Graham (GHM) Q4 2024 earnings summary

Executive summary

• Achieved record fiscal 2024 revenue of $185.5 million, up 18% year-over-year, driven by strong defense, aftermarket, and P3 Technologies sales, with significant margin expansion and cash flow improvement.

• Orders reached a record $268.4 million, with a 1.4x book-to-bill ratio and backlog rising to $391 million, providing strong visibility.

• Strategic initiatives included the acquisition and integration of P3 Technologies and a $13.5 million investment from a major defense customer for Batavia facility expansion.

• Revenue mix shifted to 54% defense, up from 25% in FY21, highlighting diversification and growth in key markets.

• All debt was repaid, and the credit facility was amended for greater flexibility and lower costs.

Financial highlights

• Q4 sales reached $49.1 million, up 14% year-over-year; full-year sales were $185.5 million, up 18% from fiscal 2023.

• Gross margin expanded to 25.9% in Q4 and 21.9% for the year, up 570 bps, driven by higher volume, favorable mix, and improved pricing.

• Net income for fiscal 2024 was $4.6 million, up from $0.4 million in the prior year; adjusted EBITDA reached $13.3 million, up 56%.

• Cash from operations more than doubled to $28.1 million; all debt repaid during the year.

• Adjusted EPS for fiscal 2024 was $0.63, up 163% year-over-year.

Outlook and guidance

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

• Gross margin guidance for 2025 is 22–23%; SG&A expected at 16.5–17.5% of sales.

• Adjusted EBITDA guidance for 2025 is $16.5–19.5 million, a 35% increase at midpoint, with margin of 9%.

• CapEx for 2025 expected at $10–15 million, with about half for Batavia expansion.

• Long-term targets: 8–10% annual organic revenue growth, $240–250 million revenue, and low to mid-teen adjusted EBITDA margin by fiscal 2027.