx o
Slide 17: Strategic Land Acquisition to Enable Future Growth and Expansion
Strategic Land Acquisition to Enable Future Growth and Expansion Addressing Land Constraints: Acquired new plot of land to overcome space limitations Strategic Purchase: Opportunistic investment of $1.4M to support New long-term growth initiatives Land Plot Planned Expansion: Facility construction e
Slide 18: Planning Advanced Cryogenic Propellant Testing Facility
Planning Advanced Cryogenic Propellant Testing Facility Enhanced Capabilities: • In-house product validation for quality assurance (support testing pumps, components, fluid management systems, and combustion devices) • Entry into new, high-demand markets with scalable testing solutions • Early feasi
Slide 19: Strong Order Growth from Defense, Space & Refining
Strong Order(1) Growth from Defense, Space & Refining ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q2 ORDERS (1) BY INDUSTRY $123.3 $20.1 Space $63.7 21% $55.8 $36.5 $103.2 $40.8 $27.2 $33.2 Defense $15.7 $20.4 48% $28.6 $30.5 Refining $20.8 $20.4 17% Q2
Slide 20: Record Backlog of $407 Million Provides Stability and Clear Growth Path
Record Backlog(1) of $407 Million Provides Stability and Clear Growth Path ($ in millions; narrative compared with prior-year period unless otherwise noted) TOTAL BACKLOG(1) Q2 BACKLOG(1) : BY INDUSTRY $399.2 $396.8 $407.0 $390.9 $64.7 $69.0 $79.6 $62.5 Refining 8% $313.3 Defense 80% Chem/ Petrochem
Slide 21: Raised Guidance for Gross Margin and Adjusted EBITDA to Reflect Improved Profitability
Raised Guidance for Gross Margin and Adjusted EBITDA(2) to Reflect Improved Profitability (as of November 8, 2024) Updated Fiscal 2025 Guidance Previous Guidance Net Sales $200 million to $210 million $200 million to $210 million Gross Margin 23% to 24% of sales 22% to 23% of sales SG&A expense (inc
Slide 22: Southwest IDEAS Conference
Graham Corporation Southwest IDEAS Conference November 21, 2024 Daniel J. Thoren, President and Chief Executive Officer Christopher J. Thome, Vice President - Finance and Chief Financial Officer www.GrahamCorp.com
Slide 23: Supplemental Information
=6HM Supplemental Information
Slide 24: Key Performance Metrics
Key Performance Metrics Key Performance Indicators In addition to the foregoing non-GAAP measures, management uses the following key performance metrics to analyze and measure the Company’s financial performance and results of operations: orders, backlog, and book-to-bill ratio. Management uses orde
Slide 25: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ADJUSTED EBITDA Quarters Years ($ in tousands except per share data) Q2 Q3 Q4 Q1 Q2 YTD YTD TTM 2024 2024 2024 2025 2025 2023 2024 Q2 FY25 Net income $ 411 $ 165 $ 1,340 $ 2,966 $ 3,281 $ 367 $ 4,556 $ 7,752 Acquisition & integration costs (income) - 274 158 (93) (587)
Slide 26: Adjusted Net Income and Adjusted Diluted EPS Reconciliation
Adjusted Net Income and Adjusted Diluted EPS Reconciliation ADJUSTED NET INCOME Quarters Years ($ in tousands except per share data) Q2 Q3 Q4 Q1 Q2 YTD YTD TTM 2024 2024 2024 2025 2025 2023 2024 Q2 FY25 Net income $ 411 $ 165 $ 1,340 $ 2,966 $ 3,281 $ 367 $ 4,556 $ 7,752 Acquisition & integration co
Slide 27: 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, Westlake Vacuum C
Slide 28: Representative List of Customers
Representative List of Customers Aerojet Rocketdyne China State-owned Refiners Jacobs Engineering Group Inc. Oak Ridge National Laboratory Air Liquide Cummins Kairos Power Raytheon Technologies Applied Research Laboratory at Pennsylvania State DuPont Koch Fertilizer ENID LLC Rolls-Royce North Americ
Slide 29: For More Information
Graham Corporation For More Information: Christopher J. Thome Deborah K. Pawlowski / Craig P. Mychajluk Vice President - Finance and CFO Alliance Advisors IR Phone: (585) 343-2216 716-843-3908 / 716-843-3832 dpawlowski@allianceadvisors.com cmychajluk@allianceadvisors.com www.GrahamCorp.com