Graham Corporation · NYSE:GHM
Graham — Investor Presentation (August 2021)
29 slides from Graham's investor presentation, Aug 25, 2021
Slide 1: Graham Corporation Investor Presentation
NYSE: GHM • August 2021 Graham Corporation Investor Presentation Daniel J. Thoren, President and Chief Operating Officer Jeffrey F. Glajch, Vice President & Chief Financial Officer Exhibit 99.1
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: Critical Equipment Supplier for Defense, Energy, Chem/Petrochem and Aerospace/Space
Critical Equipment Supplier for Defense, Energy, Chem/Petrochem and Aerospace/Space Note: Market data as of August 3, 2021 [Source: S&P Capital IQ]; ownership as of recent filings; Shares outstanding as of August 6, 2021 and includes 610,000 shares used in the BN acquisition $151 million Market capi
Slide 4: Acquisition Creates Growth Momentum
Acquisition Creates Growth Momentum FY21 Sales $97.5 million FY21 Pro Forma $155.4 million FY16 Sales $90.0 million Acquisition of Barber-Nichols (BN) expands reach into more stable, higher growth markets
Slide 5: BN: Compelling Strategic Rationale
BN: Compelling Strategic Rationale Transformative acquisition accelerates diversification strategy and expands addressable market Evolves business to increase defense industry profile Improves revenue visibility with demonstrated track record of growth Immediately accretive to EPS including share is
Slide 6: Building Opportunities on Two Primary Platforms
Building Opportunities on Two Primary Platforms Defense and Space Strong visibility into future naval programs – ships and submarines Engaged in Space development programs Energy and Chemical/Petrochemical Expanding geographically and into more price sensitive markets Expect petrochem to decouple fr
Slide 7: Deepening Presence in Defense Industry
Deepening Presence in Defense Industry Highly specialized propulsion and ejection systems for a variety of undersea defense applications Customized, highly engineered surface condensers for Naval Nuclear Propulsion Program Employs knowledge in rotating equipment, power generation cycles, electrical
Slide 8: Current Defense Programs and Pipeline
Current Defense Programs and Pipeline SSN Virginia Class Subs CVN Carrier SSBN Columbia Class Subs Content Condenser and various heat exchangers PPFW HEXs*, SGCD HEX*, ATP*, ALT/Regulator for Torpedoes Condenser, Air Ejectors, PPFW HEXs*, Pulsation Dampener, ALT/Regulator for Torpedoes Value $40 to
Slide 9: New Frontier: Space
New Frontier: Space Serving the private space exploration market NASA is long time BN customer Relationships at Marshall, Johnson, and Glenn centers Critical space flight hardware Leader in specialized turbomachinery for cryogenic rocket engine fuels High-end turbomachinery and fluid transfer for li
Slide 10: Key Drivers
Key Drivers Leveraging installed base with improved lead management process Expanding international presence, capability and competitiveness Implemented Performance Improvement engineering team Use technology to proactively address opportunities Reduced lead time End markets investing in existing fa
Slide 11: New Market: Advanced Energy Systems with Cryogenics
New Market: Advanced Energy Systems with Cryogenics Cryogenic fluid systems for hydrogen production, distribution and fueling systems Full systems and equipment to support organic binary and supercritical CO2 power generation systems Among world’s largest helium pumps moving liquid helium coolant th
Slide 12: Differentiation with Comprehensive Customer Support Model
Differentiation with Comprehensive Customer Support Model Provide unique value before and throughout project life cycle Detailed engineering and equipment scope analysis Solutions engineering and prototype developments Deliver in-depth solutions quickly and accurately Consultative Selling Platform a
Slide 13: Operating Profit and Margin, Sales, Adjusted EBITDA
Operating Profit (Loss) and Margin Sales Adjusted EBITDA and Margin(2) ($ in millions, except per share data) FY2022 guidance as of August 10, 2021, Sales estimate includes $45-$48 million from BN See supplemental slide for Adjusted EBITDA and Adjusted EBITDA margin reconciliation and other importan
Slide 14: Q1 FY22 Results – Period of Transition
Operating Loss and Margin Sales Adjusted EBITDA and Margin(1) ($ in millions, except per share data) See supplemental slides for additional important disclosures regarding Graham’s use of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted diluted EPS as well as the reconciliation of net income/(lo
Slide 15: Used Large Cash Reserves to Invest in Growth
($ in millions) Used Large Cash Reserves to Invest in Growth Accretive acquisition expected to improve return on assets Put cash to work to grow the business Invested $41.1 million of cash for acquisition Borrowed $20 million of low-cost debt for acquisition Strong liquidity and financial flexibilit
Slide 16: Continue to Look at Acquisitions to Complement Growth
Continue to Look at Acquisitions to Complement Growth Extend core competencies, reduce volatility, improve revenue and earnings Priorities Defense: Broaden participation in other programs Additional products Aftermarket: Additional products Expand share Energy/Chemical: Additional products Cost adva
Slide 17: Backlog Growth Driven by Defense
$61.8 $13.4 $11.5 $35.0 $20.9 Defense Orders Quarterly Net Orders (excl. Defense) Totals shown in graph may not equal the sum of the segments due to rounding Q1 FY22 TTM Orders $131.1 million ($ in millions) Backlog Orders Backlog Growth Driven by Defense Q1 FY22 Backlog By Industry Expect to conver
Slide 18: Transforming to Drive Value
Transforming to Drive Value Leveraging transformational acquisition to accelerate growth in defense industry Preparing for refining and petrochem upcycle expansion Enhancing leading market positions and furthering strong brand recognition More efficient balance sheet with capacity for additional acq
Slide 19: For more information
For more information: Jeffrey F. Glajch Deborah K. Pawlowski Vice President – Finance and CFO Kei Advisors LLC Phone: (585) 343-2216 Phone: (716) 843-3908 jglajch@graham-mfg.com dpawlowski@keiadvisors.com
Slide 20: Supplemental Information
7G RAHAM CORPORATION SUPPLEMENTAL INFORMATION © 2021 Graham Corp.
