Graham Corporation · NYSE:GHM
Graham — Q3 FY2021 Earnings Presentation
19 slides from Graham's earnings presentation, Jan 28, 2021
Slide 1: Third Quarter Fiscal 2021 Earnings Call
NYSE: GHM • January 28, 2021 Third Quarter Fiscal 2021 Earnings Call James R. Lines President & Chief Executive Officer Jeffrey F. Glajch Vice President & Chief Financial Officer Alan E. Smith Vice President & General Manager-Batavia © 2021 Graham Corp. 1
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: Financial Overview
Financial Overview Jeff Glajch Vice President and CFO © 2021 Graham Corp. 3
Slide 4: Third Quarter Fiscal 2021 Summary
Third Quarter Fiscal 2021 Summary • Q3 fiscal 2021 sales of $27.2 million – Refining sales to previously underserved markets – Defense industry sales were $4.5 million in Q3 and & $17.4 million YTD • Net income of $1.1 million, improved from breakeven in Q3 fiscal 2020 • Cash and short-term investme
Slide 5: Q3 FY 21: Solid Results Reflect Strength in Asia Refining
Q3 FY 21: Solid Results Reflect Strength in Asia Refining ($ in millions, except per share data) Sales Gross Profit and Margin $25.3 $27.2 $6.2 $4.0 16.0% 22.9% Q3 FY20 Q3 FY21 Q3 FY20 Q3 FY21 EBITDA and Margin(1) Diluted EPS $1.8 $0.11 $0.2 $0.0 6.7% 0.7% Q3 FY20 Q3 FY21 Q3 FY20 Q3 FY21 (1) See sup
Slide 6: YTD FY2021: International Refining Growth Offset COVID-19 Impact
YTD FY2021: International Refining Growth Offset COVID-19 Impact ($ in millions, except per share data) Sales Gross Profit and Margin $71.8 $67.5 $15.5 $13.7 20.3% 21.6% YTD FY20 YTD FY21 YTD FY20 YTD FY21 EBITDA and Margin(1) Diluted EPS $4.0 $0.20 $2.1 $0.13 3.1% 5.6% YTD FY20 YTD FY21 YTD FY20 YT
Slide 7: Significant Financial Flexibility
Significant Financial Flexibility Cash, Cash Equivalents and Investments • Cash(1) balance decreased ($ in millions) $3.7 million YTD FY21 No bank debt – Cash provided by operations was at 12/30/20 $0.7 million due to timing of working capital $73.0 – Cash(1) on hand at quarter end of $69.3 $6.94 pe
Slide 8: Operations Overview
Operations Overview Alan Smith VP & GM-Batavia © 2021 Graham Corp. 8
Slide 9: Revenue
Revenue Driven by refining market • Q3 sales increased vs prior year ($ in millions) – Refining industry: Quarterly $16.5 million, up from $12.2 million – Chemical/petrochemical industry: $28.0 $27.2 $25.3 $23.1 $4.8 million, down from $6.2 million $16.7 – Defense industry: $4.5 million, up from $4.
Slide 10: Margin Improvement Initiatives Anticipated to Continue
Margin Improvement Initiatives Anticipated to Continue Initiative Actions Vendor Management • Negotiate to lower costs • COVID creates procurement opportunities Hire and train skilled workers to • Implement on site Graham Weld School drive production volume • On-site weld lab and test facility • Imp
Slide 11: Strategic Overview & Outlook
Strategic Overview & Outlook Jim Lines President & CEO © 2021 Graham Corp. 11
Slide 12: Variable Quarterly Order Activity
Variable Quarterly Order Activity Quarterly Orders $61.8 (in millions) $43.5 $34.4 $35.0 $32.6 $52.3 $20.3 $2.7 $2.7 $1.4 $1.4 $12.6 $22.0 $23.2 $21.6 $20.1 $0.4 $3.8 $15.1 $31.7 $31.2 $7.1 $12.3 $11.5 $23.2 $21.5 $21.5 $22.4 $19.4 $15.1 $12.9 $12.3 $11.5 $9.5 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Fis
Slide 13: Market Outlook: Cautiously Optimistic
Market Outlook: Cautiously Optimistic Refining US Navy • Active pipeline in Asia • Healthy pipeline of bids – Secured ~$20m YTD. Pipeline needs to rebuild • Active in all three programs • North America weak – CVN Carrier – A few active projects and less short cycle work – SSN Virginia Class Subs – C
Slide 14: Backlog Supports Revenue Expectations
Backlog Supports Revenue Expectations Defense becoming larger contributor to revenue Backlog by Industry Backlog ($ in millions) December 31, 2020 Other Commercial 3% $132.1 $149.7 $127.8 $122.9 $117.2 $112.4 $114.9 $124.1 $107.2 Refining 20% Chemical/ Petrochemical Defense 70% 7% 3/31/2019 6/30/201
Slide 15: FY21 Guidance
FY21 Guidance(1) Excludes divested Energy Steel business Revenue: $93 million to $97 million • Implies $21.2 to $25.2 of revenue in Q4 Gross Margin: 21% to 22% SG&A: $17.3 million to $17.8 million Effective tax rate: 22% to 24% The revenue guidance and expectations for gross margin, SG&A expense and
Slide 16: Focused on Long-term: Strategic Update
Focused on Long-term: Strategic Update Goals Objectives and Progress Progress 1. Execute on Defense backlog; Gain greater Backlog has grown, increase in sole-source Increase share of wallet status predictable Data analytics complete. IT tools and 2. Focus on core installed base revenue processes in
Slide 17: Supplemental Information
NYSE: GHM • January 28, 2020 Supplemental Information © 2021 Graham Corp. 17
Slide 18: EBITDA Reconciliation
EBITDA Reconciliation (Unaudited) ($ in thousands) Three Months Ended Nine Months Ended December 31, December 31, 2020 2019 2020 2019 Net income $ 1,060 $ 9 $ 1,986 $ 1,296 Net interest income (22) (316) (134) (1,071) Income taxes 308 (3) 709 364 Depreciation & amortization 486 488 1,458 1,479 EBITD
Slide 19: Third Quarter Fiscal 2021 Earnings Call
NYSE: GHM • January 28, 2021 Third Quarter Fiscal 2021 Earnings Call © 2021 Graham Corp. 19