Mon, Jun 9, 12:32 PM (15 days ago)
**Graham Corporation (GHM) - 2025 Annual Report Summary** **Financial Performance:** - **Revenue:** $209.9 million, up 13% from the prior year. - **Gross Profit:** $52.9 million, with a 330 basis point improvement in gross profit margin to 25.2%. - **Net Income:** $12.2 million, a significant increase from $4.6 million in 2024. - **Earnings per Share (EPS):** $1.11, up from $0.42 in 2024. - **Adjusted EBITDA:** $22.4 million, reflecting strong operational performance. **Operational Highlights:** - **Defense Sales:** Increased by 23% to $121.9 million, driven by growth in existing programs and better execution. - **Space Sales:** Increased by 11% to $14.7 million, primarily due to the addition of P3. - **Energy & Process Sales:** Consistent with the prior year, with increased sales to Asia and the Middle East offsetting a decline in aftermarket sales. **Strategic Overview:** - **Acquisition of P3 Technologies:** Advances growth strategy, diversifies market and product offerings, and broadens turbomachinery solutions. - **Market Position:** Strong in Defense, with 83% of total backlog, providing stability and visibility. - **Future Outlook:** Targeting 8-10% average annualized organic revenue growth and low to mid-teen adjusted EBITDA margins by fiscal 2027. **Risk Factors:** - **Customer Concentration:** Dependence on a few major customers, particularly in the Defense sector. - **Economic and Political Risks:** Vulnerability to geopolitical tensions, supply chain disruptions, and economic volatility. - **Operational Risks:** Dependence on key personnel, potential labor shortages, and reliance on subcontractors. **Financial Condition:** - **Cash Position:** $21.6 million in cash and cash equivalents, with strong liquidity and available financing capacity. - **Capital Expenditures:** $18.9 million, focused on growth and productivity improvement initiatives. **Market Position Changes:** - **Defense Market:** Strong demand, with increased penetration and a leading position in certain systems and equipment. - **Energy & Process Market:** Transitioning to alternative energy, with a focus on hydrogen, small modular nuclear, and geothermal processes. - **Space Market:** Growth potential in commercial space/aerospace markets, with a focus on rocket engine turbopump systems and components. **Future Outlook:** - **Fiscal 2026 Outlook:** Projected net sales of $225,000 to $235,000, with a gross profit margin of 24.5-25.5% and SG&A expenses of 17.5-18.5% of sales. - **Capital Expenditures:** Expected to be $15,000 to $18,000, with a focus on completing the Batavia Defense expansion and cryogenic testing facility. **Summary:** Graham Corporation demonstrated strong financial performance in 2025, driven by strategic acquisitions and operational efficiencies. The company's focus on the Defense and Space markets, along with its commitment to innovation and growth, positions it well for future success. However, it faces risks related to customer concentration, economic volatility, and operational dependencies. The company's robust financial condition and strategic initiatives provide a solid foundation for achieving its long-term goals.