Graham (GHM) Q1 2025 earnings summary

Executive summary

• Achieved record quarterly sales of $50 million, up 5% year-over-year, driven by strong growth in defense and refining markets, and supported by the P3 Technologies acquisition.

• Net income rose 12% to $3 million, with adjusted net income up 20% to $3.6 million and net margin at 5.9%.

• Orders reached $55.8 million, with a book-to-bill ratio of 1.1x; backlog at quarter end was $396.8 million, up 23% year-over-year.

• Expansion of defense business, including a new 29,000 sq ft facility in Batavia, NY, and major project awards totaling over $65 million support future growth.

• No debt and $21.6 million in cash at quarter-end provide financial flexibility for growth.

Financial highlights

• Gross margin expanded to 24.8%, up 170 basis points, aided by higher-margin defense and P3 sales and a $480,000 Blue Forge Alliance grant.

• Adjusted EBITDA was $5.1 million (10.3% margin); SG&A rose due to investments in operations, ERP, R&D, and P3 integration.

• Cash from operations was $8.7 million; capital expenditures were $3.0 million.

• Effective tax rate dropped to 10.0% from 22.5% due to discrete tax benefits.

Outlook and guidance

• Fiscal 2025 revenue expected between $200 million and $210 million, implying 11% growth at midpoint.

• Gross margin guidance of 22%-23%; SG&A expected at 16.5%-17.5% of sales; adjusted EBITDA projected at $16.5 million-$19.5 million.

• Capital expenditures projected at $10 million-$15 million for the year.

• FY27 revenue goal of $240 million–$250 million, targeting 8%–10% annualized organic growth.