Slide 1: Expanding Defense Industry Platform with Acquisition of Barber-Nichols Inc.
NYSE: GHM • June 1, 2021 Expanding Defense Industry Platform with Acquisition of Barber-Nichols Inc. James R. Lines, Chief Executive Officer Daniel J. Thoren, President and Chief Operating Officer Jeffery F. Glajch, Vice President & Chief Financial Officer © 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: Compelling Strategic Rationale
Compelling Strategic Rationale Acquisition of Barber-Nichols expands reach into more stable, higher growth markets Transformative acquisition accelerates diversification strategy and expands addressable market Evolves business to increase defense industry profile Provides scalable platform in new in
Slide 4: Transaction Overview
Transaction Overview Putting cash to work and improving balance sheet Item Terms Purchase Price $70 million purchase price: split 87% cash / 13% stock • $61.15M in cash (funded with $20M term loan and $41.15M cash) • $8.85M in stock 11x twelve-month forward EBITDA multiple Cost Synergies None assume
Slide 5: Financing and Capital Structure
Financing and Capital Structure Creates more efficient balance sheet with lower cost of capital Bank of America CAPITALIZATION $20 million Term Loan Pro forma • 5-year term March 31, March 31, • 10-year principal amortization 2021 2021 • Variable rate loan $30 million Revolver Cash and cash equivale
Slide 6: About Barber-Nichols Inc. (BNI) Overview
About Barber-Nichols Inc. (BNI) Overview Specialty turbomachinery for critical applications • HQ: Arvada, Colorado • Established: 1966 • Employees: 155 • 2020 revenue: $56 million • Demonstrated growth • Operating margin: low double digit BNI Revenue $56.0 $58.0 $42.5 $15.6 2010 2019 2020 2021E © 20
Slide 7: BNI Provides Critical Equipment for Demanding Applications
BNI Provides Critical Equipment for Demanding Applications Technical Leadership A&D Industry Focus Defense Industry • Torpedo ejection systems Other • Torpedo power systems 7% Aerospace • Thermal management systems 20% • Aftermarket Aerospace/Space Defense • Rocket propulsion systems 73% • Thermal m
Slide 8: Deepening Presence in Defense Industry
Deepening Presence in Defense Industry BNI has long history with the U.S. Navy – was its first customer in 1966 • Highly specialized propulsion and ejection systems for a variety of undersea defense applications. • IP protected turbomachinery technology • Employs knowledge in rotating equipment, pow
Slide 9: Expands Markets Served: Aerospace
Expands Markets Served: Aerospace • NASA is long time customer with relationships at Marshall, Johnson, and Glenn centers. • Leader in specialized turbomachinery for cryogenic rocket engine fuels • Critical space flight hardware including high-end turbomachinery and fluid transfer for life support s
Slide 10: Adds Unique Expertise: Cryogenics and Advanced Energy systems
Adds Unique Expertise: Cryogenics and Advanced Energy systems Leading designer of cryogenic and thermodynamic cycle systems for demanding and sensitive applications • Cryogenic fluid systems for hydrogen fueling systems • Full systems and equipment to support organic binary and supercritical CO2 pow
Slide 11: Highly Engineered Suite of Products
Highly Engineered Suite of Products Thermal Management Solutions • Electric motor • Robust and • High speed • Permanent • Axial and radial • Ground and Pumps Rocket Engine Turbopumps Compressors & Fans Motors, Generators & Controllers Turbines & Power Systems driven economical electric motor magnet
Slide 12: Integration Priorities
Integration Priorities Overall Guiding Thesis: Initial focus on employee Two independent operating benefits, governance, businesses advancing accounting and finance, under one umbrella compliance Look for opportunities to Longer term outlook for improve operational revenue synergies, talent proficie
Slide 13: Pro Forma Market Diversity
Pro Forma Market Diversity Diversifying the business into better growth markets, opportunity for further growth Other 7% Future Aerospace 6% Refining 26% Graham Organic Graham Defense Chem/Petrochem 45% 16% Other 10% Defense Refining 25% 41% Graham with Chem/Pet BNI rochem 24% © 2021 Graham Corp. 13
Slide 14: Transformative Acquisition: Key Takeaways
Transformative Acquisition: Key Takeaways Transformational acquisition Leverage assets toward defense and aerospace Expanding, less cyclical revenue and financial results Expect to enhance EBITDA multiple Provides growth and platform for additional investment ~50% top line growth in fiscal 2
Slide 15: Expanding Defense Industry Platform with Acquisition of Barber-Nichols Inc.
NYSE: GHM • June 1, 2021 Expanding Defense Industry Platform with Acquisition of Barber-Nichols Inc. © 2021 Graham Corp. 15