Graham Corporation’s Gross Profit Surges 77% in Fiscal Q4, Exceeding Expectations
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Graham Corporation’s Gross Profit Surges 77% in Fiscal Q4, Exceeding Expectations

Graham Corporation (NYSE: GHM) reported a robust financial performance for the fourth quarter of fiscal 2024.
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Graham Corporation (NYSE: GHM) reported a robust financial performance for the fourth quarter of fiscal 2024, showcasing significant growth in key metrics.

The company achieved record net sales of $49.1 million, reflecting a 14% increase compared to the same period last year. This growth was primarily driven by a 43% surge in sales to the defense market, which included a notable contribution from the company’s aftermarket business. The acquisition of P3 Technologies also added $1.2 million to the quarter’s sales.

The gross profit for the quarter stood at $12.7 million, marking a 77% increase from the prior-year period. This substantial improvement was attributed to higher sales volume, better pricing on defense contracts, and improved execution.

Consequently, the gross margin expanded by 930 basis points to 25.9%. Operating profit also turned positive, reaching $1.5 million compared to an operating loss in the same period last year. Net income for the quarter was $1.3 million, or $0.12 per diluted share, a significant turnaround from the net loss of $0.05 per diluted share reported in the fourth quarter of fiscal 2023.

Graham Corporation Beats EPS and Revenue Expectations in Fiscal Q4

Graham Corporation’s fourth-quarter performance exceeded market expectations. Analysts had anticipated earnings per share (EPS) of $0.04 and revenue of $44.5 million.

However, the company reported an EPS of $0.12 and revenue of $49.1 million, surpassing both expectations. The adjusted net income for the quarter was $1.6 million, or $0.15 per diluted share, a substantial improvement from the negligible adjusted net income reported in the same period last year.

The company’s ability to outperform expectations can be attributed to its strategic focus on high-margin defense and aftermarket sales and the successful integration of P3 Technologies.

The gross margin expansion and improved operating efficiency also played crucial roles in driving the better-than-expected results. The adjusted EBITDA for the quarter was $3.0 million, or 6.0% of sales, compared to $1.5 million, or 3.4% of sales, in the prior-year period, reflecting a 103% increase.

Graham Corporation Expects Net Sales of $200 Million to $210 Million in Fiscal 2025

Looking ahead, Graham Corporation has provided optimistic guidance for fiscal 2025. The company expects net sales to range between $200 million and $210 million, representing an 11% increase at the midpoint compared to fiscal 2024.

The gross margin is projected to be between 22% and 23% of sales, while SG&A expenses are expected to be between 16.5% and 17.5% of sales. The company also anticipates adjusted EBITDA to be in the range of $16.5 million to $19.5 million, up 35% at the midpoint over fiscal 2024.

The favorable outlook is supported by a strong backlog of nearly $400 million and increasing demand from the U.S. Navy. The company has also received a $13.5 million strategic investment from a major defense customer to enhance its production capabilities in Batavia, N.Y.

GHM’s Strategic Initiatives and Long-Term Goals

Graham Corporation’s strategic initiatives have been pivotal in driving its recent successes and setting the stage for future growth. The company’s focus on high-margin defense projects and aftermarket services has paid off, as evidenced by the substantial increase in defense sales and improved profitability.

The acquisition and successful integration of P3 Technologies have also contributed to the company’s growth by enhancing its technological capabilities and expanding its market reach.

The company’s long-term goals include continued growth in revenue and profitability, with a particular emphasis on the defense sector.

The strategic investment to expand the Batavia facility, along with the ongoing Navy projects, positions Graham Corporation well to capitalize on future opportunities. The company remains confident in its ability to achieve its fiscal 2027 targets, driven by its strong backlog, strategic investments, and focus on operational excellence.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.