Slide 21: Adjusted EBITDA Reconciliation
(Unaudited, $ in thousands) Adjusted EBITDA Reconciliation Non-GAAP Financial Measure: Adjusted EBITDA is defined as consolidated net income (loss) before net interest expense, income taxes, depreciation, amortization and other acquisition related expenses and Adjusted EBITDA margin is defined as Ad
Slide 22: Adjusted Net Income Reconciliation
(Unaudited, $ in thousands) Adjusted Net Income Reconciliation 1) Applies a normalized tax rate of 19% to GAAP pre-tax income and non-GAAP adjustments above, which are each pre-tax. Non-GAAP Financial Measure: Adjusted net income and diluted EPS are defined as net income and diluted EPS as reported,
Slide 23: Barber-Nichols (BN) and Transaction Overview
Item Terms Purchase Price $72.0 million purchase price: split 87% cash / 13% stock $61.1M in cash (funded with $20M term loan and $41.1M cash) $9M in stock $1.9M earn out 11x twelve-month forward EBITDA multiple Cost Synergies None assumed Year Three Earn Out (FY’24) - All cash earn-out Up to $14 mi
Slide 24: BN Products: Pumps, Turbopumps, Compressors, Motors, Turbines
Pumps Electric motor driven Mixed flow, full and partial emission centrifugal pumps Mechanically sealed, hermetic and submersible configurations Rocket Engine Turbopumps Robust and economical Designed and manufactured significant number of turbopumps compared with other U.S. companies Compressors &
Slide 25: North American Competition
North American Competition Market Competitors Naval Nuclear Propulsion Program/Defense DC Fabricators; Joseph Oat; PCC; Triumph Aerospace; Xylem Refining vacuum distillation Croll Reynolds Company, Inc.; Gardner Denver, Inc.; GEA Wiegand GmbH Chemicals/Petrochemicals Croll Reynolds Company, Inc.; Ga
Slide 26: International Competition
Market Competitors Refining vacuum distillation Edwards, Ltd.; Gardner Denver, Inc.; GEA Wiegand GmbH; Korting Hannover AG Chemicals/Petrochemicals Croll Reynolds Company, Inc.; Edwards, Ltd.; Gardner Denver, Inc.; GEA Wiegand GmbH; Korting Hannover AG; Schutte Koerting Turbomachinery OEM – refining
Slide 27: Representative List of Customers
Representative List of Customers Aerojet Rocketdyne Cummins Jacobs Engineering Group Inc. Oak Ridge National Laboratory Air Liquide DuPont Kairos Power Raytheon Technologies Applied Research Laboratory Dow Chemical Koch Fertilizer ENID LLC Roush Aramco General Atomics Lockheed Martin SAIC Bechtel Pl
Slide 28: Executive Compensation
Executive Compensation Base Salary Reviewed annually by our compensation committee and determined based on company performance, individual performance, job responsibilities, and internal pay equity Provides compensation that is not “at-risk” to compensate executive officers Annual Incentive Cash Com
Slide 29: Consolidated sales reconciliation FY2018-FY2020
($ in thousands) FY 2018 FY 2019 FY 2020 Consolidated sales as reported $ 77,534 $ 91,831 $ 90,604 Commercial nuclear utility sales included above $ 9,476 $ 8,336 $ 1,276 Sales of Divested Business