Graham Corporation · NYSE:GHM
Graham — Midwest IDEAS Conference 2024
27 slides from Graham's conference presentation, Aug 29, 2024
Slide 1: Midwest IDEAS Conference
Graham Corporation Midwest IDEAS Conference August 29, 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: 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: 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 10% Defense Other 9% 56% Space 7% 22.2% Defense 25% Other 10% Refining 41% Chem/Petrochem 25% TTM Q1 FY 2025 Revenue: $187.9 Million 4
Slide 5: Strategic Initiatives Furthering Progress Toward Long-term Goals
Strategic Initiatives Furthering Progress Toward Long-term Goals 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% Engag
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 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 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 ~$1.2 to 6 Remaining Expected completion by FY2058 CVN Ford Class Carrier 24 Completed 2 per year ~$300
Slide 8: Further Revenue Diversification: Opportunities in Space
Further Revenue Diversification: Opportunities in Space • Launch vehicle, satellite, and backpack applications • Critical supplier with key commercial players in Space • NASA contract for blowers and pumps for jet propulsion backpack • Key solutions: fluid movement for launch vehicles including • ro
Slide 9: Driving New Energy Opportunities
Driving New Energy Opportunities While Leveraging Large Energy & Petrochemical Installed Base • Developing “New Energy” opportunities: hydrogen; solar; small modular nuclear; geothermal with lithium extraction • Leveraging installed base with improved lead management process; domestic aftermarket bu
Slide 10: Growth Businesses with Strategies for Expanding Margins
Growth Businesses with Strategies for Expanding Margins GHM Market Positioning Higher Space BN Defense Growth Index Target Market Growth Drivers: • Targeting growing end markets and applications New Energy • Increasing market share and market penetration • Innovative new products and solutions GM De
Slide 11: Record Revenue
Record Revenue ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q1 FY25 sales up $2.4 million or 5% + 28% Defense $49.1 $50.0 + 20% Refining $47.6 $45.1 $43.8 - 18% Space - 21% Chemical/petrochem - 28% Aftermarket Q1 FY25 Revenue impacts Q1 FY24 Q2 FY24 Q3 F
Slide 12: Strong Gross Profit and Margin Expansion
Strong Gross Profit and Margin Expansion ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q1 FY25 gross profit increased $1.4 million or 13% Margin expanded 170 bps to 24.8% $12.7 $12.4 $11.0 $9.7 Q1 FY25 gross margin impacts $7.2 + $480 thousand benefit fro
Slide 13: Strengthened Earnings Power
Strengthened Earnings Power ($ 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 N
Slide 14: Adjusted EBITDA and Margin
Adjusted EBITDA and Margin(1) ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q1 FY25 Adjusted EBITDA of $5.1 million • Margin contracted 50 bps on increased investments for $5.1 $5.1 growth $3.0 $3.0 Quarterly SG&A, inclusive of amortization, increased $2.
Slide 15: Solid Cash Generation
Solid Cash Generation ($ in millions) CAPITALIZATION Q1 FY25 cash from operating activities of $8.7 million June 30, March 31, No outstanding debt 2024 2024 $29 million available on senior secured revolving Cash and cash equivalents $21.6 $16.9 credit facility Total debt 0.0 0.0 CapEx of $3.0 millio
Slide 16: Orders Driven By U.S. Navy Programs
Orders(1) Driven By U.S. Navy Programs ($ in millions; narrative compared with prior-year period unless otherwise noted) QUARTERS Q1 ORDERS (1) BY INDUSTRY $123.3 $20.1 Other 4% $67.9 Space 3% $55.8 $34.9 $36.5 $103.2 $40.8 Defense $27.2 $20.4 Refining 12% 51% $15.6 $33.0 $20.8 $28.6 $20.4 Q1 FY24 Q
Slide 17: Diverse New Orders, Backlog Expansion
Diverse New Orders, Backlog(1) Expansion MK48 Torpedo Columbia-Class Space Cryogenic Alternator and Regulator Air Turbine Pump Recirculation Pump • Follow-on production contract • Competitive bid, production award • Production manufacturing and • 100 units each • Five boats (10 units) acceptance tes
Slide 18: Backlog of nearly $400 Million Provides Visibility and Stability
Backlog(1) of nearly $400 Million Provides Visibility and Stability ($ in millions; narrative compared with prior-year period unless otherwise noted) TOTAL BACKLOG(1) Q1 BACKLOG(1) : BY INDUSTRY $399.2 $390.9 $396.8 Refining $64.7 7% $62.5 $69.0 $322.0 $313.3 Chem/ Petrochem 6% $68.6 $62.6 Defense 8
Slide 19: Fiscal 2025 Revenue and Adjusted EBITDA Outlook
Fiscal 2025 Revenue and Adjusted EBITDA Outlook(1) Revenue: $200 million to $210 million FY25 Guidance(1) Gross margin: 22% to 23% • Implies 11% revenue growth at midpoint of range • Implies 35% adjusted EBITDA(3) growth at midpoint SG&A(2) (includes amortization): 16.5% to 17.5% of sales of range •
Slide 20: For More Information
Graham Corporation For More Information: Christopher J. Thome Deborah K. Pawlowski Vice President - Finance, CFO and CAO Kei Advisors LLC Phone: (585) 343-2216 Phone: (716) 843-3908 dpawlowski@keiadvisors.com www.GrahamCorp.com
Slide 21: Supplemental Information
=6HM Supplemental Information
Slide 22: Disclaimer Regarding Key Performance Metrics
Disclaimer Regarding Key Performance Metrics Key Performance Indicators In addition to the foregoing non-GAAP measures, management uses the following key performance metrics to analyze and measure the Company’s financial performance and results of operations: orders, backlog, and book-to-bill ratio.
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ADJUSTED EBITDA Quarters Years ($ in tousands except per share data) Q1 Q2 Q3 Q4 Q1 YTD YTD TTM 2024 2024 2024 2024 2025 2023 2024 Q1 FY25 Net income $ 2,640 $ 411 $ 165 $ 1,340 $ 2,966 $ 367 $ 4,556 $ 4,882 Acquisition & integration costs (income) - - 274 158 (93) 54
Slide 24: 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) Q1 Q2 Q3 Q4 Q1 YTD YTD TTM 2024 2024 2024 2024 2025 2023 2024 Q1 FY25 Net income $ 2,640 $ 411 $ 165 $ 1,340 $ 2,966 $ 367 $ 4,556 $ 4,882 Acquisition & integration co
Slide 25: 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 26: 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 27: Midwest IDEAS Conference
Graham Corporation Midwest IDEAS Conference August 29, 2024 Daniel J. Thoren, President and Chief Executive Officer Christopher J. Thome, Vice President - Finance and Chief Financial Officer www.GrahamCorp.com