Graham Corporation

First-quarter revenue increased 29% to a record $71.3 million, with organic revenue up 17%. Gross profit rose 21% to $17.8 million, but gross margin fell to 25% from 26.5% a year ago due mainly to mix, especially higher Defense revenue and lower-margin material receipts; sequentially, gross margin improved 230 basis points versus Q4. Net income was $3.9 million, or $0.33 per diluted share, versus $4.6 million, or $0.42 per diluted share last year; adjusted net income was $5.7 million, or $0.49 per diluted share, versus $4.9 million, or $0.45 per diluted share. Adjusted EBITDA increased 28% to $8.8 million, with a 12.3% margin, and first-quarter orders were $96 million for a 1.3x book-to-bill. Backlog ended at a record $557 million, up 15% year over year. For fiscal 2027, Graham reaffirmed revenue guidance of $285 million to $295 million, gross margin of 24.5% to 25.5%, SG&A of 16.5% to 17.5% of sales, adjusted EBITDA of $35 million to $40 million, and capex of $18 million to $22 million.

Matt Malone struck an optimistic but disciplined tone, saying the company is seeing significant momentum across end markets and that the benefits of prior investments are starting to show up in results. He emphasized capacity expansion, automation, testing infrastructure, and the acquisitions of FlackTek and Xdot as foundations for higher volumes and improved performance. He also highlighted a long-term framework for 8% to 10% organic revenue growth and 14% to 16% adjusted EBITDA margins by fiscal 2029, while saying the company is focused on profitable growth and becoming a top-quartile performer.

Chris Thome focused on the quarter’s broad-based growth and the mechanics behind margins and cash. He said gross profit increased to $17.8 million, gross margin was 25%, and the year-over-year decline was mainly due to business mix, while SG&A rose $3.2 million because of acquisition/integration costs, FlackTek, and growth investments expected to total about $2.5 million in fiscal 2027. He also noted net cash used by operating activities of $12.7 million, capex of $2.6 million, and quarter-end liquidity of $27 million of cash, no debt, and about $75 million of revolver capacity; guidance remained unchanged, including $35 million to $40 million of adjusted EBITDA.

Analysts pressed on whether Space’s 86% revenue growth signaled a more structural step-up; management said the business has changed structurally since last year, the current quarter run rate is the new norm, but orders will still be lumpy quarter to quarter. Questions also focused on Defense awards, with management saying the MK48 award was a follow-on option year and the MK19 award was a competitive win that expanded scope for fleet spares, while broader submarine demand remains strong. On margins, management said the sequential gross margin improvement was mostly mix-related, and on aftermarket, they described demand as strong because refineries are operating around 96% utilization and customers are prioritizing maintenance and efficiency projects.