Graham (GHM) Q2 2025 earnings summary

Executive summary

• Achieved record quarterly revenue of $53.6 million, up 19% year-over-year, with strong growth in defense (+23%), space (+23%), and chemical/petrochemical (+24%) segments.

• Gross margin expanded 790 basis points to 23.9%, and adjusted EBITDA margin rose 550 basis points to 10.5%.

• Net income rose to $3.3 million, a 698% increase year-over-year; adjusted net income up 353% to $3.4 million.

• Orders reached $63.7 million, driving a book-to-bill ratio of 1.2x; backlog hit a record $407 million, up 30% year-over-year.

• Raised full-year guidance for gross margin and adjusted EBITDA, targeting low to mid-teen EBITDA margins by fiscal 2027.

Financial highlights

• Net sales for Q2 FY2025 were $53.6 million (+19% YoY); gross profit was $12.8 million (23.9% margin).

• Adjusted EBITDA for the quarter was $5.6 million (10.5% margin), up 150% year-over-year.

• Q2 FY25 EPS was $0.30, up 650% year-over-year; adjusted EPS was $0.31.

• Cash flow from operations for six months was $22.6 million; cash on hand was $32.3 million with no debt.

• CapEx for H1 FY25 was $6.5 million; full-year guidance increased to $13–$18 million.

Outlook and guidance

• Fiscal 2025 net sales expected at $200–$210 million, implying 11% revenue growth at midpoint.

• Gross margin guidance raised to 23%–24% of sales; adjusted EBITDA guidance increased to $18–$21 million (9.5% margin at midpoint).

• SG&A expense forecasted at 17%–18% of sales; capital expenditures raised to $13–$18 million.

• Expect 35%–45% of backlog to convert to sales in the next 12 months, with another 30%–40% in the following 12 months.

• Targeting low to mid-teen adjusted EBITDA margins by FY2027.