Graham Posts Record Sales as Defense Demand Accelerates
Adjusted EBITDA rose 28% to $8.8 million as profitability recovered from the preceding quarter.
Graham Corporation (GHM), an engineered-equipment manufacturer, posted record fiscal first-quarter net sales of $71.3 million, up 29% from a year earlier as Defense and an acquisition lifted growth. Sales had risen 13% in the preceding quarter and increased 6.4% sequentially.
The acceleration came with mixed profitability. A heavier contribution from lower-margin Defense work pressured margins from a year earlier, while sequential improvements in gross margin, operating income and adjusted earnings marked a reversal from the fiscal fourth quarter.
The $15.9 million increase in sales included $6.6 million from FlackTek. Defense sales climbed 40%, or $11.8 million, and Space sales rose 86%, or $2.9 million, while Energy & Process sales increased 5%. Aftermarket sales across the Energy & Process and Defense markets grew 20% to $9.7 million.
Gross margin narrowed 150 basis points from a year earlier to 25.0% as lower-margin Defense sales and material receipts increased. It recovered 230 basis points from the fourth quarter. Operating income fell 16% to $4.2 million and diluted earnings declined 21% to $0.33 a share, though both improved sequentially from $2.7 million and $0.18 a share.
Adjusted diluted earnings rose 9% to $0.49 a share, reversing a 23% decline in the preceding quarter. SG&A, including amortization, increased 33% as Graham absorbed $1.8 million of incremental FlackTek expense, $0.6 million of acquisition and integration costs, and spending on people, processes and technology.
Orders totaled $95.9 million, down 24% against a year-earlier period that included $86.5 million of Virginia-class submarine follow-on orders, but up 22% sequentially. Backlog reached a record $557.2 million, 15% above a year earlier, with Defense accounting for about 84%. Space orders equaled 2.3 times quarterly Space sales, while FlackTek orders were twice its quarterly sales.
Graham reaffirmed fiscal 2027 guidance for sales of $285 million to $295 million, gross margin of 24.5% to 25.5%, and adjusted EBITDA of $35 million to $40 million, as first-quarter results met expectations. Cash increased to $27.0 million from $6.6 million sequentially, and debt fell to zero after Graham completed a $50 million stock issuance and used $13.0 million of the proceeds for repayment.